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SeeThruEquity & The Brewer Group Investor Conference February - - PowerPoint PPT Presentation

powering global commerce SeeThruEquity & The Brewer Group Investor Conference February 22, 2016 Net Element | Disclaimer Forward-looking statements. Use of Non-GAAP financial measures This presentation and comments made by management contain


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SeeThruEquity & The Brewer Group Investor Conference

February 22, 2016

powering global commerce

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www.netelement.com 2

Net Element | Disclaimer

Forward-looking statements. Use of Non-GAAP financial measures

This presentation and comments made by management contain forward-looking statements including, among others, statements regarding the expected future operating results of Net Element, Inc. (“Net Element” or the “Company”). These statements are based on management’s current expectations and assumptions and are subject to risks, uncertainties and changes in circumstances. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions. Actual results may differ materially from those set forth in the forward-looking statements due to a variety of factors. More information about these risks, uncertainties and factors may be found in Net Element’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Net Element does not assume any obligation to update any forward-looking statements as a result of new information, future developments or

  • therwise.

This presentation contains certain non-GAAP financial measures determined by methods other than in accordance with generally accepted accounting principles. Such non-GAAP financial measures include: general and administrative expense before non-cash compensation expense. Management uses these non-GAAP financial measures to assess the performance

  • f Net Element’s core business. Net Element believes that these non-GAAP financial measures provide meaningful additional

information about Net Element to assist investors in evaluating Net Element’s operating results. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titledmeasures ofother companies.

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www.netelement.com 3

Net Element | Overview

Emerging as a leader in mobile payments and transactional services

§

Net Element, Inc. (NASDAQ: NETE)

§

$21.2 million Revenue in FY2014

§

$25.2 million for Nine Months ended Sept 30, 2015

  • (59.9% growth year-over-year)

§

Active in 9 markets

  • U.S., Canada, Europe, Asia, Russia, Kazakhstan,

Kyrgyzstan, Azerbaijan, UAE

§

Leading positions in online and mobile payments

§

Highly active in world’s fastest growing markets

§

150 people including 30 IT engineers Global financial technology company specializing in mobile payments and value-added transactional services in the U.S. and fast growing emerging markets.

  • 100+ payment

methods in 50 countries

  • 161 million

transactions processed in 2015

  • Processing volume of

$1.8 billion in 2015

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www.netelement.com 4

Net Element | Overview

Emerging as a leader in mobile payments and transactional services

Who is Net Element? Our Mission and Vision

  • Emerging leader in mobile payments, transactional

and value-added services

  • Growth drivers: mobile commerce and value-added

transactional services (“VAS”)

  • Key differentiators: Our scalable operational

infrastructure, commerce expertise, scalable mobile payments platform, world-class cloud infrastructure and emerging market presence

  • Mission: We drive customer growth through our in-

depth knowledge of transactional services and value- added service offerings which separate us from the competition

  • Vision: We set the standard for mobile payments,
  • nline transaction acceptance, Person-to-Person

(“P2P”) transactions and value-added service offerings with focus on creation of unified global transaction acceptance ecosystem

  • Continued investment in our core technology and new

product offerings

  • Allocate resources and expertise to grow in commerce

and payments segments

  • Strategic acquisitions which complement our core

strategy

  • Focus on continued improvement and operation

excellence

  • Market is large and moving to where we have strength
  • Global customer expansion and strong growth in

payment acceptance

  • Ride the wave of the growing mobile payments

market: Deloitte predicted 1,000% growth in mobile payments in 2015

Who is Net Element? We Have a Focused Strategy Our Mission and Vision Our Opportunity is Significant

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www.netelement.com 5

Growth Drivers | Focus on 3 areas

Combination of all devices and technologies for multi-channel payments acceptance

Mobile Payments Direct Carrier Billing Point of Sale Solutions Payment Acceptance Value-Added Transactional Services

§ Mobile Payments

  • Carrier integrated solutions
  • Premium SMS
  • In-app purchases
  • WAP/Internet click payments

§

Point of Sale Solutions

  • Cloud-based mPOS solution
  • iOS-based self-serve kiosk
  • Digital menu

§

Payment Acceptance

  • Proprietary platform
  • Retail POS acceptance
  • Card not present acceptance
  • Mobile payments acceptance
  • Multiple payment methods
  • PCI DSS Level 1, SSL 3.1

Security

GROUP

11 million+ online payment acceptance customers 3 million+ recurring mobile payments users 90 million mobile transactions processed in 2015 71 million bankcard transactions processed in 2015

TRINITY

PLATFORM

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www.netelement.com 6

Growth Drivers | One-Stop Solution

Bringing together the best payment solutions

§ Complete Solution

Combines e-commerce, retail POS, comprehensive back office tools, mPOS, credit scoring and customer interaction in one powerful technology

§

Integration

APIs and connectors allow integration and customization. Our tools allow for easy integration and our SDK toolkit for building native apps for our omni- channel platform

§

Enabling Global Commerce

Our payment infrastructure and services are globally oriented, but adapted to each country’s unique requirements

11 million+ online payment acceptance customers 3 million+ recurring mobile payments users 161 million transactions processed in 2015 Processing volume of $1.8 billion in 2015 OMNI-Channel Processing

w O S E c

Merchant

Merchant Account Payment Gateway Risk Compliance

  • Consumer

Account Card Issuing

  • Consumer
  • 100+

PAYMENT SOLUTIONS

WITH

  • 1 Integration APIs
  • 1 Back Office
  • 1 Settlement
  • 1 Dedicated Team
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www.netelement.com 7

Growth Dynamics | United States

United States merchant strategy

United States

51.2 million bankcard transaction in 2015

(45% year-over-year growth in transactions)

  • Over 10,000 SME merchants
  • Over $1 billion in volume processed in 2015
  • Avg. annual revenue $1,800 per merchant
  • Average upfront Cost Per Acquisition $228
  • Increased revenue per merchant for value

added services $240 per annum

Features: Apple Pay; Android Pay; NFC enabled; Mobile card readers; Secure & reliable; 24/7 service Value-add services: shopping cart; rewards and loyalty programs; back office tools; inventory management; credit scoring; analytical dashboard Partners include top brands

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www.netelement.com 8

Growth Dynamics | CIS

Mobile payments strategy

Features: Premium SMS; Direct operator billing; WAP automated phone; Web billing; in-app billing Value-add services: content management gateway; SMS gateway; API integration; short code number procurement; analytical dashboard Partners include top brands

Russian Federation and CIS

90 million mobile transactions in 2015

(106% year-over-year growth in transactions)

  • Over 3 million mobile payment users
  • Over 100 content providers use TOT Money
  • Ranked as #1 SMS content provider in Russia
  • Avg. subscription annual billings ~$12 per user
  • Mobile payment users increased by 300%

year-over-year

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www.netelement.com 9

Growth Dynamics | Emerging Markets

Online payments strategy

Features: E-commerce gateway; E-wallet; Mobile in-app payments SDK; PCI DSS level 1 security; P2P transfers Value-add services: shopping cart; GDS’ merchant plug-in; fraud monitoring; back office tools; credit scoring; BIN and IP scrubbing; analytical tools Partners include top brands

Emerging Markets

19.5 million online transactions in 2015

(36% year-over-year growth in transactions)

  • Over 11 million online payment users
  • Over 3,000 merchants in CIS, EU and Asia
  • #1 IPSP in Russia, 30% market share
  • According to Forbes, 20% of leading online

merchants in Russia are clients of PayOnline

  • Approx. 40% of revenue is in EUR€ / US$
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www.netelement.com 10

Our Clients | Center of Our Success

Growing portfolio of international clients

According to Forbes, 20% of leading e-Commerce merchants in Russia use PayOnline platform to accept payment transactions in Russia, Europe and Asia.

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www.netelement.com 11

Net Element | Financial Snapshot

Selected Income Statement Data (Nine Months Ended Sept 30, 2015)

Sources of Revenues Nine Months Ended September30, 2015 Mix Nine Months Ended September30, 2014 Mix Increase / (Decrease)

US Transaction Processing $19,275,885 77% $ 14,234,253 90% $ 5,041,632 Mobile Payments 3,489,550 14% 1,548,222 10% 1,941,328 Online Payments 2,356,815 9%

  • 0%

2,356,815 Total $ 25,122,250 100% $ 15,782,475 100% $ 9,339,775

Cost of Revenues

US Transaction Processing $ 16,543,190 86% $ 11,690,214 82% $ 4,852,976 Mobile Payments 2,786,984 80% (98,779)

  • 6%

2,885,763 Online Payments 1,457,042 62%

  • 0%

1,457,042 Total $ 20,787,216 83% $ 11,591,435 73% $ 9,195,781

Gross Margin

US Transaction Processing $ 2,732,695 14% $ 2,544,039 18% $ 188,656 Mobile Payments 702,566 20% 1,647,001 106% (944,435) Online Payments 899,773 38%

  • 0%

899,773 Total $ 4,335,034 17% $ 4,191,040 27% $ 143,994

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www.netelement.com 12

Net Element | Financial Snapshot

Selected Income Statement Data (Three Months Ended Sept 30, 2015)

Sources of Revenues Three Months Ended September30, 2015 Mix Three Months Ended September30, 2014 Mix Increase / (Decrease)

US Transaction Processing $ 7,826,967 62% $ 5,565,633 92% $ 2,261,334 Mobile Payments 2,795,484 22% 461,328 8% 2,334,156 Online Payments 2,052,672 16%

  • 0%

2,052,672 Total $ 12,675,123 100% $ 6,026,961 100% $ 6,648,162

Cost of Revenues

US Transaction Processing $ 6,489,695 83% $ 4,764,144 86% $ 1,725,551 Mobile Payments 2,758,590 99% (46,289)

  • 10%

2,804,879 Online Payments 1,457,042 71%

  • 0%

1,457,042 Total $ 10,705,327 84% $ 4,717,855 78% $ 5,987,472

Gross Margin

US Transaction Processing $ 1,337,272 17% $ 801,489 14% $ 535,783 Mobile Payments 36,894 1% 507,617 110% (470,723) Online Payments 595,630 29%

  • 0%

595,630 Total $ 1,969,796 16% $ 1,309,106 22% $ 660,690

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www.netelement.com 13

Net Element | Growth Strategy

We build strong partnerships with customers over time

$0 $20 $40 $60 $80 $100 $120 2013 2014 2015 2016 2017

Starts with single piece of business

  • Single product
  • Single country

Single marketing

  • Non-core business

divestiture Infrastructure stabilization

  • Additional products
  • Technology focus
  • Additional geography

exploration

  • Restructuring
  • Marketing expansion

Strong partnership development

  • Additional products
  • Additional geographies
  • Growth financing
  • New capabilities
  • Strategic Acquisitions

Growth Mode

  • Additional products
  • Growth stabilization
  • Geography expansion

Segment Leadership

  • YOY Growth
  • Focus on profitability
  • Focus on sustained

growth

Revenue in Millions $USD

Net Element approaches payments from a broader, holistic, global view of commerce. Our objective is to become an emerging leader in mobile payments and value-added transactional services in the emerging global markets. Pay anywhere using mobile, online or traditional card present methods.

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www.netelement.com 14

Investment Highlights

What makes Net Element special

  • 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 ten years and continues to climb

  • Merchant locations accepting credit cards continue to grow

Large & Growing Industry

  • Focused on fast growing and highly profitable market segments
  • Proved transactional business in the US and selected emerging markets
  • Provides diverse, low-risk, recession proved recurring revenue stream
  • Strong established customer & partner base

Viable Business Model

  • Resilient business with strong recurring revenue, diversified customer base and

good visibility

  • Full front and back office operations including risk, underwriting, deployment,

activation, client services, data entry and retention

  • Significant, untapped opportunities for expansion and growth

Resilient Operating Leverage

  • Proven track record of scaling businesses and delivering shareholder value
  • Proven achievements in new product launch
  • Proven achievements in new market development and establishing market

presence

  • Relentless focus on value creation and growth

Proven Management Team

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  • Q&A

Questions & Answers Net Element provides global solutions for mobile payments, online payments and value-added transactional services

Net Element, Inc. 3363 NE 163rd Street, Suite 705 North Miami Beach, FL 33160 +1 305-507-8808 +1 786-272-0696 info@netelement.com www.netelement.com