Digital Turbine, Inc. · NASDAQ:APPS
Digital Turbine — Mandalay Digital Group — Merger or Acquisition (November 2014)
28 slides from Digital Turbine's merger presentation, Nov 17, 2014
Slide 1: Appia Transaction Presentation
Filed by Mandalay Digital Group, Inc. Commission File No. 001-35958 Pursuant to Rule 425 Under the Securities Act of 1933 And Deemed Filed Pursuant to Rule 14a-12 Under the Securities Exchange Act of 1934 Subject Company: Appia, Inc. Appia Transaction Presentation
Slide 2: Safe Harbor Statements
development necessary to maintain the Company’s competitive advantage; the potential for unforeseen or underestimated cash requirements necessary to enable the transaction synergies to be realized, and other risks including those described from time to time in Mandalay Digita filings on Forms 10-K a
Slide 3: Mandalay Digital & Appia: Investment Highlights
Mandalay Digital & Appia: Investment Highlights Capturing window of opportunity to accelerate scale in exploding market • Mandalay Digital and Appia combine to create single, unique, agnostic mobile app and ad ecosystem – Name to change to Digital Turbine • Transforms competitive positioning through
Slide 4: Strategic Rationale: Transformation
Strategic Rationale: Transformation Tremendous opportunity in exploding marketplace* • $38 billion mobile app+ad market expected to grow 25 CAGR% • Smartphones still only 30% of global user base – but growing * • 86% of smartphone users’ time spent in apps • Wireless operators have most to gain and
Slide 5: Combined Company: Peerless, Agnostic Value Proposition
MANDALAY DIGITAL GROUP, INC Premium demand for customers Ignite – IQ Content - Pay 20+ global carrier partners Premium supply of advertisers 250+ publishers 1,000+ campaigns from 150+ advertisers 60 of the Top 100 Grossing Apps Traffic in 200+ countries globally Delivers single app-driven ecosystem
Slide 6: Smart Money to Hold Significant Stake in Company
Smart Money to Hold Significant Stake in Company Deal Structure and Economics • Issuing approximately 19 million shares (assumes CQ1’15 close) • Jud Bowman, CEO Appia • Trident Capital • Venrock • DCM • Noro-Moseley • Wakefield Group • Relay Ventures • Eric Schmidt’s Tomorrow Ventures • Assumption o
Slide 7: Financial Rationale Compelling
Financial Rationale Compelling Financial Profile • Appia recorded $30 million revenue for twelve months ended 9/30/14 • Expected to enhance gross profit and EBITDA profile through revenue and cost synergies • Compelling valuation comps to other similar acquisitions Revenue and cost synergies • Oppor
Slide 8: Pro Forma: Board of Directors and Equity Ownership Structure
Board Composition Post Close Equity Ownership Structure Increased ownership by senior executive/founders and long-term strategic investors Rob Deutschman, Chairman Peter Guber Paul Schaeffer Chris Rogers Jeff Karish Bill Stone Jud Bowman Additional Appia appointee Pro Forma: Board of Directors and E
Slide 9: Appia: #1 Independent App Install Network
Appia:#1 Independent App Install Network Appia crossed 88M sponsored app installs to date in October 2014
Slide 10: Appia works with 150+ Advertisers & Agencies
Appia works with 150+ Advertisers & Agencies, including 60 of the top 100 grossing apps on the App Store and Google Play Appia’s App Install Advertisers (CPI)
Slide 11: Appia partners with 250+ Publishers to monetize their mobile traffic
Appia partners with 250+ Publishers to monetize their mobile traffic Publishers Leveraging the Appia Platform
Slide 12: Appia Advertiser Growth
Appia Advertiser Growth Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 October 2014 +36% from year end and + 1.5x October 2013
Slide 13: Appia CYQ4 2014 Revenue Growth
Appia CYQ4 2014 Revenue Growth Appia CQ 2014 revenue forecast ranges from $8.2M-$9.0M using recent 7 day average, 14 day average, and Quarter to Date trend line * Excludes Appia-Mandalay partnership revenue 14d Avg: $8.2M 7d Avg: $8.5M QTD Trend: $9.0M $0 $20,000 $40,000 $60,000 $80,000 $100,000 $12
Slide 14: Data Science Advertiser Demand Inventory
Data Science Advertiser Demand Inventory Drivers of RTB Success Incremental inventory through: Additional exchange integrations Geographic expansion Algorithm improvements through: Data updates User profiles Creative optimization PhD level math Leveraging existing data: 88M installs 310M profiles 5B
Slide 15: Opportunity to achieve up to $14 million revenue synergies
Opportunity to achieve up to $14 million revenue synergies on all app-installs currently projected to be sourced by third parties • Deal Sourcing – Apps currently sourced three ways: Direct, Appia, and rd Parties – MNDL + Appia consolidates app sourcing to all direct deals • Revenue share – Revenue
Slide 16: Valuation Summary
Valuation Summary • $75mm Enterprise Value – 19mm shares x $3.40 plus $10mm debt • Appia LTM revenue of $30mm • Enterprise Value / LTM revenue = 2.5x • The median of select comparable deals in the vertical is approximately 5-6x LTM revenue – Select comparable transactions include (not limited to): M
Slide 17: Illustrative PF Financial Overview
Illustrative PF Financial Overview $ in millions FYQ2 – 2015 FY – 2015 FY – 2016 Digital Turbine $5.5 $38.0 ¹ $120.0 ¹ Appia $7.9 $31.3 $59.8 ² Revenue Synergies $14.0 ³ Pro Forma Combined Gross Revenue $13.3 $69.3 $193.8 Notes: All numbers are unaudited. Appia figures are preliminary and unaudited.
Slide 18: Appia Opportunity
Appia Opportunity • Appia: #1 Independent App Install Network – Appia crossed 88M+ sponsored app installs to date in October 2014 • 100% Focused on app install ads – 100% non-incentivized with intense focus on driving high LTV installs for Advertisers – 700+ live campaigns for Android, 300+ live cam
Slide 19: Transaction Process
Step Expected Timing Transaction Process Filing s-4 Thanksgiving SEC Feedback Christmas – January MNDL Shareholder Vote 20 business days after SEC clearance Closing Estimated first calendar quarter 2015 • Transformational acquisition expected to close CQ1’15 • Capturing window of opportunity to acce
Slide 20: Digital Turbine
Digital Turbine
Slide 21: Appendix
Appendix
Slide 22: Appia: Partner Self Service Revenue
Appia: Partner Self Service Revenue $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000
Slide 23: Appia: Partner Self Service Growth
Appia: Partner Self Service Growth 1,000 1,500 2,000 2,500 Cumulative Partners Since Launch
Slide 24: Appia: Revs from Chinese Publishers
Appia: Revs from Chinese Publishers $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14(F)
Slide 25: RTB Exchange Integration Roadmap
RTB Exchange Integration Roadmap Volume (qps)
Slide 26: Current Appia Flow
Current Appia Flow Digital Turbine’s Ignite simplifies the conversion flow for app installs from 6 steps to 2 steps, creating an order of magnitude increase in mobile monetization Optimizing User Flow to Increase Performance 1: Open app or mobile web site 2: Click on mobile ad for app install 3: Go
Slide 27: Digital Turbine Ignite Flow
Digital Turbine Ignite Flow 1 2 3 Digital Turbine’s Ignite simplifies the conversion flow for app installs from 6 steps to 2 steps, creating an order of magnitude increase in mobile monetization Optimizing User Flow to Increase Performance
Slide 28: Additional Information
Additional Information Additional Information and Where to Find It In connection with the proposed transaction, Mandalay Digital intends to file with the Securities and Exchange Commission (SEC) a registration statement on Form S-4 that will include a proxy statement and a prospectus. The definitive
Mandalay Digital Group — Merger or Acquisition (November 2014) on 6ix