Project Star
July 2020
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Presentation Team
Subash Menon
Managing Director & CEO
- Subash co-founded Pelatro in April 2013
- Prior to Pelatro, Subash was the CEO and Founder of Subex - a company he transformed from a systems integrator in telecoms hardware to a global leader in telecoms software for business optimization
- Subash guided Subex through a successful IPO in 1999 and through seven acquisitions in the UK, US and Canada
Nic Hellyer
Finance Director
- Nic, is a Chartered Accountant and former investment banker with over 25 years of experience
- Nic spent the majority of his banking career at UBS and HSBC, advising on a wide range of transactions including public takeovers, private M&A, IPOs and other equity fund raisings
- Nic joined Pelatro in mid 2017 and has been responsible for the finance function since its IPO in December of that year
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Pelatro Overview
Business summary
- Pelatro is a provider of customer engagement software to telcos to enable relevant, contextual and personalised interactions with subscribers to increase the telco's revenue and reduce churn
- Headquartered and listed in the UK with offices around the world employing approximately 160 people
- Addressable market of £1.8bn growing at circa 14% per annum
- Currently serving 19 telco customers (up from 6 in 2017) in 17 countries who collectively have almost 1bn subscribers
- Large pipeline and long sales cycle provides excellent visibility - currently $5.0 million for 2020
- Pelatro is looking to raise c.£3.0m - £4.0m+ via an equity placing, of which circa £2.3m qualifies for EIS/VCT tax relief, to accelerate growth opportunities
Key Telco Customers
Key Stats
78% revenue CAGR
since 2016
Annual recurring revenue of $4.7m
59% adj PBT CAGR
since 2016
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History
Improving stature - increasing credibility - strong
foundation for the future
2019 to 2020
Large recurring revenue deals
2018 to 2019
Years of growth with significant portion of revenue being recurring
Suite of solutions
as a platform
2017 to 2018
Tier 1 customers won
Critical partner for Tier 1 telcos across the Globe providing a suite of
solutions that delivering significant value
2015 to 2017
First product
Launched
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Case Study - Vodafone India
The Problem
- Lack of new revenue streams from existing subscribers
- Reducing Average Revenue Per User (ARPU)
- Increasing customer churn - retaining customers is cheaper and more profitable than acquiring new customers
- Increasingly commoditized and unable to effectively leverage and monetize customer data
Pelatro's Solution
1) Proprietary technology to drive underlying subscriber engagement, generating incremental revenue for Telcos of up to 5% per year whilst also reducing churn
2) Enable Telcos to partner with the B2C players and provide a mobile advertisement and sales platform for non-Telco products to the subscriber base
3) Deep analytics to profile subscribers and act in real time with an easy to use end-to-end solution
Largest Managed Services contract signed with Vodafone India
- 5 year Managed Services contract worth $10m to $12m
- Replaced SAS and FlyTxt who were were unable to adapt to Vodafone India's changing campaign requirements on real time data
- Pelatro's technology provides user data within 2/3 minutes from initial impression, rather than the scheduled reports produced over number of days
- Access to real time data enables the Telco to push targeted ads to users in response to their online activity increasing the probability of a sale
- Many competitors are focused on different areas of the value chain and not end-to-end solution, which is how Pelatro has been able to displace global software companies
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Key Product / Service Offering
Telecoms is a mature industry and the marketplace is characterised by intense price competition and low levels of customer loyalty.
Pelatro's mViva software products help telcos retain customers and increase average revenue per user (ARPU)
Contextual Campaign Management | Data Monetisation Platform | Loyalty Management Solution | ||
Enables telcos to send contextual, | Enables telcos to earn additional | Enables telcos to set up and run relevant | |||||
relevant and personalised offers in real | revenue by facilitating marketing | and contextual loyalty programs | |||||
time to subscribers to facilitate curated | campaigns from other B2C companies to | covering telco and non-telco products | |||||
customer journey | their consenting subscribers | across multiple partners | |||||
- mViva collects data on a real time basis which enables the platform to develop accurate profiles of millions of subscribers on the actual
usage of different products and demographics spread over a long period of time
- Pelatro's mViva technology processes and analyses the subscriber data in a real time manner to reveal patterns, trends and key behavioral
traits as they evolve to have an accurate of each subscriber at all times
- mViva facilitates continuous, relevant and contextual interactions in a true omni channel engagement model to influence the usage
behavior thereby increasing revenue and reducing churn
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Technology
Micro-segmentation | Campaign Orchestration | |
Customer Journey Management | Network insights | |||||
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Global Customers
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Global Customers - significant cross selling opportunities
Customer | Country | No. of Subscribers | Products currently used | ||||
Contextual | Data | Loyalty | |||||
Marketing | Monetization | Management | |||||
Bangladesh | 90m |
Philippines75m
Bangladesh65m
Vietnam40m
Myanmar20m
Sri Lanka | 15m |
Malaysia15m
Nepal15m
Morocco15m
Sudan14m
Kazakhstan10m
Cambodia8m
Bulgaria3m
Maldives0.3m
Bahamas0.3m
Cyprus0.3m
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Competition Matrix - Prepared by a Customer of Pelatro
Feature | Pelatro | Party A | Party B | Party C | Party D |
American | American | French | Dutch | ||
multinational | multinational | Software | Software | ||
technology company | Software company | Developer | Developer | ||
Easy to use by marketers without scripting, querying etc. and without the help of technical personnel
Campaigns - Scheduled, Real Time, Contextual, Retailer, Quad, Enterprise etc.
AI/ML - Slicing & Dicing and What If Analysis
Modelling
Offers - Personalised to match usage pattern
Real time customer insights and drill down analysis
Real time campaign tracking and reporting of performance
Easily create events for campaigns
This is an excerpt of the evaluation report that resulted in the customer choosing Pelatro's product
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Revenue Models
Licence | Revenue Gain Share | Managed Services | ||||
Pelatro earns a share of the | Pelatro earns a fixed monthly fee | |||||
Pelatro licenses the product with | monthly revenue gain generated | for providing the product and | ||||
additional licence fee based on | by using its product | managing the operations | ||||
growth of subscribers in the network | ||||||
10% to 20% | Customers: | |||||
Includes | on-going | maintenance | ||||
income ranging from 10-15% of the | Customers: | |||||
cumulative licence fee and Change | ||||||
Requests |
Customers:
All other customers
Transition from licence to recurring revenue
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Financial Highlights
- 78% revenue CAGR since 2016
- Annual recurring revenue of $4.7m vs $1.8m in 2018
- 59% adjusted PBT CAGR since 2016
- Revenue and profit drop in 2019 is solely due to the change in revenue model
- In 2019, had all the contracts been for license, revenue and EBITDA would have increased by at least $5m each leading to significant growth
- Strategic shift in 2019 was to sacrifice the short term for a superior future
- Cash of $1.10m as at 31 December 2019
Recurring Revenue Run Rate US$M
$5.0m
$4.0m
$3.0m
$2.0m
$1.0m
$0.0m
Jan-18 | Jan-19 | Jan-20 | Current |
Recurring Revenue as % of Total Revenue
61%
44%
30%
15%
2016 | 2017 | 2018 | 2019 | 2020H1 |
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Current Trading & Outlook
- Revenue visibility for the year is at $5m - up from $4m at the start of the year
- Replaced SAS and FlyTxt on Vodafone, India - a 5 year Managed Services contract worth $10m to $12m
- Pipeline continues to be strong at about $16m
- Several contracts under discussion are "recurring" in nature
- Existing customers are increasingly procuring services from the company - adding to "recurring" revenue
- Roll out of 7 new modules this year thereby expanding the offering
- With the increase in revenue visibility, we are confident about the future
Opportunity to become a $25m revenue business in the medium term
with high recurring revenue and strong cash generation
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Telco Market Dynamics
- Global mobile advertisement market was $138bn in 2018, growing at 15% CAGR - Statista 2019
- Assuming a similar growth rate, market opportunity for Telcos in 2020, assuming 5% market share, is $9bn
- Pelatro operates on revenue share model in this virgin market - average revenue share is 20% i.e. a potential market size of $1.8bn
Subscriber addition dropping | Average Revenue Per User (ARPU) dropping |
Unique mobile subscriber penetration (global average)
ARPU
Mobile subscriber penetration | Subscriber growth (year-on-year) |
Source: Strategy & Research and Analysis 2017
Source: GSMA Intelligence 2016
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Growth Strategy & Use of Proceeds
Pelatro is at an inflexion point and is therefore looking to raise approximately £3.0m - £4.0m+ via an equity placing, of which circa £2.3m qualifies for EIS/VCT tax relief.
Growth Strategy:
- Use platform to take market share from competitors and partner with more Tier 1 Telcos
- Win Managed Services contracts in new geographies (Europe, Middle East and Central Asia)
- Cross sell products modules and add-ons to existing Telco customers
- Carefully considered strategic acquisition opportunities
Use of Proceeds:
o £0.75m (approx.) will be used for marketing at various industry conferences and events to broaden Pelatro's brand recognition and network
- £0.75m (approx.) will be used to strengthen the sales team in both existing emerging and new developed markets
- £1.0m (approx.) will be used for the repayment of short and long term debt
- The remaining proceeds will be used to fund the working capital for Managed Services, which will enable Pelatro to tender for larger contracts
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Current Shareholding Structure of Pelatro
Shareholder | Number of Shares | %OS |
Bannix Management LLP* | 12,993,553 | 39.9% |
Chelverton Asset Management | 2,121,872 | 6.5% |
Rathbones Investment Management | 1,663,335 | 5.1% |
Herald Investment Management | 1,154,035 | 3.5% |
Killik & Co. LLP | 943,440 | 2.9% |
Maven Capital Partners | 902,397 | 2.8% |
*: Bannix Management LLP ("Bannix") is the investment vehicle of Kiran Menon, Varun Menon and Sudeesh Yezhuvath
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Investment Summary
- Opportunity to become a $25m revenue business in the medium term with high recurring revenue and strong cash generation
- Opportunity to expand our customer footprint significantly
- Addressable market of £1.8bn growing at circa 14% per annum
- Significant barriers to entry with mViva technology
- Fundraise will accelerate growth and facilitate an increase in profitability
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Disclaimer
These presentation slides and the accompanying verbal presentation (together the "Presentation") are strictly confidential and has been prepared by Pelatro plc (the "Company") solely for use in connection with a proposed fundraising through the issue of new ordinary shares in the Company "Fundraising").
By accepting this Presentation, you agree to be bound by the following limitations and acknowledge that its content and any discussion surrounding the Presentation falls within the definition of a 'market sounding', as defined in the Market Abuse Regulation. By agreeing to receive the market sounding, you acknowledge that you will receive information that the Company considers to be inside information, and you are required to assess for yourself whether you are in possession of inside information or when you cease to be in possession of inside information.You are prohibited from using, or attempting to use, the inside information: by acquiring or disposing of, for your own account or for the account of a third party, directly or indirectly, financial instruments relating to that information; or by cancelling or amending an order which has already been placed concerning a financial instrument to which the information relates. This Presentation does not constitute or form part of, and should not be construed as, an offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities of the Company nor should it or any part of it form the basis of, or be relied on in connection with, or act as an inducement to enter into any contract or commitment whatsoever.
This Presentation has been produced by the Company alone and not by or in conjunction with any of its advisers. The information and opinions in this Presentation are entirely those of the Company. None of the Company's advisers have any authority whatsoever to give any information or to make any representation or warranty on behalf of the Company, the Company's directors, officers, employees, its shareholders, or any of their respective advisers or any other person in connection with the Fundraising or any other acquisition or investment in securities of the Company or otherwise.
No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or the completeness or accuracy of the same.
The information in this Presentation or on which this Presentation is based has been obtained, in part, from sources that the Company believes to be reliable and accurate. However, none of the Company, the Company's directors, officers, employees, its shareholders or any of their respective advisors, or any other person has independently verified such information in this Presentation and no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information and opinions contained in this Presentation as a whole and no reliance should be placed on such information or opinions. Any opinions, projections, estimates or forecasts contained in this Presentation constitute a judgement of the Company only and should not be relied upon and are provided as at the date of this Presentation and are subject to change without notice. In giving this Presentation the Company does not undertake or agree to any obligation to provide you with access to additional information or to update the Presentation or to correct any inaccuracies or omissions from this Presentation which become apparent. To the extent permitted by law and regulation, neither the Company nor any officer, director, employee or representative of any of them accepts any responsibility or liability whatsoever for any loss, damage or liability howsoever arising, directly or indirectly, express or implied, contractual, tortious, statutory or otherwise from any use of this Presentation or its contents or otherwise arising in connection therewith. The recipient of this Presentation shall be responsible for conducting its own investigation and analysis of the information contained or referred to in this Presentation and for evaluating the merits and risks involved in the securities forming the subject matter of this Presentation.
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This Presentation contains forward‐looking statements, including but not limited to statements in relation to the Company and its respective subsidiaries, affiliated companies and projects, the future price of, and demand for, products, services, platforms, technologies, operations, licences and new growth market opportunities. Such statements are generally identifiable by the terminology used, such as "may", "will", "could", "should", "would", "anticipate'', "believe'', "intend", "expect", "plan", "estimate", "budget'', "outlook'' or other similar wording. By its very nature, such forward‐looking information requires the Company to make assumptions that may not materialise or that may not be accurate.
Such forward‐looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company and/or its respective subsidiaries and/or its affiliated companies, to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; the actual results of current product development; conclusions of economic evaluations and studies; bank liability; political instability; insurrection or war; delays in obtaining governmental approvals or financing or in the completion of product development.
Furthermore, the forward‐looking information contained in this Presentation is made as at the date of this Presentation and the Company does not accept any obligation to disseminate any updates or revisions to such forward‐looking statements. The forward‐looking information contained in this Presentation is expressly
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This document is not intended to be, and should not be construed as, any advice on the merits of, or any recommendation to any recipient or reader of this document in relation to, the purchase of shares in the Company. Recipients and readers of this document should seek their own independent legal, investment and tax advice as they see fit.
By receiving this Presentation you agree to be bound by the foregoing limitations
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Historic Financials
Income Statement | 2018 | 2019 |
for the year ended 31 December | $'000 | $'000 |
Revenue | 6,123 | 6,667 |
Cost of sales | (555) | (999) |
Gross profit | 5,568 | 5,668 |
Administrative expenses | (2,421) | (4,048) |
Operating profit | 2,551 | 1,118 |
Finance income/(expense) | (38) | (110) |
Profit before taxation | 2,513 | 1,008 |
Income tax expense | (334) | (194) |
Net income | 2,179 | 814 |
Adjusted earnings per share (cents) | 10.2 | 4.2 |
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Historic Financials
Balance Sheet | 2018 | 2019 |
for the year ended 31 December | $'000 | $'000 |
Non-current assets | 11,604 | 12,558 |
Current assets | 6,430 | 7,178 |
Total Assets | 18,034 | 19,736 |
Non-current liabilities | 1,635 | 947 |
Current liabilities | 1,037 | 2,587 |
Total Liabilities | 2,672 | 3,534 |
Total Equity | 15,362 | 16,202 |
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Disclaimer
Pelatro plc published this content on 25 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 August 2020 08:22:07 UTC