Usio, Inc. · NASDAQ:USIO
Usio — Payment Data Systems — Investor Presentation (July 2018)
40 slides from Usio's investor presentation, Jul 9, 2018
Slide 1: July 2018 Investor Presentation
July 2018 Investor Presentation
Slide 2: Forward looking statements
Forward looking statements These slides and any accompanying oral presentation contain forward- information presently available to the Company’s management. looking statements within the meaning of the Private Securities The Company disclaims any obligation to update these forward- Litigation Reform
Slide 3: Overview
Payment Data Systems is a leading integrated payment solutions provider, offering a wide range of payment solutions to merchants, billers, banks, service bureaus, and card issuers. We operate credit, Overview debit/prepaid and ACH payment processing platforms to deliver convenient, world-class payme
Slide 4: Investor Highlights
Investor Highlights PRICE (7/5/2018) $1.69 52 WEEK RANGE $1.21 - $4.10 MARKET CAP $26.8 M SHARES 16.2 mm OUTSTANDING DEBT $0 CASH $4.8 mm 12/31/17 FISCAL YEAR END December 31 Year Founded 1998 Headquarters San Antonio, TX & office in Franklin, TN Number of Employees 33 Website www.paymentdata.com 4
Slide 5: Investor Highlights
Investor Highlights • NACHA (National Automated • Blue chip customers; laser focus on Clearing House Association) Certified three main vertices with consistent – Meeting the standards for sounds payment streams (healthcare, real estate, practices relative to ACH payment utilities). processing. • Sus
Slide 6: What We Do
What We Do ACH Credit Card Prepaid Card Electric Bill Processing Processing Issuing Presentment& Payment (EBPP) • ACH Origination • Credit/Debit • General Purpose • Account Card Processing Reloadable • Electronic Bill Verification • Debit Card ONLY • Corporate Delivery • Account Processing Incentive
Slide 7: Core Offerings – Products & Brands
Core Offerings – Products & Brands Industry Integrated Simple, Flat Innovation in Prepaid Leader in ACH Software Rate Credit Prepaid Card Card Processing Payment APIs Card Solutions Provider & Processing Program Manager 7/9/2018 Payment Data Systems | paymentdata.com 7
Slide 8: Revenue Model: How We Make Money
Revenue Model How We Make Money ACH Credit Card Prepaid Card Processing Processing Issuing We get paid per We get paid a % of Service Fees + transaction Card Volume Network Interchange Revenue 7/9/2018 Payment Data Systems | paymentdata.com 8
Slide 9: Sample Revenue Model
Sample Revenue Model Credit Card Acceptance - $100 Sale Merchant Interchange Card Brands Processor Fee Net Spread Discount Fee 2.15% .11% + $.02 $.08/txn .48% Rate 2.75% The MDR is the rate This is the fee paid to Dues and In a credit card or After all costs associated charged to a merchant the bank
Slide 10: Revenue Components
Revenue Components Electronic Bill Presentment & Payment (EBPP) The cost for mail is job Card Flat % fee is charged Mail against all card payment dependent and is in $1 + Payments volume processed addition to a postage pass- 3% - 5% thru ACH/ Flat $ amount is charged A fee is applied for all bills E
Slide 11: Built for Scale
Built for Scale < Card processing volume > < Card processing volume > Top Line Revenue Growth Contribution Margin for every $1MM x 2.65% = $26,500 = .50% x $1MM = $5,000 7/9/2018 Payment Data Systems | paymentdata.com 11
Slide 12: Market Sizing
Tomorrow Today 10x increase Market Sizing Industry research shows 3B+ 30B that “payment enablement” cards ways to pay of software platforms and “internet connected” devices will dramatically expand the size of the 44M 400M payment landscape and merchant locations ways to pay growth opportunities ove
Slide 13: ACH Transaction Flow
ACH Transaction Flow ACH payments are electronic payments that are created when the customer gives an originating institution, corporation, or other customer (originator) authorization to debit directly from the customer's checking or saving account for the purpose of bill payment. Overall volume in
Slide 14: ACH Payment Summary Investment Highlights
• Strong sales pipeline which should result in improved revenues for the rest of 2018 • Launched Same Day ACH Debits in September 2017 (ideal for urgent bill pay, payroll, etc.) • Late in 2017 PDS became only the 2nd processor to be NACHA Certified, the first was TeleCheck ACH Payment Summary Invest
Slide 15: Digital card platform
Digital card platform, period. And, the first gift and incentive card available on Apple Pay, Android Pay, and Samsung. 7/9/2018 Payment Data Systems | paymentdata.com 15
Slide 16: Custom Prepaid Program Management
Custom Prepaid Program Management – Prepaid Card True Processor • Allows companies to launch their own next-generation Services prepaid card solution Incentive, Promotional and Disbursement Cards • A fully digital way to send cards instantly by email or text, 90% cheaper than plastic cards, first pr
Slide 17: Innovated Digital Platform
Innovated Digital Platform Deliver cards Card is immediately available Cards can be instantly by text Customer online or with Apple Pay, branded with or email collects card Android Pay & Samsung Pay logos 7/9/2018 Payment Data Systems | paymentdata.com 17
Slide 18: There's Really a Prepaid Card for Everything
Refunds & Per Loan Sales Rebates Diems Disbursements Incentives There’s Really a Prepaid Card for Everything! Customer Corporate Insurance Employee Rewards Expenses Payments Appreciation Sales Contractor Focus Group Referral Promotions Payments Payments Rewards 7/9/2018 Payment Data Systems | paymen
Slide 19: Sample Prepaid Clients
Sample Prepaid Clients 7/9/2018 Payment Data Systems | paymentdata.com 19
Slide 20: PayFac Competitive Value Proposition
▪ Merchants rely on software to run their business, and increasingly to facilitate payment acceptance ▪ The future of payments is integrated!! PayFac Competitive ▪ PayFac does away with all the disparate systems in billing and streamlines the process of on- boarding customers (lengthy paper Value Pr
Slide 21: Payment Facilitator Model
Payment Facilitator Model 7/9/2018 Payment Data Systems | paymentdata.com 21
Slide 22: Retail and Virtual Payments
Upstream $30k+ monthly processing volume - Retail and Virtual Payments In-store On-line Retail Micro Ecommerce Micro merchants = merchants = $3k/month $3k/month sales sales volume volume 7/9/2018 Payment Data Systems 22 7/9/2018 Payment Data Systems | paymentdata.com 22
Slide 23: Key Differentiators
Key Differentiators Frictionless onboarding and enrollment Integrated payments into everyday solutions Mitigating double data entry Streamlined back office efficiencies Full bill presentment and payment solution 7/9/2018 Payment Data Systems | paymentdata.com 23
Slide 24: Growth Opportunity – Integrated Software Vendors
Growth Opportunity – Integrated Software Vendors (ISV’s) The U.S. has tens of < +122% / > Thousands of ISVS According to TSG’s database of The U.S. market holds a treasure 3.5 million merchants, trove of ISVs that are sought after processing through ISV by merchant acquirers for relationships grew 1
Slide 25: Our Vertical Focus
Our Vertical Focus Healthcare Insurance Utility/Government Other Bill Pay Verticals Property Management 7/9/2018 Payment Data Systems | paymentdata.com 25
Slide 26: Integration Environment
Integration Environment Software providers are able to access needed payment solutions and technology through the PDS “Integration Layer”, providing for the most seamless, user-friendly, and cost-effective payment acceptance experience. 7/9/2018 Payment Data Systems | paymentdata.com 26
Slide 27: Competitive Landscape
Competitive Landscape Setup Cost $0 $0 $0 $0 $0 Monthly Cost $0 $0 $0 $0 $0 Transaction Fees 2.9% + 2.9% + $0.30 3.5% + $0.15 3% + $0.12 $0.00 $0.30 Total Monthly Cost $117 $117 $120 $102 $87 Effective Rate 3.90% 3.90% 4% 3.4% 2.89% FLAT Prepaid X X X X ACH X 0.8% · $5 cap X $0.37 $0.15 - $1.00* Bat
Slide 28: Traditional Customer Acquisition Model (ISO)
Traditional Customer Acquisition Model (ISO) 7/9/2018 Payment Data Systems | paymentdata.com 28
Slide 29: PayFac Model
PayFac Model 7/9/2018 Payment Data Systems | paymentdata.com 29
Slide 30: Growth Strategies
Growth Strategies Organic Strategic M&A 1. Expand ACH banking 1. Acquire accretive credit card relationships processing portfolios 2. Continuous innovation of our 2. Acquire companies that have payment processing platform complimentary or differentiated products and services 3. Increase brand-awaren
Slide 31: Transactions Processed per year
Transactions Processed per year 3500 3300 16 Millions 2978 2916 3000 2830 14 2500 12 10 2000 8 1500 *Over $2.8 6 Billion dollars 1000 630 4 processed in 500 2 2017 and over 10.8 million in 0 0 transactions 2013 2014 2015 2016 2017 Dollars Processed Transactions Processed 7/9/2018 Payment Data System
Slide 32: Revenue Run Rate
Revenue Run Rate $25.00 *USD millions $24.00 $20.00 $14.38 $14.57 $15.00 $13.40 $12.08 $10.00 $7.34 $5.18 $5.00 $- 2012 2013 2014 2015 2016 2017 2018 Revenue Run Rate (Million) 7/9/2018 Payment Data Systems | paymentdata.com 32
Slide 33: Management
Management Louis A. Hoch, Co-founder, Vice-Chairman, Chief Executive Officer, COO 25 years of senior management experience, expert in payment processing and service bureau operations. Previously co-founded Billserv, Inc., (the industry leader in Electronic Bill Presentment and Payment, acquired by A
Slide 34: Management
Management Tom Jewell, CPA, Senior Vice President, Chief Financial Officer 35 years of business leadership experience focused on management, auditing, accounting, internal controls, and finance. Founder of LTJ Financial Consulting, formerly served as CFO for a multi-state photography studio chain, p
Slide 35: Appendix
APPENDIX 7/9/2018 Payment Data Systems | paymentdata.com 35
Slide 36: Balance Sheet Highlights
USD Millions Account 12/31/17 Cash $4.8 Balance Sheet Restricted cash & Settlement funds $53.0 Total Assets $67.4 Highlights Short-term/long-term debt - Total Liabilities $54.3 Total Equity $13.1 ~$41 million in unused tax NOL carry-forward 7/9/2018 Payment Data Systems | paymentdata.com 36
Slide 37: Income Statement Highlights
Income Statement Highlights USD Millions Q4 2017 Annual 2017 Revenues $5.6 $14.6 Cost of sales 4.3 10.8 Gross Profit $1.3 $3.7 SG&A 1.9 4.3 Depreciation & Amortization .4 1.3 Income tax benefit (expense) (0.2) (.3) Net Loss $(1.3) $(3.0) Adjusted EBITDA $(274k) $(611k) See Non-GAAP Reconciliation in
Slide 38: Non-GAAP Reconciliation
Non-GAAP Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, Reconciliation 2017 2016 2017 2016 Reconciliation from Operating Income (Loss) to Adjusted EBITDA: Operating Income (Loss) $(1,073,942) $ (284,043) $ (2,837,016) $ (1,360,573) Depreciation and amortiz
Slide 39: Summary
• Established provider of ACH and credit card payment processing in niche verticals • Credit card transaction processing volumes continue to be at highest levels in the history of the company • Record last quarter $5.6MM – annual revenue run rate of $24 million Summary • Recurring revenues and attra
Slide 40: Louis Hoch Co-founder, Vice-Chairman, President, Chief Executive Officer, Chief Operating Officer Vaden Landers Senior
Louis Hoch Co-founder, Vice-Chairman, President, Chief Executive Officer, Chief Operating Officer Vaden Landers Senior Vice President, Chief Revenue Officer Tom Jewell Senior Vice President, Chief Financial Officer 7/9/2018 Payment Data Systems | paymentdata.com 40
Payment Data Systems — Investor Presentation (July 2018) on 6ix