TIO Networks
TIO Networks America’s Leading Multi-Channel Bill Payment Network November 2015 1
Corporate Overview Leading Multi-Channel Billing and Receivables Management Processor in North America Processing over $6B/year TIO Networks Corp. (TSVX-TNC) 1. Over 3 Million Unique End-User Customers per month (~8M/yr) 2. Serving the “Cash-Preferred”, Underbanked User Community 3. 98%+ Residual/Recurring Revenue 4. Recently announced 3 rd acquisition in 2 years (Softgate Systems Inc.) which will increase TIO’s Revenue to $100M+ and EBITDA to $10M+ 5. ~55M Transactions Processed Annually (79M post acquisition) 6. Significant portfolio amongst the largest wireless and utility companies in North America 7. Over 70k location endpoints in the US for bill payments at retail
2
“New TIO” Facts and Figures Truly national provider of bill pay and Financial services for underbanked Quarterly Revenue (Based on fiscal Q3 2015, TIO’s fiscal year ends July 31) Gross Margin % Annualized Gross margin (based on fiscal Q3, 2015) Adjusted EBITDA (based on fiscal Q3, 2015) # of over the counter locations # of Self Service Kiosks serviced # of Devices owned by TIO # of TIO consumer accounts (incl CS) (As at Apr 30, 2015) # of billers supported by TIO # of "expedited" or "same day" billers
$13.6M 45% $26M/yr 1M 68,000 2,000 1,000 ~1.03M 9,200 700 3
Multi-Channel Payment Services for the underserved
Retail Kiosk
Retail Point of Sale
Web & Mobile
Over 1k Self Serve Kiosks In Service, 3000+ money order systems 68k+ POS locations (7k where TIO’s software is used as front end) 24 Mobile web and Native Mobile Programs 4
Consistent Multi-Year Growth
5
Gross Profits Scaling and Margins Improving
6
Highest level of R&D investment ever @ $1.1M per quarter (fully expensed)
7
Fortune 1000 Clients Biller
8
Retail
Network/Payment System
ACQUIRED GLOBAL EXPRESS IN JANUARY 2014 GLOBAL EXPRESS adds the following 1. TRANSACTION FEES strengths to TIO’s business: • Expanded Biller Catalog • Expanded Location base in the South Eastern US, adding 3,000 new locations 2. RECURRING MAINTENANCE REVENUE • Strong/experienced team in Silver Spring, MD 3. ONE TIME REVENUE SOURCES
9
Acquired Chargesmart.com from VeriFone in August 2014 Largest non-bank, payment card powered multi-purpose bill payment site on the web, allows any card not present (CNP) cardholder to pay any bill safely and easily. More than $250M processed each year Approx. 758K unique members ChargeSmart has built a unique risk management system that significantly suppress chargebacks in CNP environment. One-stop shop with wide variety of billers and frictionless checkout Easily create and manage recurring payments
10
TIO to Acquire Softgate Systems Strategically Accretive Acquisition – new TIO will create a powerhouse in the US non-bank bill payment and receivables processing marketplace generating >CAD$100M top line revenue and >CAD$10M EBITDA: a) b)
c) d) e)
Add USD$37 million in incremental revenue and USD$5 million in incremental EBITDA to TIO’s business MSB licenses in 46 states and D.C. (4 states do not require MSB licenses) allows us to leverage its licenses to operate in 50 states and D.C. Independent customer acquisition via its >4,000 direct agent location network i.e. no dependency on biller relationship Softgate operates PayXchange, state of the art proprietary POS software platform for the bill payment marketplace Deep bill payments and agent management expertise
The acquisition is expected to close later this year subject to satisfying applicable regulatory approvals and satisfaction of customary closing conditions. 11
The Evolution of the TIO Networks National Footprint
WA MT OR
ME
ND
ID
MN
AZ
CO
IL
KS
TX
TIO NETWORKS
w/ Regional Coverage
National Coverage
WV
MA CT
NJ
VA
NC
TN
SC
AR AL
GA
LA
PR
TIO NETWORKS
IN
KY
MS HI
OH
MO OK
NM
PA
IA
NE UT
NY MI
WY
CA
NH
WI
SD
AK NV
VT
FL
GLOBAL EXPRESS
SOFTGATE
ENHANCED TIO + GE /SGS JOINT COVERAGE
How we make money Revenue Model & Growth Levers
13
Revenue Model How we generate income 1. TRANSACTION FEES Convenience Fees Paid by Customers: Transaction fees Paid by Billers:
60 36
2. RECURRING MAINTENANCE REVENUE Fixed Monthly Fees paid by Billers + MO service revenue:
3
3. ONE TIME REVENUE SOURCES Mainly for licenses of Software or Hardware:
1
* Based on Q4.2014 Financial Result
14
TIO Growth Levers How does TIO grow
15
Who we focus on Demographic & market focus
16
Demographic Focus “LMI” = Low to Moderate Income
Why? Large Group (one out of every four American with GDP ~ $1 Trillion) Very specific needs ( i.e.: loans/credit, payments, transfers, prepaid etc.) An Underserved demographic (most innovators are focused on traditionally banked customer) TIO has been serving this group for over a decade and understands trends & behavior
17
Underserved/Underbanked – Big & Diverse Approximately 35 million U.S. households – 68 million adults are financially underserved
Unbanked 9.6 MM, 7.7% Underbanked 24.8 MM, 20%
Banked/unknown status 89.3 MM, 72.3%
SKEWS YOUNG and increasing! 10.5 million U.S. Millennials household NOT ALL LOW INCOME = 22% of $50-75k in HH income; 14% of income >$75k FLUID = moves in and out of fin svcs Underserved: all consumers within group by ethnicity
54% Black 46% Hispanic 42% American Indians 20% White 20% Asian
Source: 2013 FDIC National Survey of Unbanked and 18 Underbanked Households – Oct 2014
Underbanked market worth > $103B in US alone in 2013
Source: CFSI/Core Innovation Capital, 2013 Financially Underserved Market Size Dec 2014
19
Underserved Market Revenue Growth
20
The TIO Cloud Powers TIO Ecosystem…First Platform to Connect Kiosks, POS, Web, Mobile! Core Technology Asset = Cloud-based Billing and Payment Processing Support For Expedited Payments Is Key Differentiator Compared to Peers PCI Certified to Payment Card Industry Data Security Standard Two Datacenters: Vancouver, BC and Denver, CO Open Architecture Design and API For Ready Connectivity To Any Channel Patented Defensively With One Issued Patent And 4 Pending Process Patents Will Ultimately Leverage TIO Wallet To Support Sophisticated Financial Products 21
Capital Structure Price (C$)
TNC – TSX.V Symbol
$1.69
Share Price
$99.7 MM CAD ($142 M with Softgate)
Market Capitalization
59 MM (84M With Softgate)
Shares Outstanding
30%
Insider Ownership
**Based on Oct 26, 2015 Market price 22
Key Catalysts The following are key catalysts for investors to track with TIO: Complete Softgate Systems Acquisition Drive incremental Organic growth from existing large enterprise customers Consolidate platform and other services across acquired subjects to drive EBITDA Expansion Continued focus on opportunistic and complementary acquisitions Continue to ramp up wallet enrolment and value added services driving incremental monetization Devaluation of Canadian Dollar – Drives incremental profitability
23
Hamed Shahbazi Twitter: @Chsgo [email protected]
24
Corporate Overview Leading Multi-Channel Billing and Receivables Management Processor in North America Processing over $6B/year TIO Networks Corp. (TSVX-TNC) 1. Over 3 Million Unique End-User Customers per month (~8M/yr) 2. Serving the “Cash-Preferred”, Underbanked User Community 3. 98%+ Residual/Recurring Revenue 4. Recently announced 3 rd acquisition in 2 years (Softgate Systems Inc.) which will increase TIO’s Revenue to $100M+ and EBITDA to $10M+ 5. ~55M Transactions Processed Annually (79M post acquisition) 6. Significant portfolio amongst the largest wireless and utility companies in North America 7. Over 70k location endpoints in the US for bill payments at retail
2
“New TIO” Facts and Figures Truly national provider of bill pay and Financial services for underbanked Quarterly Revenue (Based on fiscal Q3 2015, TIO’s fiscal year ends July 31) Gross Margin % Annualized Gross margin (based on fiscal Q3, 2015) Adjusted EBITDA (based on fiscal Q3, 2015) # of over the counter locations # of Self Service Kiosks serviced # of Devices owned by TIO # of TIO consumer accounts (incl CS) (As at Apr 30, 2015) # of billers supported by TIO # of "expedited" or "same day" billers
$13.6M 45% $26M/yr 1M 68,000 2,000 1,000 ~1.03M 9,200 700 3
Multi-Channel Payment Services for the underserved
Retail Kiosk
Retail Point of Sale
Web & Mobile
Over 1k Self Serve Kiosks In Service, 3000+ money order systems 68k+ POS locations (7k where TIO’s software is used as front end) 24 Mobile web and Native Mobile Programs 4
Consistent Multi-Year Growth
5
Gross Profits Scaling and Margins Improving
6
Highest level of R&D investment ever @ $1.1M per quarter (fully expensed)
7
Fortune 1000 Clients Biller
8
Retail
Network/Payment System
ACQUIRED GLOBAL EXPRESS IN JANUARY 2014 GLOBAL EXPRESS adds the following 1. TRANSACTION FEES strengths to TIO’s business: • Expanded Biller Catalog • Expanded Location base in the South Eastern US, adding 3,000 new locations 2. RECURRING MAINTENANCE REVENUE • Strong/experienced team in Silver Spring, MD 3. ONE TIME REVENUE SOURCES
9
Acquired Chargesmart.com from VeriFone in August 2014 Largest non-bank, payment card powered multi-purpose bill payment site on the web, allows any card not present (CNP) cardholder to pay any bill safely and easily. More than $250M processed each year Approx. 758K unique members ChargeSmart has built a unique risk management system that significantly suppress chargebacks in CNP environment. One-stop shop with wide variety of billers and frictionless checkout Easily create and manage recurring payments
10
TIO to Acquire Softgate Systems Strategically Accretive Acquisition – new TIO will create a powerhouse in the US non-bank bill payment and receivables processing marketplace generating >CAD$100M top line revenue and >CAD$10M EBITDA: a) b)
c) d) e)
Add USD$37 million in incremental revenue and USD$5 million in incremental EBITDA to TIO’s business MSB licenses in 46 states and D.C. (4 states do not require MSB licenses) allows us to leverage its licenses to operate in 50 states and D.C. Independent customer acquisition via its >4,000 direct agent location network i.e. no dependency on biller relationship Softgate operates PayXchange, state of the art proprietary POS software platform for the bill payment marketplace Deep bill payments and agent management expertise
The acquisition is expected to close later this year subject to satisfying applicable regulatory approvals and satisfaction of customary closing conditions. 11
The Evolution of the TIO Networks National Footprint
WA MT OR
ME
ND
ID
MN
AZ
CO
IL
KS
TX
TIO NETWORKS
w/ Regional Coverage
National Coverage
WV
MA CT
NJ
VA
NC
TN
SC
AR AL
GA
LA
PR
TIO NETWORKS
IN
KY
MS HI
OH
MO OK
NM
PA
IA
NE UT
NY MI
WY
CA
NH
WI
SD
AK NV
VT
FL
GLOBAL EXPRESS
SOFTGATE
ENHANCED TIO + GE /SGS JOINT COVERAGE
How we make money Revenue Model & Growth Levers
13
Revenue Model How we generate income 1. TRANSACTION FEES Convenience Fees Paid by Customers: Transaction fees Paid by Billers:
60 36
2. RECURRING MAINTENANCE REVENUE Fixed Monthly Fees paid by Billers + MO service revenue:
3
3. ONE TIME REVENUE SOURCES Mainly for licenses of Software or Hardware:
1
* Based on Q4.2014 Financial Result
14
TIO Growth Levers How does TIO grow
15
Who we focus on Demographic & market focus
16
Demographic Focus “LMI” = Low to Moderate Income
Why? Large Group (one out of every four American with GDP ~ $1 Trillion) Very specific needs ( i.e.: loans/credit, payments, transfers, prepaid etc.) An Underserved demographic (most innovators are focused on traditionally banked customer) TIO has been serving this group for over a decade and understands trends & behavior
17
Underserved/Underbanked – Big & Diverse Approximately 35 million U.S. households – 68 million adults are financially underserved
Unbanked 9.6 MM, 7.7% Underbanked 24.8 MM, 20%
Banked/unknown status 89.3 MM, 72.3%
SKEWS YOUNG and increasing! 10.5 million U.S. Millennials household NOT ALL LOW INCOME = 22% of $50-75k in HH income; 14% of income >$75k FLUID = moves in and out of fin svcs Underserved: all consumers within group by ethnicity
54% Black 46% Hispanic 42% American Indians 20% White 20% Asian
Source: 2013 FDIC National Survey of Unbanked and 18 Underbanked Households – Oct 2014
Underbanked market worth > $103B in US alone in 2013
Source: CFSI/Core Innovation Capital, 2013 Financially Underserved Market Size Dec 2014
19
Underserved Market Revenue Growth
20
The TIO Cloud Powers TIO Ecosystem…First Platform to Connect Kiosks, POS, Web, Mobile! Core Technology Asset = Cloud-based Billing and Payment Processing Support For Expedited Payments Is Key Differentiator Compared to Peers PCI Certified to Payment Card Industry Data Security Standard Two Datacenters: Vancouver, BC and Denver, CO Open Architecture Design and API For Ready Connectivity To Any Channel Patented Defensively With One Issued Patent And 4 Pending Process Patents Will Ultimately Leverage TIO Wallet To Support Sophisticated Financial Products 21
Capital Structure Price (C$)
TNC – TSX.V Symbol
$1.69
Share Price
$99.7 MM CAD ($142 M with Softgate)
Market Capitalization
59 MM (84M With Softgate)
Shares Outstanding
30%
Insider Ownership
**Based on Oct 26, 2015 Market price 22
Key Catalysts The following are key catalysts for investors to track with TIO: Complete Softgate Systems Acquisition Drive incremental Organic growth from existing large enterprise customers Consolidate platform and other services across acquired subjects to drive EBITDA Expansion Continued focus on opportunistic and complementary acquisitions Continue to ramp up wallet enrolment and value added services driving incremental monetization Devaluation of Canadian Dollar – Drives incremental profitability
23
Hamed Shahbazi Twitter: @Chsgo [email protected]
24
