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QFOR Presentation

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    Qfor red chipjanconf Qfor red chipjanconf Presentation Transcript

    • Q4 Systems Management Presentation RedChip Emerging Growth Showcase January 2014 Dhru Desai, Executive Chairman Dr. Nandu Thondavadi, CEO Confidential | Copyright © Q4 Systems Corporation
    • 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
    • Our Vision Innovative SMAC Technology Platforms for Disruptive Business Models Social media Mobility Analytics Cloud computing Confidential | Copyright © Q4 Systems Corporation 3
    • Corporate Data – At a glance — Name: Q4 Systems Corporation — Ticker: OTC QB – QFOR — Shares: 83.5 MM (10% institutional, 20% real public float, 25% strategic holders and 45% affiliates and insiders) — Revenue & EBITDA: $37 MM / $4.5 MM (run-rate) — Corporate Counsels: Ellenoff Grossman&Shole LLP /Kelly Drye Warren — Auditors: Sassetti & Co. — Transfer Agent: Securities Transfer Crop Confidential | Copyright © Q4 Systems Corporation 4
    • Management & Board —  Dhru Desai – Executive Chairman & CFO —  30-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 —  Robert Steele, Chief Sales and Marketing Officer —  30 years veteran in health care, insurance and technology sector, NFL player —  Thomas Sawyer, Ph.D. – Director —  Senior executive with more than 40-years public company experience, Technology advisor to 3 presidents of USA. —  Eric Gurr, CPA. – Director —  Senior executive with more than 25-years public and private company experience in Telecom sector in USA and China, previously president and CEO NACT, NetTrue, Shanghai Bell JV. Confidential | Copyright © Q4 Systems Corporation 5
    • Credentials Q4 Location Statistics 20Mil hours of ADM Services 5Mil hours of IMS Services 9Mil hours of Consulting Services 300+ Content Driven Websites 64,000 Servers 400,000 Service Desk Users 74,000 Network Devices 22,000 Data Bases 6000 TBs Storage 1.5M Batch Jobs 2013 Growth Ops/technical resources 700 21% Growth Customers 115 17% Growth 40+mil 60% Growth Revenue Q4 Qualifiers !  40% of our clients are associated with us for more than 7+ years !  Industry leading attrition rate of <8% !  70% of workforce have global work experience ! Competencies covering legacy to next generation technologies Global Delivery Center Our Customers Enjoy !  4 Near site state-of-the-art facilities !  Succeeded in reducing IT cost by including 1 in Southeast, MI 70% for a large M&P client !  4 state-of-the-art global delivery !  Achieved 50% reduction in cost-tocenters serve over 6 years time for a large !  20% of workforce with media and manufacturing client publishing domain expertise !  Reduced IT OPEX by 60% in 5 years for a large discreet manufacturing client Confidential | Copyright © Q4 Systems Corporation Cloud Footprint !  Over 40 IPs owned in SaaS, mobile servicing enterprises !  Vertical focus cloud solutions for Retail, Publishing, Automobile, Healthcare 6
    • Technology Stack Confidential | Copyright © Q4 Systems Corporation 7
    • 2013 Performance Third Quarter Revenue 10 9.1 8 Nine-Month Revenue (millions) 28.1 30 6.5 6 (millions) 19.9 20 4 10 2 0 3Q12 Third Quarter EBITDA 3Q13 9 mths '12 9 mths '13 Gross Margin (millions) 40.0% 1.5 1.1 1 0.5 0 30.0% 28.6% 22.7% 20.0% 0.5 10.0% 0 3Q12 Confidential | Copyright © Q4 Systems Corporation 3Q13 0.0% 3Q12 3Q13 8
    • Business Units SMAC Confidential | Copyright © Q4 Systems Corporation 9
    • Growth Target Revenues EBITDA $120,000,000 $30,000,000 Q4 Health $100,000,000 $25,000,000 Q4 Cloud $80,000,000 $20,000,000 Q4 Solutions $60,000,000 $15,000,000 Q4 Consulting $40,000,000 $10,000,000 $20,000,000 $5,000,000 $0 2010 2011 Confidential | Copyright © Q4 Systems Corporation 2012 2013 2014 2015 2016 $0 10
    • Key Clients Confidential | Copyright © Q4 Systems Corporation 11
    • 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 12
    • 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 13
    • Exchange Platform Functionality Single & Multi Carrier Retailer Operated Insurer Operated Group Exchange Exchange Models Exchange Administration Reports & Analytics •  •  •  •  Supports Medical, Dental, Vision, LTD, STD Responsive Design Payment Gateway Integration Social Media Integration Member Engagement over social media – Quiz, surveys etc… Exchange and Wellness TV Targeted Advertisements Social sentiment analysis 1Invoice TM •  Consolidated invoice •  Bill Payments •  Reconciliation •  Fee Administration •  Disbursements and Adjustments Carriers HR/ Payroll Claims : FSA, HSA Employer Mgmt Federal Exchange Individual Exchange •  •  •  Member Engagement Member Acquisition Market Place Reach and Teach TM •  Portfolio based Recommendation External Interface Confidential | Copyright © Q4 Systems Corporation 14
    • ExchangeFunctionality EMPLOYEES •  •  •  Consolidated Billing Custom Contributions Beyond Traditional Benefits •  •  Shop, Compare, Planning Unified Access to Benefits/ Wellness market place CARRIERS / PAYORS EMPLOYERS GROUPS PRIVATE EXCHANGE BROKERS / AGENCIES •  •  QHIX Aggregation & Branding Dis-Intermediation ADMIN SUPPORT •  •  •  Confidential | Copyright © Q4 Systems Corporation Call Center Web/Chat Retail All Benefit products •  Health/ non-Health •  Wealth & Wellness •  Insurance / non- Insurance
    • 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 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
    • 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 Continuous 13 quarters of EBITDA positive result; 100+ blue chip clients and deployed technology platform; 700+ strong delivery organization Robust Product Technology and Sales Pipeline Proprietary IP-protected technology portfolio; Market leader in Health Exchange platforms; Many $1M+ revenue opportunities in sales pipeline Superior Business Model Scalable deployment with non-linear cost structure; Recurring revenue; Blend of product and services revenue Significantly Undervalued Trading @ 1.5x Revenue/11.8x EBITDA; Against target peer group comps at 4.0x Revenue & 15x-25x EBITDA; Tower Watson acquired Liazon for $215M Confidential | Copyright © Q4 Systems Corporation
    • Peer Comparison Ticker Price USD Market Cap (MM) Xhibit Corp. XBTC 1.60 174.7 3.2x N/A Callidus Software CALD 10.91 442.6 4.7x Jive Software JIVE 10.93 762.33 Datawatch Corp. DWCH 33.66 Wageworks WAGE Benefitfocus Cornerstone Ondemand Name Rev. (TTM) Fwd. Sales Growth (YoY) N/A 45.1 N/A 3.5x N/A 94.2 16.9% 5.2x 4.3x N/A 139.0 29.9% 238.9 7.4x 5.0x N/A 30.3 42.9% 58.00 2,009.3 8.9x 8.4x 52.6x 210.9 25.1% BNFT 48.05 1,196.8 12.1x 9.2x N/A 96.7 26.1% CSOD 49.97 2,584.94 15.3x 10.3x N/A 166.7 56.9% 7.4x 6.7x 52.6x 1.5x 0.9x 13.8x Median Q4 Systems QFOR 0.64 53.5 P/S Fwd. P/ EV/EBITDA (TTM) S (TTM) 26.1% 34.8 67.4% As of November 29, 2013 SOURCE: Bloomberg Confidential | Copyright © Q4 Systems Corporation 18
    • Thank You Dhru Desai, Executive Chairman dhru.desai@qfor.com Dr. Nandu Thondavadi, CEO nandu.thondavadi@qfor.com Confidential | Copyright © Q4 Systems Corporation