Araxi Limited · JSE:AXX
Araxi — Capital Appreciation — H1 FY2025 Earnings Presentation
50 slides from Araxi's earnings presentation, December 2024
Slide 1: Interim Results Presentation
Interim Results Presentation For the six-months ended 30 September 2024
Slide 2: Outline
Outline 1 Overview 2 Highlights 3 Strategy & Execution 4 Financial Performance 5 Prospects 6 Q&A 2
Slide 3: Overview
Overview We are a premier financial technology and software group that serves and partners with established and emerging financial enterprises and other large corporates International Payments Software 3
Slide 4: Capital Appreciation's Investment Case
Overview Capital Appreciation’s ✓ Strong Secular Growth Trends Investment ✓ Large Market Opportunity – Domestic and International Case ✓ Driven by Technological and Software Advances ✓ Trusted Partner to Blue-Chip Clients An extremely strong ✓ Highly Talented, Skilled and Dedicated Team foundation o
Slide 5: Satisfactory Performance in a Challenging Period
Satisfactory Performance in a Overview Challenging Period Excellent performance from Software under-performed, Marked improvement in the Payments division mainly due to transitory demand post-elections challenging conditions Revenue Revenue up 19% South African revenue up 10% R611.5m 10.4% Terminal
Slide 6: Payments – New Multi-Year Contracts Commence
Highlights Payments – New Multi-Year Contracts Commence Terminal estate up 13% YoY Terminal sales up 26% Terminal rental income up 70% 150 387 45 357 328 40 277 35 ‘000s 217 100 30 R million 185 R million 140 25 92 138.6 20 38.5 49 50 109.7 15 10 22.7 Apr Mar Mar Mar Mar Mar Mar Mar Sept 5 17 18 19
Slide 7: Software – Protecting the Skills Franchise
Highlights Software – Protecting the Skills Franchise Total Software revenue up 2% South African revenue up 10% Software International revenue down 19% (including International) on multi-year contract completion 350 250 80 74.9 300 70 200 62.6 Middle East 250 60 Asia Pacific R million R million 200
Slide 8: Our Superpower – Our Team
Highlights Our Superpower – Our Team Our people are our biggest and most valuable asset 37% 55% 8% 11% Female Black Female Black Wellness, a Holistic View Employees Employees Management Management • Physical wellness • Emotional wellness Mostly young employees – almost 80% are below 40 years of age
Slide 9: Payments, a business transformed and ready for tomorrow
Payments, a business transformed Strategy & Execution - Payments and ready for tomorrow Multiple clients • Terminal estate size 387k+ (Sept ‘24) • POS distribution, repairs and key injection (P2P PED) Multiple clients • VAS FY 2024 ……… Beyond • Regulatory compliance • Terminal estate size 328k 2017
Slide 10: Payments Growth Strategy
Strategy & Execution - Payments Payments Growth ✓ Expand market for devices ✓ Continue to take market share in established Strategy segments ✓ Grow SA client base, be the enabler and provider of choice ✓ Refresh industry’s legacy terminal estates – 2G and 3G devices Organic growth opportunities are
Slide 11: Executing on the Strategy
Strategy & Execution - Payments Executing on the Strategy Successful in Successful in Two new SA Africa expansion two material meaningful bank clients materialising bank tenders Fuel tender Deployed first Turning cost Doubling down Introduced multi-lane centres into revenue on Software new products
Slide 12: Terminals Rented to Banks
Strategy & Execution - Payments 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
Slide 13: Global Payments Revenue
Strategy & Execution - Payments Global Global payments revenue, 2013 – 28F, $trillion Payments Latin America +5% per year 3,1 Revenue EMEA* North America CAGR, 2018-23 % Asia-Pacific +7% 2,4 Total 7 per year 0,2 Latin America 16 Grew 7% per year 2,2 0,5 EMEA* 11 from 2018 – 2023 0,2 +7% 1,9 per year
Slide 14: Digital Payments Expected to Reach 69% in 2027
Strategy & Execution - Payments Digital Payments Expected to Reach 69% in 2027 Payment Methods Card Scheme Share Market Size Projections POS 2023 2027 Visa POS Mastercard E-com Debit cards 37% Amex 34% South Africa Cash 2027 33% 1% 2023 $144BN 26% $121BN POS CAGR 4% Credit cards 18% 17% 44% Digital
Slide 15: Payment Devices Are Here to Stay
Strategy & Execution - Payments Payment Number of installed payment devices by type Devices Are Here to Stay SoftPOS mPOS Large growth in Payment Infrastructure anticipated Full-Service Terminals through decade’s end 15 Source: Flagship Advisory Partners, October 2024
Slide 16: Drivers of Terminal Demand
Strategy & Execution - Payments Drivers of ✓ Growing Market – Increase in terminal Terminal enabled retail footprint Demand ✓ Enhanced Technology ✓ Increased Functionality – Provide merchants Anticipate good demand enhanced services for new terminals ✓ Terminal Envy – Merchants want contemporary equ
Slide 17: Diversified Payment Offering
Diversified Payment Offering Strategy & Execution - Payments Customers can select packages or selected services a la carte Devices Software Activations & Logistics Call Centre • Stand alone: counter-top and • Software development and testing • Asset management • Product support portable • New produc
Slide 18: Tap to Pay on iPhone
Strategy & Execution - Payments Tap to Pay on iPhone • Launched February 2022 • But NOW Apple is actively promoting “Tap to Pay on iPhone” A really big deal • Live in 18 markets around the world (not SA yet), more anticipated • Materially opens market and removes reticence of customers to invest in
Slide 19: Going Contactless – Tap to More
Strategy & Execution - Payments Tap to More Going contactless … Tap on Own Converting card-not-present to card present transactions* Tap to Add Tap to Verify Tap to Activate Tap to Pay Tap to Send/Receive Consumer taps their card Consumer is requested to Consumer taps their card Consumer taps their
Slide 20: Applicable Across Use Cases
Strategy & Execution - Payments Applicable Across Use White Label Cases App to App Embedded Relevant to existing and emerging providers of financial services Dashpay Glass a fully certified turn-key acquiring solution (PaaS) available to Events & Markets Queue busting DebiCheck be white labeled by f
Slide 21: Driving Real Results
Strategy & Execution - Payments Driving Real Results Continued progress FY22 Unit of Measurement YoY Growth >2,000 Payment Plans created QTY Tens of thousands + 50% Merchants Merchant Order Value Tens of millions + 170% >80% User Sign Up QTY Tens of thousands + 90% Completion rates Transaction Reven
Slide 22: Software Reimagined
Strategy & Execution - Software Software Reimagined We believe that providing innovative solutions based on emerging technologies will help our clients be globally competitive 22
Slide 23: Ever Growing Demand for Technology
Strategy & Execution - Software Technology Ever Growing Demand for Technology “ The 10 Most Important 1. AI In The Back Office Becomes Increasingly Sophisticated Banking And Tech, AI Financial [artificial intelligence] and the 2. increased Chatbots And migration toCustomer AI Assistants In cloud-bas
Slide 24: Financial Technology Trends
Strategy & Execution - Software Financial Technology CTA has solutions or initiatives under- Trends way in 7 of top 10 technology trends 1. AI In The Back Office Becomes Increasingly Sophisticated The 10 Most Important 2. Chatbots And AI Assistants In Customer Service Banking and Financial 3. Genera
Slide 25: Software Growth Strategy
Strategy & Execution - Software Software ✓ Leverage partnerships – New and existing - Confluent, AWS, Growth GCP, Thales - to grow domestically and internationally Strategy ✓ Grow license revenue – from proprietary software solutions, delivers operational leverage ✓ Continue with measured internatio
Slide 26: Accreditation & Recognition
Strategy & Execution - Software Accreditation & Recognition AWS Premier Tier AWS Gen AI Prize AWS Premier of Excellence 2024 Consulting Partner Partner Status 2023 AWS Migration Competency Highest tier of AWS partnership status 2022 Celebrated 200 AWS Certification Milestone • DevOps Services Compet
Slide 27: Action Plan for Improved Utilisation
Strategy & Execution - Software Software Action Plan What we have done and are doing for Improved External efforts to drive revenue ✓ Refocused sales effort to improve Pipeline Quality, Depth Utilisation and Conversion Ratios Internal efforts to manage cost and resources ✓ Judicious hiring – against
Slide 28: RegTech – Old Mutual
Strategy & Execution - Software RegTech Old Mutual must comply with tax authorities’ regulations to submit Old Mutual SARS and HMRC (UK) data submissions for IT3, DWT, and CEC. Solution Efficient Data Synthesis’ TXstream reporting platform met Old Mutual's requirements and integrates into the OM Gro
Slide 29: Cloud – JSE
Strategy & Execution - Software Cloud As part of the JSE’s strategy to expand its AWS cloud environment, the JSE Company sought to build a control tower that considers proper governance and controls. Solution Expanded Cloud AWS ProServe engaged Synthesis to build out the environment as an Environmen
Slide 30: Managed Services – KUHL Clothing
Strategy & Execution - Software Managed Services KUHL Clothing is a USA based outdoor clothing retailer with a large KUHL Clothing e-commerce footprint. Synthesis was approached to provide enhanced implementation of the AWS Cloud platform and automation through DevOps on KUHL's e-commerce platform.
Slide 31: Dariel – City Lodge Hotels
Strategy & Execution - Software Dariel City Lodge Hotel Group was struggling to meet the complexities of City Lodge Hotels managing over 50 hotels. The previous system was outdated, prone to errors and fraud, and lacked flexibility for new features or changes. Enhanced Property Solution Management S
Slide 32: AssetPool _Anything
Strategy & Execution - Software AssetPool _Anything Scan_ Inspect_ Track_ Smart inspection software available in Canada, the UK, Australia and 39 countries across Africa South Africa Botswana Kenya Senegal Madagascar The Gambia Ethiopia Zambia Mauritius Gabon Uganda Equatorial Guinea Namibia Liberia
Slide 33: Industries Adopted and 2024 Progress
Strategy & Execution - Software Industries already adopted Illustrative Clients Construction Mining Logistics Fire Safety QA/QC Packaging & Food Safety Healthcare Equipment Manufacturing Rental ✓ New features deployed: 24 2024 ✓ Net new Enterprise customers: 69 Progress ✓ YoY MRR growth: 37% ✓ YoY d
Slide 34: Financial Performance
Financial Performance 34
Slide 35: Payments Performance
Financial Performance Payments R million Performance 314.3 350 265.3 300 250 • Terminal estate up 13% 200 • Several partially fulfilled terminal sale orders 138.5 and rental orders will be completed in H2 and 117.5 further new orders received after period-end 150 (in Q3) 100 • Pleasing growth in ann
Slide 36: Payments Revenue Composition
Payments Revenue Composition Financial Performance Annuity income up 13%, now comprising 56% of total Payments revenue Terminal Rental Income Maintenance and Support Service fees Sale of Terminals up 26% up 70% from terminals stable 150 45 100 40 100 35 80 R million R million 30 R million 25 60 138.
Slide 37: Software Performance
Financial Performance Software R million Performance 350 295.2 288.4 300 250 • Disappointing results – believed to be transitory • Customer caution in committing to large projects 200 impacted profitability and operating margins 150 • Key Singapore project completed in this period had a notable, neg
Slide 38: Software Revenue Composition
Financial Performance Software Revenue Composition Services and Consultancy Fees License and Subscription Fees up 6% (includes Singapore contract) up 27% 50 250 40 • Excellent growth in AWS 200 large-scale cloud R million R million 150 30 migration programmes 45.1 and multi-cloud strategy 100 206.6
Slide 39: International Performance
Financial Performance International Contribution to Group Revenue 18% Performance 15% Percent of Total 12% 9% 13.9% 6% 10.4% • The International division remains mostly 3% transacted from South Africa 0% • Promising international opportunities Sept 23 Sept 24 • Successful completion of Singapore 3-y
Slide 40: Group Condensed Statement of Comprehensive Income
Group Condensed Statement of Comprehensive Income Financial Performance 30 September 30 September % increase / Revenue growth impacted (R million) 2024 2023 (decrease) by delayed Software projects Revenue 611.5 554.2 10.4% Gross Profit 283.3 273.0 3.7% Gross margin and EBITDA margin contracted due t
Slide 41: Group Condensed Statement of Comprehensive Income (continued)
Group Condensed Statement of Comprehensive Income Financial Performance (continued) 30 September 30 September % increase / (R million) 2024 2023 (decrease) Profit after tax 74.5 80.5 (7.5%) Earnings per share (cents) 5.94 6.48 (8.3%) Headline earnings per share (cents) 5.96 6.50 (8.3%) Dividends per
Slide 42: Condensed Group Statement of Financial Position
Condensed Group Statement Of Financial Position Financial Performance 30 September 30 September 31 March (R million) 2024 2023 2024 ASSETS Goodwill 840.3 870.9 840.3 Dariel acquisition in Intangible assets 117.1 70.5 105.8 July 2023 - R37 million Property, plant and equipment 77.0 60.9 71.7 Increase
Slide 43: Cash Flow (Key Features)
Cash Flow (Key Features) Financial Performance 30 September 30 September • Cash-generative (R million) 2024 2023 businesses • Atypical period of working capital (cut-off) Cash generated from operations 11.6 159.9 • R93 million net cash inflow in October and Finance income received 15.5 20.3 November
Slide 44: Sustainable Cash Flow From Operations Supports Dividends
Sustainable Cash Flow From Operations Supports Dividends Financial Performance Cashflow and Cash Cover Dividends R million Times (cents per share) 319.7 350 4 3.6 12 300 3.2 3.5 3.1 10 2.7 3 212.7 250 206.1 204.3 200.9 2.5 2.4 183.1 2.5 8 166.3 200 1.9 5.75 2 131.0 4.00 6 3.75 150 1.5 98.4 82.1 4 3.
Slide 45: Prospects
Prospects General Prospects Strong pipelines across divisions and significant Group is well capitalised, with the orders already placed for management skills, experience, remainder of fiscal 2025 motivation and technology (products and solutions) to deliver on our growth strategy . . . Economic clim
Slide 46: Thank You
THANK Looking back . . . YOU Alan Salomon, Retiring CFO Looking ahead . . . Sjoerd Douwenga, Incoming CFO 46
Slide 47: Q&A
Q&A 47
Slide 48: 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 49: Capital Appreciation Investment Case
Prospects 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 ✓ Trusted partner to blue-chip clients foundation o
Slide 50: Halo Dot – SlicPay Capital Software
Strategy & Execution - Software Halo Dot. SlicPay Capital Software relied on physical POS devices to perform TT3 DebiCheck authentication. This imposed high maintenance and licensing costs on Capital Software solution providers. Solution Empowering service providers to Through app-to-app integration
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