Nagarro Se · XETR:NA9
Nagarro — Investor Day (September 2020)
100 slides from Nagarro's investor day presentation, Sep 28, 2020
Slide 1: Thinking Breakthroughs
@® nagarro Thinking Breakthroughs (Version updated where indicated)
Slide 2: Disclaimer
Disclaimer ‘This presentation and the information contained herein are for information purposes only and do not constitute a prospectus or an offer to sell or a solicitation of an offer to buy or subscribe for any securities of Allgeier SE or Nagarro SE. This presentaion is not directed to, orintend
Slide 3: Agenda
Agenda 1. Introduction to Nagarro 5. Financial overview 2. Market overview 6. Strategy and growth opportunities 3. Business overview 7. Wrap-up 4. Global delivery model overview: “Enterprise Agile”
Slide 4: Today's presenters
Today’s presenters CS) Manas Fuloria Custodian of entrepreneurship in the organization Vikram Sehgal Custodian of operational excellence in the organization * Responsible for organizational design and internal alignment * Co-founder in 1996, full-time since 2011, Executive Board member at Allgeier 2
Slide 5: Nagarro — a global company with no single HQ
Nagarro — a global company with no single HQ ester 25 countries with registered offices 16 nationalities in senior management q*> NAmerica Atlanta Boston Chicago Indianapolis Jacksonville EMEA Brasov Bucharest ClupNapoca Cologne Copenhagen Craiova Dubai Ebene Frankfurt Freiburg Hamburg APAC Bangkok
Slide 6: Our Mission Statement
Our Mission Statement To make distance irrelevant between intelligent people.
Slide 7: Our core values
Our core values CS) Caring is our superpower ® 7wr P *& @ Client-centric Agile Responsible Intelligent Non- Global hierarchical
Slide 8: Nagarro at a glance
Nagarro ata glance CS) » Aglobal tech services company domiciled in Germany * €402 million 2019 revenue * Fast-growing, scaled, diversified, digital engineering leader with a full-service portfolio * €58 million’ 2019 adjusted EBITDA * 8,406 Nagarrians across 25 countries » 14% 2019 adjusted EBITDA
Slide 9: Addressing a large, fast-growing digital services market
Addressing a large, fast-growing digital services market CS) Growing spend on digital IT services, supported by structural tailwinds $543 billion Automotive, Manufacturing 2024 and Industrial Telecom, Media and Entertainment Travel and Aviation Financial Services and Insurance Retail and CPG Lifesci
Slide 10: Differentiated market positioning
Differentiated market positioning Engineering DNA < epam> @ nagarro Consulting DNA > AVA accenture Excellence in digital product engineering to “change the business” 5 9 Services DNA CGI tcs|-ut CONSULTANCY ‘SERVICES Excellence in enterprise services to “run the business” Companies ed do not include
Slide 11: A leader in digital product engineering
A leader in digital product engineering Digital Product Engineering Product architecture design, Agile development, DevOps, cloud migration, product management, user experience (UX) design, rapid prototyping Digital Commerce & CX New-Gen ERP Consulting Omni-channel, digital marketing Implementation,
Slide 12: A full-service portfolio for comprehensive solutions
A full-service portfolio for comprehensive solutions CS) Differentiated focus on digital product engineering Flexible delivery model Revenue by service line Revenue by contract type 51% 14% Digital Digital Commerce & CX 20% Product Fixed Bid Engineering 10% New-Gen ERP Consulting 1% €402m €402m Othe
Slide 13: Reach and scale to service multinational clients globally
Reach and scale to service multinational clients globally Globally diversified revenue base Globally diversified employee base Revenue by client region Personnel worldwide 10% Rest of World ° 8,406 total professionals India: 5,172 9 Romania: 721 Conta Europe | * 7,588 . . cermany: 548 €402m (Germany
Slide 14: Diversified across industries and customers
Diversified across industries and customers Active across a large variety of industries Low customer concentration . 1 2 Revenue by industry Revenue by customer 6% Management 13% 7% Consulting and Automotive, 11% Horizontal Business Information yt a and Top 6-10 Tech Industrial Pp 7% Life Sciences a
Slide 15: Working with the leaders in each industry
Working with the leaders in each industry Automotive, Manufacturing and Industrial $ Maruti suzuki SIEMENS Travel and Logistics oe vse A Fraport > wtvenss OBB Ly & Post [csx ] Telecom, Media and Entertainment. A= Retail and CPG Amway coop am @ & Walmart Labs Financial Services and Insurance Emirates
Slide 16: Driving digital transformation for blue-chip customers
Driving digital transformation for blue-chip customers CLED Audi AG has partnered with Nagarro to consult, design and industrialize the digital transformation initiatives in the connected retail area. Nagarrois a preferred vendor for New York City since 2014 with strategic initiatives in the Departm
Slide 17: Developing client accounts over time: the Lufthansa case study
Developing client accounts over time: the Lufthansa case study 2009 ~< <15 FTE engagement First project via open global RFP Topic: revenue management “We highly appreciate not just the qualitatively excellent product, but also the can-do-attitude and enthusiasm of the entire Nagarro team.” Dr. Tobia
Slide 18: Large client base to develop over time
Large client base to develop over time > €10 million 4 2019 revenue € 5-10 million 13 2019 revenue clients €1-5 million 76 2019 revenue clients 14 years average relationship, preferred vendor status 8 years average relationship 5 years average relationship These are pro-forma numbers. Data from acqu
Slide 19: Proven ability to nurture client accounts, large and small
Proven ability to nurture client accounts, large and small CS) Growing small accounts Expanding large accounts Number of > € 1million Revenue from top 20 accounts over time accounts over time (€) 93 163m 76 128m 135m 54 2017 2018 2019 2017 2018 2019 These are pro-forma numbers. Data from acquired en
Slide 20: Why customers choose us
Why customers choose us Differentiated combination of digital engineering leadership full- service offering, global presence and agile delivery capabilities Nagarro’s “Enterprise Agile” mindset, processes and organization design deliver: » Enterprise-class robust engineering * Agility in projects an
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Slide 22: Powered by a unique org design and culture
a Powered by a unique org design and culture ze a « | ey Virtual, global organization rather than a federation of national orgs or legal entities Emphasis on autonomy and choice via internal marketplaces, not top-down decision making Flat, entrepreneurial management j 50+ top-level leaders, >25% of
Slide 23: Socially responsible around the globe
Socially responsible around the globe CS) age HARYANA = ZERO | twig Testing Pro for people with autism Saving lives via road safety Incubating a university (Sy WWF Making art accessible With WWF against single-use plastic Organizing car-free days 23
Slide 24: Open, global culture driving post-merger integration and synergies
Open, global culture driving post-merger integration and synergies e oe 2 2 2 e 2011 2014 2016 2017 2018 2019 Nagarro: Softcon: Mokriya: Ciber: | iQuest: Farabi-S4M: Product Managed services Design SAP. Lifesciences, Mobile engineering loT banking Hexa: Conduct: Cloud Information Objectiva: security
Slide 25: Attractive growth profile with proven margin expansion
Attractive growth profile with proven margin expansion Revenue Gross Profit Adjusted EBITDA. €m €m €m CAGR 38% 2017-19 402 129 58 90 34 211 64 26 2017 2018 2019 2017 2018 2019 2017 2018 2019 1. Adjusted EBITDA is independent of IFRS rules and includes the company’s adjustments for certain special it
Slide 26: Spin-off benefits to the business
Spin-off benefits to the business Branding Focus Bringing visibility to the Enhanced management focus Nagarro brand via capital on the core business, fewer markets presence. distractions. Scaling Capital market access as a pure-play digital leader to support the growth potential of the business.
Slide 27: Multiple tangible growth and upside opportunities
Multiple tangible growth and upside opportunities Opportunity to sustain and improve organic revenue CAGR 2017-19 of 19% and improve margins over time Historical investments... ...create future opportunities Entry into numerous elite clients High potential in existing accounts Development of multipl
Slide 28: Investment highlights
Investment highlights Large, resilient and evolving software development market with structural tailwinds The leading digital engineering specialist with a full-service portfolio and a differentiated “Enterprise Agile” approach A large blue-chip customer base across many verticals and geographies, s
Slide 29: Market overview
Market overview
Slide 30: c.$350 billion addressable digital IT services market
c.$350 billion addressable digital IT services market CS) Digital IT services spend forecasted to grow to c.$550 billion by 2024, a 2020-2024 CAGR of 12% Digital IT services within total IT services Regional split of digital IT services $b $b CAGR 3% _——”, 785 702 CAGR 12% CAGR 10% 239 CAGR 9% CAGR
Slide 31: Structural market growth drivers playing into Nagarro's core strengths
Structural market growth drivers playing into Nagarro’s core strengths Structural Themes Key Market Drivers OO) Nagarro’s Strengths Digitalisation * Increased competition from digital disruptors across industries » Need to push digital capabilities through products and services » Working across many
Slide 32: Digital engineering landscape in context
Digital engineering landscape in context Players Limitations Nagarro’s Strengths Internal IT & captives * Increased competition from digital disruptors across industries » Need to push digital capabilities through products and services » Window to top global talent * Quick to react on new technologi
Slide 33: Differentiated positioning among IT services peers
Differentiated positioning among IT services peers Engineering DNA <epam> @® nagarro Consulting DNA > accenture Excellence in digital product engineering to “change the business” Services DNA TATA CONSULTANCY ‘SERVICES Excellence in enterprise services to “run the business” Companies presented do no
Slide 34: Business overview
Business overview
Slide 35: A digital engineering leader
A digital engineering leader Digital Product Engineering Product architecture design, Agile development, DevOps, cloud migration, product management, user experience (UX) design, rapid prototyping Digital Commerce & CX New-Gen ERP Consulting Omni-channel, digital marketing Implementation, transforma
Slide 36: A full-service portfolio for comprehensive solutions
A full-service portfolio for comprehensive solutions CS) Differentiated focus on digital product engineering Flexible delivery model Revenue by service line Revenue by contract type 51% 14% Digital Digital Commerce & CX 20% Product Fixed Bid Engineering 10% New-Gen ERP Consulting 1% €402m €402m Othe
Slide 37: Digital Product Engineering
Digital Product Engineering CS) Our clients need to transform themselves into digital-first companies that compete through superior software platforms. We enable this transformation. Customers trust Nagarro for their most complex and often mission-critical projects. Challenges our clients face Capab
Slide 38: Digital Product Engineering — examples
Digital Product Engineering — examples blackbaud The leading cloud software provider for non-profits and other social good organizations Nagarro is a strategic partner, providing product development, product sustenance and testing services across various CRM, accounting and fundraising products. Nag
Slide 39: Digital Commerce and Customer Experience
Digital Commerce and Customer Experience CS) Consumers today are more informed and more demanding than ever. We help businesses keep up. Capabilities that Nagarro brings Amway * Digital business consulting The world’s leading direct-selling company with sales in 100 countries Experience-led commerce
Slide 40: New-Gen ERP Consulting
New-Gen ERP Consulting As companies go digital, the ERP must keep pace. We accelerate this process. Capabilities that Nagarro brings » Strategy and process consulting » SAP Cloud solutions (Diamond award, 2020) * Transformation to S/4 HANA » Add-ons with own IP » Custom-developed extensions )( KRONE
Slide 41: Managed Services
Managed Services CS) Increasing digitalization leads to a larger need for multi-skilled services for running and managing the entire digital landscape. We help improve outcomes in this area. e Capabilities that Nagarro brings ERSTE S Group * Application management and enhancement One of the largest
Slide 42: Full-service capabilities driving success across regions
Full-service capabilities driving success across regions Revenue by client region thd 10% Rest of World “ “mn AN% 34% Central Europe North (Germany is 30 %) America 48 countries with Nagarro customers 15% Rest of Europe 1. Comprise tria, Croatia, Czech Republic, Germany, Hungary, Poland, Romania, Se
Slide 43: Partnerships rounding off Nagarro's ecosystem
Partnerships rounding off Nagarro’s ecosystem in Microsoft salesforce SADG OO) SRI International Microsoft Gold partner for Application Development, Cloud, Collaboration and Content; System Integrator for Dynamics Google Salesforce Gold partner for consulting A ATLASSIAN SAP Gold partner and Diamond
Slide 44: Global delivery model overview: Enterprise Agile
Global delivery model overview: Enterprise Agile
Slide 45: "Enterprise Agile", starting with core values
“Enterprise Agile”, starting with core values CS) The foundation for Nagarro’s continued strong growth ® 7wr P *& @ Client-centric Agile Responsible Intelligent Non- Global hierarchical
Slide 46: Enabling clients to win in their markets
Enabling clients to win in their markets Successfully built a global organization that delivers superior client outcomes Enterprise-class robust engineering Agility in projects and in client engagements Agility in adapting to changing business and technology environments 46
Slide 47: Agile by design, fueling sustained growth
Agile by design, fueling sustained growth Organizational design manifesto Entrepreneurial & configurable Virtual global organization Enabling creative instincts Friendly collaboration Hardcoded & static Legal entity & national orientation Restrictive & possessive instincts to exert control Competiti
Slide 48: Culture of self-responsibility operationalized via tech
Culture of self-responsibility operationalized via tech Proprietary “Business Operating System” called Ginger What * Sits atop the ERP and other systems * Friendly, conversational face of the company to each and every employee * Personalized answers and guidance for individual performance and for al
Slide 49: Attracting and enabling intelligent minds throughout the world
Attracting and enabling intelligent minds throughout CS) the world A promise that attracts the best candidates a place to learn, do complex work, work with amazing colleagues, has great culture and pays well Engage and enable those who become Nagarrians strong career paths, freedom of expression, de
Slide 50: Non-hierarchical to address growth opportunities
Non-hierarchical to address growth opportunities CS) entreprenenurially Emphasis on autonomy and choice via internal marketplaces, rather than top-down decision making Role-oriented, large senior management 50+ top leaders, over 25% of them entrepreneurs, non-hierarchical roles Non-hierarchical conc
Slide 51: Global reach through local presence
Global reach through local presence CS) | e 25 $ countries with legal presence : Avirtual global organization No headquarters concept Strong remote delivery capabilities in India, Romania and China We expand for our clients, to service them in different countries, or to service their overseas client
Slide 52: Global engineering organization for seamless client experience
Global engineering organization for seamless client CS) experience 5 & Marketi, . . . . sale ng Client facing, by client region Virtual Global Organization people Enablemen, Design largely independent of legal Local HR entities or geographical boundaries Talent Allocation, IT, Finance, Enables poole
Slide 53: A great company culture, piece by piece
A great company culture, piece by piece CS) CARING everywhere Measured in interviews, feedback, 360 reviews, recognition Roles over designations so asenior designation could occasionally be under the leadership of a junior one Yammer culture Engagement with no holds barred on the internal social net
Slide 54: Nagarrians by the numbers
Nagarrians by the numbers 8406 12 total professionals average years of senior mgmt. with Nagarro! 7588 professionals in 27% engineering women 13% global attrition TTM s with <20 professionals in engineering a 209 21 Professionals in engineering by region 76 36 22 543 172 os 721 533 5172
Slide 55: Blue-chip global clients
Blue-chip global clients
Slide 56: 750+ clients, leaders in their segments
750+ clients, leaders in their segments Global names Amway = GiUD aeoln © Lufthansa NOKIA W¥G SIEMENS wW verizon’ Houses of brands ASSA ABLOY Cox AUTOMOTIVE @RELX G Niche leaders blackbaud [| ¢8X ] (GEE) ERSTE F FRESENIUS ss:LUTRON. $ Maruti suzuki NETENT Kal $ SEISMIC
Slide 57: Diversified across industries and customers
Diversified across industries and customers Active across a large variety of industries OO) Low and declining customer concentration . 1 2 Revenue by industry Revenue by customer 6% Management % Consulting and 13% i Business Information Automotive, Horizontal Manufacturing and 299 Tech Industrial %
Slide 58: Satisfied clients and high referenceability
Satisfied clients and high referenceability 2238 responses x 11 questions Percentage of “Always” or “Mostly” responses 100 95 90 85 80 75 70 65 60 55 96.4% i ee Qi 2018 Q22018 Q32018 42018 Q1 2019 Q22019 9 annual report, which Q3 2019 is approxim: 42019 Q1 2020 22020
Slide 59: Proven ability to nurture client accounts, large and small
Proven ability to nurture client accounts, large and small 2017 €128 mil from top 20 accounts 12 | €1-5m €5-10m >€10m These are pro-forma numbers. Data from acquired entitiesis included as if they were part of the company for the entire period. 2018 63 €135 mil from top 20 accounts 10 i €1-5m €5-10m
Slide 60: ASSA ABLOY: Partnering in digital transformation
ASSA ABLOY: Partnering in digital transformation No. 1 global leader in access solutions 58% sales through electromechanical products and entrance automation Top 100 Forbes’ World's Most Innovative Companies, 2018 Challenge: With the industry increasingly becoming digitized, the client looked for mo
Slide 61: LIDO flight planning: Complex product engineering
TWR 125,950 GND = 121.800N 121,900 S| 127.925 W Radar required! GOPHER MANE BE , M8, Pau Dow 03.5 IPL. Radar Fix, : AB re Ne } D2 taeS Zoe, n-srau nV FLYING CLOUD D411,8 FCM OO) LIDO flight planning: Complex product engineering 35,000 optimized flights aday 113 airline operators 25% market share Cha
Slide 62: Seismic: Powering a technology unicorn
Seismic: Powering a technology unicorn 1 year estimated time-to-market saving due to the rapid scaling provided by Nagarro $175 million capital raised by Seismic > $1 billion Seismic valuation Challenge: As astart-up, the client needed an experienced, reliable software development partner to build a
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Slide 64: Break
Break The session will resume at 11:15 am CEST / 2:45 pm IST / 5:15 am EST
Slide 65: Financial overview
Financial overview
Slide 66: Summary financial highlights
Summary financial highlights CS) 38% 19% total revenue CAGR organic revenue 2017-19 CAGR 2017-19 Track record of strong total and organic revenue growth 87% 91% High revenue visibility driven by recurring business nature revenue visibility business from atstart ofthe year existing clients (2019) (20
Slide 67: Basis of preparation
Basis of preparation Financial information and reporting principles Basis of financials * The Combined Financial Statements have been prepared in accordance with IFRS as of and for the financial years ended December 31, 2017, 2018 and 2019 Unaudited interim financials prepared by Allgeier for the si
Slide 68: Strong growth and attractive, increasing profitability
Strong growth and attractive, increasing profitability CS) Revenues Gross Profit Adjusted EBITDA €m €m €m CAGR 38% 2017-19 402.4 129.1 57.7 89.9 19% 210.6 64.2 34.3 organic revenue growth in 2017-2019 (pro forma) 25.5 14% adjusted EBITDA margin in 2019 (reported 15%) 2017 2018 2019 2017 2018 2019 20
Slide 69: Strong revenue growth across all reporting segments
Strong revenue growth across all reporting segments Robust growth in key regions 40% North America revenue CAGR 2017-2019 32% Central Europe revenue CAGR 2017-2019 Increasing spend in Asia for cloud, mobile, big data and social driving rapid growth in Rest of World segment ' 1. Source: IDC Spending
Slide 70: High revenue visibility driven by recurring nature of business
High revenue visibility driven by recurring nature of business CS) * Recurring business from existing clients (91% in 2019) * Meticulous bottoms-up revenue planning 87% > revenue visibility 2019! * Steady nature of core business of digital transformation » Steady T&E business (79% in 2019) * Longer
Slide 71: Scale, operating leverage and synergies driving increasing margins
Scale, operating leverage and synergies driving increasing CS) margins Keeping cost growth in check » Ability to staff teams with the right skills across multiple geographies (US, Europe, China, India, the Middle East) leveraging distinct talent bases and cost differences between geographies » Lean
Slide 72: Significant cash flow generation
Significant cash flow generation Strong operating cashflows reflective of rapid growth in revenues Low capex business with most buildings, computers and datacenter equipment on lease; no material maintenance capex Reduced working capital requirements with good liquidity management and strong collect
Slide 73: Efficient capital structure
Efficient capital structure Comfortable liquidity position * Cash balances at year end adequate for company’s growing needs Cash balances held in highly liquid short-term deposits Manageable debt levels Lease liabilities recognized per IFRS16 Low net leverage given strong EBITDA generation New finan
Slide 74: Summary financial guidance
Summary financial guidance Top-line For the full year 2020, revenue growth is expected in the mid-single digit percentage range, reflecting COVID-19 impacts with clients (including temporary rate cuts to select clients) as well as USD vs. EUR currency effects We target organic revenue growth rates t
Slide 75: Robust H1 2020 performance
Robust H1 2020 performance COVID-19 effectively navigated: » Moderate topline growth despite pandemic » Near-zero productivity loss due to instant switch to work-from- home, enabled by agile org design * Bottom line lifted by temporary cost cutting (salary cuts, travel/transportation cost savings, s
Slide 76: Key financial takeaways
Key financial takeaways CS) Nagarro is a global business with €402m revenue in 2019 0, O Strong organic and inorganic growth 1 9 %o organic revenue CAGR 2017-19 Robust gross margins 32% 2019 14% Costs in check and EBITDA margin in mid-teens adjusted EBITDA margin 2019 €41m Low capex asset light busi
Slide 77: Strategy and growth opportunities
Strategy and growth opportunities
Slide 78: Multiple tangible growth and upside opportunities
Multiple tangible growth and upside opportunities Economies of scale ahead SynergisticM&A Acquiring new large clients Growth at existing clients Az) Opportunity to sustain and enhance historical organic revenue CAGR 2017-19 of 19% and margin expansion For organic revenue CAGR, data from acquired ent
Slide 79: Growth at existing clients: expanding and cross-selling
Growth at existing clients: expanding and cross-selling CS) Expanding * Across divisions * Across countries * From R&D or e-commerce to other IT needs Increasing share of wallet Increasing Cross-selling share of mind * New offerings like Al, security, independent testing * Digital topics surfaced by
Slide 80: Acquiring new large clients
Acquiring new large clients Winning capabilities Compelling testimonials, Powerful proposals And now, increased brand- case studies and references leveraging the combined recognition and credibility + Inthe industry knowledge and expertise through stock market listing * Inthe topic * Inthe region
Slide 81: Proven value-enhancing, synergistic M&A
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Slide 83: Wrap-up
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Slide 85: Q&A
Slide 86: Break
Slide 87: To make distance irrelevant between intelligent people
Slide 88: We are shaping the company of tomorrow
Slide 89: Appendix
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Slide 93: Reorganization due to spin-off
Slide 94: Historical P&L
Slide 95: Historical Balance Sheet - Assets
Slide 96: Historical Balance Sheet – Equity and Liabilities
Slide 97: Historical Cash Flow Statement – Updated
Slide 98: Adjusted EBITDA reconciliation
Slide 99: Thank you
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