APX — SPAC Merger (September 2019)
56 slides from APX's SPAC merger presentation, Sep 16, 2019
Slide 1: Creating the Smart Home Experience - Investor Presentation
C R E A T I N G T H E S M A R T H O M E E X P E R I E N C E I N V E S T O R P R E S E N T A T I O N S E P T E M B E R 1 6 , 2 0 1 9
Slide 2: Disclaimer
Disclaimer The recipient of this presentation shall not use it for any purpose other than expressly authorized by Mosaic Acquisition Corp. (“Mosaic”) and Vivint Smart Home, Inc. (“Vivint”). Any reproduction or distribution of this presentation, in whole or in part, or the disclosure of its contents,
Slide 3: Today's presenters and leadership
Today’s presenters and leadership Todd Pedersen Alex Dunn Mark Davies Drew McKnight David Maura Vivint Smart Home Vivint Smart Home Vivint Smart Home Fortress Investment Group Mosaic Acquisition Corp. Founder and Chief Executive Officer President Chief Financial Officer Managing Partner Chairman, Pr
Slide 4: Strong base of committed shareholders with aligned interests
Strong base of committed shareholders with aligned interests, including: Long-standing Commitment to Vivint Long-term Investors History of Operational Expertise Global investment manager with $545 billion1 in Leading, highly diversified global investment manager with Market-leading SPAC structure (n
Slide 5: Agenda
A G E N D A 1 I N V E S T M E N T T H E S I S 2 C O M P A N Y O V E R V I E W 3 G R O W T H S T R A T E G Y 4 F I N A N C I A L S U M M A R Y 5 T R A N S A C T I O N O V E R V I E W A N D C O M P A R A B L E S A P P E N D I X 5
Slide 6: Investment Thesis
I N V E S T M E N T T H E S I S 6
Slide 7: Investment thesis for Vivint Smart Home
Investment thesis for Vivint Smart Home Proprietary cloud-based software platform delivering premier Smart-Home-as-a-Service Attractive recurring business model Compelling unit economics with Flex Pay Strong subscriber momentum significantly enhancing capital efficiency Subscribers (M) 1.5M 20M+ Lar
Slide 8: Company Overview
C O M P A N Y O V E R V I E W
Slide 9: Customer Experience Video
C U S T O M E R E X P E R I E N C E V I D E O v i v i n t . c o m / c x v i d e o 9
Slide 10: In the next hour…
In the next hour… 84M 98K 36K 31K 33K 101K events processed in live video views from views of home changes to locks and actions performed home state changes to the cloud by the Vivint apps and panels, plus activity history from thermostats via apps, automatically by the Away decided by Smart Home OS
Slide 11: Vivint's mission
V I V I N T ’ S M I S S I O N Redefine the home experience through intelligently designed cloud-enabled solutions delivered to every home by people who care. 11
Slide 12: Delivering a transformative Smart Home experience
Delivering a transformative Smart Home experience requires simply and affordably integrating consumers’ digital and physical worlds Transforming everyday experiences sets a high bar for consumer-facing technology Digital Physical Doing this in mainstream consumers’ Transformative homes requires exte
Slide 13: Vivint is in the early days of a big opportunity
Vivint is in the early days of a big opportunity Significant household Conventional market sizing Vivint is built for redefining the home experience opportunity in North America underestimates the home opportunity North American Smart Home Market (2019E – 2023E)3 Appliances Groceries CPG replenishme
Slide 14: Vivint is succeeding at delivering a transformative Smart Home experience
Vivint is succeeding at delivering consumers a transformative Smart Home experience USER EXPERIENCE GO-TO-MARKET SCALE Smart Home Operating System that U.S. and Canada sales, installation and service 1.5M subscribers across North America4 delivers a seamlessly integrated and footprint with coverage
Slide 15: Vivint Flex Pay pricing model and unit-of-one economics
Vivint Flex Pay pricing model gives flexibility to consumers and delivers powerful unit-of-one economics Devices and services Attractive unit economics Flex Pay has transformed sold separately create long-term value3 Vivint’s business $580 Flex Pay provides greater subscriber annual subscription rev
Slide 16: Improving unit economics and business model innovation driving scaling
Improving unit economics and business model innovation are driving significant enterprise scaling Annual bookings trending at over Net subscriber cost ($) Adj. EBITDA growth and margin expansion ($M) 1.5x of GAAP revenue each year ($B) Adj. EBITDA Revenue Bookings ($B) $1,996 (47%) $1.8 $1,444 $1.7
Slide 17: Consumers want Do-It-For-Me (DIFM) services
Consumers want Do-It-For-Me (DIFM) services 4 4.8 hrs Average installation time for DIY security systems1 VS 76% of the Smart Home market in 2020 expected to be with managed service providers2 Integrating numerous devices that were not designed to work Whole-home automation requires users to write i
Slide 18: Vivint's model for delivering an end-to-end Smart Home solution
Vivint’s model for delivering an end-to-end Smart Home solution Find Design Install Manage 98% of U.S. zip codes covered1 Consultative sales critical for Professional installation White-glove support with 81% In-home, online, and retail comprehensive Smart Home with half done same-day5 first-contact
Slide 19: Consultative sales channels bring Smart Home to the consumer
Vivint’s consultative sales channels bring Smart Home to the consumer In Home Online New Channels 4,500+ in-home sales representatives1 43% of net new subscribers3 Retail: several pilots underway 8M in-home conversations per year2 28% 4-year CAGR4 Multifamily: 47.2M units in the U.S.5 Additional: ho
Slide 20: Patented technology empowers Smart Home Pros
Vivint’s patented technology empowers its Smart Home Pros to design, finance and install a customized system for every consumer Street Genie Tech Genie Care Genie Area and performance Configuration, pricing Schedule management Upgrades (CPQ, loan, Account information and history management and quoti
Slide 21: Standalone device strategy vs. winning Smart Home strategy
A standalone device strategy is different than a winning Smart Home strategy Standalone Device Smart Home Multiple apps Many devices required to create a smart home DIY install Seamless and intuitive experience in a single app One-time purchase with little or no subscription Hassle-free DIFM install
Slide 22: Extensive suite of proprietary Smart Home devices
Vivint’s extensive suite of proprietary Smart Home devices enables comprehensive coverage of the home… 15 9 14 7 1 2 3 4 5 6 8 10 12 Outdoor Doorbell Indoor 30 day In-Home Video Video Video DVR Control 5 4 3 2 13 6 7 8 9 10 Thermostat Garage Door Vehicle Flood Motion Control Control1 Protection1 Pro
Slide 23: Partners want their devices integrated into Vivint's ecosystem
Partners want their devices integrated into Vivint’s curated ecosystem… …which makes them smarter 23
Slide 24: Vivint Smart Home Operating System
The Vivint Smart Home Operating System seamlessly integrates all of these devices into a unified, intuitive experience Vivint Smart Home OS: Proprietary software running in the home, the cloud, and Smart Home apps Operating “Tell Vivint I’m System going out” Flexible and extensible Real-time events,
Slide 25: Proprietary data and AI-driven software fuel growth
Proprietary data underpinned by Vivint’s powerful AI-driven software fuels product innovation and additional growth opportunities 1.5M Technology, service, and business model subscribers innovation enable superior customer experience 20M+ managed Accurate modeling of home occupancy devices requires
Slide 26: Easy, affordable, transformative Smart Home experience
Vivint delivers an easy, affordable, and transformative Smart Home experience Technology Digital: HomeKit Physical: Service Capabilities Note: Based on management’s estimates 26
Slide 27: Founder-led management team
Founder-led management team with significant industry experience Todd Pedersen Alex Dunn Founder and President Chief Executive Officer Matt Eyring Todd Santiago Scott Hardy Mark Davies Jeremy Warren Jeff Lyman EVP, General Manager EVP, General Manager of Chief Operating Officer Chief Financial Offic
Slide 28: Growth Strategy
G R O W T H S T R A T E G Y 28
Slide 29: Five-pronged strategy for growth
Vivint has a five-pronged strategy for growth Entering adjacent markets 5 Expanding product and service offerings Selling to 4 existing customers Adding new 3 channels Growing existing channels 2 1 29
Slide 30: Growing existing channels
1 Growing existing channels Direct-to-home growth strategy Continued dedication to new and established recruiting hubs Open new recruiting hubs each year New pay scale incentives to drive recruiting National inside sales growth strategy Capitalize on increasing awareness of Vivint and Smart Home cat
Slide 31: Adding new channels
2 Adding new channels Retail Multifamily – Vivint Smart Properties Professional channels In-store lead generation coupled with in-home Sizeable opportunity, with 47.2 million total New homebuilders channel efforts target 900K sales experience units (36% of Americans rent)2 new single-family homes bu
Slide 32: Selling to existing customers
3 Selling to existing customers Vivint is just beginning to offer upgrades to its existing subscriber base Full-system upgrades Device up-sell Vivint Flex Pay unlocks the ability to offer full-system upgrades Individual device upsell to begin in 2020 Focus in 2019 has been on subscribers near the en
Slide 33: Expanding product and service offerings
4 Expanding product and service offerings New products create opportunities for subscription revenue growth Vivint Car Guard launched in 2019 Vivint can sell Car Guard not only to new subscribers, but also to its existing subscriber base Seamlessly integrated into the Vivint Smart Home Operating Sys
Slide 34: Entering adjacent markets
5 Entering adjacent markets: Vivint is in the early days of a big opportunity Vivint is able to unlock additional market opportunities, building upon: Capabilities to sell, deploy Breadth of data and depth of understanding that comes Existing subscriber base and manage services from comprehensive, p
Slide 35: Financial Summary
F I N A N C I A L S U M M A R Y 35
Slide 36: Superior financial model
Superior financial model Subscription-based business model 95%+ Recurring revenue Leading scale $1.17B Revenue (2019E) Margin outperformance 75% Net Service Margin (Q2’19) Strong adjusted EBITDA growth 30% Adjusted EBITDA CAGR (’18-’21E) Expanding subscriber base 1.6M Total Subscribers (2019E) Diffe
Slide 37: Smart-Home-as-a-Service subscription model yielding growth and margin expansion
Compelling Smart-Home-as-a-Service subscription model yielding differentiated growth and margin expansion Subscribers Revenue In M In $M $1,444 1.9 $1,303 1.7 $1,168 1.6 $1,050 1.4 1.3 $882 1.1 $758 2016A 2017A 2018A 2019E 2020E 2021E 2016A 2017A 2018A 2019E 2020E 2021E 62% projected growth from 201
Slide 38: Adjusted EBITDA bridge and margin expansion
Continued portfolio growth and service cost optimization driving adjusted EBITDA margin expansion 2018A – 2019E Adjusted EBITDA bridge Commentary 35% margin A Portfolio growth: Higher subscription and equipment revenue driven by increasing number of subscribers (1.4M ïƒ 1.6M) 27% margin B Service co
Slide 39: Flex Pay scaling and deleveraging trajectory
As Flex Pay has scaled, Vivint has accelerated the acquisition of new subscribers at increasingly attractive economic terms Flex Play new subscriber mix % Strong deleveraging trajectory (Net Leverage1) 5.7x 64% 68% 5.5x 43% 4.3x 4.0x <3.0x 2017A 2018A Q2’19 LTM Q2’18 Q2’19 Pro Forma Q2’19 2019E Targ
Slide 40: Excellence in technology and real-world operations
Vivint’s excellence in both technology and real-world operations powers a Smart Home business that delivers for consumers and investors Digital Physical Differentiated business model Proprietary cloud-enabled 1st-party direct-to-home sales Flex Pay provides consumer Vivint Smart Home OS team of 4,50
Slide 41: Transaction Overview and Comparables
T R A N S A C T I O N O V E R V I E W A N D C O M P A R A B L E S 41
Slide 42: Transaction detail: sources and uses
Transaction detail Estimated sources and uses ($M)1 Sources Mosaic IPO Cash $345 Mosaic FPA Cash $150 Fortress PIPE Proceeds $125 Blackstone PIPE Proceeds $100 Vivint Equity Rollover $2,316 Vivint Rollover Net Debt2 $2,494 Total Sources $5,530 Implied pro forma firm value Pro Forma Shares Outstandin
Slide 43: Vivint is a Category of One
Vivint is a Category of One, offering a highly differentiated strategic and financial opportunity to own the Smart Home subscriber Vivint’s attributes … … distinguish the company vs. peers … … and far exceeds the Rule of 40 3 Subscriber base is a strategic 20%+ Adj. EBITDA 50% asset margin (2020E) 4
Slide 44: Elite group of companies with runway for growth
Vivint’s business and financial profile places it in an elite group of companies with significant runway for growth and margin Smart Home Consumer Subscription Comparable Companies 30.5x 20.8x 2020E 10.5x FV / Adj. EBITDA End-to-End Platform Integration 3   Proprietary OS 3 3  Strong Recurr
Slide 45: Competitively differentiated Smart Home platform
Competitively differentiated Smart Home platform Proprietary software platform     Smart home data / analytics     Proprietary devices     DIFM service   Nationwide consultative go-to-market   Consumer financing    Revenue growth (’18A–’20E CA
Slide 46: Differentiated visibility into growth and superior margins
Vivint’s Smart-Home-as-a-Service model yields differentiated visibility into growth and superior margins Smart Home Consumer Subs 2018A – 2020E Adjusted EBITDA CAGR Vivint is positioned to Median: 31% Median: 30% deliver significant equity accretion via a Overall combination of earnings median growt
Slide 47: Attractive entry point for investors
Attractive entry point for investors Smart Home Consumer Subs 2020E EV / Adjusted EBITDA Attractive entry point … deal Median: 20.8x Median: 30.5x valuation at discount to peers 58.5x 60.9x Overall median 29.5x 29.5x 31.4x 25.1x Highly visible growth 20.8x 21.4x —95%+ recurring revenue1 10.5x —$5.7B
Slide 48: Transaction overview
Transaction overview Mosaic Acquisition Corp. (“Mosaic”) has entered into a definitive agreement to merge with Vivint Smart Home, Inc. (“Vivint”) Following the merger, Mosaic will be renamed Vivint Smart Home, Inc. Transaction Structure Pro forma corporate structure is a NYSE-listed Delaware corpora
Slide 49: Anticipated transaction timeline
Anticipated transaction timeline Date Event Transaction Agreement Executed September 2019 Transaction Announced S-4 and Preliminary Proxy Materials Filed with the SEC Mail Final Proxy Materials to Shareholders October / November 2019 Record Date for Shareholder Vote Fourth quarter of 2019 / first qu
Slide 50: Appendix
A P P E N D I X 50
Slide 51: Illustrative pro forma capital structure
Illustrative pro forma capital structure Illustrative Pro Forma Capitalization1 $M 6/30/20192 Adj PF xEBITDA3 Cash $3 $ — $3 — Revolver $134 $ — $134 — Term Loan $804 $ — $804 — Senior Secured Notes4 $1,395 $ — $1,395 — Senior Secured Debt $2,333 $ — $2,333 4.0x Net Senior Secured Debt $2,330 $ — $2
Slide 52: Adjusted EBITDA and Covenant Adjusted EBITDA reconciliation
Adjusted EBITDA and Covenant Adjusted EBITDA reconciliation Year Ended December 31, LTM ($M) 2016A 2017A 2018A 6/30/2019 Net loss ($276.0) ($410.2) ($467.9) ($443.9) Interest expense, net 197.5 225.6 244.8 255.2 Income tax expense (benefit) 0.1 1.1 (1.6) (1.1) Depreciation 16.8 21.3 25.0 25.6 Amorti
Slide 53: Unlevered Free Cash Flow reconciliation
Unlevered Free Cash Flow reconciliation Year Ended December 31, LTM ($M) 2016A 2017A 2018A 6/30/2019 Operating cash flow ($365.7) ($309.3) ($220.5) ($220.5) Capital expenditures ($11.6) ($20.4) ($19.4) ($11.9) Cash interest1 $188.1 $203.4 $236.7 $250.4 Unlevered Free Cash Flow ($189.2) ($126.3) ($3.
Slide 54: Definition of non-GAAP financial measures
Definition of non-GAAP financial measures This presentation includes Adjusted EBITDA, Covenant Adjusted EBITDA, and Unlevered Free Cash Flow, which are supplemental measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAA
Slide 55: Certain definitions
Certain definitions Total Subscribers - is the aggregate number of active Smart Home and security subscribers at the end of a given period. Average Monthly Subscription Revenue per User - or AMSRU, is Total MSR divided by Total Subscribers at the end of a given period. Attrition Rate - is the aggreg
Slide 56: Vivint.smarthome
Vivint.smarthome