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Corporate Overview Q3 FY 17

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Page 1: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

Corporate OverviewQ3 FY 17

Page 2: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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Forward-Looking Statements Disclaimer

Certain statements made in this presentation and the related materials may contain forward-looking

statements, which are not historical facts, but are based on certain assumptions and reflect

Enghouse’s current expectations. These forward-looking statements are subject to a number of risks

and uncertainties that could cause actual results or events to differ materially from current

expectations. These risk factors are identified in Enghouse’s Annual Information Form and other

periodic reports filed with applicable regulatory authorities from time to time. Enghouse disclaims any

intention or obligation to update or revise any forward-looking statements, whether as a result of new

information, future events or otherwise.

Market and Industry Data

This document contains certain statistical, market and industry data obtained from industry publications

and reports. Industry publications and reports generally indicate that information has been obtained

from sources believed to be reliable, but do not guarantee the accuracy and completeness of such

information. Actual outcomes may vary materially from those forecast in such reports or publications,

and the prospect for material variation can be expected to increase as the length of the forecast period

increases. While we believe this data to be reliable, market and industry data is subject to variations

and cannot be verified with certainty due to limits on the availability and reliability of data. Enghouse

has not independently verified any of the third party data referred to in this document.

Page 3: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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Build a diverse enterprise software and services company through:

Growing our interaction management solutions business

• Interactive Management Group

Growing our network solutions and transportation management software

businesses

• Asset Management Group

Consistently generating revenue growth and positive cash flow

Completing selective acquisitions within existing markets and entering new

strategic software markets on an opportunistic basis

Strategy

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Enghouse Interactive

Contact center software

Profitable growthRevenue~1600 employees

HQ in Canada + 25

countries

Snapshot

Enghouse Networks

Telecom software

Enghouse Transportation

Transportation software

Dual Growth – organic &

acquisitions

Toronto Stock Exchange

TSX:ENGH

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Interactive - Sector Dynamics

Contact Center is at the front line of customer interaction,commoditization of the PBX market is driving on-premise, cloud and SaaSdelivery models

Integration of contact center, CRM and analytics are needed to enablecustomer experiences that are contextual, progressive and relevant

Mobile device and application proliferation requires an intelligent andseamless transition from self service to agent assisted interactions

Email, chat and SMS interactions are increasingly popular but voice stillaccounts for 60% of interactions and are typically more complex and ofhigher value and importance

The best person to handle the interaction may be staff in the front, middleor back office, driving convergence of contact center, UC and consolesolutions

Microsoft’s entry in both on-premise and cloud-based UnifiedCommunications (Skype for Business) is a disruptive force as the marketmoves from IP Telephony to UC

Page 6: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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Consoles

2-50 seats

Channel GTM and OEM

On-premise

Mid-Market

10-500 seats

Channel GTM

On-premise or hosted private cloud

Enterprise

50-1000’s of seats

Direct/Channel GTM

On-premise, private cloud, or hybrid

Cloud

True multi-tenant cloud solution

GTM through carriers and service providers

Public, community, or private cloud

Interactive Portfolio

Leading customer interaction solutions, in the cloud, hosted or on-

premise to address specific market requirements

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Interactive Portfolio

MULTI-CHANNEL CONTACT CENTERContact Center Enterprise · Contact Center Service Provider · Communications

Center with Skype for Business · Contact Center OnDemand · Outbound Dialer

CALL RECEPTION/CALL HANDLINGIntuition Attendant Console (Avaya/Genband) · Arc Pro Attendant Console for

CISCO · Operator Console for Microsoft Skype for Business · ANDTEK Console

SELF-SERVICECommunication Portal · Mobile IVR Navigator · Knowledge Management Suite

QUALITY MANAGEMENTCall Billing and Reporting (Enterprise & Cloud) · Call & Computer Recording

Agent Evaluation · Quality Management Suite · Workforce Management

TELEPHONY & CRM INTEGRATIONCTI Connect · CTI for CRM · VoiceXML Test Suite · Directory Integration

Page 8: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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Networks - Sector Dynamics

Industry growth fueled by next generation wireless subscriber growth,demand for smartphones, tablet devices, OTT applications and Internet ofThings (IOT)

Continuing investment and roll out of next-generation networktechnologies 4G & LTE and new service offerings, while also dealing withcustomer services and retention

Big data and analytics technologies being deployed to tailor value-addedservices based on subscriber usage and behavior

Network convergence, cloud services and network function virtualization(NFV) will continue to gain momentum

Highly fragmented, open for more industry consolidation among 400+vendors

BSS/OSS market was valued at $17B in 2011 and is expected to grow to$48.5B in 2018, a CAGR of 16% from 2012-2018 (Source – Transparencymarket Research)

Investment by service providers in cloud application and infrastructuretechnologies that enable high value, high margin enterprise businessservices offerings

Page 9: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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Networks Portfolio

Technology solutions to optimize performance for next generation

network operators

OPERATIONS SUPPORT SYSTEMSService Assurance · Performance Management · Inventory Management ·

Resource Management · Planning · Configuration Management · Geographic

Information Systems

BUSINESS SUPPORT SYSTEMSWholesale Revenue Management · MVNO Revenue Management · Intelligent

Routing · Billing SaaS · Customer Experience Management · Electronic

Invoice Management

NETWORK & VALUE ADDED SERVICESMobile VAS · Routing & Control · Security · Call Recording

Page 10: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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Transportation - Sector Dynamics

Fragmented and competitive market. New technologies driving growth insystems and tangible cost benefits / savings

Evolving tablet and smart phone technologies replacing traditional MobileData Terminals (MDT’s). LTE networks to provide interoperability acrossgeographies

Cloud computing gaining momentum and driving replacement of legacytechnology systems in a space traditionally slow to adopt

Economic uncertainty and rising fuel costs driving increased ridership inboth public and private sectors

International political focus on terrorism and natural disasters drivingcontinued investment in transportation and public safety systems

Page 11: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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Transportation Portfolio

Software based transportation and workforce management

solutions for the public, private and public safety sectors

Page 12: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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ANNUAL RESULTS

Page 13: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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Fiscal Year Results (ending Oct 31)

Note¹ : CAGR – Compound annual growth rate

FY 12 FY 13 FY 14 FY 15 FY 16

$136m

$180m

$279m

TOTAL REVENUE

$220m

$308m

FY 12 FY 13 FY 14 FY 15 FY 16

$152m

$72m

$92m

$115m

$136m

49%52% 51% 49%

HOSTED & MAINTENANCE

REVENUE

52%

FY 12 FY 13 FY 14 FY 15 FY 16

$1.35

$1.69

$2.09

$2.69

$3.19

ADJUSTED EBITDA

PER SHARE

FY 12 FY 13 FY 14 FY 15 FY 16

$0.23

$0.29

$0.36

$0.44

$0.52

DIVIDEND PER SHARE (based on date of record)

Note¹: Compounded annual growth rate FY12 - FY16

Page 14: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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Revenue Split - FY 16

License

30%

Hosted & Maintenance 50%

Services

19%

Hardware

1%

REVENUE BREAKDOWN

Interactive

Management Group$192m or 62%

Asset

Management Group$116 m or 38%

REVENUE BY BUSINESS GROUP

Note: % rounding applied to charts and tables throughout this corporate presentation

US

28%

UK

21%EUROPE

16%

CANADA

3%

APAC

5%

SCANDINAVIA

27%

REVENUE BY GEOGRAPHY

Page 15: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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YTD FY 17 (9 MONTHS)

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YTD FY 17

YTD FY 17 YTD FY 16 % Change

Revenue $241.1 $229.3m 5.2%

Revenue by Segment

Interactive Management Group $141.4m $143.9m -1.7%

Asset Management Group $99.7m $85.3m 16.7%

License revenue $72.5m $69.2m 4.8%

Hosted & Maintenance revenue $122.5m $114.0m 7.5%

Adjusted EBITDA¹ per diluted share $2.43 $2.20 10.5%

Adjusted EBITDA¹ $66.3m $60.0m 10.5%

Annual dividend - per common share, based on

date of record $0.44 $0.38 15.8%

Note¹: Adjusted EBITDA: Results from operating activities adjusted for depreciation of PPE and special charges for acquisition related

restructuring costs.

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YTD FY 17

YTD FY 17 YTD FY 16

Cash spent on dividend $11.9m $10.2m

Cash spent on acquisitions (net of cash acquired &

holdbacks)$17.2m $40.3m

Cash & Investments balance - beginning of period $85.9m $98.4m

Cash & Investments balance - end of period $103.8m $90.7m

Acquisitions

CTI Q1

Cellvision Q2

NetBoss Q3

Tollgrade Q2

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Q3 FY 17

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Q3 FY 17

Q3 FY 17 Q3 FY 16 %Change

Revenue $82.8m $76.4m 8.4%

Revenue by Segment

Interactive Management Group $46.8m $46.6m 0%

Asset Management Group $35.9m $29.7m 21.0%

License revenue $24.5m $23.9m 2.3%

Hosted & Maintenance revenue $43.4m $37.9m 14.6%

Adjusted EBITDA¹ per diluted share $0.83 $0.79 5.6%

Adjusted EBITDA¹ $22.6m $21.6m 5.0%

Quarterly dividend - per common share, based on

date of record $0.16 $0.14 14.3%

Note¹: Adjusted EBITDA: Results from operating activities adjusted for depreciation of PPE and special charges for acquisition related

restructuring costs.

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Q3 FY 17

Q3 FY 17 Q3 FY 16

Cash spent on dividend $4.3m $3.8m

Cash spent on acquisitions (net of cash acquired & holdbacks) $0.6m $7.5m

Cash & Investments balance - beginning of period $87.6m $85.1m

Cash & Investments balance - end of period $103.8m $90.7m

Acquisitions

Netboss Q3

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Quarterly Results

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY 14 FY 15 FY 16 FY 17

REVENUE$ millions

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY 14 FY 15 FY 16 FY 17

HOSTED & MAINTENANCE REVENUE$ millions

$0

$5

$10

$15

$20

$25

$30

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY 14 FY 15 FY 16 FY 17

ADJUSTED EBITDA$ millions

$0.00

$0.02

$0.04

$0.06

$0.08

$0.10

$0.12

$0.14

$0.16

$0.18

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY 14 FY 15 FY 16 FY 17

DIVIDEND PER SHARE(based on date of record)

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Acquisition Strategy

Established track record of value creation through acquisitions

To consistently generate positive operating cash flows to fund

further growth, drive shareholder value while minimizing shareholder

dilution

Economic factors are favorable for acquisitions especially for small-

cap companies

Target companies in the $5m - $50m revenue range preferably with

strong recurring revenue

– Geographic, product or scale expansion

– Mission critical solutions

– High barriers to entry

Objective is for a cash payback within 5 - 6 years

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Recent Acquisitions

CTI

Dec, 2015

Q1 FY 16

USA

AKTAVARA

Sept, 2015

Q4 FY 15

SWEDEN

NETBOSS

May, 2016

Q3 FY 16

USA

CELLVISION

March, 2016

Q2 FY 16

NORWAY

PRESENCE

Oct, 2016

Q4 FY 16

SPAIN

TOLLGRADE

April, 2017

Q2 FY 17

US

SURVOX

Sept, 2017

Q4 FY 17

US

Page 24: Q3 FY 17 - Enghouse Systems · Growing our interaction management solutions business ... moves from IP Telephony to UC. 6 Consoles 2-50 seats Channel GTM and OEM On-premise Mid-Market

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THANK YOU!