Grid Dynamics Holdings, Inc. · NASDAQ:GDYN
Grid Dynamics — ChaSerg Technology Acquisition — SPAC Merger (January 2020)
27 slides from Grid Dynamics's SPAC merger presentation, Jan 31, 2020
Slide 1: Grid Dynamics Presentation
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Slide 2: Forward-Looking Statements
2 Forward - Looking Statements This communication contains “forward - looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Sec tion 21E of the Securities Exchange Act of 1934 that are not historical facts, and involve risks and uncertainties that could cause actual
Slide 3: Seasoned Executive Leadership Backed by Industry Veterans with Deep Public Company Experience
The picture can't be displayed. Seasoned Executive Leadership Backed by Industry Veterans with Deep Public Company Experience 3 20+ years of senior management experience in the high - tech industry and a serial entrepreneur ▪ Founder and CEO of Luxera, an LED solutions company ▪ VP, Sales for LedEng
Slide 4: Grid Dynamics is the emerging leader in enterprise-level digital transformation
4 Grid Dynamics is the emerging leader in driving enterprise - level digital transformation in the Fortune 1000. The Forrester Wave™ Midsize Agile Software Development Service Providers Q2 2019
Slide 5: Grid Dynamics at a Glance
The picture can't be displayed. 5 Grid Dynamics at a Glance Vast, rapidly - growing market opportunity Unique model to attract, train and retain people High value, high impact services Substantial growth opportunities/platform for acquisitions Strong and capable management team, combined with vision
Slide 6: Grid Dynamics by the Numbers
$40 $55 $71 $92 $10 $13 $17 $19 2015 2016 2017 2018 2019P 2020P 6 Grid Dynamics by the Numbers ▪ Software - like net revenue retention metrics ▪ Operating in a rapidly growing $100B market ▪ Average revenue per customer of over $3.5mm $84 $90 $93 $57 $57 $61 2016 2017 2018 Outstanding Organic Revenu
Slide 7: Grid Dynamics Operates in a $100B Market
7 Source: Forrester Research, The Economist $45B $60B $80B $100B $120B 2016 2017 2018 2019 2020 Digital Services Grid Dynamics Operates in a $100B Market… 47% 10% …That is Still in the Early Stages Fully Digital Not Embarked Upon Started Partly or Not at All Digital The picture can't be displayed. M
Slide 8: Grid Dynamics is Ahead of the Curve in Custom Application Development
The picture can't be displayed. 8 Grid Dynamics is Ahead of the Curve in Custom Application Development " The research shows that many organizations already favor a new kind of "build" that does not include out - of - the - box solutions , but instead a combination of application components that are
Slide 9: Capturing the High Value Services Budget
Capturing the High Value Services Budget 9 Revenue driving Cost saving Technical complexity Tier 1 outsourcers Pure - play digital services Low High
Slide 10: High Value, High Impact Services
High Value, High Impact Services 10 Big Data & Fast Data Cloud Computing Performance Engineering The picture can't be displayed. Digital Innovation Technical Consulting Lean Prototypes Digital Intelligence Scalable Engineering Development Culture Experience Design Proof - of - Concept Feasibility La
Slide 11: Delivering digital innovation requires radical rethinking of the delivery model
11 Delivering digital innovation requires radical rethinking of the delivery model Proprietary Delivery Model Distributed by design Globally optimized skills Client co - innovation Lean culture Mapping between skills and demand is optimized across locations and accounts, enabled by proprietary softw
Slide 12: Attract, Train, Retain Outstanding People
The picture can't be displayed. The picture can't be displayed. The picture can't be displayed. The picture can't be displayed. 12 Average of 6 qualified candidates in pipeline for every hire Fully internal recruiting process with no dependence on agencies Source graduate hires only from top - ranke
Slide 13: Attract, Train, Retain: Competitive Advantage in US
13 Attract, Train, Retain: Competitive Advantage in US Other client offices Grid Dynamics technical staff Plano, TX (201 8 ) Forth largest metro and the fastest growing in the US Destination of choice for technical talent San Ramon, CA (2006) Headquarters and the center of operations for SF Bay Area
Slide 14: Attract, Train, Retain: Sourcing from Central and Eastern Europe
Poland 14 Attract, Train, Retain: Sourcing from Central and Eastern Europe Universities in the top 20 programming championship ( Source: ACM ICPC Rankings) Grid Dynamics offices St Petersburg (2009) Largest IT labor market in Russia (80K IT specialists) Consistent world programming champions Krakow
Slide 15: Attract, Train, Retain: Professional Development Programs
Attract, Train, Retain: Professional Development Programs 15 Digital innovation requires a culture of ownership, agility , and constant learning Skills - oriented promotions ▪ Grid Dynamics U offers 250+ technical and non - technical courses to skill up ▪ Employees evaluated and promoted based on tr
Slide 16: Stable, Blue-Chip Customer Base
16 Stable, Blue - Chip Customer Base Building significant long - term relationships with Large Global Enterprises ▪ 90%+ of revenue in 2019 came from Fortune 1000 customers ▪ 2018 revenue per customer of over $3.5mm, with 2019 revenue per customer projected to be over $3.9mm ▪ Six of Grid Dynamics’
Slide 17: Case Studies
Case Studies 17 Reduced time - to - recover of a major ecommerce system from hours to 2.5 minutes Reduced Black Friday preparation time for a leading luxury retailer from six months to four weeks Increased sales 23% immediately after rolling out new customer experience The picture can't be displayed
Slide 18: Demonstrated Track Record of Land and Expand
Demonstrated Track Record of Land and Expand 18 Proven ability to upsell solutions in top accounts $mm Average Spend of Top 10 Clients # of Clients > $1mm Proven track record of adding $1mm+ accounts $3.0 $3.9 $5.1 $6.6 $8.7 $10.1 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 2014 2015 2016 2017 2018 2019P 5
Slide 19: Stable and Predictable Business Model
Stable and Predictable Business Model 19 % Net Revenue Retention ($ amount) Superior net retention than software companies % of Revenue by Client Cohort Mature: 85% New: 5% 126% 127% 122% 127% 119% 100% 105% 110% 115% 120% 125% 130% 2015 2016 2017 2018 2019P Net Retention Average Software Net Retent
Slide 20: Platform Built For Sustained Growth
Platform Built For Sustained Growth 20 Highly fragmented market provides a target rich environment for Grid Dynamics to leverage our vertical expertise to make tuck - in acquisitions at highly accretive valuations Integrated global delivery model provides expertise necessary to successfully execute
Slide 21: Management Team
▪ Over 20 years of technology and program management leadership ▪ President, Aculocity ▪ Leadership roles at GMSA and GVW Group Vadim Kozyrkov SVP, Engineering ▪ Over 15 years of industry experience ▪ Over 10 years in leadership roles ▪ Founder and CTO, Tonomi ▪ Principal product architect for eBay,
Slide 22: Management Team
22 ▪ Over 15 years of leading engineering teams, delivering complex programs, and developing engineering talent ▪ Director, Global Delivery at Grid Dynamics ▪ Built & led cross - functional teams in Telecom, Finance and e - Commerce Igor Yagovoy VP, Engineering Management ▪ Successfully led large re
Slide 23: Industry-Leading Financial Profile
$0 $5 $10 $15 $20 $25 $30 $35 2015 2016 2017 2018 2019P 2020P $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 2015 2016 2017 2018 2019P 2020P Industry - Leading Financial Profile 23 $mm $117.3 - $118.2 Revenue $mm $23.6 - $24.3 Adjusted EBITDA $146 - $153 $29 - $32 $92 $71 $55 $40 $19 $16 $13 $10
Slide 24: Grid Dynamics vs. Peer Group
24 M&A Revenue per Employee ($’000) Superior Revenue per Employee 84 90 93 52 56 61 57 61 62 61 54 61 2016 2017 2018 Grid EPAM Globant Endava FY18 Average Revenue per Customer $0M $1M $2M $3M $4M Grid EPAM Globant Endava Grid Dynamics vs. Peer Group FY19 Revenue Growth (%) 0% 5% 10% 15% 20% 25% 30%
Slide 25: Pro Forma Valuation
25 Pro Forma Valuation Transaction Overview • Enterprise value of $407mm (13.3x FY20P Adj EBITDA of $30.6mm) o Pro forma net cash of $104mm o Mgmt/existing shareholders to be paid $130mm in cash consideration and issued 21.4mm rollover shares plus 2.8mm shares (assuming strike at $3.20; cashless exe
Slide 26: Priced at >25% Discount to Public Comps
17.0x 19.2x 21.9x 36.2x 34.4x 29.7x - 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 @$10.00 @$11.00 @$12.00 Endava Globant EPAM Grid Dynamics Priced at >25% Discount to Public Comps Despite Higher Revenue Growth and EBITDA Margin 26 2019 Enterprise Value/EBITDA Multiple 2020 Enterprise Value/EBITDA Multipl
Slide 27: Historical Adjusted EBITDA Reconciliation
($ in mm) 2015A 2016A 2017A 2018A Income from Operations 9.2 10.6 13.1 13.8 Depreciation & Amortization 0.4 0.6 0.7 1.3 EBITDA 9.6 11.3 13.8 15.1 Stock-based Compensation Expense 0.4 0.4 0.8 1.8 Transaction Expenses – 0.9 1.9 2.5 Adjusted EBITDA 10.0 12.6 16.4 19.4 Historical Adjusted EBITDA Reconci
ChaSerg Technology Acquisition — SPAC Merger (January 2020) on 6ix