Industry Leadership through Innovation, Experience and Execution. Sidoti & Company s Semiannual Micro-Cap Conference January 9, 2012

Transcription

1 Industry Leadership thrugh Innvatin, Experience and Executin Sidti & Cmpany s Semiannual Micr-Cap Cnference January 9, 2012

2 Safe Harbr Statement Statements in this presentatin relating t future plans, results, perfrmance, expectatins, achievements and the like are cnsidered frward-lking statements. Thse frward-lking statements invlve knwn and unknwn risks and are subject t change based n varius factrs and uncertainties that may cause actual results t differ materially frm thse expressed r implied by thse statements. Factrs and uncertainties that may cause actual results t differ include, but are nt limited t, the risks disclsed in the cmpany s filings with the U.S. Securities and Exchange Cmmissin. The cmpany undertakes n bligatin t revise r update any frward-lking statements. 2

3 Agenda Crprate Overview Grwth Update 3

4 Abut Us Since 1996, Intersectins has been the premier prvider f cnsumer identity theft prtectin slutins. Mre than 34 millin cnsumers prtected Cmprehensive slutins Preferred partner t the financial services industry Trailing 12 mnth Revenue f $370 millin* Trailing 12 mnth Adjusted EBITDA befre share related cmpensatin f $54.9 millin* NASDAQ listed (Ticker: INTX) since 2004 *As f the Quarter ended September 30,

5 Leadership, Experience, Stability, Passin Michael R. Stanfield Chairman and Chief Executive Officer Since 1996 C-funded Intersectins Inc. Frmer Managing Directr at Leb Partners Crpratin Neal B. Dittersdrf Executive Vice President, Chief Legal Officer Jhn G. Scanln Executive Vice President, Chief Financial Officer Since 2003 Previusly served as Senir Vice President and General Cunsel Funder f intellectual prperty and technlgy practice at majr law firms; General Cunsel f publicly held credit technlgy cmpany; and Trial Attrney at U.S. Department f Justice Since 2006 Previusly served as Chief Operating Officer, Intersectins Business Services Frmer executive at Capital One Financial Crpratin, Clumbia Energy Grup, ATKearney and JPMrgan Steven A. Schwartz Executive Vice President, Cnsumer Services Since 2003 Previusly served as Senir Vice President f the Client Services divisin Frmer Senir Vice President at The Mtley Fl As f 11/21/2011 5

6 Identity Theft Prtectin Market Overview Market Size* Endrsed Identity Theft Prtectin Market: $2.5B t $3.5B and Grwing Direct t Cnsumer Only 12% f cnsumers pay fr an Identity Prtectin Subscriptin Service; indicating a huge, untapped market ** *Market Size based n internal estimates, the high end f $3.5 billin was referenced in Javelin s Fifth Annual ID Prtectin Services Screcard (August 2011). Javelin s 2011 ID prtectin market estimates were expanded in 2011 t include a wider array f antivirus and PC prtectin services. ** Accrding t Javelin s Fifth Annual ID Prtectin Services Screcard (August 2011) 20% f cnsumers received a cre Identity Prtectin Service f which 41% were fr free, limited feature and /r limited duratin subscriptins. 6

7 Cnsumers Trust Their Banks fr Their Identity Prtectin Identity Fraud Prtectin Services by Age My bank r credit card cmpany 48% 50% 46% 54% Institutin prviding identity prtectin services An independent prvider, such as LifeLck, Debix, Identity Guard, etc. Experian Equifax Other TransUnin 19% 22% 19% 9% 14% 9% 17% 17% 10% 10% 11% 11% 6% 7% 4% 3% 3% 2% 3% 5% Gen Y Gen X Baby bmers All Cnsumers 0% 10% 20% 30% 40% 50% 60% Percent f Cnsumers Surce: Javelin 2010 Annual Identity Prtectin Services Screcard, Identity Fraud Prtectin Services by Age. 7

8 Banking Partners Require a Wide Spectrum f Wrld Class Skills Prducts Custmer Best in Class Cmprehensive and Multilayered Slutins Track Recrd f Innvatin Incrprating Advanced Technlgy In-huse and Off Shre Custmer Service Centers Highly Secure Envirnment t Prtect Data Seamless Custmer Experience t Supprt Brand Secure and High Brand Quality Print Capabilities Partnership Marketing and Operatinal Expertise Dedicated Client Services Team Put Clients' Needs First Flexible Prgram Management t Meet Evlving Objectives and mre 8

9 What Is a Cmprehensive Identity Theft Prtectin Prduct? Cnsumer Benefits May Include: Custmized 1B r 3B Credit Reprts and Credit Scres Daily, mnthly, and quarterly mnitring f credit files by ne r all 3 Bureaus: Equifax, Experian & TransUnin Data mnitring f public infrmatin surces via prprietary mnitring sftware Mbile Data Strage Sftware Antivirus, Anti-Keylgging, and ther Sftware Tls Credit Educatin Identity Theft Insurance Access t The Identity Theft Assistance Crpratin (ITAC), a U.S. gvernmentspnsred nn-prfit that assists identity theft victims 9

10 Recgnized fr Best In Class Identity Fraud Prtectin Services Selected as the Exclusive Prvider f ITAC Victim Assistance endrsed by the Financial Services Rundtable 2011 Best in Class Prvider t Financial Institutins AND Best Overall service IDENTITY GUARD TOTAL PROTECTION SM Hnred as ne f the Tp 500 Innvative Infrmatin Technlgy Cmpanies (2010 and 2011) Best Online Banking Site fr Identity Theft Prtectin 10

11 Innvatins Such as kid Sure SM Cntinually Refresh the Categry Hw kid Sure SM Helps Prtect Kids All-new, patent-pending technlgy scurs thusands f data surces n the Web, prviding kid Sure SM Onging visibility int ptential expsure f a child s persnal data A cmpressive Digital Ftprint reprt shwing detected data Alerts t certain kinds f activity detected scans fr: SSN Expsure Criminal Recrds DMV Recrds Utilities Recrds 11

12 Agenda Crprate Overview Grwth Update 12

13 Strategic Fcus n Marketing f Identity Theft Prtectin Services Driving endrsed marketing grwth thrugh: Existing large clients New large client wins Prduct/channel alliance t address smaller Financial Institutins Refrmulated prducts t succeed in new industry verticals Nurturing new prgrams launched in 2011 including: An indirect relatinship with a new, large financial institutin client, which included transitining their custmer base t Intersectins A new partnership t prvide advanced identity theft prtectin services t the custmers f a leading ISP An alliance with a leading check prvider t market ur prducts t smaller financial institutins Grwing ur wn IDENTITY GUARD brand as bth a standalne business and a shwcase fr new endrsed business Returning capital t sharehlders via dividends and share repurchases due t strng cash-flw generatin As f 11/21/

14 Attractive Ecnmic Prfile $380 $370 $360 $350 $340 $330 $320 $60 $40 $20 $0 LTM Revenue ($MM) Q3 '09 Q4'09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 LTM Adjusted EBITDA ($MM) Q3 '09 Q4'09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11 Annualized Dividend 7.0% Flexible ecnmic arrangements with clients High margin fee fr service indirect arrangements High return n marketing investment direct arrangements Detailed financial mdeling at the client, prduct and marketing channel level based n cumulative knwledge frm mre than 34 millin custmers served High visibility recurring revenue and cash flw business mdel frm 4.9 MM subscribers Returning capital t sharehlders via share repurchases and dividends Dividend Yield is based n 1/4/12 clsing price f $ Adjusted EBITDA is a nn-gaap financial measure. Our cnslidated financial statements, ther data and recnciliatins f these nn-gapp financial measures t the mst directly cmparable GAAP financial measures and related ntes can be fund in the GAAP and Nn-GAAP Measures link under the Investr & Media "page n ur website at Cnslidated results adjusted fr sale f SI. EBITDA adjusted fr share related cmpensatin and nn-cash impairment charges. 14

15 Where Des The Grwth Cme Frm? Since the end f the 4th Quarter f 2009, revenue frm ur CP&S business (excluding Bank f America) grew by 24% * One large, indirect financial institutin client grew by 38% A large, natinal retail chain grew by 30% A large direct financial institutin client grew by 30% Our IDENTITY GUARD suite f prducts grew by 68% Our Canadian business grew by 40% The abve revenue grwth with existing business came frm a cmbinatin f higher sales, imprving retentin, and mving t higher priced prducts all part f ur future grwth a plans Headwinds frm Bank f America 2010 decisin t split new marketing with anther prvider Recent decisin t cease marketing identity theft prtectin services in their Cnsumer Bank (n impact befre 4Q 2011) * As f the Quarter ended September 30,

16 Hw Can We Grw Adjusted EBITDA While Revenue Declines Illustrative Cmmn Sized Assumptins fr Three Different Prgram Types 24 mnth analysis millins Direct t Cnsumer Endrsed Direct Endrsed Indirect Revenue $64.4 $56.8 $10.6 Marketing & Cmmissins $34.4 $43.4 $0 Csts $23.0 $16.7 $9.1 Cntributin Margin Breakeven Mnth $7.1 ($3.3) $ mnths 24 mnths 9 mnths Numerus assumptins used based n real client/marketing examples Each example assumes 50,000 new subscribers per mnth in year ne and then n new marketing Csts depicted are variable csts which can be directly attributed t prducts and d nt include verhead allcatins GAAP treatment f marketing utilized 5 Year ROI Highest Middle Lwest 16

17 Well-psitined t Capitalize n Industry Trends and Leverage Our Unique Advantages Favrable Industry Dynamics Market-Leading Psitin 8.1 millin adults were victims f identity theft in 2010; with ttal dllar fraud amunts f $27 billin Mre than 500 reprted data breaches in 2009, expsing an estimated 221 millin persnal recrds. Increasing trends in nn-card frauds, cmputerbased crimes, and cunterfeit sftware 4.9 millin subscribers currently prtected; mre than 34 millin prtected since inceptin Recgnized as the innvatr and prduct leader in the identity prtectin industry Mst cmprehensive identity prtectin prduct suite available Attractive Financial Characteristics Prven subscriptin mdel creates strng, predictable cash flw 6 cnsecutive quarterly dividend payments, and 2 nd cnsecutive quarter payment since the regular quarterly dividend was increased by 33% Multiple Grwth Opprtunities Multiple medium t large existing clients/prtflis with duble digit grwth rates Cnsumer Direct Recently added clients and additinal new client wins New prduct launches such as kidsure SM Surce: Javelin, 2011 Javelin Identity Fraud Survey Reprt 17

18 Thank Yu Crprate Headquarters Intersectins Inc Stnecrft Bulevard Chantilly, VA Tll-free: NASDAQ : INTX Investr Relatins Eric Miller Senir Vice President Crprate Finance and Investr Relatins Tel: emiller@intersectins.cm