POWERING GLOBAL COMMERCE MANAGEMENT PRESENTATION
IMPORTANT NOTICES Forward-Looking Statements This presentation is for discussion purposes only. All prices and rates referenced herein are indicative and subject to market conditions. The material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such. The material available in this presentation may contain forward-looking statements, which are subject to risks, uncertainties and assumptions. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “optimistic”, “potential”, “future” or “continue”, the negative of these terms and other comparable terminology. Such forward-looking statements are based on current plans, estimates and expectations and are made pursuant to the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on known and unknown risks, assumptions, uncertainties and other factors. The Company’s actual results, performance and achievements may differ materially from any future results, performance, or achievements expressed or implied by such forward- looking statements. We do not assume responsibility for the accuracy or completeness of any forward-looking statement and you should not rely on forward-looking statements as predictions of future events. We are under no duty to update any of these forward- looking statements to conform them to actual results or revised expectations. This presentation contains certain non-GAAP financial measures determined by methods other than in accordance with generally accepted accounting principles. Such non-GAAP financial measures include: general and administrative expense before non-cash compensation expense. Management uses these non-GAAP financial measures to assess the performance of Net Element’s core business. Net Element believes that these non-GAAP financial measures provide meaningful additional information about Net Element to assist investors in evaluating Net Element’s operating results. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies. www.netelement.com 2
� OVERVIEW & STRATEGY CHARTERING COURSE TOWARDS OMNI-CHANNEL PAYMENTS 3
EMERGING AS A LEADER IN TRANSACTIONAL SERVICES ‣ Net Element, Inc. (NASDAQ: NETE) (“Net Element”) is a global technology company specializing in mobile payments and value- added transacFonal services. • Headquarters in Miami, Florida (United States) • Market cap. of $36.17 million as of Apr. 18th, 2016 • 2015A revenues of $40.2 million • Organic growth run-rate of $55.5 million as of Dec. 31st, 2015 • 152 employees (44 IT engineers) ‣ Net Element provides numerous electronic payment soluFons through their numerous operaFng companies. PAYONLINE UNIFIED DIGITAL APTITO RESTOACTIVE NET LAB SALESCENTRAL PAYMENTS PROVIDER Provides merchants a Adds interactive Research and Cloud-based solution Next-generation online feature-rich, experience on to development center. Net provides agents and payments platform Provides comprehensive Mobile commerce and innovative and socially existing legacy POS Element’s Net Lab has a merchants an integrated allows access to the turnkey, payment direct carrier billing driven, all-in-one system and increases dedicated and cost toolkit to more safest and most reliable processing solutions to platform allows content digital software bottom line with more effective team of effectively manage a online shopping SME merchants and providers to bill mobile solution for the sales, faster table engineers and developers variety of sales, experience while independent agent users, including hospitality industry turnover, improved located in Ekaterinburg operations, reporting increasing revenue and networks across the messaging, incentive menu management and and Moscow, Russia and accounting minimizing risk for United States programs and reduced labor costs functions merchants couponing 4 www.netelement.com
EMERGING AS A LEADER IN TRANSACTIONAL SERVICES WHO IS NET ELEMENT? OUR MISSION AND VISION • Leader in mobile payments, transacconal and value-added • Our mission is to power global commerce and allow our services clients to conduct business globally. We believe that • Growth drivers: mobile commerce and value-added understanding the consumer behavior and the needs of our transacconal services (“VAS”) merchants is the most effeccve and, ulcmately, the most • Key differencators: Our scalable operaconal infrastructure, profitable means to accomplish our mission commerce expercse, scalable mobile payments plagorm, • Our vision is to set the standard for omni-channel payments world-class cloud infrastructure and emerging market acceptance and value-added service offerings with focus on presence creacon of unified global transaccon acceptance ecosystem WE HAVE A FOCUSED STRATEGY OUR OPPORTUNITY IS SIGNIFICANT • Concnued investment in our core technology and new • Market is large and moving to where we have strength product offerings • Global customer expansion and strong growth in payment • Allocate resources and expercse to grow in commerce and acceptance payments segments • Ride the wave of the growing mobile payments market: • Strategic acquisicons which complement our core strategy According to Stacsta report, the worldwide mobile payment Focus on concnued improvement and operacon excellence volume in 2015 was 450 billion U.S. dollars and is expected to • surpass 1 trillion U.S. dollars in 2019 5 www.netelement.com
POWERING GLOBAL COMMERCE $1.8B total bankcard volume processed in 2015 $1B 161M total transactions processed in 2015 Bankcard 51.5M volume Bankcard U.S. 71M total bankcard transactions processed in 2015 transactions U.S. ₽ 24.5B 19.5M � 90M mobile transactions processed in 2015 Bankcard Bankcard | volume transactions CIS � emerging 14M+ total active customers in emerging markets 90M 3M+ Mobile Mobile transactions 11M+ online payments acceptance clients in emerging subscribers CIS CIS 3M+ active mobile payment users in CIS 6 www.netelement.com
PROVEN MANAGEMENT TEAM Team Experience Management Team Andrey Konstantin Oleg Krotov Zaripov Firer Chief Technology CEO Chief Executive Officer Net Element Russia Officer Dmitrijus Mikhail Steven Apockinas Shabanov Wolberg Chief Operating CEO Chief Legal Officer Digital Provider Officer Marat Vladimir Jonatan Abasaliev Sadovskiy New CEO President Merchant Chief Financial PayOnline Services Officer Board of Directors Kenges Rakishev Oleg Firer Drew Freeman Chairman of the Board Director Director Noted global industrialist CEO of Net Element 30+ years experience in payments William Healy Howard Ash James Caan Director Nominated Director* Director 25+ years experience in payments International value-add specialist Accomplished actor and director 7 www.netelement.com * subject to election on June 13, 2016
ADDRESSING THE NEED Attractive Growth Drivers INCREASED GROWING USE OF NEED CASHLESS FOR PAYMENTS SECURITY DIGITALIZATION INCREASING AND PROSPERITY IN GLOBALIZATION EMERGING MARKETS 8
FOCUS ON GROWING MARKETS Large, relatively untapped markets to become a significant focus of Net Element’s strategy, resulting in impressive growth year over year and an achievement of leadership positions in selected markets UNDERSERVED, STRONG, ATTRACTIVE MERCHANT HIGHLY GROWING PORTFOLIO DYNAMICS ATTRACTIVE MARKET FOOTPRINT LEAD TO HIGHER PROFITABILITY • Less mature than the U.S. market in • Higher margin per merchant • According to Morgan Stanley tradiconal payments acceptance • More profitable mobile and report, mobile payments can • More advanced than the U.S. alternacve payments product expand the global revenue pie from market in alternacve payments and offerings $175 billion to $250 billion, mobile payments including $30 billion in emerging - Premium SMS, WAP-click, in-app • Fewer payment processors have markets purchases, mobile wallets, P2P successfully entered and succeeded • Enormous inical successful and transfers in the market Significantly lower ajricon concnued growth opportunity • Net Element has already achieved • Payments-as-a-service offering The Company is focused on • • leadership posicons in selected without the need to switch allocacng addiconal ajencon to emerging markets acquiring bank relaconships the selected emerging markets 9 www.netelement.com
FOCUS ON 3 AREAS | OMNI-CHANNEL PROCESSING ‣ Mobile Payments MOBILE PAYMENTS • Carrier integrated solucons POINT OF SALE SOLUTIONS DIRECT CARRIER BILLING • Premium SMS • In-app purchases • WAP/Internet click payments TRINITY ‣ Point of Sale SoluFons PLATFORM • Cloud-based mPOS solucons • iOS-based self-service kiosks • Digital menus PAYMENT ACCEPTANCE ‣ Payment Acceptance VALUE-ADDED TRANSACTIONS • Proprietary plagorm • Retail POS acceptance • Card not present acceptance • Mobile payment acceptance • Mulcple payment methods • PCI DSS Level 1, SSL 3.1 security 10 www.netelement.com
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