Transcript iPass is Everywhere

iPass
Investor Presentation
Q3’15
Wi-Fi: Unlimited, Everywhere, Invisible
Safe Harbor
This presentation contains “forward-looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove
incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. All statements, written or graphical, other than statements of
historical fact could be deemed to be forward-looking, including, but not limited to: any projections of financial information; any statements or expectations about growth in the
business, number of users, network footprint, revenue, profitability, cost reduction and/or cash generation of the company; any statements about historical results that may
suggest trends for our business and future results of operations; any statements of the plans, strategies and objectives of management for future operations; any statements of
expectation or belief regarding future events, potential markets or market size or technology developments; any statements of assumptions underlying any of the foregoing and
any dashed-lines on graphs referring to future periods.
These statements are based on estimates and information available to us at the time of this presentation and are not guarantees of future performance. Actual results could differ
materially from our current expectations as a result of many factors, including but not limited to: our ability to reduce our costs to the extent that we expect, quarterly fluctuations in
our business and results of operations; our ability to address market needs and sell our products and services successfully; the general market conditions of the mobility services
industry; and the effects of competition. These and other risks and uncertainties associated with our business are described in our quarterly and annual reports on Form 10-Q and
Form 10-K as filed with the SEC and which are available on our website and on the SEC’s Web site at www.sec.gov. We assume no obligation and do not intend to update these
forward-looking statements.
This presentation also contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). iPass management
evaluates and makes operating decisions using various performance measures. In addition to iPass’ GAAP results, the company also considers non-GAAP metrics, including
Adjusted EBITDA, defined as net income (loss) before interest, income taxes, depreciation and amortization, restructuring charges, certain state sales and federal tax items and
stock compensation expense. Management uses these non-GAAP financial measures as components of its comparison of results with its business plan and individual operating
budgets and to assist in the allocation of resources. Management excludes from its non-GAAP financial measures certain items in order to facilitate its review of the comparability
and performance of the company's core operations because it believes that such items are not related to the company's ongoing core operating performance. Management
adjusts for the excluded items because management believes that, in general, these items possess one or more of the following characteristics: their magnitude and timing is
largely outside of the company's control; they are unrelated to the ongoing operation of the business in the ordinary course; they are unusual or infrequent and the company does
not expect them to occur in the ordinary course of business; they are non-operational; or they represent non-cash expenses involving stock option grants. iPass believes that the
presentation of these non-GAAP financial measures is useful to investors. Detailed information, definitions and reconciliations of non-GAAP to GAAP financial measures are
included in the company’s quarterly and annual filings with the SEC and are available on the company’s Web site at www.ipass.com and at the SEC's Web site at www.sec.gov.
In addition, investors and others should note that iPass announces material financial information to its investors using its investor relations website, SEC filings, press releases,
public conference calls and webcasts. iPass also uses social media to communicate with its customers and the public about iPass, its products and services and other matters
relating to its business and market. It is possible that the information iPass posts on social media could be deemed to be material information. Therefore, iPass encourages
investors, the media, and others interested in iPass to review the information it posts on U.S. social media channels including the iPass Twitter Feed, the iPass LinkedIn Feed,
the iPass Google+ Feed, the iPass Facebook Page, the iPass Blog, the iPass Instagram account, and the iPass Pinterest account. These social media channels may be updated
from time to time.
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Reasons to Invest: Company in Transition
Wi-Fi: Unlimited, Everywhere, Invisible
Exploding market: 5.2B people connecting even more devices
Delivering mobile connectivity via largest Wi-Fi network
Implementing new Go-to-Market model to accelerate profitability
Growing IP portfolio (i.e., iPass SmartConnect)
Streamlined management improving expense structure
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Exploding Market Need
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5.2B people use mobile phones
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And already more intelligent devices than people…
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iPass is the world’s largest Wi-Fi network,
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And our goal is to connect them all
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Driving Change, Driving to Profitability
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GARY A. GRIFFITHS
President & CEO
35 years leading
high-tech companies
DARIN VICKERY
Chief Financial Officer
25+ years in
accounting & finance
PATRICIA R. HUME
Chief Commercial Officer
35 years in sales,
marketing & bus. dev.
KEITH WALDORF
VP of Engineering
20+ years with CTO
& engineering roles
• Founder & CEO
•Trapit
•Everdream
•CEO (acquired co.s)
•WebEx (Cisco)
• HEAT.net (Sega)
• 10+ years consulting
in Silicon Valley
• Pricewaterhouse
Coopers
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Trapit
Convio (Blackbaud)
SAP AG
Avaya
VerticalNet Markets
IBM and Lotus
SkyPop
DrDispense
Captus Networks
MCI/Verizon
PG&E
Cisco Systems,
awarded patents
RAJANI KOLLI
VP of Global Cloud Ops
18+ years experience
• Saba
• Cisco Systems
• WebEx
• Siemens
• KCP Sugar
So what’s new?
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So what’s new?
Pretty Much Everything:
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What’s New…
New Go-To-Market
New Product
• Unlimited service:
Wi-Fi on Unlimited devices
• Expanded addressable market:
Added SME
• New target customers:
Sales & marketing line of business
• Easy pricing:
Per-user per month
subscription
• “Invisible” client
• Cloud-based:
No on-site servers
• Intelligent network selection
New
Management
Team
New Network Footprint
• Expanding from 18M March ‘15
=> 50M December ‘15
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New Expense Structure
• Streamlined management
• OpEx reduction of >$2M/Q
• Profitability revenue run-rate reduced
from $100M to $75M
iPass Is Unlimited
Delivering unlimited access on unlimited devices
Windows
Mac
Windows
Phone
Android
iOS
Provides predictable, cost-effective pricing for customers
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iPass is Everywhere
94% coverage of the world’s
Top-100 paid airports
Over 2,700 Wi-Fi equipped planes
Over 800 Wi-Fi equipped trains
85,000 Hotel and
Convention Center Venues
Over 150 Wi-Fi Network
Partners
120 Countries | Approaching 50 Million Hotspots
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iPass Is Everywhere
Commanding
Wi-Fi Presence
50m
Approaching 50m
Hotspots Across
100+ Countries
4.5m
Embedded in
>4.5m devices
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> 150
Unique Wi-Fi
Networks
Edited
Partners
Reaching
Consumers
iPass is Invisible
iPass SmartConnect invisibly and securely connects users to the
hotspot that best meets their needs
• Aggregates anonymous user data using patented technology
• Creates a real-time network graph of hotspots classified by
performance and reliability
• Graphs hotspots outside iPass network as well
• Enables iPass to add new hotspots where users need them most
• Enhances hotspot security with last-mile VPN functionality
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Security Layers
Wireless Security (WPA)
Automatic Credential
Assignment (ACA)
Last Mile VPN for
Global Hotspot Security
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Wi-Fi protected access
Hide and encrypt
credentials
Encrypt data
The IP Behind Everywhere and Invisible
iPass developed and patented technology is turning
Everywhere and Invisible into a REALITY.
A sampling…
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Network Probe (US 8606885 B2)
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Service Quality Management (US 8606885 B2)
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Network Characterization (US 20070073868 A1
… and about 30 more patents where these came from.
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So Unlimited, Everywhere, Invisible
Where are we going?
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We’re Going to Everything…
It’s not just people that need to be connected
We’re Going to Every Device
The Internet of Things is real.
It’s here. And it must be connected
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So how are we getting there?
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Improved Go-To-Market Strategy
Before:
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Historical focus on large enterprise (LE) IT
Product design dictated by IT – not end-user
Mix of channel and direct sales – no clarity
Long sales cycles – custom pricing
Unpredictable revenues
Expensive account management model
LE
-------SME
After:
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Launch Unlimited and focus on broader segment
Standard priced cloud-based offerings (SaaS)
New logos/bookings with inside sales/hunters and
shorter sales cycles
Channel model in EMEA, LATAM & APAC and
direct sales in NA (for now)
---------------------Very Small
Executing to Plan
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UNLIMITED is making connectivity cost effective:
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EVERYWHERE is making connectivity ubiquitous and prolific:
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Launched iPass SmartConnect with super-secure connection through automatic virtual private
network (VPN) tunneling.
Setting the stage for Wi-Fi first – but not Wi-Fi only user connections.
Improving UX with updates iOS, Android, Windows, and Mac.
STREAMLINED management is delivering results:
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Integrating strategic partners Devicescape, Fon and TWC.
Pass services currently embedded on 4.5+M devices globally and growing.
INVISIBLE is making connectivity smart.
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Expanded channel partners in Italy, France, Germany and India.
Posted Q315 ACV of $1.6M , including significant upsell.
Increased deferred revenue by $0.4M to $2.5M at Sept. 30, 2015.
OpEx reduction of >$2M/Q.
Profitability revenue run-rate reduced from $100M to $75M.
Q3 2015 Financials
Income Statement
Balance Sheet (Sept. 30, 2015)
($ in millions)
Q3'15
Assets
Cash and Cash Equivalents
$24.2
Open Mobile Enterprise
$12.5
Accounts Receivable, Net
10.2
$10.2
Prepaid Expenses & Other Current Assets
Network
Total Current Assets
2.5
$36.9
Platform and Other
2.3
Open Mobile Exchange
$1.7
Property and Equipment, Net
4.6
Legacy iPC
$0.8
Other Assets
0.6
Total Revenue
Network Access Costs
Operating Expenses (excl. Restructuring) (1)
Total Assets
$15.0
Liabilities & Stockholders' Equity
Current Liabilities
$7.2
$10.2
Network Gross Margin
41.1%
GAAP Net Loss
$(3.4)
Adjusted EBITDA (2)
$(1.6)
(1) The company recorded Restructuring expense of $0.9m in Q3’15.
(2) The company defines Adjusted EBITDA as net (loss) adjusted for interest income
(expense), income taxes, depreciation and amortization, stock compensation expense,
restructuring charges, net income (loss) from discontinued operations, CEO exit costs,
20 and non-recurring legal & proxy contest costs; see notes to Earnings Press Release and
SEC filings for reconciliation of non-GAAP to GAAP numbers and definitions.
Long-Term Liabilities
Total Stockholders' Equity
Total Liabilities & Stockholders' Equity
Deferred Revenue (Short & Long-term)
Up from $0.6 million at 12/31/2014
$16.0
1.3
Total Liabilities
(3)
$42.1
$17.3
24.8
$42.1
$2.5 (3)
Creating Shareholder Value
iPass Is:
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UNLIMITED
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EVERYWHERE
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INVISIBLE
And building the foundation to be….
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EVERYTHING
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Board authorized
share repurchase
program
of up to
$3 million
through
December 31, 2016
iPass Inc.
Unlimited
Global Headquarters
3800 Bridge Parkway
Redwood Shores, CA 94065
Investor Relations
Kirsten Chapman/Becky Herrick
LHA
+1 (415) 433-3777
[email protected]
Everywhere
Invisible