Usio, Inc. · NASDAQ:USIO
Usio — Payment Data Systems — Investor Presentation (May 2018)
40 slides from Usio's investor presentation, May 22, 2018
Slide 1: Investor Presentation May 2018
Investor Presentation May 2018
Slide 2: Forward looking statements
Forward looking statements These slides and any accompanying oral presentation contain forward-looking information presently available to the Company’s management. The Company statements within the meaning of the Private Securities Litigation Reform Act of disclaims any obligation to update these fo
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 Overview credit, debit/prepaid and ACH payment processing platforms to deliver convenient, world-class payme
Slide 4: Investor Highlights
Investor Highlights PRICE (5/18/18) $1.75 52 WEEK RANGE $1.17 - $4.10 MARKET CAP $28.35 mm SHARES 16.2 mm OUTSTANDING DEBT $0 CASH $3.5 mm 03/31/18 FISCAL YEAR END December 31 Year Founded 1998 Headquarters San Antonio, TX & office in Franklin, TN Number of Employees 33 Website www.paymentdata.com 5
Slide 5: Investor Highlights
Investor Highlights • NACHA (National Automated Clearing House • Positive adjusted EBITDA¹. Association) Certified – Meeting the standards for sounds practices relative to ACH • Blue chip customers; laser focus on three main payment processing. vertices with consistent payment streams (healthcare, r
Slide 6: Public Peer Analysis
Public Peer Analysis PRICE MARKET ENTERPRISE EV/REV COMPANY TICKER REVENUE 2017 5/2/2018 CAP VALUE 2017 FIRST DATA CORP. FDC $18.01 $16.8 B $32.7 B $7.4 M 4.4 TOTAL SYSTEM SERVICES TSS $83.25 $15.13 B $18.7 B $3.4 M 5.5 GLOBAL PAYMENTS INC. GPN $112.57 $17.95 B $21.5 B $3.5 M 6.1 SQUARE INC. SQ $48.
Slide 7: 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 Analysis Processing
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 5/21/2018 Payment Data Systems | paymentdata.com 8
Slide 9: Sample Revenue Model
Sample Revenue Model Credit Card Acceptance - $100 Sale Processing Merchant Interchange Fee Card Brands Network Fee Net Spread Discount Rate 2.15% .11% + $.02 $.08/txn .48% 2.75% In a credit card or debit The MDR is the rate charged This is the fee paid to the After all costs Dues and Assessments ca
Slide 10: Revenue Components
Revenue Components Electronic Bill Presentment & Payment (EBPP) Card Mail Payments Flat % fee is charged against all The cost for mail is job $1 + 3% - 5% card payment volume dependent and is in addition processed to a postage pass-thru ACH/ eCheck Flat $ amount is charged for A fee is applied for a
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 5/21/2018 Payment Data Systems | paymentdata.com 11
Slide 12: Market Sizing
Tomorrow Today 10x increase Market Sizing Industry research shows that 3B+ 30B “payment enablement” of software cards ways to pay platforms and “internet connected” devices will dramatically expand the size of the payment landscape and growth opportunities over the next decade. 44M 400M Source: Visa
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
• 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.) ACH Payment Summary • Late in 2017 PDS became only the 2nd processor to be NACHA Investment Highlights Certified, the firs
Slide 15: Digital card platform
Digital card platform, period. And, the first gift and incentive card available on Apple Pay, Android Pay, and Samsung. 5/21/2018 Payment Data Systems | paymentdata.com 15
Slide 16: Prepaid Card Services
Custom Prepaid Program Management – True Processor • Allows companies to launch their own next-generation Prepaid Card prepaid card solution Incentive, Promotional and Disbursement Cards Services • A fully digital way to send cards instantly by email or text, 90% cheaper than plastic cards, first pr
Slide 17: Innovative Digital Platform
Innovative 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 5/21/2018 Payment Data Systems | paymentdata.com 17
Slide 18: There's Really a Prepaid Card for Everything!
There’s Really a Prepaid Card for Everything! Refunds & Per Loan Sales Rebates Diems Disbursements Incentives Customer Corporate Insurance Employee Rewards Expenses Payments Appreciation Sales Contractor Focus Group Referral Promotions Payments Payments Rewards 5/21/2018 Payment Data Systems | payme
Slide 19: Sample Prepaid Clients
Sample Prepaid Clients 5/21/2018 Payment Data Systems | paymentdata.com 19
Slide 20: Payment Facilitator Model
Payment Facilitator Model 5/21/2018 Payment Data Systems 20
Slide 21: 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 22: Upstream 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 sales $3k/month sales volume volume 5/21/2018 Payment Data Systems 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 5/21/2018 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 5/21/2018 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. 5/21/2018 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% + $0.30 2.9% + $0.30 3.5% + $0.15 3% + $0.12 $0.00 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) 5/21/2018 Payment Data Systems | paymentdata.com 28
Slide 29: PayFac Model
PayFac Model 5/21/2018 Payment Data Systems | paymentdata.com 29
Slide 30: Growth Strategies
Growth Strategies Organic Strategic M&A 1. Expand ACH banking relationships 1. Acquire accretive credit card processing portfolios 2. Continuous innovation of our payment processing platform 2. Acquire companies that have complimentary or differentiated 3. Increase brand-awareness for products and s
Slide 31: Revenue Run Rate
Revenue Run Rate $30.00 *USD millions $25.00 $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) 5/21/2018 Payment Data Systems 31
Slide 32: Transactions Processed per year
Transactions Processed per year 3500 3300 16 Millions 2978 2916 3000 2830 14 2500 12 10 2000 8 *Over $2.8 1500 6 Billion dollars processed in 1000 4 630 2017 and over 500 2 10.8 million in 0 0 transactions 2013 2014 2015 2016 2017 Dollars Processed Transactions Processed 5/21/2018 Payment Data Syste
Slide 33: 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 $22 million Summary • Recurring revenues and attra
Slide 34: Management team
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 Houston Frost Senior Vice President, Prepaid Services 5/21/2018 Payment Data Systems
Slide 35: Appendix
APPENDIX 5/21/2018 Payment Data Systems | paymentdata.com 35
Slide 36: 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 37: 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 38: 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 5/21/2018 Payment Data Systems | paymentdata.com 38
Slide 39: 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 40: Non-GAAP Reconciliation
Non-GAAP Three Months Ended Twelve Months Ended Reconciliation December 31, December 31, December 31, December 31, 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
Payment Data Systems — Investor Presentation (May 2018) on 6ix