21
SMTP, Inc. (OTCQB: SMTP) Delivering growth and dividends SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 1

Smtp 102013

Embed Size (px)

DESCRIPTION

SMTP Inc. Investor Presentation

Citation preview

Page 1: Smtp 102013

SMTP, Inc. (OTCQB: SMTP)

Delivering growth and dividends

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 1

Page 2: Smtp 102013

Safe Harbor Statement

The information posted in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by use of the words "may," "will," "should," "plans," "explores," "expects," "anticipates," "continues," "estimates," "projects," "intends," and similar expressions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. These risks and uncertainties include, but are not limited to, general economic and business conditions, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing new customer offerings, changes in customer order patterns, changes in customer offering mix, continued success in technological advances and delivering technological innovations, delays due to issues with outsourced service providers, and various other factors beyond the Company's control.

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 2

Page 3: Smtp 102013

Overview

SMTP has provided cloud-based email delivery solutions for over a decade, with a strong history of profitable growth.

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 3

Revenues (TTM) $5.5M

Sales Model Cloud-based subscription business for over 10 years, with thousands of customers (and no customer >2% sales)

Global Sales Reach Roughly 50% of sales are outside the U.S. (SMTP serves over 130 countries)

Footprint Headquartered in U.S., with the majority of technical development and service based in the Ukraine

Dividends History of steady dividends (current yield ~ 8%), along with a track record of profitable growth

Returns(TTM) ROA 94% and ROE 164%

Page 4: Smtp 102013

SMTP Facts & Figures

Financial Highlights (ttm)

Revenue $5.5M

EBITDA $2.0M

Net Income $1.2M

Profit Margin 22%

Operating Margin 35%

Total Cash $0.9M

Total Debt -

Return on Assets 94%

Return on Equity 164%

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 4

Stock Highlights (as of 10/11/13)

Price 1.06

Market Cap $16.0M

Trailing P/E 13.25

EV/EBITDA 7.86

Shares Outstanding 15.09M

Float 1.75M

Avg. Vol. (3 mo) 14,449

Diluted EPS 0.08

Dividend Yield (trailing annual)

7.1%

SMTP, Inc. (SMTP) – OTC QB

Source: CapitalIQ

Page 5: Smtp 102013

Customer Solutions

Internet Service Providers (ISP’s) have put in place a wide variety of sophisticated filters to stop SPAM.

But as a result, legitimate companies face real problems sending large volumes of email:

• Bounces • Complaints • Blacklisting

One of the primary factors considered by ISP’s in evaluating emails is the reputation of the sending server.

SMTP’s trusted servers, our 10 years of cloud-based experience, and our proactive monitoring allow us to get our client’s email to the inbox, resulting in loyal customers and a stable, recurrent-revenue base.

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 5

Page 6: Smtp 102013

How we work

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 6

A Return Path study found that 83% of deliverability issues are caused by sender reputation. Our delivery services can boost customers inbox delivery by 10-20%.

Customers send us emails for distribution

Our trusted servers relay the emails to consumer inboxes, while we manage issues of deliverability, bounces and blacklisting with ISP’s.

Page 7: Smtp 102013

Points of Differentiation

Growing businesses sending opt-in emails can experience delivery losses of 20-30% if they try to send their emails themselves. Small businesses may use do-it-yourself email platforms like Constant Contact, which tend to focus on content creation. But as they scale up, businesses typically run into three problems: 1. High costs for delivery of large volumes 2. Increasing concerns with bounces and complaints 3. Limited support for issues related to email delivery

SMTP’s customers care deeply about ensuring their e-mail reaches the intended recipient and often require extensive service and support.

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 7

Page 8: Smtp 102013

Market Opportunity

Email Marketing is a rapidly-growing $2B industry.

SMTP focuses on the email delivery the largest and fastest growing segment of the market. We will benefit from leveraging our position in delivery by adding related services for clients. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 8

Page 9: Smtp 102013

Key Company Assets

Market Reputation

A brand name synonymous with email itself (SMTP stands for Simple Mail Transfer Protocol, the protocol used for all email)

Large and well-established recurrent-revenue client base

Excellent reputation for service and customer support

Proprietary Company Capabilities

Over a decade of cloud-based email delivery experience

Robust technical infrastructure (billions of emails sent)

Pool of IP addresses trusted by Internet Service Providers

Highly capable, cost-effective 24x7 global service team providing strong English & multi-lingual support, along with deep technical experience

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 9

Page 10: Smtp 102013

Competitive Landscape

SMTP excels in customer service for deliverability issues, with a cost-effective multi-lingual service organization providing global support.

This team has been in place for over a decade, and is one of the largest teams in the industry exclusively focused on deliverability. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 10

Segment Marketing Email Creation

Marketing Email Delivery

Transactional Email Delivery

Example Companies

Constant Contact MailChimp

Campaigner

SMTP TurboSMTP

SendGrid Amazon

Dyn

Primary Focus Customer Relations

Focus on Ease of Creating Attractive Emails

Graphical interfaces for numerous small senders

Focus on Deliverability and Customer Service

High level of client

interaction and support

Focus on API’s (Application

Programming Interfaces)

Highly automated with minimal interaction

Page 11: Smtp 102013

Profitable Base for Growth

Strong revenue growth

Consistent earnings growth

Margins healthier than for other players in the industry

(E.g. Constant Contact is at <5%)

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 11

805 1,549

2,736

4,279 5,353

0

1,000

2,000

3,000

4,000

5,000

6,000

2008 2009 20102 2011 2012

History of Revenue Growth

2008 2009 2010 2011 2012 1Q 2013 2Q 2013

Net Revenue $805 $1,549 $2,736 $4,279 $5,353 $1,370 $1,395

Growth % 93% 77% 56% 25% 2%

Gross Profit $628 $1,131 $2,097 $3,456 $4,076 $1,048 $1,092

Gross Margin 78% 73% 77% 81% 76% 77% 78%

Operating Income ($196) $109 $742 $1,576 $1,714 $375 $577

Operating Margin -24% 7% 27% 37% 32% 27% 41%

Page 12: Smtp 102013

Growth, with dividends

SMTP’s goal is to provide investors with strong risk-adjusted returns. The company has an established history of profitable operation, with a proven, subscription-based revenue model. SMTP is debt-free and has minimal concentration of risk in any customer (largest customer is less than 2% of revenues). Our practice has been to return 80-90% of cash flow from operations to investors via healthy dividends every quarter, with such payments reduced by any expected cost increases in the coming quarter. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 12

Page 13: Smtp 102013

The Opportunity

SMTP has three clear opportunities to drive significant growth:

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 13

These initiatives represent modest investments to strengthen our core team and product offering. In addition, the company will revisit strategic options, such as channel partnerships and/or potential acquisitions of affordable firms with a complementary position.

Quantitative Marketing, leveraging a team with a strong record for rapidly driving results, and with a clear focus on specific verticals

International Growth, driven by localizing sales & marketing for high-growth regions

Launching new products & features, including integrated solutions that open up significant opportunities for new customers.

Page 14: Smtp 102013

Quantitative Marketing

SMTP’s growth has historically been a function of its internationally recognized brand and its reputation for stellar customer service.

The company has recently strengthened its team and is pursuing focused efforts in quantitative marketing, including:

Deeply analytical market segmentation

Targeted messaging for key segments

Cost-effective lead acquisition

Optimized online lead conversion

Quantitative lead ranking for inside sales prioritization

The team has a track record in prior firms of having rapidly reduced customer acquisition costs and driven significant revenue growth.

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 14

Page 15: Smtp 102013

SMTP’s brand is already globally recognized, due to the universal adoption worldwide of the Simple Mail Transfer Protocol. The company is well positioned for global expansion: Active customers in over 130 countries 50% of sales sourced internationally Multilingual 24x7 service team

The company’s plans include: Localizing web content regionally Emphasizing support in the local tongue Providing dedicated support for key global accounts

International Growth

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 15

Page 16: Smtp 102013

Product Roadmap

Our vision is to provide an integrated suite of solutions, leveraging our robust delivery capabilities to deliver compelling business value

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 16

Original Capabilities Core deliverability Added Capabilities PreviewMyEmail Email Marketer (paid editor)

Potential Enhancements Campaign Management Analytics Portal Customer API’s Campaign Optimization Professional Services

These solutions open a range of new market opportunities, including: • High-volume senders currently utilizing more costly integrated platforms,

such as Constant Contact and MailChimp • Clients requiring sophisticated integration via API’s • Customers requiring improved analytics for campaign visibility

Page 17: Smtp 102013

Criteria for Acquisitions

SMTP will continue to explore opportunities for strategic acquisitions, meeting the following criteria:

Providing a complementary technology or service

Providing direct access to a new customer base

Providing a distinct channel to a market

Accretive to earnings and business value

Well-understood integration path

Affordably priced

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 17

Page 18: Smtp 102013

Ruslan Bondarev Chief Technology Officer

• Over 10 years of experience in the cloud-

based delivery of email services • Expert in email protocols and data

exchange, with deep technical experience across a wide variety of relevant systems/technologies

• Passionate about solving complex tasks and delivery challenges

Jonathan Strimling Chief Executive Officer

• 20 years of experience as an executive

and as an entrepreneur focused on technology commercialization

• Former CEO of US Dynamics, American Biomass Corporation/ WoodPellets.com, and other ventures.

• Prior senior operating roles with American Industrial Partners and GE

• Track record of driving strong growth, including achieving nearly 400% growth annually for two consecutive years

• Drove prior firm to achieve 98% customer satisfaction ratings and a BBB “perfect record” award

• Direct prior experience as an online retailer with cloud based email services

• Dual Masters degrees in Management and Engineering from M.I.T.

Paul Parisi Vice President of Innovation

• Over 25 years of senior technical work in

software and systems development • Unusual blend of technical skills with

customer-focused business experience • Former CTO of HealthConnected/Cloud

Industries Health, LocalGinger • Robust portfolio of issued and pending

patents covering various IT systems

Max Ilin Vice President of Cust. Service

• Over 5 years of experience in providing

support for cloud based email delivery • Created highly-responsive and customer-

service oriented 24x7 support center • Strong technical experience with both

email delivery and supporting systems

Decades of cloud based email delivery experience. A track record of strong and profitable growth.

Yvonne Gaudette Vice President of Marketing

• 20 years of experience in marketing and

as a communications executive from VC-backed startups to Fortune 500 firms.

• Former Director of Marketing for RatePoint, Vivox, and other ventures

• Track record of driving highly successful product launches and rapidly and inexpensively acquiring new customers.

Leadership Team

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 18

Page 19: Smtp 102013

McConnell Jones Lanier & Murphy Auditors

• SEC Services Group focused on serving

publicly traded midsize and emerging growth companies with SEC compliance

• Experience with over 100 SEC registrants, supported by partners with former “Big Four” accounting experience

• Broader business experience from a range of consulting and advisory roles

Semyon Dukach Chairman

• Acquired controlling stake in SMTP Inc.

in 2002, and grew steadily and profitably, taking public in 2011

• Set precedent for a steady flow of dividends from SMTP in 2012

• Cofounded Fast Engines, Vert, Global Cycle Solutions, PDFFiller and East of Air

• Prolific angel investor, with investments in over 60 firms across a range of industries and technologies

• Wide ranging business experience across a range of ventures and technology

• Deep technical experience, including developing an early internet payment protocol in 1991 at MIT

• MS in Computer Science from MIT; BS in Computer Science from Columbia

Rens Troost Director

• Chief Executive Officer at Virtual Clarity,

a firm focused on helping enterprises virtualize their entire IT infrastructure

• Former Executive Director, Head of Core Technology Architecture at UBS, AG and Founder and Former CTO of Name, Inc.

• Expert in cloud computing, IT infrastructure, and business strategy

David M. Bovi, PA Attorney

• 20 years of transactional corporate and

securities law experience • Experience across a range of public and

private capital raising transactions, M&A, and general corporate business.

• Masters Degree in Securities Regulation, Georgetown University Law Center

SMTP Board of Directors brings extensive experience in technology.

Vadim Yasinowsky Director

• Chief Executive Officer at PDFFiller.com,

a rapidly growing, cloud-based provider of document completion services

• Former CTO at FurnitureFan.com and prior founder of ClearWeb.com

• Veteran of technology development and deeply experienced with the effective marketing of software products

Governance

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 19

Experienced auditors & counsel.

Page 20: Smtp 102013

Outstanding Performance

SMTP’s performance compares quite favorably within the industry1

SMTP leverages its SMTP brand, its cost-effective operations, and its proven team to deliver outstanding financial returns. Furthermore, the stock remains modestly priced, relative to others in the industry, even before factoring in earnings growth trends.

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 20

1Figures on all firms based on TTM through Q2 2013; EV/EBITDA ratios as of 10/12/2013 (Data from CapitalIQ)

Revenues (TTM)

Net Income (TTM)

Profit Margins

(TTM)

Quarterly Earnings Growth

(yoy)

Return on Assets (TTM)

Return on Equity (TTM)

Enterprise Value / EBITDA (TTM)

Constant Contact 269M 12.6M 4.7% N/A 0.5% 6% 30.72

Responsys 183M 5.37M 2.9% N/A 2% 3% 42.73

SMTP 5.52M 1.24M 22.4% 60% 94% 164% 7.9

Page 21: Smtp 102013

Further Information

Alena Chuprakova SMTP, Inc. 877-705-9362 [email protected] http://www.smtp.com Paul Kuntz RedChip Companies, Inc. Tel: +1-800-733-2447, ext. 105 [email protected] http://www.redchip.com

SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 21