HCL Technologies Ltd - Investor Presentation 2018

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December 7, 2018

The General Manager The Manager BSE Limited National Stock Exchange of India Limited Corporate Relationship Department Listing Department Phiroze Jeejeebhoy Towers Exchange Plaza Dalal Street 5th Floor, Plot No. C-1, Block-G Mumbai- 400 001 Bandra-Kurla Complex, Bandra(E) Mumbai-400 051 BSE Scrip Code: 532281 NSE Scrip Code: HCLTECH

Subject: Presentation at the Conference Call for today (at 8.15 a.m. IST)

Ref.: Press Release: “HCL Technologies to Acquire Select IBM Software Products for $1.8B

Dear Sir,

Enclosed please find the Presentation being made to the analysts and investors over a Conference call being held today i.e. December 7, 2018 at 8.15 a.m. (IST) with reference to the captioned press release.

This is for your information and records.

Thanking you,

Yours faithfully, for HCL Technologies Limited

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Manish Anand Company Secretary

Encl. a/a

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ANALYST BRIEFING December 7, 2018, 8:15 AM IST

Quick Business Recap

▪ Disciplined execution of our Mode 1-2-3 strategy over the last 10 quarters resulting in ▪ Mode 2: Revenue grew from 12% of FY16 to 16% in Q2 FY19, 24% CAGR ▪ Mode 3: Revenue grew from 4% of FY16 to 12% in Q2 FY19, 78% CAGR ▪ Mode 3: Revenue crossed $1B annual run rate in Q2 FY 19

▪ Continuing optimism in the demand environment reflected in

▪ Strong bookings Quarter till date ▪ Strong pipeline as on date

Organic growth momentum picking up in FY ‘19 across ALL service lines
▪ Continue to track to the mid-point of the Revenue guidance of 9.5% to 11.5% for FY19

2 |

HCL Technologies to acquire select IBM products for $1.8B

STRATEGIC RATIONALE

$50 B plus market opportunity in large growing market areas like Security, Marketing and Commerce which are strategic segments for HCL
Products well regarded by clients and positioned in the top quadrant by industry analysts
Access to serve and grow 5000+ global enterprises across a wide range of industries and geographic markets
Recent track record with these products makes us confident of growing them
Tremendous potential for creating compelling ‘as-a-service’ offerings with our Mode-1 and Mode-2 services

3 |

Transaction Financials

INVESTMENT

Total investment of $1,775 M including earn-out
Approximately 48% to be paid at close, most of balance to be paid after Y1
Financed largely through internal accruals and a debt of $300 M at close

OUTLOOK

Incremental Revenue of ~$650 M on a run-rate basis in Y2 after close
Y1 expected to be ~$25 M lower due to transition
EBITDA margin (%) expected to be over 50% on a run-rate basis (slightly lower in Y1)
Cash EPS accretion of ~15% expected
Plan to continue pay out ratio at 50%+ of Net Income

4 |

Enterprise Software Market Size of $400B+ with $50B+ addressable with this ac uisition q

Product	Market	Market Size ($B)*	Market Growth Rate	Market Position
AppScan	App Security	$2.8	26.4%	Top 3
BigFix	Endpoint Management	$14.8	8.4%	Top 3
Notes	Enterprise Email	$32.6	5.0%	Top 3
Domino	Low Code	$4.3	45.0%	N/A
Connections	Enterprise Collaboration	$34.7	11.6%	Top 3
DX	Digital Experience	$9.7	14.0%	Top 3
Unica	Marketing Automation	$5.0	8.6%	Top 3
Commerce	Digital Commerce Apps	$6.5	10.0%	Top 5

Sources: Forrester, Gartner, IDC, Markets & Markets, Radicati

5 |

Strong Analyst Recognitions

Security Marketing

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Listed as a leader in Listed as a leader in
the Gartner Magic the Gartner Magic A leader in the
Quadrant for Quadrant for Gartner Magic
Application Security Multichannel Quadrant for Digital
Testing in March Marketing Hubs in Commerce in 2018
2018. April 2018
AppScan Unica Commerce
IBM Web Content
Listed as a leader in Manager has been
A leader in the
the Gartner Magic listed as s a leader in
Gartner Magic
Quadrant for Client Gartner’s Magic
Quadrant for Digital
Management Tools Quadrant for Web
Experience Platforms
(2015) ContentManagement
(2018)
(2018)
BigFix DX DX
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Collaboration

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A leader in the
Gartner Magic
Quadrant for Digital
Commerce (2018)
Connections
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6 |

Large Enterprise Client Base Across Verticals and Geographies

Product	# of Clients	Key Verticals
AppScan	2,000	Financial Services, Retail & Technology
BigFix	2,200	Government, Distribution, Education, Financial Services
Notes / Domino	13,000	Financial Services, Government, Manufacturing
DX	1,400	Consumer Goods, Manufacturing, Airlines, Public Sector
Unica	600	Retail, Travel & Transportation, Telco
Commerce	425	Retail, Healthcare
Connections	2,000	Financial Services, Government, Transportation
This transaction offers access to huge client base, strong Sales & Marketing engine and select verticals across the globe

7 |

Proven Track Record

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80%
Product 1
40%
0%
(40%)
(80%)
1Q-16 2Q-16 3Q-16 4Q-16 1Q-17 2Q-17 3Q-17 4Q-17 1Q-18 2Q-18 3Q-18
40%
Product 2
20%
0%
(20%)
(40%)
1Q-16 2Q-16 3Q-16 4Q-16 1Q-17 2Q-17 3Q-17 4Q-17 1Q-18 2Q-18 3Q-18
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HCL IP Partnership commencement

8 |

Proven Track Record

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30%
Product 3
15%
0%
(15%)
(30%)
1Q-17 2Q-17 3Q-17 4Q-17 1Q-18 2Q-18 3Q-18
60%
Product 4
30%
0%
(30%)
(60%)
1Q-17 2Q-17 3Q-17 4Q-17 1Q-18 2Q-18 3Q-18
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9 |

FUTURE ROADMAP

Customer Delight : Customer-driven roadmaps, transparent development, joint innovation
Currency: Market currency with respect to platforms, languages and methodologies
Integration: REST APIs, 3[rd] party integration, and partner-led product extensions
Modernize : User experience, hybrid on-prem/cloud offerings
Consumability : Containerized deployments, lower TCO through client-less technologies
Innovate : Practical innovations powered by new technologies like ML and analytics
Solutionize : “As a Service” Mode 1 and Mode 2 services offerings

10 |

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$8.2 BILLION ENTERPRISE | 127,000 IDEAPRENEURS | 43 COUNTRIES

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AI assistant

HCL Technologies Ltd Investor Presentation 2018

62415_rns_2018-12-07_82c2e6a1-6ed4-489f-bf41-3d664552e240.pdf

Subject: Presentation at the Conference Call for today (at 8.15 a.m. IST)

Quick Business Recap

HCL Technologies to acquire select IBM products for $1.8B

STRATEGIC RATIONALE

Transaction Financials

INVESTMENT

OUTLOOK

Enterprise Software Market Size of $400B+ with $50B+ addressable with this ac uisition q

Strong Analyst Recognitions

Collaboration

Large Enterprise Client Base Across Verticals and Geographies

Proven Track Record

Proven Track Record

FUTURE ROADMAP

AI assistant

HCL Technologies Ltd — Investor Presentation 2018

62415_rns_2018-12-07_82c2e6a1-6ed4-489f-bf41-3d664552e240.pdf

Subject: Presentation at the Conference Call for today (at 8.15 a.m. IST)

Quick Business Recap

HCL Technologies to acquire select IBM products for $1.8B

STRATEGIC RATIONALE

Transaction Financials

INVESTMENT

OUTLOOK

Enterprise Software Market Size of $400B+ with $50B+ addressable with this ac uisition q

Strong Analyst Recognitions

Collaboration

Large Enterprise Client Base Across Verticals and Geographies

Proven Track Record

Proven Track Record

FUTURE ROADMAP

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HCL Technologies Ltd Investor Presentation 2018