Corporate Overview Q3 FY 15
Forward-Looking Statements Disclaimer Certain statements made in this presentation and the related materials may contain forward-looking statements, which are not historical facts, but are based on certain assumptions and reflect Enghouse’s current expectations. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These risk factors are identified in Enghouse’s Annual Information Form and other periodic reports filed with applicable regulatory authorities from time to time. Enghouse disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Market and Industry Data This document contains certain statistical, market and industry data obtained from industry publications and reports. Industry publications and reports generally indicate that information has been obtained from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. Actual outcomes may vary materially from those forecast in such reports or publications, and the prospect for material variation can be expected to increase as the length of the forecast period increases. While we believe this data to be reliable, market and industry data is subject to variations and cannot be verified with certainty due to limits on the availability and reliability of data. Enghouse has not independently verified any of the third party data referred to in this document. 2
Snapshot HQ in Canada + 27 countries Toronto Stock Exchange Dual Growth – organic & TSX:ESL acquisitions Enghouse Interactive Enghouse Networks Enghouse Transportation Contact center software Telecom software Transportation software 1350+ employees Revenue Consistently profitable 3
Strategy Build a larger, more diverse enterprise software and services company through: – Growing our interaction management solutions business • Interactive Management Group – Growing our network solutions and transportation management software businesses • Asset Management Group – Consistently generating revenue growth and positive cash flow – Completing selective acquisitions within existing markets and entering new strategic software markets on an opportunistic basis 4
Interactive - Sector Dynamics Contact Center is at the front line of customer interaction, driving technology upgrades on premise and in the cloud IP migration, multi media routing and email driving technology refresh Mobile computing/workforce driving significant multi-channel requirements Trend to in-sourcing contact centers due to increasing costs overseas and political/nationalistic pressures Traditional PBX market becoming increasingly commoditized, adoption of SaaS delivery model Microsoft’s entry in the IP PBX could be a disruptive force (Lync Voice Platform) 5
Interactive Portfolio Leading customer interaction solutions, in the cloud, hosted or on-premise to address specific market requirements Consoles 10-50 seats Channel GTM and OEM On-premises Mid-Market 10-500 seats Channel GTM On-premises or hosted private cloud Enterprise 50-1000’s of seats Direct/Channel GTM On-premises, private cloud, or hybrid Cloud True multi-tenant cloud solution GTM through carriers and service providers Public, community, or private cloud 6
Interactive Portfolio Leading solutions to maximize the value of customer interaction MULTI-CHANNEL CONTACT CENTER Contact Center Enterprise · Contact Center Service Provider · Communication Center w/Microsoft Lync · Contact Center OnDemand · Outbound Dialer ATTENDANT/OPERATOR CONSOLE Intuition Attendant Console (Avaya/Genband) · Arc Pro Attendant Console for CISCO · Operator Console for Microsoft Lync · ANDTEK Console SELF-SERVICE Communication Portal · Knowledge Management Suite QUALITY MANAGEMENT Call Billing and Reporting Enterprise & Cloud · Call & Computer Recording · Agent Evaluation · Quality Management Suite · Workforce Management System 7
Networks - Sector Dynamics BSS/OSS market was valued at $17B in 2011 and is expected to grow to $48.5B in 2018, a CAGR of 16% from 2012-2018 (Source – Transparency market Research) Highly fragmented, open for more industry consolidation among 400+ vendors Industry growth fueled by wireless subscriber growth and demand for smartphones, tablet devices and OTT applications Adoption of cloud and network virtualization will continue to gain momentum Big data and analytics technologies being deployed to tailor value-added services based on subscriber usage and behavior Continuing transition to next-generation network technologies and new service offerings while also dealing with customer services and retention 8
Networks Portfolio Technology solutions to optimize performance for next generation network operators FRAUD MANAGEMENT Real-time Predictive Analysis · Profiling · Dashboard · Business Rules Engine GEOGRAPHIC INFORMATION SYSTEM Network Planning · Rollout · Design · Engineering · Visual Intelligence INTELLIGENT NETWORK SUITE Least Cost Routing · Enhanced Toll Free · Wholesale · Number Portability · Analytics MOBILE VALUE ADDED SERVICES Messaging · Call Completion · Rich Communications SERVICE DELIVERY CLOUD Billing · Order Management · Workflow · CRM · Service Catalog · Provisioning WHOLESALE REVENUE MANAGEMENT Mediation · Interconnect · Roaming · Trading · Taxation · Content 9
Transportation - Sector Dynamics Fragmented and competitive market. New technologies driving growth in systems and tangible cost benefits / savings Evolving tablet and smart phone technologies replacing traditional Mobile Data Terminals (MDT’s). LTE networks to provide interoperability across geographies Cloud computing gaining momentum and driving replacement of legacy technology systems in a space traditionally slow to adopt Economic uncertainty and rising fuel costs driving increased ridership in both public and private sectors International political focus on terrorism and natural disasters driving continued investment in transportation and public safety systems 10
Transportation Portfolio Software based transportation and workforce management solutions for the public, private and public safety sectors TRANSIT OPERATIONS Fixed Route & Para-transit Scheduling · Dispatch · Workflow /Driver Management COMMUNICATIONS Fixed Route & Para-transit IVR · Web Based Trip Planning PRIVATE TRANSPORTATION Coach and Tour Operations Management PUBLIC SAFETY Emergency Control Center & Dispatch (Police, Fire, Ambulance) · Non-Emergency Patient Transport FLEET & TRANSPORTATION MANAGEMENT Logistics Management · Order Tracking · Telematics · Container and Vehicle Tracking and Monitoring 11
A NNUAL R ESULTS 12
Fiscal Year Results (ending Oct 31) TOTAL REVENUE RECURRING REVENUE $115m $220m $92m $180m $72m $136m $59m $123m $47m $94m 51% 50% 48% 52% 52% FY10 FY11 FY 12 FY 13 FY 14 FY10 FY11 FY 12 FY 13 FY 14 ADJUSTED EBITDA DIVIDEND PER SHARE PER SHARE ( based on date of record) $0.36 $2.09 $0.29 $1.69 $0.23 $1.35 $1.26 $0.18 $0.14 $0.85 FY 10 FY 11 FY 12 FY 13 FY 14 FY 10 FY 11 FY 12 FY 13 FY 14 Note¹ : CAGR – Compound annual growth rate 13
Revenue Split FY 14 REVENUE BREAKDOWN REVENUE BY GEOGRAPHY Hardware CANADA 3% 4% APAC 7% Services US License 12% 33% 33% EMEA 34% Hosted/Mtce 52% UK 22% REVENUE BY BUSINESS GROUP Asset Management Group $51m ‐ 23% Interactive Management Group $169m – 77% 14
9 MONTHS - FY 15 15
9 months - FY 15 9 m onths 9 m onths FY 1 5 FY 1 4 Revenue - increase of ~ 29% over FY 14 $203.0m $157.9m Revenue by Segment Interactive Management Group $136.7m $126.3m Asset Management Group $66.3m $31.6m License revenue $62.5m $52.8m Recurring revenue - increase of ~ 20% over FY 14 $99.7m $82.8m R & D expense as a % revenue 15.0% 17.1% Adjusted EBITDA ¹ per diluted share - increase of ~ 25% over FY 14 $1.88 $1.50 Adjusted EBITDA¹ - increase of ~ 26% over FY 14 $50.9m $40.4m Note¹: Adjusted EBITDA: Results from operating activities adjusted for depreciation of PPE and special charges for acquisition related restructuring costs. 16
9 months - FY 15 9 m onths 9 m onths FY 1 5 FY 1 4 Quarterly dividend - per common share, based on date of record $0.32 $0.26 Cash spent on dividend $8.4m $6.8m Cash spent on acquisitions (net of cash acquired) $27.3m $21.5m Cash & Investments balance - beginning of period $84.9m $90.3m Cash & Investments balance - end of period $91.3m $104.9m Acquisitions Nov 4 th IAT March 4 th IT Sonix July 4 th Basset March 3 rd CDRator May 8 th Reitek 17
Q3 FY 15 18
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