Ai Investor Presentation July 2007

482 views

Published on

Published in: Technology, Business
0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
482
On SlideShare
0
From Embeds
0
Number of Embeds
6
Actions
Shares
0
Downloads
0
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Ai Investor Presentation July 2007

  1. 1. A Leading Provider of Telecom Software and IT Security Solutions Corporate Presentation for Investors July 2007
  2. 2. Safe Harbor The information contained in this presentation is as of July 31, 2007. AsiaInfo assumes no obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments. This presentation contains forward-looking information about AsiaInfo’s operating results and business prospects that involve substantial risks and uncertainties. You can identify these statements by the fact that they use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Among the factors that could cause actual results to differ materially are the following: government telecommunications infrastructure and budgetary policy in China; our ability to maintain our concentrated customer base; the long and variable billing cycles for our products and services that can cause our revenues and operating results to vary significantly from period to period; our ability to meet our working capital requirements; our ability to retain our executive officers; our ability to attract and retain skilled personnel; potential liabilities we are exposed to because we extend warranties to our customers; risks associated with cost overruns and delays; our ability to develop or acquire new products or enhancements to our software products that are marketable on a timely and cost-effective basis; our ability to adequately protect our proprietary rights; the competitive nature of the markets we operate in; political and economic policies of the Chinese government. A further list and description of these risks, uncertainties, and other matters can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, and in our periodic reports on Forms 10- Q and 8-K (if any) filed with the United States Securities and Exchange Commission and available at www.sec.gov. 2
  3. 3. Table of Contents Company Overview Product and Service Offering Market Outlook and Position Financial Highlights Conclusion Appendix 3
  4. 4. Company Overview 4
  5. 5. Who We Are A leading provider of high quality telecom software solutions and IT security products and services in China 5
  6. 6. Company Profile President & CEO Steve Zhang Headquarters Beijing, China China Branch Offices Shanghai, Guangzhou, Hangzhou, Nanjing, Fuzhou, Shenyang, Chengdu, Xi’an Principal U.S. Office Santa Clara, CA, USA R&D Centers Hangzhou, Beijing, Guangzhou, Nanjing Employees Approximately 2,300 Capital Structure Listed on Nasdaq (ticker: ASIA) Background Founded in 1993 in the US, introduced the Internet to China in 1995, listed on Nasdaq in 2000. The first Chinese technology company to list on Nasdaq 6
  7. 7. Our Key Strengths Well-positioned in the rapidly growing Chinese telecom software market – Technology leadership – Strong market-wide brand awareness – Wide installation base and strong product stickiness – In-depth understanding of China market and customer needs China leverage – Capitalize on the rapid growth of the Chinese economy and telecom/ IT industry – Leverage relatively low cost of R&D and operations We are focused on high growth technologies in high growth markets 7
  8. 8. Product and Service Offering 8
  9. 9. Two Business Units in High-Growth Markets IT Security Telecom Software Solutions Products & Services • Core growth driver • Acquired in 2004 • Comprehensive product portfolio • High growth market • Leading solution in China market • High industry entry barrier and strong product stickiness 10%* 90%* *Approximate percentage of 2006 net revenue. Net Revenue represents total revenues net of third party hardware costs. Please refer to Appendix A for full details of net revenue. 9
  10. 10. Telecom Coverage Telecom software solutions continues to be the focus Network re Infrastructu 10
  11. 11. IT Security Products and Services Different types of firewall products and services to suit customers’ Super V series Firewall products needs Leading solutions & brand name Power V series Firewall products – industry wide brand recognition – high quality product offering New Network Gap products gain Smart V series Firewall products market acceptance quickly 3000-FE/GE/GF Network Gap products 11
  12. 12. Market Outlook and Position 12
  13. 13. Market Environment Overview China’s GDP growth (2001-2010) China’s telecom subscriber growth (2001-2010) US$ Billion Million Subscribers 3500 800 3000 700 600 2500 500 2000 400 1500 300 1000 200 500 100 0 0 2001 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E 2001 2002 2003 2004 2005 2006 2007E 2008E 2009E 2010E Data Source: National Bureau of Statistics of china PSTN Mobile Internet Broadband Data Source: BDA Strong economy growth prospect for China: if sustains the 7.5% growth objective outlined in the government’s 11th 5-year plan, China will become the world’s dominant economy in 2020 Population of 1.3 billion and rapidly growing economy creates massive demand for telecom services Increasing competition among operators creates growing demand for advanced software systems to help differentiate service offerings 13
  14. 14. Software Solutions Revenue Continues to Outpace Carrier CAPEX China’s Telecom CAPEX Spending AsiaInfo’s Software Solutions Revenue(1) US$ Billion US$ Million 60 80 72 6 50 70 – 200 % 2000 = 27 56 40 60 R 34 CAG 50 41 27 26 27 26 28 30 25 40 32 31 28 20 30 17 20 10 10 0 0 2000 2001 2002 2003 2004 2005 2006 2000 2001 2002 2003 2004 2005 2006 Source: China MII (1) Results of Lenovo-AsiaInfo have been consolidated since Q4’ 2004 As the telecom industry evolves, the capital investment focus is moving from hardware to software and services 14
  15. 15. Market Leadership in Telecom Software Solutions Market leader in China’s BOSS market with approximately 30% market share and deployment in 9 China Mobile subsidiaries Market leader in China’s BI market with approximately 50% market share and installation in 15 China Mobile subsidiaries and headquarters Deployed China’s largest BOSS system in Zhejiang province, which services over 30 million subscribers AsiaInfo’s BI systems support more than 150 million users and over 500 terabytes of data Over 60 million email users in China supported by AsiaInfo’s AIMC software 15
  16. 16. China IT Security Market Outlook China IT Security Market Size and Growth Rate US$ Million 1800 1657 30% 1600 27% 25% 1384 25% 1400 24% 11 1140 21% – 20 1200 2007 =24% 20% 20% R 921 1000 CAG 734 15% 800 576 600 10% 400 5% 200 0 0% 2006A 2007E 2008E 2009E 2010E 2011E China IT Security Market Size Growth Rate (%) Source: IDC, 2007 16
  17. 17. Emerging Market Opportunities China 3G - Spark industry wide BOSS system upgrades and development to support new services and growing user base - Operators will increasingly rely on sophisticated software solutions in face of increasing competition Next Generation Business Intelligence Systems - BI is the fastest growing segment in China’s telecom market. To grow at 18% CAGR from 2005 to 2010(1) - International BI market expected to grow from $4.4 billion to $5.7 billion from 2006 to 2007(2) Wireless Value Added Services (VAS) - Mobile push-mail, mobile music, mobile newspaper etc. Rapid Growth of Broadband Subscribers -59 million by the end of June 2006; 32% CAGR over the past 5 years (3) (1) Source: IDC. (2) Source: Yankee Group. (3) China MII 17
  18. 18. Financial Highlights 18
  19. 19. Successfully Focusing on Core Software Business Key 2Q 2007 Numbers Net Revenue Up 40% year-over-year Software Products Up 39% year-over-year and Solutions Revenue Gross Margin of Net Revenue(1) 54% Net Income Up 85% year-over-year Total Cash Position(2) 164.5 million (1) Gross profit divided by net revenue (2) Including cash and cash equivalents, restricted cash, and short-term investments 19
  20. 20. Consistent Growth in Core Software Business ware 2006 soft % US$ Million 2003 – CAGR=32 e revenu 100 87 75 80 17% 34% growth of software 63 57 25% revenue from 1H06 60 50 34% 45% 16% 40 83% 76% 66% 20 55% 84% 0 2003 2004 2005 2006 071H Software Revenue Services & Third Party Hardware Revenues Net of Third Party Hardware Costs 20
  21. 21. Leading R&D Drives Software Development Annual R&D Expenditure – On the Rise 006 2003–2 % US$ Million =16 CAGR 16.0 14.2 14.0 12.8 12.0 10.0 9.1 8.2 8.2 8.0 6.0 4.0 2.0 0.0 2003 2004 2005 2006 071H 21
  22. 22. Total Cash Position and Cash Flow Strong Total Cash Position, Operating Cash flow, and Non-organic Growth Activities US$ Million 200 150 100 50 0 2002 2003 2004 2005 2006 -50 Total cash position including cash, cash equivalent, restricted cash and short-term investment Net operating cashflow Non-organic growth (1) (1) This includes cash outflows for both investing activities in M&A and financing activities in stock repurchase. 22
  23. 23. Quarterly Results-Net Revenue Net Revenue (2006 Q1-2007 Q2) US$ Million Up 40% YoY 30.0 26.6 25.4 25.0 23.5 23.5 18.8 19.0 20.0 15.0 10.0 5.0 - 06Q1 06Q2 06Q3 06Q4 07Q1 07Q2 (1) Net Revenue represents total revenues net of third party hardware costs. Please refer to Appendix A for full details of net revenue. 23
  24. 24. Quarterly Results-EPS Basic and Adjusted EPS(1) (2006Q1-2007Q2) US$ 0.16 0.14 0.12 0.10 0.08 0.06 0.04 0.02 - 06Q1 06Q2 06Q3 06Q4 07Q1 07Q2 Basic EPS Adjusted EPS (1) Please refer to Appendix B for full details of adjusted EPS 24
  25. 25. Conclusion • Ideally positioned. . . • To capitalize on the huge opportunities in China’s telecom market and software industry • World-class total software solutions to • Ability to tailor cutting-edge solutions to client meet the evolving needs of China’s specific requirements telecom carriers. . . • Ability to leverage current telecom market penetration to sell other offerings including advanced OSS, service applications and enterprise management solutions • Lead over the competition • Well positioned vis-à-vis local and global competitors continues to widen . . . • Expanding market share in key telecom software solutions market • Consistent growth … • Both organically and through strategic acquisitions • Existing solutions for new markets • Innovation and product development to capitalize on emerging market opportunities 25
  26. 26. Thank you! Investor relations contact: Charles Zhang ir@AsiaInfo.com Tel: +8610 8216 6039 26
  27. 27. Appendix A: Explanation of Net Revenue Net Revenue Referred to in Slide Entitled “Quarterly Results-Net Revenue” Net revenue represents total revenue net of hardware costs that are passed through to our customers. We believe total revenues net of hardware costs more accurately reflects our core business, which is the provision of software solutions and services, and provides transparency to our investors. It is also the same measure used by our management to evaluate the competitiveness and development of our business. Reconciliation of Net Revenue to GAAP Revenue 06Q1 06Q2 06Q3 06Q4 07Q1 07Q2 (In US dollar thousands) Net Revenue 18,785 19,042 23,496 25,410 23,513 26,575 Third Party Hardware Costs 7,779 4,092 4,278 6,701 6,542 2,995 Total Revenues 26,564 23,134 27,774 32,111 30,055 29,570 27
  28. 28. Appendix B: Explanation of Adjusted EPS Adjusted EPS Referred to in Slide Entitled “Quarterly Results-EPS” Adjusted EPS excludes certain non-cash expenses and income, including share-based compensation expenses, amortization of acquired intangible assets, other operating income, and gain or loss from discontinued operations. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain non-cash expenses and income that may not be indicative of our operating performance from a cash perspective. We believe that both management and investors benefits from referring to this additional information in assessing our performance and when planning and forecasting future periods. Reconciliation of Adjusted EPS to GAAP Basic EPS 06Q1 06Q2 06Q3 06Q4 07Q1 07Q2 (in US dollar thousands, except for share and per share amounts) Net income 360 1,348 2,004 2,119 6,396 2,498 Adjustments: Stock based compensation expenses 135 137 138 393 939 912 Amortization of intangible assets 153 217 561 575 552 523 Other operating income - - - - (2,734) 0 Gain on discontinued operations (223) (246) (183) (183) (1,445) 0 Adjusted net income 425 1,456 2,520 2,904 3,708 3,933 Shares used in computation for EPS 45,453,267 43,941,763 42,331,045 42,838,394 43,150,828 43,231,164 Basic EPS 0.01 0.03 0.05 0.05 0.15 0.06 Adjusted EPS 0.01 0.03 0.06 0.07 0.09 0.09 28

×