retalix ltd - investors presentation january 2012 final sh
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www.retalix.com Copyright © 2010 Retalix 1 Copyright © 2012 Retalix
Investor Presentation NasdaqGS: RLTX & TASE: RETALIX
Retalix Ltd.
January 2012
Shuky Sheffer, CEO
Hugo Goldman, CFO
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Forward-Looking Statements Use of Forward-Looking Statements: This presentation and management’s remarks include forward-looking statements regarding a variety of items including the information we present under 2011 Financial Outlook and Focus. Such forward-looking statements are based upon current intentions and expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are identified in the Company's most recent SEC filings, including its Annual Report on Form 20-F. Although Retalix may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. Except as required by applicable law, Retalix undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
Use of Non-GAAP Information: In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, this presentation includes certain non-GAAP financial measures. These non-GAAP results exclude non-cash equity-based compensation charges and amortization of acquisition-related intangibles. Retalix’s management believes that these non-GAAP measures are useful to investors because they provide supplemental information that analysts frequently use to analyze software companies. Management uses both GAAP and non-GAAP information to evaluate its financial results, develop budgets and manage expenditures. The method Retalix uses to produce non-GAAP results is not computed according to GAAP, may differ from the methods used by other companies and should not be regarded as a replacement for GAAP measures. Complete reconciliation between GAAP and non-GAAP results is available on Retalix’s web site at www.retalix.com.
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Content
Retalix Overview Our Market Our Vision and Products Financial Overview Summary
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Retalix at a Glance
A leading global provider of software and services to retailers and distributors
Established: 1982
HQ: Raanana, Israel and Dallas, USA
Employees: ~1,550*
Publicly traded: NASDAQ & TASE
Major Shareholders: Alpha Group, FIMI
Balance Sheet: $132.5m cash**; no debt
Revenue:
• FY10 $207.4m • 9 months 2011 $173.5m (13% YoY Growth) • Expect to exceed guidance of $228m revenues for
2011
* September 30, 2011 ** $18.95m paid in 7/2011 for MTX acquisition
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Offerings
Mission-critical software & services for high volume, high complexity FMCG retailers & distributors worldwide
We are a Product Led company. Leveraging our deep domain expertise, we sell Services, Maintenance and SaaS around our Products
Key Segments
HEALTH & BEAUTY
GROCERY CONVENIENCE FUEL FOOD SERVICES GENERAL MERCHANDISE
DEPARTMENT STORES
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Leading Global Retailers Select Retalix 13 out of top 30 global retailers are Retalix customers
~28% market share in NA Tier 0-2 grocery
>50% market share in NA Tier 3-4 grocery
3 out of 3 of the Top 3 in Australia
3 out of the top 4 Tier 0 UK
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USA 53%
EMEA & APAC 35%
Israel 12%
Sales
Strong Global Customer Footprint
Our software solutions are deployed in more than 70,000 store locations globally
Serving Leading Retailers in 50+ countries
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Executing on Our Strategy: Growth Engines are Firing
Growth Engines, as defined in 2010, are firing - across all business lines and geographies
1. Retalix 10
2. Product-led Services (Delivery & SI)
3. Software-as-a-Service (SaaS) / Cloud
4. Customer base, geographies, adjacent retail segments
• M&A: whenever available to support our strategy
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R10
Tesco, upgrading stores worldwide to Retalix 10 (press release Jan. 2011)
North American Tier 0 retailer selected Retalix 10 as its store platform
Services
Southern Co-operative (UK) Store + loyalty + replenishment + SI services
SI – numerous new wins in this new practice
SaaS
Payments: several wins for new SaaS payments products, including Tier 0 retailers
Adjacent Retail Segments and Geographies
Tops Markets selected Retalix to enhance their customer experience and operations
Walgreens selected Retalix’s demand driven replenishment, via SaaS
Russian grocer DIXY selected Retalix store and Loyalty across its ~1,000 stores
Grocery chain in China selected Retalix store solutions
Executing on Our Strategy: Selected Customer Wins in 2011
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Executing on Our Strategy: Acquired MTXEPS to Accelerate our SaaS business
July 2011: acquired MTXEPS for $18.95 million plus up to $6 million over the next two years based on certain performance metrics
MTXEPS Description:
• A provider of SaaS end-to-end electronic payments solutions
• Fast growing, profitable company
• In >20,000 stores in North America (both SaaS and en premise models)
Deal Rationale:
1. Growing demand from our Customers
2. Support our SaaS Growth Engine
3. Enhance our capabilities in the fast growing and changing payments segment
Our first 6 months (PMI):
• Meeting our expectations; numerous good wins including a Tier 0 Retailer
• Relatively smooth PMI
Retalix will continue to innovate and expand payments offerings as well as introduce new SaaS and Cloud-based offerings: Retalix 10, Loyalty, DAX
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Our Market
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IT spend in segments addressed by Retalix today >$32B*
• ~50% of retailing IT spend is in and around the store
• ~25% of retailing IT spend is grocery and convenience store segments
Total addressable market for Retalix, not including hardware and non-relevant applications ~$7-8 Billion
Retalix Operates in a Large Global Market
Sources: Gartner, IDC, AMR, IHL, Retalix Corp Dev Internal Analysis 2010 * Includes all applications, hardware, software, external and internal services
Services $5B
Software & Maintenance
$2B
GLOBAL MARKET
Room for growth along all dimensions in our business
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Industry Analysts Confirm Retalix’s Leadership Position and the Need to Upgrade Store Solutions Point of sale (POS) has evolved into the Store Platform that supports all touch points with
consumers and is the foundation for all the IT systems that operate in the store
Gartner on Leading Retail Software Vendors Worldwide
IDC: “2011 Survey Results Reveal Strong Technology Investment Trends”
RIS: Only 25% of retailers have a store solution in place that meets their current needs
Sources: 1. Gartner: Market Share Analysis: Retail Vertical-Specific Software, Worldwide, 2010, 29 April 2011 2. IDC: Best Practices: Grocers Fighting Fire with Fire – 2011 Survey Results, July 2011 3. “Evolution of the POS Platform” By RIS News, November 2010
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As We Enter a New Decade (2010’s) Retalix Observes New Industry Challenges
Empowered and demanding shoppers with a strong sense of entitlement
Well connected, knowledgeable and updated through social networks
Shoppers expect retailers to keep pace with the latest trends, and to reward them for their loyalty
A new generation of social shoppers
Retail segments are undeniably blurring. Grocers sell fuel, Drugstores sell food…
Proliferation of global expansions, mergers and acquisitions
Increasingly complex regulatory requirements
An aggressive, competitive retail business landscape
Retailers have multiple disparate systems that require lengthy, costly integration
Inflexible architectures hold up delivery of new business capabilities
Legacy infrastructure is costly to maintain
Cost of ownership & time-to-market considerations
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Retailers Are Focused On New Goals
Provide a superior Shopper experience Boost brand loyalty through targeted
personalized promotions Retain shoppers, increase shopping frequency
and spend Attract new shoppers
Deliver a Differentiated
Shopper Experience
Increase sales and profitability Expand across geographies Diversify across retail concepts and segments Differentiate the brand
Gain Competitive Advantage
Implement innovative, state-of-the-art, agile store systems
Rapidly deliver new business capabilities to the market (TTM)
Reduce TCO (infrastructure, maintenance…) Increase monitoring and control through
centrally managed systems
Run Flexible and Lean
Operations
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Our Vision and Products
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We Enable Retailers to Understand & Influence Shoppers
Influence & Empower Consumers During
The Complete Shopping Cycle…
Via a superior, seamless Customer experience
Across all touch points
Social Networks, Portals & Shopping Lists
Kiosks
Digital Signage and Tags
Pump terminals, Fuel
Ads, Flyers, Coupons & Promotions
Review transaction history
Traditional POS
Self-checkout
Mobile Commerce
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Retalix Product Portfolio Overview STORE & SALES CHANNELS SUITE
KIOSK SCALE FUEL QSR
POS SELF SCAN
SELF CHECKOUT
MOBILE POS
CUSTOMER TOUCH POINTS
MOBILE STORE MANAGER
FORECOURT MANAGER
STORE MANAGER
INVENTORY MANAGER
STORE MANAGEMENT
MOBILE PAYMENTS
ELECTRONIC PAYMENTS
VALUE-ADDED ONLINE SERVICE
ELECTRONIC PAYMENTS &SERVICES
MOBILE MARKETING
MOBILE SHOPPER
E-STORE SERVER
MOBILE & E-COMMERCE
CUSTOMER MGMT & MARKETING SUITE
MULTI-CHANNEL TARGETED MARKETING
LOYALTY & PROMO ENGINE
CAMPAIGN MANAGEMENT
LOYALTY MANAGEMENT
CUSTOMER MANAGEMENT
PROMOTION MANAGEMENT
MERCHANDISING SUITE
INVENTORY MGMT & DEMAND-DRIVEN REPLENISHMENT
ITEM & ASSORTMENT MANAGEMENT
PROCUREMENT & SUPPLIER MANAGEMENT
PRICE & PROMOTIONS MANAGEMENT
SUPPLY CHAIN SUITE
TRANSPORTATION MANAGEMENT
WAREHOUSE MANAGEMENT
RETALIX FOUNDATION
ANALYTICS RETAIL MASTER DATA OPERATIONAL TOOLS
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The Retalix 10 Store Suite The Next Generation Store Solution Suite
Touch Points and Sales Channels Store & Inventory Management Applications
Chain Level Store Operations and Configuration Management
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Retalix 10 Store Suite Modular Suite
• Enabling implementation of select stand-alone components
Tightly Integrated with the Retalix extensive offerings of:
• Customer Management and Marketing solutions • Merchandising and inventory optimization solutions • Retail Foundation Components: Data, Analytics, Utilities
Compatible with • a large range of retail hardware platforms and • a variety of legacy and third-party systems,
…providing flexibility and protection of previous IT investments
Supports growth and diversification across multiple segments, brands, geographies: • Extensive support of multi-national features, regional business preferences and
regional regulations
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Retalix 10 - Key Benefits for Retailers
• By delivering a superior, personalized, seamless customer experience across multiple touch points and channels
Differentiate and Compete Better
• Through sophisticated management and execution of personalized, targeted, dynamic promotions and loyalty programs
• And support of value-added online services
Increase Customer Retention
and Spend
• Quick delivery of new business capabilities via easily extensible retail core, and the agile development methodologies
Quicker Time to Market
• Offered via flexible deployment alternatives (thin/thick/hybrid) • Variety of migration strategies to reduce risk • Central management resulting in lower maintenance cost
Reduce TCO
• Through integration with demand-driven merchandising and optimization solutions
Optimize Operations
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Retalix 10 is Endorsed by Leading Industry Analysts – Garner and IDC
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Product Led Services – a differentiated business model Fast growing business, winning new
customers and increasing share of wallet through launch and integration of services offerings into our portfolio
Services offering tightly linked to our software
Covering full project life cycle
Gradually introducing new services e.g. testing
Differentiated due to: • Short loop between development,
deployment & support
• One point of accountability for end result
• Global deployment ability
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Retalix is Differentiated from the Competition
Enterprise Store
Grocery Convenience
Unique Business Model: Product Led Services Retalix 10 Store Suite Breadth of Offering Domain Expertise Focus on the Retail & Food verticals Hardware agnostic Large and prestigious customer base
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Financial Overview
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Revenue Mix 2010 and 2011 YTD
Improving quality of revenue and decreasing HW as a % of Revenues
SW Licenses 13%
Hardware 15%
Professional Services
44%
Maintenance 28%
SW Licenses 10%
Hardware 11%
Professional Services
52%
Maintenance 27%
2010 9 months 2011
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Revenues and Net Income Non-GAAP
9 months 2011: • 13% growth in total Revenues: $173.5 m vs. $153.6 m • 14% growth in Net Income (Non-GAAP): $14.9 m – $0.60 per share – vs.
$13.1 m – $0.54 per share
Expect to exceed
guidance of $217-228M
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Retalix has a strong balance sheet
Note: In July 2011 Retalix used $18.95 million in cash to acquire MTXEPS
No debt
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Q3 11 P&L Highlights (Non-GAAP)
Q3 Revenue growth of 16% YoY; 20% growth in Net Income (Non-GAAP)
Seventh quarter of sequential growth, similar profitability while we continue building growth engines and investing in projects for strategic customers
Positive Cash Flow from Operations $4.1M in Q3 and $20 million YTD
Notes –
Operating Income and Net Income presented are Non-GAAP. Reconciliation to GAAP numbers is available on www.retalix.com
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2011 Financial Outlook
Profitable growth: • Expected to exceed revenue guidance for
2011 – original guidance of $217-228M
• 2011 growth was mainly organic – we expect MTXEPS to contribute in 2012
• Expect to maintain profitability as in 2010, while we continue to invest in our products and our growth engines
Note: The above guidance was issued on November 2, 2011, updating guidance first given on March 2, 2011. The Company undertakes no obligation to update its guidance.
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Summary
Great Opportunity: Large, transforming market with real and urgent IT needs
Retalix is positioned to win in this market:
• Focused strategy: defined growth engines contributing to double digit growth
• Strong management with a proven track record
• Market leader with global, blue chip customer base
• Retalix 10 – the world’s leading product
• Strong and growing SaaS business
• Unique Business Model:
1. best in class products
2. product led services
3. deep domain expertise
• Financial strength to grow and serve large, multi-year contracts
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Thank you!