VERIFONE INVESTOR RELATIONS PRESENTATION September 2014 2
COMPANY OVERVIEW 3
VERIFONE TODAY: FACTS AND FIGURES ~150 #1 or #2 20M + Active Countries In Most Markets Systems Installed Globally 37% ~5,400 37% ~ $1.86B Employees Revenue From Services Guidance For FY14 4
GLOBAL LEADERSHIP TEAM Paul Galant Marc E. Rothman Albert Liu Alok Bhanot Chief Executive Officer EVP, Chief EVP, Corporate Dev. EVP, Chief Financial Officer & General Counsel Technology Officer Jennifer Miles June Yee Felix Bulent Ozayaz Sunil Kappagoda President, VeriFone President, President, Pres., VeriFone So. Europe, Asia Pacific and EVP, Russia, Middle East & Africa VeriFone Americas VeriFone Europe Corporate Strategy Vin D’Agostino Bill Nelson Vincent Roland Amos Tamam Todd Shaw EVP, SVP, Global Services SVP, Global Business SVP, SVP, Chief Human Global Terminal Solutions Solutions Development Taxi Systems Resources Officer 5 Represents leadership additions since January 2013
LEADERSHIP TEAM ADDITIONS Bill Nelson , Paul Galant , EVP, Global Product CEO Joined October 2013 Joined October 2013 Formerly of Nuance, EMC, AT&T, Former CEO, Citi Enterprise Payments SunGard Vin D’Agostino , Marc Rothman , SVP, Global Business Development CFO Joined January 2014 Joined February 2013 Former Head of Payment Strategy, Former CFO, Motorola Mobility JPMorgan Chase Sunil Kappagoda , June Yee Felix , President, VeriFone Asia Pacific & President, VeriFone Europe EVP, Strategy Joined May 2014 Joined July 2013 Former Managing Director of Citi Former Senior Partner, Boston Consulting Enterprise Payments Group Todd Shaw , Alok Bhanot , SVP, Chief Human Resources Chief Technology Officer Officer Joined December 2013 Joined August 2014 Formerly of Inkiru, Visa, PayPal, eBay Former VP of Human Resources, PayPal 6
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. 7
BECOMING THE COMPANY WE WANT TO BE Our clients’ most trusted, secure and A “client - first” company innovative partner Operationally excellent Globally optimized operating model Clearly articulated, next chapter growth strategy focused on Payment-as-a-Service Strategically focused and Commerce Enablement Simplified organizational structure to be built around three global product businesses: Properly organized Terminal Solutions; Payment-as-a-Service; and Commerce Enablement A leader with a single, Single, global VeriFone culture focused on becoming ‘The Company We Want To Be’ distinct culture 8
EXECUTING ON THE TOP 3 VERIFONE INITIATIVES What we’ve achieved What’s still to be done ▪ Reduced SKUs from over 1,000 ▪ ~500 total SKUs by calendar Product Portfolio to ~525 year end Management ▪ Reduced core operating ▪ Migrate our multiple operating systems from 13 to 8 systems to our single next R&D ▪ Launched development of a generation platform Re-Engineering ▪ Continue consolidation of R&D single next generation platform sites to centers of excellence ▪ Consolidated 9 R&D locations ▪ Reduced headcount by ~375 ▪ Reduce core headcount by ~125 ▪ Liquidate additional 6 legal ▪ Closed 14 facilities; goal met entities ▪ Liquidated 13 legal entities out of ▪ Consolidate 20% of data centers Cost Optimization 132 9
OUR BUSINESS OUTLOOK 10
THREE MACRO FORCES ARE DRIVING THE SHIFT FROM PAYMENTS TO COMMERCE… Devices Networks The Cloud More people have smart Evolving to enable delivery of Consumer data and purchase phones than bank accounts rich content such as video history will increasingly reside and instant contextual in the cloud allowing Consumers’ increasing targeting almost everywhere merchants to create more demand for mobile payments, relevant offers and engage Cost of data is quickly loyalty, coupons, etc. with consumers in more decreasing, enabling meaningful ways ‘always - on’ data computing and analysis 11
…WHICH IS DRIVING CHANGE AND OPPORTUNITY AT BOTH ENDS OF THE VALUE CHAIN… Traditional Wallets and Cards Traditional POS Hardware Access Issuer Acquirer Access Issuer Network Acquirer device Processor Processor device Consumer Merchant Laptops Mobile Card Mobile Wallets Payment Tablet POS Other Non-Traditional Readers and Phones Apps Software Access Points 12
… AND CHANGING THE WAY CONSUMERS SEARCH, SHOP AND BUY Buy Post-visit Search Shop Compare Contact / Decide on Pay / Loyalty / Find merchants merchants Arrive at store purchase Receive Decide to return Consumer Efficient search Product availability Real-time offers Compare prices Redeem offers Accrue points Needs & points Relevant offers Social reviews Get advice Share with Complete friends Offer comparison Browse competitor payment offerings Access credit Merchant Targeted ads & Price, info & Know when Cross-sell Receive funds Drive repeat Needs offers offer delivery consumer is in visits Promote high Redeem offers & the store margin items points Refine targeting Know what they Store data are looking for Assess risk 13
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 Subscription-based, Building out commerce in physical terminals (hardware comprehensive service bundles enablement platforms that and apps) and robust services to simplify payments for position us at the forefront at the around terminal repair and merchants shift from payment to commerce management Includes cloud-based value- Allows VeriFone to offer new Continue to invest and innovate added services (security, services that will help merchants in this area to provide leading reporting, multi-channel grow their businesses and edge, certified terminal acceptance, etc.) strengthen their relationships with solutions consumers 14
WE ARE TERMINAL SOLUTIONS Delivering the latest hardware, software, security and services 15
TERMINAL PRODUCT STRATEGY PRINCIPLES Key product principles to align with VeriFone’s strategic direction Simple, common, modular and global platforms – with a common operating 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 16
EMERGING MARKET OPPORTUNITIES Q3 FY 2014 LTM VeriFone has an enviable footprint, with 38% of revenue from USA emerging markets economies Emerging 27% Markets and is well positioned to benefit 38% from growing opportunities Other Developed Conversion to electronic payments Markets 35% 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 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. 17
PAYMENT SECURITY IS MORE IMPORTANT THAN EVER Our security expertise is a major competitive differentiator against recent entrants into the payments business Hackers hit onl Established company and trusted security advisor Security experts active on PCI Council Neiman Michaels says and other industry organizations that Marcus nearly 3 million Data Breach address payment security concerns customers hit Worse Than by data breach Industrial strength security solutions First Said Full certifications with all authorities of Americans feel retail payment Multi-layered approach, including 84% security factors into decisions EMV, tamper-resistant security about where they shop modules, tokenization, and are likely to shop at a retailer end-to-end encryption 69% with the most advanced payment security technology Source: Wakefield Research 18
EMV OVERVIEW 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 more than 50% 85% VeriFone of terminals provides shipped by VeriFone of the world’s in the U.S. during the third quarter EMV-capable terminals were EMV capable 19
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