CMD 2020

Oct 15, 2020

Slides

So I guess we can start. Okay, Bjorn, thank you very much, Bjorn, for let's start. Hi, everyone. Good to have you here. It's the 4th day on our Capital Markets Week, and we're super, super happy to have Dave Weiser here. So Dave, we know Dave for a long time now, so it's and it's particular pleasure to have Dave 1% GET where we've been around since 2014, I think. And so time flies. And but we're super excited about this portfolio investment of ours. And like the previous days, we will have Dave will do a presentation of GET. And then after that, we'll open up for questions. The questions you if you want to raise a question, you type it into the Q and A or chat function here on Zoom, and I'll read them out to Dave. Good. Without further ado, thank you, Dave, for joining us. Pleasure. Pleasure. So let me take you through where the business is today and what is taking us forward. Just a quick reminder, it is a B2B business. More than 85% of our revenues come from B2B. It's a category we created in 2010. We made our very first ride with Google and Disney back in 2010. And since then, we have more than a third of Fortune 500 companies using it. Being B2B company for more than 10 years, it means that we built an infrastructure to support the portfolio of companies we have, including Stone Sales and Support Organization. And that experience enable us to keep signing and winning of about 500 new corporate clients every month. Some of the good names, key names that Global Brazil Premier Trust get pay corporate ground transportation in the locations where we have service today. Interestingly, when we look back and we analyze what is the most important API in a B2B SaaS service, that would be the net dollar revenue retention. And when we look back and look in the forward to our clients, we're actually pleased to see that the retention net dollar retention is 130% and actually stays flat this way even after the 1st year and second and third. Just as a good reference, what is known in the public B2B SaaS companies, the net dollar revenue retention stands for 126%. So we feel pretty good where we are today and obviously, we expect to increase this number with the product that we are launching across our territories, and we'll speak most of the time today about this. We also see our customers being happy. That net total retention tells us that they must be happy to stay with us and actually contribute more revenues year over year. But we also find that we save, in average, about 25% in the ground transportation spend after they install our software. Some of the clients even report a 44%, but that's more of the outliner and indeed an average is 25. This is a good example of some large customer being more than 330,000 employees, and we generated 44% in our first trial. To understand the debt corporate solution, We need to look both into experience that we generate for the employer and employees. And what we like about the service we provide today is that we established comprehensive and robust corporate solution from one hand. And from the other, we deliver best in class mobile experience, as we like to call it, consumer grade type of experience in enterprise, which is today a key when you have a solid corporate platform combined with a great user experience. I believe that up to now, I didn't share much news to you. And last year, we've been discussing exactly the differentiated strategy that guest follows, being the leader in following the corporate segment. But today, I want to speak about the most important thing we ever developed and something that we are developing the last 3 years and launched in recent times, and this is the most important and fascinating announcement. So what is Generation 10? Obviously, it's our 10th generation B2B, and it has all the knowledge and availability generated until now. But we also ask ourselves what if we're able to develop a technology that can connect to third party supply, not exactly our own supply, but non native supply. And by connecting in a way that we become seamless for the corporate user and if we succeed in making this, we will be able to help companies to aggregate all of the best ground transportation options in one single platform. And that's what we've been after in recent years. Just to give you perspective, the global corporate market spend is €1,400,000,000 over a year. That's how much the companies are spending. But until now, there were no solution that can cover all of the footprint to provide them one platform that actually does it for all. And the third problem that companies are facing today is that any global company has usually got 2 vendors in every major city and then few supplemental and they end up having more than 100 different vendors. That's pretty much how the map looks like now. So if you're any global company, you can check the view of procurement. This is the map of all different ground transportation vendors. Some of them are familiar there from tech and there are 1,000 you don't know or might be not that familiar and they have limited technology or no technology. And yet, they serve the global corporations. Eventually, they are the ones who provide a service for $1,400,000,000 a year. So you need to connect to all of them and you need to work separately with each and everyone. It means you need to go for the integration, security, privacy, user definition, project allocation, addresses, payments and then other things. And all of that should be done mainly in each different system. So that's the reality of today. This is what Gen10 does. We enable and organize all of the ground transportation vendors on one single platform, And we enable access to all of them and maintenance to one cloud platform. As a result, you can compare the prices. Though before you had multiple vendors, you couldn't even compare the prices. You can control this spending, fraud prevention, user management, project allocation, federal budget policies and so on and so far. And everything goes to 1 system, 1 interface and obviously have 1 unified at invoice. You don't need to run your own back office. This is the situation of today. Most of the companies have more than 100 people in IT just to do this. Now easy way to compare what we do is I'd like to say that there are hundreds of British Airlines and there is only and there is a Medelles. There are thousands of different fleets and ground transportation vendors and there is depth. Again, this is how the system looks like of the fleet desk and mobile with cloud solutions, so you have access from anywhere and offers the best ground travel providers in one platform. So you can focus on what you do best. Our mission is to organize all the background transportation vendors in one single platform. Again, this is the unique solution that company the only solution tactical company might need to serve their needs. Obviously, it's not simple, and that's what took us about 10 years of experience to build the whole pack across the spectrum. We just touched about it and we reviewed the B2B Brain, the one that maintains all the private policy pricing and management and mobile solutions as well, but there are also back office technology that actually enable that metric I described in the beginning that we found a way how to connect to non negative supply means we don't run the supply and we don't have operation. We just connect to third party. And there isn't and that technology is very unique because eventually you use a system like E, it was the native marketplace or native supply. Again, very unique, and we stumbled actually to accomplish this technology development. Once it's done, the service we're able to provide is beyond our native marketplace is that we aggregate and offer all of the options on one single platform. Also, the reason why the partners are signing contracts with us because the market understand that GET is not a ride hailing company. GET is not competing with other ride hailing companies. But we are partners with them and it's a new new saturation. We focus on B2B. We have a large portfolio of clients. Once we connect, we give them a lot of value and it's a leading partnership. And they're not afraid to partnership with us as we only have one aspiration to bring our corporate clients better coverage and we bring them high value rights at no cost. The supply coverage is how it looks like. We keep adding mainly every quarter. We expect to be in a 50% world coverage in supply coming next year. And importantly, we already have a full national coverage in U. K, U. S. And most international airports. This is important. We just shared the vision, and it's obviously a business vision where gas software might help and touch each and every business around the globe. But the beauty is that when you try the solution today in U. K, it already works as a charm and is the only solution that actually offers you the entire range and variety of vendors available in the country on the national scale in Bancoatl. All of our new contracts in U. K. Goes through the new platform, and any global or local customer can experience that live. The market I mentioned is as big as 1,200,000,000. And though we expect to be somewhere around 50% supply coverage next year, the commercial sales will be still at the 35% of coverage. The reason for that is it takes time and lack after we sign enough critical mass of supply vendors, the commercial sales start from within. And hence, it always has some lag. So in 'twenty one, our expectation is to be in 50% coverage technical coverage with sales and service of around 35% globally. Just to remind you, U. S. U. K. Alone is 25%. It's where we are today, plus international airports is very close to the goal, which is already almost achieved. Some financials, I know that there's a lot of negative sentiment in the travel and ground transportation. And we're especially proud that we maintain discipline with our financials across the last 5 years. Every year, we present we've been happy to share the progress, and the company has been improving year over year its financial profile up to the point that, and as promised in our last meeting, we reached operational profitability in last December. It was still a goal when we presented last time, but we reached that goal exactly on December. It was the first time company generated operational profit. And since then, we keep growing. And what is interesting is that even during the COVID and now times, we actually managed to meet our original budget, original pre COVID budget and keep improving in profitability. So since December, in the first week, operational profit, as you can see here, we actually, in June, broke our 1st record during the COVID times, actually meeting the budget and exceeding our past record. So we are on track year on year to continue to improve our financial performance and we outlook the new records for the next session that we will have next year. For the clarity, our operational profit is the consolidated EBITDA. When we look across all of our markets, each market has its own P and L. All consolidated P and L EBITDA is positive today. That excludes R and D. When we look on the right side, since our R and D cost has left, we can learn that we expect to be already fully profitable early next year. With that in mind, I think we can bow here and take questions. Okay. Thank you, Dave. It's a good overview. And I think we'll start with a question from Bjorn here. Yes, sure. And if Georgios want to ask questions, just a reminder, put them in the chat and we'll put them forward. But just to start, could you elaborate a bit on how you're signing up for this 3rd party supply? And if that's a challenge or are you very happy to be integrated in your platform? And are there challenges in the integration as well? Yes. It's a critical question. When we had this ambitious vision 3 years ago to develop technology and sign third party suppliers around the world, that was the very key question, would it be possible? Would they be willing to join the platform? I'm happy to report that today we have more than 100 different vendors join the system. So the short answer is yes. The long answer is that, as I said, the reason why we are the only company who managed to sign external supply is because the GAC is not a ride hailing company, and those partners don't see us as a ride hailing company, and they see us not as a competitor, but rather partner. I believe should we be any other right hand in company should name it, some good names you can mention, I think they will have a difficulty to sign such partners since everyone will see them as a competitor. Difference we get by the time we sign a partnership, we immediately generate savings for those partners by driving traffic from our portfolio of corporate clients, another benefit of guests, very unique one. And we immediately generate savings for our partners, and it become a leading partnership. So we believe in that, but it was the biggest risk for us when we developed the Generation 10. And I'm happy that we now presenting something that's been accomplished and validated by the market. Okay. And a follow-up on that, I guess. Could you elaborate a bit on how much of rise and capital today is is negative supply versus 3rd party and then a year or 1.5 years out, probably within the mix 2 weeks? Right. So we've been happy to report it in a way that our non native supply revenue drives are growing by a factor of 4 year over year. This is the first time we launched our Gen 10 technology in low volume just 3 years ago in 'eighteen. And then since then, it's been growing in production and commercial segments. And since 'eighteen, we've been growing by the factor of 4x, 5x, including this year, COVID year where our non native grew by 4x compared to 'nineteen. And I guess another question about in the past quarter was how we can see the leverage a bit on how the revenue what type of revenue and how that has evolved from more concession based revenue that we've got in the past to software and service type of revenue Yes. I believe it's a public event, so I will be careful answering the question. What is interesting is that when we look in our existing revenues that are, by the way, also growing even in this COVID year, I mentioned in the beginning of the math, our budget triple the version of the budget, and we actually slightly overperformed. It means that the underlying business lines, both the increasing B2B and the Gen 10 B2B are both growing. What we like about our transactional B2B, though the revenues are not based on subscriptions, those are transactional revenues per nature. The behavior of those revenues is exactly as subscription SaaS type. Actually, the numbers I shared with you are coming from our existing business and 130% net dollar retention for several years shows you that the predictability and stability, which we saw like in subscription, it is well maintained already in our existing platforms. And both the reference of 126% average being a good metric for the best SaaS companies. So as of now, we're doing 130%, so at best, at the level of the best SaaS companies. So the performance and behavior of production revenue is very similar. So the only difference is in the billings. The belief is that the new services that we add with the non native will have even higher retention since the daily we generated today for the client for our corporates is much stronger and much deeper. We also cut the cost they have in the back office that they spend the day to connecting to services. And once they do not get, it replaced this back office. And it's very unique and become a very valuable piece for the corporate. So we expect to have even stronger benchmark for our revenues. I hope that I answered your question. If not, please say it. No, no, no, great. And another question, got in some times, it's if you could elaborate a bit where you are today in terms of geographic mix and with your, I guess, core markets in terms of Russia, U. K. And the U. S? That's the question. So to bring clarity, we have our own marketplace historically, have a national operation in U. K, national operation in Russia and national in Israel. And we do have that marketplace, again, being profitable and growing. But with Gentine, the answer for that question become really global. And as of now, we're rolling out coverage in UK and U. S. And Global Airports. And as I showed you on this slide, we expect to have 55% coverage in next year and 50% coverage in supply technical supply integration. So let me show you here. I think that's the best answer for that question. Thanks. We have a question, Dave, from the audience here, which is on customer churn. And the question is why it drops from 2% to 10% from year 2 to 3% and is that because you have mainly 2 year contracts? Fantastic. Let me touch that. I guess that was related to this slide, correct? I guess so. Yes. So first of all, those are factual results, okay? You can see that the churn is 20%. Actually, it's less than 20%, about 17% something after 3 years. To give you perspective, is it better or good? The golden standard for B2B companies, the public ones that you can find on the Internet stands for churn being 20% in 1st year. Companies public companies that demonstrate churn of being less than 20% in the 1st year considered to be golden. We are happy to report that the both mature and be 20% in 3 years. In the 1st year, we lose margins. So it's actually very good in others. Interestingly, we don't this dynamic achieved not by having a long term contract. If anything, the contract can be terminated at any time. It actually shows that we the reason why we have such a good retention is that probably the value we generate delight to customers and they keep working with us, not that they're obligated. It's not exclusive. They can stop at any time. And the factual results demonstrate that actually it's not illegal content to some kind of commercial tricks that hold the customer in gaming, but rather the value we generate. And I like that result even better because that's actually driven by the service and the product. Another question we have is around Mace COVID. And if you could elaborate a bit overall operations? Yes. As everyone, it was devastating. And when the quarter started, we've been all very uncertain how we'll pass that period. Gradually and factually, you can see that our results have been actually better than before the COVID and better than the budget. The reason for that is, again, GET is entirely focused on B2B. Our most of our revenue is coming from corporate. And during the COVID, what happened is we saw them also reducing the traffic, but about less people using corporate solutions as well. But what was different is, and it's interesting, is that companies, because they have a duty of care, they also care really about the employees and their health. They started to spend more money in budget on people who actually come to the office. So they would rather use safer options such as personal ground transportation rather than public. And they compensated by this to the reduction in volume that we saw across the board. So in consumers, there is no money path to compensate that. In the corporate, the dynamic is different. Less people come into the office. But the ones who come to the office, the company is actually willing to pay and motivate those users to use the corporate solution, individual corporate solution, so they will come to office safe rather than risking others. And beyond just human care and legal care, it's also financially it's a smart decision since unlimited potential damages to the company should be have the COVID situation in the office and prioritizing everyone. So that compensated. And we saw and as I said, we started with being very worried. But eventually, we saw that we have kept warning according to the budget, and we also used other opportunities when being acted promptly and opportunities being added promptly and gold across all verticals and all levers. So So as you can see, actually, again, we actually delivered our very best performance in the months financially on the both operational profit and company EBITDA. So we feel comfortable with the outlook that we had before and keep having the same outlook for now. We didn't update our budget, and the Board is aware that we reported according to original to slightly to slightly overperform the regional budget by the end of the year for the annual results. Thanks. And maybe another question going back to the product and Gen 10 platform. And all those corporates, do you target specific segments of corporates in terms of size? Or is this a platform small and medium term size business as well? Or is it more you have a minimum number of employees for it to be relevant? So the most value it's interesting. The product we have is a true enterprise product. And when people talk business, question is very important because we need to make sure that we speak about the 2 enterprise, our classical and the best customer is the Fortune 500 type of client because those customers experience the pain the most. They are the ones who have tens of thousands, hundreds of thousands of employees across the world, different locations, and they have different vendors. And there is no system in the world. There is no Amadeus of ground transportation. Get to pay Amadeus of ground transportation is that we only can manage that. So the bigger decline, the bigger decline, the more daily we can contribute. And the daily, as I mentioned, is both in savings, which is very direct. And I think the COVID times, if anything, motivated customers to upgrade infrastructure: A, to achieve better savings and cost b, to manage the remote workforce. So the IT infrastructure and transportation infrastructure already lost for disruption, but with the COVID, this process is being expedited. So answering your question, global cost companies, large companies, the ones that have many vendors are the capitals. And they already reflected in our portfolio. Gladly, as I started the presentation, we are not new into growth into corporate sales. That's what we've been doing for the last 2, 10 years. And we're building infrastructure and organization that work like well oiled machine. This is not from the base last year, but by now, for 10 years, and we have also put an elimination and sales organization that keeps signing about 500 new cohorts clients every month. I think as a follow-up to that, there's a question from the audience on the TAM, the total addressable market and how you see that sort of changing, if at all, I mean, on the back of COVID, home and less business travel, etcetera? Yes. So clearly, no one knows at this By now, more markets will be affected long term. I believe the common knowledge is that in the horizon of 1 or 2 years, there should be a full rebound to the full traffic. You need also to remember that out of EUR 1,400,000,000, the traffic that is local, not international, is more than 95%. So we like and it's a very good question. So when I say addressable margin 1.4%, this is how much companies spend on ground transportation. Most of that spend is local. The 5% of the ground transportation spend goes for moving from one location to another. And the problem I mentioned before, the pain that customers are facing, it's not about maintaining international revenue. This is they have a team to run the local national solution. And from the level of the company headquarters to aggregate all of those invoices and maintenance, that's where the problem is. The biggest problem indeed within international, that is just 5%. So internationals might take long time until they're done, something like 2 years. The local spend, as we see from our existing budget performance, is actually back to where it's been. Again, you understand me right, there are less people come to the offices, but the money spent per person almost compensated the decline. So I guess from what we see from the actual budget performance as of now, they're probably spending locally the same amount of money they've been spending before. And clearly, they spend almost 0 on international, which is 5% of this, EUR 1,400,000,000. That's as precise as I can answer that with your question. Looking out, Dave, like if you allow yourself 5 years from now, what are your ambitions for depth in terms of financials, sites, markets? Yes. So that's really fascinating because by now, we have an ability to expand our footprint in a very short time without having any operation. So it's the first time then there is a solution in the ground transportation space that is not limited by financial cost or operational hassle to expand. And after that cycle, yes, it's probably too much in our plans. But in the 2 years, maximum of 3 years, we expect to have a full global coverage means we can cover. And so any global company in full, 100% spend, can go through us. And we might help their business to thrive by actually focusing on what they do the best and delegate all the ground transportation management to us the same way it's done with Amadeus or any other services or AWS, right? I mean, you don't hold their own service anymore. So why should those companies keep holding hundreds of people in AT and T Finance just to do reimbursement then by integrating or using cloud solutions? Yes, They both pay cost, about 25%, some case more, and they also use the infrastructure into the section of the employees in a much better way. So yes, the vision is to help businesses globally to thrive. And by this, we have an opportunity to touch each and every business on the planet. And by this, we have an opportunity to touch their employees with the mobile solution we provide, and this is really fascinating and promising to us. And so 2 years, you cover the entire world with the non native supply, etcetera. Can you stretch it out a couple more years? What can that mean in terms of GMV that you take to your system and revenues to you? What's the where will you be happy? We focus on actually making our product available globally, as I described, because once that's achieved, the financials will be really favorable. Imagine managing EUR 1,400,000,000 in ground transportation spend goes through the system, it might be very significant profits. In average, we generate 10%, 15% of margin for the services we provide. And this is after we save 25% of the company. So it might be very significant for our future prospects. But I wouldn't yes, that's the market opportunity. But the 1st and foremost, we need to keep rolling out the service that we already created live in U. K. And keep sending customers and winning customers using that product. Once that happens, there is no other way for the companies really to run the infrastructure efficiently, and that's about the time for them to upgrade the infrastructure to become modern. So their question, in the 5 years time frame, we hope to help companies to upgrade the infrastructure to modern and digital and mobile infrastructure to move the remote workforce, which I believe will become now permanent. And by doing by bringing this failure, we believe to make significant profits to our shareholder support. Okay. Thank you. So yesterday, we had the boy here and then I was wearing this cap because it said, I got this cap when they reached 1,000,000 rides, but now there are 30,000,000 rides. So they're giving me a new cap. So I'm looking for some get I'm in the position on get. I like the Get the, what do you call it, merchandise. I mean, there's we have a guest here on the panel or on the speaker who thinks that we have onethree of the sports companies now and you should send us a cap saying 200. I will be happy to do so. Anyway, I think thank you very much for being generous with your time and good luck. And we're sort of we're very happy to be shareholders. And it's a very, very exciting sort of project that you are I mean, the product you are very advanced into the launching, it's super exciting to follow. So we'll do this in the year's time and then high expectations. Thank you very much. Expectations should be high. And we also want I want to use the opportunity to thank you for continued support. It's been really instrumental to us, and we are now it's up to us to give our own results. And we'll keep doing and hopefully, towards the progress that we keep outlining right now. Thank you again, and good luck. Thank you, everyone. Thank you. Bye bye.