Investor Presentation Q2 20181
Safe Harbor Statement Forward Looking Statements 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 are difficult 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, 2017, 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. All subsequent 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 presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdictions in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. 2
Safe Harbor Statement continued Adoption of ASC Topic 606 The financial results throughout this presentation, including revenues, EBITDA and adjusted EBITDA, have been recast to conform with the requirements of Accounting Standard Codification ( ASC ) 606, Revenue from Contracts with Customers, and ASC 340-40, Other Assets and Deferred Costs Contracts with Customers, (collectively, ASC Topic 606 ). These recast financial results are preliminary and may change slightly when compared with future filings for rounding, etc. Impact on Previously Reported Results The provisions of ASC Topic 606 had a material impact on the timing and amount of revenues recognized by the Company. The most significant impact of adopting ASC Topic 606 is the result of gross versus net presentation of certain fees in the Payment Services Segment. Under ASC Topic 606, the Company reflects revenues net of certain fees that the Company pays to third parties, including interchange, which is earned by the cardholder s issuing bank, and dues and assessments, which are earned by the credit card associations. The Company previously reported certain of these items as revenues and cost of revenues under previous standards. This change in presentation will have no effect on the reported amount of operating income; however, the Company s total revenues and cost of revenues have been reduced for all periods presented. The most significant impact of adopting ASC Topic 606 in the HR & Payroll Services Segment relates to the timing of revenue recognized within the annual Form W-2, quarterly tax filing and annual tax filing revenue streams. To comply with the new standard, the timing of revenue recognized has changed from when delivery has occurred or services have been rendered to when a customer takes control of the good or service. This change in the timing of revenue recognition has been fully reflected in the results for 2018 and 2017, partially reflected in the results for 2016, and deemed immaterial for the periods prior to 2016. Additionally, ASC Topic 606 had an impact on the manner in which we account for certain costs to obtain new contracts (i.e. commissions), which we had previously expensed as incurred in both operating segments. Under ASC Topic 606, incremental direct costs of obtaining a contract, which primarily consist of sales commissions paid to inside sales professionals, are deferred and recognized ratably over the three-year and ten-year estimated terms of our customer relationships in the Payment Services and HR & Payroll Services Segments, respectively. 3
About JetPay JetPay is a fast growing provider of electronic payment processing and human capital management solutions. 250 Employees Offices in Pennsylvania, Texas and Florida Serving clients across the US and Canada HR & Payroll Payments E Check $6.8 Billion $5.3 Billion Payroll Dollars Processed in 2017 Card Volume Processed in 2017 $5.2 Billion E Check Volume Processed in 2017 Consolidated $ 44.4 Million $ 55.7 Million Revenue FY 2016 Revenue FY 2017 $ 31.1 Million Revenue 1H 2018 4
About JetPay Revenue Trend HR & Payroll Payments $17.8 Million Revenue FY 2017 $37.9 Million Revenue FY 2017 3 Year CAGR 8.9% 3 Year CAGR 31.9% $44.4 M $55.7 M 31.9% Consolidated $55.7 Million Revenue FY 2017 3 Year CAGR 22.5% $30.2 M 45.5% 54.5% $39.3 M 37.5% 62.5% 32.9% 67.1% 68.1% 2014 2015 2016 2017 5
About JetPay Payments End-to-End Payment Processing Platform Online, Recurring, Virtual Terminal Managed payment processing Settlement of Funds Transaction Reporting & Analysis Security & Fraud Services Comprehensive Solutions Set Custom & API Integration Omnichannel Acceptance HR & Payroll Full Suite Human Capital Management Payroll & Tax Filing Workforce Today HCM Application Tracking & Hiring Onboarding Time & Attendance ACA & Benefits Compliance & Recordkeeping Our People Proven Leadership Team Diane (Vogt) Faro CEO Gregory Krzemien CFO Peter Davidson Vice Chairman Michael Collester COO John Crouch CIO Michael Pires President HR & Payroll Michelle Jenkins CMO 6
Historical Performance Payments and HR & Payroll 7
Segment Performance Payments 1H 2018 55.6% 26.9% Direct Integration - $11.9 Million Government / Utilities - $5.8 Million 17.5% Financial Institutions - $3.7 Million HR & Payroll 1H 2018 46.9% 35.2% 17.9% Workforce Today - $1.7 Million Tax Filing & Other - $3.5 Million WebPay - $4.5 Million 8
Payments Performance. Strong Business Model Industry 7.4% Card Payments Growth JetPay 31.9% Growth last Three Years JetPay 27.1% Growth in 2017 Flexible and Stable Independent processing platform allows flexibility 99.99 % uptime over last five years Significant Unused Processing Capacity Sustainable and Predictable Long term contracts Retained customer base Recurring Fees 9 Integrations
Payments Performance Year Over Year Revenue Growth $37.9 Million $29.8 Million $24.5 Million $21.4 Million FY 2015 FY 2016 FY 2017 1H 2018 48.8% Revenue Growth 21.5% Revenue Growth 27.1% Revenue Growth 13.6% Revenue Growth 10
Payments Competitive Advantage Integrated and ecommerce Government and Utility Integrated and ecommerce ISV payment solutions PayFac and API Integrations Customized direct integration expertise Gateway technology Electronic Bill Presentment Payment Platform Proprietary technology platforms Government and Utility Experienced in Government and Utility sectors Omnichannel solutions phone, online, mobile and POS Integrations with core government and utility platforms 11
HR & Payroll Performance Strong Business Model $6.8 Billion Employee Pay volume in 2017 3.8 Million payroll checks in 2017. Workforce Today offers large market opportunities Sales pipeline increased with payment clients Flexibility and Capacity Proprietary platform allows for flexibility Leverage tax filing services for client growth Significant unused processing capacity Predictable Recurring revenue base Ability to cross sell add-on products 12 Long term customer relationships
HR & Payroll Performance Year Over Year Revenue Growth $17.8 Million* $14.7 Million* $14.6 Million* $9.7 Million* FY 2015 FY 2016 FY 2017 1H 2018 7.2% Revenue Growth -1.1% Revenue Growth 21.9% Revenue Growth 5.6% Revenue Growth * Prior to the effects of ASC Topic 606 revenue growth in FY 2017 and 1H 2018 would have been approximately 13.0 % and 12.6 %, respectively. 13
HR & Payroll Competitive Advantage White Glove Service Human Capital Management White Glove Service 1 to 1 service model Account Management Relationship Managers dedicated to education Strong organic growth for HCM revenues within existing clients Flexible solutions for small and mid-sized businesses Ability to scale as businesses grow Solutions for Hire to Retire Full suite of HCM solutions attracting a higher end larger client Workforce Today is a single database, cloud-based platform Sales team with expertise to secure larger business Large pipeline - 80% of companies outsource payroll & tax filing Cross sell opportunities with Payment Services client base 14
Financials 15
Key Facts Share Statistics * $ 4.89 Publically Traded JTPY Price $ 1.95 52 Week High / Low $ 1.45 12 Month Avg. Daily Volume 57,625 Shares Outstanding 15.4 Million Fully Diluted Shares 32.5 Million Market Capitalization $ 63.3 Million Enterprise Value $ 70.0 Million *As of close date of 06/29/2018. Excludes dilutive effect of Stock Options and Warrants. 16
Key Facts Capital Structure June 30, 2018 $ 8.7 Million Cash $ 64.5 Million Total Equity $ 15.3 Million Debt * Includes $4.1 Million of common stock, subject to possible redemption and $65.7 Million of redeemable convertible preferred stock. 17
Quarterly EBITDA & Adjusted EBITDA $3,076 ($ in thousands) $2,432 $1,269 $936 $1,140 $1,082 $1,313 $1,412 $1,593 EBITDA Adjusted EBITDA $70 Jun 2017 Sep 2017 Dec 2017 Mar 2018 Jun 2018 Non-GAAP Financial Measures These 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 pro forma 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 pro forma EBITDA as EBITDA, as defined above, plus certain non-recurring items, including certain legal and professional costs for nonrepetitive 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 pro forma 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 pro forma 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 pro forma 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. 18
Moving Forward Key Drivers Long Term Relationships Human Capital Management Expanded Gateway Platform Stability Strategic Acquisitions Government & Utilities Direct Integration ISV Partnerships Trending to Full Suite of HR, Payroll, Compliance, Time and Attendance Hire to Retire Cloud based with expanded API and custom opportunities 99.9% uptime for the last five years superior performance and capacity Technology companies Client-based opportunities 19
Contact Investor Relations Investorinquiries@jetpay.com Corporate Address 7450 Tilghman Street Allentown, PA 18106 Investor Presentation June 2018 20