birdstep technology asa third quarter interim report · new global rfps showing big intent to...
TRANSCRIPT
Birdstep Technology ASAThird Quarter Interim Report
Torbjörn Sandberg - CEO & President
André V. Demarest - CFO
Birdstep has passed the turning point
Page 2
Birdstep Technology & EasyConnect have passed the
turning point
Q3 revenues of 14,5 million (13,1 million)
Adjusted EBITDA of –2,1 million (-8,7 million)
Four new customers signed in Q3
Rate of new customer acquisitions is unprecedented
in the company´s history. We’re on track for a solid
year in 2011
Remaining challenge to scale SafeMove despite cuts
in Europe’s public sector.
Succeded in carving out loss making Raima
Good and steady progress for making a exit for our
non-core assets.
Page 3
Birdstep Technology ASA
Headquartered in Oslo
Listed on Oslo Stock Exchange
since 2002 (BIRD)
82 employees- whereof 14 in Orbyte
Offices in Norway, Sweden, Finland,
UK and the United States
Organisation- Birdstep Technology
- Orbyte
André V. Demarest
Page 4
12 years of relevant experience from Norway in the enterprise software industry with a strong background in financial and human resource management
5 years - Senior VP of Finance and Administration for Fast Search & Transfer ASA (FAST) until August 2006
subsequently acted as a Financial Advisor to FAST until August 2008
Previously - Senior Manager for PricewaterhouseCoopers (PwC) in Transaction Services in Oslo
Certified Public Accountant while employed at PwC in New York
American Chamber of Commerce in Norway - Treasurer and Chairman
Graduated cum laude with B.S. degree in Accounting - Fairfield University, USA
Q3 Financials– Changes in Presentational Format
IFRS Income Statement (P&L):
Operating Revenues – core businesses
EasyConnect
SafeMove
Operating Expenses
Operating Income(Loss) from Continuing Operations
Discontinued Operations
Raima – sold on August 31, 2010
Orbyte – highly probable that a sale will take place within 1 year
Net Income(Loss)
Non-GAAP Measure (EBITDA):
Operating Income(Loss) from Continuing Operations
+Share-based compensation
+Depreciation & amortization
Adjusted EBITDA
Q3 Summary – QoQ Financial Highlights
Delivering Top-Line Growth
11% for core businesses – NOK 14.5m in total
15 % for EasyConnect segment – NOK 10.4m in total
Keeping Costs under Control
Core operating losses reduced to NOK 4.7m
upside of NOK 3.3m during quarter – no more accrued pension benefits due to Norwegian employees
Moving Toward Profitability
Adjusted EBITDA improved by NOK 6.6m to (2.1m)
Operating cash flow improved by NOK 6.2m to (1.8m)
Maintaining Sufficient Cash Balances
NOK 33.5m in the bank
Net cash used during quarter reduced to NOK 4.2m
Q3 Revenue vs. Q2
Operating revenues: NOK 14.5m in Q3 (vs. NOK 13.1m)
EasyConnect: 10.4 in Q3 (vs. 9.0) = 15% increase
SafeMove: 4.1 in Q3 (vs. 4.1) = flat
Discontinued Operations (Orbyte): 6.1 in Q3 (vs. 7.1) = 14.1% decrease
EasyConnect – signed new contracts
Cell C in South Africa
Elisa in Estonia (expanded in Finland)
North American service provider
Q3 Operating Cost Development vs. Q2
Q2 Salaries and Wages:
13.3m in total per P&L
-1.0m – additional payroll tax assessment
12.3m – Total quarterly base line
Q3 Salaries and Wages:
8.0m – Total per P&L
+3.3m - reduction of accrued pension benefits
+1.0m - reduction of accrued vacation
12.3m - Total quarterly base line: before considering
employee turnover
voluntary pay cut by 25% of staff for 1 year from 15 November 2010
Q3 Adjusted EBITDA vs. Q2
Adjusted EBITDA: NOK -2.1m in Q3 (vs. NOK -8.7m)
Improvement of 6.6 – due to higher revenue + upside on cost accrual reductions
Operating cash flow: NOK -1.8m in Q3 (vs. NOK -8.0m)
Improvement of 6.2 – due to higher cash receipts from customers + upside on lower cash expenses
Adjusted EBITDA: NOK -24.5m in FY 2009
Operating cash flow: NOK -24.1m in FY 2009
Q3 Cash Balances vs. Q2
Ending cash balance: NOK 33.5m in Q3 (vs. NOK 37.7m in Q2)
Overall, net cash outflow reduced to 4.2 = improvement of 5.6
Voluntary pay cut by employees
Expected to save NOK 1.7m in cash costs over 1 year from 15 Nov 2010
Expected to receive NOK 2.3m in cash in exchange for shares at a 50% discount on 14 Nov 2011
Discontinued operations – Orbyte
Highly probable that a sale will take place within 1 year
QoQ Financial Checklist
Delivering Top-Line Growth
Keeping Costs under Control
Moving Toward Profitability
Maintaining Sufficient Cash Balances
EasyConnect customer wins Q3
Page 12
Signed agreement with CellC in South Africa for its
recently launched mobile broadband product.
Signed agreement with Virgin Media for its mobile
broadband product in the UK.
Signed agreement with Elisa Estonia for its recently
launched mobile broadband product
Signed agreement with North American service
provider
EasyConnect customer wins Q4
Page 13
Signed expansion order with a leading European mobile
operator
Signed OEM Agreement with Leading Multinational
Telecommunications Vendor
Signed expansion order with a leading European mobile
operator
EasyConnect clients out there – a growing opportunity
Page 14
-
1 000 000
2 000 000
3 000 000
4 000 000
5 000 000
6 000 000
Q1
20
07
Q2
20
07
Q3
20
07
Q4
20
07
Q1
20
08
Q2
20
08
Q3
20
08
Q4
20
08
Q1
20
09
Q2
20
09
Q3
20
09
Q4
20
09
Q1
20
10
Q2
20
10
Q3
20
10
Easy Connect Activations (excl Inside)
Cumulated
EasyConnect clients out there – a growing opportunity
Page 15
EasyConnect Go & Advanced: 5 million in total
Easy Connect Inside: 2 million
Totally more than 7 million clients by the end of 2010
Growing opportunity for us to together with our customers
capitalize on all the clients out there for future growth
Changed IR Policy
Page 17
Orbyte Q3 highlights
Revenues of 6,1 million in Q3 (7,1 million)
Two Orbyte upgrade orders from a major European mobile operator
Orbyte
Birdstep Technology has passed the turning point
• Four new Easy Connect customers signed in Q3
• Rate of new customer acquisitions is unprecedented in the company´s history.
We’re on track for a solid year in 2011
• Remaining challenge is to scale SafeMove despite cuts in Europe’s public
sector.
• Succeded in carving out loss making Raima
• Good and steady progress for making a exit for our non-core assets.
Summary
Page 19
Thank you!
Questions?
Birdstep Market & Products
Stephen Morris
VP Products & Marketing
Birdstep TechnologyProviding innovative, secure and cost cutting mobile
broadband access and management solutions for service
providers
Service Provider Solution for Operators - EasyConnect
EasyConnect BEC 2.9
Comes Pre-Installed on USB and/or embedded modems Connects to operator networks
Supports roaming control
Includes pre-paid and post billing
Simplifies support
Automate Hot-Spot logins
Automatic Hand-over / 3G handoff
Sold to Mobile Operators & Service
Providers who:
Deliver Mobile Broadband Services
Have Wifi Footprints or partnerships
Market Overview for EasyConnect
Page 23
Operators
Device
Shipments
Service
Profitability
337 Operators Globally deployed, with an estimated 600 by 2013
67 million devices shipped in 2010 growing to 138 Million devices in 2013
Market profitability a key concern with growing costs in relation to returns
GSMA August 2010
Ovum Big-Screen MBB devices
Forecast Sept. 2009
Ovum – Mobile Broadband profitability
a shared responsibility
Subscribers Wireless Modems shipped for business users
showing CAGR of 38%
ABI Research Cellular Modems and MBB
Connectivity 2008
Service Provider Solution for Operators - EasyConnect
Page 24
Support
Data Hand-off
User
Communication
User Migration
EasyConnects business justification covers 4 key areas of savings for operators
Common Client and integrated Support tools can save 9,3 Euro per subscriber customer per annum
The Ability to handoff data to preferred networks allows for savings of 9,9 Euro per subscriber customer per annum
The Inbuilt ability to market and communicate with subscribers provides for savings of 1,6 Euro per subscriber customer per annum
EasyConnects migration services brings customers onto a common platform and allows for up to 5,3 Euro per subscriber customer in savings
Increasing Importance of our Solutions
Page 25
Customers wanting Always Best Connections Seamless transitioning between
networks Alerts and network updates Pre and Post Paid Billing services Integrated Support
Operators Needing Analytics and Statistics Cost Saving network policies Direct Communication Comprehensive Support Reduction
From a Get Connected Enviroment
Page 26
1 – 6 months
Product enhancements - a continuous process
Next Generation EasyConnect
New Networking Services
Advanced Service Management
Automated Wifi Service
deployment
Analytics and Statistics
Expansions
Second Generation Support
Services
Client Communication Modules
LTE Adaptations
3rd Party Service Management
User Retention Modules
6 – 12 months 12 – 18 months
SafeMove
Corporate network
Home
Travel
Hotel
Road
Airport
SafeMove
Available on Notebooks, PDAs, Smartphones
Manages wireless networkconnectivity
Provides advanced security
Allows seamless sessions
Reduces costs and increases productivity
Sold to enterprises who:
Have mobile workforces
Recognise that successful mobility needs a differentapproach
Require secure access to data
Page 28
Market Overview for SafeMove
Enterprise
Market
Platforms
New
Technology
Service
Adoption
Enterprise Mobility Market growing alongside increasing pentration of Mobile broadband in business
Wireless Modems shipped for business users showing CAGR of 38%
The worldwide Smartphone market grew 50pc year-over-year in the second quarter of 2010, driven by Smartphone's powered by Android, IDC August 2010
Increased uptake with Mobile VPN Market growing at 26,1 % Per Annum.
Ovum Enterprise revenue forecasts,
2009-14
ABI Research Cellular Modems and MBB
Connectivity 2008
Nielsen Company 2010
Frost & Sullivan World mVPN Product Market 2008
Service Provider Solution for Enterprises - SafeMove
Page 29
Maximize
productivity
Reduce data
costs
Security
Operational
efficiency
SafeMove business justification covers 4 key areas of efficiency’s for enterprises
Real-time access to corporate resources independently of time and place results to significant time-savings, increased productivity and improved quality of service
The ability to seamlessly switch to preferred networks allows for savings of over 200.000 Euro per annum for a customer with 1000 users
Standards-compliant security
Automated secure connectivity to corporate network reduces the probability of human error when dealing with corporate data
Always online, always available
Allows up-to 30 per cent increase of efficient working time
Enables right decisions based on accurate information at the right time
Increasing Importance of these services
Page 30
Enterprises needigng Roaming Control IT Support simplification Expanded policy Controls Cost efficient network routing Reporting & Statistics Support of new technologies
Users demanding Complete mobility Automatic network selection Seamless application handling
Operators/Service Providers Seeing Opportunities in a seamless
”always connected” world!
From Corpoate LAN Access on the Move
Page 31
1 – 6 months
SafeMove Product enhancements - a continuous process
New reporting and statistics
Deployment enhancements
Authentication enhancements
Improved diagnostics
Application Session persistence
Access network resilience
Advanced application control
Next generation cryptography
6 – 12 months 12 – 18 months
Our Market Progress
Page 32
Platform extensions for WiMax and Android solutions
Regional breakthrough’s showing global suitability of Birdstep solutions
Product suitability to North American market proven with two key partnership wins in Q3
Attracting world leading SI’s for regional partnerships
Product performance is shown with a key OEM partnership with a large multi-national
Great product in a growing market
Increasing demands and service relevance
Increasing product value and platform coverage
A path of innovation
Succesful market leadership
In Summary
Page 33
EasyConnect Sales Insight
Michael Jönsson– VP Global Sales
EasyConnect
We have a great product in a growing market
We are providing advanced functionality to assist with minimising support - fully in par with market trends:
The market has challenges - and therefore opportunities. These we seek and deliver against.
The EasyConnect Market
Page 35
Svenskvalitets Institute Oct 2010
An ever increasing no. of operators face OPEX challenges and realise they need help to address these
New global RFPs showing big intent to standardise on solutions against any environment
Increasing demands on operational excellence – cost, time, innovation & quality
Increasing demands on market alignment with System Integrators and hardware manufacturers
Economy of scale driving new business - hurting the smaller competitors
What we are seeing in the space
Page 36
Cell C is 100% owned by 3C Telecommunications (part of Oger Group)
Third Mobile Operator in SA after MTN and Vodacom
Initial contact in December 2009
Sale cycle = 9 months from first contact to contract signature.
Example of our recent success – Cell C
Page 37
Our way to signature
•Complex USSD structure
•Multiple vendor support
•Backend solution for roaming tariffs
•Initially no WiFi requirements, but future capability
Special requirements
•Standard Product
•Quick turn-over project (compressed time-plan, demo)
•Constant reminder (webex, documents, meeting in Barcelona, ”home-meeting”).
• ”Honest” vendor
•Assistance with management presentation
•Mulitple interfaces within Birdstep
•Agressive yet creative Pricing
Birdstep• Assistance with ”standard
contract”
• On-site project kick-off based on a LOI and not signed contract
• On-site contract negotiations
• Management discussions (CEO -> CEO)
Contract
Product Sold:
BEC 2.9 GO
Initial Deal Value:
1 MNOK
Advanced Pre-Paid Service
Common Support Capability
Intelligent Roaming messaging
Supporting need for differentiation as well as end-customer communication
Upsell Opportunities: Extenstion to additional Wifi
Service (Phase 2) Additional Brand - RedBull
(under Negotiation)
Delivering a great experience with Cell C
Page 39
Page 40
Delivering on our Commitments – part 1 (3)
Build strong & coherent sales team
in Europe
Coninue to build pipeline
Proven product & strong experience
w/ commercial guile to close new
deals
Provide superior product, support &
road-map to grow existing accounts
Close 2 new deals per Quarter in
2010
Maintain # 1 position in Europe
Dominate Europe
In order to achieve our projected growth
Strong & experienced team in place in
Europe.
> 150% growth in pipeline. Now
exceeding 25 MNOK per quarter
Great deals with key customers in
Europe (TDC, 3Grp, KPN, Elisa Finland)
Six Deals Closed in 2010 so far:
Q1: Meteor/Eircom + KPN Group
Q2: US Serv. Prov. + Virgin Mobile UK
Q3: CellC (SA) + Elisa Estonia
+ LoE via SI for Latin American Grp
No 1 Vendor in Europe
Progress so Far
We are doing it!
Page 41
Delivering on our Commitments - part 2 (3)
Expand regional sales teams
Partnering with leading global &
regional SI‘s
Partnering with leading HW vendors
Use position and foothold in US to
enter US Operator Market
Use new products to enter
competitors fields
Increase Market Reach
In order to achieve our projected growth
New Recruits in Latin America
Juan M. Alvarez now Sales Director Latin
America
Partnership with world-leading SI for LA:
Latin America => Latin America Group Deal
with first deployment for Mexico
OEM Partnership w. Leading HW vendor:
OEM & Sales collaboration Agreement signed
Oct/Nov for BEC 2.9 & 3.0
Successfully entered US carrier market:
Contract with US Service Provider
Additional Expansion orders with US Ser. Prov.
Additional field trials underway in US
Competitor Fields:
US Serv. Prov. - DigiNext
Red Bull (CellC) - Webtogo
US Market - SmithMicro
Progress so Far
Page 42
Delivering on our Commitments – part 3 (3)
Close partnership with customers to
increase run-rate
Use strong Road-map for continued
upsale
Use new products to convert entire
MBB bases at customer to Birdstep
Create significant re-current revenue
for Birdstep
Truly become Market Leader
Capatilize on base
In order to achieve our projected growth
Examples of such close partnership:
2.8 MNOK expansion deal with Nordic Mob.
Operator
3 MNOK license deal with leading Mobile
European Operator
2 MNOK expansion deal w. Elisa
Strong Roadmap for Upsale:
EasyFlash (e.g. Elisa, 3RoI)
EasyHelp (Latin American Group)
New Products to convert installed base:
EasyFlash (see above)
UMT: Negotiations w. Operator in Europe
Recurrent revenue now generated
through new pricing & licensing models
Progress so Far
Well on our Way
What’s Next - Game Plan
Europe: Domination
Birdstep to become / remain the dominant vendor & obvious choice
Keep, Grow & Expand Installed Base
Select, Dominate & Win new Accounts
Middle East & Africa: Beach-Heads & Cherry Picking
Birdstep to become established player in preferred regions / markets through careful
selection of Markets & Customers
USA: Major Carrier Vendor
Birdstep to continue & accellerate transition from OEM player to Carrier Vendor.
Become chosen vendor to at least one of 4 major Operators.
Latin America: Strong Presence
Birdstep to capitalize on LA Engagement & SI relation to establish strong presence in
major markets in Latin America.
Asia Pacific: Investigate & Position
Birdstep needs to investigate and position for market presence in 2012
Page 43
Current EasyConnect Pipeline
Page 44
Opportunities in ClosingOpportunities in Process
(from proposal stage)
Qualfied Leads &
opportunities
52060
Closed
Ser.Prov.
US
In Summary
Page 45
f
EasyConnect Sales Insight
Delivered 2 new deals per Quarter
Increasing Revenue Quarter by Quarter
Expanding upon existing account base
Following strategy with partners for: Market Reach (System Integrator)
One-stop shopping (HW – OEM)
Overall Solution (complementary offering)
Built Sales Team and Pipeline for a great 2011
Having Fun
Operational Excellence
Anders Storm
VP Operations & Engineering
Anders Storm
Page 47
Msc, Computer Science and Engineering
ABB: Executive Management Trainee
13 years within the data and telecommunication eco-system
12 years in management, 7 years as senior line-manager
10 year within product development and operations
6 years within Sony Ericsson R&D, 100 M Euro, Presidents Award
Start-ups and large corporations
The foundation for success
Page 48
Pleased customers
Responsive sales
Innovative products
Eng
&
Ops
Engineering and operations
has fundamental impact on
Birdstep success
Birdstep
SystemIntegrators
ChipsetVendors
OperatorsMVNO
OEMs
Partners
A need to embrace the eco-system
True success comes from
embracing all players
Page 50
Key Requirements on Birdstep as a Supplier
Time To Market
High Quality
Innovative
solutions
Seamless end-
user
Experience
Technology
Services
Time To Market (TTM) is nothing without Quality
We are expected to drive the innovation
The operators/services providers brand
Low
cost Cost optimized delivery
Our principles of excellence
Page 51
Over deliver on customer expectations
Be Responsive
Learning organization
Embrace innovation
Quality, Quality, Quality
Page 52
Cost efficient resource expansion and increased efficiency
Tight quality control
Reduce TTM
Global support capabilities through world class support organization
Technology partnerships
Improved innovation process
Our planned market growth requires
2010
Q2Q1Q4Q2Q1Q4Q3 Q3
Main objectives
2011 2012
Quality ControlImplementation of full ALM toolwith test Automation and Quality Metrics
Centres oF ExcellenceComplement internal effiancy with with near-shored centres of excellence
TTM KPIReduce TTM by 50% (efficient tools, improved ways of working) Q4-2012
World class support organizationGlobal support with EU and US hosting
Embrace innovation
FedEx days ”Google 20%”
Vendor RelationshipsCloser partnerships with the key hardware vendors and chip-set manufactures Cont.
Timeboxed
In Summary
Page 54
f
Operations & Engineering
• Embrace the Eco-system
• Understand key customer requirements and over
deliver on customer expectations
• Be a trustworthy foundation for the organization
In Summary
Torbjörn Sandberg – CEO & President
Birdstep Technology
Page 56
f
In Summary
Underlying EasyConnect Growth (15,0 %) showing
positive trend
Key financial benchmarks being hit
A growing market with increasing opportunities
Fantastic customer traction and an increased
pipeline
Clear Engineering and Operation direction and
control
Focus is delivering results
Page 57
Questions