INVESTOR PRESENTATION NASDAQ: ARIS FY15 ARI Network Services, Inc. | investor.arinet.com
SAFE HARBOR STATEMENT Statements in this presentation are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. The forward-looking statements can generally be identified by words such as "believes," "anticipates," "expects" or words of similar meaning. Forward-looking statements also include statements relating to the Company's future performance, such as future prospects, revenues, profits and cash flows. The forward-looking statements are subject to risks and uncertainties, which may cause actual results to be materially different from any future performance suggested in the forward-looking statements. Such risks and uncertainties include those factors described in Part 1A of the Company’s most recent Annual Report on Form 10-K, as such may be amended or supplemented by subsequent Quarterly Reports on Form 10-Q or other reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements. For more information, please refer to the Company’s filings with the Securities and Exchange Commission. During this presentation, we will discuss GAAP measure such as net income, as well as certain non-GAAP measures such as EBITDA. We have posted on www.investor.arinet.com, a reconciliation of these non-GAAP financial measures to the most comparable financial measures under GAAP. 1
COMPANY OVERVIEW Roy W. Olivier, President & CEO
ARI’S INVESTMENT HIGHLIGHTS Strategic Financial • • Industry-leading provider of software tools and Consistent track record of growth and marketing services profitability • • Leader in solutions to help dealers, distributors and 22% revenue CAGR over last three years OEMs in selected markets Sell More Stuff! • In FY15, Adjusted EBITDA and cash flow growth • #1 or #2 in all core markets served outpacing revenue growth • Dominant player in powersports, outdoor power and • Strong recurring revenue profile marine markets with 40%+ market share • Roughly 90% of revenue is recurring • Manage largest content library in markets served • Highly diversified customer base • Attractive market opportunity • 22,000+ equipment dealers • Breadth of offering means no single competitor • 195+ distributors competes across every vertical • 1,500+ manufacturers • Recently entered new verticals that expand total addressable market by 5X • Profitable and Cash Flow Positive • Multiple growth opportunities • TTM Adjusted EBITDA margins of 16% • • Expanded service offerings to grow both customer Operational cash flow inline with Adjusted EBITDA base and average revenue per customer • Low capital intensity • Europe and Asia remain largely untapped • Strong free cash flow given low capital expenditure requirements 3
WHAT DO WE DO? We help our customers Sell More Stuff™ • Dealer business management system • OEM parts lookup In-Store • Aftermarket Parts, Garments & accessories (PG&A) lookup • Lead management • Lead generation • eCommerce Online • OEM parts • Aftermarket PG&A • Digital marketing services 4
WHO ARE OUR CUSTOMERS Our Customers are: Dealers Distributors Manufacturers (OEM) What “Stuff”? Aftermarket Parts, Service & Tire Whole Goods OEM Parts Garments & (Tires, Bike, Boat, Accessories (PG&A) RV) Markets We Serve: Aftermarket Outdoor Tire & Wheel HME Powersports Appliances Marine RV Power Auto Service CORE GROWTH 5
CONTENT THAT DRIVES COMMERCE Aftermarket PG&A OEM Parts Whole Goods 1,400+ Manufacturers 120+ Manufacturers 315 Manufacturers 500K Parts 500K Models 176K Models 10MParts MONETIZED VIA Lead Gen eCommerce Digital Mobile Business DaaS Websites Websites Marketing Apps Management 6
HOW DO WE HELP? CONTENT OEM Parts Aftermarket PG&A Whole Goods 120+ Manufacturers 1,400+ Manufacturers 315 Manufacturers 500K Models 500K Parts 176K Models 10MParts Business Lead Gen & eCatalogs Digital Marketing Management eCommerce Websites SEM POS / Inventory Mgmt. Increases sales in Dealership Leads for major units & Accounting ORM Improves customer satisfaction eCommerce sales Improves productivity and SOCIAL profitability at Dealership EMAIL / TEXT Web Presence 7
BUSINESS MODEL Lead Gen + eCommerce eCatalogs Business Mgmt. Digital Marketing Websites SaaS / Subscription 5% of Total Revenue 55% of Total Revenue 34% of Total Revenue New Offering with 3% of Total Revenue ARPD: $3,000 ARPD: $1,800 ¹ TCS Acquisition ARPD: $6,400 Target Growth: 10% - 20% Target Growth: 2% - 4% (Acquired 9/30/14) ARPD = Average Recurring Revenue Per Dealer Data as of and for the year ending July 31, 2015 ¹ Does not include bulk customers 8
SERVICING MULTI-LINE DEALERS Appliances Marine & RV Outdoor Power Wheel & Tire Powersports 9
GROWTH DRIVERS All Markets 0% • New Logos • Increase ARPD² • Lower Churn 40% MARKET SIZE • Digital Marketing 66% New Markets 90% 2% 10% • HME³ 17% • Tire & Wheel 40% • 66% Aftermarket Auto 90% 10% Service 25K dealers 25K dealers 125K dealers Acquisitions that align with our strategy ¹To tal addressable market represented by the green bars . Percentages represent ARI’s market share , or the percentage of U.S. dealers that currently use 1 or more of our products. For example, ARI currently has 40% market- share of the OPE vertical; with 40% of those dealers using 1 or more of ARI’ s products. ²Average revenue per dealer 10 ³Home Medical Equipment
HISTORICAL GROWTH Historical Revenue $45,000 $40,000 $35,000 $30,000 Non-Strategic Revenue Non-Recurring Revenue $25,000 • Pro Svcs • $20,000 Older Businesses $15,000 $10,000 $5,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Other 11
HISTORICAL GROWTH Historical Revenue $45,000 $40,000 $35,000 eCatalog • $14M Revenue $30,000 • 16,000 +Dealers • 100 Countries $25,000 $20,000 $15,000 $10,000 $5,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Other eCatalog 12
HISTORICAL GROWTH Historical Revenue $45,000 $40,000 Lead Gen/eCom Websites $35,000 • $22M Revenue $30,000 • 6,000 Websites $25,000 $20,000 $15,000 $10,000 $5,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Other eCatalog Website In FY13 Q3 we made a change to our lead generation service business model, eliminating the pass-through cost of purchased ad words from the search engine providers on behalf of our customers. 13
HISTORICAL GROWTH Historical Revenue $45,000 $40,000 $35,000 Digital Marketing Services • $1M Revenues $30,000 • 175 Customers $25,000 $20,000 $15,000 $10,000 $5,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Other eCatalog Website Digital Marketing In FY13 Q3 we made a change to our lead generation service business model, eliminating the pass-through cost of purchased ad words from the search engine providers on behalf of our customers. 14
HISTORICAL GROWTH Historical Revenue $45,000 $40,000 $35,000 Business Mgmt System/POS¹ • $2M Revenues $30,000 • 1,500 Locations $25,000 $20,000 $15,000 $10,000 $5,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Other eCatalog Website Digital Marketing POS ¹ Point of Sale In FY13 Q3 we made a change to our lead generation service business model, eliminating the pass-through cost of purchased ad words from the search engine providers on behalf of our customers. 15
HISTORICAL GROWTH $45,000 Over $40 M in Revenue for FY15 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Other eCatalog Website Digital Marketing POS ¹ Point of Sale In FY13 Q3 we made a change to our lead generation service business model, eliminating the pass-through cost of purchased ad words from the search engine providers on behalf 16 of our customers.
RESULT OF STRATEGY FY12 FY15 Revenues $22.5M $40.4M Sales & Marketing Spend 20.4% 25.8% Sales & Marketing Head Count 38 121 TAM in Dollars $100 Million $1.5+ Billion TAM – Total Addressable Market FY12 results based on public filings; TAM based on 4 verticals and two products FY15 results based on public filings; TAM based on 7 verticals and four products 17
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