Authorize.Net Investor Overview. Wedbush Morgan 5 th Annual Conference May 2007

Transcription

1 Authorize.Net Investor Overview Wedbush Morgan 5 th Annual Conference May 2007

2 Safe Harbor Statement Certain statements herein and in any accompanying presentation that are not historical facts including, without limitation, the Company s statements pertaining to its financial and operating guidance, growth opportunities, growth opportunities in the ecommerce market, and the stability and security of the company s products and services are forward-looking statements that involve significant risks and uncertainties. Such statements are based upon the beliefs and expectations of the management of the Company as of the date hereof. Actual results may vary materially from those contained in forward-looking statements based on a number of factors including, without limitation, (i) the Company's revenue concentration in the payment processing business, (ii) continuing rapid change in the payment processing industry and other markets in which the Company does business that may affect both the Company and its customers, (iii) the impact of competitive products, services and pricing on both the Company and its products and services, (iv) market acceptance of the Company's new or enhanced products, services, technologies, (v) current and future economic conditions generally and particularly in the payment processing industry, (vi) uncertainties about the Company's ability to execute on, and about the impact on the Company's business and operations of, its objectives, plans or strategies as a result of potential technological, market or competitive factors, (vii) the industry risks associated with the Company s business and operations including, without limitation, illegal or improper uses of the Company s payment system, unauthorized intrusions and attacks on the Company s payment system that may impair the operation of its payment systems, unauthorized use of disclosure of personal data, changes in or failures to comply with credit card association rules and governmental regulations, changes in the application of existing laws and the impact of new laws, and dependence on relationships with resellers, certain financial institutions and third party payment processors, and (viii) the factors disclosed in the Company's filings with the U.S. Securities and Exchange Commission including, without limitation, its most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, as the case may be. The Company undertakes no obligation to update any forwardlooking statements. The information contained herein is subject to change without notice, is summary in nature and should be read in conjunction with the Company s filings with the SEC. The Company does not adopt as its own any third party information provided herein. This document does not constitute an offer to sell or solicitation of an offer to buy the Company s securities. Copyright Authorize.Net Holdings, Inc. All rights reserved. Authorize.Net, Lightbridge and the Lightbridge logo are registered trademarks and the Authorize.Net logo is a trademark of Authorize.Net Holdings, Inc. All other company and product names mentioned may be trademarks or registered trademarks of their respective owners.

3 Our Business Authorize.Net is a leading provider of payment gateway solutions enabling merchants to securely authorize, settle and manage credit card and electronic check payments

4 Authorize.Net s Addressable Market Small and Medium Business (SMB) Market: 26 Million Businesses 14 Million Small Office / Home Office (SOHO) 12 Million Retail Storefronts + 6 Million new businesses are incorporated every year + 300K 500K Net new businesses added every year Source: IDC and the Small Business Administration

5 ecommerce Our Engine For Growth The ecommerce market is growing at 20-25% CAGR -- US Dept. of Commerce ecommerce sales at year end 2006 only 3% of total retail sales -- US Dept. of Commerce Consumers spent $102B with online retailers in comscore Growing to $197 B in Forrester Research

6 Who Authorize.Net Serves Web-based Retail Transactions Transmitted Via IP Authorize.Net manages the complex routing of payments information to appropriate parties. MOTO Mobile

7 Products & Services Core Products + Authorize.Net Payment Gateway + echeck.net Value Added Products + Automated Recurring Billing (ARB) + Fraud Detection Suite (FDS) Features + Authorize.Net Verified Merchant Seal + Virtual Terminal & Virtual Point of Sale (VPOS) + Robust Reporting + Multiple User Account Settings + Flexible and Customizable Integration Options + Built-in Fraud Tools Benefits +Stable (99.99% Uptime) +Secure (PCI Compliant) +24x7x365 +Authorizations in 3 seconds +Easy Link to Accounting Software +Extensive Partnerships +Certified Shopping Carts +Certified Hosting Cos. +Certified Developers +Free Merchant Support +Free Reseller Support

8 Payment Gateway - How it Works Transaction authorization

9 Authorize.Net Strengths + Distribution channel of approximately 3,000 plus ISO partners + Fast growing channel of more than 100 nontraditional partners + Recurring revenue model + 175,000 Active Merchants in 275 SIC codes + Scalable IP-based payment platform + Highly secure mission critical environment + Geo-distant disaster recovery facility

10 Revenue & Merchant Growth $ Thousands $70,000 $60,000 $50,000 $40,000 $30,000 Revenue CAGR = 27% 180, , , , ,000 80,000 $20,000 60,000 40,000 $10,000 20,000 $ Revenue Merchants

11 Transactions & Dollar Volume Growth Millions $ Billions $30,000 $27,500 $25,000 $22,500 $20,000 $17,500 $15,000 $12,500 $10,000 Transactions Dollars

12 Revenue Mix $18 $ Millions $16 $14 $12 $1.1 $1.1 $7.2 $10 $8 $6 $4 $2 $5.8 $6.6 $8.0 Set Up & Other Mo Fee Trx $0 1Q 06 1Q 07

13 Growth Opportunities + Continued high growth in e-commerce transactions + Electronic Check Processing (ACH) fastest growing payment type + Retail / Card Present (CP) leveraging IP connectivity via payment gateways + Mobile Commerce facilitating transactions by integrating Authorize.Net s gateway into handheld devices + Leverage our large merchant base with new e- commerce services + Expansion into new markets

14 Financial Update

15 Financials GAAP QoQ YoY Q107 Q406 Q106 Chg Chg Revenue $16.3 $15.7 $13.5 4% 21% Gross Margin 76% 77% 79% (1 pt) (3 pts) Operating Expenses $10.8 $10.0 $10.6 8% 2% Net Income $1.9 $22.0 $1.6 NM 19% EPS (Continuing Ops) $0.07 $0.82 $0.02 NM NM

16 Financials Non-GAAP* Continuing Operations Only QoQ YoY Q107 Q406 Q106 Chg Chg Revenue $16.3 $15.7 $13.5 4% 21% Gross Margin 76% 77% 79% (1 pt) (3 pts) Operating Expenses $10.2 $9.5 $9.1 7% 12% Income from Continuing Operations Before Taxes $3.9 $4.1 $2.5 (5%) 56% EPS $0.09 $0.13 $0.07 (31%) 29% EBITDA $4.1 $4.0 $2.7 3% 52% EBITDA % of Revenue 25% 25% 20% - 5 pts * Excludes stock based compensation, restructuring charges and partial reversal of valuation allowance (Q406).

17 EBITDA Reconciliation Lightbridge, Inc. and Subsidiaries EBITDA* Reconciliation (in thousands) March 31, 2007 Three Months Ended December 31, 2006 March 31, 2006 Income from continuing operations 2,086 23, Adjustments: Interest income (1,705) (1,505) (1,010) Provision (benefit) for income taxes 1,218 (19,739) 448 Depreciation & amortization 1,886 1,351 1,272 Restructuring charges Share-based compensation ,404 Total adjustments 2,035 (19,314) 2,228 EBITDA* from continuing operations 4,121 3,989 2,725 Non-GAAP Measures In addition to reporting financial results in accordance with generally accepted accounting principles, (GAAP), the Company has provided non-gaap financial measures as set forth above, which it believes are useful to help investors better understand its financial performance, competitive position and prospects for the future. Such measures exclude interest, taxes, depreciation and amortization, share-based compensation expense and restructuring charges. Management believes these non-gaap financial measures assist in providing a more complete understanding of the Company's underlying operational results and trends. Management uses these measures along with their corresponding GAAP financial measures to help manage the Company's business and to help evaluate its performance compared to the marketplace. However, the presentation of non-gaap financial measures is not meant to be considered in isolation or as superior to or as a substitute for financial information provided in accordance with GAAP. The non-gaap financial measures used by the Company may be calculated differently from, and, therefore, may not be comparable to, similarly titled measures used by other companies. Investors are encouraged to review the reconciliations of these non-gaap financial measures to the comparable GAAP results, and found on the Company s website at: or * Also excludes stock-based compensation, restructuring charges and partial reversal of valuation allowance (Q406).

18 Strong Balance Sheet + $122.7M or $4.43 per basic share in cash This includes funds held for merchants of $8.9 M Cash growth of 6% sequentially and 36% YoY + Current ratio 6.4:1 + No debt

19 Q Guidance as of April 25, 2007 Quarter Ended June 30, 2007 Low End of Range High End of Range Revenue $16.6 M $17.4 M Income from Continuing Ops per share Non-GAAP Earnings per Share $0.05 $0.07 $0.11 $0.13

20 Strategy Drive organic growth Explore acquisition opportunities Invest in new merchant tools & services Focus on profitability Shareholder Value

21 Summary + Established market leader in payment processing for small to mid-sized merchants + Well positioned for high growth in ecommerce + Strong financial performance and metrics + Proven and effective management team with a focus on shareholder value

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