Qfor 102013

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Quadrant 4 Systems Corporation Investor Presentation

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Qfor 102013

  1. 1. Management Presentation Dhru Desai, Executive Chairman Dr. Nandu Thondavadi, CEO September 2013 Confidential | Copyright © Q4 Systems Corporation
  2. 2. Safe Harbor Statement This partial discussion of the statements of financial condition and operations of the Company should be read in conjunction with the condensed consolidated financial statements and related notes contained in the Company’s latest quarterly report on Form 10-Q as filed with the Securities and Exchange Commission. Various remarks about the Company’s future expectations, plans and prospects constitute forwardlooking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Such remarks are valid only as of today, and the Company disclaims any obligation to update this information. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. In addition, today’s presentation and Webcast may include non-GAAP financial measures within the meaning of SEC Regulation G. Confidential | Copyright © Q4 Systems Corporation 2
  3. 3. Our Vision Innovative SMAC Technology Platforms for Disruptive Business Models Confidential | Copyright © Q4 Systems Corporation 3
  4. 4. Q4 Systems - At A Glance Corporate Data        Name: Q4 Systems Corporation Ticker: OTC QB – QFOR Shares: 66.8 MM Revenue & EBITDA: $40 MM / $4.5 MM Corporate Counsel: Kelly Drye Warren Auditors: Sassetti & Co. Transfer Agent: Securities Transfer Crop Focus  Information Technology for Enterprise Customers  Social Media  Enterprise Mobility  Analytics and Business Intelligence  Cloud Computing Industry Verticals  Healthcare IT  Retail IT  Financial Services IT Confidential | Copyright © Q4 Systems Corporation Business Units     Q4 Consulting Q4 Solutions Q4 Cloud Q4 Health 4
  5. 5. Management & Board  Dhru Desai – Executive Chairman & CFO  25-years experience successfully building private & public companies in IT & telecom  Founder & CEO of Cronus Technologies – later acquired by Cisco  Nandu Thondavadi, Ph.D. – CEO  Founder of Global Technology Ventures – an M&A advisory to the IT sector  Served in various roles with companies such as EDS, Square D, Coleman and others  Former professor at the Kellogg School of Management, Northwestern University  Thomas Sawyer, Ph.D. – Director  Senior executive with more than 25-years public company experience, Technology advisor to 3 presidents of USA  Robert Steele, Chief Sales and Marketing Officer  30 years veteran in health care, insurance and technology sector, NFL player Confidential | Copyright © Q4 Systems Corporation 5
  6. 6. Q4 Organization– Business Units and Offerings Q4 Consulting Q4 Cloud Q4 Solutions Q4 Health Confidential | Copyright © Q4 Systems Corporation • SMAC (Social, Mobility, Analytics, Cloud Computing) Strategies • Enterprise IT- Architecture • Migration and Compliance Consulting • Cloud Enablement • Hosting • Managed Services • Mission Critical IT systems • Implementation, Migration and Support • Full array of IT Outsourcing • Health Exchange Platforms • Benefits Administration • Systems Integration 6
  7. 7. Our Performance EBITDA Revenues $90,000,000 $25,000,000 Q4 Health $80,000,000 $70,000,000 $20,000,000 Q4 Cloud $60,000,000 $15,000,000 Q4 Solutions $50,000,000 $40,000,000 $10,000,000 Q4 Consulting $30,000,000 $20,000,000 $5,000,000 $10,000,000 $0 2010 2011 Confidential | Copyright © Q4 Systems Corporation 2012 2013 2014 2015 2016 $0 7
  8. 8. Key Clients Confidential | Copyright © Q4 Systems Corporation 8
  9. 9. Unique Selling Proposition Proprietary IP  QHIX/QBIX/QLIX  Quildlr/Qwoosh/Qrazor  Libserra  Sensatron Critical Mass Relevance     Technology Alignment with Market SMAC Thought Leadership Client Relationship  Big Enough to Deliver – Small Enough to Care  Recurring Revenues  Eco-System to Instantly Scale  Integral Part of Client’s Annual IT Spend Plan  Compete and Partner as Necessary  Client-Focused Field Offices  Cross-Sell Opportunity  Fully-Integrated Supply Chain Confidential | Copyright © Q4 Systems Corporation 9
  10. 10. Overall Market Opportunity Convergence of SMAC Technologies into Platform offering Verticals with most Disruption opportunities •Healthcare IT – Market Place/ Exchanges, Disintermediation and Consumerism, “Regulated Retail” •Retail IT – Multi/Omni Channel, SMAC enabled supply chain, distribution and retail commerce $5 trillion in IT Spend by 2020 (SMAC and Exchanges) Confidential | Copyright © Q4 Systems Corporation 10
  11. 11. Health Exchange – Drivers and Opportunities Regulatory Trends •Affordable Care Act •Changes in underwriting requirements Employer Trends •Fixed Contribution Model – similar to 401k shift 20 years ago •80% employees & over 50% employers groups will prefer health exchange Market Trends •Consolidation an Disintermediation •Aggregation - Multicarrier, Health & Non-Health products •Consumerism – Control, Freedom and Flexibility Economics •Compelling case for Market Places •Private Exchanges moving ahead with little reliance on Obama Care •Technology will improve cost and efficiency Opportunity to become Amazon.com of Healthcare Disruption Confidential | Copyright © Q4 Systems Corporation 11
  12. 12. Health Exchange Opportunity QFOR aims for at least 5% share (5 million covered lives over next 36 months) Addressable Market Over 100 million people looking to buy insurance through Exchanges QFOR Revenue Model $2 - $6 per member per month (PMPM) Distribution Model Private Label with 20 large insurance brokers Exclusive strategic arrangement with Health and NonHealth Insurance Carriers JV with HR, Payroll and Third Party Administrators Status Fully Functional exchange commercially available TODAY 50,000 members enrolled, 4 Exchange partners in implementation In discussion with 5 of 9 smaller Blue Cross and 4 other tier 2 carriers Confidential | Copyright © Q4 Systems Corporation
  13. 13. Healthcare Landscape Current Future PAYORS PUBLIC EXCHANGES TPAs PROVIDERS EMPLOYERS Confidential | Copyright © Q4 Systems Corporation BROKERS PRIVATE EXCHANGES
  14. 14. ExchangeFunctionality EMPLOYEES • Consolidated Billing • Custom Contributions • Shop, Compare, Planning • Beyond Traditional Benefits • Unified Access to Benefits/ Wellness market place CARRIERS / PAYORS EMPLOYERS GROUPS PRIVATE EXCHANGE BROKERS / AGENCIES • • QHIX Aggregation & Branding Dis-Intermediation ADMIN SUPPORT • • Web/Chat • Confidential | Copyright © Q4 Systems Corporation Call Center Retail All Benefit products • Health/ non-Health • Wealth & Wellness • Insurance / non- Insurance
  15. 15. Exchange Functionality  Offer plans as defined contributions or defined benefits.  Setup divisions, MEWA groups  Consolidated invoice at various levels.  Manage open enrollments  Explore and elect plans.  Manage personal & dependant info  Manage COFS, Special enrolment requests and dependents  Receive notification  Manage carrier details & contacts  Manage plan attributes such as tier details, marketing names, plan benefits, eligibility rules, plan riders etc...  Setup rate factors at carrier level with the flexibility to override it at plan level  Receive 834 file in 5010 format EMPLOYERS EXCHANGE USER  Complete retail-centric experience for shopping health plans  Robust plan recommendation and consumer assistance  Manage dependents  Covers the entire cycle from enrollment to billing  Manage the banquet of offerings to their clients, employers or individuals  Access invoice and commission details, including subsidy invoices  Receive notices on various business scenarios such as NPOP terminations, renewal notices etc...  Manage multiple exchange tenants  Enable initial open enrollment and annual open enrollments  Manage approval processes in various business workflow processes  Schedule and manage jobs for different business scenarios Confidential | Copyright © Q4 Systems Corporation 15
  16. 16. Investment Highlights Rapidly Growing Market Opportunity SMAC IT Market expected to grow at a CAGR rate of 38% through 2020 Healthcare >> Evolving “Market Place” and Exchange models Dynamic Industry Verticals Retail >> Multi Channel Retail platforms Growth Stage Company 12 quarters of EBITDA positive result; 100+ Blue chip clients and deployed technology platform; 600+ strong delivery organization Robust Product Technology and Sales Pipeline Proprietary IP-protected technology portfolio; Market leader in Health Exchange platforms; Many $1M+ revenue opportunity in sales pipeline Superior Business Model Scalable deployment with non-linear cost structure; Recurring revenue; Blend of product and services revenue Significantly Undervalued Trading @ 0.45x Revenue/4x EBITDA; Against target peer group comps at 2.5xRevenue/15-25xEBITDA) Confidential | Copyright © Q4 Systems Corporation
  17. 17. Peer Comparison Ticker Price USD Market Cap (MM) P/S (TTM) Fwd. P/S EV/EBITDA (TTM) Rev. (TTM) Fwd. Sales Growth YOY Cornerstone OnDemand CSOD 48.94 2,516.02 16.5x 10.0x N/A 149.2 56.51% Asure Software ASUR 4.57 27.10 1.0x 0.9x 14.7x 23.9 27.36% Bridgeline Digital BLIN 1.04 18.38 0.6x N/A N/A 24.5 N/A Callidus Software CALD 10.05 382.08 3.6x 3.2x N/A 100.6 14.05% Datawatch Corp DWCH 28.15 184.42 6.5x 4.3x 184.5x 27.5 6.86% 3.6x 3.7x 99.6x 0.7x 0.6x 8.8x 32.2 43.06% Name Median Q4 Systems QFOR 0.33 22.05 As of October 10, 2013 SOURCE: Bloomberg Confidential | Copyright © Q4 Systems Corporation 17
  18. 18. Thank You Dhru Desai, Executive Chairman dhru.desai@qfor.com Dr. Nandu Thondavadi, CEO nandu.thondavadi@qfor.com Confidential | Copyright © Q4 Systems Corporation

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