Digital Turbine, Inc. · NASDAQ:APPS
Digital Turbine — Mandalay Digital Group — Investor Day (July 2014)
64 slides from Digital Turbine's investor day presentation, Jul 9, 2014
Slide 1: Mandalay Digital Group, Inc. Investor Day Presentation
Mandalay Digital Group, Inc. Investor Day Presentation July 9, 2014
Slide 2: Safe Harbor Statements
Safe Harbor Statements. Statements in this presentation concerning future results from operations, financial position, economic conditions, product releases and any other statement that may be construed as a prediction of future performance or events, including without limitation statements regardin
Slide 3: Today's Agenda
Today’s Agenda. • Welcome – Peter Adderton, Director and CEO. • Digital Turbine – Bill Stone, President and COO. • Corporate Finance – Andrew Schleimer, Board Advisor. • Revenue and Gross Margin – Kirstie Brown, CFO Digital Turbine Asia Pacific. • Partner and Customer Presentations. • Cocktail Recep
Slide 4: Introduction and Welcome
I ntroduction and Welcome Peter Adderton – Director and CEO
Slide 5: Vision for Mobile Landscape – As predicted
V ision for Mobile Landscape – As predicted. • Mobile ecosystem has rapidly changed over the past 5 to 8 years. • Expanded to include: • Platform is now a combination of hardware and software. • In the process of transforming the mobile industry, both Apple and Google have also changed – yet the car
Slide 6: Vision for Mobile Landscape – As predicted
V ision for Mobile Landscape – As predicted. • We have seen a major shift away from carriers to new evolving ecosystems including mobile payments. • MDNL offers a real opportunity for the carriers to get back into this business – creating an alternative distribution platform for app developers, adve
Slide 7: A productive 'First Months'
A productive ‘ First 30 Months .’ • Contributed Digital Turbine for 100% equity into Mandalay Digital Group. • Combination of Technology (Adderton) with Content ( Guber) – a marriage of strengths. • Completed multiple acquisitions to build pipe to distribute products and services. MANDALAY DIGITAL G
Slide 8: A productive 'First Months'
A productive ‘ First 30 Months .’ • Strengthened Board of Directors and Management Team. • Up - listed to Nasdaq from OTC Pink Sheets. • Cleaned up balance sheet and diversified shareholder base. • Well - positioned to grow and scale. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Man
Slide 9: Massive growth and valuation potential
Massive growth and valuation potential. • MNDL current addressable market = 1 BILLION devices. • CPI advertising extremely scalable. • Range per campaign @ $1.50 per slot, four slots per device. • Current Ignite installation trajectory 0 – 12 million with a clear path to 25 million. MANDALAY DIGITAL
Slide 10: Transitioning forward – Passing the baton
Transitioning forward – Passing the baton. • Management changes – the Company is in good hands. • Intention to change the company name to: MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 10
Slide 11: Digital Turbine
Digital Turbine Bill Stone – President and COO
Slide 12: Topics
Topics. • The Big Picture. • Connecting Digital Turbine to the Big Picture. • Digital Turbine Updates: – Products. – Customers and Case Studies. – Metrics. • Q and A. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 12
Slide 13: The Big Picture
The Big Picture. • Smartphones. • Operating Systems. • Mobile Content. • Mobile Advertising and Applications. • Operators versus Over - the - top (OTT ). MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 13
Slide 14: Smartphone Users – Still lots of upside
Smartphone Users = Still lots of upside… @ 30% of 5.2B Mobile phone user base. Global smartphone quarterly unit shipments and smartphone users as % of mobile phone users, 2009 – 2013. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 14 Source: Smartphon
Slide 15: Global smartphone operating systems market share
Global smartphone operating systems “Made in the USA”: 97% share from 5% eight years ago. Global smartphone operating system market share (by units shipped), 2005 versus 2010 versus 2013. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 15 Source: 2005
Slide 16: Mobile app revenue still trumps mobile ad revenue
Mobile app revenue = Still trumps Mobile ad revenue… @ 68% of Mobile monetization. Global mobile app + advertising revenue, 2008 – 2013. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 16 Source: Global Mobile App revenue per Strategy Analytics; compri
Slide 17: Apps versus Mobile web
Apps versus Mobile web. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 17 86% of time spent on mobile on Applications. Monetization of other apps lagging Google and Facebook.
Slide 18: Remain optimistic about Mobile Ad spend growth
Remain optimistic about Mobile Ad spend growth… print remains way over - extended. % of time spent in media versus % of Advertising Spending, USA 2013. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 18 Source: Advertising Spend based on IAB data for f
Slide 19: Evolution of Apps
Evolution of Apps Internet unbundling… First, multi - purpose web apps… MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 19 Source: Megan Quinn, KPCB Partner. then, multi - purpose mobile apps. Now, single - purpose = “ There’s an app for that .”
Slide 20: Evolution of Apps – The rise of the Invisible App
Evolution of Apps Internet unbundling… The rise of the Invisible App. Now some apps are disappearing altogether. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 20 Source: Matthew Panzarino, TechCrunch. We’re entering the age of Apps as service layers.
Slide 21: Facebook and App-Installs
Facebook and App - Installs. • FB stock hits low of $17.73 on September 4, 2012. • Launches app install ads on October 17, 2012. • 350 million app installs through Q1 2014. • 945 million mobile monthly active users. • Driving more than $5 billion in annual mobile ad revenue from app install ads. MAN
Slide 22: Mobile Operators versus Over-the-top (OTT)
M obile Operators versus Over - the - top (OTT ). • Operators over $2T in revenue. • Google, Apple, Facebook are approximately 25 % of operator revenue (including non - mobile ). • OTT competing against operator services. • Operator history of competing and monetizing mobile content distribution is
Slide 23: Takeaways from the Big Picture
Takeaways from the Big Picture. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 23 Trend Implication Smartphones Global and g rowing Operating Systems Android dominates … for now Mobile Content Business Models About Apps AND Advertising not Apps OR Adv
Slide 24: How does Digital Turbine capitalize?
How does Digital Turbine capitalize? MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 24 Trend Implication for Digital Turbine Smartphones Global opportunity, not just a US one Operating Systems Focus on Android today; however, platform architected for
Slide 25: Digital Turbine product mix
Digital Turbine product mix. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 25
Slide 26: Pre-loads and customization
• Pre - loads a problem for operators. • Customization. • Platform and device agnostic. • Flexible. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 26
Slide 27: Discovery and recommendation
• Discovery. • Recommendation. • Organization. • App drawer and search. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 27
Slide 28: Sphere in the Cloud
• Sphere in the Cloud. • Full - service , all categories. • Business models changing. • Integrated billing. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 28
Slide 29: Strategic content and expansion
• Strategic. • Content providers concerned. • Operators limit connectivity. • Expansion. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 29
Slide 30: Closing the loop: Bringing the products together
Closing the loop: Bringing the products together. • Bundled versus a - la - carte. • Today versus tomorrow. • Google Play problem. • Revenue “double - dipping”. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 30
Slide 31: Customers
Customers MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 31
Slide 32: Customers
Customers MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 32
Slide 33: Media
Media. • >$5M of media sold to date for summer device launches globally. • Strong demand from advertisers. • CPI ranges from $.50 (India) to $3.00 (USA ). • Across multiple categories (eg: games, travel, etc. ). • Open rates ? MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Di
Slide 34: Case Study: Israel
Case Study: Israel . • Four slots: – El Al Airlines. – Dominos Pizza. – Gullivers Travel (local travel ). – Super Pharm (local pharmacy ). • Gross revenue 10 shekels/device ($2.80 ). • Pushed across Android device line - u p including Galaxy S5. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION
Slide 35: Metrics: Operators and Advertisers
Metrics: Operators and Advertisers • Ignite: – 100K installs on 12.31.2013. – 1M installs to date. – 12M by end of FY. – $1 CPI, three - slots and 50/50 rev share is “ average of averages ”. • IQ: – Less than 100K today. – 1M by end of FY . • Content Management and Pay: – 30M month. – 2M pay. – $3 A
Slide 36: Q and A Session
Q and A Session.
Slide 37: Corporate Finance
Corporate Finance Andrew Schleimer
Slide 38: The Past – a complex story to tell
The Past – a complex story to tell. • Former ‘shell’ c ompany. • OTC - listed – not on major exchange until June 2013. • Virtually nil liquidity. • Organic and inorganic growth financed privately by high net - worth individuals. • Private placements of convertible debt and equity with warrants. MAND
Slide 39: The Past – a complex story to tell
The Past – a complex story to tell. • Closely - held ‘quasi private’ company , no real institutional support. • Company built through acquisitions, with a number of starts and stops. • Former shell status, restructuring of ValueAct debt , subsequent acquisitions and private financings resulted in co
Slide 40: The Present – clean and well positioned
The Present – clean and well positioned. • NASD - listed as of June 6, 2013 – profile enhanced but only one piece of the puzzle. • Completed financing in August 2013 @ $2.48 per share – important transaction for Company. • Re - equitized the balance sheet in complete de - levering transaction. • All
Slide 41: The Present – clean and well positioned
The Present – clean and well positioned. • Liquidity profile enhanced following capital raise – stock started to trade more naturally as more institutions held shares. • New primary shares sold to institutions and therefore fewer shares held by insiders on a relative basis. • Enhanced IR program and
Slide 42: The Present – clean and well positioned
The Present – clean and well positioned. • Four sell - side institutions covering MNDL, more in the works. • T - Mobile announced, 2014 fiscal revenues up five - fold y - o - y. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 42
Slide 43: So, what's next?
So, what’s next? • Transition from a “ Story Stock ” to an “ Execution Stock ”: – Growth. – Stability. – Liquidity. – Credibility, trust and transparency. – M & A. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 43
Slide 44: Growth: Fiscal 2015 Revenue Guidance
Growth: Fiscal 2015 Revenue Guidance of 90 - 100% Growth. Revenue Guidance: 90 - 100% y - o - y projected revenue growth. Gross Margin Guidance: > 50% for fiscal year. Adjusted EBITDA Guidance: Positive for full second fiscal quarter. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Man
Slide 45: Growth: Current Snapshot of Financials
Growth: Current Snapshot of Financials . Where is growth coming from? CPI versus Content. Components of fiscal 2015 revenue: Growth driven by advertising spend (CPI ). MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 45
Slide 46: Growth: Keeping expenses in-line
Growth : Keeping expenses in - line . Management focused on OPEX spending. Operating expenses flat quarter - over - quarter during operational ramp for Ignite and IQ. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 46 Operating Expenses** Q1 ACTUAL Q2
Slide 47: Stability: Reported cash on hand of $22 million
Stability: Reported cash on hand of $22 million @ March 31 MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 47 Mar. ‘14 5,102 27,481 45,095 • Cash on hand. • Working capital strength: Ramp in revenues will yield increases in net working capital. • Balan
Slide 48: Liquidity
Liquidity: Company re - IPO in August 2013 through Ladenburg Offering. Nasdaq listing from OTC Pink in June 2013. Liquidity: Currently trading over 200,000 shares daily (volume increase approx 10x ) . Insider and affiliate ownership reduced from >50% to approximately 20 %. Russell Micro Index rebala
Slide 49: Credibility: Actions speak louder than words
Credibility: Actions speak louder than words. Execute on business plan. Continued progress with sell side community. First Annual Meeting of Stockholders. High quality investor confidence. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 49 Peter Guber
Slide 50: M&A
M & A. • March capital raise primarily for M & A: – $22 million of cash on hand at March 31. – Continued progress on a number of potential transactions. – Management disciplined approach. – View each opportunity through lens of financial and strategic accretion. MANDALAY DIGITAL GROUP, INC. INVESTOR
Slide 51: Revenue and Gross margin
Revenue and Gross margin Kirstie Brown
Slide 52: Revenue Models: Content and Advertising
Revenue Models: Content and Advertising. Content MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION Advertising © 2014 Mandalay Digital Group, Inc. Page 52
Slide 53: Growth: Current Snapshot of Financials
Growth: Current Snapshot of Financials . Where is growth coming from? CPI versus Content. Components of fiscal 2015 revenue: Growth driven by advertising spend (CPI ). MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 53
Slide 54: Content revenue model
Content revenue model. End User purchases content. • Traditional Carrier content services, transactional content sales for services built, hosted and managed by Digital Turbine. • API billing product enables third parties to monetize their services via direct carrier billing. • Revenue is recognized
Slide 55: Advertising revenue model – CPI
Advertising revenue model – CPI. DT sources campaigns agrees CPI. Revenue for DT Ignite and DT IQ can be generated by Digital Turbine sourcing campaigns and selling inventory… OR By the Carrier selling inventory and sourcing campaigns. • The install can be paid on either “ Pre - Load ” or “ Open ” b
Slide 56: Contribution and margin
Contribution and margin. Components of fiscal 2015 gross profit – revenue mix shift to advertising driving gross profit. MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 56 FYE 2015 – Revenue FYE 2015 – Gross profit
Slide 57: Q and A Session
Q and A Session.
Slide 58: Appia, Inc.
Appia, Inc. Jud Bowman
Slide 59: Telstra Corporation
Telstra Corporation Stuart Bird
Slide 60: Digital Group, Inc. Page
MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 60
Slide 61: Digital Group, Inc. Page
MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 61
Slide 62: Digital Group, Inc. Page
MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 62
Slide 63: Digital Group, Inc. Page
MANDALAY DIGITAL GROUP, INC. INVESTOR DAY PRESENTATION © 2014 Mandalay Digital Group, Inc. Page 63
Slide 64: Additional Customer Insight
Additional Customer Insight