Taleo Corporation - Rational Investing

Transcription

Taleo Corporation
(Nasdaq: TLEO)
Analyst Update
New York
Michael Gregoire, Chairman & CEO
Katy Murray, EVP and CFO
Guy Gauvin, EVP, Global Services
Al Campa, Chief Marketing Officer
June 18, 2008
2008 Copyright, Taleo Corporation
AGENDA
Time
Topic
Presenter
9:00 a.m. – 9:05 a.m.
Welcome
Katy Murray
EVP, CFO
9:05 a.m. – 9:45 a.m.
Talent Management
Today
Taleo/Vurv Highlights
Michael Gregoire
Chairman & CEO
9:45 a.m. – 10:00 a.m.
Integration Planning
Update
Guy Gauvin
EVP, Global Services
10:00 a.m. – 10:20 a.m.
Financial Update
Katy Murray
10:20 a.m. – 10:50 a.m.
Taleo Executive Panel
Q & A Session
Moderator: Al Campa
Chief Marketing Officer
10:50 a.m. – 11:00
Wrap-up
Michael Gregoire
Safe Harbor
Forward-looking Statements
This presentation contains forward-looking statements, including statements regarding the expected timing of the closing of Taleo
Corporation’s acquisition of Vurv Technology, Inc., the expected benefits of the acquisition to Taleo and Taleo’s customers and the future
financial performance of Taleo. Any forward-looking statements contained in this presentation are based upon Taleo’s historical performance
and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved.
These forward-looking statements represent Taleo’s expectations as of the date of this presentation. Subsequent events may cause these
expectations to change, and Taleo disclaims any obligation to update the forward-looking statements in the future. These forward-looking
statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially, including risks related to
(1) the satisfaction of closing conditions to the acquisition, (2) difficulties in integrating Vurv Technology and its products, services and
employees into Taleo and achieving expected synergies, (3) Taleo’s ability to retain key employees, (4) whether the market for Taleo’s
products and services grows as anticipated and Taleo’s ability to compete successfully, (5) Taleo’s ability to deliver new products and services
and to acquire and renew customers, and (6) other factors affecting the operation of the respective businesses. Further information on potential
factors that could affect actual results is included in Part I, Item 1A of Taleo’s Annual Report on Form 10-K, as filed with the SEC on March 14,
2008, Part II, Item 1A of Taleo’s Quarterly Report on Form 10-Q, as filed with the SEC on May 12, 2008, and in other reports filed by Taleo with
the SEC.
Non-GAAP Financial Measures
To supplement condensed consolidated financial statements presented on a GAAP basis, we plan on reporting non-GAAP financial measures
of revenue and net income. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position
or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure
calculated and presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. Non-GAAP
financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with
GAAP. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same
captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. We believe
that, while these non-GAAP measures are not a substitute for GAAP results, they provide a basis for evaluating our operating results because
they are helpful in understanding our past financial performance and our future results and facilitate comparisons of results between periods.
We believe the calculation of non-GAAP revenue, which reflects the revenue excluded from the GAAP results due to purchase accounting
adjustments to reduce deferred revenue to its fair value, provides a meaningful comparison to our historic GAAP revenue. We also believe the
calculation of net income and loss, calculated without the acquisition-related accounting adjustments to deferred revenue, stock-based
compensation expense, the amortization of certain intangible assets, restructuring costs, one-time conversion costs, and certain acquisitionrelated expenses and tax benefits, will provide a meaningful comparison to our net loss figures. Our management uses these non-GAAP
financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures
have been reconciled to the nearest GAAP measure as required under the rules and regulations promulgated by the U.S. Securities and
Exchange Commission.
Talent Management Today
Significant Market Opportunity
Taleo’s Total Addressable Market
$4,771M
%
56
R
G
A
C
$3,262M
$2,816M
$1,982M
$814M
Source: AMR Research, 2007
U.S. Market Potential
Enterprise
Mid-Market
SMB
<20%
280
<1%
??
<1%
250
<10%
<1%
<1%
10,000 10,000 10,000
<1%
Sources: BLS, Bersin, and Taleo Research
Today’s Workforce Challenges
M
151B
S
JO
CE
141M
R
O
KF
R
O
W
65+
35M
70M
2008
14%
62%
24%
Highly Engaged
Moderately Engaged
Actively Disengaged
2007 Employee Turnover
Leaving
Voluntary Total
US
23%
40%
UK
14%
18%
China
14%
16%
India
20%
22%
Sources: The Gallup Management Journal, US BLS, UK CIPD, Hewitt Associates, Taleo Research
Current Solutions Not Meeting Challenges
Silos of
Talent
Applications
and
Pools
Performance
Recruitment
Goals
Succession
Fragmented Data,
Applications, Talent Pools
Employees
Candidates
Historical and Reactive
Rear-View
Mirror
Poor Usability
Used 2-3 Times per Year.
Inconsistent Usage
Heavy IT Burden
IT
DEPARTMENT
Complex and Inefficient
The Future: Talent 2
Characteristics 1st Generation TM
PURPOSE
Goal
Cost Savings
Business Performance
Process Automation
Talent Mobilization
Application Silos
Unified Application
User Interface
Functional
Engaging
Collaboration
Workflow
Social Networking
Limited
Personalized
Adequate
High
Limited
Complete View of Talent
Reducted Costs
Method
Architecture
APPLICATION
Configurability
User Productivity
RESULTS
Talent 2
Visibility
Business Impact
User-Driven
User Friendly
Unified
Universal
Talent 2: Strategic Value
Thru Talent Mobilization
Source
Reach Talent Pools
Strategic
Classic HR
HR
As
Assess
Identify Top
Performers
Acquire
Fuel Business
Expansion
Develop
Fill Leadership &
Skill Gaps
Engage
Increase
Productivity
Align
Drive the
Business Plan
Retain
Maintain Domain
Expertise
s
As
se
Co
t
st
Co
et
st
Talent
Competitiveness
Execution
Innovation
Talent 2: Taleo Differentiation
Requirements
UNIFY
Complete View of Talent
PREDICT
Predict Performance
PERSONALIZE
Tailor to Environment
ADOPT
Easy, rapid adoption
PROVEN
Reliable, Available,
Secure
Taleo Capabilities
Unified View of Talent: recruiting
and performance data, employees
and candidates
Talent Intelligence: success profiles,
model talent pools, predict skill
gaps, precise candidate matching,
Configure to every organization
and every role: minimize IT
resources
Usability: Intuitive, easy to use
interface, Outlook integration, built
for business users
Established Scalable, on-demand
Talent Management Platform
…from a single talent management solution
DONE
Why Vurv?
Why Now?
Why Vurv?
Geographic Reach
• EMEA and APAC
• Catch SaaS and TM Wave
Solidify Market Leadership
• 600+ Enterprise Customers
• 2,800+ SMB Customers
Comprehensive Product Line
• Recruiting + Performance + Compensation
World-Class Development
• Accelerate Delivery
Complimentary Fit
• We Know This Business
IP & Domain Expertise
• Accelerate Our Vision
Talent Management Leadership
“Taleo Performance has the
opportunity to truly transform
the way business handles
talent management.”
Josh Bersin
President & CEO
Bersin & Associates
“Taleo Enterprise has strong functionality across the board.
System performance and scalability are strong. Customers
gave Taleo high marks overall on service and support.”
Gartner, James Holincheck
“E-Recruitment Magic Quadrant” Jun ‘08
“Taleo is taking a unique
approach to talent management
by focusing on a superior user
experience and real business
impact rather than just process
automation.”
Lisa Rowan
Program Director
HR and Talent Management
IDC
Product Coverage
Business Edition
Enterprise Edition
• Small and Mid-Sized Businesses
• 20-3000 Employees
• Advanced Recruiting Solution
• Sourcing, Acquisition
• Speedy deployments
• Easy to use
• Large Enterprises
• Multiple brands & divisions
• Heterogeneous staffing needs
• Talent Management Solution
• Recruiting, Performance
Management, Succession
• Unified, Configurable, Scalable
Taleo Enterprise Edition
Taleo Business Edition
Vurv Enterprise
Vurv Express
# of employees
10
100
2,000
10,000
25,000
50,000
100,000+
Broad Customer Community
48 of the Fortune 100
5 of the Top 6 Healthcare
Companies
4 of the Top 8 Health
Insurance Providers
7 of the Top 11 Best
Places to Launch a
Career use Taleo
151 of the Fortune 500
8 of the Top 10 Financial
Services Firms
For MBA’s and Recent
College Graduates
2,800+ SMB’s
17 of the Top 30 Sites
Powered by Taleo
Combined Customer Success
Strength in Numbers
Taleo/Vurv Combined Annual Revenues
2007 Revenue: $177M
3,400+ Customers
600 Enterprise
Customers
2,800 SMB
Customers
190 Countries
& Territories
25 Languages
Why Now?
Customers Want a Unified Platform
Market Demanding Leadership
and Better Solution
Market Acceleration
• Consolidation
• Broader Solution
Invest Today to Set Up
for Future
Management Team
Strong
Balance Sheet Strong
Integration Planning Update
Guy Gauvin
EVP Global Services
Focus on Value Drivers
The need for speed requires focus on the key value driving opportunities that will
have a measurable impact on the company in the near future.
Value Drivers
Shareholder
Value
Drivers
Action Steps
Revenue /
Market
Growth
•
•
•
•
Convert Vurv to TEE/TBE & Upsell
PM sell to converted installed base
Enhance brand image and advertising effectiveness
Expand services offering (optimization, intl depl, etc)
Cost
Efficiencies /
Leverage
•
•
•
•
Standardize / enhance processes (CRM, T&E, etc)
Integrate common functions (G&A, R&D, Services)
Leverage infrastructure (Data centers, offices, etc)
Maximize technology investment
Capital
Optimization
• Rationalize businesses
• Define investment priorities
• Establish return on investment goals
Integration Planning Timeline
5-May
12-May
19-May
26-May
2-Jun
9-Jun
16-Jun
Kickoff Integration Team
and Sub Teams
Functional Teams Face to
Face Meetings
Create Version 1 of
Workplan
Version 1 Deliverables
Value Drivers, Org, Budget
Finalize Decisions on Critical
Open Issues
Create Final Workplan
Executive Review of Final
Workplan
Enterprise Product Roadmap
YEAR 1
Jun ‘08
Dec ‘08
Jun ‘09
YEAR 2
Dec ‘09
Jun ‘10
YEAR 3
Dec ‘10
Jun ‘11
Dec ‘11
Jun ‘12
PRODUCT CATEGORY
Enterprise
Recruiting
Enterprise
Performance Mgmt
Taleo Recruiting
Vurv Recruit
Taleo Performance
Vurv Perform
Enterprise
Compensation
Evaluating Integration Options
Enterprise
Workforce
Monitoring/Optimize
Poor Portfolio Fit
Investment / New Sales
Sustaining / No New Sales
Migration of customers,
incremental capabilities,
best practice processes etc.
SMB Product Roadmap
YEAR 1
Jun ‘08
Dec ‘08
Jun ‘09
YEAR 2
Dec ‘09
Jun ‘10
YEAR 3
Dec ‘10
Jun ‘11
Dec ‘11
Jun ‘12
PRODUCT CATEGORY
SMB Recruiting
SMB Performance
Management
Vurv Express Recruit
Vurv Express Perform
Investment / New Sales
Sustaining / No New Sales
Migration of customers,
incremental capabilities,
best practice processes etc.
Customer Conversion
Dedicated Customer Conversion Team
• Sales and Presales
• Services and Account Management
Conversion “factory” timeline based on
• Vurv version (standard or custom)
• Renewal Date
• Complexity of deployment (BU, geographies, etc)
Taleo conversion strategy proposed to each customer
based on their unique deployment.
Infrastructure/Operations
Data Centers
Data Center
• USA
• Europe
Headquarters
International
• Sales & Services
Key functions in Jacksonville
Data Center
• Australia
• Development
• Support
• Consulting
• Marketing
• Finance
Integration On Track
• Value Drivers Validated
• Organization Structure Finalized
• Product Integration Plan Near Complete
• Customer Conversion Process Determined
Financial Update
Katy Murray
EVP and CFO
Vurv Acquisition Term Summary
• Approx. $128.8 million (based on date of signing):
• 4.1 million shares of Taleo Class A common stock
• Approximately $36.5 million in cash
• Assumption of up to $9.0 million of debt
• Subject to customary closing conditions
• HSR – waiting period expired June 16th
• California - hearing is set for June 25th
• Closing expected: July 1, 2008
Metric Comparison
+
= COMBINED
BUSINESS METRICS
At Closing
At Closing
At Closing
Enterprise Customers
SMB Customers
Total Customer Count
330
1,400
1,700
270
1,400
1,700
600
2,800
3,400
TEE Sales reps
TBE Sales reps
48
3
51
18
2
20
Fortune 100 Customers
Fortune 500 Customers
35
95
13
56
48
151
>1.3 million
>1 million
>2 million
Data Centers
2
2
4
Development Centers
3
1
4
At Closing
At Closing
LT Target
Application Revenue %
License Revenue %
Consulting Revenue %
82%
0%
18%
69%
3%
28%
>82%
0%
<18%
% International Revenue
>10%
>16%
>20%
686
330
850
Registered Users
OPERATIONAL METRICS
Company Headcount
Financial Summary
Combined Application Backlog at 12/31/07
in millions
$260
$280
$240
Vurv
$200
$200
$160
$120
$140
Taleo
$100
$80
Taleo
$40
Taleo
$0
FYE
2005
Note: Vurv backlog included for 2007 period only.
2006
2007
Annual Income Statement
Fiscal Year Ended
Revenue
Growth YoY
Subscription Software
Services
License Software
Gross Profit
Gross Margin
Non-GAAP Operating Income
(see appendix)
Non-GAAP Operating Margin
12/31/07
1/31/08
$128.0M
$49.0M
32%
23%
82%
18%
70%
27%
0%
3%
$87.3M
$30.4M
68%
62%
$10.8M
$(1.3)M
8.4%
(2.7)%
Note: * = Not meaningful metric
Annual Balance Sheet
12/31/07
1/31/08
Cash & CE
$86M
$2M
A/R
$30M
$11M
Deferred Revenue
$37M
$20M
Deferred Revenue Growth YoY
95%
7%
Debt
$0M
$7.7M
Fiscal Year Ended
Most Recent Quarter: Income Statement
3/31/08
4/30/08
$37.2M
30%
$13.6M
19%
Subscription Software
81%
69%
Services
License Software
19%
0%
28%
3%
GAAP Gross Profit
$25.2M
$8.1M
GAAP Gross Margin
67.7%
60%
Non-GAAP Operating Income (see appendix)
$3.5M
$(1.6)M
Non-GAAP Operating Margin
9.1%
(12.0)%
Quarter Ended
Revenue
Growth YoY
Note: * = Not meaningful metric
Financial Guidance
Taleo: Stand-Alone Guidance Update
Q2 2008
• Re-confirming guidance of:
• Revenue: $38.1M to $38.4M
• Non GAAP fully diluted EPS of $0.13 based on a fully diluted
share count of 29.5M for the quarter
• InterContinental Hotels Performance Management
Competitive Win
FY 2008
• Increasing prior guidance of annual revenue from $154$157M to $156-158M, representing year over year growth
of over 22%
Combined Guidance Assumptions
• Assume transaction closes on July 1, 2008
• The impact of having to write down deferred revenue
will be added back to GAAP revenue to arrive at NonGAAP revenue and Non GAAP earnings
• Amortization, stock compensation and exit and
restructuring expense will continue to be subtracted
from GAAP expenses and therefore are not included in
Non-GAAP earnings
• Conversion costs related to the conversion of
customers will be subtracted from GAAP expenses and
therefore will are not included in Non-GAAP earnings
Combined FY 2008 Guidance
• Combined Non-GAAP Revenue of $175M - $177M
• Non-GAAP EPS of $0.62 based on fully diluted weighted
average shares outstanding of 31M – 32M for the year
• Cash Flow
• Compensation expense of $2.8M per qtr
• Depreciation expense of $2.9M per qtr
• Will be negatively impacted on an annual basis by
restructuring and exit costs to be paid on closing and during
the transition
• Non-GAAP tax rate of approximately 10%
FY 2009 and Ongoing Guidance
FY 2009 Guidance
• For FY2009, the transaction is expected to generate an additional
$0.08 to $0.10 of Non-GAAP fully diluted EPS as compared to
Thomson Financial First Call for Taleo’s FY2009 mean estimate of
$0.79 on June 17, 2008.
• This assumes 2009 YTD fully diluted shares outstanding of 35M
• Additional details to be discussed on future Taleo quarterly earnings
calls
Ongoing Combined Guidance
• After Q2-08, we will only be providing Non-GAAP revenue and NonGAAP EPS guidance on a combined basis and will not provide
separate organic vs. inorganic growth rates
• Non-GAAP earnings will continue to include any revenue write-down
impact from deferred revenue
• Non-GAAP earnings will continue to exclude expenses relating to
amortization, stock compensation, restructuring and conversion
expenses
Financial Summary
• Transaction was thought out qualitatively, and
quantitatively
• Integration is well underway. Synergies have
been identified and will continue to be executed
on
• Transaction is expected to close on time
• Transaction is accretive not only to 2009 but to
fiscal year 2008
Summary
Clear Market Leader
Large Market Potential
Compelling Vision for
Talent Management
Industry-Leading Platform
Leveraging the
SaaS Model
Track Record of
Innovation & Execution
Q&A
Thank You!
Appendix
Supplemental Information
Reconciliation of GAAP Operating Income to
Non – GAAP Operating Income
Reconciliation of GAAP Operating Income to to Non-GAAP Operating Income
For the fiscal year ending:
GAAP net operating income / loss as reported
31-Dec-07
Taleo
$
Add Back:
Share based compensation
Amortization of Intangibles
Non GAAP operating income / loss
$
10,781,000
$
955,000
$
3,540,000
(1,612,000)
30-Apr-08
Vurv
$
2,476,000
109,000
$
(1,920,000)
134,000
174,000
31-Mar-08
Taleo
Add Back:
Share based compensation
Amortization of Intangibles
Non GAAP operating income / loss
$
6,733,000
366,000
For the three month ending:
GAAP net operating income / loss as reported
3,682,000
31-Jan-08
Vurv
(2,733,000)
373,000
1,100,000
$
(1,260,000)

Taleo Corporation - Rational Investing

Transcription

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