jetpay power point presentation presentation includes “forward -looking statements” within the...

©Copyright JetPay Corporation 2017

Payments | Payroll | Partners

Investor PresentationJune 2017


www.jetpay.com 2

Safe Harbor Statement

This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shallthere be any sale of securities in any jurisdictions in which such offer, solicitation or sale would be unlawful priorto registration or qualification under the securities laws of any such jurisdiction.

This presentation includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. JetPay’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside JetPay’s control and aredifficult to predict. Factors that may cause such differences include, but are not limited to, those described under the heading “Risk Factors” in the Company’s Annual Report filed with the Securities and Exchange Commission (“SEC”) on Form 10-K for the fiscal year ended December 31, 2016, the Company’s Quarterly Reports on Forms 10-Q and the Company’s Current Reports on Form 8-K.

Additional information concerning these and other risk factors is contained in JetPay’s most recent filings with the SEC. Allsubsequent written and oral forward-looking statements concerning JetPay or other matters and attributable to JetPay or any person acting on its behalf, are expressly qualified in their entirety by the cautionary statements above. JetPay cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. JetPay does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

This information is being presented by JetPay Corporation

Forward-Looking Statements


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Investment Highlights – JetPay (NASDAQ: JTPY)

Fast Growing provider of Electronic Payments Processing and Human Capital Management Solutions (HCM)

• FY ’16 Revenues + 30%⁻ Payments + 42%⁻ HCM Solutions + 6%

• 1Q ‘17 Revenues up + 62%⁻ Payments + 95%⁻ HCM Solutions 8%

Top 15, and only remaining “independent”, end-to-end Card Payments Platform• Top 50 Overall

New Management Team with proven track record:• Diane (Vogt) Faro, CEO – formerly First Data (NYSE: FDC)• Larry Stone, Board of Director – part of team that sold Mercury to Vantiv

(NYSE: VNTV) for $1.6 Billion• New experienced CIO, CMO, President of Payment Sales from industry leaders

Strong recurring revenue > 90% of revenue recurring in nature

Capital ‘light’ business model that generates attractive cash flow


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Investment Highlights – Key Facts

Share Statistics

Trading Symbol (Nasdaq) .......... JTPY

Stock Price …………...................... $ 1.95

Shares Outstanding .................. 15.6 Million

52wk Range .............................. $ 1.75 - $ 3.25

12 Month Avg. Daily Volume … 10,000

Fully Diluted Shares (2) .............. 33.6 Million

Market Capitalization (3) ........... $ 65.5 Million

Enterprise Value (3) ……………….. $ 74.5 Million

Capital Structure (1)

Cash on Hand ................................. $ 7.2 Million

Long Term Debt .............................. $ 16.2 Million

Redeemable Convertible Preferred $ 50.6 Million

Shareholder Equity ......................... $ 12.0 Million

Financials (TTM) (1)

Revenue ........................................... $ 63.6 Million

Adjusted EBITDA .............................. $ 4.4 Million

EPS …………………................................ $ (0.86)

1) As of or for the twelve months ended March 31, 2017 2) Excludes UPO available to Early Bird Capital and Stock Options3) Based on Fully Diluted shares

Full-time Employees …………………..... 225 Card Volume Processed 2016 …….... $ 4.3 Billion Payroll Checks Processed 2016 …….. 4.0 Million


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Investment Highlights – History and Background

2012 2014 2016 2017

Formed by Experienced Electronics Payments Executives

• Commenced operations through acquisition of JetPay HR & Payroll and JetPay Payments, Texas

• Representing ownership of last “independent” payments platform

• Enter complementary HR & Payroll for small businesses to offer “Complete Solution”

• Acquired JetPay Payments, Pennsylvania.

• Adds scale with new market, e.g. Financial Institutions, ISOs and VARs

• Acquired CollectorSolutions, Inc., now JetPay Payments, Florida

• Creates scale in highly attractive recurring revenue markets, e.g. government and utilities

• Diane (Vogt) Faro (First Data) becomes Chief Executive Officer

• Noted payments expert Larry Stone invests capital in JetPay and joins board

• Resolved major litigation

• Signed landmark 6 Year contract with State of Illinois

• Repurchased 2.2 Million shares in Q1 ’17


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What We Do – HCM and Payments

72%28%

PaymentsProcessingRevenues

HCM Revenues

Full range of HR and Payroll Services includes:

• Payroll Processing & Tax Filing• Human Resource Services • Time and Attendance Management• 401K Services• Affordable Care Act Assistance

Customers include:• SMEs, Governments, Higher Education,

Financial Institutions

Competitors include: • ADP, Paychex, Paycom, Paylocity

Leading provider of payments processing

Facilitate credit/debit card payments• Visa, MasterCard, Amex, Discover

Only independent with own processing technology

Customers include:• Apple Vacations, Expedia, State of Missouri, State of

Illinois

Competitors include: • First Data, Vantiv, Global Payments, Chase Paymentech,

BofA Merchant Services, WorldPay, Elavon

HCM Payments Processing


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What We Do – Payment Processing Market Today

Fast Growing Market, Enjoying Steady Growth• Card payments grew 7.4% by number, and 7.1% by value from 2012 – 2015• JetPay’s growth ~ 30% last two years – 63% 1Q 2017

Fastest growing segment is the ISV market• JTPY offers ISV one of the market’s most compelling value propositions• Easy integration, superior technology provide a competitive advantage

Merchants Increasingly Demanding the Highest Security, the Greatest Flexibility• JTPY offers industry-leading security• As the only remaining “Independent” processing platform, unparalleled flexibility• Product innovator - early to market

⁻ Providing tokenization before market⁻ Mobile product concurrent with Square⁻ First AMEX Opt-Blue transaction⁻ “Discount for Cash” unique in market


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What We Do – Payment Processing

Provider of Credit and Debit Card Processing • Solutions for Recurring Payments• Omnichannel Solutions• Card Present/ Card Not Present (online)• Virtual Terminal• Payments gateways – Includes: EBPP• Focus on maximizing customers’ revenue

Industry Leading Security• Security - Encryption and Tokenization

Significant Unused Processing Capacity

Multi-Channel Distribution Network• Direct • ISOs/VARs/ISVs• Financial Institutions

Serving a Variety of Fast-Growing End Markets• SMEs• Governments• Utilities


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What We Do – Payment Processing Economics

Dollars Percentage

Customer Purchase $100 100%

Merchant Nets $97.77 97.77% Top line – Includes Interchange, Dues & Assessments

Total Processing Fee Paid by Merchant(1) + (2) + (3)

$2.23 2.23% Top line – Includes Interchange, Dues & Assessments

(1) Interchange – Paid to Banks $1.40 1.40% Pass-Through

(2) Dues and Assessments – Paid to V, MA

$0.15 .15% Expense Line Item

(3) JetPay Fee $.68 .68% Revenue

For Illustration


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What We’ve Done – Payments Processing

Strong growth in all distribution channels• ISV, VAR, FI

Acquired CollectorSolutions, Inc. • Now JetPay Payment Services, Florida

Drove growth in government/utility• Opening new market opportunities

Financial Institution channel continues strong growth

Consolidated FY ‘16 Revenue: $ 56.3 Million + 30%

Consolidated 1Q ‘17 Revenue: $18.9 Million + 62%

8.6%

29.5% 30.%

62.7%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

2014 2015 2016 2017

Year Over YearConsolidated Revenue Growth

Q1


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What We’ve Done – HCM

Leading provider of a full range of Human Capital Management Solutions

Customized Products for Employers Large and Small• WorkForce Today - Full suite of human capital management services for employers

with 50 + employees• WebPay - Smaller employer payroll and related services solution

Full Range of High Growth Services• Payroll Processing• Payroll Tax Processing• Human Resource Services with Integrated Onboarding Platform• Time and Attendance• 401K Services• Affordable Care Act Assistance

Target Markets• Small and Medium Sized Businesses • Government• Financial Institutions


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What We’ve Done – HR & Payroll

HCM Growth Drivers• HCM growth driven by the launch of WorkForce Today• Continued success in enhancing WebPay for small employers

2016 Volume - $ 5.2 Billion

2016 Customers - ~ 5,300

2016 Payroll Checks – 4.0 Million

Growth Strategies• Migrate customers to full HCM Solutions platform• Create JetPay Portal with access to all JetPay services –

Payments, Payroll, Time and Attendance, etc.• Leverage tax filing platform


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Who We Are – Executive Management Team

Diane (Vogt) Faro - Chief Executive Officer, Member of the Board since 2014President of National Benefit Programs, LLCPresident of Global Merchant Services at First Data CorporationPresident of First Data’s Alliance GroupChief Executive Officer of Chase Merchant Services LLC

Peter B. Davidson - Chief Administrative Officer and Corporate Secretary Vice-ChairmanChief Executive Officer of Brooks FI Solutions, LLCExecutive Vice President of Genpass, Inc. President of Speer & AssociatesEVP - HSBC USA and President of HSBC Mortgage; SVP - CoreStates Financial

Gregory M. Krzemien - Chief Financial Officer Chief Financial Officer, Treasurer & Corp Secretary of Mace Security International, Inc.Chief Financial Officer & Treasurer of Eastern Environmental Services, Inc.Ernst & Young LLP, Senior Audit Manager

Michael C. Collester - Chief Operating OfficerPresident of ACI Merchant Systems, LLC More than 25 years in the merchant services space


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Milestones – 2016 Significant Progress

Acquired CollectorSolutions, Inc.• Leader in Government, Utilities payments processing• Added New Recurring Revenue Clients• Kansas City Parking Authority, City of Albany, City of Pittsburgh

Welcomed Larry Stone to Board of Directors• Invested $19.6 Million in JetPay

Strengthened Management Team• Michael Collester, Chief Operating Officer• John Crouch, Chief Information Officer• Gene M. Valentino, Chief Strategy Officer• Vinny Breault, President Payment Sales• Michelle Jenkins, Chief Marketing Officer

Settled “Direct Air” Matter (from 2012)

• Removed any future liability in the matter - potential for partial recovery


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Milestones – 2017 Strong Start

Won 6-year contract with the Office of the State Treasurer of Illinois• State’s ePAY program• Starting in the Q4 ‘17 will add 600 plus ePAY program participants

Repurchased 2.2 Million shares• Reducing common shares by 12.4% and fully diluted shares by 6%

Re-signed a key customer• ~ $2 Million in incremental 2017 Net Revenue

Launched a program as an exclusive provider to Service Finance Company• Exclusive payments provider to several home improvement dealers including

Lennox’s 6,000 + dealers (potential $6 Billion volume)


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Quarterly Review

Date Payments HCM Mar 16 $ 7.3 $ 4.3Jun 16 $ 8.8 $ 3.4Sep 16 $ 11.8 $ 3.4Dec 16 $ 12.7 $ 4.6Mar 17 $ 14.3 $ 4.6

$-

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

$20.0

Mar-16 Jun-16 Sep-16 Dec-16 Mar-17

Quarterly Revenue( in m i l l io n s )

Payment HCM


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Quarterly EBITDA & Adjusted EBITDA

Date EBITDA AdjustedMar 16 $ 436 $ 1,079Jun 16 $ (6,008) $ 579Sep 16 $ 520 $ 909Dec 16 $ 826 $ 1,216Mar 17 $ 1,401 $ 1,659

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

MAR-16 JUN-16 SEP-16 DEC-16 MAR-17

Quarterly EBITDA & Adjusted EBITDA(in thousands)

EBITDA AdjustedEBITDA


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Strategy – JetPay Growth

2012 - 2016

2016

2017

Establish Payments Processing, HCM Platform Gain Scale Through Acquisitions Build Infrastructure to Support Growth

New Management Reorganize Sales & Marketing Organization Enter New Markets - Government, Utilities

Lever new Sales & Marketing organization Accelerate organic growth Generate attractive margins on incremental Volume


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Strategy – JetPay Growth

How does the market value Payments Companies?• Mercury ( Vantiv 2014) – 7.0x EV/R• Litle (Vantiv 2012) – 7.1x EV/R• Merchant e-Solutions (Cielo 2012) – 5.4x EV/R• EPX (North American 2014) – 5.6x EV/R• SecureNet (WorldPay 2014) – 5.0x EV/R• Heartland (Global 2015) – 5.1x EV/R• Transfirst (TSYS 2016) – 3.9x EV/R• CardConnect (FDC 2017) – 5.1x EV/R

Public Valuations• 4.0x – 5.5x EV/R

How does the market value HR & Payroll Companies?

• Payroll 1 ( Heartland 2015) – 2.5x EV/R• PayChoice (Sage 2014) – 4.1x EV/R

Public Valuations• ADP – 3.3x EV/R• Paychex – 6.1x EV/R• Paycom – 7.0x EV/R• Paylocity – 5.9x EV/R

JetPay Valuation – ~ 1.0x EV/R


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Addendum – Income Statement

(000's Omitted) 2016 2015 2017 2016

Processing revenues $ 56,330 $ 43,322 $ 18,942 $ 11,643

Cost of processing revenues 37,453 26,229 12,585 7,400

Gross profit 18,877 17,093 6,357 4,243

Selling, general and administrative expenses 16,911 13,291 4,956 3,807

Settlement of legal matter 6,192 - - -

Change in fair value of contingent consideration liability (103) 56 74 46

Amortization of intangibles 3,244 3,062 874 733

Depreciation 721 499 231 179

Operating (loss) income (8,088) 185 222 (522)

Other expenses (income)

Interest expenses 1,243 819 295 253

Non-cash interest costs 170 373 34 91

Change in fair value of derivative liability 151 - - 88

Other income (8) (6) (2) (2)

Loss before income taxes (9,644) (1,001) (105) (952)

Income tax expense (benefit) (1,429) 197 62 53

Net loss (8,215) (1,198) (167) (1,005)

Accretion of convertible preferred stock (6,378) (5,158) (2,123) (1,414)

Net loss applicable to common stockholders $ (14,593) $ (6,356) $ (2,290) $ (2,419)

Basic and diluted loss per share applicable to common stockholders $ (0.89) $ (0.46) $ (0.14) $ (0.17)

Weighted average shares outstanding: Basic and diluted 16,311,243 13,892,716 16,686,696 14,401,480

For the Years Ended

December 31,

For the Three Months Ended

March 31,

(Unaudited)(Audited)


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Addendum – EBITDA & Adjusted EBITDA

(000’s omitted) 2016 2015 2017 2016

Operating income (loss) $ (8,088) $ 185 $ 222 $ (522)

Change in fair value of contingent consideration liability (103) 56 74 46

Amortization of intangibles 3,244 3,062 874 733

Depreciation 721 499 231 179

EBITDA $ (4,226) $ 3,802 $ 1,401 $ 436

Professional fees for non-repetitive matters 1,339 887 74 565

Legal settlement costs 6,192 208 - -

Non-cash stock option costs 446 278 184 78

Non-cash loss on disposal of fixed asset 32 - - -

Adjusted EBITDA $ 3,783 $ 5,175 $ 1,659 $ 1,079

Years Ended

December 31,

Three Months Ended

March 31,

Non-GAAP Financial MeasuresThese comments include a discussion of non-GAAP financial measures as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. We report our financial results in compliance with GAAP, but believe that also discussing non-GAAP measures provides investors with financial measures it uses in the management of our business. This presentation includes EBITDA and adjusted EBITDA measurements. We define EBITDA as operating income (loss), before interest, taxes, depreciation, amortization of intangibles, and non-cash changes in the fair value of contingent consideration liability. We define adjusted EBITDA as EBITDA, as defined above, plus certain non-recurring items, including certain legal and professional costs for non-repetitive matters, legal settlement costs, non-cash stock option costs, and non-cash losses on the disposal of fixed assets. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company’s operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations. Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company’s operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures and should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP such as net income or income from operations. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies.


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Addendum – Balance Sheet

(000's Omitted) December 31, March 31 December 31, March 31

2016 2017 2016 2017

ASSETS (Audited) (Unaudited) LIABILITIES (Audited) (Unaudited)

Current assets: Current liabilities:

Cash and cash equivalents $ 12,584 $ 7,224 Current portion of long-term debt and capital lease obligation $ 8,074 $ 3,061

Restricted cash 2,129 2,554 Accounts payable and accrued expenses 10,821 10,620

Accounts receivable, less allowance for doubtful accounts 4,677 2,810 Settlement processing liabilities 35,079 55,954

Settlement processing assets 35,240 57,741 Deferred revenue, derivative liability and other current liabilities 1,487 385

Prepaid expenses and other current assets 5,849 820 Current liabilities before client fund obligations 55,461 70,020

Current assets before funds held for clients 60,479 71,149 Client fund obligations 49,154 65,807

Funds held for clients 49,154 65,807 Total current liabilities 104,615 135,827

Total current assets 109,633 136,956 Long-term debt and capital lease obligation, net of current portion 13,794 13,180

Property and equipment, net 2,125 2,273 Deferred income taxes 520 520

Goodwill 48,978 48,978 Other liabilities 1,228 1,900

Identifiable intangible assets, net 26,090 25,216 Total liabilities 120,157 151,427

Deferred financing costs, net - - Mezzanine Equity 56,844 54,102

Other assets 384 601 Stockholders’ Equity 10,209 8,495

Total assets $ 187,210 $ 214,024 Total Liabilities and Stockholders’ Equity $ 187,210 $ 214,024


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Addendum – Debt

$-

$5.0

$10.0

$15.0

$20.0

$25.0

Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17

Debt(i n mi l l i ons)

Date DebtDec - 15 $ 16.7Mar - 16 $ 18.0Jun - 16 $ 18.3Sep - 16 $ 24.3Dec - 16 $ 21.9Mar - 17 $ 16.2

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