Telanetix Corporation
(OTC BB: TNXI)
Corporate Presentation
October 2009
Safe Harbor Statement
This presentation includes forward-looking statements regarding Telanetix’s
business, financial condition, products, competition, technology, customers and
prospects that are subject to various risks and uncertainties that may cause
actual results to differ materially from those referred to in the forward-looking
statements.
The forward-looking statements made in this presentation are based on
information known to us today and we do not undertake any obligation to
update them.
We refer you to Telanetix's periodic filings with the Securities and Exchange
Commission, including our most recent Form 10-K and Form 10-Q. These
documents describe important risk factors that could cause actual results to
differ materially from those contained in our projections and other forwardlooking statements.
An Historic Shift:
Communication is moving from
Hardware to Software
Paradigm Shift
HARDWIRED
Into the Devices and the Network
SOFTWARE-BASED
Flexible Devices,
Separation from the Network
SMB Segment Spend
Paying Too Much for a Solution that Doesn’t Fit Their Needs
cBeyond
• Lock-in model of Long Term Contracts
• High Cost Features
• Directory Assistance = $1.99/call
• International Calling = $1.49/min
• International Roaming = $1.29/min
• Minimal Service Feature Innovation
• Complex Purchase Process
$37 Billion
Paradigm Change
Disrupting the Business Communications Industry
App or Service
Provider
Data Pipe Provider (DSL, Broadband, Wireless)
Separation of the “Pipe” from the Application/Service allows
• Reduced Cost
• Enhance Features/Functionality
• Greater Service Flexibility
• Simplified Implementation
Disrupting Distribution
Current Indirect Model
1 of 10,000+ Regional Telco Agents
SMB Market
Purchase/Implementation Time: Weeks
Disruptive Direct Model
National Coverage
Simple Internet Ordering
Purchase/Implementation Time: Days
SMB Market
Business Voice Market
Over 25 Million Businesses in the U.S.
Number Of
Businesses
In Each
Segment
(US)
• SIP
Trunking
• Individual
Services
• SIP
Trunking
• DPS
• Individual
Services
Hosted Market Opportunity
23 Million U.S. Businesses Have
Less Than 50 Employees
•
Key Purchasing Criteria = Hosted Voice Services
– Does this save us money?
– Is it simple to buy, install and use? (normally small or no IT dept.)
– Is feature rich?
– And, I need great support
•
Hosted Digital Phone Service
– 25% of 23M SMB’s @ $200/mo = $1.15 Billion/Month
– Monthly recurring market opportunity
– Just 25% represents a $12 billion annual market opportunity
Our Product Offerings
•
• SIP Trunking:
• Digital Phone Service:
• Individual Services:
The •Best
FitDial Tone
• Launched
in 2008to Acquire, Implement
VoIP
• Virtual attendant
• Easiest
and Use
works “with”
existing
network
or
voice
solutions
• VoIP Dial Technology
Tone on design is premised• onConferencing
for existing voice
“ease of use”
Fortune 100 features
your
existing
network
service
• Find me/ follow me #
• Business
Phone
• Up market • Low Cost Provider
• Toll free number
Advantage
System
solution
• Voicemail & Fax
Technology ownership
– we provide applications ( SaaS margins)
• SMB focus
Key Channel Partners
76% Of Sales Are Made On One Of Our 18 Websites
Our Value Proposition
(SMB Example: 3 Phones + 3 Lines for 1 Year)
Hosted VoIP Solutions
Traditional Business Voice
•
Hardware
– $1,500 upfront for 3 business
phone systems
•
Installer (Indep. Telco Agent)
– $1,000 upfront installation
– $100 per year maintenance
•
Phone Service
•
Telanetix Digital Phone Service
– Bundled package includes:
– 3 business phones
– 3 lines
– No installation necessary
– Full PBX feature set
– Product support
Total cost = $1,800
– $50+ per line per month
Total cost = $4,400
60% COST SAVINGS
Competitive Advantage
Simple
Hosted
8x8
Bundlers
Simplicity
Comcast
Telanetix
Emerging Private Co.
cBeyond
Carriers
Premise Equipment
Qwest
Verizon
AT&T
Talkswitch
Sprint
Avaya
Complex
High
Cost
Low
Sales/Growth Strategy
Investing For Growth In Hosted VoIP Solutions
• Increased Channel reach and Web/Marketing
– Just beginning to ramp advertising to reach the market
– With Internet advertising, clear ROI on dollars spent
– Increasing each quarter
• Leveraging Brand Power and Exclusivity
– Costco: “Business Phone Services”
– Office Depot Click Through Rate: 2.1% (varies by product/campaign)
– High channel loyalty/ long standing relationships
• Inorganic growth
– New entrants and complimentary services
Company overview and
Financials
Company Overview
Hosted VoIP Solutions For Business Communication
•
•
•
•
•
Founded: 2001
Public: 2006 (reverse merger)
Acquisition: AccessLine, 2007
Customers Lines: 77,000 +
Business Segment:
•
•
•
•
•
•
•
•
•
•
Revenues: $32.6M
• Voice: $26.1M
• Video: $6.5M
Gross Profit Margins: 49%
Net Loss: $9.7M, or $0.36
1H09 Financial Results:
•
Costco
Office Depot
Mitel
Headquarters: Bellevue, WA
2008 Financial Results:
•
SMB
Employees: 120 full time
Key Partners:
•
•
•
•
Revenues: $16.2M, up 3%
• Voice: $13.9M, up 11%
• Video: $2.2M, down 27%
Gross Profit Margins: 53%
Cash Flow Positive
Video Business:
•
Exploring strategic alternatives
Key Financials
$000
Voice GM%
Voice Revenue
62.0%
7,200
60.0%
6,700
58.0%
56.0%
6,200
54.0%
52.0%
5,700
Qtr 2
Qtr 3
Qtr 4
Qtr 1
2008
$000
Qtr 2
50.0%
Qtr 2
$000
-
8,000
(200)
7,000
(400)
6,000
(600)
5,000
(800)
(1,000)
4,000
2008
Qtr 4
Qtr 1
Qtr 1
Qtr 2
2009
TNXI EBITDA
9,000
Qtr 3
Qtr 4
2008
2009
TNXI Operating Expenses
Qtr 2
Qtr 3
Qtr 2
2009
(1,200)
(1,400)
Qtr 2
Qtr 32008
Qtr 4
Qtr 1
2009
Qtr 2
Voice Revenue Engine
YTD thru Q209
2008
2009
Year over Year
SIP trunking (VoIP)
$1,788
$2,561
43%
$19
$651
3300%
Individual Services
$6,317
$6,626
5%
Core
Subtotal
$8,124
$9,742
18%
$4,477
$4,187
-9%
Total
$12,601
$13,929
11%
Gross Margins
53.2%
58.1%
490 BP increase
DPS
Legacy
Balance Sheet
Period ended June 30, 2009
Cash and Cash Equivalents
$1.1 M
Total Assets
$32.9 M
Total Long-Term Debt*
$17.3 M
*Face value of debentures is $29.6 M
Total Liabilities
$39.1 M
Shareholder’s Equity
($6.2 M)
Guidance
• Double digit annual growth in total voice
business
– Majority of growth in 2H09
• Cash flow positive by end of 2009
• Looking for strategic opportunities for Video
business
Capitalization Table
Shares O/S
5% Stockholders:
Enable Capital Management
Enable Growth Partners
Aequitas Capital Management
Tom Szabo
2,221,158 / 7.1%
2,002,738 / 6.4%
1,915,712 / 6.1%
2,422,929 / 7.7%
Named Executive Officers and Directors
Steven Davis
James Everline
Doug Johnson
Paul Quinn
David Rane
All Named Executive Officers & Directors
Total Shares Outstanding on June 30
Outstanding Options
Fully Diluted Shares on June 30
132,500 / **
268,500 / **
256,033 / **
57,813 / **
112,500 / **
827,346 / 2.6%
31,366,662
9,900,000
153,000,000
Investment Summary
• The New Telanetix – Well positioned
– Focused on the high growth, Hosted SMB voice market
– While seeking strategic alternatives for video
• Significant Recurring Market Opportunity
– Hosted voice market - $4.4 B monthly recurring market
• Significantly Improved Financial Results
– Core Voice revenue at 18%
– Adjusted EBITDA loss improved to $129,000 versus $1.3 million last year
• Solid Guidance
–
–
Double digit annual growth in total voice revenue
Cash flow positive by end of 2009
Telanetix Corporation
(OTC BB: TNXI)