INVESTOR
PRESENTATION
2018 FULL-YEAR RESULTS
INVESTOR PRESENTATION 2018 F ULL -Y EAR R ESULTS SAFE HARBOR - - PowerPoint PPT Presentation
INVESTOR PRESENTATION 2018 F ULL -Y EAR R ESULTS SAFE HARBOR STATEMENT Net Element, Inc. is traded on the NASDAQ Capital Market under the >cker symbol NETE This presenta>on is for discussion purposes only. All prices and rates
2018 FULL-YEAR RESULTS
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Net Element, Inc. is traded on the NASDAQ Capital Market under the >cker symbol “NETE”
This presenta>on is for discussion purposes only. All prices and rates referenced herein are indica>ve and subject to market condi>ons. The material is based upon informa>on that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. The material available in this presenta>on may contain forward-looking statements, which are subject to risks, uncertain>es and assump>ons. In some cases, you can iden>fy these statements by forward-looking words such as “may”, “might”, “will”, “should”, “expect”, “plan”, “an>cipate”, “believe”, “es>mate”, “predict”, “op>mis>c”, “poten>al”, “future” or “con>nue”, the nega>ve of these terms and other comparable terminology. Such forward-looking statements are based on current plans, es>mates and expecta>ons and are made pursuant to the Private Securi>es Li>ga>on Reform Act of 1995. Forward-looking statements are based
achievements may differ materially from any future results, performance, or achievements expressed or implied by such forward- looking statements. We do not assume responsibility for the accuracy or completeness of any forward-looking statement and you should not rely on forward-looking statements as predic>ons of future events. We are under no duty to update any of these forward- looking statements to conform them to actual results or revised expecta>ons. This presenta>on contains certain non-GAAP financial measures determined by methods other than in accordance with generally accepted accoun>ng principles. Such non-GAAP financial measures include: general and administra>ve expense before non-cash compensa>on expense. Management uses these non-GAAP financial measures to assess the performance of Net Element’s core
to assist investors in evalua>ng Net Element’s opera>ng results. These non-GAAP financial measures should not be considered as a subs>tute for opera>ng results determined in accordance with GAAP and may not be comparable to other similarly >tled measures of
Any investment in Net Element will be subject to certain risks related to the nature of the Company’s business and the structure and
described in the Company’s filings with the SEC.
www.netelement.com Net Element, Inc. (NASDAQ: NETE) (“Net Element”) is a global technology and value-added payment acceptance solu>ons group
credit, debit) at the point of sale (“POS”), online and via mobile payment technologies
services that enable merchants of all sizes to accept and process
management and tokeniza>on technologies
blockchain, payments enablement for Internet of Things, biometrics payment acceptance and ar>ficial intelligence
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LARGE & GROWING INDUSTRY
steadily increased over the past then years and con>nues to climb RECURRING REVENUE BUSINESS MODEL
RESILIENT OPERATING LEVERAGE
deployment, ac>va>on, client services, data entry and reten>on
selected ver>cals and markets with the focus on value-added offerings PROVEN MANAGEMENT TEAM
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EXECUTED STRATEGIC OPPORTUNITIES
gross profits over 4 years
agreement, projected to add over $1.5 million in gross profit over 4 years POSITIONED FOR GROWTH
FOCUS ON VALUE-ADDED RELATIONSHIPS
ACQUISITION OF ONLINE PAYMENT PLATFORM
OPERATIONAL OPTIMIZATION
2018 2017 2016 2015 2014
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OLEG FIRER
Chief Execu>ve Officer
STEVEN WOLBERG
Chief Legal Officer
JEFFREY GINSBERG
Chief Financial Officer
ANDREY KROTOV
Chief Technology Officer
DAYAN MARTINEZ
Investor Rela>ons
VLAD SADOVSKIY
Head of Integrated Payments
SVETLANA ESENNIKOVA
Head of Online Solu>ons
SHAWN BROWN
Head of Risk Management
GIOVANNI DI FEBO
Head of Acquiring & Compliance
CHRISTA SHOOK
Partner Growth
OLEG FIRER
Execu>ve Chairman Chief Execu>ve Officer Net Element
DREW FREEMAN
Director 30+ yrs payments Experience
HOWARD ASH
Director International Value-added specialist
JON NAJARIAN
Director CNBC cast member “Halnime Report”
JAMES CAAN
Non-Vo>ng Director Accomplished Actor & director
EXECUTIVE MANAGEMENT TEAM EXPERIENCE
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BOARD OF DIRECTORS JONATHAN FICHMAN
Director Seasoned Fintech Execu>ve
BUSINESS LINE MANAGEMENT
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For the five-year period ending December 31, 2018, Net Element has executed several complex ini>a>ves and con>nued to deliver double digit percentage year-over-year organic growth
158% GROWTH
Revenue growth over five-year period ending December 31, 2018
2014 2015 2016 2017 2018 $ 21.2 $ 54.3 $ 60.1 $ 65.8
31.6%
2014-18 CAGR
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$ 40.2
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We have amassed a broad poriolio of value added applica>ons that leverage the growth in payments to create a diverse array of recurring revenues and differen>ate us in the marketplace. Recurring service revenue is the primary revenue component for the Company
RECURRING REVENUE
100%
TRANSACTION PROCESSING
85%
DATA & ANALYTICS
3%
SOFTWARE LICENSE
12%
TRANSACTION PROCESSING SOFTWARE LICENSE DATA & ANALYTICS Fees charged on a per transac>on and processed volume basis for payment acceptance services provided to the merchant Sonware as a license (SaaS) model allows merchants to get point-
upfront capital expenditure Business Intelligence tools are priced based on
is charged over volume processed
RECURRING REVENUE AS PERCENTAGE OF TOTAL REVENUE 2018
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Extensive network of over 100 independent sales groups and agents, including integrators, value- added resellers, affinity and referral partners boost the Company’s merchant growth
2013 2014 2015 2016 2017
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Internal Sales Force focused on ver>cals and value-added services External Partners enable rapid scalability and expansion through indirect distribu>on Value-Added Resellers and Integrators focus on technology and synergis>c sales
2018
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innovaDve technology under the trusted bank brand
channel
FINANCIAL INSTITUTIONS
mobile commerce soluDons including DCB, one-click, PSMS, WAP, A2P/P2A and PIN submit
consumer engagement
any device worldwide
enhanced security
program allowing consumers to earn points across all devices
CONSUMERS
with consumers
relaDonship
soluDon (“Payment as a Service”)
MERCHANTS
POS Solutions Mobile Payments Value-Add Offerings Payment Acceptance Big Data/Analytics
100+
PAYMENT OPTIONS WITH 1 Integration API 1 Back Office 1 Settlement 1 Dedicated Team
MULTI-CHANNEL PROCESSING
MOBILE NETWORK OPERATORS
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All the features and buildings blocks to make global commerce a reality. Our vision is to set the standard for global cross-channel payments acceptance and value-added service offerings with focus on crea>on of unified global transac>on acceptance ecosystem
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One of the leading providers
solu>ons in the United States Future-ready mul>-channel payments and merchant management plaiorm Integrated POS plaiorm for hospitality, retail, service and on the go industries Seamlessly redefine and modernize experience at the POS and behind the scenes No fees. Merchants get the full purchase price for the transac>on Enterprise-class infrastructure tools for back-office processing Our technology development team brings ideas to life Payment acceptance without
Mobile POS applica>on makes accep>ng payments on the go easy and secure
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RECOGNIZED MERCHANTS MOBILE NETWORK OPERATORS FINANCIAL INSTITUTIONS
S
At Net Element we are commiqed to finding the most innova>ve and impaciul strategic partnership ideas, no maqer where they reside
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Card Processing Electronic Commerce Mobile Commerce Gift Cards Alternative Payments Marketing Security & Risk Management Customer Service Mobile Payments Advisory Bill Payments Business Analytics Reporting Tools
Integration Loyalty / Rewards Point of Sale
COMPREHENSIVE SOLUTION SET DISTRIBUTION
INTERNAL SALES FORCE EXTERNAL PARTNERS 1 2
in North America, Europe, CIS and Asia
INTEGRATED TECHNOLOGY PLATFORM
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Momentum in the transi>on of consumer payments away from paper and towards card and electronic alterna>ves is expected to result in total cash and
billion, respec>vely, over the forecast period. Factors accelera>ng the transi>on to digital payments include increased access to financial services and government policies. Despite substan>al growth in card payment value,
payment value is expected to increase fastest between 2017 and 2022
A LARGE, GLOBAL AND FAST-GROWING MARKET
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Fintech transacaon value
+18%
Mobile commerce
+23%
Blockchain market
+61.5%
Sources: Sta,sta Digital Market Outlook; Euromonitor; Blockchain News
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Forecast compound annual growth rates 2016-2021
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The global payments industry con>nues to deliver healthy growth, with underlying fundamentals such as transac>on volumes and account balances demonstra>ng even greater strength. This scenario also lays the groundwork for significant disrup>on likely to alter the dynamics between financial ins>tu>ons and fintechs.
Asia-Pacific EMEA LATAM North America 2014 2015 2016 2017 2022E 0.4 0.4 0.4 0.5 0.6 0.1 0.1 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.4 0.7 0.7 0.8 0.9 1.6 2019E 2020E 2023E
30% 32% 34% 35% 36%
Share of total banking, %
CAGR % 2017-22
+11% +6% +8% +7% Payments revenue in trillions US$ 1.5 1.6 1.7 1.9 2.9 Source: McKinsey Global Payments Map Source: Staasta 2018 2017 359 2,804 530 3,068 748 3,397 1,015 3,757 2,118 4,569 Mobile POS Payments Digital Commerce Transacaon volume in billions US$ 3,164 3,598 4,145 4,772 6,867
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Demand for SaaS-based solu>ons provides an opportunity for technology-enabled POS (“iPOS”). We believe that we are well posi>oned to benefit from merchants’ demand for integrated payments solu>ons at the early stage of an upgrade cycle.
2013 31% 79% 2020 2013 31% 79% 2020 2017
>$4.4 2020
SMB Spending on SaaS Expected to Increase
11% CAGR
SaaS Spending Among SMB(1)
Driving Adopaon of Technology-Enabled iPOS
Offering Value Added Services Creates New Revenue Streams & Sackier Merchants
✓ Visual POS ✓ Product organiza>on tools ✓ Omni-channel payment acceptance ✓ Ability to manage supplier rela>onships ✓ Invoicing and reconcilia>on ✓ Analy>cs and addi>onal repor>ng
As Merchants Seek to Upgrade their Soluaons Creaang a Significant Revenue Opportunity
+48%
iPOS Usage (% of Total Retailers)(2) iPOS & mPOS Addressable Market ($BN)(2)
+5% CAGR
(1) BCG “Merchant Acquiring: How to Win in a Digital World” (2) Ingenico’s 2020 Strategic Plan Presenta>on
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Revenue
2018 2017 $65.8 million $60.1 million
Transacaons Processed
2018 2017 149 million 154 million
Gross Margin
2018 2017 $10.2 million $8.8 million
Gross Margin - U.S.
2018 2017
EBITDA
2018 2017 ($1.7) million ($6.3) million
Gross Margin - Internaaonal
2018 2017 23.7% 21.9%
Total Transacaon Value
2018 2017 $3.3 billion $2.8 billion
Transacaons Value - U.S.
2018 2017 $2.9 billion $2.3 billion
Transacaons Value - Internaaonal
2018 2017 $354 million $520 million
* excludes disconDnued business line
14.5% 13.4%
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Impressive Organic Net Revenue Growth Rapidly-Growing Payment Volume Rapid EBITDA Development 2018 Gross Margin Analysis
$0 $20 $40 $60 $80 2014A 2015A 2016A 2017A 2018A 2019E 2020E
North American Transac>on Solu>ons Interna>onal Transac>on Solu>ons
19.4 27.4 42.1 51.1 59.4 64.1 70.0 1.8 12.8 12.2 9.2 $21.2 $40.2 $54.3 $60.1 $65.8 $69.5 $75.4 1 3 . 8 % C A G R
% Growth 35% 11% 10% 6% 8% ($ in millions)
$0 $1,250 $2,500 $3,750 $5,000 2014A 2015A 2016A 2017A 2018A 2019E 2020E 21.7% CAGR
% Growth 28% 22% 18% 21% 20% ($ in millions)
$667 $1,800 $2,300 $2,800 $3,300 $4,000 $4,800 8.9 6.6 8.5 $ in Millions Revenue Gross Margin % of Revenue North America $59.1 $8.6 14.5% International $6.6 $1.6 23.7% Total $32.5 $10.2 15.5%
$0 $2 2014A 2015A 2016A 2017A 2018A 2019E 2020E 1.5
0.1 0.1
($ in millions)
$ in Millions Revenue Gross Margin % of Revenue North America $51.1 $6.9 13.4% International $8.9 $1.9 21.9% Total $60.0 $8.8 14.7%
2017 Gross Margin Analysis
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BACK OFFICE Fulfillment/ Maintenance
SALES Customer Acquisition/ Boarding SALES Agent Support SALES Retention Support BACK END Merchant Acquiring RISK MANAGEMENT MANAGEMENT INFORMATION BACK OFFICE Exceptions Processing BACK OFFICE Merchant Support
customer relationship management platform
resolution
management information systems
fraud control, collection
mobile, XML on the go, fax, email
sales network
retention
retention
cross-sell opportunities
statement
billing
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Global technology and value-added solutions group that supports electronic payments acceptance in a multi-channel environment
investors@netelement.com https://www.linkedin.com/company/net-element/ https://www.facebook.com/netelement https://twitter.com/neteinc +1 (305) 507-8808 www.netelement.com