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Investor Presentation
February 2017 Jaison Dolvane President & CEO
Carl Smith CFO
© All rights reserved. Espial.
This presentation contains information that is forward looking information with respect to Espial within the meaning of Section 138.4(9) of the Ontario Securities Act (forward looking statements) and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements about anticipated benefits of new customer and partner relationships, future opportunities for the company and products and any other statements regarding Espial’s future expectations, beliefs, goals or prospects are or involve forward-looking information.
Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves risks and uncertainties, including Espial’s ability to effectively develop its distribution channels, and generate increased demand for its products. Additional risks and uncertainties affecting Espial can be found in Espial’s most recent Annual Report, most recent Annual Information Form and in its most recent quarterly report filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein. Espial assumes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
Forward Looking Statement
© All rights reserved. Espial.
Who we are
Espial develops breakthrough solutions for Video Service Providers that deliver immersive viewing
experiences incorporating powerful content discovery and intuitive navigation on all screens
• Based in Ottawa, Canada
• Global offices: US, Canada,
Europe, Japan
• Public (TSE: ESP)
espial /əsˈpī(ə)l/ 1. The act of watching or observing
2. Taking notice; discovery
© All rights reserved. Espial 4
Service Providers Face Threats On All Sides!
• OTT Invaders growing fast NetFlix, Amazon, Hulu, Sling, etc.
• SP competitors fiercer than ever Cable vs Telco vs Satellite vs Mobile
• Content “Allies” playing both sides HBO, ESPN, CBS, Sports Leagues, etc.
Competition For Subscribers Is Rapidly Escalating
Operators must innovate quickly to win
© All rights reserved. Espial 5
These challenges demand a new approach for Service Providers
USER EXPERIENCE Painful, Sluggish, Generic
Device
Expensive
INTELLIGENCE
SET-TOP BOXES
Where our industry is
Big Screen SCREENS
Fast, Customized, Personal
Cloud, recommendation
Low Cost
Espial’s Vision
All Screens
NETWORKS Broadcast; Physical plant IP; No geographic boundaries
CONTENT Traditional Traditional, Time-shift, OTT
© All rights reserved. Espial 6
Espial Offerings
6
Espial Media Service Platform (MSP)
On-Premise back-office
User centric, Multi device,
Multi network
Orchestration for seamless
consumer experience
Software defined service
delivery
New Monetization Models
© All rights reserved. Espial 7
Opportunity: $300B Pay TV Market
< 10 PROVIDERS Comcast, LGI, Charter
200+ PROVIDERS NOS, Tele Columbus, Telenor, Shaw, WOW
1000’S OF PROVIDERS Eastlink, Fidelity, Comporium, Westman
Sophisticated IT
departments
10m + subs
Limited IT dept
1 – 10m subs
Almost no IT dept.
Sub 1m subs
Custom solution On-Premise
(or Cloud)
Cloud Solution
Operator
Characteristics
Mega-Tier 1 SPs Tier 1, 2 SPs Tier 3 SPs
Services License + Maintenance
(or SaaS)
SaaS
1.1B Pay TV Subs
by 2020 (up from 923M in 2014)
$313B Revenue by
2020 (up from $257B in 2014)
1000s of
SPs (Cable, Satellite, Telecom)
Espial’s opportunity
© All rights reserved. Espial 8
A growing base of Customers Worldwide
Espial’s vision is to become the primary trusted partner for operators to help them
transition to next generation Pay TV and beyond
100
Customers
Over 50
million
devices
MVPDs &
Retail CE
© All rights reserved. Espial 9
Sales Pipeline
< 10 PROVIDERS 200+ PROVIDERS 1000’S OF PROVIDERS
Comcast, other unnamed NOS, Tele Columbus, WOW,
Telenor, over 10 others
Fidelity, Eastlink, Comporium,
Westman, Access, over 40 others
Discussions with two
additional Mega-Tier 1s for
MSAs
Short-listed with SPs with combined
subs over 5M, decision expected by
mid 2017
Over 20 engaged in various stages
Short-listed on several and over 20
engaged in various stages Pipeline update
Current customers
Services License + Maintenance SaaS Espial opportunity
Become the primary trusted partner for service providers to
transition to next generation PayTV and beyond.
Mega-Tier 1 SPs Tier 1, 2 SPs Tier 3 SPs
© All rights reserved. Espial 10
Espial Growth Strategy
Increase deployments in current operators
New Customer Wins
Offer Cloud Based SAAS Model
Upsell Products and Services
Acquisitions
• Increasing mindshare (RDK, Scale)
• Distribution agreement with ARRIS
Introduced Elevate
Cloud offering
Customer relationships,
scale, complimentary tech
• NOS launched
• TeleColumbus next
• Plus 40 Other Operators
Recent Developments
© All rights reserved. Espial 12
12
NOS Launch, Lisbon
• Elevate G4
• 4K UHD
• Voice Control
• Premium UX ( HTML5 )
• Recommendations, Search
• Personalization; Social Networking
• Cloud DVR
• 1.6 M home opportunity
June 2016
© All rights reserved. Espial 13
Acquired WHS from ARRIS
Used by 40+ Providers,
• Actively deploying; to date under 20% penetrated of over 2.9M
households (majority of expansion still to come)
• Hosted SaaS model ideal for tier 2 and 3
• Integrated with Espial G4, will be attractive to tier 1
• Dramatically strengthens Espial’s N American presence
Enhancing with Espial UX and Elevate Back Office
• Exceptional team of over 40 proven software engineers
• 2017 will introduce lower-cost RDK 4K STBs from ARRIS, others
Providers worldwide look to reduce capex and outsource ops
• Leverage Espial’s direct sales in N. America and Europe
• Leverage ARRIS sales force to offer Globally
This Emmy award winning solution is
being integrated into Espial Elevate
Aug 2016
© All rights reserved. Espial.
Wide Open West, Denver
• WOW Ultra, powered by Elevate
• 9th largest MSO in the US
• Full HD 1080p UX
• Multi-room (avg. 3TVs / home)
• NETFLIX –on all STB generations
• Wireless STB
• Whole home DVR
• ARRIS STBs
Aug 2016
© All rights reserved. Espial.
ARRIS + Espial Strategic Partnership
#1 set-top
vendor
$6 billion
revenues
7000
employees
ARRIS becomes Global Distribution Channel for Espial software solutions
• Partner on Sales opportunities
• Collaborate on Marketing
• Coordinate Product Roadmaps
• Scale Professional Services & System Integration capacities
Espial was a featured partner in the Arris booth at SCTE2016
Sept 2016
© All rights reserved. Espial.
TC Launch, Berlin
• ~4 million cable homes in Germany
• Premium UX ( HTML5 )
• Integrated SVOD/OTT with
traditional VOD
• QAM (1-way, 2-way) in home.
• IP VOD in/out of home
• Multi-screen in/out of home
• Whole home DVR
• 4K UHD
• Recommendations, Search
• Personalization
• HUMAX STBS
Jan 2017
Financials
© All rights reserved. Espial.
Growing Subscriber Base - up more than 3x in 36 months
1.6 1.6 1.6
3 3
2.9
0
1
2
3
4
5
6
7
8
2014 2015 2016
NOS Tele Columbus Elevate - Cloud
Espial’s Customer Subscriber
Base has increased more than 3x
in 36 months
• Over 7M Subscribing Households among
Espial’s customer base, and growing
• Less than 5% currently deployed with
Espial solution
• Front end of the growth curve: there is
tremendous upside
© All rights reserved. Espial 19 © All rights reserved. Espial 19
Strong revenue growth
Investing in scale now to
support additional
customers
Strong Growth
$12,549,411
$20,003,757
$24,834,692
$28,644,570
($2,960,261)
$3,170,984 $2,907,404
($1,899,798) ($3,000,000)
$0
$3,000,000
$6,000,000
$9,000,000
$12,000,000
$15,000,000
$18,000,000
$21,000,000
$24,000,000
$27,000,000
$30,000,000
Revenue Ebitda
FY13
FY14
FY15 FY16
© All rights reserved. Espial 20 © All rights reserved. Espial 20
Balance Sheet at December 31, 2016
• Strong cash balance
• No Debt
Dec 31, 2016
CURRENT ASSETS
Cash 43,047,878$
Accounts receivable 10,475,563
Investment tax credits receivable 321,018
Prepaid expenses 653,055
54,497,514
Property and equipment 1,420,957
Intangible Assets 1,818,067
Goodwill 3,632,604
$ 61,369,142
CURRENT LIABILITIES
AP and accrued liabilities 4,542,527$
Provisions 334,591
Deferred revenue 2,054,323
6,931,441
Share capital 125,362,413
Contributed surplus 15,601,861
Deficit (86,526,573)
54,437,701
$ 61,369,142
creating a compelling experience for today's viewers
… and those of tomorrow