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Q4 2017 “Making work mobile”
Gaute Engbakk, CEO Marius Drefvelin, CFO
Q4 2017 Gaute Engbakk, CEO Making work mobile Marius Drefvelin, - - PowerPoint PPT Presentation
Q4 2017 Gaute Engbakk, CEO Making work mobile Marius Drefvelin, CFO T E C H S T E P 1 Highlights Highlights Q4-2017 Organic growth in end-users of 14% in 2017 to ~620,000 Transformation to solution selling, new products and
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Q4 2017 “Making work mobile”
Gaute Engbakk, CEO Marius Drefvelin, CFO
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Outlook Operations Financials
Highlights Q4-2017
– Revenue and EBITDA growth driven by acquisitions and solutions growth
– Relative share of solutions increased from 14% in 2016 to 22% in full year 2017
efficiency in delivery has been focus in 2017
Highlights
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«Mobile first» - 60% of all internet traffic comes from mobile devices Enterprises want and employees expect a digital workplace Capability of mobile technology now surpass desktop Barriers around security, device management, user experience and regulatory
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Digitization is happening everywhere both in public and private sector
Digitization deep dive Strong expectations Management focus Pressure on IT
Employees, owners and consumers expect organizations to adopt digital tools The consequence of this is that digitization is an important part of the agenda for top management Focus on improving work processes This puts pressure on organizations especially IT-departments to change much faster than before, and since everything is digitizing, the scope of IT’s activities is increasing but budgets aren’t necessarily doing the same because of focus on costs Lack of competency in the new technologies
Rise of new solutions
Therefore new IT-systems and IT-operating models are required Enterprises are continuously adapting cloud services; in 2017 48% of enterprises were using cloud services compared with 29% in 20131 New solutions (UEM2) is the new trend to manage several types of devices and operating systems
What we see happening Digitization in the news
Source: SSB Note 1) Enterprises non-financial and above 10 employees. 2) Unified Endpoint Management
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Although majority of workforce is mobile in nature, mobility solutions currently mostly present in ‘stationary’ jobs
Source: Statistics Norway (SSB); Employed persons 15-74 years by sector and industrial division (2015)
“More than 80% of the Norwegian workforce requires some mobility or higher”
= high mobility = some mobility = little mobility
419,000 491,000 1,678,000
Mobile workforce
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Significant market opening up in the Nordics – driven by digitization agenda
Market potential
Note: 1) CAGR 10%
Addressable market 20201:
~2m users
Addressable market 20201:
~ 5m users
In addition: Highly attractive Nordic multinationals (win at home, follow abroad) 2016: 2016:
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Techstep is built to serve the expanding market for digital workplace and mobile solutions in the Nordics
T echstep positioning
6,000+
Nordic customers
600,000+
end-users
to a large-scale customer base launching Mobile-as-a-Service…
A mobile native solutions provider tailored for expanding Nordic market market for digital workplace and mobile solutions
A mobile native company…
Built Mobile-as-a-Service solution consisting
services for private and public enterprises – financing/subscription (OPEX) based Acquired 8 and established 1 company since Q3’16 | Built high quality customer and large scale end-user base | Listed on Oslo stock exchange
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Techstep delivers a complete stack of solutions that provides an improved total-cost-of-ownership (TCO) and lower risk to the customer
Customer value proposition – “one stop shop” Mobile as a Service Traditional
Buy hardware, software, connectivity, platform, support separate
IT and Procurement
× Higher total cost of ownership × Higher operational risk × Mainly competing on price
Mobile as a Service
Techstep provides complete MaaS solutions – one stop shop
✓ Lower total cost of ownership for customers ✓ Single point of contact, reduces operational risk ✓ Inherent focus on quality and functionality rather than price
MaaS
Support Operations Hardware Connectivity
Illustration
Applications Asset mgmt. Mobility
Dere gir oss en problemfri mobil hverdag
Mobility Service & Support Hardware and connectivity IT & Security Software and applications Technological enablers
IoT Big data
VideoSensors
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The proliferation of mobile devices is still relatively immature compared to the PC’s - managing mobile devices professionally is still due
Market adoption
Embryonic
Market adoption within enterprise Time
Growth Mature Aging
Enterprise market adoption of devices
AR & VR Laptops Desktops
The usage of smartphones and tablets is still relatively new in organizations <10 years Lack professional platform to manage devices Old school way of managing PC’s Shadow IT
Smartphones & tablets
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Techstep will be able to deliver management of all devices including Mac and PC at a lower cost, improved quality and better user experience
Market definition Market size Unified Endpoint Management Norway & Sweden
Unified Endpoint Management
Source: Markets & Markets: Unified Endpoint Management Market by Deployment Mode (Cloud, On-Premise, Hybrid), Vertical, Region - Global Forecast to 2020
Unified Endpoint Management
Unified Endpoint Management is an approach to securing and controlling desktop computers, laptops, smartphones, tablets and IoT in a from a single console. Can be deployed via the cloud, on premise
device management (MDM) application program interfaces (APIs) in desktop and mobile operating systems 434.6 +43% 304.1 2019 212.8 148.9 104.2 2020 2017 2016 2018 UEM
NOKm
Managed from a single console
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To conclude; the digitization and mobility trend is well documented, and the companies with mobile DNA are best suited to ride the wave
Summary market trends Digitalization Mobility Mobile DNA T echnological and societal thresholds
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Techstep has acquired key companies with hardware and solutions business
Note: 1) Techstep has an option to acquire the remaining shares in Techstep Finance on certain conditions 2) Techstep has an option to acquire the remaining shares in Conneqted on certain conditions
T echstep organization TECHSTEP
Telenor distributor of hardware and subscriptions ~80 FTEs 2016 Software as a
expense management ~10 FTEs Feb Distributor of hardware and subscriptions ~20 FTEs Feb Mobility advisory in Sweden ~10 FTEs 100% March Provider of finance and leasing products ~5 FTEs
TECHSTEP FINANCE
Apr Enterprise mobility, IT and communications solutions, service and support ~30 FTEs 2016 50%1 100% 100% 100% 100%
Hardware and subscriptions Financing Mobile device management & managed services Software
June Aug. Swedish distributor of hardware and subscriptions ~40 FTEs 100% 51%2 Swedish Enterprise Mobility Management (EMM) provider ~5 FTEs Oslo Apro
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2017: Company transformation and integration – lead to poor EBITDA performance in 2017, but will have positive effects long term
2017 - Building a foundation for growth and taking a leading market position
Creating a platform for transitioning to more solution selling, that will drive long-term EBITDA growth
People
Team and recruitment improvements: Enterprise sales team in Sweden, shared services (hub), technical resources and administration Training of sales force to sell
Hiring and training for the transition to solution selling Customers
Developing existing customers; enterprise customers lead on in «mobile first» in B2B, SME will follow Developing new customers; 4 large contracts reported to the stock exchange, double digit number of new customers signed
Growth in new and existing customers Processes
Established IT transformation program to lower costs and improve customer quality related to ERP, procurement,
and customer service
More efficient product delivery - automation Products
Developed standardized portfolio and solutions that can roll-out globally Created new products for verticals, managed services and
revenues
Scalable product portfolio and new products
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Techstep has launched MaaS to customers in both Norway and Sweden
MaaS
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Techstep entities started to deliver and win joint customer bids to cross- Nordic customers
Mytos launch in Sweden in Q4 2017 BKE delivering to Swedish subsidiaries of Apro customers BKE using Nordialog Oslo suppliers Nordialog/SmartWorks/BKE/InfraAdvice/Conneqted - joint bids to cross-Nordic customers
Techstep is delivering solutions to global customers originating from the Nordics
Shared resource pool from SmartWorks, InfraAdvice and Conneqted
Cross country cooperation
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By establishing standardised processes, Techstep can reach customers and partners more effectively
Search
Step 1
Acquire hardware vendor Well functioning solutions company
“Plug & play”
Step 2
Implement Techstep procedures on sales and delivery and distribute solutions
Step 3
Support, train and share knowledge on how to transition from traditional sales of goods to sell solutions
Step 4
The new organisation sells products from Techstep’s MaaS portfolio
Possible future expansion
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Financial summary Q4 2017
Financials – Reported P&L
Key figures (reported)
(amounts in NOK 1 000)
Q4 2017 Q4 2016 FY 2017 FY 2016 Revenue 281 544 162 335 789 792 573 498 Adjusted EBITDA1) 12 809 2 417 29 477 13 078 Adjusted EBITA1) 12 386 2 141 28 134 12 175 Adjusted EBIT1) 5 817 (1 435) 6 973 (6 808) EBITDA 3 796 (1 316) 3 096 (4 433) EBITA 3 372 (1 592) 1 753 (5 336) EBIT (3 196) (5 168) (19 408) (24 319) Adjusted EBITDA margin (%) 4.5 % 1.5 % 3.7 % 2.3 % Adjusted EBITA margin (%) 4.4 % 1.3 % 3.6 % 2.1 % Hardware, commission & bonuses, share of revenue 78% 84% 78% 88% Solutions, share of revenue 22% 16% 22% 12% T
764 214 508 409 771 355 508 409 Cash 35 278 81 692 35 278 81 692 Equity 453 441 260 294 455 688 260 294 Employees 219 121 219 121
both by acquisitions and
margin in Q4-17 of 4.5% (1.5%)
revenues NOK 937m, adjusted EBITDA NOK 42.6m
1) Adjusted for M&A costs and other one-offs of NOK 9.0 million in Q4 2017, NOK 26.3 million per FY 2017 and NOK 17.5 million per FY 2016 .
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Revenue and EBITDA adjusted development Q4 2016 – Q4 2017
Financials – Reported P&L
EBITDA adjusted
Q4 2016 – Q4 2017, NOKm
Total revenues
Q4 2016 – Q4 2017, NOKm
50 100 150 200 250 300 10% 15% 20% 25% 30% 35% 40% Q3 2017 180.8 Q2 2017 182.3 Q1 2017 281.7 Q4 2017 162.3 Q4 2016 NOKm
%
145.2
Hardware Commission&bonus Solutions % solutions
3 6 9 12 15 5.0% 10.0% 7.5% 2.5% 0.0% 9.8
%
Q3 2017 1.8 Q1 2017 Q2 2017 Q4 2017 NOKm 12.8 Q4 2016 5.1 2.4
EBITDA adjusted EBITDA adj margin
increase in the share of solutions revenue from 10% in Q1-16 to 22% in Q4-17 (target 20%)
profitability driven by acquisitions and organic growth in solutions, slightly offset by a decrease in hardware gross margin
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Revenue development in Hardware and Solution Q4 2016 – Q4 2017
Financials – Reported P&L
Reported solutions revenue
Q4 2016 – Q4 2017, NOKm
Reported hardware revenue
Q4 2016 – Q4 2017, NOKm
50 100 150 200 250 Q4 2017 218.9 138.8 Q3 2017 Q2 2017 143.4 Q1 2017 114.3 Q4 2016 NOKm 138.4
Commision & bonuses Hardware
hardware through acquisitions
(vs. 10% decrease in FY17) 10 20 30 40 50 60 70 Q2 2017 NOKm 62.8 Q3 2017 38.9 Q1 2017 Q4 2017 42.0 30.9 Q4 2016 23.9
solutions revenue, 52% organic growth in Q4-17
Solutions
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From FY16 - FY17 Solution sales grew 54%, Solutions now constitute 22%
Revenue per development per product
Pro forma revenue per product type
FY16 to FY17
NOKm
85 132 72 203 +54% Hardware 662 Solutions
Comm&Bonus 737 FY17 FY16 22% 71% 77% 14% 8% 9%
100%
FY17 FY16
actual growth has been twice as high at 54%
see the effects of cross selling of solutions to hardware customers
effect increasingly on the bottom-line, because of the higher margins from solutions
in FY17 vs NOK 953m in FY16 Comm&Bonus Solutions Hardware % of total Absolute development
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Consolidated income statement
Financials
M&A and restructuring activities in 2017
assets of NOK 25m (Kjedehuset, 8.25% holding)
Consolidated income statement
(amounts in NOK 1 000)
Q4 2017 Q4 2016 FY 2017 FY 2016 Revenue 279 827 162 071 786 561 570 526 Other revenue 1 716 264 3 231 2 972 T
281 544 162 335 789 792 573 498 Cost of goods sold (205 975) (117 421) (559 508) (405 210) Salaries and personnel costs (46 924) (29 282) (141 579) (104 041) Other operational costs (15 770) (13 214) (59 451) (51 169) Share of profit (loss) in joint ventures (66)
12 809 2 417 29 477 13 078 Depreciation (423) (277) (1 344) (903) Amortization (6 568) (3 575) (21 161) (18 984) Other income and expenses (9 013) (3 733) (26 381) (17 511) Operating profit (loss) (3 196) (5 168) (19 408) (24 319) T echnical loss
Remeasurement on equity interests
1 956 881 12 627 1 008 Financial expense (27 070) (1 749) (23 642) (6 126) Profit before taxes (28 309) (27 253) (35 779) (50 654) Income taxes 3 132 103 8 034 5 954 Net income (25 177) (27 150) (27 746) (44 700)
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Balance sheet
Financials
relations of NOK 77m
debt includes vendor note for the BKE acquisition NOK 15m and long-term loan in BKE of NOK 8m
liabilities include factoring NOK 35m, bank overdraft NOK 21m and term loan 11m
Q4-17
further growth
Balance sheet
(amounts in NOK 1 000)
31.12.2017 31.12.2016 Intangible assets 511 586 272 350 Tangible assets 9 021 3 159 Financial assets 11 040 41 829 Inventories 21 860 9 526 Accounts receivable 156 663 83 250 Other receivables 18 766 16 603 Cash and cash equivalents 35 278 81 692 T
764 214 508 409 T
453 441 260 294 Deferred tax 7 629
23 551 12 656 Other non-current debt 22 277
67 604 113 721 Accounts payable 116 431 62 050 Tax payable 4 719 9 338 Public taxes, provisions 19 403 14 007 Other current liabilities 49 160 36 342 T
764 214 508 409
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Solid customer base spanning across the Nordics includes both public and private sector
Private Public
Note: This overview contains only selected customers, it is not comprehensive
Customer base
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Growth of unique end-users, opportunity in cross selling to the 34% of customers that today have hardware only
primarily driven by organic growth in solutions
thousand hardware users that potentially could become solutions users also
that will increase ARPU
Total unique end-users base
Number of unique end-users in 1000’s
Solid user growth is a platform for future revenue and profitability growth
‘1000 users
End-users
Q3 2017 Q4 2017 618 34% +14% 23% 44% 619 23% 43% 34% 18% 573 39% 21% 20% 43% Q1 2017 Q2 2017 545 36% 45% YE 2016 38% 42% 600 Combined Hardware only Solution only
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DNB and SAS are two companies leading in digitization
Customer case
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Meny – Move from the back office to storefront
Customer case
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Storebrand – Mobile First!
Customer case
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MaaS in Health – industry specific use cases that drive the need for Techstep’s products and services
Vertical offering
driven
investment for customer
delivered as a service (MaaS)
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Summary
▪ Spent FY17 developing offerings and preparing for growth – M&A, integration, transformation product and organisational development – taking market position ▪ ~6,000 customers today, organic growth in end-users of 14% to ~620,000 ▪ 54% organic growth in solutions revenue from FY16 to FY17. From NOK 132m (14% of revenues) in FY16 to NOK 203m (22% of revenues) in FY17 ▪ Techstep built to serve expanding market for digital workplace and mobile solutions: ▪ solid existing customer base, ▪ new solutions that we now deliver into the market, ▪ experience growing demand for our solutions, ▪ sales and delivery capacity in place
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Appendix
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Top 20 shareholders at 12 February 2018
Appendix
NAME SHAREHOLDING % SHARE DATUM AS 31 829 142 21.76% MIDDELBORG INVEST AS 29 066 931 19.87% PALOS NORGE AS 11 666 667 7.98% SKANDINAVISKA ENSKILDA BANKEN AB 4 991 100 3.41% CIPRIANO AS 4 651 375 3.18% SKARESTRAND INVEST AS 4 563 097 3.12% DOVRAN INVEST AS 3 763 372 2.57% JYST INVEST AS 3 763 372 2.57% TINDE INDUSTRIER AS 3 763 372 2.57% TIGERSTADEN AS 3 300 000 2.26% ZONO HOLDING AS 3 000 007 2.05% SÅ&HØSTE AS 2 925 936 2.00% TVENGE TORSTEIN INGVALD 2 700 000 1.85% NOMO HOLDING AS 1 946 253 1.33% NORDIALOG ENSJØ AS 1 946 253 1.33% UNIFIED AS 1 849 457 1.26% VERDIPAPIRFONDET DNB SMB 1 836 322 1.26% RAKNES HOLDING AS 1 649 348 1.13% SONGA TRADING INC 1 438 596 0.98% KAPPA FINANS AS 1 354 839 0.93% Total number owned by top 20 122 005 439 83.42% Other shareholders 24 246 350 16.58 % Total number of shares 146 251 789 100.00 %
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Revenue and EBITDA adjusted development Q4 2016 – Q4 2017
Financials – Pro forma P&L
Pro forma EBITDA adjusted
Q4 2016 – Q4 2017, NOKm
Total Pro forma revenues
Q4 2016 – Q4 2017, NOKm
50 100 150 200 250 300 10% 15% 20% 25% 30% 35% 40%
%
Q4 2017 227.4 Q1 2017 267.5
+5.3%
NOKm 281.7 202.6 Q2 2017 Q3 2017 225.5 Q4 2016
Hardware % solutions Commission & bonus Solutions
3 6 9 12 15 18 10.0% 7.5% 5.0% 0.0% 2.5%
%
NOKm 13.5 16.4 11.1 12.8 Q2 2017 5.1 Q4 2017 Q4 2016 Q3 2017 Q1 2017
EBITDA adj margin EBITDA adjusted
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Revenue development in Hardware and Solution Q4 2016 – Q4 2017
Financials – Pro forma P&L
Pro forma solution revenue
Q4 2016 – Q4 2017, NOKm
Pro forma hardware revenue
Q4 2016 – Q4 2017, NOKm
50 100 150 200 250 177.0 Q4 2016 226.1 158.1 Q4 2017 Q3 2017 Q1 2017 Q2 2017 179.8 NOKm 218.9
Commision & bonuses Hardware
10 20 30 40 50 60 70 Q4 2016 Q1 2017 48.5 Q2 2017 41.4 47.7 44.5 Q3 2017 NOKm Q4 2017 62.8
Solutions
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Management team
Appendix
Gaute Engbakk – CEO
Creuna AS, a significant Nordic player within digital solutions, branding and advertising during 2010-2014, and during 2014-2016 he was the CEO of Gambit Hill & Knowlton Strategies.
Marius Drefvelin – CFO
consultancy firm with 350 employees. He has been with Creuna since 2012. During 2010-2012, he was a financial advisor at Deloitte, working with mergers, acquisitions and IPOs. Before this, he worked at Jebsen Asset Management from 2007-2009. During 2001-2007, Mr. Drefvelin worked at KPMG, also working with transactions.
Mads Vårdal – Chief Innovation Officer
been a leading figure for the development of Smartworks. He has previously had a leading position in Nordialog Skøyen AS and CEO in Buskerud Tele AS.
Inge Paulsen – Chief Operations Officer
Infratek/Hafslund, Implement and Accenture. His broad experience comes from heading strategic business development projects in venture businesses or turn around cases as well as holding various executive positions responsible for profit & loss.
Erik Haugen – Chief Commercial Officer
Mr Haugen is an international business professional, bringing with him broad commercial experience. He spent spent twelve years in London working with focus on sales, marketing and business management for companies like Pioneer and Sony Ericsson. Subsequently he moved into finance and professional services sales at Lindorff AS (now Intrum) in 2011 where he has been responsible for strategic sales, key account management and business development for a large portfolio of clients within telecoms, utilities, trade, SME and public sector.
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Disclaimer
This presentation (the “Presentation”) has been prepared by Techstep ASA (“Techstep” or the “Company” and together with its subsidiaries the "Techstep Group"). The Presentation has been prepared and is delivered for information purposes only. It has not been reviewed or registered with, or approved by, any public authority, stock exchange or regulated market place. The contents of the Presentation are not to be construed as financial, legal, business, investment, tax or other professional advice. Each recipient should consult with its own professional advisors for any such matter and advice. The Company makes no representation or warranty (whether express or implied) as to the correctness or completeness of the information contained herein, and neither the Company nor any of its subsidiaries, directors, employees or advisors assume any liability connected to the Presentation and/or the statements set out herein. This Presentation is not and does not purport to be complete in any way. By receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the Company, its financial position and prospects and that you will conduct your own analysis and be solely responsible for forming your own view of any refinancing and the potential future performance of the Company’s business. The information included in this Presentation may contain certain forward-looking statements relating to the business, financial performance and results of the Techstep Group and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words “believes”, “expects”, “predicts”, “intends”, “projects”, “plans”, “estimates”, “aims”, “foresees”, “anticipates”, “targets”, and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely views and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any other company in the Techstep Group, or any of its advisors or any of their parent or subsidiary undertakings or any such person’s affiliates, officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual
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