Investor Presentation - SuperCom December 2014

NASDAQ: SPCB | www.supercom.com
INVESTOR PRESENTATION
DECEMBER 2014
Property of SuperCom © 2014
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SAFE HARBOR STATEMENT

Forward looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended
and Section 21E of the Securities Exchange Act of 1934, as amended) regarding Supercom Corporation
(SuperCom) and/or its subsidiaries collective the company, to the extent such statements do not relate to
historical or current fact. Forward Looking Statements are based on management’s expectations,
estimates, projections and assumptions. Forward looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements
are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to
predict. Therefore, actual future results, performance and trends may differ materially from these forward
looking statements due to a variety of factors, including, without limitation: product and technology
development; the uncertainty of the market for Supercom's products; changing economic conditions; delay,
cancellation or non-renewal, in whole or in part, of contracts or of purchase orders (including as a result of
budgetary cuts resulting from automatic sequestration under the Budget Control Act of 2011); and other
risk factors detailed in Supercom's most recent Annual Report on Form 20-F for the fiscal year ended
December 31, 2013 and other filings with the Securities and Exchange Commission. Supercom assumes no
obligation to update the information in this release. Reference to the Company's website above does not
constitute incorporation of any of the information thereon into this presentation. The factors listed above
are not all-inclusive, and further information is contained in Supercom’s latest annual report on Form 20-F,
which is on file with the U.S. Securities and Exchange Commission. All forward looking statements speak
only as of the date of this release. Supercom does not undertake to update its forward-looking statements.
Property of SuperCom © 2014
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ABOUT US
An overview of SuperCom
Property of SuperCom © 2014
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SUPERCOM AT A GLANCE
“A growing company with significant upside potential”
NASDAQ TICKER
SPCB
Leader in RFID and EID technologies with 7 patents
MARKET CAP
~$160m
FREE FLOAT
In December ‘13 acquired SmartID division from OTI
Has proven itself as highly accretive to Supercom’s bottom line
~70%
Q3 2014 REVENUE
$9.1m
Announced $54.6m in new win announcements in 2014
At least 20-30% of which likely to recur on ongoing basis
Q3 2014 EBITDA
$4.2m
EBITDA MARGIN
Served 20+ governments & 3500+ commercial customers
46%
Property of SuperCom © 2014
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WHAT WE DO
Profitable, Growing and Cash Generating
∑ID
National IDs, Driver Licenses, Passports & e-Gov. systems
Transformative Business with Significant Potential
Making mobile payments ubiquitous
M2M (Internet of Things)
mPay
Electronic
Monitoring
Healthcare
Homecare
Animal
Tracking
Mobile Payments Suite
Technology & Knowhow
End-to-end suite of EID,M2M & MPAY products
eliminating the need for integrating multiple platforms and enabling easy operation and deployment
Property of SuperCom © 2014
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EXPERIENCED MANAGEMENT TEAM
MANAGEMENT
OTHER KEY TEAM MEMBERS
Arie Trabelsi
Chief Executive Officer
• 30 years experience in Wireless, Internet and
Communication Industries
• Led multiple synergistic acquisitions, corporate
restructurings and IPOs as CEO
• Led SuperCom’s turnaround to profitability & growth
• BSc and MSc in Computer Engineering
Igor Merling
Eli Basson
CTO
VP, eID
•Former CTO of OTI-Smart ID
•Top expert in Smart card
and e-ID technology
Simona Green
Chief Financial Officer
Judy Robert
VP Business
Development,
Lat. Am.
• 20 years in international finance & accounting
• VP Finance Ops. at Mercury Scientific & Industrial
•CFO of RiT Technologies (Nasdaq: RITT) for 10 years
•Somekh Chaikin, member firm of KPMG for 7 years
•CPA
•15 years of sales and
marketing for technology
companies In Lat. Am. And
Europe
Ordan Trabelsi
President, North America
• Former Founder & 6 year CEO of Klikot.com, a
global big data internet company
• Security R&D Leader - IDF Elite Unit
• MBA (Columbia University) & BSc. Computer
Engineering (Technion), graduated with distinction
Billy Gurevitch
Chief Legal
Officer
•Over 13 years experience in
legal consulting for global
technology corporations
•
Haim Confino
Ziv Koren
VP Business
Development,
Asia
VP Business
Development,
Africa
•17+ years of global business
development & marketing in
national eID solutions.
•Founded SmartID
Property of SuperCom © 2014
•Former head of Smart ID
Division at OTI
•Expert in e-ID & e-Govt
solutions
•15+ years of experience in
global business development
,including in emerging
countries
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INVESTMENT HIGHLIGHTS




Strong business growth - $54.6m in 2014 new win announcements
High profitability margins at core – gross > 75%, EBITDA > 35%
High and growing recurring revenues
Significant yet unrealized value from recent highly synergistic acquisition
 OTI SmartID acquisition closed in Dec. 2013
 Positive, growing free cash flow – over $3m in Q3 2014
 Minimal CAPEX requirements, NOL tax shield and no debt on balance sheet
 Stable, sticky long-term government contracts
 Strong growth potential from transformed M2M division
 Management incentives aligned with shareholders
 Management owns ~30% of equity
Property of SuperCom © 2014
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∑ID DIVISION
Long-term, high margin ongoing revenue
Property of SuperCom © 2014
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ƩID SOLUTIONS
Turnkey, end-to-end and
comprehensive solutions
for creation of smart IDs
and passports for various
government ID programs
Population
registries and
censuses
National eIDs
Biometric
passports and
visas
Smart driving
and vehicle
licenses
Biometric
border control
and
immigration
Property of SuperCom © 2014
Voter
registration
and elections
Internal
Revenue and
Social Security
e-Government
services
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ATTRACTIVE END MARKETS
SuperCom offers a full end-to-end solution
geared towards emerging markets
GLOBAL MARKET SIZE FOR BIOMETRIC IDS*
Increased globalization
and regulation drive a
need for better ID
systems for a growing
global middle-class
US$ BILLIONS
*Source: Frost & Sullivan, 2012
14.7
4.5
2010
2019
SELECTED COMPETITORS
Zetes (ZTS :EN Brussels)
L1 Identity Solutions (Acquired by Safran)
Gemalto (GTO.PA)
Oberthur (Private company)
OTI Smart ID (now part of Supercom)
Property of SuperCom © 2014
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NATIONAL IDS & PASSPORTS
Biometric
passports
available to
the general
public
BIOMETRIC PASSPORTS AVAILABILITY
BY COUNTRY
Announced
future
availability
of biometric
passports
No
biometric
passport
announced
COUNTRIES WITH NATIONAL ID & BIOMETRIC/eID PROGRAMS* 2010 & 2015
*Source: Acuity Market Intelligence
2010
126
140
67
National IDs
Biometric passport is only 1st stage
2015
114
Leads to Biometric IDs, Driver
Licenses & Government Services
National eIDs
Property of SuperCom © 2014
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SUPERCOM’S ƩID DIVISION
Future Upside
Adding more contracts
Long-Term Contracts
(run between 5 and 25 years)
Bids and leads pipeline continuously growing; 1-3 new bids a month
Government
Customers
Full solution for
smart cards,
IDS & passports
Strong
technical and
R&D expertise
“We have a leading position and aim to grow our business in emerging
countries with a strong pipeline and significant growth opportunities.”
Property of SuperCom © 2014
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NEW CONTRACTS IN 2014
Revenues*
$25m+
$22m+
March 27, 2014
August 8, 2014
New customers;
Majority of
revenue in 2014;
At least 20-30% of revenue from total new contract size
tend to become annual recurring revenue after initial
deployment phase is completed
New customers;
Majority of
revenue in the next
9 months;
$4m+
$3.6m
February 10, 2014
April 23, 2014
Existing customers;
Deliverable in the
first half of 2014;
2 contracts from an
existing customer;
Mostly deliverable
in H2 2014;
Total: $54.6m
$22m
$25m
$3.6m
$4m
Recurring Revenue
Q1-14
Q2-14
Q3-14
Q4-14
Q1-15
Q2-15
Q3-15
Q4-15
* Graph is illustrative and explanatory, and not to any scale
Property of SuperCom © 2014
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M2M DIVISION
Strong potential in the Internet of Things arena
Property of SuperCom © 2014
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LONG RANGE ACTIVE RFID & RTLS
TECHNOLOGY
Field proven proprietary technology supplied to over 3,500 customers
Receiving Stations

Active RFID with RTLS: Real Time Location Solution

Offers security, location and tracking services

Products optimized through proprietary chip design and
software deliver superior RFID technology:

Highly Energy Efficient with Extended Battery Life

Ultra Long Range

Lower Costs
Property of SuperCom © 2014
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COMPONENTS TO SOLUTIONS
 Global trend “Internet of Things” creates massive
opportunity SuperCom is strongly positioned for:
 By 2020, annual incremental revenues for IOT product and solution
providers expected to exceed $300B 1
 SuperCom is transforming its M2M business from offering
components to offering innovative fully connected solutions
1.
Gartner Research – Dec. 12, 2013
(http://www.gartner.com/newsroom/id/2636073)
Property of SuperCom © 2014
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TARGET VERTICALS
Growth Engines
Disrupt Industries with Proprietary IP
ELECTRONIC MONITORING
HEALTHCARE & HOMECARE
ANIMAL INTELLIGENCE
Security and tracking
of prisoners
and home detainees
Healthcare & homecare
patient and equipment
management
Tracking of
livestock and pets
Property of SuperCom © 2014
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ELECTRONIC MONITORING



Prison overcrowding is a major global
problem throughout the world
Monitored home detention provides
a surveillance solution for juvenile,
pre-trial and light offenders
Comp: Attenti (bought by 3M for $230m in 2010)
CLEAR ROI
COST PER INMATE PER YEAR
$30-60k
GLOBAL MARKET SIZE FOR ELECTRONIC MONITORING
US$ MILLIONS
*Source: Incucomm, 2011
2012 estimate:
$1bn
COST OF ELECTRONIC MONITORING
PER OFFENDER PER YEAR
$1-5k
6,000
85%+ cost saving per year
476
2010
Property of SuperCom © 2014
2018
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HEALTHCARE & ANIMAL INTELLIGENCE
Real Time Hospital Tracking



Provides a solution to monitor equipment
Track and identify patients
Comp: AeroScout (acquired by Black & Decker
for $240m in 2012)
Residential Monitoring


Home Care
Anti-Wandering
Livestock Management System



Lifecycle monitoring of animals
Locate, Monitor and Track Herds
Collect, analyze and detect critical health &
milk production issues
PetTrack™ System


Locate, Monitor and Track Pets
Low cost RFID Based Radar system
Property of SuperCom © 2014
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MPAY DIVISION
Making mobile payments ubiquitous
Property of SuperCom © 2014
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MPAY DIVISION
Super-Payment Suite
SECURE PAYMENTS ANYWHERE WITH ANY DEVICE
Property of SuperCom © 2014
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GROWTH STRATEGY
“Growth through both avenues: organic and M&A”
 Organic growth achieved by:
 Adding new EID Government customers (added 2 in H1 2014)
 Offering new services to existing customers
 Offering innovative M2M (Machine-to-Machine) and IOT (Internet
of Things) solutions in 3 target verticals
 Synergistic M&A
 Looking for businesses or assets that can strongly grow the revenue
base leveraging existing lean cost structure
 December 2013 SmartID acquisition: a clear demonstration of this
strategy
Property of SuperCom © 2014
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FINANCIALS
A profitable, fast growing recent turnaround
Property of SuperCom © 2014
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KEY FINANCIAL DATA
INCOME STATEMENT HIGHLIGHTS
US$ THOUSANDS
New management
impact from 2011
2010 2011 2012 2013
Q1 Q2 Q3
2014 2014 2014
Revenue
7,389
7,922
8,940
8,822
5,308
7,056
9104
Gross Profit
5,332
4,616
7,321
6,926
4,285
5,383
6912
72%
58%
82%
79%
81%
76%
76%
(1,048)
54
2,006
1,514
1,360
2,190
3735
-14%
1%
22%
17%
26%
31%
41%
(1,965)
1,019
4,817
6,466
1,335
2,115
3,684
-27%
13%
54%
73%
25%
30%
40%
Non-GAAP EBIT1
(1,444)
(83)
3,091
2,021
1,995
2,585
4130
Non-GAAP net
income2
(1,775)
(156)
3,111
1,865
1,970
2,510
4079
(995)
82
2,037
1,562
1,768
2,607
4163
Na
1%
23%
18%
33%
37%
46%
Gross Margin
Op. Income
Op. Margin
Net income
Net Margin
EBITDA
EBITDA Margin
1. Non-GAAP EBIT excludes the effect of non-recurring other expenses (income) as well as amortization of Software IP and Customer Contracts in the first quarter of 2014
2. Non-GAAP Net Income excludes the effects the above-mentioned operating expenses, financial expenses (income) relating to the extinguishment of convertible notes &
tax benefit related to the update of deferred tax asset.
Property of SuperCom © 2014
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SUMMARY
Emerging company at inflection point with significant potential
Property of SuperCom © 2014
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SUMMARY
 Rapidly growing company following a successful turnaround
and synergistic acquisition
 Profitable with strong margins
 Stable long-term contracts combined with growth engines
 Increasing market share in growing market sectors
 $54.6 million in 2014 new contract wins will significant benefit
company in the upcoming quarters
SuperCom is now at the inflection point
We’re just leaving the ground floor
Property of SuperCom © 2014
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NASDAQ: SPCB | www.supercom.com
THANK YOU!
 Investor Presentation
Property of SuperCom © 2014
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