avigilon corporate presentation
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© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
Corporate Presentation | August 2016
All amounts in US$ unless otherwise stated
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 2
Certain information and statements in this presentation, including all statements that are not historical facts, contain and constitute forward-looking information or forward-looking statements as defined under applicable securities laws (collectively, “forward-looking statements”). Forward-looking statements normally contain words like ‘believe’, ‘expect’, ‘anticipate’, ‘plan’, ‘intend’, ‘continue’, ‘estimate’, ‘may’, ‘will’, ‘should’, ‘ongoing’, and similar expressions and, within this presentation include, without limitation, any statements (express or implied) respecting: Avigilon’s mission, strategies, and objectives; projected growth, revenues (including the annual run rate goal), expenses, capital expenditures, and earnings; trends, opportunities, growth (including projected growth of the global video surveillance and access control market), and Avigilon’s competitive advantages within its industry; Avigilon’s plans to consider acquisitions; Avigilon’s product and research and development plans; product functionality, suitability, and performance; potential cost reductions; the addition and retention of personnel; the expansion of Avigilon’s sales reach; increases to brand and market penetration; strategies respecting intellectual property protection; the strength and projected growth of Avigilon’s intellectual property portfolio; the outlook for and strategies respecting the Avigilon Patent Licensing Program; and the expansion, development, and adequacy of Avigilon’s manufacturing and other real property facilities. Forward-looking statements, are provided for the purpose of presenting in formation about management's current expectations and plans relating to the future and allowing investors and others to get a better understanding of our anticipated financial position, results of operations, and operating environment. You are cautioned that such information may not be appropriate for other purposes. Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions, and other factors that management currently believes are relevant, reasonable, and appropriate in the circumstances. The material expectations, assumptions, and other factors used in developing the forward-looking statements set out herein include or relate to the following, without limitation: assumptions regarding Avigilon’s business, products, financial position, and industry; and those assumptions discussed in detail in Avigilon’s Annual Information Form dated March 1, 2016 (the “AIF”) and most recent Management’s Discussion and Analysis, each of which is available under Avigilon’s profile on SEDAR at www.sedar.com. Although management believes that the forward-looking statements are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Avigilon’s business, as more particularly described in the “Risk Factors” section of the AIF. Additional material risks and uncertainties applicable to the forward-looking statements set out herein include, but are not limited to, unforeseen events, developments or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately being inaccurate or irrelevant. Although Avigilon has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those contained in any forward-looking statement, there may be other factors that cause actions, events, or results not to be as anticipated, predicted, estimated, or intended. Also, many of the factors are beyond the control of Avigilon. Accordingly, readers should not place undue reliance on forward-looking statements. Avigilon undertakes no obligation to reissue or update any forward-looking statements as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements contained in this presentation are qualified by this cautionary statement.© 2016, Avigilon Corporation. All rights reserved. AVIGILON, the AVIGILON logo, HIGH DEFINITION STREAM MANAGEMENT (HDSM), and TRUSTED SECURITY SOLUTIONS are trademarks of Avigilon Corporation. Other product names mentioned herein may be the trademarks of their respective owners. The absence of the symbols ™ and ® in proximity to each trademark in this document is not a disclaimer of ownership of the related trademark. Avigilon Corporation protects its innovations with patents issued in the United States of America and other jurisdictions worldwide: www.avigilon.com/patents. Unless stated explicitly and in writing, no license is granted with respect to any copyright, industrial design, trademark, patent or other intellectual property rights of Avigilon Corporation or its licensors.*NON-IFRS MEASURES - Management uses certain non-International Financial Reporting Standards (“IFRS”) measures that it believes are useful to investors in evaluating the performance and results of Avigilon. The term “Adjusted EBITDA” refers to earnings before deducting interest, taxes, depreciation, amortization, foreign exchange gain or loss, business acquisition-related costs, restructuring costs, non-recurring legal costs, non-recurring lease termination costs, and share-based payments. Management believes that Adjusted EBITDA is a useful measure as it provides an indication of the operational results of the business prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset amortization, foreign exchange gain or loss, business acquisition-related costs, restructuring costs, non-recurring legal costs, non-recurring lease termination costs, and share-based payments. Management also believes that analyzing operating results exclusive of significant non-cash and non-recurring items provides a useful measure of the Avigilon’s performance. The term “Adjusted Earnings” refers to net earnings before share-based payments, foreign exchange gain or loss, business acquisition-related costs, financing costs, restructuring costs, non-recurring legal costs, non-recurring lease termination costs, amortization of acquired intangibles and related tax effects. Please refer to the reconciliation table that accompanies Avigilon’s Q1 2016 financial statements and associated management’s discussion and analysis, which are available under Avigilon’s profile on SEDAR at www.sedar.com. Adjusted EBITDA and Adjusted Earnings do not have standardized meanings prescribed by IFRS and are not necessarily comparable to similar measures provided by other companies. Investors are cautioned that Adjusted EBITDA and Adjusted Earnings should not be construed as an alternative to operating income or net income determined in accordance with IFRS as an indicator of Avigilon’s financial performance or as a measure of its liquidity and cash flows.This presentation includes content supplied by IHS Global Inc. (“IHS”); Copyright © IHS Global Inc., 2016. The use of this content was authorized in advance by IHS. Any further use or redistribution of this content is strictly prohibited without written permission by IHS. All rights reserved. No representation or warranty, expressed or implied, is or will be made in relation to, and no responsibility or liability is or will be accepted by IHS as to or in relation to, the accuracy, reliability, or completeness of this information and IHS expressly disclaims any and all responsibility or liability for the accuracy, reliability and completeness of such information. Such information has been prepared as at a particular date and there is no obligation for IHS to update such information.
Disclaimers
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
Be the world’s most trusted
security solutions company
Our Mission
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 4
Avigilon at a Glance
Trusted Security Solutions™Avigilon designs, develops, and manufactures video analytics,
network video management software and hardware, surveillance cameras, and access control solutions.
2015 Sales of ~$287.6M with ~65% in North America (USA + Canada)
2011 - 2015 Revenue CAGR of ~48%
Customers in over 120 countries
Installed in more than 60,000 end-users
>2,000 active resellers
>650 patent assets
2011 - 2015 Adjusted EBITDA* CAGR of ~66%
2015 Adjusted EBITDA* of ~$51.3M
Market Cap CAD $550M
Ticker Symbol TSX: AVO
* Refer to Non-IFRS Measures set out on page 2 hereof.
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 5
Highlights
1 Large and growing market
2 Market and technology leader
3 Complete security solutions & differentiated channel strategy
4Recently launched Avigilon Patent License Program provides high margin recurring revenue
5 Diversified customer base
6 Strong management team
7Proven strategy with rapid revenue growth and demonstrated operating leverage
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 6
Security Needs are Everywhere
STADIUMS HEALTH CARE CRITICALINFRASTRUCTURE
AIRPORTS LOGISTICS RETAIL
BANKS COMMERCIAL CITY SURVEILLANCE CASINOS PUBLIC TRANSIT EDUCATION
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 7
Advanced Video Surveillance and Analytics Solutions
Video Analytics
Video Management Software (VMS)
Network Video Recorders (NVR)
IP Cameras (1MP upto 30MP)
Analog Encoders
Access Control
H4 Edge Solution (All-in-one Internetof Things surveillance solution)
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 8
Public safety
Asset protection
Liability management
Regulatory compliance
2016E 2020E
$20B
$25B
Source: IHS Global Inc., 2016
Global Video Surveillance and Electronic Access Control
Large and Growing Market
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 9
The Video Surveillance Market is Evolving
Analog Cameras
1990 2000 20162010
VCR
TV
Analog Cameras
DVR
Monitor
HD Cameras
NVR
Computer & Mobile
Devices
HD Cameras (Avigilon 7K)
Real-Time Alerts/Access
Control
Computer & Mobile Devices
Video Analytics(Avigilon Appearance Search)
NVR
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 10
Video Analytics - the Future of our Industry
Industry-leading analytics:o Transforms video from reactive to proactiveo Intelligent self-learning security solutionso Plug and play
Examples:o Person and object identificationo Perimeter protectiono Anomaly detectiono Behavior recognitiono License plate recognitiono Advanced search
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 11
Key Video Analytics Patents
Foundational industry patents
> 650 international patent assets o Video Analytics
o Metadata
o Video Tripwire
o Video Segmentation
o Retail Point-of-Sale Integration
o Object Inserted/Removed
o Automated License Plate Recognition
o Access Control
o Firmware Upgrading
Patents help protect us from infringement by other company’s products and form part of our sustainable competitive advantage
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 12
Strong Patent Portfolio Generating Recurring Revenue
Major industry Licensees in the Avigilon Patent License Program include, among others:o 3VR Security, Inc.
o ACTi Corporation
o Agent Video Intelligence Ltd.
o Aimetis Corp.
o Bosch Security Systems, Inc.
o FLIR Systems, Inc.
o Hangzhou HikvisionDigital Technology Co., Ltd.
o i3 International Inc.
o Illisis,Inc.
o IntelliVisionTechnologies Corp.
o IQrity Inc.
o ITX Security Co., Ltd.
o IVS Technology Co., Ltd.
o Luxriot (A&H Software House, Inc.)
o March Networks Corporation
o Merit LILIN Ent. Co., Ltd.
o Pelco, Inc.
o SensormaticElectronics, LLC
o Sony Corporation
o TopviewOptronics Corp.
o UDP Technology Ltd.
o VIVOTEK Inc.
The Avigilon Patent License Program provides a high margin recurring revenue stream
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 13
Global Organization Global Headquarters
o Vancouver, Canada US Headquarters
o Dallas, USA Manufacturing & Fulfilment Centers
o Vancouver, Canadao Plano, USAo Amsterdam, Netherlands
Global Reseller Networko >2,000 active resellers
Global Sales Teamo Regional sales teams selling in > 120 countries
Full-time personnelo >1,100 globally
Regional Offices North America
o Bostono Washington, DC
Europeo Lisbono London o Milan
Asiao Dubaio Singapore
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 14
Manufacturing Advantage
US and Canadian Manufacturing Facilities:o production capacity of over $1 Billion in annual
revenue
Key Advantages:o higher quality control o rapid and lower cost prototypingo shorter delivery lead timeso greater IP protection
Fully automated high-speed Surface Mount Technology (SMT) lines
Multi-product assembly lines
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 15
Delivering Greater ROI for Customers
Improved securityo Proactive vs Reactive
More valueo H4 Edge Solution
combines camera, video analytics, video management software, and solid state hard drive storage in a cost effective all-in-one device
o Business intelligence provides operational efficiencies
Lower Total Cost of Ownership
Higher Quality and Performance
Industry-Leading Analytics Capabilities
Lower deployment costso Less hardware
o Less software
o Less labor
High Definition Stream Management (HDSM)TM
o Patented technology
o Reduces bandwidth
Superior customer supporto Single point of contact Vertically integratedo In-house design,
development, and manufacturing
Fully integratedo Video surveillance, access
control, and video analytics Open platformo Integrates with third party
products
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 16
High Quality and Diversified Customer Base
Q2 2016 Revenue Breakdown by GeographySelect Case Studies
UnitedStates60%
EMEA25%
Canada6%
AsiaPacific
6%
LatinAmerica
3%
Select Markets & Clients
Rogers CentreStadiums
Salop Design & EngineeringBusiness Intelligence
GripponRetail
San Diego Metro Transit SystemPublic Transit
LaSalle PlazaCommercial
University of SydneyEducation
Pan Nordic Logistics Logistics
The Point CasinoCasinos
Tampere City Department of Social Services and Health CareHealth Care
Timmins Police ServiceLaw Enforcement
City of YerevanCity Surveillance
Whistler BlackcombRecreational Facilities
Aguas do MondegoSACritical Infrastructure
King AbdulazizInternational AirportAirports
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 17
Growth Strategy - Proven and Successful
Into emerging marketso APAC and LATAM
Increase coverage in established marketso NA and EMEA
Grow Business Development Department
Expanded trade show presence
Focused marketing initiatives
Strategic advertising
R&D teams to leverage deep talent pools in Boston and Vancouver
Continue to bring new products and features to market faster
Continue to identify cost reductions
Grow our patent portfolio
Increase Brand Awareness Innovation LeaderExpand Sales Reach
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 18
Strong Management Team
Ric LeongChief Financial Officer and Senior Vice President
• Mr. Leong oversees Avigilon’s finance and accounting operations on a global basis, including public reporting, treasury, financial planning & analysis• Prior to joining Avigilon in 2014, Mr. Leong served in several senior financial leadership positions, including Corporate Controller and Director of
Business Planning at two large U.S.-listed public companies
Mahesh Saptharishi Chief Technology Officer and Senior Vice President
• Dr. Saptharishi has extensive experience in intelligent video analytics technology, software and camera hardware specifically for the security industry• Dr. Saptharishi joined Avigilon in January 2014 after its acquisition of VideoIQ Inc. and previously served as Senior Vice President, Analytics and Data
Science of Avigilon
Joel Schuster Chief Legal Officer, Senior Vice President, and Corporate Secretary
• Mr. Schuster joined Avigilon in 2013 and heads the Legal department and oversees the company’s legal and regulatory matters on a global basis• Prior to joining Avigilon, Mr. Schuster was Corporate Secretary and in-house counsel, managing the legal responsibilities for a group of public
companies
James HendersonSenior Vice President, Global Sales
• Mr. Henderson has extensive experience running Global Sales organizations in the Security, IT and Technology industries• Prior to Avigilon, Mr. Henderson held several key roles for various technology companies, including overseeing both domestic and international sales
strategies
Alexander FernandesFounder, President, Chief Executive Officer and Chairman of the Board
• Mr. Fernandes founded Avigilon in 2004 and grew Avigilon to become a global technology leader in high definition surveillance• Prior to Avigilon, Mr. Fernandes successfully founded and grew QImaging (Quantitative Imaging Corporation), a leading developer and manufacturer
of high performance quantitative digital cameras and software for the scientific imaging and machine vision markets
Years of Relevant Experience
>20
>14
>15
>17
>10
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 19
Financial Overview
Rapid Revenue Growth
1
Strong Gross Margins
2
Demonstrated Operating Leverage
3
Track Record of Profitability
4
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 20
Rapid Revenue Growth
60.7
100.3
172.7
245.2
287.6268.4
309.6
2011 2012 2013 2014 2015 2015 2016
International
North America
15%
Year ended December 31
~48% CAGR
$ Millions
Trailing twelve-month period ended June 30
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 21
Strong Gross Margins
48%49% 49% 50%
51% 52%
54%55% 56% 57% 57% 57% 58% 58% 58%
57%55%
40%
45%
50%
55%
60%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2012 2013 2015
Trailing 12 Months Performance For the Period Ended
2016
We continue to outgrow the market while maintaining strong gross margins.
2014
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 22
Demonstrated Operating Leverage
4.1 6.4
11.4
22.4 24.7
5.9 8.4
0.0
9.0
18.0
27.0
36.0
2011 2012 2013 2014 2015 Q2 2015 Q2 2016
Gross Research & Development($ Millions)
14.4 25.0
40.2
56.4
70.8
17.9 20.5
0.0
25.0
50.0
75.0
100.0
2011 2012 2013 2014 2015 Q2 2015 Q2 2016
4.5 8.9
17.6
30.0
42.3
12.1 13.3
0.0
15.0
30.0
45.0
60.0
2011 2012 2013 2014 2015 Q2 2015 Q2 2016
Sales & Marketing($ Millions)
General & Administrative($ Millions)
7% 6% 7%9% 9% 8% 10%
0%
5%
10%
15%
20%
2011 2012 2013 2014 2015 Q2 2015 Q2 2016
% of Revenue
24% 25% 23% 23%25% 25% 24%
0%
10%
20%
30%
40%
2011 2012 2013 2014 2015 Q2 2015 Q2 2016
% of Revenue
7%9% 10%
12%
15%17%
16%
0%
5%
10%
15%
20%
2011 2012 2013 2014 2015 Q2 2015 Q2 2016
% of Revenue
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 23
Track Record of Profitability
3.98.2
23.7
33.530.4
32.7
24.8
6.7
12.7
33.9
48.951.3 51.5
46.8
2011 2012 2013 2014 2015 2015 2016
Adjusted Earnings
Adjusted EBITDA
Year ended December 31 For the twelve-month period ended June 30
Adjusted Earnings*: ~67% CAGRAdjusted EBITDA*: ~66% CAGR
$ Millions
* Refer to Non-IFRS Measures set out on page 2 hereof.
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 24
On Track to Accomplish CAD$ Revenue Goal
$500MAnnual revenue run rate
goal by end of 2016
CAD$
>$445MAnnual revenue run rate
Q2 2016
$60MAnnual revenue run rate
Q3 2011 at IPO
5-year goal from 2011 IPO
© 2016, Avigilon Corporation. All rights reserved. No license is granted with respect to any copyright, industrial design, trademark, patent or other IP rights of Avigilon or its licensors.
August 2016 | page 25
Highlights
1 Large and growing market
2 Market and technology leader
3 Complete security solutions & differentiated channel strategy
4Recently launched Avigilon Patent License Program provides high margin recurring revenue
5 Diversified customer base
6 Strong management team
7Proven strategy with rapid revenue growth and demonstrated operating leverage
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