video services evolution date: may 29th 2012 …...this presentation contains information that is...

Investor Presentation

February 2017 Jaison Dolvane President & CEO

Carl Smith CFO

© All rights reserved. Espial.

This presentation contains information that is forward looking information with respect to Espial within the meaning of Section 138.4(9) of the Ontario Securities Act (forward looking statements) and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements about anticipated benefits of new customer and partner relationships, future opportunities for the company and products and any other statements regarding Espial’s future expectations, beliefs, goals or prospects are or involve forward-looking information.

Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves risks and uncertainties, including Espial’s ability to effectively develop its distribution channels, and generate increased demand for its products. Additional risks and uncertainties affecting Espial can be found in Espial’s most recent Annual Report, most recent Annual Information Form and in its most recent quarterly report filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein. Espial assumes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

Forward Looking Statement

http://www.sedar.com/


Who we are

Espial develops breakthrough solutions for Video Service Providers that deliver immersive viewing

experiences incorporating powerful content discovery and intuitive navigation on all screens

• Based in Ottawa, Canada

• Global offices: US, Canada,

Europe, Japan

• Public (TSE: ESP)

espial /əsˈpī(ə)l/ 1. The act of watching or observing

2. Taking notice; discovery

© All rights reserved. Espial 4

Service Providers Face Threats On All Sides!

• OTT Invaders growing fast NetFlix, Amazon, Hulu, Sling, etc.

• SP competitors fiercer than ever Cable vs Telco vs Satellite vs Mobile

• Content “Allies” playing both sides HBO, ESPN, CBS, Sports Leagues, etc.

Competition For Subscribers Is Rapidly Escalating

Operators must innovate quickly to win


These challenges demand a new approach for Service Providers

USER EXPERIENCE Painful, Sluggish, Generic

Device

Expensive

INTELLIGENCE

SET-TOP BOXES

Where our industry is

Big Screen SCREENS

Fast, Customized, Personal

Cloud, recommendation

Low Cost

Espial’s Vision

All Screens

NETWORKS Broadcast; Physical plant IP; No geographic boundaries

CONTENT Traditional Traditional, Time-shift, OTT


Espial Offerings

6

Espial Media Service Platform (MSP)

On-Premise back-office

User centric, Multi device,

Multi network

Orchestration for seamless

consumer experience

Software defined service

delivery

New Monetization Models


Opportunity: $300B Pay TV Market

< 10 PROVIDERS Comcast, LGI, Charter

200+ PROVIDERS NOS, Tele Columbus, Telenor, Shaw, WOW

1000’S OF PROVIDERS Eastlink, Fidelity, Comporium, Westman

Sophisticated IT

departments

10m + subs

Limited IT dept

1 – 10m subs

Almost no IT dept.

Sub 1m subs

Custom solution On-Premise

(or Cloud)

Cloud Solution

Operator

Characteristics

Mega-Tier 1 SPs Tier 1, 2 SPs Tier 3 SPs

Services License + Maintenance

(or SaaS)

SaaS

1.1B Pay TV Subs

by 2020 (up from 923M in 2014)

$313B Revenue by

2020 (up from $257B in 2014)

1000s of

SPs (Cable, Satellite, Telecom)

Espial’s opportunity


A growing base of Customers Worldwide

Espial’s vision is to become the primary trusted partner for operators to help them

transition to next generation Pay TV and beyond

100

Customers

Over 50

million

devices

MVPDs &

Retail CE


Sales Pipeline

< 10 PROVIDERS 200+ PROVIDERS 1000’S OF PROVIDERS

Comcast, other unnamed NOS, Tele Columbus, WOW,

Telenor, over 10 others

Fidelity, Eastlink, Comporium,

Westman, Access, over 40 others

Discussions with two

additional Mega-Tier 1s for

MSAs

Short-listed with SPs with combined

subs over 5M, decision expected by

mid 2017

Over 20 engaged in various stages

Short-listed on several and over 20

engaged in various stages Pipeline update

Current customers

Services License + Maintenance SaaS Espial opportunity

Become the primary trusted partner for service providers to

transition to next generation PayTV and beyond.

Mega-Tier 1 SPs Tier 1, 2 SPs Tier 3 SPs


Espial Growth Strategy

Increase deployments in current operators

New Customer Wins

Offer Cloud Based SAAS Model

Upsell Products and Services

Acquisitions

• Increasing mindshare (RDK, Scale)

• Distribution agreement with ARRIS

Introduced Elevate

Cloud offering

Customer relationships,

scale, complimentary tech

• NOS launched

• TeleColumbus next

• Plus 40 Other Operators

Recent Developments


12

NOS Launch, Lisbon

• Elevate G4

• 4K UHD

• Voice Control

• Premium UX ( HTML5 )

• Recommendations, Search

• Personalization; Social Networking

• Cloud DVR

• 1.6 M home opportunity

June 2016


Acquired WHS from ARRIS

Used by 40+ Providers,

• Actively deploying; to date under 20% penetrated of over 2.9M

households (majority of expansion still to come)

• Hosted SaaS model ideal for tier 2 and 3

• Integrated with Espial G4, will be attractive to tier 1

• Dramatically strengthens Espial’s N American presence

Enhancing with Espial UX and Elevate Back Office

• Exceptional team of over 40 proven software engineers

• 2017 will introduce lower-cost RDK 4K STBs from ARRIS, others

Providers worldwide look to reduce capex and outsource ops

• Leverage Espial’s direct sales in N. America and Europe

• Leverage ARRIS sales force to offer Globally

This Emmy award winning solution is

being integrated into Espial Elevate

Aug 2016


Wide Open West, Denver

• WOW Ultra, powered by Elevate

• 9th largest MSO in the US

• Full HD 1080p UX

• Multi-room (avg. 3TVs / home)

• NETFLIX –on all STB generations

• Wireless STB

• Whole home DVR

• ARRIS STBs

Aug 2016


ARRIS + Espial Strategic Partnership

#1 set-top

vendor

$6 billion

revenues

7000

employees

ARRIS becomes Global Distribution Channel for Espial software solutions

• Partner on Sales opportunities

• Collaborate on Marketing

• Coordinate Product Roadmaps

• Scale Professional Services & System Integration capacities

Espial was a featured partner in the Arris booth at SCTE2016

Sept 2016


TC Launch, Berlin

• ~4 million cable homes in Germany

• Premium UX ( HTML5 )

• Integrated SVOD/OTT with

traditional VOD

• QAM (1-way, 2-way) in home.

• IP VOD in/out of home

• Multi-screen in/out of home

• Whole home DVR

• 4K UHD

• Recommendations, Search

• Personalization

• HUMAX STBS

Jan 2017

Financials


Growing Subscriber Base - up more than 3x in 36 months

1.6 1.6 1.6

3 3

2.9

0

1

2

3

4

5

6

7

8

2014 2015 2016

NOS Tele Columbus Elevate - Cloud

Espial’s Customer Subscriber

Base has increased more than 3x

in 36 months

• Over 7M Subscribing Households among

Espial’s customer base, and growing

• Less than 5% currently deployed with

Espial solution

• Front end of the growth curve: there is

tremendous upside

© All rights reserved. Espial 19 © All rights reserved. Espial 19

Strong revenue growth

Investing in scale now to

support additional

customers

Strong Growth

$12,549,411

$20,003,757

$24,834,692

$28,644,570

($2,960,261)

$3,170,984 $2,907,404

($1,899,798) ($3,000,000)

$0

$3,000,000

$6,000,000

$9,000,000

$12,000,000

$15,000,000

$18,000,000

$21,000,000

$24,000,000

$27,000,000

$30,000,000

Revenue Ebitda

FY13

FY14

FY15 FY16

© All rights reserved. Espial 20 © All rights reserved. Espial 20

Balance Sheet at December 31, 2016

• Strong cash balance

• No Debt

Dec 31, 2016

CURRENT ASSETS

Cash 43,047,878$

Accounts receivable 10,475,563

Investment tax credits receivable 321,018

Prepaid expenses 653,055

54,497,514

Property and equipment 1,420,957

Intangible Assets 1,818,067

Goodwill 3,632,604

$ 61,369,142

CURRENT LIABILITIES

AP and accrued liabilities 4,542,527$

Provisions 334,591

Deferred revenue 2,054,323

6,931,441

Share capital 125,362,413

Contributed surplus 15,601,861

Deficit (86,526,573)

54,437,701

$ 61,369,142

creating a compelling experience for today's viewers

… and those of tomorrow

video services evolution date: may 29th 2012 …...this presentation contains information that is...

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