1Q17 Omni Presentation Safe harbor statement The information - - PowerPoint PPT Presentation

1q17 omni presentation safe harbor statement
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1Q17 Omni Presentation Safe harbor statement The information - - PowerPoint PPT Presentation

1Q17 Omni Presentation Safe harbor statement The information contained herein has been prepared by Linx S.A. (Linxor the Company) and this material does not constitute offering material in whole or part. This material has been


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1Q17 Omni Presentation

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Safe harbor statement

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The information contained herein has been prepared by Linx S.A. (“Linx”or the “Company”) and this material does not constitute offering material in whole or part. This material has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities and should not be treated as giving investment advice. It is not targeted to the specific investment objectives financial situation or particular needs of any recipient. No representation or warranty either express or implied is made as to the accuracy completeness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. Any opinions expressed in this material are subject to change without notice and Linx is not under obligation to update or keep current the information contained herein. The Company their respective affiliates, agents, directors, partners and employees accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. This material is intended solely for the use of persons who are market counterparties of intermediate customers (as detailed in the FSA Rules) and is only available to such persons. The information contained herein does no apply to and should not be relied upon by private customers. You should consult your own legal regulatory tax business. Investment, financial and accounting advisers to the extent that you deem necessary and you must make your own investment hedging or trading decision based upon your own judgment and advice from such advisers as you deem necessary and not upon any view expressed in this material.

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LINX at a glance:

Largest and Broadest Retail Technology Platform H I G H L I G H T S 2 0 1 6

~45,000 Clients 84% Recurring Revenues ~99% Client Retention Rates 19% 4-Year Net Revenue CAGR 25.1% Adjusted EBITDA Margin* 37.5% Market Share

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100% Retail Focus

Car Dealers Gas Stations Drugstores Service Retail Food Service Department Stores eCommerce

Apparel

* Adjusted for: (i) partial reversion of an earn-out of Neemu and Chaordic; (ii) an adjustment related to the acquisition of Rezende; (iii) the duplicated condominium and maintenance expenses in São Paulo and Recife due to the move to new locations in these cities.

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Our progress since IPO

271% 161% 94%

12,000 44,467 Profitability Retail Business Units Number of Retail Business Units Scale Clients Acquisitions Number of Acquisitions

A T I P O T O D AY

LTM Gross Revenue R$ ‘000) LTM EBITDA (R$ ‘000)* LTM Cash Earnings (R$ ‘000)* 11 22 129,971 67,037 45% 30% 118,839 47,474 586,462 224,478

850 bps 150% +11

Leadership % of Cloud on Recurring Revenues 5 9

+4

Cloud Market Share 37.5% 29%

1,500 bps “At IPO” adjusted for CSI earn out. “Today” adjusted for: (i) partial reversion of an earn-out of Neemu and Chaordic; (ii) an adjustment related to the acquisition of Rezende; (iii) the duplicated condominium and maintenance expenses in São Paulo and Recife due to the move to new locations in these cities.

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Mission

ENABLE RETAILERS TO BECOME MORE PROFITABLE, COMPETITIVE AND SUSTAINABLE THROUGH TECHNOLOGY ONLINE IN-STORE

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Broadest retail technology platform

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LINX is uniquely positioned to capture the opportunity

UNIQUELY POSITIONED ACROSS COMPETITIVE LANDSCAPE

Scale and Leadership Expertise and Focus in Brazil Retail Breadth of Retail Verticals Geographical Coverage Across Brazil Company Sizes Integrated Technology Platform New Entrants International Companies Regional Providers

850 bps Increase Since 2011

37.5%

Market Share

LEADING MARKET SHARE 7

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Multiple drivers of growth

Multiple drivers

  • f growth

Opportunity Driver

Acquisitions New capacities: technologies, verticals, geographical 1 Cross-sell Share of Wallet Omni-channel 2 Opportunity to access marketing and trade marketing in addition to IT spending New products & partnerships 3 Increased software penetration Formalization, digitalization process and professionalization IT spending 4 Client’s growth Retail growth 5 Expansion of the geographic footprint as retailers 8

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Acquisition strategy

Omni-Channel Technology

Geographies Verticals

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Acquisition strategy

What do we seek? Example:

EBITDA 1.5M Company Year 1 Year 3 Revenue 10M 14M 3.6M

Important Answers

Versus 5x Linx We pay an average of 2.5X LTM Revenue

Stand alone growth between 15 and 20%? Margin expansion for Linx average?

Target

Target A Target B Target C Target D Target E Target F Target H Target G

Estimated NOR (R$ 000’s)

50 - 100 50 - 100 25 - 50 25 - 50 0 - 25 25 - 50 25 - 50 0 - 25

Status

Add Technology Target Negotiating

Acquisition Strategy

Add Segment Reinforce Vertical Add Retail Vertical

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Cross-sell

DEVICES TRANSACTIONAL CAPABILITIES INCREASED ENGAGEMENT ANALYTICS IN-STORE PERSONALIZATION BIG DATA

ENABLE RETAILERS TO SELL MORE ERP POS CRM

Internal processes productivity

TEF ELECTRONIC INVOICING CONNECTIVITY

SOCIAL MEDIA MOBILE APPS

ONLINE & IN-STORE

KIOSKS MARKET PLACES WEB STORE TARGETED MARKETING

Omni-Channel platform in the Cloud

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Partnership with Redecard Retail Intelligence DMS Partnership with Itaucard

Cloud Systems transmit, process, analyze and deliver online data to the retail industry daily

Linx technology can directly make real time decisions with promotions, sales, training and general communication with the retail industry

Clients will be able to:

 Make real time decisions  Perform ROI analysis  Focus on stores with the

largest return potential

New market with large number of stores

 Integration of Linx’s software to Itaú’s financing system

  • Automate the process of lead generation
  • Provide a differentiated customer experience

 Multi-brand car dealerships: Currently not served by Linx; development of a specialized

ERP product, which will be distributed by Itaú, creates an unique opportunity

Drugstore Retailers Food & Beverage and HPC Companies

3 New products and partnerships

Generate value in two new markets: payments and software to small and micro retailers

 Development of Linx´s applications related to payment solutions  Efforts of both parties to promote:

  • Payment solutions of Rede
  • Linx´s management solutions, including the TEF

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556 661 777 876 1.029 1.184 1.294 2011 2012 2013 2014 2015 2016E 2017E

Large, high growth, & underserved market opportunity

Large and Underpenetrated Total Addressable Market in Brazil Retail Management Software

Current Spend on Management software Current Spend on Other software Potential Spend

Total Addressable Market: R$9.5 billion

Continued Growth in Brazil Retail Management Software (R$ MM)

Source: Gartner, IDC

13 10,8% 12,0% 77,2%

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LINX’s customers provide validation of leadership

PRESENCE IN BRAZILIAN LEADING RETAIL CHAINS INTERNATIONAL RETAILERS (50%+ Share)

Source: Euromonitor, Abras, Abrafarma, IBEVAR

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Volkswagen

With more than 600 stores,

Volkswagen is currently the largest automotive company in Brazil

Large, high growth, & underserved market opportunity

Source: Gartner, IDC

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Ipiranga Partnership Boticário (Linx UX) Partnership Habib’s and Volkswagen Partnership

Ipiranga: Unique Opportunity

Second largest fuel distributor in Brazil The largest convenience store network

and loyalty program in Brazil

Excellence in the implementation of

retail business model

Why Linx as a Partner ?

Know-how in retail and capillarity Long-term strategic alignment of

customer experience and innovation

Partnership concept Service recognized by the market

Important Client in the Retail Segment

Boticário is the largest retailer in Brazil Owned stores to initially receive the

product

Significant growth potential into other

stores

400 stores in 2016 with potential of

~4,000 stores

Potential of ~4,000 stores 400 Stores in 2016

Habib’s

With ~400 stores, Habib’s is currently

the largest fast-food retailer in Brazil and the largest Arabic fast-food retailer in the World

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Proven leadership team and solid organizational structure

Organizational Structure

Apparel Gas Stations Drugstores Food Service Car Dealers

Shared Services Bureau (Marketing, Human Resources, Billing, Finance, Legal, Back Office...)

Sales Customer support Services / Implementation R&D Connectivity and Cross Offers Service Retail Big Retail

CORPORATE DIRECTORS

eCommerce

VERTICAL DIRECTORS

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Financial Highlights

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Strong and consistent revenue growth

GROSS REVENUE GROWTH

(R$ ‘000)

115.980 129.401 20.104 23.940

136.084 153.341 1Q16 1Q17

257.285 325.868 409.765 479.750 74.049 87.403 95.468 89.455 331.334 413.271 505.233 569.205

2013 2014 2015 2016

Recurring Revenues Service Revenues

RECURRING REVENUE GROWTH

(R$ ‘000) 257.285 325.868 409.765 479.750

2013 2014 2015 2016

115.980 129.401 1Q16 1Q17

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High profitability

30.116 33.596 25,8% 25,1%

1Q16* 1Q17*

82.457 104.362 121.630 126.491 27,9% 28,3% 27,1% 25,6%

2013 2014 2015 2016*

EBITDA (R$ ‘000) AND EBITDA MARGIN

EBITDA EBITDA margin

* Adjusted EBITDA

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High cash earnings generation

13.919 25.554 5.555 5.383 2.324 2.893

21.798 33.830 18,5% 25,2%

1Q16* 1Q17*

NET INCOME AND CASH EARNINGS

(R$ ‘000) Net Income Amortization of Acquisitions Deferred Income Tax

59.519 67.583 63.818 70.500 13.816 19.963 25.445 22.504 6.619 10.004 12.496 13.803 79.954 97.550 101.759 106.807

2013 2014 2015 2016*

*Adjusted Net income and Cash earnings.

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Highly predictable SaaS business model with strong growth and profitability

Growing

19% Revenue CAGR (2013-2016)

 Growing customer base of 44.467 customers in 1Q17 (54% CAGR 2012 - 2016)  Organic growth, complemented by selective acquisitions  Cross-selling opportunities provide additional sources for growth 

Around 45% of recurring revenues from cloud

Predictable

Loyal customer base.

 Yearly subscription contracts, paid monthly and with automatic renewals/ inflation correction  Above 84% of recurrent revenues based on a monthly subscription fee model  Monthly subscription model makes our solution more accessible to new clients

Highly Profitable

 High degree of predictability  EBITDA margin higher than the sector’s average

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