Kore Group Holdings, Inc. · NYSE:KORE
Kore — Q1 2023 Earnings Presentation
44 slides from Kore's earnings presentation, May 9, 2023
Slide 1: Company Presentation May 2023
1 Company Presentation May 2023
Slide 2: Disclaimers
2 Disclaimers Market Data In this presentation, we rely on and refer to information and statistics regarding market participants in the sectors in which KORE expects to compete and other industry data. We obtained this information and these statistics from a variety of publicly available sources, in
Slide 3: Disclaimers (Continued)
3 Disclaimers (Continued) Trademarks This presentation may contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for convenience, some of the trademarks, service marks, trade names and copyrights referred to in thi
Slide 4: Today's Presenters
4 Today's Presenters Romil Bahl President & CEO, KORE Previous Experience Romil Bahl has been serving as KORE’s CEO since October 2017. He brings over 30 years of SaaS, information technology, professional services and IoT experience in high-growth environments. Prior to KORE, Romil served as Presid
Slide 5: KORE at a Glance
KORE at a Glance 5 Leading global, independent provider of mission critical IoT solutions • Market leader in enabling end-to-end IoT solutions for enterprises • Trusted advisor, enabling our customers to Build, Deploy, Manage and Scale their IoT solutions • Blue chip customer base including market l
Slide 6: Product Lines and Pricing Methods
6 Primary Pricing MethodProduct Line Product Description IoT Connectivity 66.0% of Q1’23A Per subscriber per month for lifetime of device (7-10 years and growing) Multi-year contracts with automatic renewals IoT Solutions 34.0% of Q1’23A Products • IoT connectivity services offered through market le
Slide 7: IoT Use Cases are Everywhere… Deployments are Complex
7 Inability to contextualize and analyze data Challenges in interoperability and compatibility Lack of solution deployment planning and experience Issues in compliance with regulations Fragmented ecosystem requiring multiple partners Lack of in- house IoT expertise and resources Risks and pitfalls i
Slide 8: Successful IoT Deployments Require Key Steps
8 Successful IoT Deployments Require 7 Key Steps • How these services are delivered through KORE and Partn ers Delivery: KORE Internal KORE & Partner Hybrid Partner 1.1 Business Outcomes / Business Case 2.1 Architecture 3.1 Network(s) Selection / Carrier Contracts 4.1 Forecast Management 5.1 Technic
Slide 9: Customer #1: Multinational Medical Devices Company
9 Customer #1 is a multinational medical devices company. KORE works with the cardiac monitoring (pacemakers and related devices) division, which is a market leader in this line of products. It has been a KORE customer for >10 years • Provided a global connectivity package to provide connectivity ac
Slide 10: Customer Use Case: Cardiac Rhythm Monitoring
10 Customer Use Case: Cardiac Rhythm Monitoring KORE Service DeliveryDelivery: Hardware Customization, Certifications – Gen 9 Demand Forecast Supply Chain DeploymentSetup & Optimization SubscriptionLifecycle Integration Network Design Roaming Footprint Updates Wireless Managed Services OPCO Billing
Slide 11: KORE is Well Positioned in the Early Innings of IoT Growth
11 Io T M a rk e t ($ b n ) D e v ic e s (b n ) Applications & Platforms Managed Services IoT Connectivity $906B ~$7 Trillion $382B $78B $35B $269B $250B $608B $48B IoT Devices = 12 billion Connected Devices = 37 billion IoT Devices = 75 billion Connected Devices = 91 billion 40.0% Connected Devices
Slide 12: 5G Will Drive Significant New Use Cases
12 Industry Vertical 2023E-2028E Market CAGR Internet of Things Use Cases 26% 22% 17% 15% 13% Source: Gartner Research and Transforma Insight 5G Will Drive Significant New Use Cases in Mission Critical Applications Across KORE’s Target Industries IoT & Consumer Service Providers Carrier IoT Business
Slide 13: Evolution Roadmap
13 Broadened industry sector (all 5 or more focus sectors) expertise with pre-configured solutions Massive IoT 5G, edge analytics off KORE One platform Healthy revenue mix connectivity / solutions / analytics Accelerating 5G adoption Lead with the promise of “AI + IoT” Edge computematurity 2023 2030
Slide 14: Illustrative M&A Pipeline and Recent Transactions
14 Illustrative M&A PipelineRecent M&A Transactions—Strategic Impact KORE has a successful track record of executing and integrating strategic, deleveraging acquisitions Target Location Solution Offerings Est. Revenue ($mm) Company A US IoT Solutions $8 Company B South America IoT Solutions $19 Comp
Slide 15: Acquisition of Twilio's IoT Division
15 • KORE signed a definitive agreement to acquire Twilio’s IoT division to accelerate its growth strategy, and focus on offering customers a unified, seamless method of launching IoT services • Twilio will receive 10mm shares of KORE common stock (~11.5% of issued and outstanding shares); expected
Slide 16: Positioned for Long-Term Success in IoT
16 One-time headwinds created by 2G and 3G sunsets are largely in rear-view mirror, positioning KORE to showcase industry leading organic growth, approaching 20% by 2025 ✓ ✓ Transformed from being an IoT connectivity provider to a Company that offers a broad array of technology-driven services to de
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Slide 18: Key Company Highlights
18 Key Company Highlights Large and growing market with increasing demand for IoT connectivity and solutions over the next decade 1 Leading independent IoT solution provider backed by extensive IP that creates high barriers to entry2 IoT solutions that improve customers’ ESG profile5 Strong leadersh
Slide 19: Large and Growing Market with Increasing Demand
19 • CaaS1 ‐ Licensed ‐ Unlicensed ‐ Satellite • CEaaS2 ‐ CNaaS ‐ CMPaaS ‐ PNaaS • IoT Solutions3 ‐ Managed Services ‐ Analytics 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 C o n n e c ti o n s (M ill io n s) Massive IoT Powered by
Slide 20: IoT in a Box Creates High Switching Costs
20 • ConnectivityPro service and related APIs • eSIM technology stack/ proprietary IP • Hypercore technology Connectivity IoT Solutions • Deep industry vertical knowledge and experience ‒ Connected Health – FDA, HIPAA, ISO 9001/13485 ‒ Fleet Management – SaaS product and APIs, video bundle • Unmatch
Slide 21: Strong Recurring Revenue and Gross Profit
21 91.2% 90.2% 85.1% 92.4% 89.6% 92.1% 94.7% 96.6% 90.4% Average: 91.4% Q1 2021A Q2 2021A Q3 2021A Q4 2021A Q1 2022A Q2 2022A Q3 2022A Q4 2022A Q1 2023A 87.3% 83.2% 70.4% 78.3% 75.5% 85.2% 88.0% 90.8% 83.5% Average: 82.3% Q1 2021A Q2 2021A Q3 2021A Q4 2021A Q1 2022A Q2 2022A Q3 2022A Q4 2022A Q1 202
Slide 22: Blue-chip Customer Base with Global Coverage
22 Full eSIM Coverage NA Local Coverage LATAM Local Coverage EMEA/APAC Local Coverage Satellite Coverage Well-diversified Revenue Across Blue-chip Customer Base with Truly Global Coverage 4 AT&T Sprint Verizon T-Mobile Movistar Telefonica Rogers vivo O2 UK Three Orange S.A. T-Mobile BT Optus Vodafon
Slide 23: Revenue by Customer, Region and Vertical
23 • Outside of Customer 1, a KORE customer for 10+ years, and Customer 2, no customer contributes more than 4.0% of total revenue • Customer 1’s revenue contribution in 2022 is elevated due to a large LTE transition project, which is now complete • Excluding the large LTE transition project, Custom
Slide 24: LTM Dollar-based Net Retention Rate
24 103.0% 103.0% 106.0% 108.0% 113.0% 114.0% 122.0% 122.0% 114.0% 100.0% 92.0% 107.0% 112.0% 110.0% 115.0% 114.0% 109.0% 106.0% 103% 126.0% Q2 2020A Q3 2020A Q4 2020A Q1 2021A Q2 2021A Q3 2021A Q4 2021A Q1 2022A Q2 2022A Q3 2022A Q4 2022A Q1 2023A DBNER DBNER Excluding Largest Customer • Existing cu
Slide 25: IoT Solutions that Improve Customers' ESG Profile
25 KORE’s focus as a company is to make it easy for customers to leverage and scale IoT capabilities that help solve major environmental and social issues ✓ Making healthcare accessible across the world ✓ eSIM technology provides secure and globally connected solutions for smart grid applications ✓
Slide 26: GroundWorx Case Study
26 • GroundWorx is a wireless innovations and water conservation company • KORE developed firmware, assisted with device certification and provided global connectivity for GroundWorx’s soil sensors • This collaboration enables organizations worldwide to easily manage water and electricity usage, red
Slide 27: High Quality Sales Pipeline
27 High Quality Sales Pipeline Supported by Attainable Growth Initiatives 6 Qualification & Technical Evaluation Stage Contract Signed Stage Beta Site Stage Total Closed Won1 $28mm TCV Closed Won Total Pipeline1 1,446 Opportunities $501mm TCV Proposal Stage 1 Sales funnel as of 3/31/2023
Slide 28: Analytics and Edge Computing Roadmap
28 High Quality Sales Pipeline Supported by Attainable Growth Initiatives Device Edge: DevicePro Launch Device Edge: EPX Launch Site Edge: Private Networks KORE – Impala Device Builder Products Edge Data Broker and Distributed Database KORE Anywhere – Edge On-Ramp Services 2024+2023 Analytics Servic
Slide 29: Management Team and Board of Directors
29 Management Team Board of Directors Timothy M. Donahue Chairman of the Board Mark Neporent Director Appointed to Board: 2022 Romil Bahl President and Chief Executive Officer Joined KORE: 2017 Louise Winstone EVP and Chief Human Resources Officer Joined KORE: 2019 Sundar Somasundaram SVP, Fleet Man
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Slide 31: Accelerating Long-Term Organic Growth
31 $131 $152 $166 $174 2020A 2021A 2022A Q1'23A Run-Rate $74 $78 $85 $90 2020A 2021A 2022A Q1'23A Run-Rate Accelerating Long-Term Organic Growth CommentaryIoT Connectivity: Organic Revenue1 1 Adjusted for constant currency, acquisitions, one-time customer churn, and 2G / 3G sunsetting CAGR: 12.7% Io
Slide 32: Organic Revenue Reconciliation
32 Source: Company financials 1 Q1’23A Run-Rate represents QoQ growth and LTM Q1’23A represents YoY performance versus LTM Q1’22A ($mm) 2020A 2021A 2022A LTM Q1’23A Q4’22A Run-Rate Q1’23A Run-Rate Total Revenue as Reported $159 $169 $176 $175 $175 $174 Less: Non-Core Customers (incl. 2G/3G sunsettin
Slide 33: Q1'23 Performance Update
33 Q1’23 Performance Update Period Ended ($mm) Q1’23A Δ YoY2 Δ QoQ3 IoT Connectivity 44 (1.3%) (0.3%) IoT Solutions 22 (9.7%) 19.7% Reported Revenue $66 (4.4%) 5.7% Reported Gross Profit $36 5.8% 5.5% % Margin 54.0% 518 bps (9 bps) Reported Adj. EBITDA $13 (12.8%) (14.9%) % Margin 20.2% (195 bps) (4
Slide 34: Financial Performance Summary
34 0 50 10 0 15 0 20 0 25 0 30 0 35 0 2020A 2021A 2022A LTM Q1'23A Financial Performance Summary $24 $30 $38 $38 0 10 20 30 40 50 60 70 80 2020A 2021A 2022A LTM Q1'23A $36 $44 $53 -5 5 15 25 35 45 55 65 75 2020A 2021A 2022A LTM Q1'23A $104 $120 $132 $136 -10 10 30 50 70 90 11 0 13 0 15 0 17 0 19 0 2
Slide 35: Key Company Highlights
35 Key Company Highlights Large and growing market with increasing demand for IoT connectivity and solutions over the next decade • Accelerating digital transformation and the increasing emphasis on a connected environment continues to drive rapid growth in the IoT market • $3 billion Low Power Wide
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Slide 37: Ample Opportunities to Upsell and Cross-Sell
37 Cross-Sell OpportunitiesUpsell Opportunities • KORE has the opportunity to upsell its solutions suite with majority of its customers • IoT Connectivity – Customers buy additional connectivity as they deploy more solutions and ship more products – Existing customers are upsold our multi-IMSI and e
Slide 38: KORE Company History and Evolution
38 Founded in 2003 Early machine-to-machine focus Established North America market position with AT&T and Rogers Launched first generation IoT platform PrismPro KORE 1.0 Establishing IoT Pioneer (2003 – 2013) ~1.5M devices Global geographic expansion Key acquisitions Expansion into different vertica
Slide 39: KORE is the Only Pure Play IoT Enabler
39 Enterprises IoT Applications Analytics Visualization KORE KORE fully delivers 45 of the 49 steps required to deploy an IoT Solution, and partners with others to deliver another 4 steps. KORE can help manage partners who will be accountable for the remaining 4 areas to provide a holistic IoT solut
Slide 40: KORE's Comprehensive Offering is Without Peer
40 KORE’s Comprehensive Offering is Without Peer in Today’s Market IoT Strategy & End-to-End security Analysis & Optimization Technology, Evaluation, Selection, Dev IoT Connectivity, Device & Data Management Deployment (forward logistics) Operations Management & Support Sustainment (reverse logistic
Slide 41: Strong Organic Financial Profile
41 Strong Organic Financial Profile Revenue: • IoT Connectivity: revenue increase driven by growth with existing customers. Growth partially offset by (1) decrease of revenue from non-core customers (customers lost from integration of old acquisitions) and (2) migration of customers from 2G/3G techn
Slide 42: LTM Adjusted EBITDA Reconciliation
42 LTM Adjusted EBITDA Reconciliation $mm LTM Q1’23A Net Income ($113) Depreciation & Amortization 55 Interest Expense 35 Tax Benefit (9) Reported EBITDA ($31) Non-Cash & Certain Other Adjustments: Stock-Based Compensation 11 Goodwill Impairment Loss 58 Other Adjustments 1 Investments & Transformati
Slide 43: Organic Gross Profit Reconciliation
43 ($mm) 2020A 2021A 2022A LTM Q1’23A IoT Solutions Gross Profit as Reported $21 $24 $26 $27 Less: Largest Customer LTE Transition - (5) (2) (1) IoT Solutions Gross Profit (ex Largest Customer) $21 $19 $24 $27 Less: Constant Currency (CC) Adjustment (0) (0) 0 0 IoT Solutions Gross Profit (ex Largest
Slide 44: Current Capitalization
44 Current Capitalization As of Net ($mm) March-23 Levg. Maturity Rate Floor Ratings1 Cash $31 $30mm Revolving Credit Facility -- Sept-24 S+5502 0.0% B2 / B 1st Lien Term Loan B 302 Dec-24 S+550 0.0% B2 / B 1st Lien Debt $302 4.5x Unsecured Convertible Notes 120 Sept-28 5.5% -- NR / NR Capital Lease