JCURVE SOLUTIONS LTD — Interim / Quarterly Report 2016

Feb 22, 2016

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2016 HALF YEAR RESULTS 23 February 2016 ASX:JCS

TABLE OF CONTENTS

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HALF YEAR HIGHLIGHTS CONTINUED GROWTH FOR JCURVE

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REV. MIX CHANGE CONTINUES: JCURVE SOFTWARE +42%, TEMS -27%

INCREASED INVESTMENT IN CULTURE AND BRAND

PARTNERSHIP WITH NETSUITE WORKING WELL

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CHURN LOWER AT 8.6% (-1.4pp since June ‘15)

IMPROVING CUSTOMER MIX: VALUE PER NEW CUSTOMER +100%

PRODUCTIVITY: TOTAL EXPENSES (excl. impairments) -21%

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JCURVE SOFTWARE MRR +29%

INDUSTRY RECOGNITION FROM PRESTIGIOUS AWARDS

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STRATEGY WE ARE FOCUSED ON THREE OPPORTUNITIES

STRATEGIC OPPORTUNITIES	OBJECTIVES	OBJECTIVES	TIME FRAME
Maximising value from the TEMs business	• •	Drive productivity Harvest cash to fund growth in JCurve	Short term
	•	Subscriber growth
Investing to grow the JCurve business	•	Build a large and sustainable base of monthly recurring revenue	Short to medium term
	•	Consolidate the product offering under
		JCurve Pro, renaming to ‘JCurve’
Leveraging our core strengths and capabilities	• •	Diversify our product range Reinvest for further growth	Longer term

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GROUP FINANCIAL SUMMARY

Half Year ended 31 December

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||||||
|---|---|---|---|---|
|$ millions|2015|2014|% change|
|Revenue|4.9|6.0|(19%)|
|EBITDA loss|(3.2)|(5.4)|(40%)|
|Loss before income tax|(3.2)|(5.5)|(41%)|
|Income|tax*|0.4|0.0|n/m|
|Loss after income tax|(2.8)|(5.5)|(48%)|
|Impairment|3.0|4.9|(39%)|
|Profit/(loss) after income tax|
|0.2|(0.6)|133%|
|(excl. impairment)|
|Cash from operating activities|(1.1)|(1.8)|(40%)|
|Dec|Jun|
|Selected balance sheet lines|% change|
|2015|2015|
|Cash at bank|1.0|2.0|(53%)|
|Net intangibles|2.3|5.3|(56%)|

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Highlights

• Revenue mix change includes increased JCurve Software revenue +42% to $2.7m, lower TEMS revenue -27% to $3m and $1.1m of revenue from discontinued operations booked in the prior corresponding period

• Impairment expense related to the TEMS business (Full Circle Group $2.6m and Phoneware $0.4m)

• The net intangibles balance of $2.3m relates to the JCurve Software business

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5 * Includes rebate for research and development

INVESTING TO GROW THE JCURVE BUSINESS

About JCurve

Big software for small business JCurve ERP is the economical all-in-one solution for SMEs Cloud technology for accounting, CRM, inventory management and eCommerce capabilities

Tailwinds

Cloud technology adoption

Growing trade liberalisation driving an increase in the large market size of wholesale distributors Supportive policy framework and political sentiment

Adoption and growth of NetSuite in the fast growing Asia Pac region

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JCURVE’S COMPETITIVE ADVANTAGES

Made for small business

Scalable

Exclusive license with NetSuite for small business in A & NZ

The last software a growing business will ever need

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Simplify Complexity

Empowers growth

Streamlines and automates end-to-end business processes

Delivers improved sales and inventory performance

Unified Solution

World Class Technology

Integrating accounting, CRM, Inventory, eCommerce and more in a single platform

Built on the world #1 in Cloud ERP but priced for small business

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INVESTING TO GROW THE JCURVE BUSINESS

CULTURE

§ New talent and capability recruited

§ Recognising our ‘values’

§ New, modern and technology friendly premises

§ Training with NetSuite and solutions selling focus.

BRAND

“

JCurve is our home base and has allowed us to compete on the world – stage. AUDIOFLY

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§ Launched new customer case studies § Launched new website www.jcurve.com.au § Industry recognition.

“

The dashboard alone has made my business forward thinking, insight powered and put operational error detection firmly back in my hands. – KLEENMAID

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“

I’ve worked with other systems but JCurve’s ability to transact, answer questions and problem solve anywhere, anytime is by far the easiest and most mature I’ve experienced.

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– THE OLIVE CENTRE

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WHO ARE WE SELLING TO?

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Our target market is growing Wholesale & Distribution businesses in Australia and New Zealand, typically employing less that 20 employees. There are 79,000 such businesses in ~~Australia.~~

5 – 20 EMPLOYEES

1 – 4 EMPLOYEES

58,000

LOWER CHURN AND HIGHER VALUE

21,000

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POSITIVE CUSTOMER MIX CHANGE: ACQUIRING AND RETAINING HIGHER VALUE CUSTOMERS

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NUMBER OF AVERAGE
MONTHLY CHURN
SUBSCRIBERS
6 4.0% % CUSTOMER CHURN % MRR CHURN
3.0%
2016
3 2.0%
1.0%
0.0%
0
DEC-14 MAR-15 JUN-15 SEP-15 DEC-15
2011 2013 2015
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JCURVE RECURRING REVENUE GROWTH

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JCURVE RECURRING REVENUE - ANNUALISED
$314K
$6,000,000
+29%
2016
2015
$244K $4,000,000 2014
2013
2012
$2,000,000 2011
2010
DEC ‘14 DEC ‘15 2009
$0
2009 2010 2011 2012 2013 2014 2015 2016
MONTHLY RECURRING
REVENUE (forecast)
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MAXIMISING VALUE FROM TEMS

TEMS

TEMS Headwinds

1H’16 Initiatives

TELECOM EXPENSE MANAGEMENT

Automates the administration of telecoms expenditure and improves visibility of usage

Responding to bill shock caused by excess data and or voice charges

‘All you can eat’ and large buckets of included data and roaming from telecom carriers

Internet enabled communication tools such as Skype, Line, WhatsApp, Viber and Facetime bypassing telecom carriers

Fewer complaints to the Telecommunications Industry Ombudsmen

Productivity: reduced headcount in TEMS has enabled group opex to decrease 21% (excl. impairment expense)

Impairment of $3m included $2.6m for the Full Circle Group and $0.4m for Phoneware.

TEMS business has now been written down to $0

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2016 OUTLOOK AND PRODUCT TRENDS

MEASURE ($ MILLIONS)	FY15	FY16 OUTLOOK (issued Nov ‘15)	FY16 REVISED OUTLOOK
JCurve Solutions
Revenue	$11.3m	Range: $10m to $10.5m	Range: $9.5m to $10.5m
EBITDAexcl.	($0.9m)	Range: ($0.5m to $0.2m)	Unchanged
Impairments	loss	loss*
NPAT excl.	($0.3m)	Range: ($0.2m) loss to	Unchanged
Impairments	loss	$0.1m profit*
JCurve Product
Paid Subscriptions	2,035	2,500+
Churn	10%	Below 10%

PRODUCT REVENUE TRENDS AFFECTING FY16

• JCurve - strong double digit growth

• TEMS - continued weakness driven by structural headwinds

• Discontinued operations having contributed $1.1 million in FY15

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CONCLUSION

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JCurve software business is performing well and should continue to grow strongly

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Productivity is helping to maximise value from the TEMS business

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We have a plan to grow and are investing in our people, our brand, and our customers for sustainable growth

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CONTACT DETAILS

Stephen Canning CEO JCurve Solutions

e. stephen.canning@jcurve.com.au

www.jcurvesolutions.com

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