Non-GAAP financial measures. Forward looking statements

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2 Forward looking statements Today s discussion may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of Such statements relate to future events and expectations and involve known and unknown risks and uncertainties. Verifone s actual results or actions may differ materially from those projected in the forward-looking statements. For a summary of the specific risk factors that could cause results to differ materially from those expressed in the forward-looking statements, please refer to Verifone s filings with the Securities and Exchange Commission, including its annual report on Form 10-K and quarterly reports on Form 10- Q. Verifone is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise Non-GAAP financial measures With respect to any non-gaap financial measures presented in the information, reconciliations of non- GAAP to GAAP financial measures may be found in Verifone s quarterly earnings release as filed with the Securities and Exchange Commission as well as the Appendix to these slides. Management uses non-gaap financial measures only in addition to and in conjunction with results presented in accordance with GAAP. Management believes that these Non-GAAP financial measures help it to evaluate Verifone s performance and to compare Verifone s current results with those for prior periods as well as with the results of peer companies. These non-gaap financial measures contain limitations and should be considered as a supplement to, and not as a substitute for, or superior to, disclosures made in accordance with GAAP 2

3 Agenda Paul Galant Vision Driven by clients current and future needs Vin D Agostino Strategy Defining market dynamics and strategy for growth Glen Robson Solutions Launching nextgeneration, clientcentric devices and services Joe Mach June Felix Carlos Lima Steve Aliferis Regional Leadership Delivering global solutions locally Sheetal Shah Operations Increasing efficiency and discipline Marc Rothman Finance Driving improved results and delivering greater shareholder value 3

4 Agenda Paul Galant Vision Driven by clients current and future needs Vin D Agostino Strategy Defining market dynamics and strategy for growth Glen Robson Solutions Launching nextgeneration, clientcentric devices and services Joe Mach June Felix Carlos Lima Steve Aliferis Regional Leadership Delivering global solutions locally Sheetal Shah Operations Increasing efficiency and discipline Marc Rothman Finance Driving improved results and delivering greater shareholder value 4

5 Verifone history Verifone founded Vx series Mx series mpos series 5

6 Verifone is a company that is essential to the payments industry We are a leader in virtually all markets where we operate Verifone cloud services process 7.6B transactions annually ~30M devices globally accepting payments securely Payments accepted across >150 countries We earned $2B total revenue in FY16 ~6,000 professionals working around the world Provide our clients with: Consumer payments acceptance Connectivity between merchants and financial institutions Security and comprehensive payment and commerce services 6

7 OUR VISION To be our clients most trusted, secure, and innovative technology partner, providing integrated payments and commerce solutions globally 7

8 Verifone s clients are facing unprecedented change Market forces impacting our clients IMAGE IMAGE IMAGE Acceleration away from cash to electronic payments Proliferation of POS solutions Increasing complexity of consumer payments Convergence of payments and commerce Growing consumer expectation for omni-channel experiences 8

9 Our clients need Verifone to help navigate these market forces and drive growth Create more POS touch points with high personalization and accept payments in multiple formats Drive differentiated and higher yielding consumer relationships to compete on more than price Reduce security and fraud risks Lower total cost of ownership Enable omni-channel experiences 9

10 Verifone is a strong and unique partner for our clients 35 years of experience deploying highly secure and ubiquitous payment solutions across the globe We are a truly global, Silicon Valley based technology company, with deep payments expertise We operate as a solutions company, leveraging global scale and local execution We have a focused innovation agenda targeting frictionless consumer authentication and identity, Internet of Payment Things, and alternative payments Our guiding principle is that we are an enabler to our clients and do not compete in their core businesses 10

11 OUR STRATEGY Build next-generation devices and connect them with our expanded services to enable the future of payments and commerce 11

12 To execute this strategy, we set four goals in FY14 1 Earn back the trust of our clients 2 Launch next-generation devices to meet the evolving needs of our clients 3 Connect our clients to Verifone cloud services through new platforms 4 Enable new omni-channel and commerce capabilities through proprietary technology and partnerships 12

13 and we have made material progress in achieving them FY14 Today Status 1 Earn back the trust of our clients Terminal sales orientation Solutions and relationship orientation 2 Launch next-generation devices Fragmented terminal base with limited capabilities Next-generation commerce capable devices 3 Connect our clients to Verifone cloud services Multiple operating systems, gateways, and services Streamlined platforms for payments and commerce 4 Enable new omni-channel and commerce capabilities Limited e-commerce and omni capability Broader e-commerce and omni technology and partnerships 13

14 creating real value for our clients and Verifone Our impact Earn back the trust of our clients Launch next-generation devices Connect our clients to Verifone cloud services Enable new omni-channel and commerce capabilities We ve significantly increased revenues with our Top 100 clients over the past 3 years Next-generation devices will generate between 5-10% of revenue in FY17 We have ~2 million devices connected to our payment services platforms globally Our non-gaap Services revenue has grown from ~38% in FY14 to an expected 41% in FY17 14

15 In FY17, we begin one of the most robust launches of new devices and services that will fuel our growth through FY Verifone founded Vx series Mx series mpos series Engage Series E-series (mpos) Value Series Carbon (ipos) 15 Device Services Payment Services Commerce Services Omni-channel

16 Our success provides a foundation from which we will establish three pillars of growth increasing total revenues at a CAGR of 5-6% Provide Inew solutions in the market segments where we operate II Expand our share in under-penetrated geographies Capture new segments with new solutions Verifone FY17 FY20 CAGR Systems Engage E-series Value Carbon +4-5% Services Device Services Payment Services Commerce Services Omnichannel +7-8% 16 Note: P&L figures are non-gaap

17 Success with our clients translates into success with our shareholders Revenue Growth Operating Margin Target EPS Growth +5-6% FY17-FY20 CAGR 15%-16% FY20 ~15% FY17-FY20 CAGR 17 Note: P&L figures are non-gaap

18 Agenda Paul Galant Vision Driven by clients current and future needs Vin D Agostino Strategy Defining market dynamics and strategy for growth Glen Robson Solutions Launching nextgeneration, clientcentric devices and services Joe Mach June Felix Carlos Lima Steve Aliferis Regional Leadership Delivering global solutions locally Sheetal Shah Operations Increasing efficiency and discipline Marc Rothman Finance Driving improved results and delivering greater shareholder value 18

19 Our strategy is shaped by market forces impacting our clients and our key assets Forces impacting our clients Verifone s key assets 1 Acceleration away from cash to electronic payments A trusted brand 2 Proliferation of POS solutions 3 Increasing complexity of consumer payments Our Strategy Differentiated relationship management, product and engineering talent Deep experience in payments security and regulations 4 5 Convergence of payments and commerce Growing consumer expectation for omni-channel experiences Global scale and local execution Comprehensive portfolio of devices and services 19

20 OUR STRATEGY Build next-generation devices and connect them with our expanded services to enable the future of payments and commerce 20

21 MARKET FORCES 1 Acceleration away from cash to electronic payments Card payments are growing Consumer transactions by type Debit 4% 5% Credit 3% 3% Other 3% 4% Cash 90% 88% 7% 4% 4% 85% Drivers of the shift Growing consumer income (e.g., urban consumer income in China growing 4% per annum) Modernizing payment systems (e.g., cashless initiatives in Thailand, Indonesia) Growing financial inclusion (e.g., World Bank Universal Financial Access 2020 initiative) Expanding fiscalization (e.g., Turkey directive on tax office communications) Growing use of electronic payments is increasing demand for payment devices and services Demonetizing paper currency (e.g., India ceasing usage of 500 and 1,000 notes) 21 Source: McKinsey Global Payment Map

22 MARKET FORCES 2 Proliferation of POS solutions ~80% of US retailers are projected to have implemented mpos/ipos in some form by FY20 31% 79% Drivers of the shift Larger merchants looking for new checkout solutions to create new personalized shopping experiences for their consumers Small merchants who view mpos/ipos as an appealing, lower-cost alternative Large and small merchants are increasing their demand for new types of payment devices FY13 FY20 22 Source: Business Intelligence July 2017

23 MARKET FORCES 3 Increasing complexity of consumer payments New payment types are expanding with increases in cross-border commerce and the rise of digital wallets Payment formats are expanding as payment becomes embedded into different devices Security challenges and new regulatory requirements are raising the bar in payments Clients are seeking a technology partner who can help navigate the complex payments landscape 23

24 Merchant services providers MARKET FORCES 4 Convergence of payments and commerce Payments and Financial Services The Last Inch of consumer payments Loyalty and Incentives Targeted Marketing Convergence creates demand for nextgeneration devices and services 24

25 5 MARKET FORCES Growing consumer expectation for omni-channel experiences Businesses are moving from silo-channel to omni-channel Single-channel No e-commerce channel, traditional stores Silo-channel e-commerce channel and stores exist next to each other Omni-channel e-commerce channel closely integrated with store network Omni-channel requires the integration and inter-operability of card-present and card-not-present solutions Lower complexity Higher complexity 25

26 OUR CAPABILITIES Verifone s key assets position us to provide solutions to our clients as they navigate these market forces Brand 35 years of experience and a brand that stands for security and ubiquity in payment acceptance Next-generation devices and services to execute our vision and achieve our goals Devices & Services Talent ~6,000 people working towards delivering the most comprehensive suite of solutions Accepting payments in >150 countries with global insight and local execution Distribution Experience Deep understanding of our clients business objectives and security needs 26

27 OUR STRATEGY Leveraging our assets to solve clients' opportunities and challenges by launching next-generation devices 1 2 Forces impacting our clients Acceleration away from cash to electronic payments Proliferation of POS solutions Scaling nextgeneration devices Engage E-series Our key assets A trusted brand Differentiated relationship management, product and engineering talent 3 Increasing complexity of consumer payments Value Carbon Deep experience in payments security and regulations 4 Convergence of payments and commerce Global scale partnered with local execution 5 Growing consumer expectations for omnichannel experiences Comprehensive portfolio of devices and services 27

28 OUR STRATEGY and connecting our clients to Verifone Services platform to enable the future of payments and commerce 1 2 Forces impacting our clients Acceleration away from cash to electronic payments Proliferation of POS solutions Verifone Services offerings Device Services Payment Services Our key assets A trusted brand Differentiated relationship management, product and engineering talent 3 4 Increasing complexity of consumer payments Convergence of payments and commerce Commerce Services Omnichannel Deep experience in payments security and regulations Global scale partnered with local execution 5 Growing consumer expectations for omnichannel experiences Comprehensive portfolio of devices and services 28

29 By executing this strategy, Verifone s next-generation devices will capture a larger share of the overall device market Market ex-verifone Verifone Mature markets are expanding as economies grow and merchants embrace evolving payment standards such as PCI and EMV ~$3.8B Mid-single Digit >$4.4B Emerging market growth lead by government mandates such as fiscalization and demonetization Global growth in new product segments such as ipos and mpos Sources: ABI Research, Verifone estimates, TAMS

30 and, combined with our new services platform, deliver complete solutions to increase our lifetime revenue per device Commerce Services Lifetime revenue per devices Illustrative Coupons Payment Services Big Data analytics Warranty Payment gateways Integrated cloud POS Devices mpos Traditional Value Device management Card-based loyalty programs Internet of Things Paid search Identity authentication Device services Pay with points E-commerce hosting Advertising Mobile ads Standalone device sale with Payment Services and with Commerce Services 30

31 Our success provides a foundation from which we will establish three pillars of growth Provide Inew solutions in the market segments where we operate II Expand our share in under-penetrated geographies Capture new segments with new solutions Systems Engage E-series Value Carbon Services Device Services Payment Services Commerce Services Omnichannel 31

32 and generates revenue growth Systems Revenue Growth +4-5% Total Revenue Growth +5-6% Services Revenue Growth +7-8% 32 Note: P&L figures are non-gaap

33 Agenda Paul Galant Vision Driven by clients current and future needs Vin D Agostino Strategy Defining market dynamics and strategy for growth Glen Robson Solutions Launching nextgeneration, clientcentric devices and services Joe Mach June Felix Carlos Lima Steve Aliferis Regional Leadership Delivering global solutions locally Sheetal Shah Operations Increasing efficiency and discipline Marc Rothman Finance Driving improved results and delivering greater shareholder value 33

34 OUR MISSION Delivering solutions that delight our clients and power Verifone s evolution from a devices sales company to a solutions provider 34

35 Verifone is focused on solving clients needs by combining our unique products into solutions Product strategy Our integrated solution Systems Launch four families of next-generation devices built on common platforms Payment Commerce Payment Commerce Reduce clients total cost of ownership through Device Services Enhance security and flexibility of our client s POS environment through Payment Services Build a comprehensive marketplace, providing access to an ecosystem of proprietary and 3rd party apps Become a leader in omni-channel solutions through proprietary technology and partnerships Systems Combine next-generation devices and our new services platform to enable our clients to grow revenue 35

36 We are fundamentally changing how we build our devices Payment Commerce Systems Client From devices... purpose built to accept card payments To network endpoints designed and built with extensive client inputs Market designed and built for developed markets and stretched to cover emerging markets that position us to compete and succeed in all markets through a full suite of next-generation devices Commerce with limited commerce enablement abilities with full commerce enablement capabilities 36

37 Our full suite of next-generation devices comprises four families Payment Commerce Systems Engage Next-generation of our best selling suite of devices E-series Targeted for the global growing mpos segment Value Positioned for price sensitive emerging markets Carbon Leading edge and most innovative product for the fast growing ipos segment 37

38 Engage will further our leadership position in the markets we operate Payment Commerce Systems Engage Value for clients Leading performance and features Commerce enabled Provides superior consumer experience Built for Key Client Segments Target Product Segment Key Target Markets All segments Multilanes, Portables, Countertops, Transportables Mature and certain emerging markets Value for Verifone Highly competitive offerings Enhances recurring revenue through commerce services Faster certification Improves margin profile 38

39 E-series mobility devices will strengthen our leadership with large merchants and expand our offerings to cover smaller merchants Payment Commerce Systems E-series Value for clients Personalizes service away from the register Line busting Provides acquirers Verifone branded mobility product for the SMB segment Built for Key Client Segments Target Product Segment Key Target Markets Large Merchants, SMBs thru Banks/Acquirers Mobile Payment Acceptance All Regions Value for Verifone Further strengthens position with large merchants Positions Verifone to compete in $350M+ market for SMB mobility devices Enables a large footprint for attached services for the under-penetrated market 39

40 Value devices targeted for price-sensitive emerging markets Payment Commerce Systems Value Value for clients Features and functions tailored for the pricesensitive markets Verifone brand proposition at value prices Built for Key Client Segments Target Product Segment Key Target Markets 40 Banks / Acquirers Portables, Countertops, Transportables Price sensitive emerging markets Value for Verifone Enables Verifone to compete in pricesensitive high growth emerging markets China South East Asia Latin America EMEA

41 Carbon expands Verifone offering into ipos market segment Payment Commerce Systems Carbon Value for clients The best integrated POS device for the SMBs Creates recurring revenue stream for clients Drives differentiation and merchant stickiness for banks and acquirers Built for Key Client Segments Target Product Segment Key Target Markets 41 Banks / Acquirers ipos Developed and targeted emerging markets Value for Verifone Opens new recurring revenue pools Drives higher margin for Verifone and banks/acquirers Addresses growing client interest

42 The four next-generation device families power our three growth pillars Payment Commerce Systems Provide Inew solutions in the market segments where we operate II Expand our share in under-penetrated geographies Capture new segments with new solutions Engage E-series Value Carbon 42

43 Verifone Services platform is comprised of four categories Payment Commerce Systems Device Services Combination of physical and digital services for estate management Payment Services Provide seamless and secure payment acceptance Commerce Services Create and distribute valueadded-service applications Omnichannel Seamless interoperability between online and offline payments 43

44 Device Services reduce total cost of ownership through rapid and frictionless management of devices and applications Payment Commerce Systems Device Services Value for clients Rapid deployment including remote key loading Remote diagnostics and predictive analytics Improves uptime through predictive maintenance Repair services and client support Built for Key Client Segments Target Product Segment Merchants, Banks / Acquirers All Regions Value for Verifone Broadens and enhances recurring revenue Connects devices for future services upsell Lowers maintenance costs 44

45 Payment Services enhances security and flexibility of our clients POS environment Payment Commerce Systems Accept Tender virtually Types all payment methods through physical and online channels processed through secure Gateways connected to major banks/acquirers Tender Types Payment Channels Gateways Financial Networks Credit & debit Vouchers Terminal Online Cloud Processing Merchant Portal Acquirers VAS Providers Invoices Direct debit mpos Mobile Wallet Token Service Settlement Engine Payment Networks Command Center 45 Multiple payment types Multi-currencies Multi-channel Supports 3rd party devices Proprietary wallet APIs 7.6B transactions/year Merchant analytics State-of-the-art security

46 Verifone Payment Services are tailored to client needs Payment Commerce Systems Built for Large merchants Value for clients Improved consumer experience via custom integrations Simplifies operations via pan-market standardized solutions Value for Verifone Creates loyalty and stickiness Small merchants Turnkey solutions Predictable costs via fixed monthly fees Generates recurring revenue streams Bank acquirers Reduces cost via outsourcing Grows revenue with vertical-specific implementations Leverages clients merchant reach to drive services revenue Processors and distributors Lowers cost of ownership by leveraging Verifone scale and footprint Increases revenue from additional transaction volumes 46

47 Commerce Services improves the overall POS experience by providing access to proprietary and 3 rd party apps Payment Commerce Systems Merchants Consumers Value for clients Drives incremental consumer sales Increases consumer engagement Enables acquirers to deliver merchant solutions by vertical Delivers tools to SMBs to run business better Built for Key Client Segments Target Product Segment Merchants, Banks/Acquirers All Regions Value for Verifone Taps into $100B+ commerce market Creates recurring revenue stream Stickiness and differentiation with clients 47

48 We are integrating our physical POS with e-commerce through proprietary technology and partnerships to deliver omni-channel solutions Purchase online; Return in-store Order ahead; Pick up at restaurant Receive offer online; Redeem in-store Payment Commerce Systems Omni-channel use cases Through proprietary technology in Europe Partnership with CyberSource Examples of omni-channel solutions 170+ Countries 150+ Countries 48

49 Commerce Payment The four service offerings power our three growth pillars Payment Commerce Systems Provide Inew solutions in the market segments where we operate II Expand our share in under-penetrated geographies Capture new segments with new solutions Device Services Payment Services Commerce Services Omni-channel 49

50 We are commercializing our solutions through a powerful Go-To- Market and pricing model Devices Services Device(s) One Time or Recurring revenue From Devices Sales Company Services Device Services Recurring revenue Payment Services Recurring revenue to Solutions Provider Commerce Services Recurring revenue Omni-channel Recurring revenue 50

51 Verifone s innovation agenda is focused on improving payment security and consumer experience Identity and Frictionless Payments Alternative Payments Biometric Authentication Internet of Payment Things Shift from credential presentation to consumer authentication New payment types digital wallets, Bluetooth, barcode, and others Bio-related authentication that offers higher level of security seamlessly Embedding secure payments into connected devices 51

52 Going to market with our next-generation devices and services will drive revenue growth Total Revenue Growth +5-6% 52 Note: P&L figures are non-gaap

53 Presentation Break 53

54 Agenda Paul Galant Vision Driven by clients current and future needs Vin D Agostino Strategy Defining market dynamics and strategy for growth Glen Robson Solutions Launching nextgeneration, clientcentric devices and services Joe Mach June Felix Carlos Lima Steve Aliferis Regional Leadership Delivering global solutions locally Sheetal Shah Operations Increasing efficiency and discipline Marc Rothman Finance Driving improved results and delivering greater shareholder value 54

55 Verifone has a unique global footprint to distribute our next-generation devices and services North America EMEA Latin America Asia Pacific Goal: expand our lead as the #1 provider of devices and attach services Goal: leverage our solutions portfolio to strengthen and expand our franchise Goal: jump-start growth through new devices and services Goal: rebuild the China franchise, maintain share in mature markets, and capture emerging market growth #1 terminal provider in the United States Growing services business Expanding our lead in the Petro market #1 or 2 in markets where we compete Solutions for both emerging and mature markets including omnichannel & cross-border capabilities #1 terminal provider in Mexico, Colombia, and Argentina and a leading terminal provider in Brazil Launched a new gateway in the region to drive growth in services #1 in Australia, New Zealand, India, and other countries Verifone sells to 30 countries in the region 55

56 North America: expand our lead as the #1 device provider and attach services Mid-single Digits TAM Growth FY17 FY20 Verifone #1 terminal provider in the United States Growing services business Growing our lead in the Petro market Local presence: ~1,600 employees, 6 major locations Market Trends EMV is working its way down to smaller retailers with focus from banks/processors Hospitality growth due to QSRs, hotel chains, and pay-at-the-table at restaurants Beginning stages of the outdoor EMV (at-the-pump) upgrade cycle Increasing demand for omni-channel solutions Continued shift from episodic sales to annuity services 56 Sources: ABI Research, Verifone estimates, TAMS

57 North America: expand our lead as the #1 device provider and attach services Provide Inew solutions in the market segments where we operate II Expand our share in under-penetrated geographies Capture new segments with new solutions Increase our presence in the Top 200 retailers Penetrate new verticals and segments Lead in services and omni-channel 57

58 EMEA: leverage our solutions portfolio to strengthen and expand our franchise Low- to Mid-single Digits TAM Growth FY17 FY20 Verifone #1 or 2 in almost all markets where we currently sell devices Solutions for both emerging and mature markets including omni-channel & cross-border capabilities Local presence: ~2,800 employees, 53 facilities Market Trends Omni-channel solutions in high demand Cross-border, driven by e-commerce, will continue to grow double digits Banks and processors more open to partnerships Continued move towards fiscalization and terminalization 58 Sources: ABI Research, Verifone estimates, TAMS

59 EMEA: leverage our solutions portfolio to strengthen and expand our franchise Provide Inew solutions in the market segments where we operate II Expand our share in under-penetrated geographies Capture new segments with new solutions Enhance and expand our Pan- European coverage Partner to bring our value-based solutions to under-penetrated and new countries Capitalize on fiscalization and terminalization trends in the region 59

60 Latin America: jump-start growth through new devices and services Low-single Digits TAM Growth FY17 FY20 Verifone #1 terminal provider in Mexico, Colombia, and Argentina A leading terminal provider in Brazil Launched a new gateway in the region to drive services Extensive device servicing capabilities Local presence: ~400 employees, 8 facilities Market Trends Continued move towards fiscalization Economic and political risks may create volatility Low-cost hardware companies attempting to expand their presence Highly price-sensitive markets 60 Sources: ABI Research, Verifone estimates, TAMS

61 Latin America: jump-start growth through new devices and services Provide Inew solutions in the market segments where we operate II Expand our share in under-penetrated geographies Capture new segments with new solutions Re-establish a leadership position in Brazil and protect our position in other countries Introduce solutions that lower TCO and create new revenue streams for our clients Expand our services offerings 61

62 Asia-Pacific: rebuild the China franchise, maintain share in mature markets, and capture emerging market growth Mid- to High-single Digits TAM Growth FY17 FY20 Verifone #1 in direct-sales markets including Australia, New Zealand, and India Strong distribution partners in evolving markets such as Japan, Malaysia, and Philippines Rebuilding our China franchise Verifone sells to 30 countries in the region Local presence: ~1,200 employees, 22 facilities 62 Market Trends Government mandates in India, Thailand and Indonesia continue to push demand for devices EMV adoption in Japan and Korea are opening new opportunities Competition will remain intense as players try to capture growth and low-cost manufacturers shift their focus towards the rest of Asia Sources: ABI Research, Verifone estimates, TAMS

63 Asia-Pacific: rebuild the China franchise, maintain share in mature markets, and capture emerging market growth Provide Inew solutions in the market segments where we operate II Expand our share in under-penetrated geographies Capture new segments with new solutions Capitalize on demonetization, fiscalization and terminalization trends in the region Introduce products that expand services footprint Leverage value devices to win share in the region 63

64 Factors to consider Technological changes Security-related upgrades Demonetization Fiscalization Foreign Exchange volatility 64

65 Agenda Paul Galant Vision Driven by clients current and future needs Vin D Agostino Strategy Defining market dynamics and strategy for growth Glen Robson Solutions Launching nextgeneration, clientcentric devices and services Joe Mach June Felix Carlos Lima Steve Aliferis Regional Leadership Delivering global solutions locally Sheetal Shah Operations Increasing efficiency and discipline Marc Rothman Finance Driving improved results and delivering greater shareholder value 65

66 Operational Imperatives Driving a new standard of execution for our solutions to deliver faster with better margins 66

67 We have made material progress on our top operational imperatives FY14 Today Results 1 Faster Time To Market Highly fragmented between core engineering & client implementations teams Integrated end-to-end solution deployment 25% reduction in time to market 2 Total Cost Management Fragmented & de-centralized supply chain Undisciplined supplier selection No leverage of common components Strategic & streamlined supply chain Strategic partnering Common components across devices $15M incremental reduction in costs for component & manufacturing 13% increased spend with strategic partners 30% improved platforming 3 Operational Excellence Disconnected demand & supply planning Inefficient device services footprint End-to-end Sales & Operations planning Consolidated service network $6.8M freight cost reductions Eliminated a third of our global repair sites 67

68 Driving gross margin improvement of 300bps by FY20 ~44% ~41% Gross Margin FY17 New Product Introduction Sourcing Freight Services Delivery Product Mix FY20 Design for cost Faster time to market Supplier innovation Supplier consolidation Platform commonality Should-be cost modeling Mode-mix optimization Operations planning Global service platform re-engineering 68 Note: P&L figures are non-gaap

69 Drive inventory days ~30% lower 57 Days 40 Days Inventory Days FY17 Common Components & Products Improved Channel Visibility Product Lifecycle Management Enhanced Delivery Strategic Inventory FY20 Greater leverage of common components & modules Value chain inventory planning Collaborative forecasting Support market fluctuations End of life planning rigor 69

70 Our efforts to drive efficiency and discipline will result in improved operating margin Simplification Operational Excellence Velocity Operating Margin Target 15-16% Deep Relationships 70 Note: P&L figures are non-gaap

71 Agenda Paul Galant Vision Driven by clients current and future needs Vin D Agostino Strategy Defining market dynamics and strategy for growth Glen Robson Solutions Launching nextgeneration, clientcentric devices and services Joe Mach June Felix Carlos Lima Steve Aliferis Regional Leadership Delivering global solutions locally Sheetal Shah Operations Increasing efficiency and discipline Marc Rothman Finance Driving improved results and delivering greater shareholder value 71

72 Reaffirming Q1 and FY17 Guidance Q1 17 FY17 Non-GAAP Net Revenues $450M $1.900B $1.915B Non-GAAP EPS $0.20 $ $1.39 Free Cash Flow N/A ~$120M 72

73 Foundational drivers of shareholder value Large and growing global market opportunity Global scale and local execution Accelerating revenue growth Margin expansion opportunities Higher free cash flow conversion Optimized capital structure 73

74 1. LARGE AND GROWING GLOBAL MARKET OPPORTUNITY Five market forces are creating a large and growing market Market forces Total Addressable Market (TAM) 1 Acceleration from cash to electronic payments Systems $4B 2 Proliferation of POS solutions FY17-FY20 3 Increasing complexity of consumer payments Payments >$10B Mid-single digit growth 4 Convergence of payments and commerce 5 Growing consumer expectation for omni-channel experiences Commerce >$100B 74 Sources: ABI Research, Verifone estimates, TAMS

75 2. GLOBAL SCALE AND LOCAL EXECUTION Verifone is a company that is essential to the payments industry We are a leader in virtually all markets where we operate Verifone cloud services process 7.6B transactions annually ~30M devices globally accepting payments securely Payments accepted across >150 countries We earned $2B total revenue in FY16 ~6,000 professionals working around the world Provide our clients with: Consumer payments acceptance Connectivity between merchants and financial institutions Security and comprehensive payment and commerce services 75

76 2. GLOBAL SCALE AND LOCAL EXECUTION We are a scaled provider and investing to deliver for our clients Global presence (FTEs) ~6,000 professionals globally with local expertise ~1,600 ~400 ~2,800 ~1,200 >40 strategically placed global services centers to meet clients needs R&D expense Services $164M ~$200M Overall investment increased by >20% since FY13 Systems FY13 FY17 R&D spending driven by Services investments 76 Note: P&L figures are non-gaap

77 3. ACCELERATING REVENUE GROWTH Three pillars to accelerating revenue growth Business Lines Regions CAGR Provide new solutions in the market segments where we operate Expand our share in underpenetrated geographies Services ~$1.9B +5-6% ~$2.2B +5-6% ~$1.9B +7-8% ~$2.2B North America EMEA Capture new segments with new solutions Systems +4-5% Latin America APAC FY17 FY20 FY17 FY20 77 Note: P&L figures are non-gaap

78 4. MARGIN EXPANSION OPPORTUNITIES We are driving improvements to our business Introducing next-generation devices with improved gross margin profile Growing digital services at a higher rate than physical services Driving operating efficiencies 78 Transitioning from fragmented device platforms to modern, consolidated platforms Supplementing physical services with payment, commerce, and omnichannel services Reducing development time Improving strategic sourcing and collaboration Simplifying operations Optimizing distribution

79 4. MARGIN EXPANSION OPPORTUNITIES that are also improving our margin ~44% ~41% Gross Margin FY17 New Product Introduction Sourcing Freight Services Delivery Product Mix FY20 Design for cost Faster time to market Supplier innovation Supplier consolidation Platform commonality Should-be cost modeling Mode-mix optimization Operations planning Global service platform re-engineering 79 Note: P&L figures are non-gaap

80 4. MARGIN EXPANSION OPPORTUNITIES Focus on efficiency and cost management drives further operating leverage ~29% Total OpEx ~28% FY17 R&D S&M G&A FY20 resulting in operating margin in the 15-16% range 80 Note: P&L figures are non-gaap

81 4. MARGIN EXPANSION OPPORTUNITIES Delivering more robust top line growth and creating earnings per share leverage FY16 FY17 growth challenges EMV-related comps At-the-pump delays Product & Geo mix Unfavorable FX Revenue 5-6% EPS ~15% (CAGR) FY17 FY20 growth drivers Revenue (5%) EPS (17%) New global product launches Further our Services agenda Structural margin tailwinds Creating operating leverage Low cash tax rate 81 FY16 FY17 FY17 FY20 Note: P&L figures are non-gaap

82 5. HIGHER FREE CASH FLOW CONVERSION We will improve our free cash flow conversion to ~80% Working Capital optimization and CapEx management Free cash flow conversion improvements Free cash flow Conversion rate Inventory (Days) A/R (Days) A/P (Days) CapEx % FY16 $88M 48% FY20 $180M ~80% FY16 FY20 FY16 FY20 FY16 FY20 FY16 FY20 82

83 6. OPTIMIZED CAPITAL STRUCTURE Our strategic priorities for capital allocation Organic investments Modest-sized acquisitions Debt repayments Share repurchases 83

84 6. OPTIMIZED CAPITAL STRUCTURE M&A Considerations Stronger bias toward tuck-in acquisitions Align with core and expansion opportunities Disciplined approach to integration 84

85 6. OPTIMIZED CAPITAL STRUCTURE Sources and uses of cash from FY14 FY16 Source Use $M Free Cash Flow Balance Sheet cash Acquisitions Stock repurchases Debt repayments Financial policy leverage (Gross Debt / EBITDA) between 2.0x-3.0x except for temporary M&A impacts 85

86 Financial performance objectives through FY Organic revenue CAGR in the 5-6% range Operating margin expansion into the 15-16% range EPS CAGR ~15% Convert ~80% of non-gaap net income into free cash flow Optimize debt levels/leverage Target incremental top-line growth through tuck-in M&A 86

87 We have the assets to deliver on our vision 35 years of experience Brand Next-generation devices and services Devices & Services Talent ~6,000 people Accepting payments in >150 countries Distribution Experience Deep understanding 87

88 88

89 Appendix

90 Reconciliation of GAAP to Non-GAAP net revenues Year-ended October 31, 2014 $M, except percentages Note Service net revenues Total net revenues GAAP net revenues $ $ 1,868.9 % of total GAAP net revenues 37.8% Amortization of step down deferred service net revenues at acquisition A Non-GAAP net revenues $ $ Services net revenues as a % of total Non-GAAP net revenues 37.9% 90

91 Reconciliation of GAAP to Non-GAAP Research and Development Expense $M Note Year-ended October 31, 2013 GAAP research and development expenses $ Acquisition, divestiture & restructure related costs B (2.7) Stock based compensation C (6.1) Non-GAAP $

92 Reconciliation of operating cash flow to free cash flow Year ending Three years ending $M Note October 31, 2017 October 31, 2016 October 31, 2016 GAAP net cash provided by operating activities D $ $ $ 640 Less: GAAP capital expenditures D (105.0) (105.3) (300) Free cash flow D $ $ 88.4 $

93 Reconciliation of GAAP to Non-GAAP projected net revenues Three months ending Year ending January 31, October 31, $ in millions Note GAAP net revenues $ 446 $ 1,895-1,910 Adjustment to net revenues A 4 5 Non-GAAP net revenues $ 450 $ 1,900-1,915 93

94 Reconciliation of GAAP to Non-GAAP Earnings per Share Three months ending Year ending January 31, October 31, $ in millions Note Diluted GAAP earnings per share (1) $ (0.08) $ Adjustments: (2) Amortization of step-down in deferred services net revenues at acquisition A $ 0.02 $ 0.02 Amortization of purchased intangible assets B $ 0.20 $ 0.70 Stock based compensation C $ 0.10 $ 0.40 Income tax effect of non-gaap exclusions (3) E $ (0.04) $ (0.14) Diluted Non-GAAP earnings per share (1) $ 0.20 $ (1) Diluted GAAP and non-gaap earnings per share are determined using the most dilutive weighted average number of shares, which includes outstanding RSU and RSA shares in the calculation of the weighted average diluted shares outstanding for periods in which we expect net income. (2) Except for the adjustments noted herein, this guidance does not include the effects of any future acquisition or divestiture related costs, restructuring activities, significant legal matters, and non-recurring income tax adjustments, which are difficult to predict and may or may not be significant. (3) Assuming a GAAP effective tax rate of 12.5% applied to the above non-gaap exclusions. 94

95 Explanatory Notes to reconciliations of GAAP to non-gaap items 95 Note A: Non-GAAP net revenues, costs of goods sold and gross margin. Non-GAAP net revenues exclude the fair value decrease (step-down) in deferred revenue at acquisition. Non- GAAP costs of goods sold exclude the costs of goods associated with the fair value decrease (step-down) in deferred revenue at acquisition. Although the step-down of deferred revenue fair value at acquisition and associated costs of goods sold are reflected in our GAAP financial statements, they result in net revenues and gross margins immediately post-acquisition that are lower than net revenues and gross margins that would be recognized in accordance with GAAP on those same services if they were sold under contracts entered into post-acquisition. Accordingly, we adjust the step-down to achieve comparability to net revenues and gross margins of the acquired entity earned pre-acquisition and to our GAAP net revenues and gross margins to be earned on contracts sold in future periods. These adjustments, which relate principally to our acquisition of AJB during February 2016, enhance the ability of our management and our investors to assess our financial performance and trends. These non-gaap net revenues, costs of goods sold and gross margin amounts are not intended to be a substitute for our GAAP disclosures of net revenues, costs of goods sold and gross margin, and should be read together with our GAAP disclosures. Note B: Merger and Acquisition Related. Verifone adjusts certain revenues and expenses for items that are the result of mergers and acquisitions. Merger and acquisition related adjustments include the amortization of intangible assets, contingent consideration fair market value adjustments, interest on contingent consideration, transaction expenses associated with acquisitions, and acquisition integration expenses. Amortization of intangible assets: Verifone incurs amortization of intangible assets in connection with its acquisitions, such as amortization of finite lived customer relationships intangibles. We are required to allocate a portion of the purchase price of each business acquisition to the intangible assets acquired and to amortize this amount over the estimated useful lives of those acquired intangible assets. Because these amounts have no direct correlation to Verifone s underlying business operations, we eliminate these amortization charges and any associated minority interest impact from our non-gaap operating results to provide better comparability of pre-acquisition and post-acquisition operating results. Contingent consideration fair market value adjustments and interest on contingent consideration: In connection with its acquisitions, Verifone owes contingent consideration payments based upon the post-acquisition performance of and other factors related to acquired businesses. These contingent consideration liabilities are reported at fair market value and incur non-cash imputed interest. Changes in the fair market value of contingent consideration and imputed interest expense vary independent of our ongoing operating results and have no direct correlation to our underlying business operations. Accordingly, Verifone excludes these amounts from our non-gaap operating results to provide better comparability of pre-acquisition and post-acquisition operating results. Transaction expenses associated with acquisitions: Verifone incurs transaction expenses in connection with its acquisitions, which include legal and other professional fees such as advisory, accounting, valuation and consulting fees. These transaction expenses are related to acquisitions and have no direct correlation with the ongoing operation of Verifone s business. Accordingly, Verifone excludes these amounts from our non-gaap operating results to provide better comparability of pre-acquisition and post-acquisition operating results. Acquisition integration expenses: In connection with its acquisitions, Verifone incurs costs relating to the integration of the acquired business with Verifone s ongoing business, which includes expenses relating to the integration of facilities and other infrastructure, information technology systems and employee-related costs such as costs of personnel required to assist with integration transitions. These acquisition integration expenses are related to acquisitions and have no direct correlation with the ongoing operation of Verifone s business. Accordingly, Verifone excludes these amounts from our non-gaap operating results to provide better comparability of pre-acquisition and post-acquisition operating results.

96 Explanatory Notes to reconciliations of GAAP to non-gaap items Note C: Stock-Based Compensation. Our non-gaap financial measures eliminate the effect of expense for stock-based compensation because they are non-cash expenses that management believes are not reflective of ongoing operating results. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types which affect the calculations of stock-based compensation, we believe that the exclusion of stock-based compensation allows for more accurate comparisons of our operating results to our peer companies. Stock-based compensation is very different from other forms of compensation. A cash salary or bonus has a fixed and unvarying cash cost. In contrast the expense associated with a stock based award is unrelated to the amount of compensation ultimately received by the employee; and the cost to the company is based on valuation methodology and underlying assumptions that may vary over time and does not reflect any cash expenditure by the company. Furthermore, the expense associated with granting an employee a stock based award can be spread over multiple years and may be reversed based on forfeitures which may differ from our original assumptions unlike cash compensation expense which is typically recorded contemporaneously with the time of award or payment. Accordingly, we believe that excluding stock-based compensation expense from our non-gaap operating results facilitates better understanding of our long-term business performance and enhances period-to-period comparability. Note D: Free Cash Flow. Verifone determines free cash flow as net cash provided by operating activities less capital expenditures. Note E: Income Tax Effect of Non-GAAP exclusions. Income taxes are adjusted for the tax effect of the adjusting items related to our non-gaap financial measures and to reflect our medium to long term estimate of cash taxes on a non-gaap basis, in order to provide our management and users of the financial statements with better clarity regarding the on-going comparable performance and future liquidity of our business. Under GAAP our Income tax provision as a percentage of Income before income taxes was 701.2% for the fiscal quarter ended January 31, 2017 and 7.8% for the fiscal quarter ended January 31, For non-gaap purposes, we used a 14.5% rate for all periods presented. 96