www.arbinet.com © Copyright 2006 Arbinet-thexchange, Inc. All Rights Reserved. Exhibit 99.1 |
www.arbinet.com 1 This presentation contains “forward-looking statements”, including statements regarding the Company’s growth, strategic and business plans, product development and service offerings, and future operating results. Various risks and uncertainties which may cause the Company’s actual results to differ materially from the results indicated by these forward-looking statements are set forth in the Company’s SEC filings. These include: the Company’s revenue growth and losses; ability to attract and maintain members (in particular, significant trading members); ability to successfully introduce new products and services (including data on the exchange, mobile on thexchange services, Direct Axcess (SM) trading service, PrivateExchange (SM) , AssuredAxcess (SM) , and Peering Solutions (SM) services); continued volatility in the volume and mix of trading activity (including the average call duration and the mix of geographic markets traded); our uncertain and long member enrollment cycle; the failure to manage our credit risk; pricing pressure; system failures, human error and security breaches which could cause the Company to lose members and expose it to liability; the Company’s ability to attract and maintain key personnel; and the Company’s ability to obtain and enforce patent protection for our methods and technologies. Safe Harbor Statement |
www.arbinet.com 2 The Arbinet The Arbinet Platform Platform |
www.arbinet.com 3 Without Arbinet • Multiple competing sellers • One-to-one commercial agreements • Expensive and inefficient With Arbinet • One efficient connection to 446 members • Helps effectively manage increasing complexity Arbinet’s Efficient and Cost Effective Solution Trade Trade Route Route Settle Settle US Carrier Indian Carrier |
www.arbinet.com 4 Easy to Use Trading Platform |
www.arbinet.com 5 Global Membership, Includes World’s 10 Largest Carriers |
www.arbinet.com 6 Global Footprint Frankfurt London Hong Kong New York Los Angeles 2002 2000 2001 2003 2004 Miami 2006 2006 |
www.arbinet.com 7 Scalable Financial Model Largely fixed cost operating structure Volume based pricing to drive aggregate fee revenue growth High incremental margins Low capital intensity Fee Revenue Breakdown Access Fees Credit Risk Premium Other Service Fees |
www.arbinet.com 8 Arbinet Has Built a Strong Set of Assets Market Leadership 446 voice members as of June 30, 2006 Top 10 international carriers 12 billion minutes were bought and sold in 2005 Global footprint Platform Powerful, low-cost transaction management platform Foundation of world's leading electronic market for trading, routing, and settling voice capacity Manages entire transaction (trade, route, settle) 33 patents Financial Scalable financial model High operating leverage; $10M in free cash flow in 2005 Strong balance sheet |
www.arbinet.com 9 Strong Balance Sheet ($ in Millions) 30-Jun-06 Current Assets: Cash, Cash Equivalents & Marketable Securities 67.3 $ Total Current Assets 90.2 Total Assets 119.2 Liabilities: Total Current Liabilities 28.1 Total Liabilities 31.6 Total Stockholders' Equity 87.6 Total Liabilities and Stockholders' Equity 119.2 |
www.arbinet.com 10 International Voice Is Under Pressure Fragmentation Driven by VoIP & deregulation Increasing complex web of interconnects International Voice (280B minutes per year 1 ) VoIP VoIP being adopted by end user Complicates routing decisions Financial Price decline Decreasing margins Wireless Shift to wireless Increasing complex web of interconnects 1) ITU |
www.arbinet.com 11 Recent Arbinet Challenges Volatility in mix of markets Revenue in core business has been flat Shareholder litigation Proxy contest |
www.arbinet.com 12 Growth Strategy Growth Strategy |
www.arbinet.com 13 Arbinet’s Vision Voice Exchange Managed Services VoIP Peering Other Digital Goods First market Market leader Industry’s low cost platform Funds new opportunities Non-spot Provides access to low cost platform Solves member cost issues VoIP adoption at origination Addresses complexities w/ VoIP-VoIP Provides routing and settlement Fragmented buyers / sellers Examples: Media Advertising Content ROUTE SETTLE BUY/SELL |
www.arbinet.com 14 Opportunity – 123.1M Matching and Overflow Calls Monthly 47.6 25.3 16.1 11.0 - Too many/few digits dialed - Not home - No answer - Calls sent but no supply - Calls sent; instructed not to match 454.0M Call Attempts Percent - Bid orders with no matches - Have match but exhausted sellers’ capacity 216.1M Incomplete 114.8M Completed 73.0M Overflow 50.1M No Match/Do Not Match |
www.arbinet.com 15 A $13M Annual Revenue Opportunity Associate Membership Initiative - Targets specialty sellers for additional liquidity - Targets AssuredAxcess (SM) buyers for additional demand - Simple fee structure Traffic Blending Initiative Example Quality Price Expected Blending Results Buyer 52% $.10 - Buyer receives traffic at bid price/quality Seller 57% $.107 - 3 sellers now made to match Seller 49% $.098 - Arbinet completes more traffic Seller 47% $.095 |
www.arbinet.com 16 Introducing Two New Managed Services AssuredAxcess (SM) - Bidless trading - Value for wholesale; rates fixed for 15 days - Quality for retail; fixed for 30 days - Entire World - Applications: > Outsource bottom 20-80% of route > Use for overflow PrivateExchange (SM) - Use Arbinet’s exchange with your own commercial agreements - Arbinet is global hub where carriers meet - Eliminates back office costs (bad debt, legal, management of rates, codes, routing changes) - Geographic advantage |
www.arbinet.com 17 Arbinet’s Commercially Relevant Peering Solution 1. A major cable operator inputs 4.3M telephone numbers to Arbinet’s Peering Solutions 2. Arbinet uploads to SPIDER Registry 3. Arbinet queries SPIDER for each UK call 4. Arbinet sends a major cable operator calls directly to them via TDM interconnection 5. Arbinet pays a major cable operator every 15 days 6. Calls are 100% margin to a major cable operator Allows A Service Provider to Allows A Service Provider to Generate Revenue Today. . . Generate Revenue Today. . . 4. Arbinet sends a major cable operator calls directly to them via VoIP and Migrate to VoIP and Migrate to VoIP On Its Schedule On Its Schedule |
www.arbinet.com 18 Arbinet Digital Media Corporation – Applying Arbinet’s Core Competencies to Digital Media Marketplace for digital media (mobile, web, IPTV, etc.) in secure environment Leverage existing platform and intellectual property Enables discovery, efficient purchase of target demos Fragmented market with high growth potential |
www.arbinet.com 19 Arbinet Investment Considerations Strong balance sheet, $67M cash and no debt Cash flow positive Growing membership Trading at nominal premium to book value Poised for return to growth |
www.arbinet.com © Copyright 2006 Arbinet-thexchange, Inc. All Rights Reserved. |