INTEGRATED RESEARCH LIMITED — AGM Information 2012

Nov 14, 2012

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Integrated Research Limited FY2012 Annual General Meeting

15 November 2012 ABN: 76 003 558 449

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8 of the world’s
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www.ir.com

Agenda

• Chairman’s Address

• Financial Results

• Growth Strategy

• Questions

Steve Killelea Peter Adams Mark Brayan Steve Killelea

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Providing Business Insight™

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Chairman’s Address

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8 of the world’s
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www.ir.com

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Financial Results

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Providing Business Insight™

Financial Results

Revenue $'000

	30 June	30 June		% change
	2012	2011	%	in
	A$000’s	A$000’s	change	constant currency
Licence fees	28,861	25,005	15%	19%
Maintenance fees	16,406	16,941	(3%)	2%
Consulting fees	3,341	2,646	26%	31%
Total revenue	48,608	44,592	9%	13%
R&D expenses - net	10,134	8,949	13%
Sales, consulting &	23,004	21,023	9%
marketing expenses
General &	4,278	4,137	3%
Administrative
expenses
PBT	11,568	9,694	19%
PAT	9,035	7,465	21%

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55,000
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
2004 2005 2006 2007 2008 2009 2010 2011 2012
AUD USD
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• Revenue growth – 4% stronger in constant currency

• Ongoing investment in R&D and Sales & Marketing

• Margin* increased from 17% to 19%

• PAT/Revenue

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Balance Sheet

Dividends

	30 June	30 June
	2012	2011
	$000’s	$000’s
Cash at bank	12,038*	11,635
Current Receivables	20,725	14,058
Development	13,849	13,808
capitalization
Deferred Revenue	11,783	9,259
Net assets	29,233	27,357

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6.0
5.0
c 4.0
e
n 3.0
t
2.0
s
1.0
0.0
2005 2006 2007 2008 2009 2010 2011 2012
Final Special Interim
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Shareholder Returns

	2012	2011	2010
Basic earnings per share	5.41¢	4.47¢	3.24¢
Dividends per share (interim
and final)	5.0¢	4.0¢	3.0¢
Franking percentage	58%	65%	19%
Return on equity	31%	27%	22%

• Cash at 31 July 12: $15.9M

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Review of Operations - Products

**Unified Communications Billings ***

	June	June		% change in
Revenue by	2012	2011	%	constant
Product Line ($A)	$000’s	$000’s	change	currency
Unified Communications (UC)	21,448	16,977	26%	31%
Infrastructure	20,558	22,504	(9%)	(5%)
Payments	3,261	2,465	32%	36%
Consulting Services	3,341	2,646	26%	31%
Total Revenue	48,608	44,592	9%	13%

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25,000
20,000
15,000
10,000
5,000
-
2007 2008 2009 2010 2011 2012
AUD USD
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• Strong growth in UC - now the Company’s highest revenue line

• High Payments growth, validating investment

• NonStop sales up 2%

*Excluding deferred revenue

• Consulting growth continues

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Review of Operations - Regions

Revenue by	30 June	30 June
Geographic region (In	2012	2011
local currency)	000’s	000’s	% change
Americas ($US)	33,137	26,489	25%
Europe (GBP)	4,687	4,416	6%
Asia Pacific ($A)	8,668	8,858	(2%)

• Americas up 25% due to strong UC sales

• Europe up 6% on improved Payments sales

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Revenue by region (‘000)
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
2007 2008 2009 2010 2011 2012
Europe (GBP) Americas (USD) Asia Pacific (AUD)
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• Growth opportunity in Asia Pacific

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Providing Business Insight™

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Growth Strategy

www.ir.com

Growth Strategy

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Create, sell and support Prognosisbased products and services

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Deliver profitable growth from existing markets and customers

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Create new products to open new markets

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IR Revenue Growth Trend
2001 – 2012
$ US M’s
60.0
50.0
Total
40.0
30.0
Infrastructure
20.0
UC
10.0
Payments
Consulting
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Revenue
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Growth Strategy – Customers

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UC Growth

• 156 new customers

• Over 6.1 million phones licensed and monitored to Oct 2012

• Revenue up 26%

Payments Growth

• Investment in payments yields a further 32% increase in

revenue

Infrastructure

• Sound result: $20.5m revenue

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Providing Business Insight™

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Growth Strategy – Unified Communications

1 UC shipments increasing – accelerated by Microsoft Lync

Expansion from Voice to 2 UC applications increases market

Growth in size, complexity 3 and criticality of networks = greater need for Performance Management

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Target
Global UC Endpoints (M's)
Market
Source: Gartner
Share 25%
300
250
Current
200
Market
Share 5%
150
100
50
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Global UC Endpoints
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Providing Business Insight™

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Growth Strategy – Payments

Increasing Payments 1 transactions – fuelled by micropayments and developing economies

Greater Payments 2 complexity – online, phone, cross-border …

Increasing governance and 3 regulation = Demand for Performance Management

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Global Payments Volumes
(M's Transactions)
Source: BCG
800,000
700,000 Middle East and North
Africa
600,000 Asia-Pacific
500,000
Central and Eastern Europe
400,000
Western Europe
300,000
200,000 Latin America
100,000
North America
-
2010 2020
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4

Greater need for Data Analytics

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Growth Strategy – Infrastructure

1 HP continue to invest in NonStop – part of market leading Blade server family Data Centre growth of 2 $101BN at 6% CAGR – fuels infrastructure monitoring

IR NonStop sales up 2% in 3 FY12

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Blade Server Market, Gartner 2012

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Providing Business Insight™

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Growth Strategy – Global

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EUROPE
•
Increase global
share of revenue
• APAC
Expand presence in
•
Germany – focus on Maximize fastest
strong economy growing market
AMERICAS
•
• Open office in
Maximize largest
market Singapore
•
Develop Latin
America
Providing Business Insight™
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Growth Strategy – R&D

	30 June 2012 A$000’s	30 June 2011 A$000’s	% Change
Gross spending	10,215	8,924	14%
Development –	6,730	5,655	19%
Capitalised
Capitalised %	66%	63%
Amortised	6,649	5,680	17%
Net Expense	10,134	8,949	13%
% of revenue	21%	20%

• Maintain investment in R&D – 21% of revenue

• New product development – expand vendor and application support

• People – graduate program and Agile development increase R&D capability

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Providing Business Insight™

Growth Strategy - Risks

Risk and Challenges

• Currency exchange rate movements

• Global economic volatility

Proactive Management

• Hedging

• Diversification of product and services

• Geographic diversification

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Source: National Australia Bank
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• Continuous productivity improvements:

• Absorbs AUD increases

• Well positioned if AUD declines

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Providing Business Insight™

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FY2012 Summary

Financial Strength

UC Growth

• 156 new customers

• New Licence Sales $28.9m up 15%

• Total Revenue $48.6m up 9%

• Net Profit After Tax $9.0m up 21%

• No debt

• Over 6.1 million phones licensed and monitored to Oct 2012

• Revenue up 26%

Payments Growth

Currency Impact

• Investment in payments yields a further 32% increase in revenue

In constant currency:

• New Licence Sales up 19%

Infrastructure

• Total Revenue up 13%

• Sound result: $20.5m revenue

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Providing Business Insight™

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Providing Business Insight™