Aconex : FY16 Financial Results teleconference transcript

ASX Market Disclosure

29 August 2016

FY16 Results Teleconference Transcript

Public webcast and teleconference

Attached is the transcript of the Aconex FY16 webcast and teleconference held on 23 August 2016.

The webcast and transcript are also available at http://investor.aconex.com/irm/content/presentations- webcasts.aspx.

About Aconex

Aconex Limited provides a leading cloud and mobile collaboration platform for the global construction industry. The platform connects owners, contractors and their project teams in the construction, infrastructure, and energy and resources sectors, providing project-wide visibility and control between the many different organisations collaborating across their projects. With more than 60,000 user organisations and over $1 trillion of project value delivered in more than 70 countries, Aconex is the

industry's most widely adopted and trusted platform. Founded in 2000, Aconex has 47 offices in 23 countries around the world, including global headquarters in Melbourne, Australia. The company's ordinary shares are traded on the Australian Securities Exchange (ASX) under the ticker code ACX and are included in the S&P / ASX 200 Index.

Supporting resources

For more information on Aconex, please visit:

• Investor Center: http://investor.aconex.com

• Website: http://www.aconex.com

Aconex contacts:

Rachel Cooper

+61 3 9240 0269

rcooper@aconex.com

Citadel-MAGNUS Matthew Gregorowski

+61 2 9290 3033

mgregorowski@citadelmagnus.com

Operator: Ladies and gentlemen, thank you for standing by and welcome to the Aconex Ltd FY16 results webcast. At this time all participants are in a listen only mode. Following the presentation there will be a question and answer session during which time if you wish to ask a question you will need to press star one on your telephone key pad.

Please be advised that this conference is being recorded today, Tuesday 23 August 2016.

I would now like to turn the conference over to your first speaker Rachel Cooper, Investors Relationships and Communications Manager at Aconex Ltd. Thank you. Please go ahead.

Rachel Cooper: Good morning. This is Rachel Cooper. I would like to welcome you to our public teleconference and webcast on our full year results for financial year 2016. With me here are Aconex CEO Leigh Jasper and CFO Steve Recht. We released our results to the market in an ASX announcement approximately one hour ago. Today, Leigh will present a business overview for the year ended 30 June 2016 and Steve will follow with a summary of our financial performance. After that we will open the floor for questions. As stated before the presentation and Q&A session are being recorded.

Before we start I would like to call your attention to our safe harbour statement regarding forward looking information and other matters related to today's discussion. Our presentation materials regarding this result have been lodged with the ASX.

Now I would like to introduce Aconex CEO Leigh Jasper.

Leigh Jasper: Thanks, Rachel, and welcome to everyone on the all today.

It's been another exceptional year of strong growth for Aconex. The Company is in great shape and well positioned to take full advantage of the large opportunity in our market. The rapid digitisation of the construction and infrastructure industry globally is driving increased demand for Aconex and we've executed well on our strategic objectives over the last 12 months. This has delivered strong financial results for the Company.

Revenue including Conject was up 50% for the financial year to $123 million. EBITDA was up significantly, 350% to

$13.6 million. We also saw a strong lift in operating contribution. Across our regions ANZ continues to perform well growing at 35% to nearly $50 million. Our international business grew rapidly with total revenues up 61% to nearly $75 million and now about 60% of total revenue. On a constant currency basis and excluding Conject all of our regions aside from Asia grew organically and over 30%. We are very pleased with these financial results.

Our strong results have been driven by consistent execution of a three-part growth strategy. The first is to grow the network, the second is to increase customer value and the third is to drive performance. Our strong network growth has been driven by key influential customer wins such as CIMIC, Burns & McDonnell and Fluor in the US and ExxonMobil in the oil and gas sector. These influential customers are the gold standard in our industry and recognised leaders. They help us drive significant uptake in the Aconex network on both the projects that they work on and also more broadly across the construction and infrastructure ecosystem. In a minute I'll dive into some of the key customer wins we have had across our four major operating regions.

As we have discussed with many of you in the past investment in product is critical to the long term success of Aconex. We have significantly increased our investment in R&D and continue to build out wider and deeper functionality for our

customer base. Some examples of the products we have been focused on over the last 12 months include BIM collaboration, field inspections, cost management particularly through the Worksite acquisition and insights and analytics which provide our customers with more valuable reporting and insights into their projects.

In addition to investing in product we continue to invest into our customer service team and resources to ensure we provide strong support to projects using Aconex.

Lastly we remain focused on driving performance as the Company increases in scale around the world. On the back of strong revenue growth we have delivered a large increase in profitability with EBITDA up dramatically 350% for the year. We continue to invest in creating one global operating platform for all of our business units and with the integration of Conject we are looking to bring the entire Company onto one set of operating systems and standards. I will cover this in more detail later in the presentation.

Last year Aconex delivered significant revenue growth and large increases in operating contribution across all of our regions and our international business is tracking the trajectory of the ANZ business. We delivered strong growth of 35% in the ANZ market as mentioned before, taking revenue to $50 million and contribution to nearly $35 million or just over 70% margin.

The Americas region had a sensational year growing revenue to over $20 million at a 45% growth rate. In the short term as we continue to invest in that region we do not expect contribution margins to lift significantly but over the long term we expect them to approach the contribution margins we see in Australia.

Revenue in the EMEA region grew rapidly partly through the acquisition of the Conject business, to $40 million representing 90% growth over last year. Contribution was $17 million at nearly 50% margin. Again over time we expect the EMEA contribution margin to approach the Australian business as that region continues to develop.

The Asia region didn't have quite as strong a year as some of our other markets. It still remains a larger longer term opportunity for the Company with lower penetration levels in other regions. Asia grew 30% and generated $2 million of contribution.

Overall international revenue was up 61% for the financial year, a tremendous growth rate which shows the long term opportunity we have in this very large unpenetrated market around the world.

You can see on the right the progress of each of our regions over the last couple of years and that revenue is accelerating as the Company increases in scale. On a constant currency basis and excluding Conject our international growth rate was 29%. Asia had weaker growth at 19% but both the Americas and EMEA grew rapidly at 35% and 31% respectively.

I'm now going to touch on some of the operating and sales highlights across each of our regions. Firstly, we have continued to expand our global network around the world and currently have 47 offices serving 4.5 million project users on projects in approximately 65 different countries. This global office infrastructure provides an unparalleled capability to serve our customers and projects wherever they are and is a significant differentiator from other providers in the market.

We've had a great year in ANZ winning new customers and transitioning accounts across to enterprise agreements which now represent nearly two-thirds of our revenue in ANZ. We have an experienced account management team which is continuing to drive penetration and further embedding Aconex across our customers' project portfolios. The other key strategic driver for us in the ANZ market is the growing adoption of new products with Aconex Field in particular being widely used. From a customer standpoint we have already mentioned the CIMIC agreement. We have

also secured new enterprise agreements with Probuild, Scentre Group and Westfield, Hickory Group and Fletcher out of New Zealand.

We've had an incredible year in the Americas securing significant relationships with influential customers right across the US, Canada and Latin America. We continue to drive adoption with these global market leaders and we're seeing accelerating momentum in tier one particularly in the heavy engineering space and also in building and construction. Significant new customer wins include Fluor, Burns & McDonnell, ExxonMobil as I mentioned before, Caltrain, a large rail project and we are particularly excited to be involved in the Tesla Gigafactory development in Nevada. Overall in the Americas we delivered outstanding wins and increased our momentum. We will continue to invest in our rapidly growing presence in the North American market.

The Asia region represents a sizeable long term opportunity for Aconex and we are building a platform to enable us to capture this opportunity. We are executing a targeted set of sales initiatives going after key influences and big infrastructure opportunities such as the multi hundred billion One Belt One Road program being driven by China.

Significant wins in the region include projects with China State Construction with Nippon Koei, with Sinopec in the oil and gas space, with SK Engineering and Construction out of South Korea and also with IKEA for retail projects across China.

In Europe, the Middle East and Africa we are consolidating our market leadership position. We are well down the track of integrating the Conject business which is going very well at an operational and at a people level. I'll talk more about that - in more detail about that in a couple of slides. We have a strong customer base in Europe including market leaders as Mace, VINCI and ArcelorMittal. While Brexit has created some uncertainty in the region we expect to be able to continue growing the business over the coming year.

We've had solid growth in the Middle East through customers such as Aldar, TDIC and Bluu. It has been a more challenging year in the Middle East given the reduction in infrastructure projects due to the oil price decline. However, the region still performed well and we think new business will improve this year on the back of a stabilising oil price and renewed interest in developing key infrastructure projects across the region.

All in all, it's been a great year across our regional businesses with significant growth in both new customers and also existing accounts. A strength of Aconex is its diversified revenue both across regions and industry sectors. This has enabled the business to grow through challenging conditions and economic cycles over the last 15 years.

The breadth and quality of the Aconex product suite is a key competitive differentiator and we are continuing to invest in new and deeper product functionality to extend that advantage. This investment in product also helps drive higher yield as our customers take up additional Aconex modules to increase the value to their projects. There are four primary areas that we have been investing in over the last 12 months, firstly extending field processes with PDF forms; BIM Mobile which is enhancing our functionality around building information modelling particularly for use out on site; cost and schedule management initially through the Worksite acquisition and then extending that product - we have a number of customers currently using the connection cost product and with a full launch plan for later this financial year - and insights and reporting providing our customers with valuable insights and analytics drawn from the rich dataset on Aconex. This investment into R&D is supported by over 200 staff in our products and engineering teams in our development centres around the world.

Over the last 12 months Aconex has completed three significant acquisitions all reinforcing our strategic focus on growth. The largest of these is the Conject acquisition consolidating the global leadership position of Aconex and adding significant revenue scale. We have the number one position in Europe and have brought additional capability to our product, sales and customer service teams. The integration has been progressing very well. Migration plans are in place and to date we have not lost a single customer. We have retained all key staff and we have a very engaged team.