AD1 Holdings (ASX:AD1) Presentation, FNN Online Investor Event, September 2021

Company Presentations

AD1 Holdings Limited (ASX:AD1) Non-Executive Chairman Andrew Henderson and CEO and Managing Director Brendan Kavenagh present on the company, discussing recent business highlights, revenue model, growth initiatives and indicative timeline.

Andrew Henderson:

So to welcome everyone, thanks for your time today. And the organiser is pretty excited to be here. We are in the process of having quite a revolutionary change in this business. My name's Andrew Henderson. I'm non-executive chair of AD1 Holdings and have been since March 2019. What I'm going to do today is take you through a little bit about history, a little bit about where we're going, and then talk about each of our individual business units and how they've lined up against our share price over time. With me today is a relatively newly appointed CEO, Brendan Kavenagh. Brendan's been with the business since July of this year, taking over from Prashant Chandra.

You'll see on the following slide, we have a number of disclaimers. The normal stuff you'd expect to see in terms of constituting personal advice to people listening today, suggesting that you seek professional advice before making any actions. And in addition, this is our known position as at to date.

Flipping forward to the table of contents, what we'll look to address today, and as I understand that this deck will be uploaded for participants to deep dive further under that appendix area of DoubleClick by vertical. But in the first instance, we're running through a corporate overview, a bit about our team, a bit about our business and investment highlights, the journey to date and where we see ourselves going. It's pretty exciting time for the business. As I say, I've been involved for the last two and bit years and it's certainly been a journey to date.

Just click onto the next slide, if you could Brendan. Regarding AD1 Holdings we've been listed ASX company, genesis of which was many, many years ago before I got involved. But we took the business on 2009 as a result of a reverse merger, if you like, between Utility Software Services, where I acted as a non-executive on that board, right through to acquiring that business as part of that merger with Apply Direct. And then coming up with the vision around how do we build a software as a service business that really leverages the ability to look at a technology stack, and really harvest synergies in technology stack, look at geography and look at where we have like verticals where we can start to cross sell some of our products. And we'll go into those in a second.

Just in terms of shareholder management alignment, that board and management own nearly 36% of the shares within the business. So there's a bit of a float out there from a liquidity perspective, for those that are interested in investing. From 2015, our view the world is that SaaS industry, and we have a more beneficial source then my view of the world, has grown from $170 billion in next year, right up to $436 in 2025.

At the moment, we're in pretty advanced stages of conversation with some global channel partners. And assuming those come to fruition, which is our understanding are in the near term, we're going to see a significant multiplier in the scale of our business in terms of new opportunities coming in the door. Just in terms of capital structure, currently have a market cap of $21 million. Our share price has been bouncing around that three and a half, four cents. When I joined it was sub one cent. So we've seen some shareholders pick up significant gains over the period. Shares on issue at 604.5 million. And you'll see our management and director teams are well incented to get that market price up with an average option exercise price nine, eight cents. Our annual run-rate recurring revenue, I should say, is at $5.7 million, and we have a number of substantial shareholders that make up that nearly 36%. Thanks Brendan.

So just quickly talking about the team. I think we have constructed a fairly strong team here. I've got over 20 years experience, having bought and sold lots of IT and sales, both services and software companies over the journey. I'm currently the managing director of an American firm in Asia Pacific called JitterBit proprietary limited. Moving along to Michael Norster. Michael, in a similar boat, has bought and sold a number of businesses and currently the chairman of Blue NRG, and one of the founders of USS pre the merger into AD1. Nicholas Smedley has come on about at eighteen months ago, I want to say. And has really brought in an M&A bent to it. And you'll say, let me get to Art of Mentoring, how we've been able to bring those businesses together and really get some synergy out of what we're all collectively doing.

Nick is also the chairman of Vortiv Limited and Respiri Limited. Brendan, who can introduce himself, but as I said, just joined in July of this year. He had worked with us on our review of our Apply Direct business, which we'll talk about in a sec. And as a result of that review, thought he was best placed to execute on the sales strategy and product strategy required moving forward. And Melissa, who came to us through the Art of Mentoring acquisition, based up in northern New South Wales, has been the founder of Art of Mentoring and still running the business today and doing a cracking job. Thanks, Brendan.

Brendan Kavenagh:

Thanks Andrew. Just to introduce myself, I did join the business just a couple of months ago, and I'm delighted to be here today. So, thanks for the introduction and welcome. The businesses that we're operating in are assessed beta B businesses. And the market is growing very, very, very quickly. Now, the two businesses that I'll talk with you about first up is both Apply Direct and the Art of Mentoring. These are part of the two companies that represent a diversified mix of technology, but also in terms of synergies from people, skills and our market offering. Both the HR tech industry, which they provide services within software platforms, is disrupted and it is growing very, very quickly. A recent survey, for example, from Pricewaterhouse PwC, global resource report of 600 organisations, said that the number one HR technology focus is finding and attracting talent. Apply Direct and Art of Mentoring, solve critical problems in this space.

So if we look at Apply Direct down the slide, we provide recruitment solution software. And that's all about attracting, sourcing and engaging talent across all industry sectors. And what we've seen more and more of, is the need for customers to want to control their employee brand by moving away from third-party providers and owning that source themselves, or using SaaS product such as Apply Direct. Our two largest customers, Australian government, New South Wales government, and Vic government Careers.Vic. Over the past 12 months, we've processed 200,000 new jobs on those platforms, and attracted 7,000,000 visitors and processed through to Apply, 1.3 applications. These are big numbers in Australia market. And what we're wanting to do as we move forward, is productise that offering into a B2B off the shelf product that the immediate market can then enjoy. Quite very complimentary to the Apply Direct product, is Art of Mentoring. And mentoring in recent times, particularly since the pandemic, is gathering more and more focus and attention from organisations as the ability to attract talent and skills into the workplace is becoming harder and harder.

So the emphasis is moving toward retention of talent and talent are voting with their fee. So, if they can't find an organisation or they're not satisfied with brand, they're unlikely to apply, and they're also more unlikely to unseen jobs to stay in the jobs. So Art of Mentoring, has been gathering significant momentum. A recent competitor, Art of Mentoring, raised $78,000,000 to invest in product and expand footprint. In fact, mentees are five times more likely to be promoted in non-mentored peers. Our retention rates increased by one and a half times amongst mentors and mentees. So it's a great engagement tool, and excellent for retention and growing in momentum. In fact, our webinars have increased in off shore traffic by 514% in the last 12 months. And as Andrew said, we're really excited to almost... It's very close to sign on with a global channel partner that will actually facilitate significant growth into the US.

Utility Software Services known as USS is also operating in a highly disrupted market being in the energy space. We provide energy retailers with billing software platforms, as well as back office managed service functions as well. And we're seeing significant growth in that space with invoices processed up 161% year on year. And we will see later in terms of the key metric of ours, meters under management is increased by 60%. So that's significant growth there. As we move forward, the opportunity is to continue to invest in product and bring that to market, grow market share, and also continue to support our existing customer base.

So this slide represents a cross section of our customers across the various divisions. And you can see that we have very high customer retention rate of 90% plus. We're also working with some very, very strong brands that partner with us because they trust our service and trust what we do.

So Careers.VIC speak, I've mentioned before. AHRI, which is the Australian HR Institute association right through to the Australian government defence force, which we announced today, an ongoing partnership with them, which we're delighted about.

Investment highlights, the strategy is working. So we've on-boarded or integrated to new customers, SaaS customers in the last couple of years. And we're now starting to move towards understanding and leveraging what those cross-selling synergies may be. We've got billing plan in place to be able to work more closely together and target the existing customer base with a better offering. We do have an entrepreneurial management team and similar customer base, and we have the ability to offer sophisticated solutions for our enterprise customers. And if we think about some of those slides that you saw before or the customers you saw before, there's significant opportunity within those large organisations to provide a much more valuable service through the integration of existing products, particularly with AOM and Apply Direct. So we look forward to working with those customers, realise those opportunities.

Andrew Henderson:

Thanks Brendan. Look, this is a bit of a view of our share price. As I said, we came on board, rather myself, through the USS acquisition in March 19. We were trading sub one cent. I mean, a number of things we did there really cut the cloth from a cost perspective to our revenue. And getting it to a point where we were not going to take investment from external parties until we were in a position to say that we are only taking money for acquisition and for product and go to market growth. As you see, as the time progressed, we then signed a number of contracts. We then did an additional raise, which has taken us to where we are now.

And I suppose when you look at it, we've signed a number of federal government contracts along the journey, appointed Brendan into the CEO role. And now see the increase in revenue from Art of Mentoring. And as I said, we're trading around that three and a half cents mark. You'll see, back in October of 2020, we came up to seven cents, that sort of paid it out over time. And that's really been as a result of us just sticking to our knitting and really just being relatively conservative about the way we go to market, and very much solid that concentrating on acquisitions, organic growth, and getting our product mix right.

Brendan Kavenagh:

So successful expansion is providing a really good foundation for growth. We've mentioned before, we've integrated two verticals in the last 24 months, and we are seeing growth in each of the three businesses. So media is under management for USS, it's increased by 60%. And the great story with USS is that as our customers grow, they made us, our revenue base also increases. Apply Direct has seen a 27% increase in users for FY21, and AOM, over the two year period of 500% increase in participants on their platforms. So these are some of the key metrics that we use to measure success and growth of the business. Revenue is up in the two year period, almost 200%. And we're really excited about the cross-sell initiatives as we move forward and start to mature out our sales philosophy and methodologies.

Three milestones to date, the three horizons. We're really focused on today, I think we've covered off enough on the key milestones to date, but we're really looking forward into the future. We are very excited about global channel partnerships at US market penetration and innovation across the product. So the launch of the new Apply Direct and USS offering, as well as what we can do with Art of Mentoring and also productising the USS software, and building a market share there. Mergers and acquisitions will continue as they have in the past. And with Nicholas heading that, we'll continue to push through there. Just quickly here, I noticed the time.

This is the revenue model. Each business has an implementation fee. Depending on the size and scale of the implementation, will depend on the fee as well as the customer. And then we enjoy monthly fees. You can see the scale of each annual revenue per client, that there is Apply Direct. As we productise the new product, will start to decrease in value, but bigger scale.

In talking about scale, our total addressable market, significant $158 billion in growth by 2027. And you can see here on the global market, in particular with the US is where we're headed, there's significant opportunity. The Australian market, we cannot forget that there is enormous opportunity locally, and we've got plans in place to capitalise on that.

This is a busy slide. This is a busy slide, but it tells a good story. We've had our first month of cashflow positive back in July 2020, and we continue to acquire and need to create businesses. That's not going to stop. We're still focused on productising a product, building a website, marketing collateral, building market share with the existing, and adding new logos through growth.

That sort of brings me to the end. If there are any questions or you'd like to contact me, please reach out to either on that email or my mobile is there as well. Thank you Andrew, for presenting with me today and back to you Clive.


Are you a 708 sophisticated investor?

A sophisticated investor is defined under Section 708 of the Corporations Act (net assets of $2.5 million or annual incomes in excess of $250,000).

They are eligible to receive information regarding wholesale investment opportunities that are not available to regular or retail investors.

Please subscribe if you would like to be alerted to these types of opportunities.