Real-Time Digital Engagement Increasing Customer Lifetime Value in - - PowerPoint PPT Presentation

Real-Time Digital Engagement

Increasing Customer Lifetime Value in Telecom, Retail & Financial Services

Investor Presentation – December 2017

Safe Harbor Statement

This presentation contains “forward-looking statements” based on expectations, estimates and projections that are subject to risk. Statements about future revenue, addressable market size, cash, growth and profitability are forward-looking and actual results could differ. These forward looking statements are based on Evolving System’s current estimates and assumptions as of the date of the information presented and as such, involve uncertainty and risk. Forward looking statements are not guarantees of future performance, and actual results may differ materially from those contemplated by the forward looking statements because of a number of factors, including the factors described in the Company’s Form 10-K for the fiscal year ended December 31, 2016 and other reports on file with the Securities and Exchange Commission. Except to the extent required under the federal securities laws, Evolving Systems does not intend to update or revise the forward-looking statements.

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EVOLVING SYSTEMS: AT-A-GLANCE

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• NASDAQ: EVOL
• HQ: Englewood, CO; Offices: Asia, Africa, Europe, LATAM, USA

Background

• Premise and SaaS Provider of Real-Time Digital Engagement Solutions targeting Telecom,

Retail & Financial Services

Product / Services

• 100+ Customers in 65+ countries on 5 continents touching ~1.3 billion consumers

Customers

• 38 consecutive quarters of positive net income
• Profitable on an operating, net and Adjusted EBITDA basis quarterly and YTD
• Sequential revenue growth of ~21%; YTD revenue growth of ~5%
• Recent acquisitions of BLS and Lumata expected to positively impact top- and bottom-line in

Q4 FY17 and FY18, leading to increased cash flow and strengthened balance sheet

Consistent Financial Performance

2017 FINANCIAL SNAPSHOT

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• Total Revenue – $19.6M vs. $18.7M (up ~5% YTD)
• License Fees – $2.1M vs. $2.3M (down ~7% YTD, due primarily to business model transition)
• Expert Services – $17.5M vs. 16.4M (up ~7% YTD)

Revenue

• YTD Gross margin of ~71% vs.~79%; shift due to acquisitions completed in 3Q which carry

lower but still, high gross margins

• YTD Operating expenses of $9.4M vs. $10.9M; increase due to one-time acquisition related

costs, one-time restructuring costs and overhead added from BLS and Lumata; synergies to drive further reductions and expenses anticipated to decline as a % of revenue

Margin and Expenses

• Operating income of $4.5M vs. $3.8M YTD, an improvement of ~18% YOY
• Net income of $2.8M vs. $2.1M, an improvement of ~32% YOY

Profitability

• Cash and cash equivalents of $7.6M vs. $7.6M, which includes acquisitions
• $9.4M balance under the Term Loan and Facility Loan, net of ~$14k of debt issuance costs
• In compliance with all covenants; higher anticipated cash flow in future periods to fund

working capital needs, debt obligations and future accretive acquisitions

Balance Sheet

(Nine Months ended September 30, 2017 vs. Nine Months ended September 30, 2016)

EVOL: OUR BUSINESS TRANSFORMATION

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Becoming an end-to-end provider of digital consumer engagement across Telecoms, Retail and Financial Services

Customers

2015 2017 Technology Leadership in Customer Activation in Mobile Telecoms Expansion into Real- Time Contextual Marketing Acquired Sixth Sense Media (Sept. 2015) Expansion to cover Telecoms, Financial Services & Retail Leader in Real Time Digital Engagement Acquired Business Logic Systems (June 2017) Acquired Lumata (Sept 2017) 2000s 20+ 50+ 100+

PROVEN TECHNOLOGY PLATFORM DEPLOYED ACROSS A GROWING GLOBAL CUSTOMER BASE

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Telcos at forefront of Customer Lifetime Value (“CLV”) technology Our learning in telecom and the highly competitive emerging market can now be applied in the digital transformation of new verticals and developed markets

DECADES OF EXPERIENCE WORKING WITH GLOBAL BRANDS

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Name and Title Experience Thomas Thekkethala

President and CEO

Former CEO of Sixth Sense Media; 30 years of experience in financing and building enterprise software companies

Richard Lewis

SVP, Sales

Former CEO of BLS; 32 years of sales leadership in telecom software companies with extensive experience in Europe, Middle East & Africa

Mo Firouzabadian

SVP, Sales

Former co-CEO of Lumata; 13+ years of experience in telecom and mobile marketing; formerly Head of Connected Devices/New Business with Buongiorno

Adhish Kulkarni

SVP, CVM Solutions

Former co-CEO of Lumata; 15+ years of experience in telecom and mobile marketing; previously part of the senior team at Buongiorno Digital and Flytxt; and served as a Management Consultant for 6 years with Accenture

Eric Hatton

SVP, Activation Solutions

Over 20 years of experience delivering new products for telecom networks and point-

• f-sale systems affecting billions of people globally

Don Stone

SVP, R&D

Over 25 years of experience designing, developing and implementing large-scale, mission-critical software systems for global telecom carriers

Hart Singh

SVP, New Ventures

Over 25 years of experience ranging from multiple start-ups to corporates in planning and deploying break-through software solutions

Leadership team with over 125+ years of experience in building and scaling enterprise software and technology companies

NEW SENIOR LEADERSHIP DRIVING “TRANSFORMATION”

What is Customer Lifetime Value?

CUSTOMER LIFETIME VALUE (“CLV”) DEFINED

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Increasing CLV through Real-Time Digital Engagement

Customer Base Average Spend Average Tenure Activate More Customers Increase Customer Spend Extend Tenure

CLV AT WORK WITH ORANGE (EU Mobile Carrier Group)

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Rewards based on real-time customer lifecycle triggers Personalized physical and virtual rewards 20 strategic brand partners in retail, film, media and app developers.

Driving real-time digital engagement with a two-sided business model – generate incremental revenues through brand partners and extend tenure of customers > drives increased CLV

Engaged Customers Engage: Orange Thank You

CLV AT WORK WITH ORANGE – “MOVIES AND MORE”

Any Movie Any Theatre Every Wednesday Get Offers Select a Movie

1 Get Ticket

Real-Time Digital Engagement generates higher spend and longer retention resulting in increased CLV.

2 3 Skip The Line

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“$pend More” Time

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Higher CLV Trans- actions Higher Spend Longer Tenure

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CLV AT WORK: RAPID CUSTOMER ACTIVATION AND ON-BOARDING

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Helping one of Asia’s largest mobile operators to drive customer activations from 1,000/day to over 100,000/day for higher value 4G services resulting in higher CLVs

Ecommerce Bundling Handset Bundling SIM Flooding

1,000 100,000 Customer Activations Per Day

Empower Dealers Time-to-Market Additional Revenue Dealer Experience Improvement Retail Channel Analytics

CLV AT WORK WITH AIRTEL – “4G IS HERE”

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Choose Language Enter Details Convenient Biometrics You’re Live! Do More at Your Pace Instant Lite App Installed (no wait for download or install) Full Service Support App Data Reward for 1st Use: FREE 4G data promotes use

• f partner apps and data

usage behavior

1 2 3 4 5 6 7

More Customers Higher Spend Higher CLV

CLV AT WORK #3 – RETAIL OFFERS

Install Partner App For Extreme Savings

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Select Products at Partner Store

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App Scans Product for Offers

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Displays Discount or Competing Products

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Platform Learns for Better Future Offers

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App Tracks Choices Made

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Customers

Higher Spend

Increased Tenure

Higher CLV Real- Time Rewards That Matter Using Insights That Matter

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Shifting Market Dynamics Key Drivers for our Optimism Transitioning and Expanding our Business in Targeted Growth Areas

MARKETS EXPANDING IN DIGITAL CHANNELS AND ADVERTISING

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Newer digital channels enhancing traditional Print, E-mail and TV

THE “DIGITAL TRANSFORMATION MARKET” IS GROWING RAPIDLY

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The global “Digital Transformation Market” is expected to top $431.7B by 2021, growing at a CAGR of 19.2% between 2016 and 2021

MARKET TRENDING TOWARDS SMARTER, DATA-DRIVEN ENGAGEMENT

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• Data capture
• Interactive dialogue

Smart Conversations

• Predictive Analytics
• Machine Learning
• Propensity Forecast
• ROI optimization
• Automatic Execution

Real-Time Campaigns 1-to-1 Dialogue Personalized Messages One-way Broadcasts

• Rules-based
• Real-time triggers
• Data Analytics
• Test & Learn
• Personalized fields
• Contextual content
• No customization
• Limited targeting

Redefining the boundaries of digital customer engagement by applying cognitive technology to solve tomorrow’s marketing challenges…

MARKETS CONTINUING “CROSS-CONVERGENCE” ACROSS VERTICALS

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• Real-time engagement
• Transaction history and insights

from large data sets

• Engagement across multiple channels
• Customer valuation
• Contextual marketing

This converging landscape requires real-time digital customer engagement based on intelligent, data-driven solutions

EVOLVING PLATFORM: OUR POSITIONING & CUSTOMER VALUE

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Evolving’s platform is based on massively-scalable, cognitive and machine learning technologies to process real-time events and trigger highly personalized and relevant offers

Intelligent Actions-based Triggers Transaction Data Engage with the Right Offer

DELIVERING INTELLIGENT REAL-TIME CUSTOMER ENGAGEMENT

(Applying Predictive Analytics & Machine Learning to Enable Better Engagement Decisions)

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Dealer Activity Micro-Segmentation & Personalization Activation Stats Product / Offer / Campaign Performance Learn, Explore & Exploit – Machine Learning Phases

OUR TRANSFORMATION CONTINUES: STRATEGY TO DRIVE GROWTH AND PROFITABILITY

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• Closed key “Digital Engagement” acquisitions, significantly expanding our expertise, offerings and

customer base, creating up-sell / cross-sell opportunities

• Strengthened leadership team through acquisitions, adding significant expertise in customer real-

time digital engagement and value management

• Successfully continued transition from “traditional” software license model towards SaaS and

Managed Services recurring revenue model

• Several new customer wins spanning Africa, Europe, the Middle-East, and Latin America; expanding
• ur customer base to over 100 customers across 65 countries
• Continue to drive profitability through off and near-shore, back-office operational excellence
• Implementing transformation plan to leverage synergies of the acquired businesses to improve

gross margins, lower fixed expenses and drive both profitability and cash flow

• Progress on inorganic growth initiatives: continuing to identify and pursue accretive acquisitions

Momentum continued in the 3rd quarter with acquisitions, innovation and new customers!

WELL POSITIONED FOR THE FUTURE

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Opportunities for Long-Term Growth; Near-Term Focus on Predictability and Sustainability Consistent Track Record

• f Profitability

Enhanced Leadership, Product Development and Sales Teams from BLS and Lumata Upselling Longstanding Customer Relationships with Leading Global Carrier Groups Back-Office Operations Excellence and Efficiency with Near-Shore and Off-Shore Teams Opportunity to Expand Customer Base in Retail & Fin Services Verticals Globally Digital Transformation Market growing at ~20% CAGR Digital Engagement Solutions Well Positioned to Compete in this Growth Market Clean Balance Sheet with Access to Capital

Appendix: 2017 3rd Quarter and Nine-Month Financial Statements

APPENDIX: PROFIT AND LOSS STATEMENT

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APPENDIX: BALANCE SHEET

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APPENDIX: GAAP RECONCILIATION

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CONSISTENT TRACK RECORD IN DRIVING PROFITABILITY

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$5.6 $5.0 $8.4 $4.3 $5.6 $4.5 $5.6 $3.8 $5.6 $3.3 $3.4 $2.8

$0 $1 $2 $3 $4 $5 $6 $7 $8 $9

2012 2013 2014 2015 2016 9mo 2017

Operating Income Net Income

($US in millions)

Evolving Systems, Inc.

9777 Pyramid Court, Suite 100 Englewood, Colorado 80112 Glenn Wiener, Investor Relations GW Communications, Inc. Tel: 212-786-6011 gwiener@GWCco.com Michael Glickman, Investor Relations GW Communications, Inc. Tel: 917-397-2272 mglickman@GWCco.com

http://www.evolving.com/ NASDAQ: EVOL