SMTP, Inc.
(OTCQB: SMTP)

Delivering growth and dividends

SMTP Inc. | www.smtp.com | OTCQB: SMTP

October 2013 | Page 1
Safe Harbor Statement
The information posted in this release may contain forward-looking
statements within the meaning of ...
Overview
SMTP has provided cloud-based email delivery solutions for
over a decade, with a strong history of profitable gro...
SMTP Facts & Figures
SMTP, Inc. (SMTP) – OTC QB
Financial Highlights (ttm)

Stock Highlights (as of 10/11/13)

Revenue

$5...
Customer Solutions
Internet Service Providers (ISP’s) have put in place a wide
variety of sophisticated filters to stop SP...
How we work
Customers send us emails for distribution
Our trusted servers relay the emails
to consumer inboxes, while we
m...
Points of Differentiation
Growing businesses sending opt-in emails can experience delivery
losses of 20-30% if they try to...
Market Opportunity
Email Marketing is a rapidly-growing $2B industry.

SMTP focuses on the email delivery the largest and ...
Key Company Assets
Market Reputation
 A brand name synonymous with email itself
(SMTP stands for Simple Mail Transfer Pro...
Competitive Landscape
Segment

Marketing
Email Creation

Marketing
Email Delivery

Transactional
Email Delivery

Constant ...
Profitable Base for Growth
History of Revenue Growth

 Strong revenue growth
 Consistent earnings growth
 Margins healt...
Growth, with dividends
SMTP’s goal is to provide investors with strong risk-adjusted returns.
The company has an establish...
The Opportunity
SMTP has three clear opportunities to drive significant growth:
 Quantitative Marketing, leveraging a tea...
Quantitative Marketing
SMTP’s growth has historically been a function of its internationally
recognized brand and its repu...
International Growth
SMTP’s brand is already globally recognized, due to the universal
adoption worldwide of the Simple Ma...
Product Roadmap
Our vision is to provide an integrated suite of solutions, leveraging
our robust delivery capabilities to ...
Criteria for Acquisitions
SMTP will continue to explore opportunities for strategic acquisitions,
meeting the following cr...
Leadership Team
Decades of cloud based email delivery experience.
A track record of strong and profitable growth.
Jonathan...
Governance
SMTP Board of Directors brings
extensive experience in technology.

Experienced
auditors & counsel.

Semyon Duk...
Outstanding Performance
SMTP’s performance compares quite favorably within the industry1
Revenues
(TTM)

Net Income
(TTM)
...
Further Information
Alena Chuprakova
SMTP, Inc.
877-705-9362
alena@smtp.com
http://www.smtp.com
Paul Kuntz
RedChip Compani...
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Smtp 102013

  1. 1. SMTP, Inc. (OTCQB: SMTP) Delivering growth and dividends SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 1
  2. 2. Safe Harbor Statement The information posted in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by use of the words "may," "will," "should," "plans," "explores," "expects," "anticipates," "continues," "estimates," "projects," "intends," and similar expressions. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. These risks and uncertainties include, but are not limited to, general economic and business conditions, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing new customer offerings, changes in customer order patterns, changes in customer offering mix, continued success in technological advances and delivering technological innovations, delays due to issues with outsourced service providers, and various other factors beyond the Company's control. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 2
  3. 3. Overview SMTP has provided cloud-based email delivery solutions for over a decade, with a strong history of profitable growth. Revenues (TTM) $5.5M Sales Model Cloud-based subscription business for over 10 years, with thousands of customers (and no customer >2% sales) Global Sales Reach Roughly 50% of sales are outside the U.S. (SMTP serves over 130 countries) Footprint Headquartered in U.S., with the majority of technical development and service based in the Ukraine Dividends History of steady dividends (current yield ~ 8%), along with a track record of profitable growth Returns(TTM) ROA 94% and ROE 164% SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 3
  4. 4. SMTP Facts & Figures SMTP, Inc. (SMTP) – OTC QB Financial Highlights (ttm) Stock Highlights (as of 10/11/13) Revenue $5.5M Price EBITDA $2.0M Market Cap $16.0M Net Income $1.2M Trailing P/E 13.25 Profit Margin 22% EV/EBITDA 7.86 Operating Margin 35% Shares Outstanding Total Cash $0.9M Total Debt - Return on Assets 94% Return on Equity 164% 1.06 15.09M Float 1.75M Avg. Vol. (3 mo) 14,449 Diluted EPS 0.08 Dividend Yield (trailing annual) 7.1% Source: CapitalIQ SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 4
  5. 5. Customer Solutions Internet Service Providers (ISP’s) have put in place a wide variety of sophisticated filters to stop SPAM. But as a result, legitimate companies face real problems sending large volumes of email: • • • Bounces Complaints Blacklisting One of the primary factors considered by ISP’s in evaluating emails is the reputation of the sending server. SMTP’s trusted servers, our 10 years of cloud-based experience, and our proactive monitoring allow us to get our client’s email to the inbox, resulting in loyal customers and a stable, recurrent-revenue base. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 5
  6. 6. How we work Customers send us emails for distribution Our trusted servers relay the emails to consumer inboxes, while we manage issues of deliverability, bounces and blacklisting with ISP’s. A Return Path study found that 83% of deliverability issues are caused by sender reputation. Our delivery services can boost customers inbox delivery by 10-20%. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 6
  7. 7. Points of Differentiation Growing businesses sending opt-in emails can experience delivery losses of 20-30% if they try to send their emails themselves. Small businesses may use do-it-yourself email platforms like Constant Contact, which tend to focus on content creation. But as they scale up, businesses typically run into three problems: 1. High costs for delivery of large volumes 2. Increasing concerns with bounces and complaints 3. Limited support for issues related to email delivery SMTP’s customers care deeply about ensuring their e-mail reaches the intended recipient and often require extensive service and support. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 7
  8. 8. Market Opportunity Email Marketing is a rapidly-growing $2B industry. SMTP focuses on the email delivery the largest and fastest growing segment of the market. We will benefit from leveraging our position in delivery by adding related services for clients. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 8
  9. 9. Key Company Assets Market Reputation  A brand name synonymous with email itself (SMTP stands for Simple Mail Transfer Protocol, the protocol used for all email)  Large and well-established recurrent-revenue client base  Excellent reputation for service and customer support Proprietary Company Capabilities  Over a decade of cloud-based email delivery experience  Robust technical infrastructure (billions of emails sent)  Pool of IP addresses trusted by Internet Service Providers  Highly capable, cost-effective 24x7 global service team providing strong English & multi-lingual support, along with deep technical experience SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 9
  10. 10. Competitive Landscape Segment Marketing Email Creation Marketing Email Delivery Transactional Email Delivery Constant Contact MailChimp Campaigner SMTP TurboSMTP SendGrid Amazon Dyn Primary Focus Focus on Ease of Creating Attractive Emails Focus on Deliverability and Customer Service Focus on API’s Customer Relations Graphical interfaces for numerous small senders High level of client interaction and support Example Companies (Application Programming Interfaces) Highly automated with minimal interaction SMTP excels in customer service for deliverability issues, with a costeffective multi-lingual service organization providing global support. This team has been in place for over a decade, and is one of the largest teams in the industry exclusively focused on deliverability. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 10
  11. 11. Profitable Base for Growth History of Revenue Growth  Strong revenue growth  Consistent earnings growth  Margins healthier than for other players in the industry 5,353 6,000 4,279 5,000 4,000 2,736 3,000 2,000 1,000 (E.g. Constant Contact is at <5%) 805 1,549 0 2008 2009 20102 2011 2012 2008 2009 2010 2011 2012 1Q 2013 2Q 2013 $805 $1,549 $2,736 $4,279 $5,353 $1,370 $1,395 93% 77% 56% 25% $628 $1,131 $2,097 $3,456 $4,076 $1,048 $1,092 78% 73% 77% 81% 76% 77% 78% Operating Income ($196) $109 $742 $1,576 $1,714 $375 $577 Operating Margin -24% 7% 27% 37% 32% 27% 41% Net Revenue Growth % Gross Profit Gross Margin SMTP Inc. | www.smtp.com | OTCQB: SMTP 2% October 2013 | Page 11
  12. 12. Growth, with dividends SMTP’s goal is to provide investors with strong risk-adjusted returns. The company has an established history of profitable operation, with a proven, subscription-based revenue model. SMTP is debt-free and has minimal concentration of risk in any customer (largest customer is less than 2% of revenues). Our practice has been to return 80-90% of cash flow from operations to investors via healthy dividends every quarter, with such payments reduced by any expected cost increases in the coming quarter. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 12
  13. 13. The Opportunity SMTP has three clear opportunities to drive significant growth:  Quantitative Marketing, leveraging a team with a strong record for rapidly driving results, and with a clear focus on specific verticals  International Growth, driven by localizing sales & marketing for high-growth regions  Launching new products & features, including integrated solutions that open up significant opportunities for new customers. These initiatives represent modest investments to strengthen our core team and product offering. In addition, the company will revisit strategic options, such as channel partnerships and/or potential acquisitions of affordable firms with a complementary position. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 13
  14. 14. Quantitative Marketing SMTP’s growth has historically been a function of its internationally recognized brand and its reputation for stellar customer service. The company has recently strengthened its team and is pursuing focused efforts in quantitative marketing, including:  Deeply analytical market segmentation  Targeted messaging for key segments  Cost-effective lead acquisition  Optimized online lead conversion  Quantitative lead ranking for inside sales prioritization The team has a track record in prior firms of having rapidly reduced customer acquisition costs and driven significant revenue growth. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 14
  15. 15. International Growth SMTP’s brand is already globally recognized, due to the universal adoption worldwide of the Simple Mail Transfer Protocol. The company is well positioned for global expansion:  Active customers in over 130 countries  50% of sales sourced internationally  Multilingual 24x7 service team The company’s plans include:  Localizing web content regionally  Emphasizing support in the local tongue  Providing dedicated support for key global accounts SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 15
  16. 16. Product Roadmap Our vision is to provide an integrated suite of solutions, leveraging our robust delivery capabilities to deliver compelling business value Original Capabilities  Core deliverability Added Capabilities  PreviewMyEmail  Email Marketer (paid editor) Potential Enhancements  Campaign Management  Analytics Portal  Customer API’s  Campaign Optimization  Professional Services These solutions open a range of new market opportunities, including: • High-volume senders currently utilizing more costly integrated platforms, such as Constant Contact and MailChimp • Clients requiring sophisticated integration via API’s • Customers requiring improved analytics for campaign visibility SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 16
  17. 17. Criteria for Acquisitions SMTP will continue to explore opportunities for strategic acquisitions, meeting the following criteria:  Providing a complementary technology or service  Providing direct access to a new customer base  Providing a distinct channel to a market  Accretive to earnings and business value  Well-understood integration path  Affordably priced SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 17
  18. 18. Leadership Team Decades of cloud based email delivery experience. A track record of strong and profitable growth. Jonathan Strimling Chief Executive Officer Paul Parisi Vice President of Innovation Ruslan Bondarev Chief Technology Officer • 20 years of experience as an executive and as an entrepreneur focused on technology commercialization • Over 25 years of senior technical work in software and systems development • Unusual blend of technical skills with customer-focused business experience • Former CTO of HealthConnected/Cloud Industries Health, LocalGinger • Robust portfolio of issued and pending patents covering various IT systems • Over 10 years of experience in the cloudbased delivery of email services • Expert in email protocols and data exchange, with deep technical experience across a wide variety of relevant systems/technologies • Passionate about solving complex tasks and delivery challenges • Track record of driving strong growth, including achieving nearly 400% growth annually for two consecutive years Yvonne Gaudette Vice President of Marketing Max Ilin Vice President of Cust. Service • Drove prior firm to achieve 98% customer satisfaction ratings and a BBB “perfect record” award • 20 years of experience in marketing and as a communications executive from VCbacked startups to Fortune 500 firms. • Former Director of Marketing for RatePoint, Vivox, and other ventures • Track record of driving highly successful product launches and rapidly and inexpensively acquiring new customers. • Over 5 years of experience in providing support for cloud based email delivery • Created highly-responsive and customerservice oriented 24x7 support center • Strong technical experience with both email delivery and supporting systems • Former CEO of US Dynamics, American Biomass Corporation/ WoodPellets.com, and other ventures. • Prior senior operating roles with American Industrial Partners and GE • Direct prior experience as an online retailer with cloud based email services • Dual Masters degrees in Management and Engineering from M.I.T. SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 18
  19. 19. Governance SMTP Board of Directors brings extensive experience in technology. Experienced auditors & counsel. Semyon Dukach Chairman Rens Troost Director McConnell Jones Lanier & Murphy Auditors • Acquired controlling stake in SMTP Inc. in 2002, and grew steadily and profitably, taking public in 2011 • Chief Executive Officer at Virtual Clarity, a firm focused on helping enterprises virtualize their entire IT infrastructure • Former Executive Director, Head of Core Technology Architecture at UBS, AG and Founder and Former CTO of Name, Inc. • Expert in cloud computing, IT infrastructure, and business strategy • SEC Services Group focused on serving publicly traded midsize and emerging growth companies with SEC compliance • Experience with over 100 SEC registrants, supported by partners with former “Big Four” accounting experience • Broader business experience from a range of consulting and advisory roles Vadim Yasinowsky Director David M. Bovi, PA Attorney • Chief Executive Officer at PDFFiller.com, a rapidly growing, cloud-based provider of document completion services • Former CTO at FurnitureFan.com and prior founder of ClearWeb.com • Veteran of technology development and deeply experienced with the effective marketing of software products • 20 years of transactional corporate and securities law experience • Experience across a range of public and private capital raising transactions, M&A, and general corporate business. • Masters Degree in Securities Regulation, Georgetown University Law Center • Set precedent for a steady flow of dividends from SMTP in 2012 • Cofounded Fast Engines, Vert, Global Cycle Solutions, PDFFiller and East of Air • Prolific angel investor, with investments in over 60 firms across a range of industries and technologies • Wide ranging business experience across a range of ventures and technology • Deep technical experience, including developing an early internet payment protocol in 1991 at MIT • MS in Computer Science from MIT; BS in Computer Science from Columbia SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 19
  20. 20. Outstanding Performance SMTP’s performance compares quite favorably within the industry1 Revenues (TTM) Net Income (TTM) Profit Margins (TTM) Quarterly Earnings Growth (yoy) Return on Assets (TTM) Return on Equity (TTM) Enterprise Value / EBITDA (TTM) Constant Contact 269M 12.6M 4.7% N/A 0.5% 6% 30.72 Responsys 183M 5.37M 2.9% N/A 2% 3% 42.73 5.52M 1.24M 22.4% 60% 94% 164% 7.9 SMTP SMTP leverages its SMTP brand, its cost-effective operations, and its proven team to deliver outstanding financial returns. Furthermore, the stock remains modestly priced, relative to others in the industry, even before factoring in earnings growth trends. 1 Figures on all firms based on TTM through Q2 2013; EV/EBITDA ratios as of 10/12/2013 (Data from CapitalIQ) SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 20
  21. 21. Further Information Alena Chuprakova SMTP, Inc. 877-705-9362 alena@smtp.com http://www.smtp.com Paul Kuntz RedChip Companies, Inc. Tel: +1-800-733-2447, ext. 105 info@redchip.com http://www.redchip.com SMTP Inc. | www.smtp.com | OTCQB: SMTP October 2013 | Page 21
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