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IPass Investor Presentation Q3’15 Wi-Fi: Unlimited, Everywhere, Invisible.

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Presentation on theme: "IPass Investor Presentation Q3’15 Wi-Fi: Unlimited, Everywhere, Invisible."— Presentation transcript:

1 iPass Investor Presentation Q3’15 Wi-Fi: Unlimited, Everywhere, Invisible

2 Safe Harbor This presentation contains “forward-looking” statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. All statements, written or graphical, other than statements of historical fact could be deemed to be forward-looking, including, but not limited to: any projections of financial information; any statements or expectations about growth in the business, number of users, network footprint, revenue, profitability, cost reduction and/or cash generation of the company; any statements about historical results that may suggest trends for our business and future results of operations; any statements of the plans, strategies and objectives of management for future operations; any statements of expectation or belief regarding future events, potential markets or market size or technology developments; any statements of assumptions underlying any of the foregoing and any dashed-lines on graphs referring to future periods. These statements are based on estimates and information available to us at the time of this presentation and are not guarantees of future performance. Actual results could differ materially from our current expectations as a result of many factors, including but not limited to: our ability to reduce our costs to the extent that we expect, quarterly fluctuations in our business and results of operations; our ability to address market needs and sell our products and services successfully; the general market conditions of the mobility services industry; and the effects of competition. These and other risks and uncertainties associated with our business are described in our quarterly and annual reports on Form 10-Q and Form 10-K as filed with the SEC and which are available on our website and on the SEC’s Web site at www.sec.gov. We assume no obligation and do not intend to update these forward-looking statements. This presentation also contains financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (GAAP). iPass management evaluates and makes operating decisions using various performance measures. In addition to iPass’ GAAP results, the company also considers non-GAAP metrics, including Adjusted EBITDA, defined as net income (loss) before interest, income taxes, depreciation and amortization, restructuring charges, certain state sales and federal tax items and stock compensation expense. Management uses these non-GAAP financial measures as components of its comparison of results with its business plan and individual operating budgets and to assist in the allocation of resources. Management excludes from its non-GAAP financial measures certain items in order to facilitate its review of the comparability and performance of the company's core operations because it believes that such items are not related to the company's ongoing core operating performance. Management adjusts for the excluded items because management believes that, in general, these items possess one or more of the following characteristics: their magnitude and timing is largely outside of the company's control; they are unrelated to the ongoing operation of the business in the ordinary course; they are unusual or infrequent and the company does not expect them to occur in the ordinary course of business; they are non-operational; or they represent non-cash expenses involving stock option grants. iPass believes that the presentation of these non-GAAP financial measures is useful to investors. Detailed information, definitions and reconciliations of non-GAAP to GAAP financial measures are included in the company’s quarterly and annual filings with the SEC and are available on the company’s Web site at www.ipass.com and at the SEC's Web site at www.sec.gov. In addition, investors and others should note that iPass announces material financial information to its investors using its investor relations website, SEC filings, press releases, public conference calls and webcasts. iPass also uses social media to communicate with its customers and the public about iPass, its products and services and other matters relating to its business and market. It is possible that the information iPass posts on social media could be deemed to be material information. Therefore, iPass encourages investors, the media, and others interested in iPass to review the information it posts on U.S. social media channels including the iPass Twitter Feed, the iPass LinkedIn Feed, the iPass Google+ Feed, the iPass Facebook Page, the iPass Blog, the iPass Instagram account, and the iPass Pinterest account. These social media channels may be updated from time to time. 2

3 Reasons to Invest: Company in Transition Wi-Fi: Unlimited, Everywhere, Invisible Exploding market: 5.2B people connecting even more devices Delivering mobile connectivity via largest Wi-Fi network Implementing new Go-to-Market model to accelerate profitability Growing IP portfolio (i.e., iPass SmartConnect) 3 Streamlined management improving expense structure

4 Exploding Market Need 5.2B people use mobile phones And already more intelligent devices than people… iPass is the world’s largest Wi-Fi network, And our goal is to connect them all 4

5 Driving Change, Driving to Profitability GARY A. GRIFFITHS President & CEO 35 years leading high-tech companies Founder & CEO Trapit Everdream CEO (acquired co.s) WebEx (Cisco) HEAT.net (Sega) PATRICIA R. HUME Chief Commercial Officer 35 years in sales, marketing & bus. dev. Trapit Convio (Blackbaud) SAP AG Avaya VerticalNet Markets IBM and Lotus DARIN VICKERY Chief Financial Officer 25+ years in accounting & finance 10+ years consulting in Silicon Valley Pricewaterhouse Coopers KEITH WALDORF VP of Engineering 20+ years with CTO & engineering roles SkyPop DrDispense Captus Networks MCI/Verizon PG&E Cisco Systems, awarded patents RAJANI KOLLI VP of Global Cloud Ops 18+ years experience Saba Cisco Systems WebEx Siemens KCP Sugar 5

6 So what’s new? 6

7 Pretty Much Everything: 7

8 What’s New… 8 New Go-To-Market Unlimited service: Wi-Fi on Unlimited devices Expanded addressable market: Added SME New target customers: Sales & marketing line of business Easy pricing: Per-user per month subscription New Product “Invisible” client Cloud-based: No on-site servers Intelligent network selection New Network Footprint Expanding from 18M March ‘15 => 50M December ‘15 New Expense Structure Streamlined management OpEx reduction of >$2M/Q Profitability revenue run-rate reduced from $100M to $75M New Management Team

9 iPass Is Unlimited Provides predictable, cost-effective pricing for customers Delivering unlimited access on unlimited devices Windows Mac iOSAndroid Windows Phone 9

10 iPass is Everywhere 94% coverage of the world’s Top-100 paid airports 85,000 Hotel and Convention Center Venues Over 2,700 Wi-Fi equipped planes Over 150 Wi-Fi Network Partners Over 800 Wi-Fi equipped trains 120 Countries | Approaching 50 Million Hotspots 10

11 Approaching 50m Hotspots Across 100+ Countries Embedded in >4.5m devices iPass Is Everywhere > 150 Unique Wi-Fi Networks Partners Reaching Consumers 50m 4.5m Commanding Wi-Fi Presence 11 Edited

12 iPass is Invisible Aggregates anonymous user data using patented technology Creates a real-time network graph of hotspots classified by performance and reliability Graphs hotspots outside iPass network as well Enables iPass to add new hotspots where users need them most Enhances hotspot security with last-mile VPN functionality iPass SmartConnect invisibly and securely connects users to the hotspot that best meets their needs 12

13 Security Layers Wireless Security (WPA) Automatic Credential Assignment (ACA) Last Mile VPN for Global Hotspot Security Wi-Fi protected access Hide and encrypt credentials Encrypt data 13

14 The IP Behind Everywhere and Invisible iPass developed and patented technology is turning Everywhere and Invisible into a REALITY. A sampling… Network Probe (US 8606885 B2) Service Quality Management (US 8606885 B2) Network Characterization (US 20070073868 A1 … and about 30 more patents where these came from. 14

15 So Unlimited, Everywhere, Invisible Where are we going? 15

16 We’re Going to Everything… It’s not just people that need to be connected We’re Going to Every Device The Internet of Things is real. It’s here. And it must be connected 16

17 So how are we getting there? 17

18 Improved Go-To-Market Strategy SME ---------------------- Very Small -------- LE Target LOB Before: Historical focus on large enterprise (LE) IT Product design dictated by IT – not end-user Mix of channel and direct sales – no clarity Long sales cycles – custom pricing Unpredictable revenues Expensive account management model After: Launch Unlimited and focus on broader segment Standard priced cloud-based offerings (SaaS) New logos/bookings with inside sales/hunters and shorter sales cycles Channel model in EMEA, LATAM & APAC and direct sales in NA (for now) 18

19 UNLIMITED is making connectivity cost effective: –Expanded channel partners in Italy, France, Germany and India. –Posted Q315 ACV of $1.6M, including significant upsell. –Increased deferred revenue by $0.4M to $2.5M at Sept. 30, 2015. EVERYWHERE is making connectivity ubiquitous and prolific: –Integrating strategic partners Devicescape, Fon and TWC. –Pass services currently embedded on 4.5+M devices globally and growing. INVISIBLE is making connectivity smart. –Launched iPass SmartConnect with super-secure connection through automatic virtual private network (VPN) tunneling. –Setting the stage for Wi-Fi first – but not Wi-Fi only user connections. –Improving UX with updates iOS, Android, Windows, and Mac. STREAMLINED management is delivering results: –OpEx reduction of >$2M/Q. –Profitability revenue run-rate reduced from $100M to $75M. Executing to Plan 19

20 Q3 2015 Financials (1)The company recorded Restructuring expense of $0.9m in Q3’15. (2)The company defines Adjusted EBITDA as net (loss) adjusted for interest income (expense), income taxes, depreciation and amortization, stock compensation expense, restructuring charges, net income (loss) from discontinued operations, CEO exit costs, and non-recurring legal & proxy contest costs; see notes to Earnings Press Release and SEC filings for reconciliation of non-GAAP to GAAP numbers and definitions. Income StatementBalance Sheet (Sept. 30, 2015) ($ in millions) Q3'15 Open Mobile Enterprise$12.5 Network$10.2 Platform and Other2.3 Open Mobile Exchange $1.7 Legacy iPC $0.8 Total Revenue$15.0 Network Access Costs$7.2 Operating Expenses (excl. Restructuring) (1) $10.2 Network Gross Margin41.1% GAAP Net Loss$(3.4) Adjusted EBITDA (2) $(1.6) Assets Cash and Cash Equivalents$24.2 Accounts Receivable, Net10.2 Prepaid Expenses & Other Current Assets2.5 Total Current Assets$36.9 Property and Equipment, Net4.6 Other Assets0.6 Total Assets$42.1 Liabilities & Stockholders' Equity Current Liabilities$16.0 Long-Term Liabilities1.3 Total Liabilities$17.3 Total Stockholders' Equity24.8 Total Liabilities & Stockholders' Equity$42.1 Deferred Revenue (Short & Long-term) $ 2.5 (3) (3) Up from $0.6 million at 12/31/2014 20

21 Creating Shareholder Value iPass Is: UNLIMITED EVERYWHERE INVISIBLE And building the foundation to be…. EVERYTHING 21 Board authorized share repurchase program of up to $3 million through December 31, 2016

22 Unlimited InvisibleEverywhere iPass Inc. Global Headquarters 3800 Bridge Parkway Redwood Shores, CA 94065 Investor Relations Kirsten Chapman/Becky Herrick LHA +1 (415) 433-3777 ipass@lhai.com


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