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Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 1
October 2019
Amedeo D’Angelo, Chairman & CEO
Richard Vacher Detournière, GM & CFO
Investor Presentation
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 2
This presentation and the information it contains are not, and will not constitute or form part of an offer of securities or a solicitation for the purchase, subscription or sale of securities
of Verimatrix in the United States of America or any other jurisdiction where restrictions may apply. Securities of Verimatrix may not, directly or indirectly, be offered, sold, pledged or
otherwise transferred within the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended (the “U.S. Securities
Act”), it being specified that the securities of Verimatrix have not been and will not be registered under the U.S. Securities Act and that Verimatrix does not intend to register its
securities or conduct a public offering of its securities in the United States of America. Any public offering of Verimatrix securities would be made by means of a prospectus previously
approved by the AMF that contains detailed information about Verimatrix. This information is not intended for, and shall not be distributed, directly or indirectly, to persons who are
residents of or located in the United States of America, Canada, Japan or Australia. The disclosure, distribution and publication of this presentation may be restricted by law in certain
jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and comply with any such restrictions.
Verimatrix takes no responsibility for any violation of any restrictions by any person.
This presentation includes statements that are, or may be deemed to be, “forward-looking statements” and may include projections and estimates and their underlying assumptions,
statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and
statements regarding future performance of Verimatrix, if completed (the “Transaction”). These forward-looking statements are generally identified by the use of forward-looking
terminology, including terms such as “believe,” “estimate,” “anticipate,” “expect,” “intend,” “may,” “will” or “should,” and similar expressions, and include statements that Verimatrix
makes concerning the intended results of its strategy and of the completion of the Transaction. Although Verimatrix’s management believes that the expectations reflected in such
forward-looking statements are reasonable, Verimatrix cannot assure investors that these expectations will prove to be correct. Investors are cautioned that forward-looking
information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Verimatrix, that could cause actual
results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. No statement in this presentation is
intended as a profit forecast or estimate for any period. Persons receiving this document may not and should not rely on forward-looking statements. Past performance is not an
indicator of future results and the results of Verimatrix in this document may not be indicative of, and are not an estimate or forecast of, the future results of Verimatrix. The forward-
looking statements speak only as of the date hereof and, other than as required by applicable law, Verimatrix does not undertake any obligation to update or revise any forward-
looking information or statements.
For a more detailed description of the risks and uncertainties with respect to Verimatrix, please refer to the "Risk factors" section of the 2018 annual financial report filed with the AMF
on April 30, 2019, available on www.verimatrix-finance.com/en
Disclaimer
Business Overview
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 4
Feb. 28, 2019
Completion of
the acquisition
April 2019
New organization
in place
July 2019
New corporate
name to reflect
broader vision
Building
a major pure player
as a software-based
security solutions
2019: An intense year
Sept. 2019
Carve-out of
Silicon IP
division
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 5
To secure and enable the connected future
Our Vision:
Our Mission:
We enable success through trusted business
insights and friendly security
We promise to protect our customers’ most valuable digital assets and provide actionable business intelligence to enable success
Our promise to our customers:
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 6
Company Profile
1,200 Customers
113 Countries
GLOBAL PRESENCE
400+
EmployeesEstablished in 1995
2 Billion Devices Protected
TRUSTED BY
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 7
Verimatrix: Spanning multiple industries shifting
towards software and cloud-based security solutions
Financial
Institutions
Data
Center
Internet of Things
& Connected CarsEntertainment
OTT
Silicon IP serving the
expanded Entertainment
business
Data Analytics
Entertainment
Verimatrix
Silicon IP Secure Protocols
Code Protection
Content Protection
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 8
Markets Served
AUTOMOTIVE
Protecting automotive software. supporting the security of autonomous
vehicles
FINANCIAL
Securing mobile payments and online
financial services
DIGITAL CONTENT
Protection against piracy for all content in media
delivery process
INTERNET OF THINGS
Securing devices’firmware and keys from
various attacks
MOBILE
Latest mobile application protection
DATA & ANALYTICS
Business intelligence solutions to increase customers’ revenue
ENTERPRISE
Threat intelligence and real time risk analysis for
remote devices
SEMICONDUCTOR IP
Largest silicon-proven security IP portfolio to protect SoCs and ASICs
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 9
Verimatrix products for video content distribution
WHAT
Premium live & VOD content piracy tracking
WHY
Studios and premium live video providers
need to stop piracy in real time, and to track
pirated content for forensic purposes
HOW
Verimatrix patented client-side and server-
side video watermarking for OTT, IPTV and
DVB
WATERMARKING
WHAT
Proven security for valuable video content
WHY
Studios and content owners require
assurance that their content assets will not
be pirated; Video and TV operators need to
protect their service revenue
HOW
One-stop-shop for all content protection
needs, from the cloud service to the device
level; from linear TV Conditional Access
System (CAS) to over-the-top (OTT) DRM
VCASfor DVB Hybrid, IPTV & OTT
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 10
Verimatrix products for simple & secure authentication
WHAT
Simple cross-screen,
cross-technology authentication for video
service operators
WHY
simplify OTT subscribers’ login experience and
parental control to improve user experience
and increase transactional VoD revenue
HOW
Seamless QR code or SMS-based
authentication between different devices
& services. Remote parental control via mobile
app
MULTI-SCREEN
AUTHENTICATION
WHAT
Cross-standard authentication service to
replace passwords
WHY
Simplify users authentication and remote
authorization. Improve users engagement
and reduce dropouts
HOW
Mobile phone app authentication service
supporting multiple standards, including
FIDO biometric, to suite different products
capabilities and service needs
STRONG
AUTHENTICATION
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 11
Verimatrix products for mobile, IoT and automotive
WHAT
Protecting mobile applications, IoT and
automotive firmware from reverse engineering,
key extraction, and various other attacks
WHY
Hackers focus on hacking mobile apps,
automotive firmware and IoT devices. A hacked
application or device gives hackers access to
valuable business assets and users’ private
information
HOW
Easy-to-use 3 layers of code protection.
delivered as tools or SaaS
CODE
PROTECTION
WHAT
Visa and Mastercard certified mobile
payment service at the heart of mobile
payment wallets
WHY
Necessity for banks and merchants who
want to launch their own branded mobile
payment wallet and service
HOW
Complete mobile payments solution from the
cloud tokenization service, to the android
client, certified by Visa & Mastercard
MOBILE
PAYMENTS
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 12
Verimatrix data analytics products
WHAT
Video and TV subscribers’ business intelligence & data
exploration to increase users satisfaction, reduce churn
and optimize video content licensing costs
WHY
Many video and TV operators and have little visibility to
how subscribers use their service, and to the level of
their engagement. This can lead to higher churn and
wrong content licensing decisions
HOW
Anonymized user behavior data is collected from
different sources and analyzed by Verimatrix’s SaaS
service. Unlike other services, data is owned by the
customer and is not sold by Verimatrix to 3rd parties
Video Analytics
WHAT
Service providers enterprises want to monitor
the security of devices connected to their
cloud service
WHY
Assess the security of a device to decide in
real-time what assets and services are
available to that device
HOW
Assess the security risk of a mobile device
and app to determine the level of service and
data the device can access
ProtectMyApp
security analytics*
*Limited services functionality. Full commercial availability is expected in 2H’2020
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 13
Verimatrix Flexible Deployment
Verimatrix turnkey installation, with
24/7 global support to quickly
address any technical problem
Verimatrix
On-Premise
From video operators, OTT service providers, to banks
and mobile app developers, AWS based Verimatrix
secure cloud is at your service
Verimatrix
SaaS
We support our customer’s legacy on-prem operations with an easy
migration path to innovative and cost effective SaaS model
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 14
2019 key milestones: new organization, streamlining
and cost synergies plan fully implemented
Thorough review of targeted cost synergies plan;
New organization in place
Plan fully implemented: ahead of schedule
and with greater savings than anticipated
$12.5 million cost savings on an annual
basis starting 2020 ($7m for 2019 overall)
$12.5m $10m
Estimated cost
synergies when
announcing the
acquisition project
(Dec. 2018)
Updated cost
synergies p.a.
once fully
implemented
(as of July 2019)On going: build single company culture
Financials
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 16
Q3 and YTD 2019
$65.5 million: consolidated revenue in first 9 months of 2019, up 369% YoY
$74.1 million: pro forma1 adjusted1 revenue in first 9 months of 2019, up 5%
YoY
Q3 2019: delivered revenue comparable, overall, to last year and in line with
the historical seasonality of the new company
Operating expenses continued to decrease as expected, following the
completion of the streamlining of operations and the implementation of the cost
synergy plan in Q2
((1) See basis of preparation hereinafter, excluding Silicon IP business unit
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 17
Strong First half 2019 Results
$60.8 million: pro forma1 adjusted1 revenue in H1 2019
$10.0 million: pro forma EBITDA1 in H1 2019 (16.5% of revenue) up 68% vs H1 2018
New organization, streamlining and cost synergies plan fully implemented
Cost synergies expected to be $12.5 million on an annual basis, 25% above plan
Objectives upgraded:
• 2019: strong focus on integrating Verimatrix, Inc. and delivering higher cost synergies
• 2021: revenue of $150 million and EBITDA margin of 26.5%
((1) See basis of preparation hereinafter – including Silicin IP business
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 18
H1 2019: 68% growth of pro forma EBITDA year-over-year
in million $ H1 2019 H1 2018
Revenue 60,8 58,5
Adjusted gross profit 49,4 48,4
as % of revenue 81,3% 82,7%
Research and development expenses (16,8) (19,0)
Selling and marketing expenses (15,3) (17,1)
General and administrative expenses (11,1) (9,8)
Other gains / (losses), net (0,1) (0,1)
Total adjusted operating expenses (43,3) (46,0)
Adjusted operating income from continuing operations 6,1 2,4
as % of revenue 10,0% 4,1%
EBITDA 10,0 6,0
as % of revenue 16% 10%
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 19
H1 2019: IFRS net income impacted by one-off expenses and non-cash charges
in million $ H1 2019 H1 2018
EBITDA 14,0 3,2
Amortization and depreciation of assets (*) 2,9 0,5
Adjusted operating income/(loss) 11,1 2,7
Amortization and depreciation of assets acquired through business combinations (*) (2,5) (1,2)
Acquisition related expenses (2,9) (0,5)
Restructuring costs (4,5) -
Impairment of unused building (6,8) -
Share based payments (0,5) (0,3)
Operating income/(loss) (6,0) 0,8
Finance income/(losses), net (2,2) 1,4
Income tax expense 0,1 (0,4)
Net income/(loss) from continuing operations (i) (8,1) 1,8
Net income/(loss) from discontinued operations (ii) 1,7 -
Net income/(loss) (i) + (ii) (6,5) 1,8
(*) Items without cash impact
Sums may not equal totals due to rounding
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 20
H1 2019: cash generation reflecting operating performance
in million $ H1 2019 H1 2018
Cash generated by / (used in) operations before changes in working capital 6,4 2,1
Cash generated by / (used in) changes in working capital (15,7) 1,9
Interest received, net and Income tax (2,6) (0,4)
Net cash generated by / (used in) operating activities (11,9) 3,6
Cash flows used in investing activites, net (129,6) (0,1)
Cash flows from financing activities, net 108,3 -
Net increase in cash and cash equivalents (33,3) 3,5
Cash and cash equivalents at beginning of the period 47,4 45,9
Foreign exchange impact 0,0 (0,3)
Cash and cash equivalents at end of the period 14,1 49,1
Looking ahead
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 22
2019: Upgraded Business Profitability Outlook
(*) on a like-for-like basis by integrating only Verimatrix, excluding any acquisitions or disposals of businesses or companies. Including the full impact of the $12.5 million annual expected cost synergies from the combination of Inside Secure and Verimatrix. Target revenue and operating expenses are based on a dollar/euro exchange rate of $1.17, i.e. the conversion rate used for the operating budget for the year 2019.
Close the sale to Rambus
Anticipating strong business
activity in line with historical
seasonality and business pipeline
Strong focus on integrating Verimatrix
Delivering higher cost synergies($7m in 2019 and $12.5m on an annual basis)
Higher EBITDA* due to Verimatrix
incremental earnings & generation
of first cost synergies
2019 Q4 2019
Investing in the product offering to deliver future revenue growth with
innovative and award winning solutions such as ProtectMyApp or nTitleMe
Appendix
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 24
Basis of preparation
Inside Secure (renamed Verimatrix following shareholders vote on June 24, 2019) completed the acquisition of Verimatrix, Inc, on
February 28, 2019. Verimatrix (the “Company”) has prepared its results in accordance with IFRS (consolidated Verimatrix, Inc. starting
March 1, 2019).
The Company has also prepared unaudited pro forma results as if the acquisition of Verimatrix, Inc. had been completed on January 1st
to enable year-on-year comparison of the combined businesses while reflecting the new company organization implemented in April 2019.
Pro forma are deemed “adjusted” compared with IFRS since, consistent with the Company’s prior financial communications, they exclude
(i) non-recurring adjustments on revenue due to purchase accounting (deferred revenue), (ii) the amortization of intangible assets related
to business combinations, (iii) any potential goodwill impairment, (iv) share-based payment expense and (v) non-recurring costs
associated with restructuring and business combinations. See definitions in appendix hereof.
Consistent with prior communication in 2019, Verimatrix (the “Company”) has prepared its revenue in accordance with IFRS (which
account for 7 months of activity of Verimatrix, Inc. in 2019 year to date and nil in 2018). The Company has also prepared unaudited pro
forma revenue as if the acquisition of Verimatrix, Inc. had been completed on January 1st to enable year-on-year comparison of the
combined businesses. Pro forma are deemed “adjusted” compared with IFRS since, consistent with the Company’s prior financial
communications, they exclude non-recurring adjustments on revenue due to purchase accounting (deferred revenue); definitions of
adjusted measures are provided hereinafter.
Following Verimatrix announcement on September 11, 2019 of the execution of a binding agreement to sell its Silicon IP business unit
to Rambus Inc., the completion of the sale being considered highly probable and in accordance with IFRS 5, revenue from this
discontinued operation is no longer recognized in Verimatrix consolidated revenue. Figures for the previous periods, including 2018,
have been restated in a similar manner to allow for comparisons with the corresponding third-quarter and first nine months figures. Pro
forma revenue have been prepared in a similar manner. Silicon IP business had generated a revenue of $24.0 million in fiscal year 2018.
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 25
Supplementary non-IFRS financial information (adjusted measures)
Certain financial measures and performance indicators are presented on an adjusted basis. These indicators are not defined under IFRS; theyshould be considered to be supplementary information, not substitutable for any other indicators of operating and financial performance that are strictly accounting measures, such as those presented in the Group's consolidated financial statements
• Adjusted revenue is defined as revenue before non-recurring adjustments related to business combinations. It enables comparable revenue for 2018 and 2019. In 2018, the combined entities would have generated a pro forma adjusted revenue of $123.3 million and a pro forma revenue of $121.1 million as Verimatrix recorded $2.2 million of deferred revenue as at December 31, 2017 which, in accordance with IFRS, cannot be recognized in the year following the acquisition.
• Adjusted gross profit is defined as gross profit before (i) the amortization of intangible assets, (ii) any potential goodwill impairment, (iii) share-based payment expense and (iv) non-recurring costs associated with restructuring and business combinations and divestitureundertaken by the Company.
• Adjusted operating income/(loss) is defined as operating income/(loss) before (i) the amortization of intangible assets, (ii) any potentialgoodwill impairment, (iii) share-based payment expense and (iv) non-recurring costs associated with business combinations and divestiture undertaken by the Company.
• EBITDA is defined as adjusted operating income before depreciation, amortization and impairment losses not related to business combinations.
• Net cash/(debt) is defined as cash on hand, cash equivalents and short-term investments, less bank overdrafts, financial debt includingnotably obligations under IFRS 16 for finance leases, bank loans, private loans, and the debt component of the OCEANE convertible bonds.
(in million US$)
June 30,
2019
December 31,
2018
Cash and cash equivalents 14,1 47,4
Financial debts (lease commitmentrs under IFRS16) (8,7) -
Private loans (51,6) -
Convertible bonds (14,6) (14,2)
Other loans (0,4) (0,4)
Net Cash / (debt) (61,1) 32,8
Copyright © 2019 Verimatrix, Inc. All Rights Reserved. Confidential. 26
H1 2019: balance sheet reflecting increased scope and acquisition financing
December 31, 2018:
$32.8m net cash*
June 30, 2019:
$61.1m net debt*(including convertible bonds
- OCEANE - and IFRS 16
leases)
(*) see definition in Appendix hereof
in million $
June 30
2019
December 31
2018
Goodwill and intangible assets 150,7 35,4
Property, plant & equipment 7,8 5,7
Other receivables 11,6 1,2
Total non current assets 170,1 42,3
Trade receivables 39,9 10,5
Other current receivables 15,8 4,3
Cash and cash equivalents 14,1 47,4
Total current assets 69,8 62,2
Total assets 239,9 104,5
Equity and retained earnings 123,5 70,4
Derivatives financial instruments 0,6 0,8
Borrowings 57,9 0,4
Convertible bonds at fair value 14,6 14,2
Other non current liabilities 2,2 2,2
Non current liabilities 75,3 17,6
Trade and other payables 18,6 9,0
Provisions for other liabilities and charges 4,3 3,6
Borrowings 2,7 0,2
Unearned revenues 15,4 3,7
Current liabilities 41,0 16,5
Total equity and liabilities 239,9 104,5
Investor information
Investor relationsRichard Vacher Detournière
GM & CFOfinance@verimatrix.com
Media ContactKelly Foster
communication@verimatrix.com
Financial calendar
FY 2019: March 4, 2020
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