For personal use only MOBILE EMBRACE ASX: MBE 2016 AGM CEO ADDRESS. Chris Thorpe 24 Nov 2016 REACH ENGAGE TRANSACT EMBRACE

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1 MOBILE EMBRACE ASX: MBE 2016 AGM CEO ADDRESS Chris Thorpe 24 Nov

2 TABLE OF CONTENTS 2016 FY RESULTS 1. THE CHALLENGE AND GLOBAL OPPORTUNITY FOR MOBILE 2. MBE OVERVIEW FINANCIAL REVIEW 4. GROWTH STRATEGY 5. OUTLOOK APPENDICES P 3 P 6 P 14 P 20 P 27 P 29 2

3 World Population Mobile Phone Accts People with Bank Accts Credit Card Accts THE GLOBAL OPPORTUNITY FOR MOBILE MARKET OPPORTUNITY PROJECTED INTERNET ACCESS 2016 GLOBAL DIRECT CARRIER BILLING MBE s Opportunity DESKTOP 1.2 BILLION MOBILE 2 BILLION $16.6 bn $25 bn High concentration in APAC People (billion) 44% of the world s population MOBILE USAGE Check phone 85 times per day = Mobile Internet and Apps hours per day APP DOWNLOADS CUSTOMER CONVERSION Credit Card MBE Carrier Billing 1 x 6 x SMARTPHONE PURCHASES 180 billion 284 billion 2015 $122 billion 2020 $319 billion Nearly one in two dollars of online spend will stem from mobile in 2020 See Appendix for sources

4 THE SCARCEST COMMODITY FOR BUSINESSES TODAY IS HUMAN ATTENTION FACT: Human attention span has dropped from 12 seconds in 2002 to only 8 seconds in 2013, which is one second shorter than a goldfish. People are captivated by their devices Consumers look at phone 85 times/day and have short attention span Consumers expect to run their lives through their phone, seamlessly engaging and transacting REACHING CUSTOMERS PRESENTS A HUGE CHALLENGE FOR BUSINESSES 4

5 OUR OPPORTUNITY IS EVERY BUSINESSES CHALLENGE To acquire customers, businesses must: Reach and Transact with the growing volume of consumers who prefer to engage on mobile devices and Monetise the transactions To do so you must: Give consumers relevant marketing and easy payment options

6 WHO WE ARE MOBILE EMBRACE COMPANY OVERVIEW 6

7 GLOBAL MOBILE COMMERCE COMPANY MOBILE MARKETING AND CARRIER BILLING OUR TEAM TECHNOLOGY LEADERSHIP EXPERIENCE Digital and mobile specialists in Sydney, Melbourne, NZ, UAE, UK and Kuala Lumpur Global-leading technology platforms Led by founders (since 2005) and managers holding substantial equity in MBE Leaders have 70 years combined mobile marketing & carrier billing expertise 7

8 WHAT WE DO Carrier Billing Mobile Marketing Any marketing activity that is designed to interact with a consumer whilst they are using their mobile phone or any other hand held device A mobile payment method that allows a consumer to purchase a product from a third party vendor via their mobile phone bill 8

9 WE VE COME FAR Founded in 2005, MBE is operating across: 16 countries supported by 107 specialist staff with a reputation for delivery and we are focused on our continued growth We are strong in our experience, the quality of our businesses and our infrastructure, our determination to succeed and our dedicated and talented people, our greatest strength

10 WE ARE MBE OUR TRACK RECORD PROVEN Consistent, successful business delivery to 200+ brands, over 11+ years Global agreements with major telecommunications groups Five-year revenue 40%, EBITDA 100% and EPS CAGR 325% PROFITABLE Revenue of $60.6 million up 83% YoY from $33 million EBITDA of $9.5 million up 86% YoY from $5 million Basic EPS 1.26 cps up 57% YoY from 0.8 GROWING International operating footprint tripled from FY15 to FY16 Monthly transactions increased 50% from 2 to 3 million over the year Carrier billing live 10 countries with capacity to expand into 10 more countries new territories pending STRAEGIC PLAN 10

11 OUR GROWING GLOBAL FOOTPRINT Australia Bahrain Egypt France Hong Kong Malaysia New Zealand Norway Pakistan Qatar Saudi Arabia Singapore Switzerland Thailand United Arab Emirates United Kingdom

12 ESTABLISHED AND PROVEN NETWORKS CARRIER PARTNERS Integrating with the world s largest carriers to provide Carrier Billing to their customers BRANDS Delivering customers for over 200 brands and agencies globally PUBLISHERS Hundreds of brands and agencies, delivering incremental revenue to quality publishers

13 QUALITY PRODUCTS Diverse portfolio. Content Providers partner with MBE to acquire, bill and manage customers at scale. A SELECTION OF OUR CARRIER BILLING PRODUCTS Subscription services driving strong annuity revenue VIDEO-ON-DEMAND Short-form VOD content across multiple genres MOBILE SECURITY Virus and malware protection on your mobile devices FITNESS Manage your health and fitness with our fitness tracker GAMES Huge selection of quality games EDUCATION Educational games for students SPORTS Watch some of your favourite sport at anytime 13

14 2016 REVIEW 14

15 $m $m PROVEN PROFITABLE GROWING FINANCIAL RESULTS 60 REVENUE Exceeded guidance 9 EBITDA Exceeded guidance FY11 FY12 FY13 FY14 FY15 FY16-1 FY11 FY12 FY13 FY14 FY15 FY16 15

16 $ m $ m PROVEN PROFITABLE GROWING REVENUE BREAKDOWN BY TRANSACTION DIRECT CARRIER BILLING MOBILE MARKETING FY14 FY15 FY16 0 FY14 FY15 FY16 16

17 BUSINESS SENSITIVITIES MARKET TECHNOLOGY COMPETITORS REGULATION Fluctuation in mobile advertising spend, Effective access to inventory, business spend on mobile / digital or consumer sentiment Lumpiness that can come from campaign sales or change in spending patterns, changing market conditions or technologies that may impact access Forex Hedging Strategies in place Cash conservatively managed Competitive technologies Risk that new technologies emerge that impact competitive advantage or market environment Carrier support of billing platforms Carriers changing their support for carrier billing of mobile products and services Programmatic Platforms Use of platforms for purchase/pricing of ad inventory negatively impacting demand or access for mobile advertising New competitive market entrants Risk that new competitors enter market with a similar business Marketing channels, New Product and Billing channel performance Non-performance of marketing channels or disinterest in products by consumers Regulation Changes in rules around the regulation of mobile products and services and digital marketing Restrictions in handset platform access e.g. Apple s current ecosystem Handset manufacturers or mobile platform developers restricting consumer access to products and services 17

18 PROVEN PROFITABLE GROWING HALF YEAR GUIDANCE 1H13 $M 1H14 $M 1H15 $M 1H16 $M 1H17 $M Revenue >28 EBITDA >2 NPAT * FULL YEAR GUIDANCE Revenue EBITDA >$70 m >$8 m 18

19 $ Million PROVEN PROFITABLE GROWING INTERNATIONAL DIRECT CARRIER BILLING REVENUE GROWTH 2.5 Forecast 2 GLOBAL ORGANIC GROWTH Strong global organic growth in 2.5 years GLOBAL CUSTOMER ACQUISITION Model proven in multiple territories in line with stated strategy INTERNATIONAL TERRITORIES Existing agreements provide scope for expansion of carrier billing operations into multiple countries new agreements in the pipeline 0 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q

20 GROWTH STRATEGY 20

21 THREE YEAR GROWTH STRATEGY 1. INTERNATIONAL GROWTH 2. PROPRIETARY DATA ASSETS 3. TECHNOLOGY 21

22 THREE YEAR STRATEGY 1. INTERNATIONAL GROWTH STRATEGY Build expansive MBE global operational footprint and financial performance GROUP PROGRESS June 2015, 5 countries November 2016, 16 countries COMMERCIAL BENEFITS Diversification Strengthened partner relationships Scalable model stable fixed costs CARRIER BILLING BY THE NUMBERS Countries 3 11 >30 Telcos 5 24 >50 Addressable Market 30 m 340 m >1.0 bn 22

23 $m THREE YEAR STRATEGY 1. INTERNATIONAL GROWTH 25 Forecast % GROUP INTERNATIONAL REVENUE GROWTH International revenue forecast to grow > $25m (up 140%) from $10.6m in FY % INTERNATIONAL CUSTOMER BASE Experiencing strong growth across multiple territories International Transactions have grown 100% since June FY15 FY16 FY17 23 INTERNATIONAL REVENUE

24 THREE YEAR STRATEGY 2. PROPRIETARY DATA ASSETS STRATEGY Grow our proprietary data assets to enable targeted acquisition of valuable customers at massive scale PROGRESS o Average monthly transactions increased 50% from 2 million FY15 to 3 million FY16 o Data assets growing in multiple territories expanding targeting capabilities and delivering strong annuity revenues COMMERCIAL BENEFITS o Higher quality data drives ability to turn consumers into customers through targeted marketing o Businesses pay more for delivery of quality customers o Loyal business partners and recurring spend 24

25 THREE YEAR STRATEGY 3. TECHNOLOGY PROPRIETARY MARKETING AND BILLING PLATFORMS STRATEGY Continue to enhance MBE technology platform assets to further strengthen competitive advantage and scalability PROGRESS o MOBIPAY NINJA new proprietary Billing and Customer Management platform is being rolled out o New Automation features are now live on Mobile Marketing Platform o New business product launches on Mobile Marketing Platform COMMERCIAL BENEFITS o Faster, more cost effective global carrier integration o Better customer conversion rates and diversity o Marketing spend efficiency o Mobile digital marketing platforms generating new parallel revenue streams

26 ADDING VALUE TO OUR CLIPP INVESTMENT USER STATS > 200,000 downloads > 98,000 registered consumers o 750 venues live o 250 on Last Minute Deals o Focus 2016 has been on growing Last Minute deals to increase usage at each venue o FY17 focus is venue growth, usage and major brand partnership BRAND PARTNERSHIPS o Partnership opportunity with major breweries o They promote Clipp and offer a free drink o Proven results from test campaigns CLIPP FOR BUSINESS HOSPITALITY o Launched August 2016 o Enables staff discounts for major hospitality chains (avg 900+ staff per chain) o Venues direct all staff to use Clipp to receive discounts up to 50% off food and drink in their venue CLIPP FOR BUSINESS CORPORATE o Enables venues to white label a domain and provide discounts to staff of nearby offices o Corporates already enabled: Macquarie Bank, AMP KPMG, EY, Ch7 WHAT WE OWN o MBE currently owns 31% of Clipp o $2.95m of a $3.5m drawdown facility has been fulfilled o If converted today MBE would own 72% of Clipp 26

27 OUTLOOK MOBILE SECTOR STRONG Fundamentals for the mobile marketing and carrier billing sectors are sound. Industry tail winds are strong SUPPORTED MODEL Subscription billing, recurring revenue, business model is growing in popularity CONSUMER ENGAGEMENT The way consumers transact through their mobile devices is evolving at rapid pace OPERATIONAL DIVERSITY Continued rollout of MBE mobile marketing and carrier billing capabilities into international markets is driving growth and diversifying revenue MARKET COMPETITIVE Continued development of MBE proprietary technology platforms and datasets is building competitive strength, commercial robustness and marketing channel diversity 27

28 SUMMARY Mobile Embrace was established 11 years ago and is now a market leader We have a strong track record of growing earnings and revenue We are focused on growing the business We have a diversified business model which is Internationally proven We continue to expand in new territories 28

29 APPENDIX 29

30 CASE STUDIES: SUCCESS WITH MBE CASE STUDY 1: Carrier Billing (UK) CASE STUDY 1: Mobile Marketing (UAE) PARTNER BUSINESS PROBLEM: Our business objective is to grow the membership numbers and revenue of our product, but how do we get it to mobile consumers? PARTNER BUSINESS PROBLEM: Our business objective is to grow the sales of BBQs but how can we target consumers on mobile that will convert to valuable customers? Product partner works with Mobile Embrace to take FiTTR to consumers Mobile Embrace trading desk engages with consumers on multiple digital channels & platforms Individual becomes a customer by: Marketing transactions: 1. Agreeing to subscription Billing Transaction: 2. Agreeing to be billed Mobile Embrace manages users on an ongoing basis throughout their lifetime, optimising customer lifetime value Week 2 Week 3 Weber works with Mobile Embrace to utilise specific datasets to target and reach interested consumers Mobile Embrace engages with consumers on multiple digital platforms Mobile Embrace adds value by generating quality leads Marketing Transaction: Interested consumers agree to be communicated to by Weber Weber uses Mobile Embrace s quality leads to drive high customer conversion Week 1 Demographics Female (72%) Active / Health enthusiasts / Foodie / Travel Celebrity culture / Lifestyle Due to sophisticated customer experience and care, customers continue to use product week after week via subscription model Demographics Male English & Arabic speaking / Foodie / Outdoors / Sports / Travel 30

31 THE FUTURE IS SUBSCRIPTION SUBSCRIPTION BILLING PLATFORMS SUPPORT A DIVERSE SET OF MONITESATION MODELS 1 One-time transactions In-app purchases Micro-transactions One-time add-ons DIGITAL SUBSCRIPTIONS Consumers are willing to pay regularly for quality mobile digital products and content THE MODEL WORKS Spotify, Netflix, Foxtel, SMH, News Ltd, Premier League, Apple and Google App Stores Subscriptions Monthly Quarterly Annually Custom Timeframe Family Plans Pricing Tiers Freemium / Trial Usage / Consumption Min Use Quarterly Annually Thresholds Rollover BILLING MADE EASY Subscription payment made seamless with direct carrier billing straight to customers mobile phone bill DELIVERS GLOBAL SCALE Scalable, repeatable, transportable. Leverage cloud based technology to drive global recurring revenues MERCHANDISING RIGHT PLACE, RIGHT TIME MBE is strongly positioned to grow subscriptionbased business globally via DCB with expanding major Telco partners 1 The Forrester Wave: Subscription Billing Platforms, Q4 2015: November 11, 2015.

32 STATISTICS SOURCES The global population vs: mobile phone vs bank account vs credit card Source: Ovum Report, 2016 App download growth from 180 billion times in 2015 to 284 billion times in 2020 Source: Wired 2015, International Business Times 2016 Carrier Billing in 2015 worth $16.6 billion, will be $25.3 billion in 2019 Source: Ovum Report 2016 Mobile usage - 85 times a day/5 hours a day: Nottingham Trent University ( More information and numbers on the m-commerce stat from Goldman Sachs: $204 billion in 2014 to $626 billion in 2018 ( Smartphone purchases 2015 $122 billion, $319 billion in 2020 Source: Javelin Report 2016

33 DISCLAIMER This presentation has been prepared by Mobile Embrace Limited (ABN ) (MBE). Each recipient of this presentation (Recipient) is deemed to have agreed to accept the qualifications, limitations and disclaimers set out below. MBE and its subsidiaries, directors, officers, employees, advisers or representatives (together, Beneficiaries) make no representation or warranty, express or implied, as to the accuracy, reliability or completeness of any information contained in this presentation, including any forecast or prospective information. Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. The historical information in this presentation is, or is based upon, information that has been released to the market. For further information, please see past announcements released by MBE to ASX. The forward-looking statements included in this presentation involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, the Beneficiaries. Actual future events may vary materially from the forward looking statements and the assumptions on which those statements are based. Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. Similarly, statements about market and industry trends, which are based on interpretations of current market conditions, should be treated with caution. Such statements may cause the actual results or performance of MBE to be materially different from any future results or performance expressed or implied by forward-looking statements. Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Such forward-looking statements speak only as of the date of this presentation. MBE disclaims any intent to, and does not promise or undertake to, update publicly any forward-looking statements or any other content of this presentation, whether as a result of new information, future events or results or otherwise. This presentation is a general overview only, it does not take into account the individual investment objectives, financial situation or particular needs of any person, and it does not purport to contain all the information that may be required to evaluate an investment in MBE. The information in this presentation is provided personally to the Recipient as a matter of interest only. It does not amount to an express or implied recommendation with respect to any investment in MBE, nor does it constitute investment, legal, tax or other advice. The Recipient, intending investors and their respective advisers, should: (a) conduct their own independent review, investigations and analysis of MBE, and of the information contained or referred to in this presentation; and (b) seek professional advice as to whether an investment in the securities of MBE is appropriate for them, having regard to their personal objectives, risk profile, financial situation and needs. Nothing in this presentation is or is to be taken to be a solicitation, offer, invitation or other proposal to subscribe for MBE securities. This presentation does not and will not form part of any contract for the acquisition of MBE securities. The distribution of this presentation in jurisdictions outside Australia may be restricted by law and persons who come into possession of this presentation in such jurisdictions should seek advice on and observe any such restrictions. Except insofar as liability under any law cannot be excluded, none of the Beneficiaries shall have any responsibility or liability for any information contained in this presentation or in any other way for errors or omissions (including responsibility to any persons by reason of negligence). 33