INTEGRATED RESEARCH LIMITED — AGM Information 2015

Nov 12, 2015

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Integrated Research Limited (IRI) FY2015 Annual General Meeting

13 November, 2015 ABN: 76 003 588 449

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4 of the world’s
9 of the top
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Global Commerce Depends on IR

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Financial Results

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Financial Results

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			%
30 June 2015 A$000’s	30 June 2014 A$000’s	% change	change in constant
			currency

Licence fees	41,031	28,048	46%
Maintenance fees	23,700	20,562	15%
Consulting fees	5,548	4,633	20%
Total revenue	70,279	53,243	32%	24%
R&D expenses - net	12,431	11,067	12%
Sales, consulting &
marketing expenses	35,161	26,836	31%
General &
Administrative
expenses	5,220	4,707	11%
Total expenses	52,812	42,610	24%	19%
Profit before tax	19,266	10,653	81%
Profit after tax	14,251	8,489	68%	41%

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•
All regions
growing
•
All product lines
growing
•
Continuing
investment in
Product
Development
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	30 June	30 June
	2015	2014
	A$000’s	A$000’s
Cash at bank	15,323	13,300
Receivables	38,272	22,857
Capitalised Development	17,020	16,257
Deferred Revenue	22,523	16,369
Net assets	36,132	30,747

Balance Sheet

Dividends (cents)

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8.0
6.0
4.0
2.0
0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Final Special Interim
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Shareholder Returns

	2015	2014	2013
Basic earnings per share	8.41¢	5.03¢	5.40¢
Dividends per share	7.5¢	5.0¢	5.0¢
Franking percentage	35%	33%	36%
Return on equity	39%	28%	30%

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10 year CAGR 24%

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Product Line Performance

Revenue by	June	June	%
Product Line ($A)	2015	2014	change
	A$000’s	A$000’s
Unified Communications	36,485	25,118	45%
Infrastructure	23,177	19,530	19%
Payments	5,069	3,962	28%
Consulting Services	5,548	4,633	20%
Total Revenue	70,279	53,243	32%

• Strong growth across all product lines

• • 10+ years of consecutive UC growth

• Six years of consecutive consulting growth

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Regional Performance

Revenue by region

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50,000
40,000
Strong and
diversified 30,000
Americas 20,000
growth
10,000
-
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Americas Europe (GBP) Americas (USD) Asia Pacific (AUD)
represents
75% of
Company Revenue by 30 June 30 June %
revenue Geographic region 2015 2014 change
(In local currency) $000’s $000’s
Americas ($US) 43,621 34,759 25%
Europe and
APAC
Asia Pacific ($A) 8,866 8,100 9%
momentum
building
Europe (£GBP) 5,338 4,415 21%
95% of revenue earned offshore
95% renewal rate
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Growth Strategy Update

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WHO

WE ARE

WHAT WE DO

IR

Capabilities

IR is the leading global provider of performance management solutions for Unified Communications, Payments and IT Infrastructure

Prognosis provides availability & performance management, diagnostics and actionable business insight for mission critical systems

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Value Proposition

Competitive Advantage

Prognosis increases

technology performance, minimizes outages, reduces cost, optimizes operations, delivers business critical insight and ensures user and customer

• satisfaction

• Prognosis is real-time, scalable, extensible & flexible

• Prognosis supports multiple platforms, vendors and applications

• IR has 1,000+ enterprise customers globally

• IR has 120+ of the Fortune 500 customers

• IR has a world-class R&D capability

WHY CUSTOMERS

BUY

• IR is profitable and debt-free

WHY WE SUCCEED

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Market & Technology Leadership

The Company: IR

• Global, publically listed , profitable and growing

• Over 1,000 enterprise customers worldwide

• 120+ Fortune 500 customers

• 5 of 6 ‘Leaders’ in the Gartner Communications Outsourcing Magic Quadrant

The Solution: Pro nosis g

• UC & CC Market Leader -13+ million managed endpoints

• Avaya Sponsored & Recommended solution

• Microsoft Gold Partner for Communications

• Cisco Certified Management Solution

• Multiple 300,000+ user deployments

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IR Strategic Initiatives

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Four Drivers of Growth

New Subscription Pricing

• Lower Approval Levels Approval by lower levels of management

• Easier Access to Budget No CapEx approval required

• Deferred Payment Terms

Aligned with License term, usage and customer business cycle

Innovation (new and expanded solutions)

Four new products added to portfolio;

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• Contact Center

• Call Recording Assurance

• StressTest [®] & Heartbeat [®]

Strategic Marketing

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10
year
CAGR
24%
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• Pipeline Building

• Thought Leadership

• Setting the tone for industry innovation

• Building Momentum Market becoming aware of IR and its industry leadership

• Broader Market Reach Expanding Demand Generation deeper and wider

Strategic Partner Engagement

• Leveraged Pipeline

• Access to Power & Budget Owners Through large Partner contacts

• Leveraged Marketing

Using Partner channels and funding

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IR grows with UC Cloud Providers

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UC Service Providers are aggressively building cloud-based Unified Communications as a Service (UCaaS) offerings

• “In the North American UC market over the next five years, Gartner estimates that: UCaaS will experience compound annual growth rate (CAGR) of 20% to 25%”[1]

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Communications Outsourcing & Professional Services
2014 Magic Quadrant
CHALLENGERS LEADERS
NICHE PLAYERS VISIONARIES
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5 out of 6 ‘Leaders’ rely on to power their Communications Outsourcing Services

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1. Source: Gartner, Tech Go-to-Market: Selling Unified Communications in a Highly Disrupted Market, June 2014

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New Customers

Increasing number of New Customers using multiple solutions

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UK
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IQ Services Acquisition

Acquisition Summary

Effective 1 July 2015

US$1.5m Cash + Earn-Out capped at US$3.5m

FY16 projections EPS accretive

Integration Project well progressed Joint Execution underway

Virtual Customer[®] Solution Methodology

Market Growth Opportunity

Automated army of “secret shoppers” testing Unified Communications and Contact Centers to ensure high quality customer experience

• Cloud based experience engine Enables fully automated outside-in testing

• StressTest[®]

Load testing on systems Ensure they can handle peak season or Go-Live

• HeartBeat[®]

Regular (hourly, daily) testing to ensure customer experience is always performing as designed

• Patented methodologies using Virtual ® Customer process

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• Expanded access to two major markets with a unique and market leading solution

Contact Center : US$ 1.7 billion annual spend[1] Unified Communications : US$ 13.7 billion annual spend[1]

• First complete Communications Experience Management solution covering both proactive testing and real-time performance insight

• Leadership in testing new WebRTC, projected by 2019 to be utilized for 15% of enterprise voice & video communication, up from less than 1% today

• Expansion from current American market to Europe and Asia Pacific

1 Source : Gartner Forecast: Enterprise Communications Applications, Worldwide, 2012-2019, 2Q 2015 Update

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Product Innovation

Summary

Operational Highlights

Three new releases of Prognosis including; Three new releases of Prognosis

• Skype for Business Real Time Visibility

• Cisco HCS Cloud Support

• Avaya IP Office for Cloud

• Cloud Security

UC Growth

• Revenue up 45%

• Enterprise & Service Provider growth

• Skype for Business adoption growing

• Maintenance retention at 96%

• New Automation Framework

• Upgraded Analytics

• HP NonStop X Series Add-Ons

• Payments ATM enhancements

Payments Growth

• Revenue up 28%

• Fraud Management adoption growing

• New payment types driving sales

Four new products added to portfolio

• ACI partnership supporting growth

• Contact Center

• Call Recording Assurance

Infrastructure

• StressTest® & Heartbeat®

• Revenue up 19%

• Consistent revenue performer

• High Profit margins

Best in Class Customer Satisfaction 92%

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Thank you. Questions?

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