Gamma Communications Plc · LSE:GAMA
Gamma Communications — Investor Day (January 2019)
63 slides from Gamma Communications's investor day presentation, Jan 15, 2019
Slide 1: Capital Markets Day
Capital Markets Day Gamma 2023 Strategy Update London 15th January 2019 Edinburgh 17th January 2019
Slide 2: Agenda
Setting the scene • Objectives for the day • Introduction to Gamma and the team • Thoughts on the business • 2023 Strategic Planning approach Agenda The Market Opportunity • Telecommunications market sizing • Coffee Break • Main market trends and opportunities Our strategic priorities moving forward
Slide 3: Objectives for the Day
Objectives for the Day • Update on Gamma’s medium to long-term strategy • Provide a clear understanding of our planning approach, the methodology adopted and our key conclusions • Provide a view of the market opportunity for Gamma • Explain our strategic priorities and ambitions moving forward • Mee
Slide 4: Gamma Senior Leadership Team
Gamma Senior Leadership Team CEO Andrew Taylor CFO App Services & Channel Sales Chief Technical Andrew Belshaw Marketing Daryl Pile Officer Alan Mackie Phil Stubbs Chief Strategy & Access & Digital Direct Sales Operations Operations Strategy David John Murphy Andy Morris David Doherty Ma
Slide 5: A quick snapshot of our business
A quick snapshot of our business • A UK based provider of voice, data & mobile communication services, enabled by a next generation network • Focused on the UK and European B2B communications market • Recently acquired Dean One, a provider of communications services in the Netherlands • 75% of our s
Slide 6: Gamma is a fast-growing B2B Cloud Communications Provider
Gamma is a fast-growing B2B Cloud Communications Provider Key financials Growth H1 2017* Margin breakdown by route to market 2010-2017 plus H1 2018 % H1 2018 to H1 2018 Revenues +18.3% 25% Gross Profit Direct +20.7% 75% Indirect Adj EBITDA +30.5% 2010 2011 2012 2013 2014 2015 2016 2017 H1 Source: Ga
Slide 7: Gamma is leading the UK transformation to IP Voice
Gamma is leading the UK transformation to IP Voice 11% Gamma SIP channels 27% Gamma Hosted PBX seats # thousands, Market share # thousands, Market share 384 766 331 680 511 230 360 142 2015 2016 2017 H1 2018 2015 2016 2017 H1 2018 x% UK market share in units
Slide 8: Agenda
Setting the scene Introduction to Gamma Agenda Thoughts on the business Strategy planning approach
Slide 9: Core Gamma Foundations - What makes us different
Core Gamma Foundations - What makes us different Product and Driving innovation on the back of strong network and product foundations Network Quality (carrier grade, high availability and rock solid end-user performance) Channel Portal capabilities (built around the channel with overlay support gear
Slide 10: Channel Partners and our sales organisation
Channel Partners and our sales organisation Who are the indirect channel partners? Who Our Channel Sales Organisation Channel Partner Distinct Markets Sales Central Carrier & New South E South W Scotland North BPO & NI Infrastr. Business Sales Operations (Feed & Support) Support Product Specialists
Slide 11: Our indirect channel strategy
Our indirect channel strategy Consistent growth in reach and revenues year on year Indirect channel partner network evolution Indirect revenue and margin +57 +119 +136 1,146 1,089 970 834 2015 2016 2017 2018 H1 2016 2017 2018 H1 Top 20% ~80% Margin • 75% of Gamma’s revenue and margin • 85% of Gamma’
Slide 12: Opportunity in existing base
Opportunity in existing base Sustained competitive advantage SIP deployments by SIP order size H1 2018, # of channels Greater Wallet Share • 48% of SIP provisions, 100+ channels (~400 seats) • Gamma Cloud PABX 16 seats on average • Evolve services to fit larger business needs • Existing channel serv
Slide 13: Our Direct Business customer base is delivering 20%+ revenue growth
Our Direct Business customer base is delivering 20%+ revenue growth Direct business segmentation Market segment Customers Details Revenues (£m) • 3,000 Customers <25 • Gamma Products – Data, Voice & Mobile SME • 1,300 Customers >25 • Average customer size has doubled in 3 years 25-500 UK • Focus is
Slide 14: Gamma USP is a combination of disruptive products and world class Customer Service
Gamma USP is a combination of disruptive products and world class Customer Service Direct Customer Engagement Differentiation against competition Continual Customer Sales Gamma Fixed Mobile Systems Assessment Business Engagement Market Operators Operators Integrators Continual Challenges Business va
Slide 15: Many organisations rely on Gamma for their business critical communications and services
Many organisations rely on Gamma for their business critical communications and services A Large A Large Financial Retailer Institution • Complete Managed • Typical SIP • Complete Managed • 20 Site Core • Very large SIP • 1,000 Site Network Communications deployment Communications Network with 900 d
Slide 16: Agenda
Setting the scene Introduction to Gamma Agenda Thoughts on the business Strategy planning approach 16
Slide 17: A thorough process to define Gamma's 2023 Strategic Plan
A thorough process to define Gamma’s 2023 Strategic Plan… Goals Re-evaluation Review all Complete & Thorough internal process Analyse relevant detail all Markets opportunities opportunities • +50 1-2-1 interviews, multiple workshops including the SLT and Board, and +10 internal workstreams launched
Slide 18: Focused on key strategic areas and a financial and action plan
...Focused on key strategic areas and a financial and action plan Key strategic areas Data New UCaaS Access Mobile products services and services International 2023 Strategy Plan Market segments Route to market Digital Network Efficiencies Transformation Financial plan Action plan
Slide 19: Key strategic questions
Key strategic questions What growth can we continue to drive from our core products and markets? What strategy should we pursue to maximise growth from cloud telephony? What new growth markets (products, segments, geographies) should we enter? How should we use technology to evolve our value proposi
Slide 20: Identified key growth opportunities
Identified key growth opportunities Cloud Telephony & UCaaS represents a significant opportunity for established and trusted players. Data Access is a core need for businesses operations as well as a strategic enabler for UCaaS. Market trends are set to open new business opportunities in this market
Slide 21: 2023 strategy plan based on four key strategic priorities
2023 strategy plan based on four key strategic priorities 1 Evolve our strong cloud telephony position into the UCaaS market Build on our Fixed and Mobile Telecom strength to differentiate our 2 proposition from pure OTT’s 3 Expand to Europe to gain continued growth and scale 4 Continue to build on
Slide 22: Agenda
Setting the scene The market opportunity Agenda Our strategic priorities moving forward Wrap-up and Q&A 22
Slide 23: Telco and ICT market growth from 2018-2023
Telco and ICT market growth from 2018-2023 B2B Telco & ICT revenues Key market insights CAGR 18-23 0% 1% CAGR CAGR Western Europe UK 85.6 €bn 11.4 £bn 13% 1 IoT 3.4 0.5 15% Overall market is flat Hosting & Cloud1 6.0 7% 1.2 1% Advanced VAS2 12.4 1% 1.4 5% Growth in new services 2 compensates decreas
Slide 24: Market developments will create significant opportunities for Gamma
Market developments will create significant opportunities for Gamma • Market demand moving progressively from Traditional to SIP to Cloud Telephony to UCaaS • Data market impacted by new demand and new innovative services • Mobile experience becoming a key driver for UCaaS. Ability to provide E2E Qu
Slide 25: Agenda
Setting the scene The market opportunity Agenda Our strategic priorities moving forward Wrap-up and Q&A 25
Slide 26: Key principles driving our thinking and strategic prioritisation
Key principles driving our thinking and strategic prioritisation Understand end customer needs and behaviours, and build our products and processes accordingly Build cloud native communication products that tap into growth markets and are easy to sell, set-up and support Ensure and reinforce an end
Slide 27: 2023 strategy plan based on four key strategic priorities
2023 strategy plan based on four key strategic priorities 1 Evolve our strong cloud telephony position into the UCaaS market Build on our Fixed and Mobile Telecom strength to differentiate our 2 proposition from pure OTT’s 3 Expand to Europe to gain continued growth and scale 4 Continue to build on
Slide 28: Key strategic priorities
Key strategic priorities 1 Evolve our strong cloud telephony position into the UCaaS market Build on our Fixed and Mobile Telecom strength to differentiate our 2 proposition from pure OTT’s 3 Expand to Europe to gain continued growth and scale 4 Continue to build on our digital capabilities to assur
Slide 29: In the fixed voice market, traditional voice is rapidly migrating to IP voice
In the fixed voice market, traditional voice is rapidly migrating to IP voice UK B2B fixed voice revenues £bn 3.0 2.8 -3% 2.8 2.6 CAGR 2.5 2.4 2.4 2.3 2.2 Fixed voice market will 2.2 2.1 fall at 3% CAGR -9% Traditional voice CAGR will fall at 9% CAGR +10% IP voice CAGR will grow at 10% CAGR 2013 201
Slide 30: IP Voice made up of SIP Trunking and Cloud PBX services
IP Voice made up of SIP Trunking and Cloud PBX services 8.9 UK SIP1 Market UK Cloud PBX Market Total trunks m, Gamma market share Total seats m, Gamma market share 7.8 Value migration from SIP 1a to UCaaS 1b 6.6 Gamma has a 27% market share of the UK SIP market Gamma has an 11% market share (and 24%
Slide 31: UCaaS market development will create new adjacent market opportunities for Gamma
UCaaS market development will create new adjacent market opportunities for Gamma UCaaS technology stack UCaaS components APIs • Word processing, Spreadsheets, Slide presentations Office • Collaborative creation and edition 4 suites • • Email Calendar • Real time voice and video conferencing, screen-
Slide 32: The overall UCaaS market is expected to grow 11% per year
The overall UCaaS market is expected to grow 11% per year UCaaS market £bn, 2009-2023 +11% 3.3 CAGR 3.0 2.8 2.6 2.3 2.0 1.7 1.4 1.1 0.8 0.6 0.4 0.2 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 22% UK UCaaS Market penetration1 49% 1 UCaaS penetration measured as “Cloud telephony s
Slide 33: Traditional fixed voice migration has created three waves
Traditional fixed voice migration has created three waves: SIP, Cloud Telephony and UCaaS. Gamma is well positioned to capture them Market opportunity SIP wave Cloud UCaaS wave Simple VoIP Telephony wave Full stack Integrated Telephony VoIP bundled with experience Hosted PBX Mid-term Long-term Sourc
Slide 34: The size of the opportunity is attracting different types of players to the UCaaS market
The size of the opportunity is attracting different types of players to the UCaaS market, increasing competitive pressure UCaaS competitive environment Key market insights Tech vendors CSPs The product offering will become more 1 sophisticated Price pressure will increase, resulting in 2 ARPU decrea
Slide 35: We will leverage our leadership position to extend our offering to adjacent markets
We will leverage our leadership position to extend our offering to adjacent markets and provide a compelling UCaaS proposition UCaaS Service Stack Gamma Position and Strategy APIs Office Integration with cloud-based Office suites suites Collaboration & Collaboration and Conferencing Conferencing Cal
Slide 36: New Services
Horizon Collaborate Service Launch H1 2019 Horizon – Cloud PBX services New Services Application Sharing Conferencing Instant Messaging Presence Video Desktop Client (Mac & Mobile Client Windows)
Slide 37: Coffee break
Coffee break Back in 10 mins
Slide 38: Key strategic priorities
Key strategic priorities 1 Evolve our strong cloud telephony position into the UCaaS market Build on our Fixed and Mobile Telecom strength to differentiate our 2 proposition from pure OTT’s 3 Expand to Europe to gain continued growth and scale 4 Continue to build on our digital capabilities to assur
Slide 39: A full telecom wrap is a critical part of Unified Communications
A full telecom wrap is a critical part of Unified Communications to deliver a business quality user experience UCaaS and the network wrap Fixed UCaaS Mobile data APIs Office suites Collaboration & Conferencing Hosted PBX (Call management) • Broadband • 4G • Ethernet • 5G VoIP Telephony • WAN Service
Slide 40: Fixed data access is a £3bn market
Fixed data access is a £3bn market where new regulations and technology will generate additional opportunities for Gamma B2B Fixed Data revenues Key market insights £bn Fixed data is a market of £3.2bn and it is -1% CAGR 1 mostly stable (-1% CAGR 2018-2023) 3.2 3.2 3.2 3.2 3.1 3.1 3.0 3.0 Total 2.7
Slide 41: B2B mobile is also a £3bn market in which mobile data will strongly grow
B2B mobile is also a £3bn market in which mobile data will strongly grow, substituting mobile voice B2B Mobile revenues Key market insights £bn, % of mobile voice and data Mobile is a market of £2.9bn and it is -1% CAGR 1 mostly stable (-1% CAGR 2018-2023) 3.39 3.41 3.29 3.09 2.94 2.90 2.86 2.82 2.7
Slide 42: We will continue to build on our telecom strength to differentiate from pure OTTs
We will continue to build on our telecom strength to differentiate from pure OTTs Public Cloud/ SaaS Voice & Data WiFi LAN BB ethernet Managed devices Mobile RAN Core Network Private Cloud PSTN 42
Slide 43: Data access services will continue to focus on enhancing quality
Data access services will continue to focus on enhancing quality for our communication products Strategic objectives of data access services 1 Ensure Quality of Service for • Keep control of network quality and security to maintain clear USP our Communications apps in our communication applications
Slide 44: Mobile is a fundamental enabler for our UCaaS value proposition
Mobile is a fundamental enabler for our UCaaS value proposition Mobile as a key differentiator for UCaaS • End to End seamless experience and QoS • Fixed Mobile Convergence capabilities • Customer contract ownership for Channel Partners • Good understanding of mobile market and drivers We have defin
Slide 45: Key strategic priorities
Key strategic priorities 1 Evolve our strong cloud telephony position into the UCaaS market Build on our Fixed and Mobile Telecom strength to differentiate our 2 proposition from pure OTT’s 3 Expand to Europe to gain continued growth and scale 4 Continue to build on our digital capabilities to assur
Slide 46: Major UCaaS growth opportunity in Western Europe
Major UCaaS growth opportunity in Western Europe Western Europe UCaaS revenues £bn 12.2 12% CAGR 11.1 10.2 Very large market with 123m seats and £6.8bn 9.1 8.0 Growing at 12% CAGR 6.8 5.6 16% Market penetration 4.6 3.7 At least two years behind UK and Netherlands 2015 2016 2017 2018 2019 2020 2021 2
Slide 47: UK is the leading VoIP telephony market and Gamma is well positioned to lead
UK is the leading VoIP telephony market and Gamma is well positioned to lead the VoIP migration in the rest of Europe European B2B Cloud telephony adoption % of VoIP seats/total B2B seats Gamma has developed unique UCaaS assets and know-how in the most advanced European market Other European countri
Slide 48: European expansion will provide significant benefits to Gamma
European expansion will provide significant benefits to Gamma Levers Opportunities • Leverage Gamma’s expertise to replicate its success story in less mature markets on a similar trajectory Realise new market • Expand Gamma’s unique approach into existing European businesses opportunities • Capture
Slide 49: Our first acquisition is a fast growing cloud telephony company
Our first acquisition is a fast growing cloud telephony company and a good example of our target profile • The Netherlands cloud telephony market is highly attractive The (4th largest in Europe) Netherlands Market • The Netherlands is an attractive location to start the expansion to other key EU mar
Slide 50: We have developed a strong capability to support our inorganic growth ambitions
We have developed a strong capability within Gamma to support our inorganic growth ambitions • Created an M&A capability, utilising both internal and external resources, to successfully execute this aspect of our growth strategy • Established a European Board (including both Gamma and Dean One leade
Slide 51: Key strategic priorities
Key strategic priorities 1 Evolve our strong cloud telephony position into the UCaaS market Build on our Fixed and Mobile Telecom strength to differentiate our 2 proposition from pure OTT’s 3 Expand to Europe to gain continued growth and scale 4 Continue to build on our digital capabilities to assur
Slide 52: Businesses purchasing behavior change
Businesses purchasing behavior change Key market trends Customer sophistication New channels will disrupt the will increase current route to market • Customers will “pull” more • UCaaS providers will push simple • Brand importance high (low-end) dealer model • Integration requirements (high-end) • S
Slide 53: In the years ahead, new channels will appear and existing channels will evolve
In the years ahead, new channels will appear and existing channels will evolve Route to market trends Digital Dealers Resellers Will drive: Simplicity drives economy of scale Refine value add Sales Micro/Small Lead generation SME Rise of the Dealer Model Embrace digital platforms Self-service All So
Slide 54: Telco digital disruption is here and it will increase significantly
Telco digital disruption is here and it will increase significantly in the coming years Digital disruption status per industry Level of disruption Telco Low disruption Medium disruption High disruption Public Agricul- Construc- Food Health Home & Banking FMCG Mobility Consumer Travel Stage of admin.
Slide 55: Gamma's digital Portal has been a key innovation in the industry
Gamma’s digital Portal has been a key innovation in the industry and part of our success with the Indirect Channel Through our Digital Portal, Partners can: • Provision and manage services online • Port numbers • Generate reports • View bills and invoices • View product and training news The Gamma P
Slide 56: Digitalisation objectives
Digitalisation objectives We have an opportunity to lead the provision of an end-to-end Improve customer communications portal for the business market that evolves experience with channel and user behaviors Improve ability to launch/ Ability to increase rate of innovation, based on more flexible adj
Slide 57: Key strategic priorities
Key strategic priorities 1 Evolve our strong cloud telephony position into the UCaaS market Build on our Fixed and Mobile Telecom strength to differentiate our 2 proposition from pure OTT’s 3 Expand to Europe to gain continued growth and scale 4 Continue to build on our digital capabilities to assur
Slide 58: These strategic decisions will have a very positive impact on our Indirect Channel
These strategic decisions will have a very positive impact on our Indirect Channel • Enhance profitability for Gamma and Partners, digital programmes drive automation in sales, provisioning, service & lead generation • Increase Cloud PABX margins, through UCaaS “Collaborate” service and enhancements
Slide 59: … and a positive impact on our Direct Channel initiatives
… and a positive impact on our Direct Channel initiatives • Accelerate the mid-market segment (250-499) – with UCaaS & product improvements, go to market messaging and expansion and realignment of our sales teams • Boost Public Sector revenues - renewing Crown Commercial frameworks plus adding the n
Slide 60: Agenda
Setting the scene The market opportunity Agenda Our strategic priorities moving forward Wrap-up and Q&A 60
Slide 61: An ambitious plan for long term sustainable growth
An ambitious plan for long term sustainable growth 1 Evolve our strong cloud telephony position into the UCaaS market Build on our Fixed and Mobile Telecom strength to differentiate our 2 proposition from pure OTT’s 3 Expand to Europe to gain continued growth and scale 4 Continue to build on our dig
Slide 62: Wrap-up
Wrap-up Strong foundations: Gamma is in very good shape and very well positioned to deliver future profitable growth Significant market opportunity: The UK and European market opportunity for Gamma is very significant and at the early stage of the growth curve Focused on delivering long term profita
Slide 63: Thank you
"s2eeke Thank you Q&A