Overview of iPass and its enterprise mobility offering

1. March 2011
March 2011
IPASS INC.
Company Overview
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2. Forward-Looking Statements
F d L ki St t t
The information contained in this presentation regarding iPass' belief that its new open Mobile Platform provides a compelling and value-
focused set of integrated mobility offerings to the enterprise and to channel and carrier partners; iPass' belief that its new Open Mobile Platform
and f
d functionality are central t evolving it b i
ti lit t l to l i its business model f
d l from a network services-centric model t a value-added platform b i
t k i ti d l to l dd d l tf business th t sells
that ll
enterprise mobility services via a cloud-based infrastructure; iPass' belief that it's driving forward in having a meaningful impact on changing the
economics of mobility for the enterprise; iPass’ belief that technology innovation will create stockholder value over the long-term; iPass’ belief
that there’s a compelling new opportunity around the company’s Wi-Fi assets with potential carriers; and iPass’ projections of any financial
results are forward-looking statements.
Actual results may differ materially from the expectations contained in these statements due to a number of risks and uncertainties, including:
the risk that current poor economic conditions and reduction in business travel will have a greater negative impact on iPass than it predicts; the
risk that iPass' new mobility platform does not achieve customer acceptance or does so slower than iPass predicts; the risk that iPass will
experience unexpected technical or other delays in the implementation of added functionality to its new platform; the risk that iPass may not be
able to generate revenue from new services if market acceptance of those new services is not as iPass expects; the risk that the rate of decline
in use of narrowband/dial technology as a means of enterprise connectivity may be faster than iPass predicts; the risk that iPass will not be able
to generate broadband revenues in the manner expected; rapidly emerging changes in the nature of markets served by iPass, which may not be
compatible with iPass' services; increased competition, which may cause pricing pressure on the fees iPass charges; the risk that iPass could
unexpectedly lose current integrated broadband access points if one or more current broadband access point providers perceive iPass' services
to be competing with the provider's services in a manner that renders the relationship with iPass detrimental to the provider; and the risk that
iPass may not be able to establish additional relationships with broadband access point providers, including providers of 2.5G/3G/4G Mobile
Data,
Data at the level iPass expects and if it is unable to negotiate such relationships on terms acceptable to both iPass and the providers on the
timeframe iPass currently expects for any number of reasons, including perceived competition with the providers.
Detailed information about these and other factors that could potentially affect iPass' business, financial condition and results of operations is
included in iPass' quarterly and other filings with the SEC and is available on the company’s Web site at www.ipass.com and at the SEC's Web
site at www.sec.gov. iPass undertakes no responsibility to update any information in this presentation if any forward-looking statement later
turns out to be inaccurate.
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3. Non-GAAP
Non GAAP Financial Measures
Meas res
This presentation 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
p y , g j , ( ) , , p
and amortization, restructuring charges, impairment charges, certain state sales and federal tax items, stock compensation expense and revenue
adjustments related to the correction of historical billing errors.
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
it review of th comparability and performance of th company's core operations b
i f the bilit d f f the ' ti because it b li
believes th t such it
that h items are not related t the
t l t d to th
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.
Management uses certain non-GAAP financial measures as a component for the measurement of incentive compensation. 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 is available on the company’s Web site at www.ipass.com and at the SEC's Web site at www.sec.gov.
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4. Company Overview Presentation
iPass Overview ………………………………………….…. 5
The E t
Th Enterprise Mobility Open Mobile Business ………....
i M bilit O M bil B i 10
The Carrier Off-load & Enablement Business ………..…. 23
Financial Results Highlights ………………….................. 27
Key Take-Aways ………………………………………….... 32
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5. iPass Overview
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6. Investment Profile
iPass is a leading enterprise mobility provider focused on delivering cloud‐based services to
g p , g g
large and multi‐national enterprises and telecom carriers, enabling them to manage the
economics, complexity, compliance and security needs of the global mobile workforce.
ATTRACTIVE MARKET & OPPORTUNITIES
Real Time
Real-Time Enterprise Mobility Needs Around Compliance Cost Control & End-User Experience
Compliance, Cost-Control End User
Meaningful Carrier Needs Around Mass Market Wi-Fi Off-load and International Roaming
IPASS’ UNIQUE & COMPELLING ADVANTAGES
Unique Open Mobile SaaS Platform
Unmatched Global Wi-Fi Network and Authentication/Transaction Fabric
Strong and Long-standing Relationships with Tier-1 Enterprise Customers
Transforming Company from Network-Centric Arbitrage Model to Value-Add Cloud-Based Platform
FOCUSED NEW TEAM & BOARD
New Leadership, Financial Discipline and Focus on Driving Meaningful Stockholder Value
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7. iPass’ Two Broad Business Opportunities
iPass is leveraging it’s unique assets to pursue two compelling business
opportunities: the enterprise mobility space with its Open Mobile Platform, and
new opportunities with global carriers for mass market Wi‐Fi offload,
international roaming and related needs.
Two Business Opportunities
1. MORE DEVELOPED VALUE PROPOSITION: Open Mobile Enterprise Mobility Platform
2. NEWLY-EMERGING OPPORTUNITY: Carrier Off-load International R
C i Off l d & I i l Roaming
i
Leveraging the Same Set of Assets
Importantly, these businesses both leverage iPass’ unique set of
assets and competencies in network connectivity management,
cloud-based service provisioning, transaction authentication and
p g
Wi-Fi network expertise.
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8. Leveraging iPass’ Unique Assets
There’s strong alignment how iPass’ assets line-up to support success
in the two business opportunities around enterprise mobility
and carrier mass-market Wi-Fi off-load.
Enterprise Mobility Business Wi‐Fi Enablement Business
iPass’ Core Assets
Network Access Contracts
Network Access Contracts Connection Managers
Connection Managers
Wi‐Fi Authentication Fabric Profile Configuration Management
Location/Access Method Updates User Experience Data Collector
Network Access Config and Enforcement
Network Access Config and Enforcement User Policy Config and Enforcement
User Policy Config and Enforcement
Transaction Processing
Usage Reporting & Analytics
Transaction Clearing
Transaction Clearing
Operational Support
8
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9. The Enterprise Mobility Open Mobile Business
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10. The State of Enterprise Mobility
The mobile ecosystem for enterprises is
chaotic, expensive and out-of-control
Enterprises are caught between carriers
E i h b i
and consumers
The control point has shifted from the VPN
to the Internet
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11. The Mobility Trends That Are Playing Out
Playing-Out
For The Enterprise …
Mobile bill >2x and
more variable ! No
N such thi as an
h thing
“enterprise device” !
• 64% of mobile don’t know how much • Corporate liable, personal use
mobility costs
bili • Individual liable, Mixed use
• Mobility costs $1448 annually per worker • 36% see smartphones driving mobility
• 66% of enterprises see mobility spend spend increase; 30% see 3G costs
going up; 38% by more than 5% driving increase
Fragmentation
worsens ! More mobile attacks !
• Countries, carriers, devices, connections • Very profitable activity
• 25% of enterprises manage more than 5 • Billions of new threats opening
carriers; and 15% manage more than 10 • Data privacy, asset, operational and
• 2+ devices/user; 3+ connections/device compliance risks
Sources: iPass Mobile Workforce Survey, February 2010 and March 2011; iPass Enterprise Mobile Cost Survey, June 2010
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12. … And The Mobile Worker Trends That Are
Impacting Enterprise IT
1. Security and Cost/Productivity Imbalance
2. The Hyper-Connected M bil W k
2 Th H C t d Mobile Worker
3. The Post PC Era: The Laptop is the New Desktop,
p p p,
The Smartphone/Tablet is the new Laptop
4.
4 The Technical Chasm is Multi-Generational & Global
Multi Generational
5. Multi-Mobile (the “Mobile Stack”) Rules the Day
*Data from the 2010 iPass IT Costs of Enterprise Mobility Survey Results and 2010 Mobile Workforce Report
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13. The iPass Solution: Enterprise Value Proposition
The iPass Open Mobile Platform delivers cloud‐based services to enable
enterprises to manage the economics, complexity, compliance
and security needs of their global mobile workforce.
Radically improve mobility economics
Revolutionize th mobile user experience
R l ti i the bil i
Enforce control at the point of connect
Extend across all networks and devices
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14. Th iP
The iPass S l i
Solution: C i V l P ii
Carrier Value Proposition
Differentiation, Higher-Value Conversation
across market segments and from competition
Optimize Revenue and Increase ARPU
up-sell and cross-sell new services
Customer Retention
offering a “seamless” user experience
Change the Economics of Service Management
controlling mobility services complexity
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15. The iPass Enterprise Mobility Offerings
iPass offers a compelling suite of enterprise mobility services through two
broad offerings: (1) Mobility Management Platform Services and
Services,
(2) Mobile Network Services.
Open Mobile Platform Network Services
connection manager
• provides an excellent user experience with always-on,
auto-connect, intuitive user interface global mobile broadband network
(Wi-Fi, OpenAccess, In-Flight, etc.)
• provides the enterprise with access to the
reporting & analytics world’s largest commercial Wi-Fi network.
• enables th IT manager with unmatched visibility across
bl the ith t h d i ibilit
the enterprise’s mobility devices, networks and users
policy management
• ensures efficient and effective security and
compliance f all connections at th edge
li for ll ti t the d
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16. Enterprise Offering Details:
The simplest and smartest connection manager
that d li
th t delivers remote and mobile access.
t d bil
Ubiquitous Master Connection
Management Across Multiple
Devices and Networks
Automatic, Zero-Click Connectivity
Smart Network Selection™
No-Fee OpenAccess
iPass Open Mobile Client
Web-based Management Portal
(end user experience)
Customizable Experience to
Enterprise Configuration and Style
Data Collection Engine
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17. Enterprise Offering Details:
The reporting and analytics functionality that provides the
enterprise with the intelligence they need to optimize the
quality, security and cost of their mobile network activity.
Mobile User Management
• Real-time view into mobility usage across the enterprise
• Track access by connection method
y
• Track user success and failures for mobile usage
• Track deployment of iPass software and updates
Mobile Broadband Management
• View usage of iPass & 3rd-party Mobile Broadband devices
• Categorize users into high and low usage
• C
Catch and reduce international roaming
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18. Enterprise Offering Details:
Policy manager functionality that p
y g y provides enforcement of
enterprise security, spend & other policies across global fleet of
laptop, netbook and mobile devices
Web-based creation
Policy distribution
Any state change
Enhanced 3G Co t o s
a ced Controls
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19. Enterprise Offering Details:
272,000 Mobile Network Venues in 101 Countries
Wired – 2,000 Wi-Fi – 270,000 96 of the Top 100 Airports
72 Countries 91 Countries and 657 Airports WW
North America Europe Asia-Pacific Over 41,000 Hotels and
30,000 70,000 165,000 Convention Centers WW
Over 110,000 Retail Locations WW
,
More than 6,000 iPass validated
Free Wi-Fi locations
Latin, Central and Middle East, Africa and
South America Rest of World Premium Inflight Wi-Fi service –
4,000 3,000 Available on 3,800 daily U.S. flights
US, CN, UK JP Mobile
US CN
broadband
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20. iPass’ Unique Mobility Infrastructure & Network Assets
The iPass Cloud: 5 data centers around the world
Large distributed authentication network and clearing house
consisting of 350+ carriers and over 3500 enterprises.
Support for broad range of mobile devices from Windows to Mac
laptops to iPhone, Blackberry, Symbian, Android and Windows Mobile
Broad ecosystem support from Cisco, Juniper, Dell, Lenovo,
Qualcomm, Checkpoint, Nokia, RIM and others
400 network partners i l di AT&T Deutsche Telekom, BT,
t k t including AT&T, D t h T l k BT
Orange, NT, Sprint, Telstra
World’s largest Wi-Fi footprint with over 270,000 hotspots and hotel
g p , p
Ethernet locations in 101 countries.
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21. Strong Reputation With Tier-1 Customers
More Than 3,500 Customers
240 of the Forbes 500
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22. The Carrier Off-load & Enablement Business
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23. Exciting New Opportunity With iPass Wi-Fi Assets
Imminent Bandwidth Constraints Driving The Second Wave Of Wi‐Fi
g f
Explosion in bandwidth consumption
Driven by video based apps on more
capable smartphones and tablets
Annual hotspot connects anticipated to grow
to over 11 billion by 2014
By 2012, handhelds are anticipated to
y , p
account for half of hotspot connects
LTE exacerbates the problem
Existing experience shows that higher
bandwidth leads to higher usage
Carriers are readjusting their service strategy
AT&T, Verizon, T-Mobile, O2 and others are abandoning unlimited data plans
Wi-Fi offload gaining momentum as a result
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24. iPass’ New Wi-Fi Offload/Roaming Value Proposition
1. DOMESTIC OFFLOAD – Provide carriers with a client/connection
technology and authentication solution that enables mobile users
(Smartphones) to access a range of Wi‐Fi networks in home market
2. INTERNATIONAL ROAMING – Provide carriers with a client/connection
technology and authentication solution that enables mobile subscribers to
access Wi‐Fi networks while travelling internationally
CDMA Carriers
CDMA Carriers GSM Carriers
Carriers
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25. Why iPass’ Wi-Fi Position is Unique
Efficient Cloud-Based Offering
Effi i t Cl d B d Off i Wi-Fi
Wi Fi Connection
Ability to manage preferred networks Management Expertise
and configure user profiles Integral to end-to-end user experience
Core and edge hierarchical
g Enable Wi-Fi user experience to
Wi Fi
architecture resemble Mobile (e.g., auto-connect)
SaaS-based interfaces
Proven Authentication Fabric Largest Commercial Wi-Fi
The ‘Visa’ model for transaction Network
processing In-place Wi-Fi asset and relationships
Delegated authentication and tie to Model is extensible and evolves over
carrier credential/policies time – Mobile carriers can strike own
Leverages existing, industry-standard
existing commercial relationships and still
interfaces into mobile network leverage platform for implementation
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26. Financial Results Highlights
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27. Q4 2010 Financial Highlights
Change
(in millions, except per share amounts) Q4 2010 Q3 2010 Favorable / (Unfavorable)
Revenue $38.6 $38.1 $0.5 1%
Operating Expenses $37.9 $39.4 $1.5 4%
Adj. EBITDA( )
Adj EBITDA(1) $0.1
$0 1 ($0.3)
($0 3) $0.4
$0 4 n/m
n/m
Cash & Investments(2) $30.7 $34.1 ($3.4) (10%)
_________________________
(1) Non‐GAAP metrics exclude restructuring, amortization of intangibles, stock‐based compensation and certain state and federal tax items; see
notes t Q4 2010 earnings press release, 10 K and other SEC fili
t to i l 10‐K d th filings f reconciliation of GAAP t non‐GAAP numbers and f d fi iti
for ili ti f to GAAP b d for definitions.
(2) In December 2010, iPass paid $4 million in a special cash dividend; additionally, in 2009, iPass distributed $30 million in cash dividends and
from November 2009 through August 2010, iPass repurchased approximately 5m shares of the Company’s common stock for $6 million.
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28. Revenue Overview
% Change vs.
(in millions) Q4 2010 % of Total Q3 2010
Enterprise Mobility Services (EMS):
Network Revenues $26.0 67% 2%
Platform Revenues 4.2 11% (3%)
Fees & Other Services 1.3
13 4% (10%)
Total EMS Revenue $31.5 82% 1%
Managed Network Services (MNS) 7.1 18% 4%
Total Revenue $38.6 100% 1%
Revenue By Geography: 59% US, 41% ROW
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29. Monetized Users and Value Creation
Long term
Long-term Value Creation Achieved By Driving Increased Usage
Q4 2010 Q3 2010 Q4 2009
Total Average Monthly
624,000 621,000 689,000
Monetized Users
Platform Users 560,000 552,000 612,000
Implied ARPU (monthly) $2.48 $2.58 $1.98
Network Users 190,000 192,000 222,000
Implied ARPU (monthly) $45.72 $44.46 $42.45
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30. Initiatives and Priorities To Drive Growth
Sign Customers onto Open Mobile Platform
• Migrate existing customers and partners to Open Mobile platform.
• Bring-on new enterprise customers to Open Mobile.
Drive Platform Usage
D i Pl tf U
• Increase penetration of usage into enterprise customers.
• Increase frequency-of-use from month to month.
Continue to Drive Carrier Distribution and Service Offerings
• Build-out Open Mobile-based carrier platform.
• Pursue opportunities around Wi-Fi off-load & authentication needs.
Drive Platform Features & Functionality
• Deliver value-added Platform roadmap and new services.
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31. Key Take-Aways
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32. Focused on Continuing to Build Stockholder
Value
Strong, new senior management & board of directors.
Transforming company from network-centric arbitrage model to
SaaS-based, value-add mobility platform.
Driving innovation and creating technology value.
Driving high margin revenue growth with Open Mobile Platform.
high-margin Platform
Leveraging unique and largest global Wi-Fi network and
authentication platform around new Carrier Wi-Fi opportunities.
opportunities
Managing with financial discipline.
• Reduced operating cost structure: Q4’10 OpEx down 26% YoY
• Returned $34m in cash to stockholders and repurchased $6m in stock
• Stabilized foundation: $30m in Cash and zero Debt at 12/31/10
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33. Thank You.
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