Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - INTERSECTIONS INC | p15-0363_8k.htm |
| EX-10.3 - SUBSCRIPTION AGREEMENT WITH OSMIUM PARTNERS - INTERSECTIONS INC | p15-ex103_8k.htm |
| EX-10.2 - SUBSCRIPTION AGREEMENT WITH DAVID A. MCGOUGH - INTERSECTIONS INC | p15-ex102_8k.htm |
| EX-99.1 - PRESS RELEASE DATED NOVEMBER 16, 2015 - INTERSECTIONS INC | p15-ex991_8k.htm |
| EX-10.1 - SUBSCRIPTION AGREEMENT WITH LOEB HOLDING CORPORATION - INTERSECTIONS INC | p15-ex101_8k.htm |
*
Third Quarter 2015 Investor Update
November 9, 2015
© Intersections Inc. All Rights Reserved 2015
2
Forward Looking Statements
Statements in this presentation relating to future plans, results, performance, expectations, achievements and the
like are considered “forward-looking statements.” You can identify forward-looking statements by the fact that
they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,”
“estimate,” “expect,” “project,'' “plan,” “intend,” “believe,” “may,” “should,” “can have,” “likely” and other words
and terms of similar meaning in connection with any discussion of the timing or nature of future operating or
financial performance or other events. Those forward-looking statements involve known and unknown risks and
uncertainties and are subject to change based on various factors and uncertainties that may cause actual results to
differ materially from those expressed or implied by those statements, including the impact of the regulatory
environment on our business, including the investigation or examination of our financial institution clients and the
continuing attention by the Consumer Financial Protection Bureau and other regulatory agencies to our industry;
the continued dependence on a small number of financial institutions to service our U.S. financial institution
customer base; our ability to execute our strategy and previously announced transformation plan; our incurring
additional restructuring and/or impairment charges; the timing and success of new product launches, including our
Identity Guard® and VOYCE™ and Voyce Pro™ platforms, adjustments in investments in our IDENTITY GUARD® and
insurance services businesses and other growth initiatives; our ability to control costs; and our needs for additional
capital to grow our business, including our ability to maintain borrowing availability under our loan agreement or
seek additional sources of debt financing. Factors and uncertainties that may cause actual results to differ include
but are not limited to the risks disclosed under “Forward-Looking Statements,” “Item 1. Business—Government
Regulation” and “Item 1A. Risk Factors” in the Company’s most recent Annual Report on Form 10-K, and in its
recent Quarterly Reports on Form 10-Q and other filings with the U.S. Securities and Exchange Commission. The
Company undertakes no obligation to revise or update any forward-looking statements unless required by
applicable law.
like are considered “forward-looking statements.” You can identify forward-looking statements by the fact that
they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,”
“estimate,” “expect,” “project,'' “plan,” “intend,” “believe,” “may,” “should,” “can have,” “likely” and other words
and terms of similar meaning in connection with any discussion of the timing or nature of future operating or
financial performance or other events. Those forward-looking statements involve known and unknown risks and
uncertainties and are subject to change based on various factors and uncertainties that may cause actual results to
differ materially from those expressed or implied by those statements, including the impact of the regulatory
environment on our business, including the investigation or examination of our financial institution clients and the
continuing attention by the Consumer Financial Protection Bureau and other regulatory agencies to our industry;
the continued dependence on a small number of financial institutions to service our U.S. financial institution
customer base; our ability to execute our strategy and previously announced transformation plan; our incurring
additional restructuring and/or impairment charges; the timing and success of new product launches, including our
Identity Guard® and VOYCE™ and Voyce Pro™ platforms, adjustments in investments in our IDENTITY GUARD® and
insurance services businesses and other growth initiatives; our ability to control costs; and our needs for additional
capital to grow our business, including our ability to maintain borrowing availability under our loan agreement or
seek additional sources of debt financing. Factors and uncertainties that may cause actual results to differ include
but are not limited to the risks disclosed under “Forward-Looking Statements,” “Item 1. Business—Government
Regulation” and “Item 1A. Risk Factors” in the Company’s most recent Annual Report on Form 10-K, and in its
recent Quarterly Reports on Form 10-Q and other filings with the U.S. Securities and Exchange Commission. The
Company undertakes no obligation to revise or update any forward-looking statements unless required by
applicable law.
Please see the company’s release and website at www.intersections.com for additional details on quarterly results.
3
Company Overview
Intersections Inc. (Nasdaq: INTX) (“Intersections” or the “Company”) is a leading provider of identity risk
management, privacy protection and other subscription based services for consumers. Our core services monitor
personal information for our customers, aggregate it into digestible, consumer-friendly reports and alerts, and
provide personalized education and support to help our customers understand their information and take the
actions they deem appropriate. Since the business was founded in 1996, Intersections has protected the
identities of more than 37 million consumers.
management, privacy protection and other subscription based services for consumers. Our core services monitor
personal information for our customers, aggregate it into digestible, consumer-friendly reports and alerts, and
provide personalized education and support to help our customers understand their information and take the
actions they deem appropriate. Since the business was founded in 1996, Intersections has protected the
identities of more than 37 million consumers.
The Company operates through three main segments:
• Personal Information Services (Identity Guard®):
• Identity Guard® offers identity theft, privacy protection and credit monitoring services for consumers to understand, monitor, manage, and protect
their personal information and privacy. This segment also offers breach response services to organizations responding to compromises of sensitive
personal information.
their personal information and privacy. This segment also offers breach response services to organizations responding to compromises of sensitive
personal information.
• Insurance and Other Services:
• Habits at Work™ (“Habits at Work”), the d/b/a for wholly owned subsidiary Intersections Insurance Services Inc., leverages proprietary tools and
analytics to provide health and wellness services to insurers, employers and wellness groups through innovative behavior-linked products &
solutions.
analytics to provide health and wellness services to insurers, employers and wellness groups through innovative behavior-linked products &
solutions.
• Captira Analytical, a wholly-owned subsidiary, provides SaaS solutions for the bail bonds industry that automate common tasks and provide easy
and efficient ways for bail bondsmen, general agents and sureties to organize and share data and make better underwriting decisions.
and efficient ways for bail bondsmen, general agents and sureties to organize and share data and make better underwriting decisions.
• Pet Health Monitoring Services (Voyce):
• Voyce™ (“Voyce”), the d/b/a for wholly owned subsidiary i4C Innovations Inc., offers a health and wellness management platform that connects
pets and their owners, veterinarians, and other caregivers with pet health monitoring data, pet health related content, and information
management tools.
pets and their owners, veterinarians, and other caregivers with pet health monitoring data, pet health related content, and information
management tools.
4
Company Dynamics
Intersections’ private-label identity theft protection and credit monitoring services business was greatly impacted
by the regulatory environment that developed following the U.S. recession in 2007 to 2009.
by the regulatory environment that developed following the U.S. recession in 2007 to 2009.
• The financial institution private-label business was Intersections’ largest business line that provided and
distributed identity theft protection and credit monitoring credit services primarily through financial
institutions in the U.S.
distributed identity theft protection and credit monitoring credit services primarily through financial
institutions in the U.S.
Following the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, the Office of the Comptroller
of the Currency (OCC) and Consumer Financial Protection Bureau (CFPB) focused on the incremental services
offered by financial institutions to their customers which curtailed those offerings.
of the Currency (OCC) and Consumer Financial Protection Bureau (CFPB) focused on the incremental services
offered by financial institutions to their customers which curtailed those offerings.
• Financial institutions ultimately halted sales of most incremental products, including identity theft protection
and credit monitoring.
and credit monitoring.
Sales of Intersections’ U.S. private-label identity theft protection and credit monitoring services were halted and
became a run-off business for which Intersections expects to continue servicing existing customers.
became a run-off business for which Intersections expects to continue servicing existing customers.
The Company decided to leverage it’s core competencies of data processing, management, and analytics by
investing in:
investing in:
• Expansion our direct-to-consumer Identity Guard® services.
• Expansion our insurance and wellness analytics business, now called Habits at Work.
• Expansion our bail bonds industry data management solutions through it’s Captira Analytical platform.
• Development of a new business line focused on pet and animal health, Voyce, which would become a new
platform upon which to utilize the Company’s core capabilities in data processing, management, and analytics.
platform upon which to utilize the Company’s core capabilities in data processing, management, and analytics.
5
Business Highlights
• 15.1% growth of our Identity Guard® subscriber base in the third quarter
compared to same period last year.
compared to same period last year.
• Financial institution subscriber base decreased 3.5% during the quarter,
which we believe is a normal attrition rate given the ceased marketing and
retention efforts for this population.
which we believe is a normal attrition rate given the ceased marketing and
retention efforts for this population.
• Announced partnership with The National Conference on Public Employee
Retirement Systems and Arthur J. Gallagher & Co. to provide identity theft
protection services to public employees and their families.
Retirement Systems and Arthur J. Gallagher & Co. to provide identity theft
protection services to public employees and their families.
• Introduced VOYCE PRO™ to the veterinary community, began contracting
with, training and on-boarding veterinarian hospitals.
with, training and on-boarding veterinarian hospitals.
• Entered strategic relationships for VOYCE PRO™ with Zoetis, a leading animal
pharmaceutical firm, Paterson Veterinary, a leading national distribution
company, and two leading U.S. veterinary hospital networks.
pharmaceutical firm, Paterson Veterinary, a leading national distribution
company, and two leading U.S. veterinary hospital networks.
• Appointed John H. Lewis, Founder and Managing Partner of Osmium
Partners, LLC to the Board of Directors.
Partners, LLC to the Board of Directors.
6
Identity Guard® Third Quarter 2015 Update
Provides prevention, detection & resolution products and services to
help subscribers protect their personal information from misuse.
help subscribers protect their personal information from misuse.
• $27.3 million third quarter revenue from subscribers acquired through U.S.
financial institutions.
financial institutions.
• 862 thousand subscribers (September 30, 2015) decreased at an average rate of 1.2% per month during the
third quarter which we believe represents a normal attrition rate given ceased marketing and retention
efforts.
third quarter which we believe represents a normal attrition rate given ceased marketing and retention
efforts.
• $14.9 million IDENTITY GUARD® third quarter 2015 revenue, up 7.8% over
second quarter and 24.1% over third quarter 2014.
second quarter and 24.1% over third quarter 2014.
• 388 thousand U.S. subscribers (September 30, 2015).
• 2.4% subscriber growth for third quarter.
• 15.1% subscriber growth compared to September 30, 2014.
• $3.3 USD million Canadian third quarter 2015 revenue, down 36% from second
quarter and 56% from third quarter 2014.
quarter and 56% from third quarter 2014.
• Revenue and subscribers were negatively impacted by the cancellation of a financial institution subscriber
portfolio in the second quarter of 2015.
portfolio in the second quarter of 2015.
7
Pet Health Monitoring Services Third Quarter 2015 Update
Voyce™ is a revolutionary health monitor and wellness
management system for every stage of a dog’s life.
management system for every stage of a dog’s life.
• VoycePro™, our service for veterinarians was launched in
the third quarter 2015.
the third quarter 2015.
• Began contracting with Veterinarian clinics through in-
house sales and marketing efforts and began training and
on-boarding programs.
house sales and marketing efforts and began training and
on-boarding programs.
• Began two large research projects in October 2015 with
Zoetis Corporation, a leading animal pharmaceutical
company, using VoycePro™.
Zoetis Corporation, a leading animal pharmaceutical
company, using VoycePro™.
• Commenced VoycePro™ programs in October 2015 with
two of the three largest U.S. veterinary hospital owners.
two of the three largest U.S. veterinary hospital owners.
• Entered strategic partnership with Patterson Veterinary in
November 2015 to distribute VoycePro™ to veterinary
hospitals in the U.S.
November 2015 to distribute VoycePro™ to veterinary
hospitals in the U.S.
8
• Identity Guard® is our flagship platform for growth with notable increases in revenue and
subscribers.
subscribers.
• Two recent financial institution client losses negatively impacted our Canadian business.
• U.S. financial institution subscribers declined 3.5%, or 1.2% per month, since the end of
second quarter, a rate we believe represents normal attrition.
second quarter, a rate we believe represents normal attrition.
• Revenue from other business units was negatively impacted by ceased marketing by our
clients of insurance and membership services partially offset by revenue from new products
and services offered by our Habits at Work business.
clients of insurance and membership services partially offset by revenue from new products
and services offered by our Habits at Work business.
|
|
Quarter Ended September 30,
($millions)
|
Subscribers at September 30,
(thousands)
|
||||
|
|
2015
|
2014
|
% Change
|
2015
|
2014
|
% Change
|
|
Identity Guard®
|
$14.9
|
$12.0
|
24.2%
|
388
|
337
|
15.1%
|
|
Canadian Business
|
$3.3
|
$7.6
|
-56.6%
|
164
|
315
|
47.9%
|
|
U.S. Financial Institutions
|
$27.3
|
$35.7
|
-23.5%
|
862
|
1,477
|
-41.6%
|
|
Sub Total
|
$45.5
|
$55.3
|
-17.7%
|
1,414
|
2,215
|
-36.2%
|
|
Other Business Units
|
$3.4
|
$4.5
|
-24.4%
|
|
|
|
|
Consolidated Revenue
|
$48.9
|
$59.8
|
-18.2%
|
|
|
|
2015 Third Quarter Financial Highlights - Revenue
9
|
(in $ millions)
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
||
|
|
2015
|
2014
|
2015
|
2014
|
|
Consolidated Loss from Continuing
Operations before Income Taxes |
$(6.7)
|
$(9.8)
|
$(19.4)
|
$(14.6)
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$(3.5)
|
$(6.6)
|
$(2.5)
|
$(3.3)
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$8.2
|
$11.3
|
$8.2
|
$11.3
|
• Adjusted EBITDA for the third quarter was negatively impacted by lower revenue from our
financial institution clients and Canadian partners, offset by the inclusion of $7.5 million of
restructuring and non-income tax liabilities recorded in the third quarter 2014.
financial institution clients and Canadian partners, offset by the inclusion of $7.5 million of
restructuring and non-income tax liabilities recorded in the third quarter 2014.
• Adjusted EBITDA for the third quarter includes $(3.9) million adjusted EBTIDA for our Voyce
business, which was flat compared to the third quarter 2014 and $(12.5) million adjusted
EBTIDA for Voyce in the nine month period compared to $(10.3) in the prior year period.
business, which was flat compared to the third quarter 2014 and $(12.5) million adjusted
EBTIDA for Voyce in the nine month period compared to $(10.3) in the prior year period.
• Cash flow (used in) operations was $(139) thousand for the third quarter and $2.5 million for
the nine month period. We continue to evaluate our liquidity needs including additional cost
reduction programs and seeking additional sources of financing.
the nine month period. We continue to evaluate our liquidity needs including additional cost
reduction programs and seeking additional sources of financing.
See reconciliation of non-GAAP financial measures in the back of this presentation.
2015 Third Quarter Financial Highlights
10
Reconciliation of Non-GAAP Financial Measures
|
|
|
2014
|
|
|
2015
|
|
||||||||||||||||||||||
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
||||||||||||||||||||||
|
|
|
March 31
|
|
|
June 30
|
|
|
September 30
|
|
|
December 31
|
|
|
March 31
|
|
|
June 30
|
|
|
September
30 |
|
|||||||
|
Reconciliation from consolidated loss before income taxes to
consolidated adjusted EBITDA before share related compensation and non-cash impairment charges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated loss before income taxes
|
|
$
|
(1,840
|
)
|
|
$
|
(3,026
|
)
|
|
$
|
(9,756
|
)
|
|
$
|
(29,011
|
)
|
|
$
|
(1,695
|
)
|
|
$
|
(11,035
|
)
|
|
$
|
(6,711
|
)
|
|
Non-cash share based compensation
|
|
|
1,191
|
|
|
|
1,486
|
|
|
|
509
|
|
|
|
1,240
|
|
|
|
1,574
|
|
|
|
1,427
|
|
|
|
1,422
|
|
|
Dividend equivalent payments to RSU holders and option holders
|
|
|
448
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Impairment of goodwill, intangibles and other long-lived assets
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
25,837
|
|
|
|
0
|
|
|
|
7,355
|
|
|
|
0
|
|
|
Depreciation
|
|
|
1,539
|
|
|
|
1,439
|
|
|
|
1,276
|
|
|
|
1,401
|
|
|
|
1,297
|
|
|
|
1,613
|
|
|
|
1,488
|
|
|
Amortization
|
|
|
853
|
|
|
|
853
|
|
|
|
853
|
|
|
|
848
|
|
|
|
119
|
|
|
|
156
|
|
|
|
206
|
|
|
Interest expense (income), net
|
|
|
91
|
|
|
|
170
|
|
|
|
257
|
|
|
|
87
|
|
|
|
104
|
|
|
|
(22
|
)
|
|
|
71
|
|
|
Other (income) expense, net
|
|
|
(149
|
)
|
|
|
287
|
|
|
|
239
|
|
|
|
291
|
|
|
|
82
|
|
|
|
(10
|
)
|
|
|
65
|
|
|
Consolidated adjusted EBITDA before share related compensation
and non-cash impairment charges (1) |
|
$
|
2,133
|
|
|
$
|
1,209
|
|
|
$
|
(6,622
|
)
|
|
$
|
693
|
|
|
$
|
1,481
|
|
|
$
|
(516
|
)
|
|
$
|
(3,459
|
)
|
|
|
|
Nine Months Ended September 30,
|
||
|
|
|
2014
|
|
2015
|
|
Reconciliation from consolidated loss before income taxes to
consolidated adjusted EBITDA before share related compensation and non-cash impairment charges: |
|
|
|
|
|
Consolidated loss before income taxes
|
|
$
(14,622) |
|
$
(19,441) |
|
Non-cash share based compensation
|
|
3,186
|
|
4,423
|
|
Dividend equivalent payments to RSU holders and option holders
|
|
448
|
|
0
|
|
Impairment of goodwill, intangibles and other long-lived assets
|
|
0
|
|
7,355
|
|
Depreciation
|
|
4,254
|
|
4,398
|
|
Amortization
|
|
2,559
|
|
481
|
|
Interest expense (income), net
|
|
518
|
|
153
|
|
Other (income) expense, net
|
|
377
|
|
137
|
|
Consolidated adjusted EBITDA before share related compensation and
non-cash impairment charges (1) |
|
$
(3,280) |
|
$
(2,494) |
__________________
(1)For the reconciliation of certain non-GAAP measures visit our website at www.intersections.com.
$ in Thousands
$ in Thousands
11
Reconciliation of Non-GAAP Financial Measures: Pet Health Monitoring
Business
Business
Three Months Ended September 30,
2014
2015
Reconciliation from consolidated loss before income taxes to consolidated
adjusted EBITDA before share related compensation
adjusted EBITDA before share related compensation
Loss before income taxes
$ (3,898)
$ (4,359)
Depreciation
28
392
Amortization
0
18
Adjusted EBITDA before share related compensation (1)
$ (3,870)
$ (3,949)
Nine Months Ended September 30,
2014
2015
Reconciliation from consolidated loss before income taxes to consolidated
adjusted EBITDA before share related compensation
adjusted EBITDA before share related compensation
Loss before income taxes
$ (10,416)
$ (13,297)
Dividend equivalent payments to RSU holders and option holders
17
0
Depreciation
60
800
Amortization
0
32
Adjusted EBITDA before share related compensation (1)
$ (10,339)
$ (12,465)
__________________
(1)For the reconciliation of certain non-GAAP measures visit our website at www.intersections.com.
$ in Thousands
$ in Thousands
12
Thank You
Corporate Headquarters
Intersections Inc.
3901 Stonecroft Boulevard
Chantilly, VA 20151
Toll-free: 800.695.7536
www.intersections.com
Investor Relations
Ron Barden, CFO
IR@intersections.com
Tel: 703.488.6100