Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Digital Turbine, Inc. | d823492d8k.htm |
| EX-99.1 - EX-99.1 - Digital Turbine, Inc. | d823492dex991.htm |
| EX-99.2 - EX-99.2 - Digital Turbine, Inc. | d823492dex992.htm |
 Mandalay Digital Group, Inc.
Appia Transaction Presentation
November 13, 2014
Exhibit 99.3 |
 MANDALAY DIGITAL GROUP, INC.
©
2014 Mandalay Digital Group, Inc.
Page 2
Safe Harbor Statements.
Use of Non-GAAP Financial Measures.
Statements in this presentation that are not statements of historical fact and
that concern future results from operations, financial position, economic
conditions, product releases, revenue and product synergies, cost savings,
product or competitive enhancements and any other statement that may be
construed as a prediction of future performance or events, including that
Appia's technology will enhance Mandalay Digital's existing products or
foster new technology innovation, perceived benefits from the business
combination to the surviving company, or that the acquisition will result in
increased revenue, cost savings and better competitive position, or that
Mandalay Digital will successfully integrate Appia’s technology, are
forward-looking statements that speak only as of the date made and which
involve known and unknown risks, uncertainties and other factors which may,
should one or more of these risks uncertainties or other factors
materialize, cause actual results to differ materially from those expressed or
implied by such statements. These factors include the occurrence of any
event, change or other circumstances that could give rise to the
termination of the merger agreement; the inability to complete the merger
within the expected time period or at all, including due to the failure to
obtain stockholder approval, or the failure to satisfy other conditions to
completion of the merger; risks related to disruption of management’s
attention from the ongoing business operations due to the proposed merger;
the effect of the announcement of the proposed merger on Mandalay’s or
Appia’s relationships with their respective customers, lenders,
operating results and businesses generally; material adverse changes in
Mandalay Digital’s or Appia’s operations or financial results prior to closing; the ability
to expand the combined company’s global reach, accelerate growth and create a
scalable, low-capex business model that drives EBITDA; failure to
realize anticipated operational efficiencies, revenue (including projected
revenue) and cost synergies and resulting revenue growth, EBITDA and free
cash flow conversion if the merger is consummated; the ability to achieve
internal strategic forecasts; inability to refinance the assumed Appia debt
subsequent to the closing or to refinance the debt on favorable terms; unforeseen
challenges related to relationships with operators, publishers and advertisers and
expanding and maintaining those relationships; the ability to execute upon,
and realize any benefits from, potential value creation opportunities
through strategic relationships in the future or at all, including the
ability to leverage advertising opportunities effectively and increase
revenue streams for carriers; unforeseen difficulties preventing rapid
integration of Appia’s app-install infrastructure into Digital Turbine’s existing
platform; the inherent and deal specific challenges in converting discussions with
carriers into actual contractual relationships; the Company’s ability
as a smaller company to manage international, and as a result of the
proposed merger, larger operations, varying and often unpredictable levels
of orders, the challenges inherent in technology development necessary to
maintain the Company’s competitive advantage ; the potential for
unforeseen or underestimated cash requirements necessary to enable
the transaction synergies to be realized, and other risks including those
described from time to time in Mandalay Digital Group's filings on Forms
10-K and 10-Q with the SEC, press releases and other
communications. You should not place undue reliance on these
forward-looking statements. The company does not undertake to update
forward- looking statements, whether as a result of new information,
future events or otherwise, except as required by law. Adjusted EBITDA is
calculated as income (loss) from continuing operations before interest
expense, foreign exchange gains (losses), financing and related expenses, debt
discount and debt settlement expense, gain or loss on extinguishment of debt,
acquisition and integration costs, income taxes, asset impairment charges,
depreciation and amortization, stock-based compensation expense,
change in fair value of derivatives, and accruals for discretionary
bonuses. Since Adjusted EBITDA is a non-GAAP measure that does not
have a standardized meaning, it may not be comparable to similar measures
presented by other companies. Readers are cautioned that Adjusted EBITDA
should not be construed as an alternative to net income (loss) determined in
accordance with U.S. GAAP as an indicator of performance, which is the
most comparable measure under GAAP. Adjusted EBITDA is used by management
as an internal measure of profitability. We have included Adjusted EBITDA
because we believe that this measure is used by certain investors to assess
our financial performance before non-cash charges and certain costs
that we do not believe are reflective of our underlying business. A
reconciliation of Adjusted EBITDA to U.S. GAAP net income is expected to be
included in the press release announcing the results of our second fiscal
quarter, however such reconciliation to future net income is not currently
available without unreasonable effort. The information that is unavailable
is primarily asset impairment and expenses related to stock-based
compensation; it is probable that when such amounts are available they
will result in a significant GAAP net loss for our second fiscal quarter
notwithstanding our expected Adjusted EBITDA results. This communication
is for informational purposes only and is neither an offer to purchase, nor
a solicitation of an offer to sell, subscribe for or buy any securities or
the solicitation of any vote in any jurisdiction pursuant to the proposed
transactions or otherwise, nor shall there be any sale, issuance or transfer
of securities in any jurisdiction in contravention of applicable law. No
offer of securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended. |
 Digital Turbine + Appia:
Investment Highlights
MANDALAY DIGITAL GROUP, INC.
©
2014 Mandalay Digital Group, Inc.
Page 3
Capturing window of opportunity to accelerate scale in
exploding market
•
Mandalay Digital and Appia
combine to create single, unique, mobile app and ad
ecosystem –
Name to change to Digital Turbine
•
Transforms competitive positioning through vertical integration
•
Mandalay stock to be issued at agreed-upon price of $4.50/share
–
Appia
investors to receive a number of shares equivalent to $100 million less debt and
expenses at agreed-upon value
•
Opportunity to achieve up to $14 million in revenue and ~$2 million cost
synergies •
Adds scale and accelerates ad revenue and existing DT product growth
•
Enhances MNDL’s financial profile: Appia
stakeholders becoming key new MNDL
investors |
 Strategic Rationale: Transformation
MANDALAY DIGITAL GROUP, INC.
©
2014 Mandalay Digital Group, Inc.
Page 4
Tremendous
opportunity in
exploding
marketplace*
•
$38 billion mobile app+ad market expected to grow 25 CAGR%
•
Smartphones
still
only
30%
of
global
user
base
–
but
growing*
•
86%
of
smartphone
users’
time
spent
in
apps
•
Wireless operators have most to gain and most to lose from monetizing
mobile
apps
–
away
from
Google
and
Facebook
Competitive
Positioning -
Enhances
revenue
opportunity for
operators
•
Vertically integrates DT’s distribution platform with Appia, #1 independent
mobile app advertising company
•
Appia fits hand-in-glove with MNDL app installation growth
•
Combines complementary customer bases, including Telcel Mexico, Claro in
South America and Metro PCS in US
•
Accelerates
growth
for
both
companies
–
ads
and
DT
product
suite
•
Diversification of revenue streams; operators major part of stream, but not
entire stream
Adds scale and
talent pool with
deep expertise
•
Access to leading publishers and advertisers in a single marketplace
•
Global
reach
with
active
campaigns
in
over
200
countries
–
in
all
major
formats
•
Gaining control of ad tech capabilities to help ensure execution
*Sources: @KPCB - Global Mobile App revenue per Strategy Analytics;
comprises virtual goods, in-app advertising, subscription and download
revenue. Global Mobile Advertising revenue per PWC; comprises browser,
search and classified advertising revenue- and Flurry.
|
 MANDALAY DIGITAL GROUP, INC
Premium demand for customers
Ignite –
IQ
Content -
Pay
20+ global carrier partners
Premium supply of advertisers
210+ publishers
100+ advertisers and agencies
Traffic in 200+ countries globally
1BB+ users across multiple carriers
Delivers single app-driven ecosystem to
carriers to generate new revenue streams
Largest non-incentivized engine
Global
Highest LTV publishers
Vertically integrated
Leveraging App explosion
Capitalizing on RTB
Combined company
Peerless, Agnostic Value Proposition
Peerless, Agnostic Value Proposition
©
2014 Mandalay Digital Group, Inc.
Page 5 |
 Deal Structure and Economics
MANDALAY DIGITAL GROUP, INC.
©
2014 Mandalay Digital Group, Inc.
Page 6
•
Issuing approximately 19 million shares (assumes CQ115 close)
•
Jud Bowman, CEO Appia
•
Trident Capital
•
Venrock
•
DCM
•
Noro-Moseley
•
Wakefield Group
•
Relay Ventures
•
Eric Schmidt’s TomorrowVentures
•
Assumption of ~$10 million debt (Silicon Valley Bank and North Atlantic
Capital) •
Plan to refinance assumed indebtedness following closing
Shares to be issued are
subject to lockup agreements
Smart Money to Hold Significant Stake in Company
Smart Money to Hold Significant Stake in Company |
 Financial Rationale Compelling
MANDALAY DIGITAL GROUP, INC.
©
2014 Mandalay Digital Group, Inc.
Page 7
Financial Profile
•
Appia recorded $30 million revenue for twelve months ended 9/30/14
•
Expected to enhance gross profit and EBITDA profile through revenue and
cost synergies
Revenue and cost
synergies
•
Opportunity to achieve up to $14 million revenue synergies on app-installs
currently projected to be sourced by third parties, including Appia
•
Mandalay to capture third-party ad partner feeds
•
Approximately $2 million in expected cost synergies from campaign
management, CPI-infrastructure functions, duplicative corporate
headcount
Business Model
•
Combining complementary, scalable, low-capex business models
•
Direct access to advertisers boosts revenue profile
•
Drives incremental EBITDA/FCF
Integration
•
Eased by existing partnership and retention of Appia expert resources
•
App-install infrastructure and platform integrates immediately
•
Identified cost synergies
•
Appia founder and CEO Jud Bowman joining Mandalay board
|
 Pro
Forma: Board of Directors and Equity Ownership Structure
MANDALAY DIGITAL GROUP, INC.
©
2014 Mandalay Digital Group, Inc.
Page 8
Board Composition Post Close
Rob Deutschman, Chairman
Peter Guber
Paul Schaeffer
Chris Rogers
Jeff Karish
Bill Stone
Jud Bowman
Additional Appia appointee
Equity Ownership Structure
Increased ownership by senior
executive/founders and long-term
strategic investors
18%
82%
% Shares Held Today
Insiders
Public Float
33%
12%
55%
% Shares Held Post Close
Appia
Other insiders
Public Float |
 Transaction Process
MANDALAY DIGITAL GROUP, INC.
©
2014 Mandalay Digital Group, Inc.
Page 9
Step
Expected Timing
Filing s-4
Thanksgiving
SEC Feedback
Christmas –
January
MNDL Shareholder Vote
20 business days after SEC clearance
Closing
Estimated first calendar quarter 2015 |
 Summary
MANDALAY DIGITAL GROUP, INC.
©
2014 Mandalay Digital Group, Inc.
Page 10
•
Transformational acquisition expected to close C’Q115
•
Capturing window of opportunity to accelerate scale in
exploding market |
 Additional Information
Thursday, 13 November 2014
Page 11
Additional Information and Where to Find It
In connection with the proposed transaction, Mandalay Digital intends to file
with the Securities and Exchange Commission (SEC) a registration statement
on Form S-4 that will include a proxy statement and a prospectus. The definitive proxy
statement/prospectus will contain important information about the proposed
transaction and related matters. INVESTORS AND SECURITY HOLDERS ARE
ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE,
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may
obtain a free copy of the registration statement (when available) and
other documents filed by Mandalay Digital with the SEC at the SEC’s web site at
www.sec.gov. These documents may be accessed and downloaded for free at Mandalay
Digital’s website at www.mandalaydigital.com,
or
requested
from
Mandalay
Digital
by
mail
at
2811
Cahuenga
Boulevard
West,
Los
Angeles,
CA
90068, or by directing a request to MacKenzie Partners, Inc., 105, Madison
Avenue, New York, New York, 10016, (212)
929-5500,
proxy@mackenziepartners.com
.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any security holder of
Mandalay Digital. However, Mandalay Digital and its directors and
executive officers and certain members of management and employees may be deemed to be participants in the
solicitation of proxies from Mandalay Digital’s stockholders in respect of
the proposed transaction. Information regarding the directors
and
executive
officers
of
Mandalay
may
be
found
in
its
Form
10-K/A
for
the
fiscal
period
ended
March
31,
2014,
which
was filed with the SEC on July 29, 2014. Other information regarding the
interests of those persons and other persons in the proxy solicitation and
a description of their direct and indirect interest, by security holdings or otherwise, will be contained in the proxy
statement/prospectus and other relevant materials to be filed with the SEC when
they become available. You may obtain free copies of this document
as described in the preceding paragraph. MANDALAY DIGITAL GROUP, INC.
|
 Digital Turbine |