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Leapfrog Enterprises Breadon, William Hollis, Diana James, Mark Johnston, Charles

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Leapfrog Enterprises. Breadon , William Hollis, Diana James, Mark Johnston, Charles. Executive Summary. About - PowerPoint PPT Presentation

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Page 1: Leapfrog Enterprises

Leapfrog EnterprisesBreadon, WilliamHollis, DianaJames, MarkJohnston, Charles

Page 2: Leapfrog Enterprises

Executive Summary About

Leading designer, developer and marketer of innovative, technology-based educational products and related content. LeapFrog is 100% focused on developing products that will provide the most engaging, effective learning experience - for all ages, in school or home, around the world.

Founded in 1995 by Michael Wood and Robert Lally.

Employs over 550 full and part-time employees.

Page 3: Leapfrog Enterprises

Mission

“Helping kids to learn how to read.”

Page 4: Leapfrog Enterprises

Products• LeapPad Ultra (4-9 yrs.)• LeapPad2 Power (3-9 yrs.)• LeapPad2 (3-9 yrs.)• LeapsterGS (4-9 yrs.)• Leapster Explorer (4-9 yrs.)• LeapReader (4-8 yrs.)• Tag (4-8 yrs.)• App Toys (3-6 yrs.)• Learning Toys (0-4 yrs.)• iPhone®/iPad® Apps (2-5

yrs.)

Page 5: Leapfrog Enterprises

SWOT AnalysisStrengths• Brand recognition

and reputation• Popular licensed

content (i.e. Disney)• In-house design• Proprietary

curriculum developed by expert educators

Weaknesses•Perceived high retail prices

•Heavy reliance on main customers (Wal-Mart, Target, Toys R Us)

•Most suppliers and manufacturers concentrated in China

•Few numbers of proprietary characters

Opportunities• International

expansion• Lower priced

products• More mobile

applications• Expansion to an older

demographic of children.

Threats•Seasonal fluctuations •No long term agreement with retailers

•Mobile market (smartphones and tablets)

•Competition manufacturing lowered priced products

Page 6: Leapfrog Enterprises

Marketing Impact LeapPad is following the basic

marketing plan as the Apple IPad. They intend on developing a pad that is aimed at children ages 4 to12.

Strategy: Sell the cheapest tablet on market,

for $100.

Focus on children ages 4 to 7.

Develop and sell accessories for the LeapPad unit.

Sell hundreds of apps for units.

Page 7: Leapfrog Enterprises

Marketing ImpactThird-party apps

allowed in 2011. Available apps doubled on their store.

LeapFrog’s marketing focuses on the concept of “connecting with more carefully selected customers.”

Page 8: Leapfrog Enterprises

Marketing ImpactStiff competition, specially from

Mattel Power Touch Pad.Closed environment, very

proprietary.More diversification to hinder

competition.

Page 9: Leapfrog Enterprises

Marketing Impact In June 29, 2011, LeapFrog

introduced the LeapPad Explorer, a personalized learning tablet for children aged 4 to 9. The LeapPad Explorer pre-

sale units sold out in the first two weeks. LeapPad hit shelves on August 15, 2011

2013 LeapFrog app to be available for the IPad and IPhone.

Page 10: Leapfrog Enterprises

Stakeholders 15% of shares held by all insider and 5%

owners 75 % of shares held by institutional &

mutual fund owners 89 % of float held by institutional &

mutual fund owners

Page 11: Leapfrog Enterprises

Shareholders• Mollusk Holdings LLC (2,130,116),• Milken Michael R (1,301,789)• Rissman Owen Randall (443,321)• Barbour John (206,175) • Kalinske Thomas J (170,513)

Direct

• Wellington Management Company, LLP (6,026,546)• Wells Fargo & Company (4,599,629)• Franklin Resources, Inc. (4,294,730)• Vanguard Group, Inc. (The) (3,762,958) • Oppenheimer Funds, Inc. (2,500,000)

Institutional

Page 12: Leapfrog Enterprises

Current Marketing Strategy Global initiative ‘We Give Books’ Facebook campaign

"Read 20 Minutes A Day"

Expand the impact from 150k to 2M

Page 13: Leapfrog Enterprises

Financial ReportsLeapFrog (5 year) revenue model:

Page 14: Leapfrog Enterprises

Financial ReportsLeapFrog (10 Year) Stock price:

Page 15: Leapfrog Enterprises

Financial Performance$ in millions (except per share data) 2009 2010 2011 2012 2009-2012Net Sales $380 $433 $455 $581 15% CAGR

U.S. Segment Net Sales $307 $344 $342 $425 11% CAGR

International Net Sales $73 $88 $113 $156 29% CAGR

Operating Income (Loss) ($8) $8 $24 $64 $72

Operating Margin (2%) 2% 5% 11% 13 Points

Net Income (Loss) ($3) $5 $20 $86 $89EPS (Loss) ($0.04) $0.08 $0.03 $1.24 $1.28

Normalized EPS (Loss)* ($0.10) $0.06 $0.18 $0.56 $0.66

Adjusted EBITDA* $23 $34 $49 $93 60% CAGR

Cash & Equivalents $62 $19 $72 $120 25% CAGRDebt $0 $0 $0 $0 N/A

*Normalized EPS (Loss) and Adjusted EBITDA are non GAAP financial measures. Please see the following pages ‐for a discussion of these measures and their reconciliation to the most appropriate GAAP measure.**CAGR - Compound Annual Growth Rate

Page 16: Leapfrog Enterprises

Strategic RecommendationToday’s Situation

Slow market growth. Increased apps and accessories for

LeapPad. Reaching out to children 4- 7 years old Competition with other tablet and

smartphones. Launching app for iPad and iPhone in

2013.

Page 17: Leapfrog Enterprises

Strategic RecommendationHow we got here

Losses from 2005 to 2011. Competition with Mattel. Introduction of LeapPad

Explorer in 2011. Development of 3rd party apps

in 2011. Expanded content and games

in 2012. Agreements with children

educational content companies including Sesame Workshop.

Page 18: Leapfrog Enterprises

Strategy Recommendation Addition of card readers and WIFI. Cloud storage for LeapPad products. More parental controls Compatibility with multiple platforms. Continue development of technology to

keep up.

Page 19: Leapfrog Enterprises

Strategy Recommendation Establish more brand recognition. Engage costumers directly. Addition of other language and cultures

for international market. Build relationships with teachers,

families and caregivers.

Page 20: Leapfrog Enterprises

Questions?

Thank you!