Safe Harbor Statement
Statements in this presentation that are not purely historical facts, including statements regarding Fusion's beliefs,
expectations, intentions or strategies for the future, may be "forward-looking statements" under the Private
Securities Litigation Reform Act of 1996. Such statements consist of any statement other than a recitation of
historical fact and can be identified by the use of forward-looking terminology such as “may”, “expect”, “anticipate”,
“intend”, “estimate” or “continue” or the negative thereof or other variations thereof or comparable terminology.
The reader is cautioned that all forward-looking statements are speculative, and there are certain risks and
uncertainties that could cause actual events or results to differ from those referred to in such forward-looking
statements. This disclosure highlights some of the important risks regarding the Company’s business. The
primary risk of the Company is its ability to raise new and continued capital to execute its comprehensive
business strategy. There may be additional risks associated with the integration of businesses following an
acquisition, the Company’s ability to comply with its senior debt agreements, concentration of revenue from one
source, competitors with broader product lines and greater resources, emergence into new markets, natural
disasters, acts of war, terrorism or other events beyond the Company’s control, the termination of any of the
Company’s significant contracts or partnerships, the Company’s inability to maintain working capital requirements
to fund future operations or the Company’s ability to attract and retain highly qualified management, technical and
sales personnel, and the other factors identified by us from time to time in the Company’s filings with the
Securities and Exchange Commission, which are available through http://www.sec.gov. However, the risks
included should not be assumed to be the only things that could affect future performance. 2
Provides cloud services, including cloud communications, cloud computing and managed cloud solutions to small, medium and large businesses and global communications carriers
October 2012 acquisition of NBS, a $26.5 million cloud services company generating $4.9 million in EBITDA. Acquisition turned Fusion EBITDA positive and provided proprietary cloud services
technology platform, extensive cloud network, and robust back office infrastructure.
Six months 2013 revenues of $30.4 million (40% increase over six months 2012) and adjusted EBITDA of $0.8 million (150% improvement from six months 2012)
Distinguished Board, Advisory Board and management team have significant experience in the communications industry Approximately 30% of the company is owned by officers and Directors
Recently executed asset purchase agreement to buy certain assets from Broadvox for $32.1 million. The business generates approximately $32.5 million in revenue and $6 million in Adjusted EBITDA.
Fusion is at an inflection point. There is a large and growing pipeline of opportunities. The Company is positioned for accelerated cloud services growth, organically and through acquisition.
Business Highlights
3
The Future of Communications is in the Cloud
Cloud Services is a $109 billion market opportunity* 79% of US businesses will have deployed a cloud-based solution by 2013
Cloud services used by 62% of SMBs, up from 48% in first half of 2012; jumps to 73% in first half of 2013
Cloud Communications Cloud-based Unified Communications (UC) services forecast to grow from $12.2
billion in 2011 to $20.8 billion in 2016
76% of enterprises planned to increase UC usage in 2012
32.2% of Fortune 500 companies had deployed a UC solution in early 2012; 47% more planned to implement a solution by 2013
* Gartner
Cloud Computing and Managed Cloud Services Cloud Computing fastest growing cloud services segment at 45.4%; forecast to
reach $241 billion by 2014
Cloud management and security forecast to grow to $3.3 billion in 2012
4
Business is moving to the Cloud
5
Key Driver Result
Agil i ty & Flexibil i ty 72% of companies that are using cloud are planning to move more applications to the cloud in next 12 months
Efficiency 42% SMEs have witnessed reduced IT workload and have improved their productivity
Considerable reduction in cost 82% of all cloud companies reduced their IT expenditures by adopting cloud
Faster Time to Market 58% companies agree that being on cloud has given them better control of their data
Organically grow the revenue from the business services segment
Direct and indirect sales efforts Secure large scale strategic distribution partners Leverage management, board and shareholder relationship network to
accelerate growth
Grow through verticalization Develop vertically oriented solutions to expand revenue opportunities and
further differentiate service suite Enter into strategic partnerships to expand cloud services product portfolio
Acquire cloud services companies Expand customer base Add additional products and services Gain scale of operations and leverage existing infrastructure
Fusion’s Strategy
6
Fusion operates in a large and fast growing marketplace as Cloud based services gain customer acceptance and market share from incumbent telephone and technology companies
The competitive landscape is highly fragmented with providers typically offering a limited service offering and geographic coverage
Many of these smaller firms lack the financial and operational resources to remain competitive and present excellent acquisition opportunities for Fusion
The opportunities of cross marketing synergies as well as the benefits of economies of scale make acquisitions an attractive vehicle to enhance Fusion's growth profile
Fusion successfully acquired and integrated its first acquisition in October 2012 and now has the staff and technical infrastructure platform to more easily tuck in additional accretive acquisitions.
Fusion has signed a binding letter of intent to purchase select cloud services assets of Broadvox, a provider of wholesale US voice, shared tenant services and cloud services.
Acquisit ion Opportunit ies
7
Cloud communications provider Dramatically changed Fusion’s financial profile by adding:
$26.5 million in revenue $4.9 million in adjusted EBITDA $3.1 million in net income Approximately $2 million in synergies (half of which has been achieved)
Robust infrastructure Proprietary cloud communications platform Proprietary back office systems Low cost / next generation data network
Increase scale of operations 60 additional staff 3,300 customers
Strong reputation of service delivery and support Low churn
Attractive purchase price $19.6 million aggregate purchase price Below market deal -> 4 times Adjusted EBITDA
Well positioned to conclude additional tuck-in acquisitions and accelerate organic growth
Recent Acquisit ion of NBS
8
9
Broadvox Acquisit ion Rationale
Strong Financial Profile
$32.5 million in revenue, 95% of which is recurring
Over $6 million in Adjusted EBITDA
Over 65% gross margin
Dramatically Expands Current Customer Base 5,800 business customers with low churn
Significant number of marquee customers
Concentration on legal vertical, an industry Fusion knows well
Expands Fusion’s Cloud Network and Back-Office Infrastructure Adds 7 new network facilities; expanding geographic reach and further lowering cost structure
Over 100 people bolsters sales, marketing, and support infrastructure
Accelerates Growth Drivers
Expanding marketing department and budget
Over 300 distribution partners
Resources dedicated towards upselling new services to existing customers
Comprehensive suite of innovative Cloud Services delivered over an advanced proprietary services platform
Nationwide coverage with international reach Low cost, scalable and highly flexible services platform, network architecture and
infrastructure Expansion based on customer demand
Lowers customers’ total cost of ownership while increasing productivity and providing new levels of flexibility, scalability and speed of deployment
Serves small to mid-sized businesses and large enterprises Strong customer base with service revenue generated through monthly recurring
billing, implementation and usage fees; multi-year contracts Over 3,500 customers 95% of revenue is contracted and recurring EBITDA margin is 15-20%
Business Services Segment
10
Seamlessly Integrated Service Portfolio
Cloud Communications Hosted Voice and Unified Communications
Advanced features and functionality increase productivity and collaboration; remove end of life and management issues;
reduce costs without adding significant capex
Connects workers from the desktop to any Smartphone or tablet
Turns mobile devices into an office extension Seamlessly integrates voice, video, messaging and web
conferencing Click to dial Audio, video and web conferencing Document sharing CRM integration; e.g., Salesforce
Clear Connections in the Cloud
11
Contact Center Services Hosted solution increases agent productivity
and reduces operational costs CRM integration Call recording Real-time monitoring and reports
Data and Managed Network Services Network solutions for access; data storage,
retrieval and transfer Internet access Ethernet MPLS Ultra high bandwidth solutions for data
storage, retrieval and modification
Cloud Communications
12
Cloud Computing Services
Information management, hardware, network and infrastructure are centralized off-premise, hosted and managed by Fusion, driving efficiencies in cost and resources, allowing for rapid scalability and deployment of applications
Private, public or hybrid solution Server consolidation and management saves
money, increases scalability and flexibility
Faster, easier, more cost-effective deployment of new, mission-critical applications
Burstable bandwidth options meet explosive data growth
Removes obsolescence concerns Secure and encrypted Rapid deployment saves time and money Provisioning completed in minutes Pay as you grow, with predictable billing
Cloud Services
13
Managed Services in the Cloud
Managed Cloud Solutions deliver increased performance, productivity and cost savings
Security Services, Risk and Compliance Solutions NSA-certified Stealth Security solution developed for the DOD protects
data at rest as well as in motion Enables secure migration to the Cloud
Applications Management, including Secure Mobile Device Management Data Storage
Emergency Preparedness and Disaster Recovery
IT and Data Center Management
Managing the Cloud
14
Strong focus on high growth healthcare market: Healthcare IT expected to grow to $102.3 billion in 2014 – Gartner
Growth in healthcare Cloud Computing to increase by 20%
Exponential growth in data storage requirements
New Regulations requiring implementation of major Healthcare IT changes over the next 36 months Affordable Care Act (ACA), Meaningful Use Stages II & III (ARRA),
ICD-10
Targeting Hospital and Physician Practice acquisitions, system consolidations, Accountable Care Organization and Health Information Exchanges drive larger data pools
Top IT Priorities for Health Delivery Organizations*: Virtualization Cloud Computing Software applications modernization IT modernization Data Center Consolidation
Building on GNYHA foundation to expand healthcare marketing initiatives to healthcare organizations in key markets
Healthcare Vertical
15* Gartner
Exclusive Communications and Cloud Services Agreement with GNYHA
The Greater New York Hospital Association (GNYHA) is a 100 year old association with 15,000 members nationally (many members are composed of multiple companies) including nearly 250 hospitals and continuing care facilities
Concentration on healthcare, a high growth industry
Potential to sell full range of cloud solutions to GNYHA members - will utilize call center and nationwide sales force to market Fusions products and services
Positions Fusion to take advantage of multiple strategic relationships to add additional products and services and gain larger percentage of total customer spend
Building on GNYHA foundation to expand healthcare marketing initiatives to healthcare organizations in key markets
Driving the development of vertically oriented solution portfolio
GNYHA Agreement
16
Strategic Agreement with UNISYS
Full sales, technical and service delivery support of specialized technology solutions
Provides secure public, private and hybrid cloud services, and applications management solutions to large enterprises
Stealth Solution Suite
Military-grade encryption designed by UNISYS for the Department of Defense
Unique “bit-splitting” technology HIPAA compliant Protects data in motion as well as at rest Unique solution secures the cloud Helps healthcare systems and other enterprises
save capital and operating expenses by simplifying network infrastructure
UNISYS Agreement
17
Carrier Services
Fusion provides voice services to carriers worldwide Transports approximately 750 million minutes per year Contracted with over 270 carriers worldwide
Ensures high quality and low cost structure for corporate service offerings
Ability to provide corporations with global product offerings such as international private networks, Internet Access and VPNs
World class customer base
Advantage over most cloud communications providers
18
Key Customers
19
Management Team
Matthew Rosen – CEO
Formerly President of the Northwest and New England Operations for Expanets, a $1.3 billion nationwide roll-up of voice and data networking companies; an investment banker in Merrill Lynch’s corporate finance department, where he worked on over $1 billion of debt, equity and M&A transactions; and the Director of Operations for Oxford Health Plans, a $4 billion healthcare company.
Don Hutchins – President, COO, and Acting CFO
Formerly President and CEO of SwissFone, a $100 million international carrier; President and CEO of STAR Telecommunications, an $800 million communications carrier; a consultant on strategic planning, M&A, and integration to over 100 telecommunications companies; interim CEO/COO for ten companies; and founder of Telecom One. He also held positions early in his career with MCI, McDonnell Douglas, and AT&T, and was a founder of ASCENT and ECTA.
Jan Sarro – EVP Corporate Marketing and Business Development
Formerly President of the Americas for Viatel, a global, facilities-based carrier where she built a $300 million business and carrier organization to market Internet access, corporate networks and international voice services to multinational corporations in the United States and Latin America. She also held senior executive marketing and sales management positions at Argo Communications, FTC Communications and TRT Communications, and WorldCom.
Jon Kaufman – President Business Services
Formerly served as the Chief Executive Officer of NBS, the Unified Communications and cloud services provider recently acquired by the company. Mr. Kaufman founded Target Telecom Inc., a telecommunications service company, in 1984, and served as its chief executive officer until the sale of the business to WorldCom in 1996. Mr. Kaufman founded NBS in 1998, and served as its Chief Executive Officer since its inception until Fusion’s acquisition of the company.
Russell Markman - EVP Business Svcs.
Formerly Sales Director of RCN Corporation in its commercial and wholesale markets group. Former President of National Calling Plan, he has a background rich in hardware and circuit technology.
Marc Gelberg - VP of Finance and Controller
Formerly Vice President and Corporate Controller for Cross Match Technologies, a multi-national manufacturer of biometric devices, and Vice President of Accounting and Financial Reporting for ION Media Networks, an AMEX-listed television broadcasting company with 60 television stations and more than $1 billion in assets. 20
Board of Directors
Marvin RosenChairman of the Board, Formerly name partner at Greenberg Traurig, Finance Chairman under President Clinton, Chairman of the Florida Housing Finance Agency, Director of Terremark Worldwide.
Matthew Rosen see Management
Philip Turits Co-Founder and Treasurer, Former Treasurer of Larry Stuart, CEO of Continental Chemical
Larry BlumFormer Senior Partner of the Florida Region of Marcum LLP (Marcum Rachlin), Managing Partner of Rachlin LLP, litigation advisor and member of the Florida Bar.
Alan BrumbergerFormerly Managing Director Drexel Burnham, Managing Director of Shearson American Express, and President and CEO of Shearson’s international Investment Banking business.
Michael Del GiudiceBoard member of Con Edison and former board member of Barnes and Noble; Formerly Chief of Staff for Mario Cuomo and General Partner at Lazard Freres.
Paul O’BrienFormer President and Chairman of New England Telephone (Nynex), Advisor to Sovereign Bank.
Jack RosenCEO of Rosen Partners; Hudson Institute Board Member; Chairman of the American Jewish Congress.
William RubinPresident of the Rubin Group, providing full service lobbying and marketing services to clients before local governments, as well as Florida's Legislative and Executive Branches of State Government.
21
Advisory Board
John H. SununuChairman of the Advisory Board, Former three term Governor of New Hampshire, Chief of Staff for President Bush and Counselor to the President.
Fred SalernoBoard member of CBS, Viacom, Popular Inc., Intercontinental Exchange and Akamai, Former Vice Chairman and CFO for Verizon.
Ken Sunshine
Founder and Partner of Sunshine Sachs, providing public relations services to Fortune 500 corporations, labor unions and political figures, and to some of the biggest household names in the entertainment, music and sports industries. Formerly Chief of Staff for former New York City Mayor David Dinkins.
Tonio Burgos
Former Director of Executive Services for the Governor of New York; Commissioner of the Port Authority of NY and NJ; Director of the Path Commuter Rail System; Vice Chairman of the NJ Economic Development Authority; member of the School Construction Corporation.
Vice Admiral Al Konetzni, USN (ret)
Commissioned in 1966 and served through 2004. Board member of Simulex, Larry King Cardiac Foundation, Tompkins Builders, American Shipbuilding Suppliers Association, Pennsylvania State University Applied Research Laboratory.
22
23
Financial Overview
($ in thousands)
Fiscal Year 2012
Six Months 2012
Six Months 2013 % chg
Business Services Revenue $6,830 $1,173 $14,967 1176%
Carrier Services Revenue $37,458 $20,581 $15,432 -25%
Total $44,288 $21,754 $30,399 40%
Business Services Gross Margin 46.8% 36.4% 50.4% 38%Carrier Services Gross Margin 9.1% 11.3% 9.8% -13%Gross Margin 15.0% 12.6% 29.7% 136%
Adjusted EBITDA ($3,435) ($1,495) $757 151%
24
Financial Highlights
Q2 revenues of $14.2 million represent a 39% increase from the second quarter of 2012
Higher margin Business Services Segment increased revenues by $6.9 million to $7.5 million
Gross margin increased to 32.5% from 12.3% in Q2 2012
Adjusted EBITDA of $0.5 million; compared to an adjusted EBITDA loss of $0.9 million in Q2 2012
The number of business customers totaled 3,538 in the second quarter of 2013, with the average revenue per customer reaching approximately $727
Signed contracts valued at more than $2.6 million, a 58% increase over Q2 2012.
Completed integration of operations from NBS, the recently acquired cloud services provider
Financial Highlights – Q2 2013
25
Revenues of $30.4 million represent a 40% increase from the first six months of 2012
Higher margin Business Services Segment increased revenues by $13.8 million to $15.0 million
Gross margin increased to 29.7% from 12.6% in the first six months of 2012
Adjusted EBITDA of $0.8 million; compared to an adjusted EBITDA loss of $1.5 million in the first six months of 2012
Financial Highlights– Six Months 2013
26
Large market opportunity
Compelling strategy and next generation product suite
Great team
Strong momentum
Well positioned for substantial growth
Highly fragmented marked offers solid growth opportunities through acquisitions
Compelling valuation based on comparable analysis
Why Fusion?
27
Contact Us
28
Corporate Headquarters
Investor Contact
Fusion Telecommunications International, Inc.:
Matt Rosen CEO [email protected]
420 Lexington Avenue Suite 1718
New York, NY 10170 www.fusiontel.com
Philip Turits
(212) 201-2407