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Q4 2006 Earnings Presentation Presented By: Amir Hudda, CEO David Ehrhardt, CFO February 7, 2007
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Proprietary and Confidential 2 Q4 2006 Earnings Presentation Presented By: Amir Hudda, CEO David Ehrhardt, CFO February 7, 2007
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Proprietary and Confidential 3 Agenda Q4 Highlights Sales Update Business Update Financials Summary Q & A
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Proprietary and Confidential 4 Q4 Highlights – Apptix Delivers on EBITDA+ Goal 5th Consecutive Record Bookings Quarter Q4 Seat Bookings Were Best Ever Booked ~ 24,500 seats of Exchange in Q4, an increase of 15% over Q3 All seats in Q4 were in the SMB segment, resulting in an increase of 33% over Q3 Strong performance from MailStreet, ASP-One and Mi8 Financial Results Recurring revenue was up 45% over Q3 to $7.33 million Top line revenue was up 48% over Q3 to $7.74 million Achieved goal of EBITDA positive in Q4 of $0.2 million compared to an EBITDA loss of $0.70 million in Q3
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Sales Update
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Proprietary and Confidential 6 SMB Exchange Summary Booked ~42,900 SMB seats of Exchange in H206, an increase of 46% over H106 Direct SMB seat bookings made up 88% of seat bookings, compared to 12% for the channels in Q4
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Business Update
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Proprietary and Confidential 8 8 Revenue Growth Remains Strong Achieved positive EBITDA of $0.2 million in Q4 after 4 consecutive quarters of EBITDA improvement Average Revenue Per User (ARPU) of $15.35 increased relative to Q3 of $14.74 by 4% and has increased over the last 5 quarters by 61%
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Proprietary and Confidential 9 Business Metrics – Q4 2005 vs. Q4 2006 Focus on SMB and direct sales has resulted in dramatic growth across all key business metrics USD 000Q4 2005Q4 2006% Change Top Line Revenue$2,694$7,744187% Recurring Revenue$2,375$7,325208% Booked Seats9,32724,485163% Booked Sites25637848% Average Revenue per Seat$11.66$15.3432% Average Revenue per Site$64.25$59.60-7% Number of Seats - Direct44,238122,771178% Number of Seats - Channel25,26525,5181% Revenue Breakdown – Direct vs. Channel80/2091/9 EBITDA($1.52)$0.2
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Financials
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Proprietary and Confidential 11 Q4 2006 Financial Highlights Recurring revenue of $7.33 million in Q4, an increase of 45% over Q3 Top line revenue of $7.74 million in Q4, an increase of 48% over Q3 Achieved positive EBITDA of $0.2 million in Q4 compared to negative EBITDA of $0.70 million in Q3 Net loss decreased 49% in Q4 to $0.79 million compared to a loss of $1.57 million in Q3 Closed the fourth quarter with $4.5 million in cash
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Proprietary and Confidential 12 Q3 2006 – Q4 2006 Income Statement Gross Margin improved to 74.6% as a result of increased NRR Operating Expenses were flat exclusive of ~$1.2M in Mi8 expenses for the full quarter in Q4 vs. only 24 days, or $0.5M in Q3 Depreciation and Amortization increased 66% largely as a result of a full quarter expense related to Mi8 intangible assets of $325k from allocation of the purchase price USD 000Q4 2006Q3 2006% Change Revenue$7,744$5,24348% COGS($1,966)($1,434)37% Gross Margin$5,778$3,80952% Gross Margin Percentage74.6%72.6% Operating Expenses (less Depreciation/Amortization)($5,563)($4,510)23% EBITDA$215($701) Depreciation and Amortization Expense($979)($591)66% EBIT($764)($1,292)(41%) Interest and Taxes($30)($275)6% Net Income($794)($1,567)(33%)
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Future Outlook
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Proprietary and Confidential 14 Email Platforms Market Share 14 Source: Radicati Group Messaging and Collaboration Survey (2005)
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Proprietary and Confidential 15 Hosted Exchange Market Share Worldwide 15 Source: Apptix, Inc. Estimates
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Proprietary and Confidential 16 Apptix Is The Global Leader 16 Source: Apptix, Inc. Estimates In North America, Apptix enjoys a market share of more than 25%
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Proprietary and Confidential 17 Hosted Exchange Market Potential 17 Source: Apptix, Inc. Estimates An estimated 150MM users use Microsoft Exchange worldwide
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Proprietary and Confidential 18 Hosted Exchange Market Potential 18 Source: Apptix, Inc. Estimates Our core market – the SMB segment – represents about half of overall deployments
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Proprietary and Confidential 19 Hosted Exchange Has HUGE Potential 19 Source: Apptix, Inc. Estimates But today, only about 1MM of those seats are hosted – offering significant growth potential
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Proprietary and Confidential 20 Exchange 2007 - Tipping the Scale for Hosted Exchange Exchange 2007 – Technically more challenging Exchange 2003Exchange 2007 Complex Multi-Server Deployments Requires High End 64-bit Servers New Skills For Management Simple Single Server Deployments Uses Commodity 32-bit Servers Easily Managed
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Proprietary and Confidential 21 Exchange 2007 – More Expensive Too Exchange 2007 requires additional servers to support specific messaging functions Environment requires 64-bit hardware Exchange 2007 provides a more robust infrastructure and very compelling capabilities – but is more expensive to deploy, upgrade and maintain
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Proprietary and Confidential 22 The Rapidly Expanding VoIP Market VoIP is projected to be a $10 billion market within 10 years. For years, high-end telephony systems were reserved for large corporations that could afford to pay for them Small and mid-sized businesses were largely left with sub-par solutions for their communications needs. Apptix Hosted VoIP will provide enterprise-class services to the SMB market.
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Proprietary and Confidential 23 And SMBs are Signing-Up By 2010, 12.4% of small business lines and 5.1% of mid-size business lines will be using: Hosted IP Telephony and VoIP Access Services in the US On a current base of over 50 million SMB phone lines, this translates into an estimated VoIP SMB market potential of at least 6 million lines or over $2 billion by 2010 Source: Frost & Sullivan and New Global Telecom Estimates
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Proprietary and Confidential 24 Future Outlook – Summary Organic growth remains strong, averaging 10 to 15% on a quarterly basis Exchange 2007 increases the market opportunity due to increased capital cost and maintenance complexity for SMBs Apptix business model is proving to be scalable VOIP & IM provide upside
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Summary
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Proprietary and Confidential 26 Summary Record seat bookings in Q4 Top line growth of 48% in Q4 vs. Q3 ARPU has increased by 61% over the last 5 quarters Positive EBITDA of $0.2 million in Q4
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Q & A
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