READYTECH HOLDINGS LIMITED — Interim / Quarterly Report 2021

Feb 16, 2021

ReadyTech 1H FY21 Results – Page 1

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RESULTS
PRESENTATION
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NEXT
SAAS
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I’m a ReadyTecher

ReadyTech 1H FY21 Results – Page 2

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1H FY21 KEY FINANCIAL AND OPERATIONAL HIGHLIGHTS
Results on track to achieve FY21 market guidance of mid-teens revenue growth and EBITDA margin in the
range of 37% to 39%
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REVENUE YoY Growth to $21.8m

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RECURRING
REVENUE
vs HY20: 88%
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EBITDA* Margin of 37.9%

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UNDERLYING
NPATA
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CLTV TO CAC RATIO^ vs HY20: 7.2x

OPERATING CASH FLOW CONVERSION TO EBITDA vs HY20: 86%

CUSTOMER REVENUE RETENTION vs HY20: 95%

AVERAGE REVENUE PER CUSTOMER

vs HY20: $9.6K vs HY20 Growth: +22.3%

^CLTV: Customer life time value and CAC: Customer acquisition costs

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*Underlying results exclude the impact of non-recurring costs of $1.3m

ReadyTech 1H FY21 Results – Page 3

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NEW BUSINESS DRIVING TOP LINE GROWTH
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ReadyTech continues to expand its customer base with blue-chip customers
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Annualised revenue per new customers has grown +49% to $42.5k, with many customers above $100k p.a. This is in line with strategy to target high value customers, backed by a strong revenue pipeline of $13m and a win rate of 65% over the last 12 months.

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Major new customer wins including MAX Solutions, Australia’s largest backto-work provider with 1,500+ users, against a backdrop of momentum in sector with increased caseload activity.

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Continued investment in the Sales, Marketing and R&D teams, with 20+ new roles hired in the last 12 months.

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Strong new customer growth in the Workforce Solutions segment led by all-in-one cloud platform proposition.

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Launch of integrated Learning Management System (LMS) in Education delivering new upsell opportunity. Education market activity has been boosted by government support, including $2b JobTrainer program.

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Example of new customer wins
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Student Management Systems & Work Pathways
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Workforce Solutions
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ReadyTech 1H FY21 Results – Page 4

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STRATEGIC PRIORITIES – THE READYTECH FLYWHEEL
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EGIC ACQUISITIO
N
AT
R S
T
S
D
N
U
F
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INVEST IN PRODUCT AND R&D

NEW PRODUCT IMPROVEMENTS & MODULES

• New modules planned and deepen 1 investment inment in in enterprise market product • Expand investment in data analytics and AI to drive innovative edge

INCREASE MODULES investment inment in in enterprise market product “STICKINESS”, • Expand investment in data analytics and AI SHARE OF to drive innovative edge WALLET REINVEST INCREASE PROFITABILITY AND • Invest incremental margin into GENERATE INCREASE CASH CREDIBILITY, sales and marketing to underpin 5 ADVOCACY future revenue growth and leverage & BECOME ReadyTech portfolio benefits MARKET LEADER

RETAIN CUSTOMERS

• Invest in customer success to enhance experience, upsell (increase ARPC) and sustain customer retention

WIN NEW CUSTOMERS

• Investment in enterprise/higher

• Increase market share in

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LEVERAGE
SCALABILITY
OF SAAS
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4

INCREASE SUBSCRIPTION/RECURRING REVENUE

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ReadyTech 1H FY21 Results – Page 5

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MANAGEMENT
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I’m a ReadyTecher

ReadyTech 1H FY21 Results – Page 6

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OPEN OFFICE INVESTMENT HIGHLIGHTS
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• Open Office is a citizen-centric integrated software business that services the government and justice verticals. • Comprehensive range of advanced software provides customers with an end-to-end offering. • Founded c.20 years ago with a proven offering, track record and modern tech stack.

INDUSTRY LEADING PLATFORM WITH STRONG MARKET POSITION		. • Founded c.20 years ago with a proven offering, track record and modern tech stack. • Strong penetration of the core local government asset management, community health and finance systems markets driving revenue
		and earnings growth.
		• Government and global justice markets are digitising services at a record pace. Both are also seeing migration to cloud and SaaS
ATTRACTIVE MARKET		based platforms. Resilient customer base with public sector budget support. • Large TAM of 500+ local councils with each providing c.70 services in communities and c.35,000 touchpoints to drive growth.
		• The global justice segment has a large, global addressable market.
		• Strong recurring revenues with all software provided on a subscription basis.
VISIBILITY OF FUTURE REVENUES		• Long established ‘sticky’ customer base with an average length of customer relationships at ~7 years.
		• Extremely low levels of customer churn with retention rates of more than 95%.
		• The group’s revenue is split across local government customers in all states of Australia, state government departments and global
DIVERSIFIED CUSTOMER BASE		justice organisations, providing extremely low levels of customer concentration on both a geographic and service level basis.
		• Open Office currently has 137 local government customers and 16 courts and justice customers.
EXPERIENCED MANAGEMENT TEAM		• 80+ FTEs with an extremely experienced management team who have long tenure in the government software sector. • Founder shareholders to join ReadyTech Executive Leadership.
ROBUST PLATFORM WITH		• Being part of ReadyTech allows for greater brand awareness and the ability to compete for lucrative ‘blue-chip’ contracts.
UNIQUE GROWTH OPPORTUNITIES		• Open Office to benefit from ASX-listed company status and support for investment in sales and marketing.

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ReadyTech 1H FY21 Results – Page 7

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OPEN OFFICE OVERVIEW AND MARKET OPPORTUNITY
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Open Office is an integrated business that services the government and justice software verticals. The group consists of Open Office, which provides software solutions for a variety of local and state governments, and McGirr Technologies (McGirr), a market leader in the justice case software markets (collectively 'Open Office').

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Local State Government / Justice
Government Authorities Departments
Business unit Open Office Open Office McGirr
Citizen-centric, end-to-end community Pointed solutions configured to
Citizen-centric, end-to-end solutions
Description
engagement and workflow management manage specific legislative
to streamline justice processes.
solutions. environments.
SAAS SAAS SAAS
Delivery
Geographies AUSTRALIA AUSTRALIA GLOBAL
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Large target addressable Provides RDY with a beachhead
Resilient end market with
market: 500+ councils and 200 into the UK market to drive new
public funding support.
global justice departments. growth into the future.
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ReadyTech 1H FY21 Results – Page 8

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OPEN OFFICE PRODUCT OFFERING
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SAAS SOLUTIONS OFFERED

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Asset & PROPERTY Licensing, Compliance Management & ENVIRONMENT

Finance, HR

& payroll

Customer Community Service Management 24/7

Courts and Justice Case Management

• DISTINCTIVE VALUE PROPOSITION THAT DIFFERENTIATES FROM COMPETITORS

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User
experience
• Citizen-centric
• Strong self-service
• Modern & Intuitive UI
• Supports “offline” mode
• Customer support
excellence
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Advanced
Functionality
• End-to-end,
comprehensive solution
• Modular flexibility
• Automated workflows
• Custom reporting
• Insightful analytics
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Customer
Onboarding
• Highly configurable
• Repeatable process
• Rapid delivery
• Flexible integration
• Seamless migration
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Architecture
• SaaS offering
• Cloud-based
• Modern tech stack
• Mobile apps
• Highly secure
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ReadyTech 1H FY21 Results – Page 9

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READYTECH’S PLAYBOOK DELIVERS HIGH VALUE
ReadyTech Business Strategy
TO SEGMENTS AND VERTICALS
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Education
Student Management & Work Pathways
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Workforce Solutions
Payroll, HR & Workforce Management
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–
Shared platform Best practice SaaS
–
Principles: Customer Centric – Usability – Configurability Agility
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Technology & Product
Market Fit Quality & Scale &
& Agility Velocity Efficiency
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Customer
Awareness & New & Upsell/ Retention
Lead Generation Cross-Sell & Advocacy
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-
One high performing ReadyTech culture
Customer and future focused
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ReadyTech 1H FY21 Results – Page 11

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STRONG
GROWTH
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I’m a ReadyTecher

ReadyTech 1H FY21 Results – Page 10

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FINANCIAL RESULTS ON TRACK TO MEET FY21 GUIDANCE
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$ MILLION
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1H FY21 1H FY20 %YoY
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Subscription and licence revenue 19.4 16.8 15.6%
Implementation, training and other revenue 2.4 2.5 (4.0%)
Total revenue 21.8 19.2 13.4%
Total expenses (13.5) (10.9) (23.4%)
Underlying EBITDA 8.3 8.3 0.5%
Underlying EBITDA Margin 37.9% 43.2% (12.4%)
Depreciation and amortisation (2.2) (1.9) (17.6%)
Amortisation of acquired intangibles (2.9) (2.6) (20.9%)
Underlying EBIT 3.2 3.8 (14.6%)
Underlying NPAT 2.6 2.4 8.7%
Add: amortisation of acquired intangibles (post-tax) 2.1 1.9 10.0%
Underlying NPATA 4.7 4.3 9.3%
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• Total revenue of $21.8m represented 13.4% YoY growth. Subscription and licence revenue was $19.4m or 89% of total revenue, which represents a 15.6% YoY growth (organic revenue growth of 10.3%).

• Total revenue growth was driven by new customer wins and upsell/ cross-sell to existing customers, which resulted in Average Revenue per Customer of $11.8k (growth of 22.3%).

• Total expenses of $13.5m reflects:

• Continued investment in key sales and marketing roles and costs to 9.6% of revenue (1H FY20: 7.4% of revenue)

• Continued growth in R&D with annualised R&D costs of $12.3m representing growth of 7.9% compared to FY20 of $11.4m

• • LTIP of $0.2m (1H FY20: nil).

• EBITDA margin of 37.9% is in line with FY21 guidance of 37% to 39%. • Increased customer lifetime value to $81.4k from $64.1k in FY20.

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• Underlying results exclude the impact of non-recurring costs of $1.3m mainly relating to capital raising and acquisition costs

ReadyTech 1H FY21 Results – Page 12

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INCREASED OPERATING CASHFLOW, DEBT HEADROOM
AND COMFORTABLE BALANCE SHEET SUPPORT INVESTMENT
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NET DEBT AS AT 31 DECEMBER
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$ MILLIONS 31-Dec-20 30-Jun-20
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Total Debt 22.5 25.0
Cash and cash equivalents 34.2 10.2
-
Capital raise for Open Office transaction (24.3)
Adjusted cash and cash equivalents 9.9 10.2
Net debt/EBITDA 0.9x 1.0x
BALANCE SHEET
$ MILLIONS 31-Dec-20 30-Jun-20
Cash and cash equivalents 33.2 10.2
Trade and other receivables 4.3 3.5
Other current assets 0.7 1.3
Total current assets 38.2 15.0
Intangibles 60.7 62.6
Other non-current assets 8.9 8.2
Total non-current assets 69.6 70.8
Total assets 107.8 85.9
Trade and other payables 4.3 3.9
Contract liabilities 11.4 12.0
Deferred consideration 4.1 4.1
Borrowings 22.5 25.0
Other liabilities 6.5 7.8
Total liabilities 48.8 52.8
Net assets 59.0 33.1
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$ MILLIONS
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1H FY21 1H FY20
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EBITDA 8.3 8.3
Changes in working capital (1.1) (1.2)
Cash flow from operating activities 7.2 7.1
% conversion (as % of EBITDA) 87% 86%
Capitalised development costs (2.4) (2.3)
Other capital expenditure (0.8) (0.6)
Net cash flow pre financing and tax 4.0 4.2
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• Gross debt facility of $27.5m with a leverage ratio of 0.9x represents significant bank covenant headroom of $5m. The existing debt facility has been refinanced for another three years in February 2021, which caters for the funding of the Open Office transaction.

• Cash balance of $33.2m includes $24.3m of cash which was raised for the Open Office transaction.

• Operating cash of $7.2m which is an 87% conversion supported by continued growth in customers pre-paying annual subscription fees.

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ReadyTech 1H FY21 Results – Page 13

*excludes Open Office transactions

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EDUCATION:
STUDENT MANAGEMENT
SYSTEMS & WORK PATHWAYS
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I’m a ReadyTecher

ReadyTech 1H FY21 Results – Page 14

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READYTECH EDUCATION MARKET OPPORTUNITY
STRONG PROGRESS MADE PENETRATING THE LARGE ADDRESSABLE MARKET OF TERTIARY
EDUCATION, TRAINING AND BACK-TO-WORK
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Australian tertiary
ENTERPRISE Private PRIVATE BACk-TO- education and training
State Gov
WORK industry ICT expenditure
(TAFE/UNIVERSITY) Colleges HIGHER ED
$1.85bn in 2020
(VET)
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Market Size[] : 67 4150 133 167 8 † RDY Customers[1] : 12 1300+ 10 47 1 Significant Market leader Progressing well Market leader to Well positioned to opportunity as for VET with breakthrough providers in major win further contracts TAFE/Unis seek providers and higher ed wins government given experience next-gen benefits of scale funded back-towith ACT Gov technology work programs*

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1. Management estimates as at FY20.

2. Source of market data: Frost & Sullivan Report citing Universities Australia, National Centre for Vocational Education Research (NCVER), English Australia, Tertiary Education Quality and Standards Agency (TEQSA).

† 3 JR Plus customer, 9 My Profiling customers

Example customers:

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DRIVING GROWTH IN CUSTOMER BASE
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Australia’s largest Employment Services provider.

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Highly diversified VET community college.

Enterprise Workforce Development.

Management team identified need for new platform to drive digital strategy and support for future government contracting.

: Consolidation of short courses, traditional VET and international students onto one platform for easier management.

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Audi Australia's current Student Management System was reaching the end of its lifecycle.

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WHY WE WON
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WHY WE WON
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WHY WE WON
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• ReadyTech’s ability to deliver on digital strategy.

• Strong community investment / ongoing development.

• Ability to scale combined with deep sector expertise.

• Ability to understand and support all facets of education business.

• Support for streamlining workflows and increasing data management efficiency.

• Strong referral and reputation from market.

• Established vendor to deliver on highly specific workflows and in-depth requirements.

• Depth and rigour in all facets of onboarding to delivery and beyond.

• Capability to deliver on risk, governance, compliance, cyber and technology requirements.

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ReadyTech 1H FY21 Results – Page 16

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STUDENT MANAGEMENT SYSTEM STRENGTHENING
PRODUCT SET AND INDUSTRY REPUTATION
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• ReadyTech launched integrated LMS in 1H FY21 as strong upsell opportunity to deliver new revenue stream.

• Includes white-label of globally leading online learning technology.

• Expect to perform well with growing demand for online learning, accelerated by COVID-19.

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ENTERPRISE PROGRESS
• Growing reputation as a viable
alternative SaaS platform for
enterprise.
• BKI TAFE project progressing
well and on track for go-live in
1H FY22.
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ReadyTech 1H FY21 Results – Page 17

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GROWTH IN EDUCATION REVENUE AND EBITDA
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$ MILLIONS
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1H FY21 1H FY20 Growth
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Revenue 11.7 10.7 9.5%
EBITDA 5.4 4.8 11.7%
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• Revenue growth of 9.5% driven by strong new business and significant upgrades from existing customers.

• Strengthening recurring revenue base through increased customer engagement, with retention revenue at 95%. Minimal impact of COVID-19 with less than 3% of international students across ReadyTech's Student Management Systems (SMS).

• Growth in average revenue per new customer is 68% in 1H FY21 compared to FY20.

• Continued investment in sales and marketing to drive high value qualified leads for the work pathways and tertiary education sectors.

• BKI progressing well with go-live projected in 1H FY22.

• CLTV to CAC ratio of 11.0x with a CLTV of $102k (FY20: CLTV of $77k).

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ReadyTech 1H FY21 Results – Page 18

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WORKFORCE
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I’m a ReadyTecher

ReadyTech 1H FY21 Results – Page 19

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WORKFORCE SOLUTIONS CLOUD OFFERING
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ONE VENDOR

Traditionally in mid-market, separate systems – legacy technology.

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UNIFIED

Single view of employee and unified employee experience via mobile.

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HIGH VALUE

EXPANDED

EFFICIENT

Average revenue per customer is typically 3 times greater than payroll-only customer.

Ability to support Australia and NZ on one platform.

Real-time management of connected data.

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• Next-gen facial and temperature recognition device integration.

• Supports time capture for contactless workforce management.

Seamless workflow and risk management for the COVID-19 period and beyond.

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ReadyTech 1H FY21 Results – Page 20

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NEW CUSTOMER GROWTH ACHIEVED WITH COMPELLING OFFERING
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Building retail. 1,100 employees.

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• Wellness. 375+ employees.

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Group of childcare centres/early learning. Approx 400 employees across 12 ABNs.

Consolidating companies onto one HRIS as previously multiple systems for payroll, rostering, HR, time and attendance.

:

Outgrew previous platform. They had disparate systems in place across the business and needed to consolidate these, as well as identifying the need for a time & attendance solution.

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Issues with previous provider – service, errors, lack of accuracy. Also, the way the previous payroll and time & attendance systems integrated caused many time-consuming issues.

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WHY WE WON
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WHY WE WON
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WHY WE WON
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  - A unified service for payroll and time & attendance to drive efficiency.

• Vendor care and ReadyTech local expertise.

• ReadyTech was selected as met needs for administrative efficiency and automation in rostering, payroll processing and HCM.

• Accuracy via sole source-of-truth, total compliance and confidence in pay and accruals. System provides strong visibility across workforce data.

  • Supported by a commitment to high service standards and a local presence.

• Productivity improvement via software automation and integration.

• Sole source-of-truth also provides all business reporting requirements.

• ReadyTech system supports decentralisation and empowering people.

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Strengthening Upsell Opportunity across product set
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• Average revenue per client is typically 3 times greater than payroll only client.

• Comprehensive offering provides multiple sources of new and extension revenue: - Upsell from Payroll only to Workforce Management and/or HR

  • Page 8

• Investment in facial recognition software.

• Upsell to Managed Services

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ReadyTech 1H FY21 Results – Page 21

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GROWTH IN WORKFORCE REVENUE AND EBITDA
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$ MILLIONS
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1H FY21 1H FY20 Growth
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Revenue 10.1 8.5 19.4%
EBITDA 4.3 4.1 2.9%
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• Revenue of $10.1m, growth of 19.4% driven by new customer wins with Zambion all-in-one platform, as well as managed services. Retention revenue is 96%.

• Growth in average revenue per new customer is 33% in 1H FY21 compared to FY20.

• Increased investment in sales and marketing costs as planned of 8.7% of revenue in 1H FY21 compared to 1H FY20 6.8% of revenue.

• CLTV to CAC ratio of 7.2x with a CLTV of $64k (FY20: CLTV of $60k).

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ReadyTech 1H FY21 Results – Page 22

ReadyTech 1H FY21 Results – Page 23

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OUTLOOK
RDY expects FY21 revenue growth rate in the mid teens,
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KEY TAKEAWAYS
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Growth in average revenue of new customers in 1H FY21 of 49%, backed by a strong revenue pipeline of $13m and a win rate of 65% over the last 12 months.

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Navigating through COVID-19 with software supporting companies to remotely manage people (jobs) and students (skills). Minimal impact with less than 3% of international students across ReadyTech's Student Management Systems.

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Strong and scalable growth in revenue and earnings with 27% increase in customer lifetime value to $81.4k from $64.1k in FY20.

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Continued investment in sales and marketing, technology and talent.

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Acceleration of digital transformation/ government support programs underpins substantial growth opportunities.

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RDY expects FY21 revenue growth rate in the mid teens, with EBITDA margin in the range of 37%-39%, excluding the Open Office transaction.

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ReadyTech 1H FY21 Results – Page 24

ReadyTech 1H FY21 Results – Page 26

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APPENDIX
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EDUCATION
STRONG OPPORTUNITY FOR GROWTH AND COMPELLING DIFFERENTIATORS
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LEGACY
Sunset current legacy systems with
digital transformation projects.
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CONSOLIDATION
Seeking improved productivity,
efficiency and system consolidation.
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AGILITY
Seeking agility to evolve technology
and maintain regulatory requirements,
limited by rigid, slow-moving systems.
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EXPERIENCE
Focus on improving student outcomes
and student experience.
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INVESTMENT MODEL
Sentiment has shifted from large,
upfront technology investments.
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Pure cloud provides agile
development and regular releases via
subscription.
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Customer-centric cloud solutions,
providing an entire suite of student
management services.
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Local and strong regulation
expertise and technology partner
offering.
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Student Coach – a unique value-
added predictive capability focused
on increasing student outcomes.
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Strong student self-service
and support for “student life”.
Marketplace manages employment
pathways and internships.
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Attractive nature of SaaS subscription
contracts and payments.
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ReadyTech 1H FY21 Results – Page 26

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WORKFORCE SOLUTIONS
LARGE ADDRESSABLE MARKET OPPORTUNITY WITH TRUSTED AND ADVANCED PRODUCT
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REGULATORY CHANGES
Continuous regulatory and legislative
changes, affecting awards, annualised salaries
(‘underpayment’ issues) & Single Touch Payroll
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OPTIMISE
Increasing necessity to optimise the
workforce. Efficiency gains through
productivity, managing people better
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REMOTE
Growing demand for remote staff management
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Compliance is ReadyTech’s key strength.
Flexible cloud-based system with regular
releases, such as JobKeeper payments. Highly
trusted brands
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Date effective (what and when it happened)
automation including in-platform automated
compliance checker
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State-of-the-art cloud workforce management
including timesheets, rostering and employee
self-service
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ALL-IN-ONE
Growing demand to shift from legacy
systems to pure cloud and all-in-one offering
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MANAGED
Growing demand to outsource all or
part of payroll compliance management
due to growing complexity or cost &
changing market conditions
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Unified cloud offering with payroll, workforce
management and HR, delivered with mobile
employee experience
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ReadyTech offers a trusted managed service
on its platforms, locally based with dedicated
payroll consultants with easy transitions
(hybrid model)
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ReadyTech 1H FY21 Results – Page 27

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DISCLAIMER
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This presentation has been prepared by ReadyTech Holdings Limited for professional investors. The information contained in this presentation is for information purposes only and does not constitute an offer to issue, or arrange to issue, securities or other financial products. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. The presentation has been prepared without taking into account the investment objectives, financial situation or particular need of any particular person. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in the presentation. To the maximum extent permitted by law, none of ReadyTech Holdings Limited, its directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault. In particular, no representation or warranty, express or implied is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in this presentation nor is any obligation assumed to update such information. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and contingencies.

Before making an investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance is no guarantee of future performance.

The distribution of this document is jurisdictions outside Australia may be restricted by law. Any recipient of this document outside Australia must seek advice on and observe such restrictions.

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ReadyTech 1H FY21 Results – Page 28

For more information:

Ronn Bechler

Market Eye Pty Ltd

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P: +61 400 009 774

E: ronn.bechler@marketeye.com.au

About ReadyTech

ReadyTech (ASX:RDY) is a leading Australian provider of next generation SaaS technology for educators and employers managing the complex human journey through study, work and career transitions. ReadyTech provides people management software to over 4,000 educators, employers and facilitators of work transitions. Bringing together the best in student management, apprenticeship management, workforce management, employment services and behavioural science technology, ReadyTech’s technology ecosystem supports the development and success of tomorrow’s workforce.

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ReadyTech 1H FY21 Results – Page 29