advent software, inc. investor...

Advent Software, Inc.

Advent Software, Inc.Investor Presentation

October 28th, 2008

Advent Investor Relations

Contact: [email protected]

2

Forward-Looking Statements

The financial projections under Financial Guidance, our growth internationally and demand in the US, and other forward-looking statements included in this presentation reflect management's best judgment based on factors currently known and involve risks and uncertainties; our actual results may differ materially from those discussed here. These risks and uncertainties include: potential fluctuations in results and future growth rates; continued market acceptance of our Advent Portfolio Exchange®, Geneva® and Moxy® products; the successful development and market acceptance of new products and product enhancements; continued uncertainties and fluctuations in the financial markets; the Company’s ability to satisfy contractual performance requirements; difficulties in integrating merged businesses, such as Tamale Software, and achieving expected synergies and results; and other risks detailed from time to time in our SEC reports including, but not limited to, our quarterly reports on Form 10-Q and our 2007 annual report on Form 10-K. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements including any guidance, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.


Table of Contents

Overview and Strategy

Market Opportunity

Solutions and Competition

Financials


Overview and Strategy

5

Advent is . . .

The leading provider of mission critical solutionsfor the investmentmanagement industry

6

Advent Software

In Business for 25 yearsSelling primarily to the “buy side”4,700 clients in 60 countries

Mission-critical Software and ServicesPortfolio AccountingTrade Order Management and ComplianceStraight Through ProcessingResearch Management

80% Recurring Revenue95% average renewal level

Unique Corporate Culture Rated one of the best places to work in the SF Bay AreaVery experienced employee base

› Average tenure of engineering staff (above the entry level) is 6 years› Average tenure of sales team is nearly 6 years

7

Advent’s Opportunity

Market Drivers› Global AUM grew

16%/yr 2002-2006

› Growth in investment complexity

› Tightening regulatory environment

› Industry consolidation and spin-offs

Advent’s Market Strategy

› International development

› Expand footprint in accounts

› Extend into adjacent markets

› Expand delivery options

8

Total Value of Assets ManagedWorld’s Largest 500 Asset Managers, split by domicile

› Source: Watson Wyatt Worldwide, The World’s 500 Largest Asset Managers, Year end 2006

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1997 1998 1999 2000 2001 2003 2004 2005 2006

24.829.1

33.6 35.235.5

43.348.8

53.6

63.7

3 year CAGR = 14%US $billion

Other Europe North America Japan

9

U.S. 48% of 2006 Global AUMWorld’s Largest 500 Asset Managers

$30.7

$6.8$4.3

$3.4

$2.2

$2.1

$1.8

$1.7

$1.7

$1.2$7.9

US (48%)

UK (11%)

Japan (7%)

France (5%)

Germany (3%)

Netherlands (3%)

Canada (3%)

Switzerland (3%)

Italy (3%)

Australia (2%)

Other (12%)

2006 AUM ($ in trillions)

› Source: 11/07 BCG Report, “The Growth Dilemma” citing BCG’s Global Asset Management Database


Market Opportunity

11

Advent’s Total Market

Advent’s proven core competencies in portfolio management and back office comprise a market opportunity of

$3.2 billion

› Tower Group estimates from 10/07 from analyst Peter Delano› Of the $85 billion/year of projected 2008 global securities IT

spending, over 10.4% ($8.8 billion) is in Asset Mgt› Asset Management growth rate is approximately 4% per year› Portfolio management and back office account for 54% ($4.8 billion)› Removing the Risk and Reference Data Management segments

brings the market size to approximately $3.2 billion

17%37%

46%

Portfolio Management› Order Management› Risk & Analytics › Portfolio Management› Compliance

Distribution/Client Services › MF Distribution› Transfer Agency› Recordkeeping› Institutional Accounts› Client Reporting

Back Office› Portfolio & sub-accounting› Corporate actions› Performance measurement and attribution› Reconciliation› Data Management

Global IT Spend in Asset Management

12

Advent’s Addressable Market

Segment Spend Segment Firm Distribution

› Prime Brokerage› HF/MF Administration › Global Asset Managers › National Wealth Managers/PCS › Clearing Firms

~ $50B AUM

› Original Advent Research (2007). Estimated ASP * number of firms in segment (including Advent clients) for the following solution categories: Portfolio Management and Back Office (excluding maintenance and services).

Total market size of $4.7 billion includes risk and reference data products which are not currently offered by Advent

$0.5B

$1.3B

$1.4B

~ 25,870 Firms

370

2,700

22,800

› Complex Hedge Fund› Managers Mid-Tier Asset› Managers Regional Wealth› Managers/PCS Regional› Broker/Dealers

~ $1B AUM

› Emerging Asset Managers› Independent Advisors › Simple Hedge Fund Managers› Family Offices

$3.2B Market Size(+ 4% per year)


Solutions and Competition

14

Suite Strategy: Broad & Comprehensive

Trading & Compliance Information ManagementPortfolio Management & Accounting

Trading

Portfolio Management

Operations

Portfolio Analysis

Marketing/Client Service

Research & Analysis

Moxy AdventRulesManager

AdventRevenueCenter

AdventRevenueCenter

AdventCorporateActionsandAdventCustodialData

MarketData

Advent Solutions in the Investment Management Process

APX:AdventPortfolioExchange

Geneva Axys

Axys

AdventPartner

AdventPartner

Tamale RMS

15

Advent’s Product Portfolio

None of Advent’s competitors offer this full range of front/middle/back office productsOther Core Applications were 16% and the MicroEdge subsidiary was 10% of 2007 revenue

TradeCompliance

Trade Order Management

Straight-Through-Processing

Partnership Accounting for Hedge Funds

Client Billing

Portfolio Accounting & Reporting

MiddleOffice

BackOffice

Partner

Geneva20% of 2007 revenue

APX Axys36% of 2007 revenue

Revenue Center

STP/Custodial Recon.18% of 2007 revenue

Moxy

Rules Manager

Research & Analysis

FrontOffice Tamale RMS

16

Case Study: Large Asset Manager

ProfileSmall Cap focus with high net worth, mutual fund and SMA business lines

1997: $1B AUM, $30K in recurring revenue

2007: $10B AUM, $500K in recurring revenue

The value of the suite

builds over time,increasing Advent’s footprint and the client’s dependency on Advent with every newproduct, service, upgrade added

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Est.

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

Ann

ual R

ecur

ring

Rev

enue

MoxyAxys

FTID

ACDBREURex

QubeLatent ZeroSeat Upgrade

ACA

PinnacleServiceUpgrade

APXSeat Upgrade

17

Competitive Landscape

Trade Order Management, Compliance

Portfolio Accounting and

Reporting

Alternative Asset Ecosystem(26% of revenue)

Long Only Buy Side(64% of revenue)

› MicroEdge subsidiary was 10% of 2007 revenue

Research Management

18

Advent’s Core Platforms

Core Product Offering Customer Segment Addressable Market Size (#)

Typical Contract Size

($)

Global Asset Managers/Mutual Funds

> 1,000 $150K/yr to $1M+/yr Prime Brokerage/Fund Administrators

Hedge Funds

Asset Managers

~26,000

$50K/yr to $200K/yr

$5K/yr to $100K/yr

Bank/Trust/PCS

Wealth Management

Financial Advisors/RIA’s

Hedge Funds

> 7,000 $50K/yr to $200K/yr

Asset Manager/Mutual Funds

Fund of Funds/Endowments/Foundations

Wealth Management

19

Portfolio Accounting Platform Positioning

Core Product Offering AUM “Sweet Spot”

Customers(as of Q1 ’08)

Environment/Database

InstrumentCoverage

CurrenciesReported

$50B + ($1B+ for

Hedge Funds)

186(launched 1999)

› UNIX®

› Object-oriented DB

Alternatives +

derivatives +

traditional investments

Unlimited reporting and settlement in any currency

$1B - $50B266*

(launched 09/05)

› .Net

› Relational

Equities +

fixed Income +

some derivatives

System and reporting currencies

$100M - $1B~ 4,150

(launched 1993)

› Windows

› Flat File

Equities +

basic fixed income

Multi-currency optional

* 45% are migrations from Axys (with annual revenue uplift of > 70%; 55% are brand new clients to Advent

20

Complementary Products

Product or Service Description Current Product Requirements

Launch Date

Number of Customers (as of Q208)

Typical Contract Size

Trade order management

Geneva, APX Axys

(or stand alone)1994 ~ 825 $25K - $100K

per year

Partnership accounting for hedge funds

Geneva, Axys 1997 ~ 300 $10K - $20K per year

Electronic delivery of standardized custodial data

APX, Axys, ABOS 1997 ~ 3,200

$1K-10K

per year

Integrated billing and revenue management

APX, Axys Q107 ~ 55 $15K - $60K per year

Pre and post trade compliance Moxy 6.0 Q407 ~ 15 $30K - $50K

per year

21

0%

20%

40%

60%

80%

100%

MicroEdge 12% 11% 10%Other Apps 16% 16% 16%STP 19% 18% 18%Geneva 14% 18% 20%APX/Axys 39% 37% 36%

2005 2006 2007

Revenue Product Mix

Genevawas 2005-7 revenue growth driver

$24M $33M $42M

› Tamale, with 130 customers is expected to contribute $17 - $20M to total revenue in 2008

22

Market Segment Revenue Mix

› Alternatives ecosystem includes prime brokers, hedge funds, fund of funds, and hedge fund administrators

0%

20%

40%

60%

80%

100%

Other 7% 9% 7%Philanthropic 20% 15% 12%Bank/Trust 3% 3% 3%Wealth Mgt 9% 9% 10%Alternatives 20% 23% 26%Asset Mgt 41% 41% 42%

2005 2006 2007

$34M $42M $56MAsset Managers and Alternativesecosystem were the 2005-7 growth drivers $69M $75M $90M

23

Representative Clients

Core Business Clients by AUM

› 35 Firms > $50B

› 250 Firms > $5B

› 800 Firms > $1B

› 3,525 Firms < $1B

Core BusinessClients by Type

› 8 of the top 10 prime brokers

› 25 Global Hedge Funds (> 500 total)

› 2,500 Asset Managers

› 2,000 Financial Advisors

› 250 Family Offices

› 200 Wealth Managers


Financials

25

Revenue, Deferred and Backlog ($M)

$258 - $260

$215

$137 $150$169

$184

$0

$50

$100

$150

$200

$250

$300

FY03 FY04 FY05 FY06 FY07 FY08G

“G” indicates guidance range as provided 10/28/08

$M $M

$0 $4

$138$120

$50 $56$65

$84

$17

$43

$73

$0

$50

$100

$150

$200

$250

$300

FY03 FY04 FY05 FY06 FY07 Q308

Term License Backlog is defined as Term License Contract Value not yet billed

Deferred Revenue

Term License BacklogRevenue

n/a

26

Revenue Growth Enabling Operating Leverage

Non-GAAP Operating Margin

9.4%

12.5% 12.0%

19 - 20%

9.1%

17.0%

8.9%

3.9%

14-15%13.5%

0%

5%

10%

15%

20%

25%

2004 2005 2006 2007 2008GRevenue Growth Rate

Term licensing is primary growth driver

27

Operating Profit and Cash Flow

$72 - $75

$47

$62

$7

$25

$37

$0

$20

$40

$60

$80

$100

$12

($40)

($0)$6

($18)

$6

14%-15% of

Revenue $29

($16)

$22$15

($60)

($40)

($20)

$0

$20

$40

$60

GAAP Income from Operations

Non-GAAP Income from Operations(excludes amortization, stock compensation expense, IPR&D and restructuring expense)

“G” indicates guidance range as provided 10/28/08

Operating Profit/(Loss)

FY03 FY04 FY05 FY06 FY07 FY08G FY03 FY04 FY05 FY06 FY07 FY08G

Operating Cash Flow

DriversRevenue growthDeferred Revenue growthImproving profitabilityWorking capital management

$M $M

28

Successful Transition to Term Licensing ($M)

$5.5 $3.4 $3.6 $1.5

$5.6 $6.3$6.8

$1.4

$6.2

$4.3$5.9

$1.4

$6.7

$12.1

$3.2

$0

$8

$16

$24

$32

2004 2005 2006 2007 2008 YTD

Q1 ACV Q2 ACV Q3 ACV Q4 ACV

$20.2

$27.6

$18.6

$7.4

$1.7

For the first three quarters of

2008, Annual Contract Value

growth is 19%

29

Advent’s Financial Model

Income Statement Lines FY06 FY07 YTD08Long Term

Business Model

Total Revenue Growth 9% 17% 22% 15% - 20%

› Gross Margin 68% 68% 66% 70% - 72%

› Sales & Marketing 27% 26% 24% 23% - 24%

› Product Development 19% 19% 19% 16 – 18%

› General & Administrative 18% 16% 15% 10% - 12%

› Amortization, Restructuring, IPR&D 4% 2% 1% 2% - 3%

GAAP Operating Margin 0% 6% 7% 18% +/-

(Stock Compensation, IPR&D, Amortization and Restructuring) 12% 8% 7% 6% - 8%

Non-GAAP Operating Margin 12.0% 13.5% 14.4% 25% +/-

30

Investment Highlights

Segment LeaderValuable franchise in investment management industryLarge and diverse client baseConsistently spending 19% of revenue on R&DOpportunities: collateral management, stock lending, modeling & asset allocation

International Market DevelopmentGlobal Platform14% to 25% of revenue in 3 – 5 years

Profitable growth with 80% recurring revenue modelAnnual contract value growth is 38%, ttmOperating cash flow growth is 47%, ttmNon-GAAP operating margin 15.6% to 25% in 3 – 5 years


Advent Software, Inc.Investor Presentation

Advent Investor Relations

Contact: [email protected]

advent software, inc. investor...

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