Top Image Systems Investors Presentation September 2015
Safe Harbor Certain statements made in this presentation may be forward-looking in nature (within the meaning of the "safe harbor" provisions of the US Private Securities Litigation Reform Act of 1995). These statements are based on the current expectations or beliefs of the company s management and are subject to various known and unknown risks that could cause actual results to differ materially from those described in the forward-looking statements, including, but not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development, the effect of the Company's accounting policies, increasing competition, our ability to integrate companies and businesses acquired by us and certain other risk factors, including those that are set forth from time to time in the Company's filings with the United States Securities and Exchange Commission, which may cause the actual results, performance and achievements of the Company to be materially different from any future results, performance and achievements implied by such forward-looking statements. 2
The TIS Difference TIS empowers our customers to compete in the digital economy
Digital business starts here.
The Company FOUNDED/ IPO CUSTOMERS GLOBAL FOOTPRINT REVENUE BALANCE SHEET R&D PARTNERS SOLUTIONS AWARDS 1991/1996, Public company, NASDAQ: TISA 1000+ enterprise-level installations in 40 countries 250+ Employees in the Americas, Europe & Asia $35.9 M in FY2014; Q2 Revenues $9.9M US$4.5M cash, no debt Israel, US, Germany Worldwide partner network eflow capture & processing platform; MobiFLOW imaging platform & apps; CloudDocs doc management & archiving 2014: ECM Awards Finalist; Mobile Innovations Award; 2015 Pentadoc & Innovationpreis, Fintech Innovation finalist
Our Customers Global presence with large and diversified customer base of more than 1,000 7 6
TIS Mission Statement To transform and organize all business content, making it understandable and digitally usable by everyone, everywhere on any device.
Shift to Customer Engagement as a Driver of Business Value Cloud, Mobile
Bank of the West s Scan to Pay Since the launch of Scan to Pay by Bank of the West in October, mobile photo bill payment continues to grow in popularity among the Bank s customers; Today Scan-To-Pay accounts for some 4% of overall new payees at Bank of the West; For 30% of the users, Scan-to-Pay was their first interaction with bill payment at BOTW; Bank of the West is seeing a growing trend of new bill payee addition via mobile of customers adopting new services from the bank that they did not use before the app was available positively impacting the bank s top line; BotW has a significant opportunity to drive adoption and usage of Scan-to-Pay (based on TIS MobiPAY) to grow their active mobile and active bill pay user base.
Communications/ Telecom We at Xerox Brazil are extremely enthusiastic about the enormous business potential of this partnership. There are endless opportunities across the Brazilian market to leverage mobile image processing to accelerate and increase the efficiency and accuracy of document-based processes...and to generate substantial new business. Marcus Vinicius Lopes, Global Document Outsourcing, Xerox Brazil Company Profile TIM Participações, the Brazilian subsidiary of Telecom Italia Mobile, has been active in Brazil since 1998 and is the first mobile company present in all Brazilian States, serving over 70.9 million customers. TIM employs over 12,000 persons and offers converged mobile and fixed telephony, data transmission and high speed Internet services. Gross revenues for FY2014 reached US$9,818 million. Business Challenges To become Apple s partner carrier, TIM needed a digital enrollment solution to run in Apple stores. Together with their IT vendor Xerox, TIM approached Top Image Systems to provide a mobile enrollment app that would efficiently integrate with Xerox s back office document management solution. TIS Solutions MobiENROLL - Sales reps in the store use the TIS app to onboard phone purchasers to a TIM phone plan, automatically capturing ID and documentation with the mobile camera, integrate it with keyed-in and CRM data, have the PDF form signed and submitted for processing, accelerating and optimizing the process and revolutionizing customer experience. Benefits Upon deploying the app for Apple, TIM decided to deploy it for Android devices as well, rolling out to over 3000 points of sale across Brazil Seamless integration between MobiENROLL and eflow Digital Mailroom enables an end-to-end multichannel onboarding process
Why Big Banks are Adopting Mobile Check Deposit Technology According to data from JPMorgan Chase, more than 21X in savings. Adoption of this technology is expected to grow rapidly. one third of retail bank deposits will be completed remotely by the end of 2015, and half by 2016.
The Mobile Capture Market Forecast Source: Forrester Research 12
# of Banks as Customers We are focused on building partnerships with industry leaders two new U.S. based partners signed in Q2 soon to be announced 1,000 900 800 700 600 500 400 300 200 100 0 Partner Strategy in Mobile Banking Assets / Bank Customer $100b+ $5b - 100b >$5b * Source: Celent
TIS Milestones Across 24 Months Q2/2013 Q2/2015 2013 Establish and run U.S. subsidiary - Q2/2013 Launch Mobile Solution Portfolio Q2/ 2013 Promote CTO to COO and to CEO Q4/2013 2014 Appoint new CFO Q3/2014 Initiate Product Migration to Cloud/SaaS Q3/ 2014 Acquire U.S. based vendor egistics Q3/ 2014 2015 Initiate Corporate Rebranding Q2/ 2015 Appoint new CTO Q2/ 2015 Appoint new President TIS Americas Q2/ 2015 Appoint new VP HR Q2/2015 Appoint new CMO Q3/2015
Acquisition News in Data Capture Market 03/15 - Lexmark to Acquire Kofax in Q2/15 for some $1b Lexmark to acquire all outstanding Kofax shares @ $11 per share in cash = enterprise value of some $1b Acquisition to double Lexmark s enterprise software business to $700m in market worth $10b, with CAGR of 10%. 09/14 Lexmark acquires 98% of the shares of ReadSoft at (SEK) 57.00 per share; total to be paid is approximately $251 million; 08/13 - Lexmark acquires Saperion AG for a cash purchase price of approximately $US72 million. 03/12 - Lexmark acquires BDGB Enterprise including US subsidiary Brainware, Inc. for a cash purchase price of approximately $148 million.
The TIS Strategy Hybrid Cloud Mobile Capture Growth in North America
Grow Core Business Corporate Strategy Drive adoption of new products globally Gain market share (US, Australia) SaaS / recurring revenue offering Capitalize on Mobile Scale mobile with current partners Expand new use cases Build and expand strategic partnerships Leverage Technology for New Applications Mobile capture of all doc types (eg A4) via cloud Crowdsourcing (Amazon) Capture for wearable tech 6 Pursue Selective M&A Leverage cross-sell and upsell with egistics Build scale Pursue additional accretive acquisitions 17
Growth in Revenues with M&A (in $m) 100 Crossing $100 million by 2017 90 M&A 80 70 TIS M&A M&A 60 50 TIS 40 M&A TIS 30 TIS 20 10 TIS TIS TIS TIS 0 2011 2012 2013 2014 2015 2016 2017 18
Smart Process Applications (SPAs) SPAs have the highest demand in the financial services, government, insurance and healthcare verticals; Forrester forecast the SPAs for Financial Services market to reach some $3.26b in 2015 - the largest SPA sector by vertical, and one that tends to be an early adopter of capture and smart technology. Forrester calculates the CAGR for SPAs for the financial services market to be 18.93% through 2016* * Market Analysis of Multichannel Capture, Business Process Management and Smart Process Applications 2013-2016, Forrester Research, January 2013
TIS Cited as Leader in the Capture Market
TIS Solution Portfolio MobiFLOW Platform & Mobile App Portfolio DMR Digital Mailroom Solution P2P-ERP (AP Automation) Solution CAPTURE RECOGNITION VALIDATION ANALYTICS REPORTING DELIVERY eflow Platform Structured/ Unstructured data WORKFLOW ERP, Mobile, Core system CloudDocs Platform i-remit Remittance & Related Doc Management Solution
Selected U.S. based Customers 5 of Top 5 U.S. Banks 2 Largest Remittance Processors #1 Bank Processor BANKS #1 Asset Management Company #1 U.S. Medicaid Operation PAYMENT PROCESSORS Health Insurance, Communications and others 5
Banking & Finance Titan expects eflow to execute rapid, accurate data recognition and classification for high volumes of complex, varied types of documents to significantly increase productivity and to expand production efficiency and loan fulfillment capacity. In short, we will be able to grow revenues by controlling FTE count while providing efficient service to a larger number of satisfied customers, Mary Kladde, CEO Titan Lenders Corp. Company Profile Titan Lenders is a domestic BPO and risk management services provider offering back-office outsourcing services to mortgage lenders of all types and numerous added value services loan purchase review, pre and post-closing, mortgage document production, warehouse line fulfillment and audit, document retention services, and correspondent jumbo whole loan purchase. Business Challenges Prior to project, manual document, signature and field review was long, tedious, error-prone and offered very poor transparency or visibility into front end processes.. TIS Solutions eflow Digital Mailroom Phase 1 Automated Classification of Document Types Completed Successfully Benefits Compliance, Lower cycle time, fewer errors, Better visibility and transparency Primary benefit company can handle much higher business volume and give better customer service with same resources
Banking & Finance Company Profile SDV is an IT service provider to the Sparda Banking Group, Germany, focused mainly on private retail banking Sparda includes 12 regional cooperative banks with roughly 6,000 employees spread across more than 400 branches, serving some 3.4m members By purchasing cooperative shares, customers of Sparda-Banken can become members of their bank. Business Challenges Phase 1: Processing 500.000 documents/ year by 450 users Multichannel input (email, white mail, fax, MFD scans at branches Number of document classes in phase 1: 20 (customer onboarding, application for new cards (debit/ credit), account closing, etc.) TIS Solutions eflow Digital Mailroom Inbound Mail Management Benefits Straight through Processing Automated Mail Routing Speeds Business Processing Automated Response Management Reduces Data Entry Tasks and Expenses, Accelerating Responses and Increasing Customer Satisfaction
Launch of eflow Lending at FinovateSpring 2015 First consolidated eflow-clouddocs- MobiFLOW intelligent process application eflow Lending transforms the costly, time-consuming manual loan origination process into an automated, selfservice digital business experience; By capturing, processing and tracking loan-related document submissions of any type, in any volume, via any device - anywhere, at any time, eflow Lending accelerates loan processing and approval cycles; While ensuring the data security and regulatory compliance mandatory for financial providers, eflow Lending maximizes lender productivity and borrower satisfaction. See a recording of the eflow Lending demo first shown at FinovateSpring:
The Cloud Market Opportunity 26
Cloud Capabilities Salesforce.com Supplier/Invoice Portal eflow CloudBridge Mobile Devices Multifunctional Devices Enhanced Cloud Technologies for intelligent capture
Crowdsourcing -> BPO in the cloud Recognize ~700.000 Crowd Workers waiting for a HIT
Multi-year, multi-million dollar Contract Signed with U.S. Top Five Bank Based on a SaaS business model, deal provides visibility and stable, consistent source of revenues against the bank s steady multi-year stream of transactions. Deployed cloud-based solution because of the solution s superior technology and functionality, as well as to benefit from: cloud-based economics; state of the art security; capacity for compliance, experience integrating existing banking systems Focus on innovative cloud and mobile solutions will rapidly strengthen TIS market share in banking and finance, both globally and in the U.S. 29
Financial Overview
Long-Term Model Long-Term Model 2011 2012 2013 2014 Q2-2015 Target Model Gross Margin 61% 62% 59% 60% 62% 65% R&D 7% 8% 12% 14% 12% 15% Sales & Marketing 27% 28% 33% 36% 29% 25% G&A 15% 16% 16% 19% 15% 10% EBITDA 13% 15% 3% -1% 12% 15% 31
FY 2014 & H1/15 Figures Q1/14 Q2/14 Q3/14 Q4/14 Total 2014 Q1/15 Q2/15 Revenue 8,054 8,193 9,564 * 10,044 35,855* 8,261 9,914 9,781** 10,583** 36,613** 9,074** 11,125** EBITDA 417 568-2,632 1,187-460 8 1,225 % vs Prev year Revenue 19.3% 28.7% 23.0% 25.1% 23.4% 2.6% 21.0% 23.8%** 31.8%** 26.0%** 12.7%** 35.8%** % vs Prev year EBITDA 305% 206% -423% 9792% -617% -98% 116% * Including 2 months egistics revenues ** Revenues value prior to EURO currency impact
Objectives for 2015 Grow annual revenues by more than 20% based on constant currency exchange rates; Achieve Adjusted EBITDA margin of 10-12% annually and positive Adjusted EBITDA each quarter; Grow worldwide mobile revenues by 100%; Increase Accounts Payables Automation (AP) and Digital Mailroom (DMR) solution sales in North America by 40%; Grow recurring revenues to a run-rate level of $5.9 million; Sign a significant multi-year contract for a CloudDocs solution with a large financial institution; Cross-sell our AP or DMR solutions to an existing CloudDocs customer. 33
24% Revenue Growth YOY 5-Year Annual CAGR of 16.9%
Recurring Revenues SaaS 80% YOY
101 New Logo Customers
73% Increase in Number of Employees from 2013 2014
Q2 2015 Highlights Revenues of $9.9 million, a 21% increase over Q2 2014 and 20% sequential growth over Q1 2015; Q2 constant currency revenues of $11.1 million, an increase of 35% year over year; Recurring revenues of $5.2 million, representing 52% of total revenues, an increase of 86% over the prior year; Adjusted EBITDA* of $1.2 million, a 225% increase over Q2 2014; Adjusted EBITDA* margin of 12.4%; Accelerating growth of mobile imaging business - first half revenues exceed 90% of full-year 2014 revenues; Following the end of Q2, signed a large multi-year multi-million dollar agreement with a top 5 U.S. bank; Named seasoned industry executives Bob Fresneda as TIS Americas President and Andrew Pery as CMO; Yossi Dagan, most recently VP Finance at a large SaaS vendor, appointed TIS CFO. * Adjusted EBITDA defined in Non-GAAP Financial Measures section of press release issued 40
Currency Basket In Q2 the currency basket declined by 1.8%. The Basket is 16.9% lower than Q2 2014. 41
Revenues Year over Year 50 45 43.1 43.8 40 7.2 7.2 35 30 - - 4.8 25 20 15 10-21.8 28.7 31.2 29.0 35.9 36.6 5 0 2010 2011 2012 2013 2014 2014 (Constant Currency) Revenues Year over Year TCV (Total Contract Value) - SaaS
Annual Revenue Breakdown by Product Revenue by Product 2011-2014 60% 50% 52% 49% 2011 2012 2013 2014 40% 30% 20% 38% 35% 36% 32% 29% 26% 19% 20% 22% 25% 10% 0% 11% 0% 0% Core Capture ERP Solutions DMR Mobile 5%
Revenue by Quarter vs. Constant Currency 12,000 10,000 9,781 9,564 10,583 10,044 9,074 9,914 11,125 8,000 8,054 8,054 8,193 8,193 8,261 6,000 4,000 2,000 - Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Revenue (USD) Revenue (USD) - Constant Currency 45
Recurring Revenues The line graph represents Recurring Revenues as a percentage of Total Revenues. 53% 54% 58% 52% 6.0 5.0 4.0 25% 23% 23% 29% 28% 34% 28% 30% 32% 34% 3.0 5.0 5.4 4.8 5.2 2.0 1.0 1.9 1.9 2.0 2.1 1.9 2.2 2.2 2.4 2.6 2.8 47 - Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15
Thank You! Michael Schrader, CEO michael.schrader@topimagesystems.com Tel: +49-172-659-5962 Yossi Dagan, CFO yossi.dagan@topimagesystems.com Tel: +972-54-696-0875