JMP Securities 2015 Technology Conference · 2015-03-03 · JMP Securities 2015 Technology Conference March 3, 2015 ... equity method company on February 20, 2013 for periods going

© 2015 Actua Corporation / All Rights Reserved / 1

JMP Securities 2015 Technology Conference

March 3, 2015


Forward-Looking Statements

The statements contained in this presentation that are not historical facts are forward-looking statements that

involve certain risks and uncertainties, including, but not limited to, risks associated with the effect of economic

conditions generally, capital spending by our customers, our ability to retain existing customer relationships and

secure new ones, our ability to compete successfully against alternative solutions, our ability to timely and

effectively respond to technological developments, our ability to retain key personnel, our ability to have continued

access to capital and to deploy capital effectively and on acceptable terms, our ability to maximize value in

connection with divestitures, and other risks and uncertainties detailed in Actua’s filings with the Securities and

Exchange Commission. Those and other factors may cause actual results to differ materially from those projected.


Non-GAAP Financial Measures

Non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and non-GAAP cash flows from operations are non-GAAP financial

measures and have no standardized measurement prescribed by GAAP. When referring to non-GAAP financial measures, the term “adjusted” is used

interchangeably with the term “non-GAAP” by Actua’s management and the two have identical definitions. Non-GAAP net income (loss) is GAAP net

income (loss) attributable to Actua, including acquired businesses’ deferred revenue and excluding share-based compensation, amortization of

intangibles, impairment-related and other costs, transaction expenses, other (income) loss, net, equity loss current non-cash income tax benefit on

discrete item, loss (income) from discontinued operations and impact of non-controlling interest for discontinued operations. Non-GAAP net income (loss)

per diluted share is non-GAAP net income (loss) divided by (1) GAAP shares, including the any impact of incremental dilutive securities (in the case of

income) or (2) GAAP shares, excluding any impact of incremental dilutive securities (in the case of loss). Non-GAAP cash flows from operations is GAAP

cash flows from operations excluding cash amounts associated with impairment related and other costs and transaction expenses. Actua's consolidated

companies are BOLT, GovDelivery and MSDSonline as of September 30,2014. Please note the following:

• FolioDymanix’s results are not included BOLT became a consolidated company on December 27, 2012. Actua has deemed BOLT’s operating

results for the final four days of 2012 insignificant for consolidation purposes. Therefore, BOLT is included in equity loss for all 2012 periods

presented, and BOLT’s results are presented in Actua’s consolidated results beginning on January 1, 2013.

• BOLT became a consolidated company on December 27, 2012. Actua has deemed BOLT’s operating results for the final four days of 2012

insignificant for consolidation purposes. Therefore, BOLT is included in equity loss for all 2012 periods presented, and BOLT’s results are

presented in Actua’s consolidated results beginning on January 1, 2013.

• MSDSonline's results are not included in Actua's results for periods prior to Q2 2012 as Actua did not acquire an ownership stake in MSDSonline

until March 30, 2012.

• CIML’s continuing operating results are included in Actua’s consolidated results from July 11, 2012 to February 20, 2013 as Actua owned 51.6%

and controlled CIML during this period. CIML was an equity method company for periods prior to July 11, 2012 and, accordingly, was included in

the equity loss line item. Actua’s ownership in CIML was diluted as part of the Channel Intelligence sale described below, and CIML became an

equity method company on February 20, 2013 for periods going forward.

• Channel Intelligence, Investor Force and Procurian were sold in Q1, Q1 and Q4 2013, respectively, and are presented as discontinued operations

under GAAP. Their results are presented within our non-GAAP measures as “Loss (income) from discontinued operations” and “impact of non-

controlling interest for discontinued operations.”

Actua's management believes these non-GAAP financial measures provide useful information to investors and potential investors that enables them to

view Actua’s business in a similar manner as Actua's management and provide meaningful supplemental information regarding Actua’s operating results

as they exclude amounts that Actua excludes as part of its monitoring of operating results and assessment of the performance of its business.


Overview

BRINGING THE POWER OF THE CLOUD TO INDUSTRY-SPECIFIC VERTICAL MARKETS


Overview

• Multi-vertical cloud software company

• Exceeded 2014 revenue and earnings guidance, reporting $84.8 million of revenue

and $(0.37) of adjusted net income for the year

• Generated $4.5 million in operating cash flow in Q4 2014

• 2015 guidance ranges:

– $133 million to $138 million of revenue (net of $2.5 million of deferred revenue)

– $(0.37) to $(0.41) of ANI

– Between $(6.0) million and $(10.0) million of annual operating cash flow

• 87% recurring revenue with 97+% retention rates

• Operating under 4 market leading brands

• Leader in each market at early stage of cloud adoption

• 3 of 4 brands are operating cash flow positive

• Investing for growth with emphasis on sales and marketing, product development

and tuck-in acquisitions


Evolution of Cloud Computing Space

Emergence of SaaS

• Software is eating the world

• The cloud is eating software

• Dozens of examples of horizontal

cloud companies: Salesforce, Concur,

NetSuite, etc.

Vertical SaaS

• Deep industry solutions with

significant leverage

• More capital efficient

• Attractive competitive moats

• Few new market entrants

• Sticky customer relationships

• Automating areas outside the

enterprise

1ST WAVE 2ND WAVE


Actua’s Vertical Strategy

Powering established, successful brands—with significant growth still ahead


What it Means to be an Actua Company

Being an Actua Company makes it easier to:

• Sell to customers

• Accelerate market share and adoption

• Attract, grow and retain talent

• Deliver innovation faster


Actua Market Characteristics

Attractive Market Size & Growth Opportunities> $ Billion + market, growing >20%

Pursuing markets we can transform

Highly fragmented, unautomated, slow to innovate

Early Cloud AdoptionProven customers, yet < 10% total market penetration

Attractive Competitive Dynamics

Clear competitive moat via big data and network effect


Audience Building / Efficiency / Actionable Insight

Safety / Compliance / Regulatory Reporting

Insurance Market

Public SectorCommunications Market

EH&S ComplianceMarket

MULTI-BILLIONDOLLAR

Total Addressable

Market

Actua’s Platforms

Investment / Wealth Management

Wealth Management

Market

Distribution / Access /

Retention


$0.0

$35.0

$70.0

$105.0

$140.0

2012 Actual 2013 Actual 2014 Actual 2015 Guidance

Revenue Growth

2014 Guidance

Range:

$83.0M - $84.5M

Actual = $84.8M

2015 Guidance

Range:

$133.0M - $138.0M

Fig

ure

s s

how

n in

mill

ions


Non-GAAP Net Income/Share

($0.60)

($0.45)

($0.30)

($0.15)

$0.00

2012 Actual 2013 Actual 2014 Actual

2015 Guidance

Range:

$(0.37) - $(0.41)

2015 Guidance

2014 Guidance

Range:

$(0.39) - $(0.41)

Actual = $(0.37)


Financial Profile

Gross Margins %

Sales and Marketing %

General and Administrative %

Research and Development %

%s determined excluding stock-based compensation and deferred revenue adjustments

2014

71%

46%

41%

15%

2013

72%

45%

32%

17%

Retention Rates %

Recurring Revenue %

95%

87% 87%

97%


Provides a multi-channel, multi-carrier software platform

that enables insurance distributors to retain and grow

revenue through a comprehensive insurance solution

Important metrics:*

• Annual Revenue Growth: 52% in 2014 compared to 2013

• New Customer Bookings: Closed one new customer after

quarter-end, which we expect to launch in August and expect to be

a multi-year, multi-million dollar opportunity once implemented

• Total Customers: Insurance carriers (61, of which 5 are carrier

distribution partners), independent agents (2,100), alternative

distribution partners (4) and state exchange(1)

• TAM: Multi-billion $$

• $850 million of premium running through the platform, up from

$140 million at the beginning of 2014

• Competitive Moat: Platform is integrated into 61 of the largest

insurance carriers and has ~2,800 carrier connections which

creates the largest source of insurance flow for direct carriers,

agents, agencies and alternative insurance distributors

• Operating cash flow negative

• Multi-year/multi-million dollar contracts

* As of 12/31/14

Actua’s Platforms


Actua’s Platforms

Enables the delivery of client-centric, innovative, scalable,

wealth management solutions through secure, cloud-based,

fully integrated, advisory products and solutions

Important Metrics:*


• New Customer Bookings: Added medium sized bank with $3B in

assets as a customer of our full-service turnkey asset management

platform and a small RIA for a TAMP Solution

• Total Customers: > 200 banks, brokerage firms and large RIAs

• TAM: Multi-billion $$

• Competitive Moat: Comprehensive, client-centric technology

platform with integrated proprietary advisory products

• Operating cash flow positive

• Multi-year/multi-million dollar contracts

• $668B in assets under administration

• 89.7K+ Advisors and users

• $3.7B in regulatory assets under management

*As of 12/31/2014


**

Digital communications and marketing platform that

enables public sector organizations to effectively reach

citizens and drive action

Important metrics:*


• New Customer Bookings: Record growth in state, local

and UK markets in 2014; closed 37 deals in Q4 2014

(largest number ever in a quarter), including a new 7-figure

federal program contract

• Total Customers: Serving 1,000+ federal, state, local and

UK government agencies reaching 75 million citizen

subscribers

• TAM: > $1 billion

• Competitive Moat: Subscriber base creates network effect,

significantly expanding reach and audience for each

customer


• Annual subscription revenue model

* As of 12/31/14

Actua’s Platforms


Environmental, Health and Safety compliance platform

that enables organizations to meet stringent and costly

OSHA requirements

Important Metrics:*


• New Customer Bookings: Signed 600 new customers in Q4

2014; average annual contract value increased 18% over prior

year

• Total Customers: Approximately 10,000 enterprises, mid-

sized companies, universities and health systems; protecting

more than 5 million employees in U.S. and Canada

• TAM: > $3 billion

• Competitive Moat: Database of 7.5 million material safety

data sheets is the only comprehensive web-based library that

ensures 100% compliance for companies, and continues to

expand as new customers come onto the platform


• 3-year subscription revenue model

* As of 12/31/14

Actua’s Platforms


Investment Highlights

• Large market opportunity

• Clear market leader in each vertical market

• Strong recurring revenue base

• Demonstrated record of outstanding revenue growth

• Proven track record of successfully entering and scaling cloud-ready

markets


Financials


Consolidated Income Statements

(In thousands, except per share data)

2014 2013 2014 2013

Revenue 26,591$ 17,680$ 84,804$ 59,201$

Operating Expenses

Cost of revenue (a) 8,091 4,935 24,420 17,757

Sales and marketing (a) 10,876 8,335 39,710 28,129

General and administrative (a) 15,062 7,085 51,784 30,960

Research and development (a) 4,648 2,306 15,408 9,032

Amortization of intangibles 3,569 2,259 10,532 8,470

Impairment related and other 95 3,525 1,187 4,292

Total operating expenses 42,341 28,445 143,041 98,640

Operating income (loss) (15,750) (10,765) (58,237) (39,439)

Other income (expense):

Other income (loss), net 4,280 (4,032) 5,300 (4,210)

Interest income 71 77 463 227

Interest expense (13) (408) (1,613) (1,484)

Income (loss) before income taxes, equity loss and discontinued operations (11,412) (15,128) (54,087) (44,906)

Income tax benefit (expense) 10,896 17,601 13,271 17,571

Equity loss - (1,044) (776) (2,963)

Income (loss) from continuing operations (516) 1,429 (41,592) (30,298)

Income (loss) from discontinued operations 10,237 196,685 14,026 232,339

Net income (loss) 9,721 198,114 (27,566) 202,041

Less: Net income (loss) attributable to the noncontrolling interest (683) (2,067) (4,246) (7,018)

Net income (loss) attributable to Actua 10,404$ 200,181$ (23,320)$ 209,059$

Amounts attributable to Actua common shareholders:

Net income (loss) from continuing operations 167$ 2,803$ (37,346)$ (25,669)$

Net income (loss) from discontinued operations 10,237 197,378 14,026 234,728

Net income (loss) attributable to Actua common shareholders 10,404$ 200,181$ (23,320)$ 209,059$

Basic and diluted net income (loss) per share:

Income (loss) from continuing operations attributable to Actua common shareholders 0.00$ 0.08$ (1.01)$ (0.70)$

Income (loss) from discontinued operations attributable to Actua common shareholders 0.28 5.38 0.38 6.42

Income (loss) attributable to Actua common shareholders 0.28$ 5.46$ (0.63)$ 5.72$

Diluted net income (loss) per share:

Income (loss) from continuing operations attributable to Actua common shareholders 0.00$ 0.08$ (1.01)$ (0.70)$

Income (loss) from discontinued operations attributable to Actua common shareholders 0.28 5.10 0.38 6.42

Income (loss) attributable to Actua common shareholders 0.28$ 5.18$ (0.63)$ 5.72$

36,780 36,664 37,130 36,536

36,780 38,680 37,130 36,536

(a) Includes equity-based compensation of:

Cost of revenue 21$ 15$ 76$ 63$

Sales and marketing 42 39 160 156

General and administrative 6,803 291 23,509 6,081

Research and development 51 27 144 111

6,917$ 372$ 23,889$ 6,411$

Shares used in computation of basic net income (loss) per common share attributable to Actua

Shares used in computation of basic and diluted net income (loss) per common

share attributable to Actua common shareholders

Three Months Ended December 31, Year Ended December 31,


Consolidated Balance SheetsDecember 31, December 31,

2014 2013

ASSETS

Cash and cash equivalents 103,134$ 334,656$

Restricted cash 1,484 1,242

Accounts receivable, net 22,787 11,300

Deferred tax asset 246 -

Prepaid expenses and other current assets 4,413 5,907

Total current assets 132,064 353,105

Fixed assets, net 7,894 5,840

Goodwill and Intangibles, net 369,949 149,221

Cost and equity method investments 17,672 20,373

Deferred tax asset 3,009 -

Other assets, net 1,288 1,179

Total Assets 531,876$ 529,718$

LIABILITIES AND EQUITY

Current maturities of other long-term debt 500$ 5,902$

Accounts payable 12,634 2,970

Accrued expenses 8,816 5,176

Accrued compensation and benefits 9,241 8,732

Deferred revenue 33,980 21,830

Total current liabilities 65,171 44,610

Long-term debt - 6,008

Deferred revenue 575 254

Other liabilities 6,727 1,726

Total Liabilities 72,473 52,598

Redeemable noncontrolling interest 6,221 3,442

Total Equity 453,182 473,678

Total Liabilities, Redeemable noncontrolling interest and Equity 531,876$ 529,718$


Demonstrated Quarterly Growth

$4.2$5.4

$8.0$9.0

$12.0

$13.5

$16.1

$17.7$18.4

$19.0

$20.8

$26.6

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

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

2012 2013 2014

Re

ve

nu

e (

Mil

lio

ns

)


Quarterly Non-GAAP Net Income/Share

-$0.14

-$0.10

-$0.08-$0.09

-$0.10

-$0.12 -$0.12

-$0.03

-$15.00

-$10.00

-$5.00

$0.00

$5.00

$10.00

$15.00

-$0.20

-$0.15

-$0.10

-$0.05

$0.00

$0.05

$0.10

$0.15

$0.20

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Non-GAAP Net Income/Share Operating Cash Flow

2013 2014

No

n-G

AA

P N

et

Inc

om

e/S

ha

re

Op

era

tin

g C

as

h F

low


Actua Stock Repurchases by Year

$9.3

$2.7

$8.6 $8.3

$12.0

$10.0

$1.7

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2008 2009 2010 2011 2012 2013 2014 2015

Co

st

of

Rep

urc

ha

se

(in

mil

lio

ns

)

Repurchased

1.9 million

shares

Per share

cost

$4.75

Repurchased

0.5 million

shares

Per share cost

$5.45

Repurchased

0.8 million

shares

Per share cost

$10.17

Repurchased

0.9 million

shares

Per share

cost

$8.94

Repurchased

0.9 million

shares

Per share

cost

$13.23

None

Repurchased

Total amount deployed from inception of buyback program through current = $55.3 million to repurchase 6.0

million shares at an average price of $9.23, with $94.7 million remaining under plan

Repurchased

0.8 million

shares

Per share

cost

$16.52

Repurchased

0.1 million

shares

Per share

cost

$17.66


JMP Securities 2015 Technology Conference

March 3, 2015

Documents

JMP Securities 2015 Technology Conference · 2015-03-03 · JMP Securities 2015 Technology Conference March 3, 2015 ... equity method company on February 20, 2013 for periods going