IPO Pitch and Investor Presentation. High Point

Transcription

1 IPO Pitch and Investor Presentation December 6, 2017 High Point Capital Advisors

2 Contents Credentials 3 IPO Market 6 Industry Overview 8 Business Overview 9 Risks 15 Valuation 16 Appendix 20 2

3 High Point Capital Advisors Team Michael Hansen, Analyst: After an illustrious career at the world-renowned Business Research Division, Michael decided to upgrade titles from Student Assistant to Analyst. Nathan Mpiana, Analyst: Nathan was a soccer star until a debilitating ankle injury. He now puts his skills to use on the High Point company team as a coach and works as an analyst on the side. Virgil Nunan, Analyst: Virgil recently won a Grand Slam tennis tournament, but decided that international fame and fortune were nothing compared to looking at Excel and PowerPoint all day (and night). Nonie Ziel, Analyst: Following her three-year stint at the Burridge Center, Nonie decided to put her considerable Outlook skills to use at High Point and frequently hits reply-all on client s. 3

4 Why High Point? Proven consumer sector track record Commitment to creating the best outcome for the client Established relationships with high quality investors Recent High Point Consumer and Tech Deals $131 million November 15, 2017 IPO $16 million October 19, 2017 IPO $820 million May 12, 2017 IPO $500 million November 2, 2017 IPO NMVN Lead Left Bookrunner NMVN Sole Bookrunner NMVN Bookrunner NMVN Lead Left Bookrunner 4 Source: IPO Scoop. Data as of November 29, 2017.

5 Illustrative Road Show for Stitch Fix West Coast: Northern Trust AM West Coast AM Rainer FPA Franklin Templeton Dodge & Cox West / Mid-West: Janus Henderson Grandeur Peak Wasatch Cortina AM 1492 Capital East Coast: Halcyon AM J.P. Morgan AM GSAM AllianceBernstein Columbia Mgmt Group Lord Abbett Neuberger Berman T. Rowe Price Wellington Mgmt 5

6 IPO Market IPOs driven by financial sponsor exits Increase in proceeds, volume and median deal size of IPOs compared to prior YTD Positive performances of IPOs in 2017 Low volatility, bull market 6 Source: EY Global IPO Trends: Q Data as of September 31, 2017.

7 Consumer / Internet IPO Market Consumer goods IPOs YTD have performed well Internet-focused technology IPOs have not performed well Stitch Fix is uniquely poised in the consumer goods / retail equity market with a distinct emphasis on technology, data analytics and internet 2017 Selected YTD Consumer Goods IPOs Company Date Proceeds ($mm) Offer / Current Funko 11/2/ % Evoqua 11/2/ % RumbleOn 10/19/ % CarGurus 10/12/ % Blue Apron 6/29/ % Gardner Denver 5/12/ % Floor & Décor 4/27/ % Netshoe 4/12/ % Mean % Median % 2017 YTD Selected Technology IPOs Company Date Proceeds ($mm) Offer / Current Jianpu 11/16/ % SendGrid 11/15/ % Sogou 11/9/ % Sea Limited 10/20/ % Snap 3/2/2017 3, % Mean 1, % Median % 7 Source: IPO Scoop. Data as of November 29, 2017.

8 Percent Change Annual Sales ($mm) Industry Overview The online retail industry is booming, especially for clothing & apparel U.S. Retail Industry Sales Growth U.S. Online Clothing Sales 12.00% 140, % 120, % 100, % 80, % 60, % 40, % Total Retail Online 20, Source: PwC Strategy& and Statista.

9 Stitch Fix Overview 75+ data scientists 3,400+ employee stylists 2.2 million active clients Culture of teamwork, creativity, data, and diversity 2017 Revenue: $997m 2017 adj. EBITDA: $61m 9 Source: Stitch Fix Fact Sheet.

10 Stitch Fix: The Future of Online Retail Bring personal connection with clients back to ecommerce Online retailer with a strong emphasis on technology Growing company in a growing industry 10 Source: Stitch Fix S-1.

11 Business Model New Customer The Fix The Purchase Survey gauges preferences 5 pieces of clothing, shoes & accessories Expert advice on how to wear and pair the new items Customer purchases or returns 11 Source: Stitch Fix S-1.

12 Business Model Data That Matters Our trusted relationship with clients allows us to collect rich high-signal data. Data Science Woven Into the Fabric of Stitch Fix We apply proprietary algorithms to our unique data set to power our entire business. Client Loyalty Better Fixes and client-stylist relationships drive repeat purchases and more data. Human Judgment Applied to Data Science The combination delivers personalization at scale. 12 Source: Stitch Fix S-1.

13 Data Sources Meaningful data from multiple sources Client Data Merchandise Data Feedback Data Fort Worth, Texas Pays $50-75 for button up shirts Button height Brand Price Color Return Comments Keep Daniel, Age 32 Body Type: Slim Pattern Sleeve opening Style Size Wears business formal 1-2 times per week Pants legs often too tight Style Length $72 Return Knowledge Cotton Gregory Textured Tee Keep 13 Source: Stitch Fix Fact Sheet.

14 Meet the Management Team A management team with experience and exceptional skills Katrina Lake Mike Smith Paul Yee Cathy Polinsky Founder & CEO COO CFO CTO 14 Source: Stitch Fix website.

15 Percent of Revenue Risks Competition with brick-andmortar and online retailers 8.00% Stitch Fix Profit Margin FY17 Slowing growth 6.00% 5.60% Short operating history in highly dynamic industry Negative profit margin due to high promotional costs 4.00% 2.00% 0.00% -2.00% 0.10% -1.70% -4.00% -3.90% -6.00% Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 15 Source: Stitch Fix S-1.

16 Selected Comparable Companies Comparable Companies Company FY 2017 Revenue ($mm) FY 2017 EBITDA ($mm) Enterprise value ($mm) $927.1 $167.1 $ , , , , , , , ,

17 Discounted Cash Flow Bull case Bull case WACC 9.00% Bull case L-T growth 2.00% Enterprise value ($1,000s) $1,997,774 Adjustments for Equity Value 53,051 Equity value ($1,000s) 2,050,825 Number of shares (1,000s) 10,500 Value per share $20.22 Bear case Bear case WACC 11.00% Bear case L-T growth 1.00% Enterprise value ($1,000s) $1,350,254 Adjustments for Equity Value 53,051 Equity value ($1,000s) 1,403,305 Number of shares (1,000s) 10,500 Value per share $13.84 Base case Base case WACC 10.00% Base case L-T growth 1.50% Enterprise value ($1,000s) $1,616,478 Adjustments for Equity Value 53,051 Equity value ($1,000s) 1,669,529 Number of shares (1,000s) 10,500 Value per share $

18 Market Multiple Analysis FY 2017 EV / EBITDA Low Selected High 4.2x 7.1x 15.9x Stitch Fix FY17 EBITDA ($1,000s) $20,456 Implied EV ($1,000s) 146,186 Adj. for equity value ($1,000s) 53,301 Equity value ($1,000s) 199,237 Number of shares (1,000s) 10,500 Value per share $1.96 FY 2017 EV / Revenue Low Selected High 0.2x 0.7x 3.4x Stitch Fix FY17 Revenue ($1,000s) $977,139 Implied EV ($1,000s) 711,507 Adj. for equity value ($1,000s) 53,301 Equity value ($1,000s) 764,558 Number of shares (1,000s) 10,500 Value per share $ Year Forward EV / EBITDA Low Selected High 6.7x 9.4x 28.1x Stitch Fix 5YF EBITDA ($1,000s) $295,432 Implied EV ($1,000s) 2,767,174 Adj. for equity value ($1,000s) 53,301 Equity value ($1,000s) 2,820,225 Number of shares (1,000s) 10,500 Value per share $ Year Forward EV / Revenue Low Selected High 0.3x 0.6x 1.6x Stitch Fix 5YF Revenue ($1,000s) $2,367,219 Implied EV ($1,000s) 1,315,671 Adj. for equity value ($1,000s) 53,301 Equity value ($1,000s) 1,368,722 Number of shares (1,000s) 10,500 Value per share $

19 Conclusion Stitch Fix Profit Margin FY17 Offering price range Average $16 $23 Lower limit Upper limit EV / 5YF Revenue $11 $16 $18.00 $20.00 EV / 5YF EBITDA $24 $31 Proceeds Shares sold in IPO (mm) 10.5 DCF $14 $20 $0 $10 $20 $30 $40 Implied Share Price Price in middle of range $19 Proceeds raised ($mm) $