Araxi Limited · JSE:AXX
Araxi — Capital Appreciation — Investor Presentation (July 2024)
44 slides from Araxi's investor presentation, July 2024
Slide 1: Unlock The Stock
A CAPITAL Unlock The Stock July 2024
Slide 2: Disclaimer
Disclaimer This report contains forward-looking statements that relate to Capital Appreciation’s future operations and performance. Such statements are not intended to be interpreted as guarantees of future performance, achievements, financial or other results. The statements rely on assumptions and
Slide 3: Outline
Outline 1 Introduction & Highlights 2 Payments 3 Software 4 Financial Performance 5 Prospects 6 Q&A 3
Slide 4: We are a financial technology company
We are a financial technology company that seeks to serve and partner with established and emerging financial enterprises and other large corporates Revenue People Revenue People Revenue People R 562 m 226 R 618 m 522 R 137 m 5 International Payments Software Note: Team complement does not include t
Slide 5: Investment Case
Capital Appreciation’s ✓ Strong secular growth trends Investment ✓ Large market opportunity – domestic and international Case ✓ Trusted partner to blue-chip clients ✓ Highly talented, skilled and dedicated team An extremely strong ✓ Demonstrated leadership and track record foundation on which to gro
Slide 6: Strong Progress in Sluggish Economy
Strong Progress in Sluggish Economy ✓ Group Revenue exceeds R1.1 billion, up 19% HEPS up 83%, DPS up 21% ✓ Demand for Payments products accelerating, Excluding ECL, HEPS up 11% and Software demand remains strong (although sales cycle protracted) 14.65 ✓ New and diversified revenue streams 13.61 13.1
Slide 7: Strong Topline Growth and Cash Generation
Strong Topline Growth and Cash Generation Revenue up 19% EBITDA up 53% 1182.0 *Incl. GovChat ECL, per IFRS 995.1 251.6 252.8 Revenue benefiting 831.0 from terminal orders, R million R million 164.9 Payments’ software solutions, Software’s cloud and digital consulting and 2022 2023 2024 2022 2023* 20
Slide 8: Continued Strong Growth from Payments
Continued Strong Growth from Payments Total terminal estate up 9% Payments EBITDA margin up 500bps 328 357 Terminal rental 44 277 income up 95% 41 39 Percent 217 35 ‘000s 185 140 Transaction related 216.5 income up 39% 92 49 Apr Mar Mar Mar Mar Mar Mar Mar Momentum 2021 2022 2023 2024 17 18 19 20 21
Slide 9: Strong Revenue Growth from Software
Strong Revenue Growth from Software Service and Software Revenue up 32% Software EBITDA margin down 600bps 618.8 consultancy fees up 44% 25% 469.9 24% R million 19% 297.2 Percent 222.1 Licence and 13% subscription fees up 20% 2021 2022 2023 2024 2021 2022 2023 2024 Security hardware Services and con
Slide 10: Payments
Payments
Slide 11: Payments, a business transformed and ready for tomorrow
Payments, a business transformed and ready for tomorrow Multiple clients • Terminal estate size 357k+ • POS distribution, repairs and key injection Multiple clients (P2P PED) 2024 ……… Beyond • VAS • Terminal estate size 328k • Regulatory compliance • POS distribution, repairs and key injection • Log
Slide 12: Payments Growth Strategy
Payments ✓ Grow market for devices Growth ✓ Continue to take market share in established segments Strategy ✓ Grow SA client base ✓ Refresh industry’s legacy terminal estates – 2G and 3G devices Organic growth opportunities ✓ Follow clients across Africa (hardware & software) are plentiful for a busi
Slide 13: Executing on the Strategy
Executing on the Strategy Successful in Successful in Two new SA two material important bank clients bank tenders Fuel tender Deployed first Turning cost Doubling down Introduced multi-lane centres into revenue on Software new products installation opportunities Expecting MARKED positive impact on P
Slide 14: Terminals Rented to Banks
Terminals ✓ Contractual arrangement is 3 to 5+ years with Banks Rented to ✓ Revenue is recognised over the contract period Banks ✓ Terminal lease is accompanied by monthly software license fees, estate management fees and service income Estate expected to grow ✓ Cost of sales is replaced by deprecia
Slide 15: Multi-lane Retail
Multi-lane • Cost savings due to the Retail Multi-lane devices are designed for an intensive use structure/setup of the in retail, built with powerful environment processing to increase • Seamless connection to transaction speed. ECR or external devices They provide the simplest Revolutionising Reta
Slide 16: Global Partnership
Global Partnership ACI Development • Embedded Payment Partnership Status Software Development • Payment Application DashPay has been appointed as a full ACI Software development partner in Africa. This classification is • Android Universal App of strategic importance in delivering a Software Store a
Slide 17: Leading with more Innovation
Leading with more Innovation MicroPOS Vending Solution Parking Solution A micro-merchant queue- African Resonance will over- Dedicated terminals designed for busting, admin-reducing, see the installation of Coca- unattended payment scenarios, business-in-a-box solution Cola’s unattended terminal inc
Slide 18: Payment in the palm of your hand
Payment in the palm of your hand Full end-to-end solution available in components – branded or on white label basis Payments Security Authentication A software development kit that allows A companion app that allows your A feature rich application that allows you integrators to embed a contactless t
Slide 19: 2G / 3G Networks making way for 5G
2G / 3G Both networks to be decommissioned by Networks… December 2027, commencing June 2025 …making Majority of POS way for 5G terminals are not 5G compatible 2G and 3G networks will be deprecated in the years ahead, Terminal replacement requiring replacement of all 2G / strategies already 3G enable
Slide 20: Driving Real Results
Driving Real Results Still early days . . . with continued progress FY22 Unit of Measurement YoY Growth c.2,000 Payment Plans created QTY Tens of thousands + 70% Merchants, up >100% Merchant Order Value Tens of millions + 80% >80% User Sign Up QTY Tens of thousands + 105% Completion rates Transactio
Slide 21: Software
Software
Slide 22: Software Growth Strategy
Software ✓ Leverage partnerships – New and existing - Confluent, Growth AWS, GCP - to grow domestically and internationally ✓ Grow license revenue – from proprietary software solutions, Strategy delivers operational leverage ✓ Continue with measured international expansion against ZAR based cost str
Slide 23: Stellar Reputation & Recognition
Stellar Reputation & Recognition Customer appreciation award for the PayShap Rapid Payments Programme Awarded the AWS Prize of Excellence for Generative AI development by launching the Synthesis AI Launchpad that helps customers kick start their AI journey’s Voted The Preferred Software Development
Slide 24: Leading Cloud Credentials
Noteworthy Accreditation Leading Regional Launch Digital App & Innovation Focus Partner Designation Cloud Credentials Advanced Consulting Partner Meta- DevOps Competency One of the first Financial Services Competency AWS partners in Africa Microsoft Workloads Competency AWS Partner of the year Secur
Slide 25: Software Reimagined
Software Reimagined We believe that providing innovative solutions based on emerging technologies will help our clients be globally competitive 25
Slide 26: Global Telematics Partner
Global Telematics Intelligent Data & Labs Partner More than 2 million connected devices update locations and transmit data as they move all over the world. These updates are made as frequently as once per second or Optimise Operations as infrequently as four times an hour Discerning the nature, legi
Slide 27: Howler
Howler Halo Dot. Enhance UX & Revenue Enjoying the experience of events means that customers should not have to worry about making payments Most events do not allow for payment with credit cards Enabling Commercial Howler possessed android devices, loaded with its app, to Devices with Contactless va
Slide 28: Life Healthcare
Life Healthcare Dariel Many healthcare service providers are hamstrung by older Create Efficiency technologies that are poorly supported and expensive to maintain. An ongoing modernisation programme using IoT shows that improvements in operational and clinical efficiencies can become a cost-saving r
Slide 29: AssetPool Minority Investment
AssetPool Minority Investment A cloud-native B2B SaaS platform focused on asset management, tracking, maintenance, compliance and verification 2024 Progress: ✓ New features deployed: 13 ✓ Net new Enterprise customers: 40 ✓ YOY MRR* growth: 43% _Anything ✓ YOY deal volume growth: 41% Scan_ Inspect_ T
Slide 30: GovChat Exits Business
GovChat ✓ Operations Terminated ✓ Exits Costs limited to legal services ✓ Meta/Facebook/WhatsApp Litigation Business ✓ Competition Commission prosecuting Meta in front of Competition Tribunal Rescue ✓ Granted leave to Intervene by Competition Tribunal ✓ GovChat Litigation Costs FY’24 Capital Appreci
Slide 31: Financial Performance
Financial Performance
Slide 32: Payments Performance
Payments Performance R million 562.8 533.8 600 524.8 500 • Strong recovery in H2 400 • Terminal estate up 9% 248.0 300 218.2 206.3 • Rental estate doubled 200 • Pleasing growth in payment services activities and annuity income 100 • Substantial investment in business 0 development, converting termin
Slide 33: Payments Revenue Composition
Payments Revenue Composition Sale of Terminals Maintenance and Support Service fees down 14% from terminals up 5% • Meaningful recovery in terminal sales in H2, up 52% R million R million 317.3 • Clients’ shift to rental 186.9 255.1 218.2 148.7 177.4 agreements strengthens annuity income and additio
Slide 34: Software Performance
Software R million 618.8 Performance 650 600 469.9 550 500 450 • Good progress in acquiring new 400 297.2 customers, entering new sectors and 350 building its brand 300 250 • Profitability affected by the 200 delay/deferment of projects, causing 89.7 150 79.4 70.1 over-capacity of bench resources 10
Slide 35: Software Revenue Composition
Software Revenue Composition Services and Consultancy Fees License and Subscription Fees up 44% up 20% 320 70 280 60 240 • Now a key provider to 438.7 50 clients with a multi-cloud R million R million 200 40 160 305.0 74.7 strategy 30 60.0 62.5 120 219.4 80 20 • Intelligent data attracted 40 10 seve
Slide 36: Condensed Group Statement Of Financial Position
Condensed Group Statement Of Financial Position (R million) 31 March 31 March Uncomplicated Balance Sheet 2024 2023 No debt ASSETS Property, plant and equipment 71.7 42.5 No contingent liabilities Goodwill 840.3 760.2 Asset-light business Intangible assets 105.8 68.4 Cash and cash equivalents 467.4
Slide 37: Group Condensed Statement of Comprehensive Income
Group Condensed Statement of Comprehensive Income 31 March 31 March % increase / (R million) 2024 2023 (decrease) Strong demand for products and services and Revenue 1 182.0 995.1 19% 9 months’ contribution from Dariel Gross Profit 560.8 499.5 12% Gross margin contracted Gross Profit margin 47.4% 50
Slide 38: Group Condensed Statement of Comprehensive Income (continued)
Group Condensed Statement of Comprehensive Income (continued) 31 March 31 March % increase / (R million) 2024 2023 (decrease) Profit after tax 170.9 91.9 86% Earnings per share (cents) 13.59 7.39 84% Headline earnings per share (cents) 13.61 7.44 83% Earnings per share (cents) excluding ECL 14.63 13
Slide 39: Cash Flow (Key Features)
Cash Flow (Key Features) 31 March 31 March Sustainable cash (R million) 2024 2023 generation Cash generated from operations 319.7 183.2 • Higher average cash balances • Excludes interest and Finance income received 39.6 33.1 loans to associates • Effective asset Dividends paid (104.3) (98.4) managem
Slide 40: Sustainable Cash Flow From Operations Supports Dividends
Sustainable Cash Flow From Operations Supports Dividends Cash Cover Dividends R million Times (cents per share) 319.7 350 3.5 3.1 3.2 10.00 300 2.8 3 2.7 8.25 212.7 206.1 250 2.4 2.5 204.3 200.9 7.50 183.1 2.1 166.3 200 2 1.7 5.50 131.0 5.00 150 1.5 108.1 4.25 4.00 98.3 72.1 100 1 66.1 65.5 62.2 50
Slide 41: Prospects
Prospects
Slide 42: General Prospects
General Prospects Strong pipelines across divisions and significant Group is well capitalised, with the orders already placed management skills, experience, for fiscal 2025 motivation and technology (products and solutions) to Economic climate is deliver on our impacting our clients and remains pres
Slide 43: Investment Case
Capital Appreciation Investment ✓ Leadership position in industry with strong secular growth trajectory Case ✓ Strong culture of innovation resulting in relevant client solutions ✓ Demonstrated track record of delivery An extremely strong foundation on which to grow – organically ✓ Trusted partner t
Slide 44: Q&A Thank you
Q&A Thank you
Capital Appreciation — Investor Presentation (July 2024) on 6ix