Numerex
NASDAQ: NMRX
Global M2M Managed Services Provider
Sidoti Micro-Cap Conference
New York, NY
January 9, 2012
©
2012 Numerex Corp. All rights reserved. Numerex, the Numerex logo and all other Numerex marks contained herein are
trademarks of Numerex Corp. and/or Numerex-affiliated companies. All other marks contained herein are the property of
their respective owners.
Safe Harbor Statement
This presentation contains forward looking statements, including future projections, descriptions of Management's
plans and objectives for future operations, statements of future economic performance and statements concerning
the assumptions underlying and relating to these projections, plans, objectives and future performance. The
following factors, among others, could cause actual results to differ materially from forward-looking statements or
historical performance: our inability to reposition our platform to capture greater recurring service revenues; the
risks that a substantial portion of our revenues are derived from government contracts that may be terminated by
the government at any time; variations in quarterly operating results; delays in the development, introduction,
integration and marketing of new wireless services; customer acceptance of services; economic conditions resulting
in decreased demand for our products and services; the risk that our strategic alliances and partnerships will not
yield substantial revenues; changes in financial and capital markets, and the inability to raise growth capital; the
inability to attain revenue and earnings growth in our data business; changes in interest rates; inflation; the
introduction, withdrawal, success and timing of business initiatives and strategies; competitive conditions; the
inability to realize revenue enhancements; and extent and timing of technological changes. Numerex SEC reports
identify additional factors that can affect forward-looking statements.
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
2
What is M2M?
M2M is using a device … … … … … …
sensor, meter, etc.
to capture an event … … … … … … …
level, location, status, etc.
that is relayed through a network …
wireless, wired or hybrid
to an application … … … … … … … …
software program
which translates the
captured data into
meaningful,
actionable
information … … …
“there is a breach”
“tank level is low”
“measurements are out of normal range”
“lost vehicle is located”
“vending machine needs to be restocked”
... etc.
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
3
M2M may be found everywhere
Residential Security
In-vehicle Emergency Services
Fleet Management
M2M is called many things…
Pervasive Internet, Internet of Things,
Telematics, Telehealth, Telemetry,
Connected Life, Smart Device,
Smarter Planet (IBM), etc.
Telehealth
ATMs/Surveillance
Automatic Meter Reading
Pipeline Monitoring
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Vending
M2M Market
“Analysys Mason forecasts that the number of M2M device
connections will grow from 62 million* in 2010 to 2.1 billion
devices in 2020”.
* Commercial segment accounts for well over half of today’s M2M deployments
Gartner expects the M2M
cellular module business for
ENTERPRISE APPLICATIONS
to grow at a CAGR of 16.3%
from 2009 levels, with
tracking, remote monitoring
and security remaining as
the 3 largest applications.
(Source: Morgan Keegan)
Commercial and consumer M2M device connections by industry sector, worldwide, 2020
Source: “Imagine a world with 2.1 billion connected things…” Analysys Mason Insight, January 27, 2011
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
5
Who is Numerex?
•
•
•
•
•
•
Publicly traded on NASDAQ: NMRX
Unique repository of M2M experience, know-how
and intellectual property
Top enterprise (B2B) service provider with over 1.4
million M2M subscriptions
Unique
Repository
of
Industry
standard trend-setter
with first M2M North
American
ISOExperience,
27001 (information
security) and
M2M
Know-how,
certification Intellectual Property
(Numerex CTO) chairs the Global Standards
Collaboration M2M Standardization Task Force
(International Telecommunication Union)
M2M networks supporting global cellular and
satellite solutions
© 2012 Numerex Corp. Proprietary & Confidential.
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6
Major organizations using Numerex services include:
CABLE TV MSOs
© 2012 Numerex Corp. Proprietary & Confidential.
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7
Streamlining the complexity - Numerex DNA®
Network
GSM/GPRS Network Offerings
Optimization & Configuration
Bundled & Pre-Paid Programs
Device
Application
Embedded & Finished Solutions
Modem and Sensor Coupling
Firmware Design & Optimization
Planning & Certification Support
Provisioning / Logistics
Numerex Open Architecture
Numerex FAST®
Professional Services
We are the 3rd party M2M Experts. While it typically takes multiple vendors to develop a solution
for an individual customer, Numerex uniquely provides these services as a single source and takes
responsibility for the timely development, commercialization, and operation of a customer solution.
© 2012 Numerex Corp. Proprietary & Confidential.
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8
Examples of Numerex’s approach to market
M2M Business Solutions
We assist clients in the development of their
own solution:
• “DNA” integration via an easy-to-use process
• Disaster relief agencies & emergency services
providers
• Government contractors with asset tracking
responsibilities
• Customizable and scalable
• Rapid development and deployment
 Fortune 1000 companies
We sell pre-packaged M2M products and
solutions to a variety of customers such as:
• Security monitoring & installation companies
• Single source provider of all M2M
components
• Selling through, to and with:
M2M Distributed Products
• Automobile insurance companies
• Fleet Management
• Supply Chain & Logistics
 Wireless Carriers
 Strategic Partners
© 2012 Numerex Corp. Proprietary & Confidential.
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9
Numerex’s Technology Advantage
Numerex offers a broad cloud-based M2M horizontal platform
(Numerex FAST®), which is an M2M solution foundation that can
be accessed through three service delivery options, separately or
combined: Network-as-a-Service (NaaS); Platform-as-a-Service
(PaaS) and Software-as-a-Service (SaaS).
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
10
Numerex’s Technology Architecture
Customer Portal
(Subscription & Device Mgmt)
CDMA Device
CDMA
Security Alerts
GSM Device
GSM
Next Gen
B-Band System
PaaS/SaaS
NaaS
Database & Business Analytics
IP
Dispatch
Center
© 2012 Numerex Corp. Proprietary & Confidential.
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Application Portal
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What makes Numerex different?
• Simplify and provide one
single point of contact for
the whole M2M value
chain
• Focus our resources on
generating long-term
recurring high-margin
service revenues
© 2012 Numerex Corp. Proprietary & Confidential.
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12
Data Security & Privacy is in our DNA
ISO/IEC 27001: 2005 information security
certified (“ISO 27001”)
ISO 27001–certified
Organizations in the US
AT&T
EDS
Federal Reserve
Microsoft
Salesforce.com
SAP
United Nations
Verizon
World Bank
Xerox
etc.
11 Security Domains
33 Control Objectives
133 Security Controls
ISO 27001 facilitates compliance with:
HIPAA requirements
FERC/ NERC Security Mandates
Other security laws/regulations
Sarbanes-Oxley Compliant
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
13
Driving global M2M standardization
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•
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•
Numerex’s CEO is a member of the Telecommunications
Industry Association’s (TIA) Board of Directors
Numerex’s CTO chaired TIA ’s Smart Device
Communications Committee for the 2010-12 term during
which a new Smart Device Communications Reference
Architecture standard was released
Numerex’s CTO chairs the M2M Standardization Task Force
(MSTF) of the Global Standards Collaboration* (GSC)
Numerex recently organized international conferences on
M2M standards with preeminent standard groups and
forums (May and September 2011)
* GSC is a group of major standards development organizations centered on the International
Telecommunication Union (ITU), a specialized agency of the United Nations
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
14
Working hand-in-hand with our customers
Discover & Define
Design & Develop
Phase 1 - Solution Inception
Phase 2 – Solution Building
Phase 3 – Commercialization
Working sessions & requirements
for device, network, application –
as well as data integration into
existing legacy systems
Build a small number of working
prototypes of the complete endto-end solution. Also develop a
detailed ROI model that quantifies
the benefits.
Implement early stage deployment,
validating the ROI model in real
market conditions with sufficient
scale for valid results while limiting
out-of-pocket expenses.
© 2012 Numerex Corp. Proprietary & Confidential.
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Deploy & Defend
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Solution example: tank level monitoring
We can remotely and instantly monitor tanks
almost anywhere in the world via cellular or satellite…
Know exactly how full or empty they are and when
they need service.
Remote
Asset
Monitoring
Device
+
Web-Based
Application
Wireless
Network
+
=
Cutting operating costs and improving customer satisfaction!
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
16
Why Do Customers Choose Numerex?
History in the M2M Industry
Data and Access Security Emphasis
Ease of Doing Business & Customer-Centered Core Values
Efficiency, Reliability and Speed of Delivery
Worldwide Footprint
Single Source for DNA-Enabled M2M Solutions
© 2011 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
17
Numerex
Financial Performance
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
18
Compound Annual Growth Rates – Key Metrics
• Subscriptions
• Recurring Revenue
• Non-GAAP EBITDA
25% CAGR
15% CAGR
25% CAGR
The Company’s compound annual growth rate (CAGR)
in subscriptions from January 2008 through end of
September 2011 was 25%, generating a 15% CAGR in
recurring revenue.
This growth in subscriptions and resulting growth in
recurring revenue drove non-GAAP EBITDA CAGR of
25% over that same period.
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
19
Subscription Growth
1,600,000
1,346,000
1,400,000
1,266,000
1,224,000
1,171,000
1,200,000
1,102,000
1,027,000
977,000
1,000,000
937,000
843,000
800,000
799,000
600,000
400,000
200,000
0
Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311
© 2012 Numerex Corp. Proprietary & Confidential.
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20
M2M Recurring Revenue
In Millions
$11.0
$10.0
$9.0
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$8.6
$8.0
$8.7
$9.0
$9.4
$9.8
$8.1
$7.9
$7.3
$6.9
$6.2
© 2012 Numerex Corp. Proprietary & Confidential.
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21
Adjusted EBITDA*
In Thousands
$2,500
$2,112
$1,914
$2,000
$1,799
$1,857
$1,576
$1,500
$1,238
$1,188
$1,000
$1,365
$1,374
$815
$796
$500
$0
* * Adjusted for litigation settlement and stock option expenses
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
22
Balance Sheet
Balance Sheet
Extract
(in $ millions)
Sept.
June
March
Dec.
Sept.
June
March
Dec.
2011
2011
2011
2010
2010
2010
2010
2009
Cash
10.2
10.5
4.4
10.5
9.6
7.5
6.4
5.3
Accounts
Receivable
7.6
6.5
6.8
6.5
7.3
7.9
6.2
6.3
Inventory
6.0
5.0
4.5
4.8
4.3
4.0
5.7
6.3
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
23
Capital Structure 1
12/31/2011
Shares Outstanding
15.1 million
Float
9.4 million
Insider Ownership
5.7 million
Market Cap
1
$124.27 million
$8.23 per share
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
24
Key Takeaways
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–
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Pure play on fast-expanding M2M market
Rapidly growing subscription base
High margin recurring revenue
Positive cash flow (operations and adjusted EBITDA)
Significant operating leverage
Strong capital structure
Numerex powers its customers to success
© 2012 Numerex Corp. Proprietary & Confidential.
All Rights Reserved.
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