ARI Network Services, Inc. (ARIS) www.investor.arinet.com ARI Network Services, Inc. (ARIS) FY14 – Q1
ARI Network Services, Inc. (ARIS) www.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 annual report on Form 10-K for fiscal year ended July 31, 2013, filed with the Securities and Exchange Commission and on subsequent filings 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 no-GAAP financial measures to the most comparable financial measures under GAAP. 2
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Investment Highlights Growing, Profitable, SaaS-based business, with 95% Recurring Revenue Unique Business Model & Value Proposition • Strong Operating Cash Flows • Historic gross margins greater than 80% • 10 consecutive years of positive EBITDA and operating cash flows • Over 22,000 customers • High barriers to entry 3
ARI Network Services, Inc. (ARIS) www.investor.arinet.com What do we do? We e Help Help Our C Our Custo stomers mers Online In-Store eCommerce Enabled Websites • OEM parts lookup • o Leads Aftermarket PG&A lookup • o OEM Parts Lead Management o Aftermarket Parts, Garments & • Accessories (PG&A) 4
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Who are our Customers? What “Stuff?” Our Customers are Dealers • Distributors • Manufacturers (OEM) • Whole Goods Aftermarket Parts, Garments Service OEM Parts (Bike, Boat, RV) & Accessories (PG&A) Markets We Serve Outdoor Power Wheel & Tire Powersports Whitegoods HME Marine RV GROWTH CORE 5
ARI Network Services, Inc. (ARIS) www.investor.arinet.com How do we help? Websites eCatalogs Lead Management Web presence Increases sales in Dealership Increases sales by closing more leads Platform for driving leads and Increases customer satisfaction by Improves customer satisfaction eCommerce sales delivering a better experience Content OEM Parts Aftermarket PG&A Whole Goods 120+ Manufacturers 1,400+ Manufacturers 315 Manufacturers 500K Models 500K Parts 176K Models 10MParts 6
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Business Model Websites eCatalogs Lead Management SaaS Subscription Transaction / Usage Fees 49% of Total Revenue 43% of Total Revenue 5% of Total Revenue ARPD: $3,300 ARPD: $1,200 ARPD: $1,500 ARPD = Average Revenue Per Dealer Growth: 174%* Growth: 2.8% Growth: 0% *includes growth from acquisitions Data as of and for the TTM ending Oct. 31, 2013 7
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Some of Our Customers Appliances Marine & RV Tire & Wheel Powersports Outdoor Power Appliances Marine & RV Outdoor Power Wheel & Tire Power Sports 8
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Growth Drivers 50 Below had the leading market share in the fast-growing automotive tire and wheel market with more than 2,000 dealer websites. With 18,000 tire and wheel dealers and over 80,000 aftermarket auto dealers, this market is bigger than all New of our current markets combined. Markets Home Medical Equipment – 25,000 Potential Customers Acquisitions Acquisitions that Align with our Strategy Aftermarket Product Launched February 2013 New Products Others Coming Additional Content Aimed at International Markets Global New Product that Supports Growth in BRIC Markets 9
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Financial Summary 10 years of positive EBITDA & operating cash flows Quarterly Recurring Revenue (QRR) and Churn Most Recent Quarter highlights 1 • 95% Recurring Revenue • 80% Gross Margin • 11.8% Adjusted EBITDA Margin • Improved Q/Q Churn by 21.1%³ Annualized Churn rate 11.6%³ • Total CAC² ‐ 23 months Inside Sales CAC – 14 months 1 as of and for the Quarter ending October 31, 2013 ² Customer Acquisition Costs ³ Revenue Churn rate FY = Fiscal Year ending July 31 10
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Revenue Growth 5-yr Total Company Recurring Revenue Growth CAGR = 13.9% 5-yr Organic Growth CAGR = 4.7% $35.0 $32.3 $30.1 $30.0 Millions $25.0 $22.5 $21.5 $21.3 $20.0 $30.2 $20.7 $15.0 $18.7 $16.9 $17.2 $10.0 $5.0 $0.0 FY2010 FY2011 FY2012 FY2013 TTM FY = Fiscal Year Ending July 31 Recurring Revenue Total Revenue 11
ARI Network Services, Inc. (ARIS) www.investor.arinet.com EBITDA Margin $6.0 24% Includes $1.2M of $5.0 acquisition- 19% related costs. $4.0 12% Impact of 2 11% Millions Acquisitions $3.0 12% $2.0 $1.0 $0.0 FY2010 FY2011 FY2012 FY2013 TTM FY = Fiscal Year Ending July 31 12
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Operating Cash Flow $6.0 $5.0 $4.0 $3.5 Impact of 2 $3.5 Millions Acquisitions Impact of 2 Acquisitions Impact of 2 Impact of 2 $3.0 Acquisitions Acquisitions $2.4 $1.9 $1.6 $2.0 $1.0 $0.0 FY2010 FY2011 FY2012 FY2013 TTM FY = Fiscal Year Ending July 31 13
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Recent News Acquired DUO Web Solutions (November 2013) Expands our skill-set and product offering in the Digital Marketing space • Debt Refinancing & New Commercial Banking Relationship (April 2013) • $4.5M Senior Debt Refinanced @ 3.75% $3M Revolving Credit Facility • Closed $4.8M Private Placement (March 2013) Issued 3.2M Shares (1.06M warrants) • Reduced Debt by approximately $4.5M • Acquired Competitor - 50 Below (November 2012) Aligns with Strategy in 2 Ways • New Markets (Tire & Wheel, Medical) - Scale – On-boards 3,700 Dealers (Website) - 14
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Balance Sheet Highlights • Cash and Investments: $1.12M¹ • Total Debt and Lease Obligations: $4.6M¹ • Shares Outstanding: 13.0M¹ The weighted average effect of dilutive stock options and warrants for the quarter ending October 31, 2013 was 763,000. • Stock Price: $ 3.26² • Market Cap.: $42.4M² • Enterprise Value: $45.8M² • TTM Enterprise Value/EBITDA: 13.2x • TTM Enterprise Value/Revenues: 1.4x ¹ As of and for the Quarter ended October 31, 2013 ² as of Market Close January 8, 2014 15
ARI Network Services, Inc. (ARIS) www.investor.arinet.com Management Team Roy W. Olivier - President & CEO Rob A. Ostermann - Chief Technology Officer Bill Nurthen – Chief Financial Officer MSI, ProQuest, Pacific Telesis Parcel Pro, The California Breath Clinics, OC-Net Cabrera Capital, Inforte Corp., Platinum Technology 25+ Years Experience 15+ Years Experience 20+ Years Experience Heather Blessington – Chief Marketing Marv Berg - Vice President of Operations Officer Time Warner Cable, Norlight Telecommunications, DUO Web Solutions Utopia 20+ Years Experience 15+ Years Experience 16
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