George hosted the Digital Disruptors Conference in 2015. He brought together ~200 investors and 10 senior executives to introduce their companies. Attached is his presentation.

1. 1
Digital Disruptors Conference 2015
INTERNET INVESTMENT TRENDS -
A road map for navigating the online
investment jungle
13 October 2015
George Gabriel, CFA
Senior Equities Research Analyst
george.gabriel@wilsonhtm.com.au

2. 2
Digital Disruption It’s just getting started…
Digital disruption…it’s just beginning, it’s here to stay and it’s gaining momentum.
“The impact of the internet has been extraordinary and broad…but, in many ways, it’s just
beginning…”Source: Mary Meeker, venture capitalist and tech analyst, named “one of the ten smartest people in tech” by Fortune magazine in 2010.
October 2015
• Three key drivers:
 Cloud computing
 Internet penetration – up from 0.6% population (1995, 35m users) to 39% population
(2014, 2.8 bn users).
 Mobile phone penetration – up from 1.0% population (1995, 80m users) to 73% population
(2014, 5.2bn users).
• Gaining momentum because it’s now easier than ever to scale globally at relatively low cost.

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Digital Disruption No sector is immune…
So far, most disruption has been focused on B2C and B2B models. Other segments present
disruption opportunities/risks to incumbents – security, education, health, government.
October 2015
• Sectors impacted to date:
 Mostly B2C, and then B2B.
 To a lesser extent security/safety/warfare.
 Emerging impacts in education and healthcare.
 Limited impact in government/regulation/policy thinking.
Source: KPCB internet trends.

4. 4
Digital Disruption
Enormous wealth has
been created
Enormous shareholder value has been created.
• The total market capitalisation of the top 15 global public internet companies has increased ~145x from
 $16.7 billion in 1995; to
 $2.415 trillion 2015.
October 2015

5. 5
Digital Disruption An investor road map…
ROAD MAP: Navigating the online investment jungle
• Investors must navigate a complex range of issues – sectors, business models, business maturity, valuation,
regulation and fast-moving outlook.
• To assist, we provide our ROAD MAP for navigating the online investment jungle. We consider:
 Gorilla hunting –
 Finding the next near-monopoly in “winner takes all” markets.
 Unicorn watching –
 Avoid the “Uber effect”.
 Eagles soaring –
 High revenue multiple stocks .
 Gazelle running –
 High organic growth stocks.
 Acorn planting -
 Often early stage, venture-capital like companies still developing business models and testing customer demand. Back-door
listings common entry to market.
 Park ranger ruling –
 Changing regulations change the game.
 Uber example - legality; labour laws; taxation. Also, privacy (big data) issues.
 Valuation guides –
 Traditional valuation metrics do not apply in “winner takes all” markets.
October 2015

6. 6
Digital disruption Gorillas and unicorns
Two investors objectives: finding the next gorilla and avoiding the “Uber effect”
October 2015
• Rise of the gorilla (industry incumbent with near-monopoly)
 “Winner takes all” online dynamic drive customer “land grab”, drives near-monopoly outcome.
 Size of the prize – market capitalisations of:
 REA - $6bn
 SEK - $4.4bn
 CRZ - $2.5bn
• The “Uber effect” – shareholder value is effectively transferred from disrupted to disruptor.
 eg. CAB to Uber
 CAB has lost ~35% of its shareholder value since Uber arrived in Australia.
 "Rule No.1: Never lose money. Rule No.2: Refer rule No.1.“ – Warren Buffett.

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Digital disruptions Gazelles and eagles
Two investor objectives: run with gazelles and pick eagles carefully.
• Gazelles are high organic revenue growth stocks, with less demanding valuation. Can be good portfolio
holds.
 ACX
 Revenue almost doubled in 3 years (FY12 - $44m to FY15 - $82m).
 Share price - $2.04 to $4.17 (from 5 June 14 to today).
• Eagles are high revenue multiple stocks. Can be profitable if investors have skill and judgement to pick the
right player in the right segment include
 Examples include XRF and FLN (~10x forecast revenue multiples).
 Private markets transactions often justify public market multiples:
 Menulog (17x revenue) – online take-away food ordering
 Lynda (10x revenue) – online eduction
 Internet of Things (IOT) acquisition valuation range - 2.5x - 11.2x revenue
 Caution: overpaying has obvious risks!
October 2015

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Digital Disruption Valuation paradigm
Traditional valuation metrics do not apply during the “land grab” customer acquisition phase.
October 2015
• High revenue multiples are justified by customer lifetime value (CLTV) in winner takes all markets
• In “winner takes all” markets, customer ‘land grab’ opportunity emphasises sales and marketing costs,
impacting short-term cash flow generation and reported profits.
• Winner obtains a near-monopoly, acquired customers add material value over the customer’s lifetime,
• Accordingly, EV/revenue metrics are more appropriate proxies of valuation than traditional
valuation metrics (eg. PE, yield, EV/EBITDA).
• Australian investors are familiar with this dynamic and have valued stocks with these characteristics on
EV/revenue multiples ranging from 1.4x to 13.6x (average 7.8x). Examples include Xero (XRF), Freelancer
(FLN), Urbanise (UBN) and Surfstitch (SRF).

9. 10
Recommendation structure and other definitions: Definitions at http://www.wilsonhtm.com.au/Disclosures
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HEAD OF RESEARCH
Shane Storey (07) 3212 1351
INDUSTRIALS
James Ferrier (03) 9640 3827
Stewart Oldfield (03) 9640 3818
Andrew Dalziel (07) 3212 1946
Daniel Wan (02) 8247 6694
George Gabriel (03) 9640 3864
HEALTHCARE AND
BIOTECHNOLOGY
Shane Storey (07) 3212 1351
RESOURCES
Phillip Chippindale (02) 8247 3149
James Redfern (02) 8247 6609
Liam Schofield (02) 8247 3173
QUANTITATIVE
Nathan Szeitli (03) 9640 3806
WEALTH MANAGEMENT
RESEARCH
Peter McManus (02) 8247 3186
John Lockton (02) 8247 3118
Email:
firstname.lastname@wilsonhtm.co
m.au
NATIONAL OFFICES
Brisbane (07) 3212 1333
Melbourne (03) 9640 3888
Sydney (02) 8247 6600
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Sunshine Coast (07) 5451 4600
Our website: www.wilsonhtm.com.au
October 2015

10. 10
Recommendation structure and other definitions: Definitions at http://www.wilsonhtm.com.au/Disclosures
Disclaimer
While Wilson HTM Ltd believes the information contained in this communication is based on reliable information, no warranty is given as to its
accuracy and persons relying on this information do so at their own risk. To the extent permitted by law Wilson HTM Ltd disclaims all liability to any
person relying on the information contained in this communication in respect of any loss or damage (including consequential loss or damage)
however caused, which may be suffered or arise directly or indirectly in respect of such information. Any projections contained in this
communication are estimates only. Such projections are subject to market influences and contingent upon matters outside the control of Wilson
HTM Ltd and therefore may not be realised in the future.
The advice contained in this document is general advice. It has been prepared without taking account of any person’s objectives, financial situation
or needs and because of that, any person should, before acting on the advice, consider the appropriateness of the advice, having regard to the
client’s objectives, financial situation and needs. Those acting upon such information without first consulting one of Wilson HTM Ltd investment
advisers do so entirely at their own risk. This report does not constitute an offer or invitation to purchase any securities and should not be relied
upon in connection with any contract or commitment whatsoever. If the advice relates to the acquisition, or possible acquisition, of a particular
financial product – the client should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any
decision about whether to acquire the product. This communication is not to be disclosed in whole or part or used by any other party without Wilson
HTM Ltd’s prior written consent.
Disclosure of interest
The Directors of Wilson HTM advise that at the date of this report they and their associates have relevant interests in securities mentioned in this
report. They also advise that Wilson HTM and Wilson HTM Corporate Finance A.B.N. 65 057 547 323 and their associates have received and may
receive commissions or fees from these companies in relation to advice or dealings in securities. Some or all of Wilson HTM authorised
representatives may be remunerated wholly or partly by way of commission.
In producing research reports, members of Wilson HTM Research may attend site visits and other meetings hosted by the issuers the subject of its
research reports. In some instances the costs of such site visits or meetings may be met in part or in whole by the issuers concerned if Wilson HTM
considers it is appropriate and reasonable in the specific circumstances relating to the site visit or meeting.
Please see disclosures at http://www.wilsonhtm.com.au/Disclosures. Disclosures applicable to companies included in this report can be found in the
latest relevant published research.
HEAD OF RESEARCH
Shane Storey (07) 3212 1351
INDUSTRIALS
James Ferrier (03) 9640 3827
Stewart Oldfield (03) 9640 3818
Andrew Dalziel (07) 3212 1946
Daniel Wan (02) 8247 6694
George Gabriel (03) 9640 3864
HEALTHCARE AND
BIOTECHNOLOGY
Shane Storey (07) 3212 1351
RESOURCES
Phillip Chippindale (02) 8247 3149
James Redfern (02) 8247 6609
Liam Schofield (02) 8247 3173
QUANTITATIVE
Nathan Szeitli (03) 9640 3806
WEALTH MANAGEMENT
RESEARCH
Peter McManus (02) 8247 3186
John Lockton (02) 8247 3118
Email:
firstname.lastname@wilsonhtm.co
m.au
NATIONAL OFFICES
Brisbane (07) 3212 1333
Melbourne (03) 9640 3888
Sydney (02) 8247 6600
Dalby (07) 4660 8000
Gold Coast (07) 5509 5500
Hervey Bay (07) 4197 1600
Sunshine Coast (07) 5451 4600
Our website: www.wilsonhtm.com.au
October 2015