MANAGEMENT PRESENTATION 2018 H ALF Y EAR R ESULTS SAFE HARBOR - - PowerPoint PPT Presentation

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MANAGEMENT PRESENTATION 2018 H ALF Y EAR R ESULTS SAFE HARBOR - - PowerPoint PPT Presentation

MANAGEMENT PRESENTATION 2018 H ALF 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


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SLIDE 1

MANAGEMENT

PRESENTATION

2018 HALF YEAR RESULTS

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www.netelement.com

SAFE HARBOR STATEMENT

2 www.netelement.com

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

  • n known and unknown risks, assump>ons, uncertain>es and other factors. The Company’s actual results, performance and

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

  • business. Net Element believes that these non-GAAP financial measures provide meaningful addi>onal informa>on about Net Element

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

  • ther companies.

Any investment in Net Element will be subject to certain risks related to the nature of the Company’s business and the structure and

  • pera>ons of the Company. Any investment in the Company should be made only with an apprecia>on of the applicable risks, which are

described in the Company’s filings with the SEC.

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www.netelement.com

COMPANY OVERVIEW

CHARTERING A COURSE TOWARDS SEAMLESS COMMERCE

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www.netelement.com

NET ELEMENT OVERVIEW

  • Net Element, Inc. (NASDAQ: NETE) (“Net Element”) is a

global technology and value-added solu>ons group

  • Provides secure, reliable, easy-to-use and cost-effec>ve

payment acceptance, processing, support, authoriza>on and se\lement services for tradi>onal, mobile and alterna>ve payments in a mul>-channel environment

  • Fully-integrated payment solu>ons incorpora>ng fraud

management and tokeniza>on technologies

  • Developing decentralized blockchain ecosystem to act as a

framework for a number of value-added payment services

  • Diversified client base with strong recurring revenues
  • Surpassed $60 million in revenue in 2017
  • $32.45 million in revenues for the First Half 2018
  • Highly ac>ve in world’s fastest growing markets
  • 97 full->me employees

COMPANY OVERVIEW

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www.netelement.com

INVESTMENT HIGHLIGHTS

LARGE & GROWING INDUSTRY

  • Large and growing market with favorable economic trends
  • The use of non-cash forms of payments including mobile payments has

steadily increased over the past then years and con>nues to climb RECURRING REVENUE BUSINESS MODEL

  • Focused on fast growing and highly profitable market segments
  • Proved business in the United States with recurring revenues
  • Diverse, low-risk, recession proved recurring revenue stream
  • Strong established customer & partner base

RESILIENT OPERATING LEVERAGE

  • Resilient business with strong recurring revenue, diversified customer

base and good visibility

  • Full front and back office opera>ons including risk, underwri>ng,

deployment, ac>va>on, client services, data entry and reten>on

  • Significant, untapped opportuni>es for expansion and growth

PROVEN MANAGEMENT TEAM

  • Track record of scaling businesses and delivering shareholder value
  • Proven achievements in new product launch
  • Proven achievements in new market development
  • Relentless focus on value crea>on and growth

5 www.netelement.com

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www.netelement.com

COMPANY HIGHLIGHTS

CONTINUED GROWTH

  • Acquisi>on of recurring cash flows porkolio, projected to add over $5

million in gross profits over 4 years

  • Launched subscrip>on-based payment processing, signed partnership

agreement, projected to add over $1.5 million in gross profits over 4 years POSITIONED FOR GROWTH

  • Received $7.55 million ins>tu>onal investment to support growth
  • Ensured con>nued compliance with NASDAQ lis>ng requirements
  • Launched business unit focused on blockchain technology

FOCUS ON VALUE-ADDED RELATIONSHIPS

  • Expanded rela>onships with financial ins>tu>ons
  • Expanded service offerings to over 100 payment methods interna>onally
  • Annual revenues increased 35%

ACQUISITION OF ONLINE PAYMENT PLATFORM

  • Acquisi>on of PayOnline, leading online payment plakorm
  • Expanded PayOnline to selected emerging markets
  • Annual revenues increased 89.5%

OPERATIONAL OPTIMIZATION

  • Debt reduced from $31 million to $3 million
  • G&A reduced from $12 million to $7 million, excluding non-cash items
  • $10 million credit facility to implement strategic ini>a>ves

H1 2018 2017 2016 2015 2014

6 www.netelement.com

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www.netelement.com

www.netelement.com

We focus on maximizing opportuni>es for our brands. 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

PORTFOLIO OF BRANDS

www.netelement.com

SalesCentral

One of the leading providers

  • f payment acceptance

solu>ons in the United States All the features and building blocks to make global commerce a reality Visual POS solu>on includes all that the business needs to streamline opera>ons 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

  • borders. Fully-integrated
  • nline processing plakorm

Allows users to make purchases by charging payments to their mobile phone bill

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www.netelement.com

MANAGEMENT TEAM

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

ALEXANDER BORISOV

Head of Online Solu>ons

SHAWN BROWN

Head of Risk Management

GIOVANNI DI FEBO

Head of Acquiring & Compliance

CHRISTA SHOOK

Partner Growth

KENES RAKISHEV

Chairman Noted global Industrialist

DREW FREEMAN

Director 30+ yrs payments Experience

HOWARD ASH

Director International Value-added specialist

JON NAJARIAN

Director CNBC cast member “Haloime Report”

JAMES CAAN

Director Accomplished Actor & director

EXECUTIVE MANAGEMENT TEAM EXPERIENCE

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BUSINESS LINE MANAGEMENT BOARD OF DIRECTORS JONATHAN FICHMAN

Director Seasoned Fintech Execu>ve

OLEG FIRER

Director Chief Execu>ve Officer Net Element

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www.netelement.com

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For the five-year period ending December 31, 2017, Net Element has executed several complex ini>a>ves and con>nued to deliver double digit percentage year-over-year organic growth

REVENUE GROWTH

223% GROWTH

Revenue growth over five-year period ending December 31, 2017

2013 2014 2015 2016 2017 $ 18.7 $ 21.2 $ 40.2 $ 54.3 $ 60.1

26.4%

2013-18 CAGR

www.netelement.com 9

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www.netelement.com

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RECURRING REVENUE STREAMS

We have amassed a broad porkolio 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 TRANSACTION PROCESSING DATA & ANALYTICS SOFTWARE LICENSE

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 Sooware as a license (SaaS) model allows merchants to get point-

  • f-sale sooware without

upfront capital expenditure Business Intelligence tools are priced based on

  • usage. A percentage fee

is charged over volume processed

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www.netelement.com

www.netelement.com

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

CLIENT 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

2018E

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www.netelement.com

POWERFUL ECOSYSTEM

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  • Maintain control of their network
  • Acquire new consumers seeking

innovaCve technology under the trusted bank brand

  • EffecCve adverCsing and loyalty

channel

FINANCIAL INSTITUTIONS

  • Enables MNOs to provide full

mobile commerce soluCons including DCB, one-click, PSMS, WAP, A2P/P2A and PIN submit

  • Significant pathway for growing

consumer engagement

  • Allows fricConless commerce on

any device worldwide

  • Cloud-based plaWorm provides

enhanced security

  • Omni-channel giX and loyalty

program allowing consumers to earn points across all devices

CONSUMERS

  • Allows real-Cme engagement

with consumers

  • Maintain control of consumer

relaConship

  • Merchant-branded, white label

soluCon (“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

  • w ○

MULTI-CHANNEL PROCESSING

MOBILE NETWORK OPERATORS

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www.netelement.com

PREMIER RELATIONSHIPS

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INTERNATIONAL MERCHANTS MOBILE NETWORK OPERATORS FINANCIAL INSTITUTIONS

S

At Net Element we are commi\ed to finding the most innova>ve and impackul strategic partnership ideas, no ma\er where they reside

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www.netelement.com

INTEGRATED SOLUTIONS

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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

  • Turn-key

Integration Loyalty / Rewards Point of Sale

COMPREHENSIVE SOLUTION SET DISTRIBUTION

INTERNAL SALES FORCE EXTERNAL PARTNERS 1 2

  • Established sales force and market expertise
  • Motivated team leaders
  • Access to proprietary commission platform
  • Contracts to elected partners & distributors

in North America, Europe, CIS and Asia

INTEGRATED TECHNOLOGY PLATFORM

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www.netelement.com

INDUSTRY OVERVIEW

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www.netelement.com

www.netelement.com

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

  • ther paper declining by $1.9 trillion and $453

billion, respec>vely, over the forecast period. Factors accelera>ng the transi>on to paper payment alterna>ves include increased access to financial services and government policies. Despite substan>al growth in card payment value,

  • n a year-over-year growth basis, electronic direct

payment value is expected to increase fastest between 2017 and 2022

DIGITAL PAYMENTS

A LARGE, GLOBAL AND FAST-GROWING MARKET

www.netelement.com

Fintech transacYon 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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www.netelement.com

INDUSTRY OVERVIEW

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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 2013 2014 2015 2016 2021E 0.4 0.4 0.4 0.4 0.5 0.1 0.1 0.1 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.6 0.7 0.7 0.7 1.1 2014 2016 2019E 1,336 1,915 3,418 392 620 1,080 Mobile Payments Online Commerce

28% 30% 32% 34% 36%

Share of total banking, %

CAGR % 2016-21

+8% +4% +9% +6% Payments revenue $ trillions Volume $ billions 1,728 2,535 4,498 1.3 1.4 1.5 1.6 2.2 Source: McKinsey Global Payments Map Source: StaYsta, TrendForce

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www.netelement.com

INDUSTRY OVERVIEW

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Demand for SaaS-based solu>ons provides and opportunity for iPOS. We believe that we are well posi>oned to benefit from merchant’s demand for integrated payments solu>ons and the easy stage of an upgrade cycle.

2013 31% 79% 2020 2013 31% 79% 2020 2017

  • $3.8

>$4.4 2020

SMB Spending on SaaS Expected to Increase

11% CAGR

SaaS Spending Among SMB(1)

Driving AdopYon of Technology-Enabled iPOS

Offering Value Added Services Creates New Revenue Streams & SYckier 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 SoluYons CreaYng a Significant Revenue Opportunity

+48%

iPOS Usage (% of Total Retailers)(2) iPOS & mPOS Addressable Market ($BN)(2)

+5% CAGR

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www.netelement.com

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