1 March 2015
Synety Group plc - Disclaimer Group PLC - Disclaimer These slides have been prepared by Synety Group plc ( the Company ) in accordance with the proposed placing of new ordinary shares of the Company ( the Placing ) and the admission of such shares to trading on AIM, a market operated by London Stock Exchange plc. These slides do not constitute a prospectus, especially not according to the regulations of the German Securities Prospectus Act (Wertpapierprospektgesetz), nor do they constitute or form part of any offer or invitation to purchase, sell, underwrite or subscribe for, or any solicitation of any such offer or invitation to purchase,sell,underwrite or subscribe for,any shares in the Company nor shall the slides or any part of them or the fact of their distribution form the basis of or be relied on in connection with any contract therefore. Offers will only be made and applications accepted on the basis of formal placing letters. 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A Cloud Software & Telecoms Company Places & People 96 Offices UK Leicester: 68 people US Boston: 13 people PK Karachi: 15 people Staff Breakdown Sales & Marketing: 32 people Client Services: 14 people IT and Engineering: 9 people Development: 28 people Support & Admin: 13 people Simon Cleaver EXECUTIVE CHAIRMAN Simon is an entrepreneur and highly experienced director who has built, developed and sold a number of successful companies in both the private and the public arenas. He has in depth knowledge of acquiring and building companies, often under distressed circumstances. Mark Seemann CHIEF EXECUTIVE Mark has 15 years experience in the Internet and telecoms sectors and has been directly responsible for various technical innovations including one of the UK's first telecom web control panels and patented VoIP technology now owned by Cable & Wireless. Paul Williams CFO Paul Williams is a Chartered Management Accountant with over 18 years experience in the technology services sector, having worked previously for IBM, ECsoft Group plc and most recently, Ciber as Group Financial Controller and Interim CFO of the International Division. Peter Simmonds FCCA PROPOSED NON-EXECUTIVE DIRECTOR Peter is a chartered accountant with over 20 years of experience at senior management and board level, principally in I.T., amongst other areas. He has considerable business entrepreneurial experience having been involved at start up or early stage in a number of companies. From 2009 to 2015, Peter was the CEO of dotdigital Group plc, the AIM-quoted leading provider of intuitive SaaS and managed services to digital marketing professionals, where he continues in the role of Deputy CEO. 3
Contact functionality, from your Existing CRM Solving a Known Problem Historically - CTI - attempts to link multiple disparate systems Telco PABX Call Recording CRM Requires compatible hardware/software Expensive on-premise solution Moving CRM to Cloud can disconnect integration Challenging for smaller businesses where upfront CAPEX is an issue For many smaller & niche CRMs - no integrated CTI link exists CloudCall - four elements in one Can operate as an overlay on existing phone system Cloud based Service No CAPEX and easy to deploy API Driven Any CRM platform can integrate 4
Sales Approach & the Opportunity Sales Approach Leveraged marketing of Integrated CRM partners & their resellers Advantages for CRM partners Customer demand shows that CRM users want telephony integration Commission from SaaS fees Low call costs can help sell CRM Seats Joint marketing to CRM s customer base 14 Day Free Trial c.+70% conversion in both UK and the US The Opportunity CRM software revenues forecast to hit $23.9bn in 2014* US represents 54% of Global CRM revenue* Significant market opportunity for Synety Worldwide CRM Spend by Vendor Market Size* Others 54% Salesforce 16% SAP 13% Oracle 10% Microsoft 7% * Gartner s 2014 CRM Market share update 5
Income Streams Two Primary Visible Recurring Income Streams Recurring Service Fees - SaaS 10-35 per user per month SaaS income = 100% gross margin before partner commissions Telecom Income All you can eat packages or pay-as-you-go Packages and PAYG combined 79% gross margin Telco income = 31% of overall gross profit Other Income Streams Other Recurring Revenues Enhanced support packages Add-ons eg. 7 year call recording Additional DDIs Gross Margin % varies One Off Income Set-up fees Hardware sales Approx. 47% combined gross margin Overall Blended Gross Margin = 73% 6
Cloud Based Model Hub and spoke Cloud models are more efficient at scale Cloud models have relatively fixed overheads - efficiencies increase with scale Synety s Hub and Spoke structure is a shared services model, allowing for contention which also benefits cost efficiency UK based Hub includes 24/7 Global platform management R&D and software development (some dev. in Karachi PK) Provisioning / Customer On-boarding Technical Support / Customer Help desk Brand and digital marketing Centralised Billing UK / US Spokes Include Sales and account management Partner Management Localised marketing Spokes 2012 Launched UK 2014 Expanded UK and Launched US 7
2014 Trading Review / Key Financials Revenue Strong revenue growth, 1.63m (2013: 0.55m) 196% Loss Before Tax (Adj.*) ( 5.3m) (2013: 3.0m) Costs in line with plan * Excludes Share Based Payments and before non-recurring items Cash 2.36m (2013: 2.3m) 339k Q4 14 Average monthly cash absorbed by operations 369k 338k 309k OPERATING STATEMENT ( m) DEC 2014 DEC 2013 CHANGE % Revenue 1.63 0.55 196% Gross Profit 1.19 0.37 221% Sales and Marketing Expenses (1.51) (0.65) 132% Admin Expenses (4.00) (2.26) 77% R&D Expenses (1.03) (0.51) 102% Operating Loss (before non-recurring items) (5.34) (3.04) 76% FINANCIAL POSITION ( m) DEC 2014 DEC 2013 Assets 1.78 1.72 Other Assets 0.62 0.27 Cash 2.36 2.30 Total Assets 4.76 4.29 Current Liabilities 0.91 0.47 Other Liabilities 1.58 1.45 Net Assets 2.27 2.37 Customer Profile Total Number = 613 (2013: 266) Top 10 = 21% of recurring monthly income Top 20 = 32% of recurring monthly income CASHFLOW ( m) DEC 2014 DEC 2013 Cash absorbed by operations (4.40) (2.22) Cash absorbed by investing activities (0.53) (0.94) Net cash from financing activities 4.89 1.91 Cash and cash equivalents at end of period 2.36 2.30 Note: These numbers are preliminary, and not yet fully audited. 8
KPI Performance to Date ARR 2014 247% Year-on Year Increase Q1: 47% Q2: 51% Q3: 57% Q4: 92% RRPU 2014 Up 26% ARR per customer Up 51% Q4 31 Dec 2013 Q1 31 Mar 2014 Q2 30 Jun 2014 Q3 30 Sep 2014 Q4 31 Dec 2014 Growth 2014 31 Jan 2015 ARR - Annualised Recurring Revenue 0.87m 1.28m 1.72m 2.22m 3.02m 247% 3.20m No of End Users 2,678 3,866 4,834 6,156 7,705 188% 8,458 RRPU - Recurring Revenue per User 24.10 25.04 26.31 29.59 30.48 26% 30.51 ARR per Customer 3,273 3,720 4,218 4,331 4,935 51% 5,196 For full KPI definitions please see Appendix 9
Sales Acceleration Increase in Sales Activity 2014 Expansion of UK Sales & Marketing Launched in US Growth in addressable UK Market Increases as CRMs integrate Continuing to add CRM companies CloudCall Chrome increases addressable market Ongoing Product Enhancement increased RRPU Improves CloudCall proposition Leads to increased RRPU Further enhancements planned for 2015 Click 10 Per User Per Month 31.00 29.00 27.00 25.00 23.00 21.00 Click & Enterprise 20 Per User Per Month Contact Centre 30 Per User Per Month Campaigns 35 Per User Per Month (equivalent) Increase in RRPU & Product Enhancements CRM confidence / relationship takes time Increased lead flow Larger customers 10
Key Indicators of SaaS Business Performance Churn Rates Churn rates can be indicators of customer satisfaction and predictors for lifetime values Underlying churn figures are trending in the right direction Company s data showing that expansion revenues are substantially outpacing churn Lifetime Value and Cost of Customer Acquisition Lifetime value of customer contracts is increasing Costs of acquiring new customers in relation to anticipated lifetime values is encouraging Whilst only young data, indicators are positive Number of months to pay back customer acquisition costs 11
UK Spoke 2014 UK Sales Expansion Expanded UK Sales & Marketing team (May September 14) from 18 to 26 Typically 4 6 months to bring new sales resources fully on line 729k ARR increase in last 3 months Average customer size is 26 users from deals closed in last 3 months Trading Positive growth in RRPU UK now profitable at Spoke level and generating returns to offset Hub costs 2015 Plans UK Sales heads forecast to expand by approx. 12% (3 heads) Competitive Landscape Some competition on Salesforce and large CRMs Currently limited competition with the smaller/niche CRMs Recent increase in average customer size 12
US Spoke Launched July 2014 Trading 2015 Plans Initially 3 ( 7) sales / inside sales staff with focus on Salesforce.com & Bullhorn Orders received ahead of internal forecasts Orders received indicative of considerable appetite January 2015 best month to date for orders received US Sales heads forecast to expand by approx. 5 heads Competitive landscape Similar to UK Primary competition on Salesforce.com Key Partner CRMs * Estimated Users UK Estimated Users in US Salesforce US 0.4m 5m Microsoft CRM US 0.3m 3m ACT! US 0.6m 2.5m NetSuite US 0.08m 0.8m Sage 2000 & CRM UK 0.2m 0.8m Goldmine CA 0.1m 0.8m Bullhorn US 8k 70k US sales metrics mirror earlier UK sales metrics RRPU & Average User per Customer have grown over time in UK ARR per Sales head increased in UK as sales staff gain experience Territory Monthly Demos Per Telesales Head Trial Success % Average users per customer RRPU Users Per Sales Head per month ARR per Sales Head per month * End Users Addressable Market UK 40 69.5% 12.7 31.13 25 15,364 1.7m US 38 70.4% 11.7 25.08 27 8,708 20m Calculated using Q4 2014 data * The estimates for market size in the tables above are based on available market information and the reasonable estimates of Synety and its directors and are only intended to illustrate the potential market place in the US relative to the UK 13
Placing and Open Offer Company seeking to raise up to 2.75m ( 2m placing & 0.75m open offer) to strengthen the technical hub and for further limited expansion: UK investment c. 1.0m Sales & Presales Product Development and Marketing Key managerial hire - CMO US investment c. 0.75m Sales & Marketing US Customer Success Team Indicative Timetable 2015 Road Show 2 nd March Close Book 16 th March Announcement and Circular posted 18 th March General Meeting 8 th April Working Capital c. 0.25m Admission of new shares to trading 9 th April Open Offer Any funds from Open Offer will be used to further increase sales and marketing and for general working capital 14
Summary Fantastic, easy to set up, great system product was delivered way before expected Gemma Waltham MD, Compare your Healthcare Some of the best support I've ever had!! Chris Richards Council Tax Advisors Excellent Service almost immediate response Laura Riley Edward Mellor Of all support desks, Synety has been and is continuing to be the most superior Paul Tovey Fenwick Ryan CloudCall is a simple system to adopt, is easy to configure and is very feature rich. Click to dial from salesforce has been a real benefit Cillian O Grady Global Sales Manager, Induction Manager 15
Appendix Appendix 16
Significant and Director Shareholdings Shareholders % Holding * Mark Seemann (Director) 10.40% IPConcept Fund Management (Mellinkrodt 2) 9.35% Herald Investment Management 8.08% Aquaglow 5.20% Jason Kendall 5.03% Commerz Real 4.38% Simon Cleaver (Director) 3.77% Investec Wealth and Investment Limited 3.09% Graham Ward (Director) 2.46% Paul Williams (Director) 0.50% * Shareholdings listed as at 31 December 2014 17
Simple to Use, Brandable with Powerful Reporting 18
Key Performance Indicators Definitions Annualised Recurring Revenue (ARR) ARR is a forward looking number based on products sold to date. To calculate the ARR, we strip out any one-off invoices such as setup, hardware sales or professional fees and simply take the ongoing monthly recurring licence fees customers have subscribed for and add in the projected telecommunications income (average daily telecommunications spend X working days in an average month). This figure is then multiplied by 12 to give the expected annual recurring revenue. The Board believes that this is the clearest way of expressing the underlying annualised recurring revenue as it levels out inconsistencies that may be caused by how many working days there are in any particular month telecoms revenues that are not included in any calling package, are particularly sensitive to these fluctuations. It further removes any anomalies that may be introduced by large customers coming on-stream partway through the month which lower the ARPU since they are only billed for a partial month. No of Users Number of End Users (sometimes denoted as seats ) is defined as the actual number of individual users licenced to access the CloudCall platform. Recurring Revenue per End User (per month) (RRPU) This figure is not simply the ARR divided by the number of End Users. RRPU is calculated by combining the actual billed subscription revenue with the monthly subscription fees ordered, together with an estimate of the related telecommunications spend (eliminating any one-off billings) and dividing by number of End Users. To reduce the effects of monthly variations, RRPU published is the average RRPU of the preceding three months. 19