PRESENTATION September 2014 2 COMPANY OVERVIEW 3 VERIFONE TODAY: - - PowerPoint PPT Presentation

VERIFONE INVESTOR RELATIONS PRESENTATION

September 2014

2

COMPANY OVERVIEW

3

4

VERIFONE TODAY: FACTS AND FIGURES

~150

Active Countries

#1 or #2

In Most Markets

20M +

Systems Installed Globally

~5,400

Employees

37%

Revenue From Services

~ $1.86B

Guidance For FY14 37%

GLOBAL LEADERSHIP TEAM

5 Paul Galant

Chief Executive Officer

Marc E. Rothman

EVP, Chief Financial Officer

Albert Liu

EVP, Corporate Dev. & General Counsel

Alok Bhanot

EVP, Chief Technology Officer

Jennifer Miles

President, VeriFone Americas

June Yee Felix

President, VeriFone Europe

Bulent Ozayaz

Sunil Kappagoda

Vincent Roland

SVP, Global Services Solutions

Vin D’Agostino

SVP, Global Business Development

Amos Tamam

SVP, Taxi Systems

Bill Nelson

EVP, Global Terminal Solutions

Todd Shaw

SVP, Chief Human Resources Officer

Represents leadership additions since January 2013

6

LEADERSHIP TEAM ADDITIONS

Marc Rothman, CFO

Joined February 2013 Former CFO, Motorola Mobility

Paul Galant, CEO

Joined October 2013 Former CEO, Citi Enterprise Payments

Sunil Kappagoda, President, VeriFone Asia Pacific & EVP, Strategy

Joined July 2013 Former Senior Partner, Boston Consulting Group

Alok Bhanot, Chief Technology Officer

Joined December 2013 Formerly of Inkiru, Visa, PayPal, eBay

Vin D’Agostino, SVP, Global Business Development

Joined January 2014 Former Head of Payment Strategy, JPMorgan Chase

Bill Nelson, EVP, Global Product

Joined October 2013 Formerly of Nuance, EMC, AT&T, SunGard

June Yee Felix, President, VeriFone Europe

Joined May 2014 Former Managing Director of Citi Enterprise Payments

Todd Shaw, SVP, Chief Human Resources Officer

Joined August 2014 Former VP of Human Resources, PayPal

7

VISION & STRATEGY

OUR VISION

To become our clients’ most trusted, secure and innovative partner by delivering the best terminals, payment-as-a-service and commerce-enablement solutions.

OUR STRATEGY

To connect our terminals and solutions into our secure payment-as-a-service platform capable of hosting VeriFone and 3rd party-developed commerce enablement applications.

BECOMING THE COMPANY WE WANT TO BE

A “client-first” company Our clients’ most trusted, secure and innovative partner Operationally excellent Globally optimized operating model Strategically focused Clearly articulated, next chapter growth strategy focused on Payment-as-a-Service and Commerce Enablement Properly organized Simplified organizational structure to be built around three global product businesses: Terminal Solutions; Payment-as-a-Service; and Commerce Enablement A leader with a single, distinct culture Single, global VeriFone culture focused on becoming ‘The Company We Want To Be’

8

9

EXECUTING ON THE TOP 3 VERIFONE INITIATIVES

Cost Optimization

▪ Reduce core headcount by ~125 ▪ Liquidate additional 6 legal

entities

▪ Consolidate 20% of data centers ▪ Reduced headcount by ~375 ▪ Closed 14 facilities; goal met ▪ Liquidated 13 legal entities out of

132

Product Portfolio Management

▪ ~500 total SKUs by calendar

year end

▪ Reduced SKUs from over 1,000

to ~525

R&D Re-Engineering

▪ Migrate our multiple operating

systems to our single next generation platform

▪ Continue consolidation of R&D

sites to centers of excellence

▪ Reduced core operating

systems from 13 to 8

▪ Launched development of a

single next generation platform

▪ Consolidated 9 R&D locations

What’s still to be done What we’ve achieved

OUR BUSINESS OUTLOOK

10

11

THREE MACRO FORCES ARE DRIVING THE SHIFT FROM PAYMENTS TO COMMERCE…

Devices

• More people have smart

phones than bank accounts

• Consumers’ increasing

demand for mobile payments, loyalty, coupons, etc.

Networks

• Evolving to enable delivery of

rich content such as video and instant contextual targeting almost everywhere

• Cost of data is quickly

decreasing, enabling ‘always-on’ data computing and analysis

The Cloud

• Consumer data and purchase

history will increasingly reside in the cloud allowing merchants to create more relevant offers and engage with consumers in more meaningful ways

12

…WHICH IS DRIVING CHANGE AND OPPORTUNITY AT BOTH ENDS OF THE VALUE CHAIN…

Merchant

Issuer Processor Issuer Acquirer Acquirer Processor Network Access device Access device

Consumer

Traditional Wallets and Cards Traditional POS Hardware Mobile Wallets and Phones Payment Apps Laptops Tablet POS Software Mobile Card Readers Other Non-Traditional Access Points

13

… AND CHANGING THE WAY CONSUMERS SEARCH, SHOP AND BUY

Consumer Needs Merchant Needs

Find merchants Compare merchants Contact / Arrive at store Decide on purchase Pay / Receive Loyalty / Decide to return

Shop Buy Search Post-visit

Efficient search Relevant offers Product availability Social reviews Offer comparison Real-time offers Compare prices Get advice Browse competitor

• fferings

Redeem offers & points Complete payment Access credit Targeted ads &

• ffers

Price, info &

• ffer delivery

Know when consumer is in the store Know what they are looking for Cross-sell Promote high margin items Receive funds Redeem offers & points Store data Assess risk Accrue points Share with friends Drive repeat visits Refine targeting

14

THIS IS TRANSFORMING HOW VERIFONE DOES BUSINESS Building Our Next Chapter Strategy

Terminals Payment as a Service (PaaS) Commerce Enablement

• Today we are a market leader

in physical terminals (hardware and apps) and robust services around terminal repair and management

• Continue to invest and innovate

in this area to provide leading edge, certified terminal solutions

• Subscription-based,

comprehensive service bundles to simplify payments for merchants

• Includes cloud-based value-

added services (security, reporting, multi-channel acceptance, etc.)

• Building out commerce

enablement platforms that position us at the forefront at the shift from payment to commerce

• Allows VeriFone to offer new

services that will help merchants grow their businesses and strengthen their relationships with consumers

WE ARE TERMINAL SOLUTIONS

Delivering the latest hardware, software, security and services

15

16

TERMINAL PRODUCT STRATEGY PRINCIPLES Key product principles to align with VeriFone’s strategic direction

Simple, common, modular and global platforms – with a common

• perating and applications development environment that drive a

consistent user experience Products that cover the range of functionality and price points – in particular low-cost products Technology leadership – in particular security and mobile (embracing the de facto Smartphone and Tablet platforms) Connected devices for coming shift to Payment as a Service and Commerce Enablement business units – in particular devices that support external ecosystems

17

EMERGING MARKET OPPORTUNITIES

• Conversion to electronic payments
• Turkey: Complete market re-terminalization

to ECR-enabled POS devices

• Russia: 450K+ unit tender with

Sberbank, the country’s largest bank

• Brazil: 2014 World Cup, 2016 Olympics
• India: Under-developed payments

infrastructure

Q3 FY 2014 LTM USA 27% Emerging Markets 38% Other Developed Markets 35%

VeriFone has an enviable footprint, with 38% of revenue from emerging markets economies and is well positioned to benefit from growing opportunities

• Approx. 13,000 volunteers at this year’s World Cup

FIFATM were given Visa payWave contactless cards for meal access on VeriFone VX 680 payment terminals.

• Established company and trusted

security advisor

• Security experts active on PCI Council

and other industry organizations that address payment security concerns

• Industrial strength security solutions
• Full certifications with all authorities
• Multi-layered approach, including

EMV, tamper-resistant security modules, tokenization, and end-to-end encryption

18

PAYMENT SECURITY IS MORE IMPORTANT THAN EVER

Our security expertise is a major competitive differentiator against recent entrants into the payments business

84% 69%

• f Americans feel retail payment

security factors into decisions about where they shop

are likely to shop at a retailer with the most advanced payment security technology

Source: Wakefield Research

Hackers hit onl

Michaels says nearly 3 million customers hit by data breach

Neiman Marcus Data Breach Worse Than First Said

What is EMV?

• Global Standard for the implementation of

chip cards for the purpose of facilitating an electronic payment transaction

• Born out of transit payment programs based

in Europe

• An effective technology to protect against duplicate card fraud

19

EMV OVERVIEW

VeriFone provides more than 50%

EMV-capable terminals

• f the world’s

85%

• f terminals

shipped by VeriFone

were EMV capable

in the U.S. during the third quarter

20

U.S. EMV RE-TERMINALIZATION & TOTAL ADDRESSABLE MARKET (TAM) INCREASE

U.S. TAM Before EMV Migration U.S. TAM After EMV Migration TODAY:

10 million*

customer-facing point of sale devices (5 million VeriFone) POST MIGRATION: ~3 million*

businesses will require customer-facing POS:

• Hospitality including

restaurants, quick service, fast casual

• Hotels
• Government offices
• Specialty retail

*Source: VeriFone Estimates

30% increase In 2015, fraud liability will shift to U.S merchants not accepting EMV (chip card) payments, causing a re-terminalization of the market and an approximately 30% increase in the total addressable market

21

END-TO-END ENCRYPTION

Store POS Merchant Server Acquirer and/

• r Processor

VeriFone Device

(Data encrypted at card swipe) (Data decrypted at processor)

• VeriShield Protect is the de facto standard for 8 of the top 11 US acquirers, handling

84% of U.S. transaction volume

• 170 US merchants have engaged us to encrypt data at the point of swipe with

VeriFone solutions; executing 600 million transactions in 2013 (69% increase YoY)

VeriFone end-to-end encryption technology protects a merchant’s brand reputation by reducing the potential for data breaches, while also reducing the scope and complexity of PCI compliance

22

TERMINAL SOLUTIONS: A SECURE, SMART, PHYSICAL POINT-OF-SALE

• Certified
• Sleek & Modern
• Simple UI
• Secure
• EMV Capable
• Tablet & Smartphone Integration

Our multimedia and countertop solutions for stationary merchants of all sizes:

MX 925 MX 915 VX 520

23

TERMINAL SOLUTIONS: PORTABLES

VX 675 VX 690

• Our portable payment solutions deliver the extended coverage and

flexibility that merchants need to accept payment anytime, anywhere

• Designed for rugged environments including restaurant and

hospitality, as well as transit and outdoor retail where multiple wireless connectivity options are needed

24

TERMINAL SOLUTIONS: MOBILE POS HARDWARE

• A complete family of mobile payment acceptance systems to turn any

smart device into a secure point of sale

25

POSITIVE MOMENTUM: TERMINAL SOLUTIONS

14 significant clients upgraded to our MX 900 EMV-capable platform; 40,000 terminals to large global retailer Unattended devices first to achieve certification under the latest Interac standards for contactless payment in Canada Signed a deal with Germany’s 2nd largest drugstore chain, ROSSMANN, to deliver thousands of our terminals Portable terminal win with Brazil’s two largest acquirers BNP Paribas selected VeriFone as its supplier for countertop terminal solutions Won tender to provide ~75k countertop, PIN pad, and mobile devices to the world’s largest bank, ICBC

WE ARE PAYMENT AS A SERVICE

Delivering convenient managed services that simplify the complexities of payment.

26

KEY RETAIL TRENDS FORCING SHIFT TO MERCHANT-DRIVEN PAYMENT ENVIRONMENT

Category Trend Retailer Requirement Multi-channel solutions

Retailer uses several channels of selling their products, e.g. physical stores and online Increasing demand for multi-channel payment solutions

Alternative payment methods

A number of new payment methods introduced Acceptance and routing of various payment methods

Customer insights

Customer insights result in competitive advantage and targeted offers increase sales Timely and accurate information

• re. transaction data in easily formats

Technology sourcing

Sourcing payments technology from multiple sources increases operational complexity for merchants Bundled offerings and technology that can be easily integrated

Security/PCI

Increased regulatory requirement (EMV, PCI) and continuous upgrades of security protocol Highest level of security and regulatory compliance

Emerging technologies

Range of emerging payment technologies such as NFC Flexibility to implement new technologies in a cost efficient and timely manner

Payment as a Service reduces much of this complexity and allows merchants to

• utsource all aspects of electronic payments except processing to a trusted partner.

27

PAYMENT AS A SERVICE: BUNDLED HARDWARE & SERVICES, CONNECTED TO A SINGLE PLATFORM

Secure, Single- Server Platform

Terminals Helpdesk & Support Service & Maintenance Value-added Services Software & Applications Security eCommerce Mobile Commerce & Contactless

• Payment as a Service (PaaS) is a

subscription based bundle of services and solutions to retailers

• Includes hardware, software, local

service, and value added solutions

• Provides router capability to connect

to any acquirer/processor

• Security and other features delivered

via cloud – all terminals are connected to our cloud

• Merchants sign multi-year contracts

at a fixed monthly fee

• Multiple service levels to suit

merchants of various types and sizes

• PaaS is not an acquirer, not a

processor

• Brings VeriFone closer to the

merchant and enables suite of commerce enablement

28

29

POSITIVE MOMENTUM: PAYMENT AS A SERVICE

One of Sweden’s largest banks is rolling out a new solution that includes VeriFone’s latest secure hardware for accepting mobile Chip & PIN Continue to expand PaaS footprint in the US – recent wins include Big 5 Sporting Goods, Haverty’s, and Ten Thousand Villages Comprehensive managed services unify payment

• perations and reporting

across retail affiliate of third largest French mobile phone operator Significant market investment; wins with top banks in Australia & New Zealand English Home, a home décor retailer in Turkey, will be rolling out PaaS in

• ver 200 lanes

Providing a leading PaaS solution for quick service restaurant and fast-casual dining markets

WE ARE COMMERCE ENABLEMENT

Creating an open platform that fosters innovation at the point of sale.

30

COMMERCE ENABLEMENT: NEW REVENUE STREAMS

Consumer decision journey

Find merchants Compare merchants Contact / Arrive at store Decide on purchase Pay/receive Loyalty/Decide to return Shop Buy Search Post-visit

Payments and merchant value chains are combining into a single search, shop and buy model. A war is beginning for ownership of these new business

• pportunities.

Payments and commerce are converging

VeriFone has assets (brand, technology, market position) to enter this battle and help our clients sell more and help our clients grow their business.

31

32

COMMERCE ENABLEMENT SNAPSHOT

• 1. Marketing services: Expand our Media/Lift offerings

in select verticals (e.g., taxi, gas station, retail)

• 2. Security: Focus on EMV, tokenization, and

end-to-end encryption

• 3. Retail POS and mPOS: Develop new

manufacturing/distribution partnerships for Clover POS, Global Bay, etc.

• 4. Value-added services gateways: Offer services

such as shopping carts, fraud prevention, etc.

• 5. Online/mobile solutions: Provide a digital

marketplace for merchants to grow

• 6. Loyalty/couponing: Enter online and offline CRM,

coupon and loyalty platform

• 7. Application stores: enabling innovation on our POS terminals
• 8. Analytics and data capabilities: Develop big data and

analytics capabilities

Existing & potential commerce enablement verticals

Transaction Costs (+/-)

WE HAVE FORMED PARTNERSHIPS WITH LEADING CARD BRANDS, WALLET AND ALTERNATIVE PAYMENT PROVIDERS

33

TAXIS, MEDIA & DIGITAL ADVERTISING

Find merchants Compare merchants Contact / Arrive at store Decide on purchase Pay / Receive Loyalty / Decide to return

Shop Buy Search Post-visit

• Tens of thousands of taxis in

major markets handle electronic payment and display advertising for consumers daily

• VeriFone Digital Network (VNET)

streams digital advertising and

• ffers; day-parting and geo-

targeting allow for more targeted content

34

AT-THE-PUMP AND LIFTRETAIL UPSELL SOLUTIONS HELP INCREASE IN-STORE SALES IN U.S. CONVENIENCE STORES

Find merchants Compare merchants Contact / Arrive at store Decide on purchase Pay / Receive Loyalty / Decide to return

Shop Buy Search Post-visit

35

• Media-enabled pumps and LiftRetail stream

unique offers to consumers based on their purchases

• Recently signed deals with Sunoco, Tesoro,

and Citgo for digital media screens at the pump and inside the c-store

• Formed global partnership with Gilbarco

Veeder-Root to provide next generation forecourt payment solutions and to create the largest at-pump interactive media network worldwide

AMEX PAY WITH POINTS

Find merchants Compare merchants Contact / Arrive at store Decide on purchase Pay / Receive Loyalty / Decide to return

Shop Buy Search Post-visit

• Trillions of dollars in

unused points

• 11,000 New York City taxis
• Pay with Membership

Rewards points

36

Position of strength Market position ▪ #1 or #2 in most markets ▪ 20M+ systems installed globally ▪ Strong relationship with major customers across verticals ▪ Present in 150+ countries Brand strength ▪ Highest brand awareness among payment solution providers ▪ High brand perception in providing leading edge payment solutions, security, and driving revenue/growth for customers Technology expertise ▪ Leader in EMV, contactless and security ▪ Deep knowledge of global and regional certification standards and processes ▪ Successful in managing PaaS at scale Our assets will help deliver new experiences at the physical, mobile, and on-line points

• f commerce and

drive new revenue

• pportunities for
• ur clients

37

IN CLOSING, VERIFONE IS POSITIONED TO WIN

INVESTOR RELATIONS CONTACT INFORMATION

Doug Reed

SVP, Treasury & Investor Relations

Christine Marchuska

Manager, Investor Relations Email: ir@verifone.com Phone: 408-232-7979

38

THANK YOU