asia corporate presentation_20130301

24
AsiaInfo-Linkage, Inc. Leading Provider of Telecommunications Software and Services NASDAQ: ASIA March 1, 2013

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Page 1: Asia corporate presentation_20130301

AsiaInfo-Linkage, Inc. Leading Provider of Telecommunications

Software and Services

NASDAQ: ASIA March 1, 2013

Page 2: Asia corporate presentation_20130301

The information contained in this presentation is as of March 1, 2013. AsiaInfo-Linkage assumes no obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments. This presentation contains forward-looking information about AsiaInfo-Linkage’s operating results and business prospects that involve substantial risks and uncertainties. You can identify these statements by the fact that they use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Among the factors that could cause actual results to differ materially are the following: government telecommunications infrastructure and budgetary policy in China; our ability to maintain our concentrated customer base; the long and variable billing cycles for our products and services that can cause our revenues and operating results to vary significantly from period to period; our ability to meet our working capital requirements; our ability to retain our executive officers; our ability to attract and retain skilled personnel; potential liabilities we are exposed to because we extend warranties to our customers; risks associated with cost overruns and delays; our ability to develop or acquire new products or enhancements to our software products that are marketable on a timely and cost-effective basis; our ability to adequately protect our proprietary rights; the competitive nature of the markets we operate in; and political and economic policies of the Chinese government. A further list and description of these risks, uncertainties, and other matters can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and in our periodic reports on Forms 10-Q and 8-K (if any) filed with the United States Securities and Exchange Commission and available at www.sec.gov.

Safe Harbor Statement

1

Page 3: Asia corporate presentation_20130301

Company Background

• AsiaInfo-Linkage, Inc. (NASDAQ: ASIA) is a leading provider of high-quality telecommunications software solutions and services (No. 1 BSS solution provider in Asia Pacific)*

• IPO on the NASDAQ exchange in March 2000 • Delaware incorporated—US company · The only US-listed Chinese software company, incorporated in the US • Highest level of accounting and corporate governance policies · • Leading position in China’s telecom software and services market Our vision is to be the leading solution provider in the global telecom industry,

enabling the connected digital lifestyle, helping our customers to build, maintain, operate and constantly improve their network and IT infrastructure

2

A “10-K filer,” not FPI (foreign private issuer); subject to higher disclosure requirements

* Source: Gartner

Page 4: Asia corporate presentation_20130301

Steve Zhang President and CEO

• Joined AsiaInfo-Linkage in December 1999 as VP for Software

• Appointed CEO of AsiaInfo-Linkage in May 2005

• Prior to AsiaInfo-Linkage, 10 years experience at several successful companies in Silicon Valley

• Bachelor’s degree in Information Science, University of Pisa, Italy

• Master’s degree in Computer Science, Rice University

• Listed as one of “Asia’s 25 Hottest People in Business” by Fortune Magazine in 2012

Michael Wu CFO

• Joined AsiaInfo-Linkage in August 2010 as CFO

• Served as the CFO of iSoftStone Information Service Corporation

• Served as Finance VP at Huawei Technology

• Served in other financial managerial roles at Lucent Technologies China and SAP China

• MBA from City University of Seattle

Presentation Team

3

Page 5: Asia corporate presentation_20130301

Core Business Overview

Telecom Software Solutions: Customer Relationship Management

(CRM)

Billing

Business Intelligence (BI)

Serving all 3 telecom operators and

majority of provincial level entities

4

CRM

Page 6: Asia corporate presentation_20130301

FY2012 Revenue Breakdown*

5

*As of December 31, 2012

China Telecom 17.2%

Others 4.2%

China Mobile 52.8% China Unicom

25.8%

Page 7: Asia corporate presentation_20130301

Revenue Streams

6

On-going Services (OGS)—maintenance and daily operational functions

3

Change of Requirements (CR)—smaller and immediate upgrades

2

Project Revenue—new contracts and annual upgrade requirements

1

Non-Recurring

Recurring

Page 8: Asia corporate presentation_20130301

Key Facts

7

> 890m customers serviced by our systems

6b call detail records processed every day by our systems

7PB data analyzed every day by our BI systems

115m WLAN/Broadband customers are authenticated by our systems

20,000+ servers running our BSS applications @ 24x7x365

36m Online Transaction / Day

48m Replenishments / Day

40,000+ agents

Page 9: Asia corporate presentation_20130301

AsiaInfo-Linkage Competitive Advantage

8

What’s their Telco 2.0 Strategy ? • Adding value to OTT services and

generate new revenues

Operational Challenges: • How to increase subscribers and

increase ARPU in the highly saturated market?

• How to lower the cost to support larger customer base?

Heavy Investment in Infrastructure: • New Technology for Infrastructure • New Application Platforms

AsiaInfo-Linkage Capabilities

Operators Strategic Initiative

Infrastructure Integrator

Business Operational Consulting

IT Planning & Consulting

IT Project Implement & System Maintenance

• Understand the strategy

• Enable the digital lifestyle

Business Strategy

Business Operation

Business Support System

Infrastructure

Satisfy operators’ key strategic and operational initiatives with core IT solutions

Page 10: Asia corporate presentation_20130301

Investment Highlights & Business Strategy

9

Page 11: Asia corporate presentation_20130301

Investment Highlights

Large and growing market opportunity

Market leader with extensive customer base

Comprehensive product and service offering

High product stickiness and barriers to entry

Strong financial position

Disciplined growth strategy

10

Over 18 years of operating history 1

6

7

5

4

3

2

Page 12: Asia corporate presentation_20130301

EBITDA Margins (2012)

45%

34%

Enabling our Customers’ Financial Success

Subscribers (2012)

715 million

107 million

BSS/OSS spend per sub (2012)

$0.70**

$10.00*

China Mobile AT&T * Conservative estimate from published data ** ~$500 million (60% of which is AsiaInfo-Linkage)

12

Page 13: Asia corporate presentation_20130301

Dominant Market Share

13

CRM/Billing/BI Leading position in three core products

with about 50% market share

AsiaInfo-Linkage

56%

Others44%

China Operators’ Billing Market Share 56% Market Share

AsiaInfo-Linkage

37%Others

63%

China Operators’ BI Market Share

37% Market Share

AsiaInfo-Linkage

56%

Others44%

56% Market Share

China Operators’ CRM Market Share

Page 14: Asia corporate presentation_20130301

14

AsiaInfo is Financially Strong

37% CAGR +

+

3 Groups

× 31 Provinces

96 Potential

Customers = 3 + 93 Operators

Market Leader with Extensive Customer Base (cont’d)

14

Page 15: Asia corporate presentation_20130301

Digital Lifestyle Enablement

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Page 16: Asia corporate presentation_20130301

Stage I

Jan 13, 2010 Chinese government pushing

convergence

Policy Launch Stage II

Focus on cable / telco dual- way entrance

Pilot

Stage III

Pilots wrap-up and expansion

Implementation

Mobile China Mobile China Unicom

Cable Many small operators

Stage I

Fixed+ Broadband China Telecom China Netcom

Stage II Cable

Many small operators

Fixed+Broadband+Mobile China Mobile

China Telecom China Unicom

Triple play

China Mobile China Telecom China Unicom

One Cable operator

Stage III

Triple Play – New Market Dynamic

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Page 17: Asia corporate presentation_20130301

Our International Expansion

Up to 2010… • No. 1 in China • Strong

customer base • High entry

barriers • Remarkable

success & potential

2010 onwards • Zong • Mfone • U Mobile • Nepal Telecom • And more…

2012 • Regional HQ in

Cambridge UK • Appointed Alex

Hawker as GM EMEA

• International Marketing established

• Completed Phase 1 BSS transformation for Nepal Telecom within 4 months

2013 & beyond • Launched

Veris™ product suite for EMEA

• Showcased Veris™ at Mobile World Congress 2013

• Kick-started customer engagement in Europe and Middle East

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Page 18: Asia corporate presentation_20130301

High Barriers to Entry in Domestic Market

18

Competitors

Early Mover Advantage

Comprehensive Product and Service Portfolio

Product Stickiness – High Switching Costs

Deep Relationship with All Three Chinese Telecom Operators at HQ and Provincial Levels

Large Investment in R&D

Page 19: Asia corporate presentation_20130301

1 4G Mobile Virtual Network Operator (MVNO) Monetization of Data

2 International expansion—Southeast Asia telecom market and other regions around the world

Disciplined Growth Strategy

3 Expand into domestic cable market—Triple Play Mobile number portability (MNP)

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4 Move up the value chain within the domestic telecom vertical

Page 20: Asia corporate presentation_20130301

Financial Highlights

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Page 21: Asia corporate presentation_20130301

0.0

100.0

200.0

300.0

400.0

500.0

600.0

2006 2007 2008 2009 2010 2011 2012

Service & third-party hardware revenue net of third-party hardware costs

Software products and solution revenue

97 78

134

202

329

US$ mm

Consistent Revenue Growth

21

464

530

Page 22: Asia corporate presentation_20130301

Net Cash Balance (1)

Strong Balance Sheet and Margin Profile Non-GAAP Gross Profit and Margin (2)

Non-GAAP Op. Profit and Margin (2) Non-GAAP Net Income and Margin (2)

22

1. Cash balance excludes restricted cash and short term investments. 2. Reflects GAAP gross, operating and net profits as a percentage of net revenue. 3. Excludes amortization of intangibles resulting from the acquisition of Linkage Technologies.

US$mm

US$mm US$mm

6% 11%

14% 17%

25% 24%

14%

0%

5%

10%

15%

20%

25%

30%

0

20

40

60

80

100

120

2006 2007 2008 2009 2010 2011 2012 Operating Profit % Margin

29% 41%

46% 56%

55% 50%

45%

0%

10%

20%

30%

40%

50%

60%

0

50

100

150

200

250

2006 2007 2008 2009 2010 2011 2012 Gross Profit Gross Margin

5%

15%

18%

25%

28%

24%

16%

0%

5%

10%

15%

20%

25%

30%

0

20

40

60

80

100

120

2006 2007 2008 2009 2010 2011 2012 Net Income % Margin

0

50

100

150

200

250

300

2006 2007 2008 2009 2010 2011 2012 Net Cash Balance

US$mm

Page 23: Asia corporate presentation_20130301

2013 Q1 Guidance Overview (US$ mm, except EPS, Margin) 2012 Q4 Margin 2013 Q1 Net Revenue (non-GAAP) 155.2 - 133.0-136.0

Gross Profit 55.2 47.4% -

Operating Income 29.5 19.0% -

Net Income (non-GAAP) 30.1 19.4% -

EPS (basic, non-GAAP) 0.41 - 0.23-0.25

1. Margins are non-GAAP of net revenue 2. Non GAAP Net revenue and Non GAAP net income per basic share 3. Gross margin of net revenue (non-GAAP) is calculated by dividing gross profit, , excluding third-party hardware costs, amortization of acquired intangible

assets, and share-based compensation expenses, by net revenue (non-GAAP) 4. Operating margin of net revenue (non-GAAP) is calculated by dividing income from operations, amortization of acquired intangible assets, share-based

compensation expenses, and non-recurring consulting related expenses, by net revenue (non-GAAP) 5. As of December 31, 2012, includes cash and cash equivalents, restricted cash and short-term investments 6. Weighted average of basic shares as of December 31, 2012

Cash Balance: $353.9 million

Shares Outstanding: 72.7 million

23

(5)

(6)

(3)

(2)

(1)

(4)

(2)

Page 24: Asia corporate presentation_20130301

Thank You.

Jimmy Xia Investor Relations [email protected] +86 (10) 8216-6039