Investor Presentation November 2018
Disclaimer 2 Forward Looking Statements This presentation contains “forward-looking information” which may include, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as “plans,” “expects,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates,” or “believes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may,” “could,” “would,” “might” or “will” be taken, occur or be achieved. These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business. Management believes that these assumptions are reasonable. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, risks related to the speculative nature of the Company’s business, the Company’s formative stage of development and the Company’s financial position. Forward-looking statements contained herein are made as of the date of this presentation and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Non-GAAP Financial Measures This presentation contains references to certain financial measures, including Adjusted Earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), Monthly Recurring Revenue (“MRR”), and Annual Recurring Revenue (“ARR”) that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other entities. These non-IFRS measures should be viewed as a supplement to, and not a substitute for the Company's results of operations reported under IFRS. The term Adjusted EBITDA (“Adjusted EBITDA”) is a non-IFRS measure and refers to earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Adjusted EBITDA provides useful information to users as it reflects the net earnings prior to the effect of non-operating expenses, share- based compensation (which includes share based payments, restricted share units, performance share units, and deferred share units), and unusual items such as discontinued operations. Management uses Adjusted EBITDA in measuring the financial performance of the Company as this measure reflects results that are controllable by management in day-to-day operations. Management monitors Adjusted EBITDA against budget and past results on a regular basis. Accordingly, Adjusted EBITDA is therefore unlikely to be comparable to similar measures presented by other issuers . The term Monthly Recurring Revenue (“MRR”) is a non-IFRS measure and includes revenues earned in a given month relating to monthly fixed subscription fee, monthly transaction fees, ARC Lite™ revenue, and PayPort™ revenue. MRR is a common metric used in Software as a Service (“SaaS”) companies and its definition is not guided by IFRS standards. Accordingly, MRR is unlikely to be comparable to similar measures presented by other issuers. The term Annualized Recurring Revenue (“ARR”) is a non-IFRS measure and refers to multiplying the MRR value defined above by 12 to represent management’s best estimate of forward looking 12 months of recurring revenues that the Company would earn based on the current Monthly Recurring Revenue. Make customers happy. Get paid faster.
VersaPay 3 Named White label TSXV Tech partnership IPO on Toronto Strategic partnerships: Company of launched Stock Exchange Banks & CC Companies IDC company the Year January profile January 2018 2010 2006 2016 2017 2009 2013/14 Merchant Services Ranked #1 2015 Two lines of Significant business sold to in Profit Ranked Top 20 business: backing by BluePay to focus Top 50 in Most Innovative Payments & Solutions global on ARC™ Public Companies institutional investor MERCHANT SERVICES OUR MISSION IS TO DRIVE A SEA CHANGE IN THE WAY COMPANIES MANAGE THEIR ACCOUNTS RECEIVABLE Make customers happy. Get paid faster.
Current State of A/R 4 CUSTOMER SUPPLIER THE MESSY MIDDLE Customers may lose their § invoices There may be disagreements § on invoice amounts or terms Customers may not call you § when there is a problem Time passes § Supplier Email Customer requests new invoice creates invoice or Mail HAS NOT CHANGED IN DECADES Make customers happy. Get paid faster.
ARC: A/R Reinvented 5 1 DELIVER INVOICES Publish invoices & supporting documentation online and deliver by email and mail 2 COLLABORATE & COLLECT Communicate with customers Track and manage customer commitments and follow-ups 3 ACCEPT PAYMENT Offer customers breadth of electronic payment options PCI compliant manner 4 APPLY CASH Automatically match payment and remittance data and reconcile with incoming payments Make customers happy. Get paid faster.
A Compelling Business Case Customer satisfaction Days to get paid Cash application Actionable insights Collections Labor and other costs “The ROI for this project is a no-brainer” Make customers happy. Get paid faster.
The Opportunity (Selected Verticals)* 7 165,000 MARKET SIZE >$5B USD U.S. firms with $50M to $1B in revenue 88% 1,120 1,582 Percent of U.S. firms rely on paper invoices * Selected Vertical Industries: 3,845 50M-100M • Media • Trucking / Logistics 100M-500M • Commercial Realty / Property Managers 500M-1B • Wholesale / Distributors • Manufacturing • Professional Services Make customers happy. Get paid faster.
ARC: Positioned to Grow Rapidly 8 • A compelling value • Experience in the market has proposition proven our story is compelling • A large untapped market • Addressable market is with limited competition estimated to be at least 5B • Little competition • Our approach overcomes • The solution, pricing and historical obstacles implementation approach take away reasons to say no • Partners provide • Thousands of existing tremendous market reach customers ranging from small business to large corporations Make customers happy. Get paid faster.
Go-To-Market Strategy 9 DIRECT Enterprise accounts Extensive client base of Enterprise, mid- FIs market and small businesses Extensive client base of Enterprise and mid- ERP market businesses ARC as distribution channel for financial services ARC to customers of our customers Make customers happy. Get paid faster.
Direct and Channel Sales Direct + Channel = ARR Growth Direct + Channel = ARR Growth 10 Make customers happy. Get paid faster.
Recent Highlights 11 • 48 new clients including 10 enterprise clients won so far this year (Nov 2018) • $2.3M in new ARC ARR signed YTD (Q3 2018) • ARC selected as enterprise standard for family of large US distributors (Q2 2018) • Two major accounting firms endorse ARC (Q2 2018) • TSXV Canadian Tech Stock of the Year and Executive of the Year (Craig O’Neill) (Q1 2018) • White label partnership with RBC (Q3 2017) Make customers happy. Get paid faster.
Highest Adoption in the Industry 12 All figures cumulative Make customers happy. Get paid faster.
Consistent ARR Growth 13 Total ARR (000's) 45% Compound Quarterly Growth 15% $5,000 4,427 $4,500 4,217 $4,000 3,722 3,408 $3,500 3,061 $3,000 Payport ARR (000's) 45% $2,500 2,272 1,930 $2,500 $2,000 % 1 5 t h w o G r l y e r r t a $1,500 u Q d n 1,913 1,895 $2,000 u p o m o C 1,803 1,629 $1,000 1,441 $1,500 1,283 $500 1,151 $1,000 $0 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 $500 $0 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Make customers happy. Get paid faster.
Top Line Momentum - ARC 14 $4,000,000 $700,000 $584K $3,500,000 $600,000 $1258K $3,000,000 $500,000 $2,500,000 ARR / ARR Backlog Quarterly Revenue $400,000 $2,000,000 $300,000 $1,500,000 $2532K $200,000 $1,000,000 $100,000 $500,000 $0 $0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 ARR ARR Backlog ARC Quarterly Revenue Make customers happy. Get paid faster.
Great Companies Are Using ARC › Make customers happy. Get paid faster.
Financial Overview As of Q3 2018 Financial Statements Make customers happy. Get paid faster.
Quarterly Revenues 17 $1,400 $1,200 $1,000 Revenue (000s)* $800 $600 $400 $200 $0 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 * Excludes POS Merchant Services business sold in January 2017 Make customers happy. Get paid faster.
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