Retalix Ltd - Investors Presentation January 2012 Final SH

www.retalix.com Copyright © 2010 Retalix 1 Copyright © 2012 Retalix

Investor Presentation NasdaqGS: RLTX & TASE: RETALIX

Retalix Ltd.

January 2012

Shuky Sheffer, CEO

Hugo Goldman, CFO

2 Copyright © 2012 Retalix

Forward-Looking Statements  Use of Forward-Looking Statements: This presentation and management’s remarks include forward-looking statements regarding a variety of items including the information we present under 2011 Financial Outlook and Focus. Such forward-looking statements are based upon current intentions and expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are identified in the Company's most recent SEC filings, including its Annual Report on Form 20-F. Although Retalix may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized. Except as required by applicable law, Retalix undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

 Use of Non-GAAP Information: In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, this presentation includes certain non-GAAP financial measures. These non-GAAP results exclude non-cash equity-based compensation charges and amortization of acquisition-related intangibles. Retalix’s management believes that these non-GAAP measures are useful to investors because they provide supplemental information that analysts frequently use to analyze software companies. Management uses both GAAP and non-GAAP information to evaluate its financial results, develop budgets and manage expenditures. The method Retalix uses to produce non-GAAP results is not computed according to GAAP, may differ from the methods used by other companies and should not be regarded as a replacement for GAAP measures. Complete reconciliation between GAAP and non-GAAP results is available on Retalix’s web site at www.retalix.com.


Content

 Retalix Overview  Our Market  Our Vision and Products  Financial Overview  Summary


Retalix at a Glance

  A leading global provider of software and services to retailers and distributors

  Established: 1982

  HQ: Raanana, Israel and Dallas, USA

  Employees: ~1,550*

  Publicly traded: NASDAQ & TASE

  Major Shareholders: Alpha Group, FIMI

  Balance Sheet: $132.5m cash**; no debt

  Revenue:

•  FY10 $207.4m •  9 months 2011 $173.5m (13% YoY Growth) •  Expect to exceed guidance of $228m revenues for

2011

* September 30, 2011 ** $18.95m paid in 7/2011 for MTX acquisition


Offerings

Mission-critical software & services for high volume, high complexity FMCG retailers & distributors worldwide

We are a Product Led company. Leveraging our deep domain expertise, we sell Services, Maintenance and SaaS around our Products

Key Segments

HEALTH & BEAUTY

GROCERY CONVENIENCE FUEL FOOD SERVICES GENERAL MERCHANDISE

DEPARTMENT STORES


Leading Global Retailers Select Retalix 13 out of top 30 global retailers are Retalix customers

~28% market share in NA Tier 0-2 grocery

>50% market share in NA Tier 3-4 grocery

3 out of 3 of the Top 3 in Australia

3 out of the top 4 Tier 0 UK


USA 53%

EMEA & APAC 35%

Israel 12%

Sales

Strong Global Customer Footprint

Our software solutions are deployed in more than 70,000 store locations globally

Serving Leading Retailers in 50+ countries


Executing on Our Strategy: Growth Engines are Firing

  Growth Engines, as defined in 2010, are firing - across all business lines and geographies

1.  Retalix 10

2.  Product-led Services (Delivery & SI)

3.  Software-as-a-Service (SaaS) / Cloud

4.  Customer base, geographies, adjacent retail segments

•  M&A: whenever available to support our strategy


R10

  Tesco, upgrading stores worldwide to Retalix 10 (press release Jan. 2011)

  North American Tier 0 retailer selected Retalix 10 as its store platform

Services

  Southern Co-operative (UK) Store + loyalty + replenishment + SI services

  SI – numerous new wins in this new practice

SaaS

  Payments: several wins for new SaaS payments products, including Tier 0 retailers

Adjacent Retail Segments and Geographies

  Tops Markets selected Retalix to enhance their customer experience and operations

  Walgreens selected Retalix’s demand driven replenishment, via SaaS

  Russian grocer DIXY selected Retalix store and Loyalty across its ~1,000 stores

  Grocery chain in China selected Retalix store solutions

Executing on Our Strategy: Selected Customer Wins in 2011


Executing on Our Strategy: Acquired MTXEPS to Accelerate our SaaS business

  July 2011: acquired MTXEPS for $18.95 million plus up to $6 million over the next two years based on certain performance metrics

  MTXEPS Description:

•  A provider of SaaS end-to-end electronic payments solutions

•  Fast growing, profitable company

•  In >20,000 stores in North America (both SaaS and en premise models)

  Deal Rationale:

1.  Growing demand from our Customers

2.  Support our SaaS Growth Engine

3.  Enhance our capabilities in the fast growing and changing payments segment

  Our first 6 months (PMI):

•  Meeting our expectations; numerous good wins including a Tier 0 Retailer

•  Relatively smooth PMI

  Retalix will continue to innovate and expand payments offerings as well as introduce new SaaS and Cloud-based offerings: Retalix 10, Loyalty, DAX

11 Copyright © 2012 Retalix 11

Our Market


  IT spend in segments addressed by Retalix today >$32B*

•  ~50% of retailing IT spend is in and around the store

•  ~25% of retailing IT spend is grocery and convenience store segments

  Total addressable market for Retalix, not including hardware and non-relevant applications ~$7-8 Billion

Retalix Operates in a Large Global Market

Sources: Gartner, IDC, AMR, IHL, Retalix Corp Dev Internal Analysis 2010 * Includes all applications, hardware, software, external and internal services

Services $5B

Software & Maintenance

$2B

GLOBAL MARKET

Room for growth along all dimensions in our business


Industry Analysts Confirm Retalix’s Leadership Position and the Need to Upgrade Store Solutions   Point of sale (POS) has evolved into the Store Platform that supports all touch points with

consumers and is the foundation for all the IT systems that operate in the store

  Gartner on Leading Retail Software Vendors Worldwide

  IDC: “2011 Survey Results Reveal Strong Technology Investment Trends”

  RIS: Only 25% of retailers have a store solution in place that meets their current needs

Sources: 1.  Gartner: Market Share Analysis: Retail Vertical-Specific Software, Worldwide, 2010, 29 April 2011 2.  IDC: Best Practices: Grocers Fighting Fire with Fire – 2011 Survey Results, July 2011 3.  “Evolution of the POS Platform” By RIS News, November 2010


As We Enter a New Decade (2010’s) Retalix Observes New Industry Challenges

  Empowered and demanding shoppers with a strong sense of entitlement

  Well connected, knowledgeable and updated through social networks

  Shoppers expect retailers to keep pace with the latest trends, and to reward them for their loyalty

A new generation of social shoppers

  Retail segments are undeniably blurring. Grocers sell fuel, Drugstores sell food…

  Proliferation of global expansions, mergers and acquisitions

  Increasingly complex regulatory requirements

An aggressive, competitive retail business landscape

  Retailers have multiple disparate systems that require lengthy, costly integration

  Inflexible architectures hold up delivery of new business capabilities

  Legacy infrastructure is costly to maintain

Cost of ownership & time-to-market considerations


Retailers Are Focused On New Goals

  Provide a superior Shopper experience   Boost brand loyalty through targeted

personalized promotions   Retain shoppers, increase shopping frequency

and spend   Attract new shoppers

Deliver a Differentiated

Shopper Experience

  Increase sales and profitability   Expand across geographies   Diversify across retail concepts and segments   Differentiate the brand

Gain Competitive Advantage

  Implement innovative, state-of-the-art, agile store systems

  Rapidly deliver new business capabilities to the market (TTM)

  Reduce TCO (infrastructure, maintenance…)   Increase monitoring and control through

centrally managed systems

Run Flexible and Lean

Operations


Our Vision and Products


We Enable Retailers to Understand & Influence Shoppers

Influence & Empower Consumers During

The Complete Shopping Cycle…

Via a superior, seamless Customer experience

Across all touch points

Social Networks, Portals & Shopping Lists

Kiosks

Digital Signage and Tags

Pump terminals, Fuel

Ads, Flyers, Coupons & Promotions

Review transaction history

Traditional POS

Self-checkout

Mobile Commerce


Retalix Product Portfolio Overview STORE & SALES CHANNELS SUITE

KIOSK SCALE FUEL QSR

POS SELF SCAN

SELF CHECKOUT

MOBILE POS

CUSTOMER TOUCH POINTS

MOBILE STORE MANAGER

FORECOURT MANAGER

STORE MANAGER

INVENTORY MANAGER

STORE MANAGEMENT

MOBILE PAYMENTS

ELECTRONIC PAYMENTS

VALUE-ADDED ONLINE SERVICE

ELECTRONIC PAYMENTS &SERVICES

MOBILE MARKETING

MOBILE SHOPPER

E-STORE SERVER

MOBILE & E-COMMERCE

CUSTOMER MGMT & MARKETING SUITE

MULTI-CHANNEL TARGETED MARKETING

LOYALTY & PROMO ENGINE

CAMPAIGN MANAGEMENT

LOYALTY MANAGEMENT

CUSTOMER MANAGEMENT

PROMOTION MANAGEMENT

MERCHANDISING SUITE

INVENTORY MGMT & DEMAND-DRIVEN REPLENISHMENT

ITEM & ASSORTMENT MANAGEMENT

PROCUREMENT & SUPPLIER MANAGEMENT

PRICE & PROMOTIONS MANAGEMENT

SUPPLY CHAIN SUITE

TRANSPORTATION MANAGEMENT

WAREHOUSE MANAGEMENT

RETALIX FOUNDATION

ANALYTICS RETAIL MASTER DATA OPERATIONAL TOOLS

19 Cppyright © 2012 Retalix

The Retalix 10 Store Suite The Next Generation Store Solution Suite

Touch Points and Sales Channels Store & Inventory Management Applications

Chain Level Store Operations and Configuration Management


Retalix 10 Store Suite   Modular Suite

•  Enabling implementation of select stand-alone components

  Tightly Integrated with the Retalix extensive offerings of:

•  Customer Management and Marketing solutions •  Merchandising and inventory optimization solutions •  Retail Foundation Components: Data, Analytics, Utilities

  Compatible with •  a large range of retail hardware platforms and •  a variety of legacy and third-party systems,

…providing flexibility and protection of previous IT investments

  Supports growth and diversification across multiple segments, brands, geographies: •  Extensive support of multi-national features, regional business preferences and

regional regulations


Retalix 10 - Key Benefits for Retailers

•  By delivering a superior, personalized, seamless customer experience across multiple touch points and channels

Differentiate and Compete Better

•  Through sophisticated management and execution of personalized, targeted, dynamic promotions and loyalty programs

•  And support of value-added online services

Increase Customer Retention

and Spend

•  Quick delivery of new business capabilities via easily extensible retail core, and the agile development methodologies

Quicker Time to Market

•  Offered via flexible deployment alternatives (thin/thick/hybrid) •  Variety of migration strategies to reduce risk •  Central management resulting in lower maintenance cost

Reduce TCO

•  Through integration with demand-driven merchandising and optimization solutions

Optimize Operations


Retalix 10 is Endorsed by Leading Industry Analysts – Garner and IDC


Product Led Services – a differentiated business model   Fast growing business, winning new

customers and increasing share of wallet through launch and integration of services offerings into our portfolio

  Services offering tightly linked to our software

  Covering full project life cycle

  Gradually introducing new services e.g. testing

  Differentiated due to: •  Short loop between development,

deployment & support

•  One point of accountability for end result

•  Global deployment ability


Retalix is Differentiated from the Competition

Enterprise Store

Grocery Convenience

  Unique Business Model: Product Led Services   Retalix 10 Store Suite   Breadth of Offering   Domain Expertise   Focus on the Retail & Food verticals   Hardware agnostic   Large and prestigious customer base


Financial Overview


Revenue Mix 2010 and 2011 YTD

Improving quality of revenue and decreasing HW as a % of Revenues

SW Licenses 13%

Hardware 15%

Professional Services

44%

Maintenance 28%

SW Licenses 10%

Hardware 11%

Professional Services

52%

Maintenance 27%

2010 9 months 2011


Revenues and Net Income Non-GAAP

  9 months 2011: •  13% growth in total Revenues: $173.5 m vs. $153.6 m •  14% growth in Net Income (Non-GAAP): $14.9 m – $0.60 per share – vs.

$13.1 m – $0.54 per share

Expect to exceed

guidance of $217-228M


Retalix has a strong balance sheet

Note: In July 2011 Retalix used $18.95 million in cash to acquire MTXEPS

No debt


Q3 11 P&L Highlights (Non-GAAP)

  Q3 Revenue growth of 16% YoY; 20% growth in Net Income (Non-GAAP)

  Seventh quarter of sequential growth, similar profitability while we continue building growth engines and investing in projects for strategic customers

  Positive Cash Flow from Operations $4.1M in Q3 and $20 million YTD

Notes –

Operating Income and Net Income presented are Non-GAAP. Reconciliation to GAAP numbers is available on www.retalix.com


2011 Financial Outlook

  Profitable growth: •  Expected to exceed revenue guidance for

2011 – original guidance of $217-228M

•  2011 growth was mainly organic – we expect MTXEPS to contribute in 2012

•  Expect to maintain profitability as in 2010, while we continue to invest in our products and our growth engines

Note: The above guidance was issued on November 2, 2011, updating guidance first given on March 2, 2011. The Company undertakes no obligation to update its guidance.


Summary

  Great Opportunity: Large, transforming market with real and urgent IT needs

  Retalix is positioned to win in this market:

•  Focused strategy: defined growth engines contributing to double digit growth

•  Strong management with a proven track record

•  Market leader with global, blue chip customer base

•  Retalix 10 – the world’s leading product

•  Strong and growing SaaS business

•  Unique Business Model:

1.  best in class products

2.  product led services

3.  deep domain expertise

•  Financial strength to grow and serve large, multi-year contracts


Thank you!

Retalix Ltd - Investors Presentation January 2012 Final SH

Documents

seamless customer experience

net income

exceed guidance

growth engines

business capabilities

reduce tco

acquired mtxeps

gaap measures