![]() Overview
April 2010
April 2010
CDC Software SaaS
Update
Expansion of Hybrid Model
Exhibit 99.1 |
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Copyright CDC Corporation 2
Cautionary Note Regarding Forward-Looking Statements
The contents of this presentation and what we say during it contain certain
forward-looking statements within the meaning of
the
United
States
Private
Securities
Litigation
Reform
Act
of
1995.
We
caution
you
that
all
forward-looking
statements
involve risks and uncertainties.
These forward-looking statements include statements regarding our beliefs about our
plans, strategies and pipelines and factors that may affect them, our beliefs
regarding our integration approach, our beliefs regarding Q1 2010 revenues, our
beliefs and projections regarding recurring revenues for any future period, including
the composition and amount thereof, our plans for future growth, our plans and
beliefs regarding acquisitions or strategic partnerships, including the completion,
terms and potential benefits thereof, and any estimates we may make.
Important factors could cause actual results to differ materially from those in the
forward-looking statements. We urge you to read the company’s
public filings with the Securities Exchange Commission (SEC), including our registration statement,
other filings we may make, and our earnings and other press releases, all of which are
available on our corporate website at www.cdcsoftware.com
and
at
www.sec.gov.
We
also
encourage
you
to
review
the
press
releases
and
filings
of
our
ultimate
parent company, CDC Corporation.
All forward-looking statements are based upon information available to management
as of the date thereof, and you are cautioned not to place any undue reliance on
any forward-looking statements, which speak only as of such date. We assume
no obligation to update or alter the forward-looking statements whether as a result of new information, future events
or otherwise. Historical results are not indicative of future performance.
|
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Pursuing an aggressive SaaS
Strategy
Goal is for SaaS
+ maintenance revenue to exceed 70% of total revenue within
the next several years
Target to be at 60% within a year based on potential deals and organic growth from
integrated acquisitions
Three SaaS
deals since late November 2009
•
gomembers
•
Truition
•
Computility
Pipeline
•
Term Sheet signed for biggest Supply Chain SaaS
deal to date
•
2 currently-planned investments in SaaS
companies
•
We
believe
there
is
a
robust
pipeline
of
targets
that
fit
within
our
valuation
criteria
Strategy |
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Execution Focus
•
We believe that smaller SaaS
vendors have struggled to balance growth with profitability
and could never make it “alone”
Targeted companies generally have the following characteristics:
•
Fit with CDC Software’s “hybrid”
SaaS
and perpetual license model
•
Expected to be earnings accretive and increase EBITDA margin over time
•
Can be leveraged into traditional/new verticals
•
Maintain proven pricing discipline and still getting SaaS
GOAL: SaaS
revenue for Q1 2010 targeted at $1.6 m/quarter, $9 m/quarter by end of 2010
Execution Plan |
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Integration Approach
Strategic
Initiatives
Integration
Approach
Conclusions
•Acquisitions are a high priority
with significant executive visibility
•Integration
SVP’s
responsibilities:
•Ensure overall
success •Serve as a
primary point of contact throughout the integration
•Ensure smooth
transition
•Business Owner coordinates due
diligence •Senior
Department Leaders participate in due diligence and integration planning
•President and CEO reviews and
approves rollout plan
•Onsite visits by team to help
ensure objectives are clearly communicated
•Progress reports distributed
weekly •Business
Owner and Senior Department Leaders confirm completion of integration when
acquisition is under their operational control
•Integration approach proven
successful for past acquisitions
•New companies integrated
without significant disruption to business
•Approach has been successful
for multiple acquisitions integrated simultaneously |
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Recent Acquisitions
Integration Progress: 100%
•
Organizational consolidation under Professional Services is complete
•
Sales
training
is
complete
-
cross-sell
opportunities
underway
•
Marketing initiatives underway to increase pipeline
•
Offshore Engineering team is being recruited and trained
•
Toronto facilities consolidation is complete
•
Back-office systems integration is complete
•
Financial results through Q1 2010 are above Board-approved targets
Integration Progress: 75%
•
Headcount consolidation and 2010 Sales planning is complete.
•
Chicago facilities consolidation is complete
•
Final back-office cutover on target for later in Q2 2010: gomembers
delayed
slightly
in
order
to
cutover
Computility
at
same
time
•
Financial results through Q1 2010 are above Board-approved targets
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Successfully integrated Truition, now CDC eCommerce
Integration Excellence
•
Leveraging global sales and back office shared service centers
•
Expect cross sell opportunities
Truition
CDC ecommerce
Last full Qtr unaudited
Q3 2009
First full Qtr unaudited
Q1 2010
Revenue
1.8
1.8
GM%
56%
56%
Sales & Marketing % of Rev
12%
7%
R&D % of Rev
14%
13%
G&A % of Rev
25%
9%
EBITDA % of Rev
5%
27% |
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Plan to reach closer to 70% of total revenue over the next few years
Recurring Revenue
* Estimated based upon current plans, goals and projections. Subject to change.
49%
56%
62%
70%
0
50
100
150
200
250
300
350
2009
2010*
2011*
Goal*
Recurring Rev as % of Total
Total Revenue |
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Target to grow from $7M in Q1 2010 to $47M by Q1 2011
Annualized Recurring SaaS
Revenue
* Estimated based upon current plans, goals and projections. Subject to change.
100%
99%
55%
48%
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Q1 '10
Q2 '10*
Q3 '10*
Q4 '10*
Amount Secured
Annualized SaaS
Rev
Secured Recurring SaaS revenue comes from Truition, Gomembers, Computility, IDC
plus anticipated revenue from recently announced supply chain company
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Sales Force Compensation
Goal
Plan
Results
•Salespeople sell what is in the
customers best interest
•Motivate salespeople to get
paid up front on both On-Premise or SAAS,
as such, we are considering:
•For SAAS deals crediting the
TCV (Total Contract Value) equalizing compensation to the on-premise
license ratio •Salesperson
to be paid when CDC Software is paid •
Have been seeing strong cross sell interest into our customer base
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Company Growth Plan |
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CDC Acquisition Strategy
•
Companies should fit strategically:
5 criteria on a 1-10 scale based on criteria Scale A, B, C:
1.
Product architecture
2.
Vertical/industry
3.
Geography
4.
Back office integration
5.
Cross sell / strategic
•
Should be earnings accretive
•Cost
should
be
no
more
than
2
times
recurring
revenue |
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Qualified Pipeline
Summary
FY09 Revenue
FY09 % SaaS
Company A
10 million +
84%
Company B
10 million +
43%
Company C
10 million +
94%
Company D
5 million
31%
Company E
4 million
60% |
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Snapshot
Minority investments of up to $3 million
Can also be set up as a debt instrument: 8-12% interest rate and convertible into
equity Co-invest in tier 1 venture capitalists
Establish commercial relationship to OEM/Cross-sell
Private label
Geographic exclusivity
Potential shared services
Infrastructure for SaaS
Offshore R&D
Support
Services
Strategic Cloud Investment Partner Program (SCIPP) |
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First Investment:
•
Leading provider of on-demand for lead generation
•
75 customers in 2009, targeting 280 in 2010
•
Common customers with CDC Software:
Second Investment:
•
Leader in Supply Chain Management IT systems
and solutions delivered on the cloud
•
9 Fortune 500 customers; over 65 customers
•
Common customer with CDC Software:
•
Investment structured as a convertible instrument
•
Get board seat
•
Investment structured as a convertible instrument
•
Get board seat |
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Marketbright: Commercial Relationship
Marketbright
is a partner for Pivotal CRM in USA and Canada
•Developing connector to Pivotal
CRM CDC Software is partner for Marketbright
in USA and Canada
•Exclusive
partner
for
Marketbright
outside
in
EMEA,
APAC
and
everywhere
else
Other opportunities:
•
Leveraging
the
co-location
and
managed
hosting
facilities
that
CDC
Software's
other
SaaS
solutions
use
•
Professional services, training or custom development projects for CDC Global
Services •
Using CDC Software’s Global Technical Support for customer and technical
support |
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Copyright CDC Corporation 18
Significant Joint Opportunities include:
•
Leverage
CDC
Software
sales
and
partner
network
to
sell
eBizNET
Suite
•
Complementary solutions
•
Supply Chain execution competency
•
Growing demand for SaaS
•
Footprint expansion
•
Enhance SaaS
portfolio in SCM
•
Common Focus on emerging markets
•
Increases Top Line, Bottom Line and
Market Cap
Potential Benefits for CDC
•
Focus on emerging markets
•
Growth potentials
•
Jointly explore new frontiers with CDC
•
SaaS
adoption growing rapidly
worldwide
Reasons for eBizNET
7Hills eBizNET
Solutions, Inc.: Partnership
Consideration:
Commercial Agreements-
CDC and 7Hills to negotiate in good faith:
a)
CDC
to
become
a
co-branded
reseller
of
eBizNET
globally
b)
Jointly offer an integrated solution to potential customers of both companies
c)
CDC to consider leasing SaaS
infrastructure globally to 7Hills
d)
CDC to consider utilizing 7Hills Consulting and SI services
e)
7Hills to consider utilizing CDC offshore development and support centers
|
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CDC Software Hybrid/SaaS
Model Peer Group
According to 2010 Analysts Expectations-
CDC Software is currently trading at 1.3x EV/Revenues, with a 7.0x P/E
*Source:
Based
on
publicly-available
financial
information
obtained
from
Thomson
Reuters-
www.thomsonone.com
**Calculated
by
CDC
Software
as
of
12/31/09
and
based
upon
publicly-available
financial
information
obtained
from
Thomson
Reuters-
www.thomsonone.com
Market C.
Sales
TEV/Sales
EPS
P/E
FCF/Share
CY09
CY09
CY09
CY09
CY09
Ariba*
$ 1,276
$
339 3.3x
$ 0.70
21x
$ 0.91
Concur Tech*
$ 2,290
$
257 7.9x
$ 0.76
58x
$ 1.17
Intuit*
$ 11,354
$ 3,221
3.5x
$ 1.92
18x
$ 2.61
Netsuite*
$
943
$
167 5.1x
$ 0.05
NM
$ (0.03)
RightNow*
$
620
$
153 3.5x
$ 0.39
48x
$ 0.18
Salesforce.com*
$ 10,742
$ 1,306
7.5x
$ 1.15
73x
$ 1.49
Blackboard**
$ 1,512
$
377 NM
$ 1.42
189x
NM
Unica**
$
163
$
101 NM
$ 0.13
NM
NM
Art Tech Group**
$
688
$
179 NM
$ 0.21
35x
NM
189x
73x
58x
48x
35x
21x
18x
n/a
n/a
P/E: FY09
Mean: 63x
$1.92
$1.42
$1.31
$1.15
$0.76
$0.70
$0.39
$0.21
$0.13
$0.05
Intuit
Blackboard
CDC Software
Salesforce.com
Concur Tech
Ariba
RightNow
Art Tech Group
Unica
Netsuite
Earnings Per Share:
FY09 |
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Copyright CDC Corporation 20
CDC Software Roadmap
Existing Model
New Model
Perpetual licensing model
Customization capabilities
Traditional implementation
Recurring subscription model
Hosted applications
E-learning and instant usage
Shared by multiple customers
Further software and software related
growth
Further margin increase
More predictable revenue stream
Potentially high economies of scale
Target new market segment
Drive accelerating growth and margin
expansion
Hybrid Model
Key Risks of SaaS
Strategy: faster-than-expected deterioration in legacy revenues from
cannibalization,
increased
competition,
stumbles
in
selling
SaaS
offerings |
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Copyright CDC Corporation 21
Investor Inquiries
Monish Bahl
Senior Vice President
678.259.8510
mbahl@cdcsoftware.com
Monish Bahl
Senior Vice President
678.259.8510
mbahl@cdcsoftware.com
©
Copyright CDC Corporation |