Kore Group Holdings, Inc. · NYSE:KORE
Kore — Debt Investor Presentation (January 2022)
32 slides from Kore's debt investor presentation, Jan 19, 2022
Slide 1: Business Update January 2022
Business Update January 2022
Slide 2: Today's presenters
Today’s presenters Romil Bahl Chief Executive Officer Paul Holtz Interim Chief Financial Officer 2
Slide 3: Agenda
Agenda 1. Business overview 2. Key credit highlights 3. Financial update 3
Slide 4: Business Overview
KORE Business Overview
Slide 5: KORE at a glance
KORE at a glance 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 Deploy, Manage and Scale their IoT solutions Who We Are • Blue chip customer base including market
Slide 6: KORE business model: offering high demand IoT services
KORE business model: offering high demand IoT services Product line Products Product description Primary pricing method IoT IoT • IoT connectivity services offered through market leading IoT platform ‘KORE One’ Connectivity • Our IoT connectivity solutions allow devices to seamlessly and securely co
Slide 7: KORE is well positioned in the early innings of an exciting growth opportunity in IoT
KORE is well positioned in the early innings of an exciting growth opportunity in IoT 2020 2025 2030 $906B bn) $382B ( $ $78B $250B $608B $269B ~$7 Trillion TAM $35B $48B Applications & Platforms Managed Services Connectivity 5% 3% 2% 7% 12% 10% 5% 12% 12% (bn) 40% 10% 21% 57% 78% 26% Devices Connec
Slide 8: IoT use cases are everywhere… deployments are complex
IoT use cases are everywhere… deployments are complex • Sample IoT use cases • Top challenges in IoT deployments Connected Fleet Mgmt. Blood Sugar Lack of in-Monitors house IoT expertise and resources Connected Inability to Challenges in Home contextualize interoperability Gas Tank Security and and
Slide 9: KORE's IoT managed services portfolio
KORE’s IoT managed services portfolio KORE provides a one-stop-shop for IoT deployment IoT Strategy Technology IoT Deployment Operations Sustainment Analysis & 1 & End-to-end 2 Evaluation, 3 Connectivity , 4 (forward 5 Management & 6 (reverse 7 Optimization Security Selection, Dev Device & Data logi
Slide 10: KORE is the Only Pure Play IoT Enabler
KORE is the Only Pure Play IoT Enabler IoT Applications Analytics Visualization Enterprises KORE’s customers deliver end-to-end industry solutions. Unencumbered by solution management and deployment complexities, these customers can focus on IoT & Enablement their end customer experience Onboard Con
Slide 11: KORE's five focus industry sectors are growing fast
KORE’s five focus industry sectors, representing 80%+ of the IoT market, are growing fast 5G will drive significant new use cases in mission critical applications across KORE’s target industries Industry Vertical 2020P-2025P Market CAGR Internet of Things Use Cases Assets 34.2% Home / Business Offen
Slide 12: Customer case study: Customer #1
Customer case study: Customer #1 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 KORE’s customer for >10 years. Cardiac Device Bedside Monitor KORE
Slide 13: Customer use case: Cardiac rhythm monitoring
Customer use case: Cardiac rhythm monitoring KORE’s solution enables global deployment and management of regulated medical equipment Network Design Demand Forecast Technical Support Advanced Manage Roaming Footprint Supply Chain Tier 2 Services Updates Tier 3 – Connectivity / Network Order Managemen
Slide 14: Phased transformation to KORE 3.0
Phased transformation to KORE 3.0 Our 5-year direction is clear Five Year Plan 2021 Five Year Plan 2026 • Strategy for “KORE 3.0” • Begin transformation • Acquisition/integration • eSIM industry • Broadened industry • Portfolio mix from 100% finalized of connectivity of Integron; launch of leadershi
Slide 15: New leadership has repositioned KORE
New leadership has repositioned KORE Pre-Romil Bahl (2017A) Today (YTD 2021) Market positioning Global IoT Connectivity Deploy, Manage & Scale IoT solutions Core capabilities IoT Connectivity as a Service (CaaS) IoT Connectivity, Solutions & Analytics TAM ~$10 Billion ~$60 Billion (2030 estimate is
Slide 16: Key Credit Highlights
KORE Key Credit Highlights
Slide 17: Key Credit Highlights
Key Credit Highlights 1 IoT market is accelerating, driven by significant tailwinds for the next decade 2 Leading IoT offering, backed by extensive IP, creates sustainable competitive moat 3 Well-diversified customer base 4 Highly recurring revenue with long term visibility 5 Long track record of cu
Slide 18: IoT market is accelerating, driven by significant tailwinds for the next decade
1 IoT market is accelerating, driven by significant tailwinds for the next decade IoT connections by technology 80,000 of total mobile 45% data over 5G (1) • CaaS networks - 70,000 Licensed Broadband & Critical IoT Unlicensed - Low-Power Wide- (4G/5G) - Satellite 60,000 2.7B Area Connections • CEaaS
Slide 19: Leading offering, backed by extensive IP, creates sustainable competitive moat
2 Leading offering, backed by extensive IP, creates sustainable competitive moat • Comprehensive mission-critical IoT solution set • KORE’s IoT in a Box creates high switching costs 1 2 3 4 44 7 engine carrier integrations KORE One platform Technology Connectivity, IoT Strategy & Deployment Evaluati
Slide 20: Well-diversified customer base
3 Well-diversified customer base • Outside of Customer 1, which has been a KORE customer for 10+ years, no customer contributes more than 3% of total revenue • Despite Customer 1 comprising 19.4% of LTM 09/30/21 revenue, its gross profit contribution is significantly lower at 10.8% • Customer 1’s re
Slide 21: Highly recurring revenue with long term visibility
4 Highly recurring revenue with long term visibility ~90% annual recurring revenue and 99% installed base as of 2021 IoT Connectivity IoT Solutions Non-Core Customers1 ($mm) Reported Revenue $206 $214 $184 $32 $21 $156 $12 Revenue excl. non- $193 $16 $174 $172 core customers $55 $140 $47 $58 $41 $12
Slide 22: Long track record of customer retention
5 Long track record of customer retention LTM dollar-based net retention rate (“DBNER”)1 • Strong growth and stickiness among existing customer base demonstrated by growing DBNER – DBNER is calculated by dividing current year by prior year revenue for the customer cohort that existed in the prior ye
Slide 23: Financial update
KORE. Financial update
Slide 24: Q3 financial performance
Q3 financial performance Three Months Ended September 30, ($000s) 2021 2020 IoT Connectivity $41,542 61% $39,604 72% IoT Solutions 26,336 39% 15,653 28% Total Revenue $67,878 100% $55,257 100% Gross Margin 32,914 29,729 Gross Margin % 48% 54% SG&A 26,001 17,792 Adj. EBITDA $15,896 $15,369 Top Custom
Slide 25: Historical financial performance
Historical financial performance FY LTM YTD $mm Dec-19 Dec-20 Sep-20 Sep-21 Sep-20 Sep-21 A • Special project revenue in 2021 related to large LTE transition project Revenue IoT Connectivity $125.9 $137.6 $131.5 $152.2 $98.8 $113.4 • B Reflects customer churn from the integration of old acquisitions
Slide 26: Financial policy overview
Financial policy overview Leverage • Expect to delever to a target total net leverage of ~4-4.5x within ~24 months • Near-term emphasis on tuck-in opportunities to expand geographically, build out capabilities and use cases in industry verticals, enhance technical and analytical know-how, as well as
Slide 27: Appendix
KORE. Appendix
Slide 28: Net Loss, EBITDA & Adjusted EBITDA Reconciliation
Net Loss, EBITDA & Adjusted EBITDA Reconciliation ($000s) 2019 2020 YTD 9/30/2020 YTD 9/30/2021 LTM 9/30/21 1 • Transformation expenses are related to the implementation of our strategic Net loss ($23,443) ($35,201) ($19,474) ($12,474) ($28,201) transformation plan, which includes Income tax expense
Slide 29: Quarterly historical financial performance
Quarterly historical financial performance $mm Q1 20 Q2 20 Q3 20 Q4 20 2020 Q1 21 Q2 21 Q3 21 YTD 2021 Revenue IoT Connectivity $32.3 $32.0 $34.5 $38.8 $137.6 $36.5 $39.3 $37.6 $113.4 IoT Solutions 11.6 13.9 15.6 13.9 55.0 14.6 17.4 26.4 58.4 Total Adj. Revenue $43.9 $45.9 $50.1 $52.7 $192.6 $51.1 $
Slide 30: Current Capitalization
Current Capitalization Current Capitalization as of 9/30/2021 Current KORE as of 9/30/2021 ($mm) Ratings Maturity Amount xEBITDA LTV Cash & cash equivalents Corp: B3 / B- $73 (Stable / Stable) $30mm Revolver B2 / B Dec-23 -Senior Secured TLB B2 / B Dec-24 307 Total First Lien Debt $307 5.1x 33% Tota
Slide 31: Summary of terms: Convertible notes
Summary of terms: Convertible notes Structure Exchangeable Notes Size $120 million Issuer KORE Wireless Group, Inc. Underlying KORE Group Holdings, Inc. Purchaser Fortress Credit Corp. Maturity 7 years (2028) Coupon 5.50% (paid quarterly) Conversion price $12.50 Issue price Par Ranking Senior unsecu
Slide 32: Disclaimers
Disclaimers Forward-Looking Statements This presentation includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. KORE’s actual results may differ from their expectations, estimates and projections and consequen
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