Filed by South Mountain Merger Corp.
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934
Subject Company: South Mountain Merger Corp.
Commission File No. 001-38947
Date: October 19, 2020
Investor Presentation October 2020
Disclaimers 1 This presentation is provided for informational purposes only and has been prepared to assist interested parties in making their own evaluation with respect to a potential business combination (the “proposed business combination”) between Factor Systems, Inc. (d/b/a Billtrust) (“Billtrust”) and South Mountain Merger Corp. (“South Mountain”) and related transactions (the “Transactions”) and for no other purpose. No representations or warranties, express or implied are given in, or in respect of, this presentation. Industry and market data used in this presentation have been obtained from third-party industry publications and sources as well as from research reports prepared for other purposes. Neither Billtrust nor South Mountain has independently verified the data obtained from these sources and cannot assure you of the data’s accuracy or completeness. This data is subject to change. In addition, this presentation does not purport to be all-inclusive or to contain all of the information that may be required to make a full analysis of Billtrust or the Transactions. Viewers of this presentation should each make their own evaluation of Billtrust and of the relevance and adequacy of the information and should make such other investigations as they deem necessary.Forward-Looking StatementsThis presentation includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “will,” “expect,” “anticipate,” “believe,” “seek,” “target” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of financial and performance metrics, projections of market opportunity and market share, potential benefits and the commercial attractiveness to its customers of Billtrust’s products and services, the potential success of Billtrust’s marketing and expansion strategies, the growth of demand on Billtrust’s platform and the expansion of Billtrust’s customers’ utilization of its services, potential benefits of the Transactions (including with respect to shareholder value), and expectations related to the terms and timing of the Transactions. These statements are based on various assumptions, whether or not identified in this presentation, and on the current expectations of Billtrust’s and South Mountain’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Billtrust and South Mountain. These forward-looking statements are subject to a number of risks and uncertainties, including Billtrust’s ability to attract and retain customers and expand customers’ use of Billtrust’s services; market, financial, political and legal conditions; the impact of the COVID-19 pandemic on Billtrust’s business and the global economy; the inability of the parties to successfully or timely consummate the proposed business combination, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect the combined company or the expected benefits of the proposed business combination or that the approval of the stockholders of South Mountain or Billtrust is not obtained; failure to realize the anticipated benefits of the proposed business combination; risks relating to the uncertainty of the projected financial and operating information with respect to Billtrust; risks related to future market adoption of Billtrust's offerings; risks related to Billtrust's marketing and growth strategies; the effects of competition on Billtrust’s future business; the amount of redemption requests made by South Mountain’s public stockholders; the ability of South Mountain or the combined company to issue equity or equity-linked securities in connection with the proposed business combination or in the future, and those factors discussed in South Mountain’s final prospectus filed on June 21, 2019, Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, in each case, under the heading “Risk Factors,” and other documents of South Mountain filed, or to be filed, with the Securities and Exchange Commission (“SEC”). If any of these risks materialize or any of South Mountain’s or Billtrust’s assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that neither South Mountain nor Billtrust presently know or that South Mountain and Billtrust currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect South Mountain’s and Billtrust’s expectations, plans or forecasts of future events and views as of the date of this presentation. South Mountain and Billtrust anticipate that subsequent events and developments will cause South Mountain’s and Billtrust’s assessments to change. However, while South Mountain and Billtrust may elect to update these forward-looking statements at some point in the future, South Mountain and Billtrust specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing South Mountain’s and Billtrust’s assessments as of any date subsequent to the date of this presentation. Accordingly, undue reliance should not be placed upon the forward-looking statements.Use of ProjectionsThis presentation contains projected financial information with respect to Billtrust, namely GAAP total revenue, non-GAAP net revenue, GAAP gross profit, non-GAAP gross margin and non-GAAP net revenue split for 2020, 2021, 2022, and the financial information included in Billtrust’s long-term target operating model. Such projected financial information constitutes forward-looking information and is for illustrative purposes only and should not be relied upon as necessarily being indicative of future results. The assumptions and estimates underlying such projected financial information are inherently uncertain and are subject to a wide variety of significant business, economic, competitive and other risks and uncertainties that could cause actual results to differ materially from those contained in the prospective financial information. See “Forward- Looking Statements” above. Actual results may differ materially from the results contemplated by the projected financial information contained in this presentation, and the inclusion of such information in this presentation should not be regarded as a representation by any person that the results reflected in such projections will be achieved. Neither of the independent registered public accounting firms of Billtrust or South Mountain have audited, reviewed, compiled, or performed any procedures with respect to the projections for the purpose of their inclusion in this presentation, and accordingly, neither of them expressed an opinion or provided any other form of assurance with respect thereto for the purpose of this presentation.Financial Information; Non-GAAP Financial MeasuresThe financial information and data contained in this presentation is unaudited and does not conform to Regulation S-X. Billtrust is in the process of completing its Public Company Accounting Oversight Board (“PCAOB”) audits for the fiscal years ended December 31, 2017, 2018 and 2019 and the review procedures for the six months ended June 30, 2019 and June 30, 2020, respectively, and, therefore, all of Billtrust’s historical financial information included in the presentation is preliminary and subject to change. Billtrust’s independent registered public accounting firm, BDO USA, has not audited or reviewed, and does not express an opinion with respect to, any of the financial information or data included in this presentation. The financial information included in this presentation is not a comprehensive statement of Billtrust’s financial results for the periods shown, and Billtrust’s actual results may differ materially from the financial information included in this presentation due to the completion of Billtrust’s financial closing procedures, final adjustments, completion of the audits and review of Billtrust’s financial statements referenced above and other developments that may arise between now and the time those audits and review are completed. Accordingly, the financial information and data contained in this presentation may not be included in, may be adjusted in or may be presented differently in, any proxy statement, registration statement, or prospectus to be filed by South Mountain with the SEC.
Disclaimers (cont’d) 2 Further, some of the financial information and data contained in this presentation, such as non-GAAP net revenue, non-GAAP gross margin, EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, free cash flow, free cash flow margin, net recurring revenue percentage, and the financial information included in Billtrust’s long-term target operating model, have not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Non-GAAP net revenue is defined as total revenue less revenue from out-of-pocket expense reimbursements. Non-GAAP gross margin is defined as GAAP gross profit divided by non-GAAP net revenue. EBITDA is defined as net profit/(loss) plus depreciation and amortization expenses, income tax expense/(benefit) and other expense/(income). EBITDA margin is defined as EBITDA divided by non-GAAP net revenue. Adjusted EBITDA is defined as net profit/(loss) plus depreciation and amortization expenses, income tax expense/(benefit), other expense/(income), stock-based compensation expense, severance costs and acquisition and integration costs and other onetime costs associated with the merger transaction. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by non-GAAP net revenue. Free cash flow is defined as net cash flows from operating activities less capitalized expenditures and capitalized software development costs. Free cash flow margin is defined as free cash flow divided by non-GAAP net revenue. Net recurring revenue percentage is defined as subscription and transaction fees divided by non-GAAP net revenue.South Mountain and Billtrust believe these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Billtrust’s financial condition and results of operations. South Mountain and Billtrust believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating actual and projected operating results and trends in and in comparing Billtrust’s financial measures with other similar companies, many of which present similar non-GAAP financial measures to investors. Neither South Mountain nor Billtrust considers these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and other amounts that are required by GAAP to be recorded in Billtrust’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgments by management about which expense and other amounts are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, Billtrust presents non- GAAP financial measures in connection with GAAP results. Billtrust is not providing a reconciliation of its projected non-GAAP net revenue split for full years 2020, 2021, 2022 or the financial information included in Billtrust’s long-term target operating model to the most directly comparable measure prepared in accordance with GAAP because Billtrust is unable to provide this reconciliation without unreasonable effort due to the uncertainty and inherent difficulty of predicting the anticipated expense related to such projections, which is variable. You should review Billtrust’s audited financial statements, which will be included in the registration statement relating to the proposed business combination.IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND ITThis communication is being made in respect of the proposed business combination involving South Mountain and Billtrust. South Mountain intends to file a registration statement on Form S-4 with the SEC, which will include a proxy statement of South Mountain, a consent solicitation statement of Billtrust and a prospectus of South Mountain, and South Mountain will file other documents regarding the proposed Transactions with the SEC. A definitive proxy statement/consent solicitation statement/prospectus will also be sent to the stockholders of South Mountain and Billtrust, seeking any required stockholder approval. Before making any voting or investment decision, investors and security holders of South Mountain and Billtrust are urged to carefully read the entire registration statement and proxy statement/consent solicitation statement/ prospectus, when they become available, and any other relevant documents filed with the SEC, as well as any amendments or supplements to these documents, because they will contain important information about the proposed Transactions. The documents filed by South Mountain with the SEC may be obtained free of charge at the SEC’s website at www.sec.gov. In addition, the documents filed by South Mountain may be obtained free of charge from South Mountain at www.SMMergerCorp. Alternatively, these documents, when available, can be obtained free of charge from South Mountain upon written request to South Mountain Merger Corp., 767 Fifth Avenue, 9th Floor, New York, New York 10153, Attn: Secretary, or by calling (646) 446-2700.South Mountain, Billtrust and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of South Mountain, in favor of the approval of the Transactions. Information regarding South Mountain’s directors and executive officers is contained in South Mountain’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 20, 2020, and its Current Report on Form 8-K, which was filed with the SEC on June 29, 2020. Additional information regarding the interests of those participants, the directors and executive officers of Billtrust and other persons who may be deemed participants in the Transactions may be obtained by reading the registration statement and the proxy statement/consent solicitation statement/prospectus and other relevant documents filed with the SEC when they become available. Free copies of these documents may be obtained as described in the preceding paragraph.No Offer or SolicitationThis presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.TrademarksThis presentation contains trademarks, service marks, trade names and copyrights of Billtrust, South Mountain and other companies, which are the property of their respective owners.
3 $10.25 $5.15 $3.50 $18.90 Total Return South Mountain overview SMMC Management Team Led CardConnect to SuccessReturns Since FinTech Acquisition Corp Announced the Acquisition of CardConnect +~85%Total Return CCN Outperformed the S&P 500 by +30% over ~1 year Who we are and what we offer Unit Value @ Merger Total Stock Price Appreciation(1)Announcement (3/7/2016)CardConnect stock price performance Indexed Share Price Performance ¹ Stock price appreciation from 03/07/2016 merger announcement to First Data’s offer price of $15/share2 Warrant price appreciation from 03/07/2016 merger announcement to First Data’s acquisition. Assumes $3.90 acquisition warrant price 80 100 120 140 160 180% Mar 16 May 16 Aug 16 Nov 16 Apr 17 Jun 17 CCN Jan 17S&P 500 20.4% 52.5% Total Warrant Price Appreciation (2) Extensive public company experience at CardConnect and First Data Anchor investors and significant portion of committed capital from long-term investors Execution and structuring capability within the Financial Technology sector $250mm equity capitalraised in June 2019 via a listing on the Nasdaq Strong track record of identifying and sourcing transactions with proven playbook of value creation Proprietary sourcing channels and leading industry relationships with strategic corporates and financial sponsors
4 Transaction summary Billtrust team Flint LaneFounder & CEO Steve PinadoPresident Mark ShifkeCFO South Mountain Merger Corp. team Chuck BernickerCEO, President, Director Nick DermatasCFO Transactions Details Valuation Overview South Mountain Merger Corp. (NASDAQ: SMMC.U) is a publicly-listed special purpose acquisition company with$250mm in cash$200mm PIPE is being raised in support of the transaction Capital Structure • $200mm of pro forma cash held on the balance sheet Pro forma enterprise value of $1,293mm, which equates to 10.5x 2021E revenue of $123mm Transaction announcement October 19th and closingAnticipated Timing after SEC review process and receipt of approval bystockholders of SMMC and Billtrust Ownership 68% existing shareholders; 19% SPAC IPO and founder shares; 13% PIPE investors Closing Cash Conditions $225mm of which $200mm has been committed via the PIPE and an incremental $22mm has been committed in the form of a non-redemption commitment from an institutional shareholder
5 1,800+Customers $49 billion+Total payment volume $105 million2020E Net revenue 19%2020-2022ENet revenue CAGR ~93%2019 Net recurring revenue percentage 100%+Net dollar retention 69%2020E non-GAAPgross margin Note: Data as of LTM 06/30/2020; All financial metrics presented here, including net revenue, net recurring revenue percentage, net revenue CAGR and non-GAAP gross margin, are presented on a non- GAAP basis. See the Appendix to this presentation for a reconciliation to the GAAP equivalent measure. The historical financial information presented is preliminary and subject to adjustment as Billtrust is in the process of completing its audit procedures for prior periods.1 This calculation aggregates data elements across our modules that may not be unique We are a leader in the digital transformation of accounts receivable and the future of B2B Payments $1 trillion+(1)Invoice dollars processed
Founder-led, visionary management team Flint LaneFounder & CEO Steve PinadoPresident Mark ShifkeCFO Previous experience 6
Billtrust’s equity story Strong revenue growth with high revenue visibility and expandingmargins Founder-led and visionary management team Huge TAM with strong tailwinds in B2B commerce and electronic billing and paymentsProprietary platform combining cloud-based software and integrated payments capabilitiesComprehensive, end-to-end B2B commerce solutions across the value chainLoyal customer base with high retention rates across diverse industry verticalsExtensive distribution network with tremendous opportunity to scaleand monetize payments 7
8 Huge market with strong tailwinds in B2B commerce and payments 280+ billionGlobal invoices(1) $120+ trillionGlobal commercial payments(3) 22%+Mid-term growth in global B2B e-invoicing market(2) 50%+ of B2B payments are still made by paper check, but COVID-19 has accelerated the shift to digital (4) ¹ Billentis E-Invoicing / E-Billing Digitisation & Automation report, September 2019; Represents business (B2B/G2B) invoices2 2019-2024 CAGR based on Technavio report, February 20203 Visa Investor Day presentation, February 20204 Mastercard Business Payments 2022 Report, 2018
Conventional AR/AP processes are outdated, inefficient, manual, and largely paper-based Request line of credit Order enablement Present invoice Apply funds and update ERP Process application and provide credit Place an order Pay invoice Collect outstanding payments 4 6 8 7 2 3 5 1 9
AR is ripe for digital transformation Payments ERPs have little to no Electronic Invoice Presentment and Payment (EIPP)capabilities Ordering B2B ordering is complex with disparate needs across verticals Cash App Once payments are received, applying cash is incredibly time consuming and expensive Credit B2B companies sell on credit, and evaluating credit risk on an ongoing basis is difficult Collections When customersdon’t pay in a timely fashion,how do you follow upeffectively? Invoicing Paper invoicing is still widespread and customers struggle to convince their customers to move to electronic Opportunity to drive efficiencies and monetize payments along the process 10
The status quo: massive manual lift and a myriad of legacy solutions to send invoices and process payments SUPPLIER ERP BANK BUYER ERP BANK Payments Email/Phone Epayables ACH Credit card Paper check Email / Online 11 Print Fax A/P Portal Invoices
Powerful, proprietary technology platform combining cloud-based software and integrated payments capabilities Payments Invoices Email/Phone Epayables ACH Credit card Paper check Email / Online Print Fax A/P Portal SUPPLIER BUYER ERP ERP BANK BANK 12
The industry also needs a B2B payments platform to connect buyers and suppliers their remittances? “What are these payments truly costing us? Our customer “Why are these customers paying late? “How will we process “Should we participate in these programs? “ “ “ “ 13
Billtrust Business Payments Network is the Venmo for B2B Connected platform for suppliers, buyers, and financial institutions Complex financial / payment data and streamlined reconciliation Online directory with full view of participating suppliers and payment acceptance preferences Suppliers receive homogenized remittance information to apply to their ERP system Supplier ERP Buyer ERP One billing file out from ERP One payments file into ERP BPN Powered by BilltrustBanks & AP systemsProcess starts over with next purchaseBusiness Payments Network (“BPN”) 14
There is a new generation of companies focused on B2B automation FocusEnd marketIntegrated paymentsTotal paymentvolumeCustomersEmployees AR automation AR / AP automation Procurement Enterprise / mid-market SMBs Enterprise Yes Yes Early days $49bn+ $96bn+ N/A 1,800+ 98,000+ 1,400+ 558 618 1,693 15 Note: Billtrust data as of LTM 06/30/2020; Bill.com and Coupa data as of latest company filings and investor presentations
Automated credit application, decisioning, and management eCommerce marketplace with configurable web stores Accept and manage payments and remittances in nearly any format Reduce overdue receivables, bad debt, and write-offs Comprehensive, end-to-end B2B commerce solutions across the value chain Streamlined and simplified invoice delivery and presentment Payment acceptance flexibility Multiple payment modalities Embedded remittance Process optimization Financial ecosystem integrator / connector 16
Why we win in the market We deploy great software We have extensive ecosystem integrations Enabling frictionless money movement Generating high customer ROI 100%+Net dollar retention 50+NPS score 160AP integrations Note: Data as of LTM 06/30/2020 18
Loyal customers across diverse industry verticals Tech Construction CPG Industrial Healthcare 4 of the 5LargestIT distributors 4 of the 10Largest medical suppliers 6 of the 10LargestLess-than-truckload carriersTop 10 customers contribute ~18% of total net revenue 4 of the 10Largest equipment dealers 8 of the 10Largest building material suppliers 3 of the 10Largest food distributors Note: Data as of LTM 06/30/2020 19
Case studies Problem Outdated ACHIssue-prone online payment portal Time consuming process Low customer satisfaction 20-hourReduction in daily cash application99.5%Match rate achieved for ACH20%+Annual growth in electronic payments Internal teams burdened by 760,000 mail invoices a monthTime consuming process Manual process 71%ePresentment achieved33KCustomers converted to eInvoicing in 1 yearResults800K+Invoices emailed per month Global leader in performance-driven golf products 20 Global storage and information management solutions provider
Billtrust go-to-market strategy New logo Mid-market Enterprise Existing customer Large and growing market withwhitespace opportunityDisciplined sales andmarketing approachStrong growth within existing customer baseCost effective customer acquisition strategy MarketingBroad reach, campaign, and content-drivenSalesDirect, channel MarketingTargeted ABM SalesDirect, channel MarketingAccount coverage, targeted campaign and contentSalesDirect 21
Multiple avenues for future growth Direct salesWin new logos and cross-sell / up-sell in the enterprise market Business Payments Network Scale the Business Payments Network and cross-sell other solutions Channel distribution Further penetrate the mid-market New geographical markets Global expansion Strategic M&A Acquire attractive, accretive businesses (new solutions, new verticals) Monetize payments Increase volume of payments processed 22
22 Total Payment volume Invoice volume Payment volume $120T of B2B payments (1)between companies annually $1T+ invoice dollars processed (2)and currently monetizing only$49bn+ (3) of payments Overall payment volume is growing 36% year over year on Billtrust’s platform (3) 1 Visa Investor Day presentation, February 20202 This calculation aggregates data elements across our modules that may not be unique3 Data as at LTM 06/30/2020 $120 trillion (1) $49 billion+ (3) $1 trillion+ (2) Tremendous opportunity to monetize payments Total payment volume Invoice dollars processed(3) Total payment volume
23 Business Payments Network by the numbers LTM(2) ~$170mm $2bn+ Payments processed ~70K 955K Transactions processed 15+Network payablespartners 234%Revenue growth YoY(2) 2017 1 September 2020 annualized2 As of LTM 6/30/2020 Today(1) $5bn+ ~1,600K
Opportunity to expand into large, new markets with compatible trends 280+ billion global invoice volume(1) International capabilities Invoicedelivery abroad 25 Multiple currencies Multiple languages Regulatory compliance ¹ Billentis E-Invoicing / E-Billing Digitisation & Automation report, September 2019; Represents business (B2B/G2B) invoices
How Billtrust makes money Contracted recurring revenue for software generated from tiered subscription pricing models on evergreen contracts SUBSCRIPTION Per transaction recurring processing fees based on electronic bills delivered and bills/pages stored via our software platform, or the number of printed envelopes, on evergreen contracts TRANSACTIONINVOICING Customers are charged a percentage of payment volume processed or per item processing fees at contracted rates based on number of payments, invoices paid, or files sent TRANSACTIONPAYMENTS Professional fees generated from implementations and consulting SERVICES 26
6,780 9,371 13,034 2017 2018 2019 183 215 243 2017 2018 2019 Strong underlying operating metrics driving top-line growth Number of eBills presented (mm) Card payment volume ($mm) 23,479 31,402 43,931 2017 2018 2019 Total payment volume ($mm) 27
27 44 54 69 21 21 21 4 5 7 2017 2018 2019 Net revenue ($mm) Gross profit ($mm) 44 53 64 2017 2018 2019 CAGR 39% (2%) 25% 69 80 96 Non-GAAP gross margin 67% 67% 63% Print Services and other Software andPayments 1 Net revenue and non-GAAP gross margin are non-GAAP financial measures; see Appendix for a reconciliation to the GAAP equivalent measures. This information is preliminary and is subject to adjustment as Billtrust is in the process of completing its audit procedures for the periods presented. Rapid growth in Software and Payments revenue with high gross margins(1)
28 Impact of COVID-19 15% 12% 7% 4% 3% 3% 1% 0% 0% (0%) (0%) (3%) (4%) (5%) (6%) (13%) (21%) YoY invoice growth (July 2020) Year over Year Ratio YoY invoice growth by industry in July 2020>90% of total July net revenue YoY bill count ratio – 15 day moving average (existing customer cohort)(1)Covid Impact Swift Recovery Sept 29, 2020Ratio of 0.95 1.0 0.8 0.6 Mar 2020 Apr 2020 May 2020 Jun 2020 Jul 2020 Aug 2020 Sept 2020 1 Cohort includes 833 active customers who commenced billing prior to January 2019 and remained active as of March 2020
29 29 35 1H 19 1H 20 (12%) 16% 19% 32 38 11 9 3 3 1H 19 1H 20 45 YoY growth50 Non-GAAP gross margin 69% 65% Print Services and other Software and Payments Net revenue ($mm) Gross profit ($mm) 1 Net revenue and non-GAAP gross margin are non-GAAP financial measures; see Appendix for a reconciliation to the GAAP equivalent measures. This information is preliminary and is subject to adjustment as Billtrust is in the process of completing its review procedures for the periods presented. Update on 1H 2020 financials(1)
30 80 97 123 19 19 17 6 8 8 2020E 2021E 2022E 73 87 106 2020E 2021E 2022E CAGR 12% (3%) 24% 105 123 148 Non-GAAP gross margin 69% 70% 71% Services and otherPrint Software andPayments Net revenue ($mm) Gross profit ($mm) 1 Net revenue and non-GAAP gross margin are non-GAAP financial measures. See Appendix for a reconciliation to the GAAP equivalent measures. Financial projections(1)
31 21% 7% 71% 2022E revenue split Print Services and other Software and Payments Continued eAdoption from Print to EIPP Monetizing BPN Opportunities Monetizing Payment Opportunities 12% 6% 83% 31% 5% 64% Estimated favorable shift in revenue mix going forward Note: May not sum to 100% due to rounding.1 This information is preliminary and is subject to adjustment as Billtrust is in the process of completing its audit procedures for the periods presented. (1)2019A revenue split (1)2017A revenue split
32 Long-term target operating model Non-GAAP measures Target % of revenue Gross Margin 80%+ S&M 25% R&D 20% G&A 10% Adjusted EBITDA 25%+ Note: non-GAAP financial figures exclude stock-based compensation expense and the amortization of acquired intangible assets. The company has not reconciled, any of the non-GAAP measures referenced above to the most comparable GAAP measure in its long-term target non-GAAP operating model because certain items are out of the company's control and/or cannot be reasonably predicted. Accordingly, a reconciliation is not available without unreasonable effort.
Transaction Overview
34 $1,01125020031 Total sources $1,493 Transaction overview Pro forma ownership at close Existing Billtrust shareholders Cash considerationRetire existing debtCash to balance sheet Founder sharesEstimated fees and expenses $1,011178452003127 Total uses $1,493 Illustrative Sources ($mm) Illustrative Uses ($mm) Pro forma valuation ($mm, except per share data)SMMC share price $10.00 Pro Forma shares outstanding 149.3 Total equity value $1,493 Cash on balance sheet $200 Total firm value $1,293 1 Metric $1,458x FV / 2021E revenue FV / 2022E revenueFV (incl. earn-out) / 2022E revenue $123 148148 10.5x8.79.8 1 Includes 6mm shares triggered at $12.50 per share and 6mm shares triggered at $15.00 per share for a total earn-out consideration of $165mm2 Assumes no redemptions by SMMC’s existing shareholders3 Assumes 3.13mm founder shares at $10.00. Additional 0.94mm and 0.94mm founder shares subject to $12.50 and $15.00 earnouts, respectively Firm value (incl. earn-out)(1) Transaction Multiples Existing Billtrust shareholders(2)SPAC cash in trustAdditional PIPE equity(3)Founder shares
35 10.5x 45x 39x 38x 22x 8.7x 35x 31x 26x 18x FV / 2021E Revenue FV / 2022E Revenue Attractive initial valuation relative to peers Financial SaaS(2) High-growth FinTech(2) 2021E growthrevenue CAGR margin FV / 2021E revenue / 0.6x 1.9x 1.5x 1.2x 0.9x 2020E – 2022E19%(1) 27% 27% 40% 24% 2021E gross70%(3) 73% 72% 45% 72% Marketpositioning Leader in AR automationProprietary platform with integrated paymentsLoyal enterprise customer base Leader in AP automationSMB customer base Procurement software solutionsEarly stages of integrated payments Industry disruptorsMixed revenue models with volume and subscription components Subscription revenue modelsCloud-based automated solutions Source: Company materials; FactSet as of 10/16/2020 ¹ CAGR estimate based on non-GAAP net revenue2 Metrics reflect median of peer set3 Estimate based on non-GAAP gross margin
Billtrust’s equity storyHuge TAM with strong tailwinds in B2B commerce and electronic billing and paymentsProprietary platform combining cloud-based software and integrated payments capabilitiesComprehensive, end-to-end B2B commerce solutions across thevalue chainDiverse customer base with high retention rates across industry verticals Extensive distribution network with tremendous opportunity to scaleand monetize paymentsFounder-led and visionary management teamStrong revenue growth with high revenue visibility and expanding margins Questions? 37
Appendix 38
38 Peer operating and trading metrics Sorted by 2021E FV / Revenue Primary Source: FactSet as of 10/16/2020 Note: FCF defined as CFO – Capex1 Represents pre-COVID market peak High-growthFinTech Financial SaaS ($bn) Revenue Revenue growth CY21E margins FV / Revenue CY21E MRQ CY20E CY21E CY22E Gross EBITDA FCF CY21E CY22E Stock perf. (1)Feb 19 peak $9.724.3 $0.20.6 33%32% 31%29% 24%26% 31%27% 73%72% (9%)16% (16%)12% 45x39x 35x31x 1.9x1.5x 85%78% Median 33% 30% 25% 29% 73% 4% (2%) 42x 33x 1.7x $56.4129.795.6 1.13.49.3 27%97%64% 31%63%56% 43%32%27% 38%48%26% NM53%37% 56%10%7% 52%8%8% 52x38x 10x 38x26x 8x 1.2x1.2x0.4x 82%96%119% Median 64% 56% 32% 38% 45% 10% 8% 38x 26x 1.2x $7.3 $0.2 52% 38% 25% 23% 60% (3%) (4%) 32x 26x 1.3x NA 48.913.15.79.56.3 1.80.60.30.50.4 45%28% NA 26%20% 42%23%19%27%17% 32%23%17%25%19% 30%26%17%28%21% 80%72%58%78%81% 14%1%1%(3%)12% 12%2%(1%)0%9% 28x23x 22x 18x 16x 21x18x 19x 14x 13x 0.9x1.0x1.3xxx 156%75% NA (1%)47% 5.9 0.5 26% 27% 21% 23% 52% 7% 2% 12x 10x 0.6x 10% Median 27% 27% 23% 23% 72% 1% 2% 22x 18x 0.9x FV /21E revenue / 21E growth Firm value
39 Definitions Non-GAAP net revenue is defined as total revenue less revenue from out-of-pocket expense reimbursements.Non-GAAP gross margin is defined as GAAP gross profit divided by non-GAAP net revenue.EBITDA is defined as net profit/(loss) plus depreciation and amortization expenses, income tax expense/(benefit) and other expense/(income). EBITDA margin is defined as EBITDA divided by non-GAAP net revenue.Adjusted EBITDA is defined as net profit/(loss) plus depreciation and amortization expenses, income tax expense/(benefit), other expense/(income), stock-based compensation expense, severance costs and acquisition and integration costs and other one time costs associated with the merger transaction.Adjusted EBITDA margin is defined as Adjusted EBITDA divided by non-GAAP net revenue.Free cash flow is defined as net cash flows from operating activities less capitalized expenditures and capitalized software development costs. Free cash flow margin is defined as free cash flow divided by non-GAAP net revenue.Net recurring revenue percentage is defined as subscription and transaction fees divided by non-GAAP net revenue.Net dollar retention rate is calculated by comparing, for a given period, actual recurring revenue (excluding revenue for expense reimbursements such as postage) for all customers who had recurring revenue for all three-months in the corresponding quarter of the prior year, to the same amount from the same customers in the given quarter. The calculation does not include new customers added during the one-year calculation period. This calculation includes additional modules purchased, pricing changes, transaction volume changes and product cancellations during the given period. For periods other than quarters, Billtrust takes the average of the quarters for the stated period.
40 ($mm), year ending 12/31 2017A 2018A 2019A 2017A-2019A CAGR 2020E 2021E 2022E 2020-2022E CAGR 110 121 136 11% 142 161 183 13% GAAP Total RevenueLess: Revenue from Out of Pocket Reimbursements (41) (41) (40) (37) (37) (35) Non-GAAP Net Revenue 69 80 96 18% 105 123 148 19% GAAP Gross ProfitGAAP Gross Margin (%) 4440% 5344% 6447% 7351% 8754% 10658% Non-GAAP gross margin (%) (1) 63% 67% 67% 69% 70% 71% 1 The historical information for 2017, 2018, 2019, 1H 2019, and 1H 2020 is preliminary and is subject to adjustment as Billtrust is in the process of completing the audit procedures for the periods presented. Reconciliation of non-GAAP net revenue and non-GAAP gross margin(1) ($mm), six months ending 6/30GAAP Total Revenue 1H 2019$65 1H 2020$69 YoY Growth5% Less: Revenue from Out of Pocket Reimbursements ($20) ($19) Non-GAAP Net Revenue $45 $50 11% GAAP Gross Profit $29 $35 GAAP Gross Margin (%) 45% 50% Non-GAAP gross margin (%) (1) 65% 69%
41 ($mm), year ending 12/31Subscription and transaction fees 2019A$89 Services and other 7 Out of Pocket reimbursements 40 GAAP Total Revenue 136 Less: Revenue from Out of Pocket Reimbursements 40 Non-GAAP Net Revenue 96 Net recurring revenue percentage (1) (2) 93% GAAP recurring revenue percentage (1) (3) 65% 1 The historical information for 2019 is preliminary and is subject to adjustment as Billtrust is in the process of completing the audit procedures for the periods presented.2 Net recurring revenue percentage is calculated as subscription and transaction fees divided by non-GAAP net revenue.3 GAAP recurring revenue percentage is calculated as subscription and transaction fees divided by GAAP total revenue. Reconciliation of non-GAAP net recurring revenue percentage(1)
($mm), year ending 12/31 2017A 2018A 2019A GAAP Net Profit / (Loss) (17) (18) (23) Add: Depreciation & Amortization 5 6 6 Add: Other Expense/(Income) 1 1 2 Add: Income Expense/(Tax Benefit) (1) 0 0 EBITDA (12) (11) (15) GAAP Net Profit / (Loss) (17) (18) (23) Add: Depreciation & Amortization 5 6 6 Add: Other Expense/(Income) 1 1 2 Add: Income Expense/(Tax Benefit) (1) 0 0 Add: Stock compensation 2 2 2 Add: Severance 0 1 1 Add: Acquisition & Integration Costs 1 0 1 Adjusted EBITDA (10) (8) (11) GAAP Net Cash from Operating Activities (6) (6) (7) Less: Capex (2) (7) (3) Less: Capitalized Software (0) (1) (1) Free Cash Flow (8) (14) (12) 1 The historical information for 2017, 2018 and 2019 is preliminary and is subject to adjustment as Billtrust is in the process of completing the audit procedures for the periods presented. 43 Reconciliation of historical non-GAAP financial metrics(1)
($mm), year ending 12/31 2017A 2018A 2019A 2020E 2021E 2022E Software and Payments 44 54 69 80 97 123 % growth 23% 28% 16% 21% 26% Print 21 21 21 19 19 17 % growth (1%) (2%) (10%) (0%) (6%) Services and Other 4 5 7 6 8 8 % growth 28% 50% (8%) 20% 5% Non-GAAP Net Revenue 69 80 96 105 123 148 % growth 16% 21% 9% 18% 20% GAAP Gross Profit 44 53 64 73 87 106 % Non-GAAP gross margin 64% 67% 67% 69% 70% 71% Research & Development (20) (24) (34) Sales & Marketing (21) (22) (22) General & Administrative (16) (19) (23) Total Operating Expenses (56) (64) (80) EBITDA (12) (11) (15) % margin (18%) (14%) (15%) Adjusted EBITDA (10) (8) (11) % margin (14%) (10%) (12%) Free Cash Flow (8) (14) (12) 1 The historical information for 2017, 2018 and 2019 is preliminary and is subject to adjustment as Billtrust is in the process of completing the audit procedures for the periods presented. 44 Summary financials (1)