Mosaic Acquisition : 2nd Quarter 2020 Financial Results

Vivint Smart Home, Inc.

Second Quarter 2020 Results

August 6, 2020

forward-looking statements

This presentation includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including but not limited to, statements of Vivint Smart Home, Inc. (the "Company", "Vivint", "we", "our", or "us") related to the performance of our business, our financial results, our liquidity and capital resources, our plans, strategies and prospects, both business and financial, and other non-historical statements. Forward-looking statements convey the Company's current expectations or forecasts of future events. All statements contained in this presentation other than statements of historical fact are forward-looking statements. These statements are based on the beliefs and assumptions of our management. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. These statements may be preceded by, followed by or include the words "believes," "estimates," "expects," "projects," "forecasts," "may," "will," "should," "seeks," "plans," "scheduled," "anticipates" or "intends" or similar expressions.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, in addition to those discussed in in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, as filed on May 11, 2020, and our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, which is expected to be filed on or about the date of this earnings release, as such factors may be updated from time to time in the Company's periodic filings with the SEC, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements: (1) the duration and scope of the COVID-19 pandemic; (2) actions governments, the company's counterparties, and the company's customers or potential customers take in response to the COVID-19 pandemic; (3) the impact of the pandemic and actions taken in response to the pandemic on the global economies and economic activity; (4) the pace of recovery when the COVID-19 pandemic subsides; (5) the impact of the COVID-19 pandemic on our liquidity and capital resources, including the impact of the pandemic on our customers and timing of payments, the sufficiency of credit facilities, and the company's compliance with lender covenants; (6) the ineffectiveness of steps we take to reduce operating costs; (7) risks of the smart home and security industry, including risks of and publicity surrounding the sales, subscriber origination and retention process; (8) the highly competitive nature of the smart home and security industry and product introductions and promotional activity by our competitors; (9) litigation, complaints, product liability claims and/or adverse publicity; (10) the impact of changes in consumer spending patterns, consumer preferences, local, regional, and national economic conditions, crime, weather, demographic trends and employee availability; (11) adverse publicity and product liability claims; (12) increases and/or decreases in utility and other energy costs, increased costs related to utility or governmental requirements; (13) cost increases or shortages in smart home and security technology products or components; (14) the introduction of unsuccessful new Smart Home Services; (15) privacy and data protection laws, privacy or data breaches, or the loss of data; (16) the impact to our business, results of operations, financial condition, regulatory compliance and customer experience of the Vivint Flex Pay plan and our ability to successfully compete in retail sales channels; and (17) risks related to our exposure to variable rates of interest with respect to our revolving credit facility and term loan facility. In addition, the origination and retention of new subscribers will depend on various factors, including, but not limited to, market availability, subscriber interest, the availability of suitable components, the negotiation of acceptable contract terms with subscribers, local permitting, licensing and regulatory compliance, and our ability to manage anticipated expansion and to hire, train and retain personnel, the financial viability of subscribers and general economic conditions. The Company undertakes no obligations to update or revise publicly any forward-looking statements, whether a result of new information, future events, or otherwise, except as required by law.

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non-GAAP financial measures

This presentation includes Adjusted EBITDA and Covenant Adjusted EBITDA, which are supplemental measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States ("GAAP").

"Adjusted EBITDA" is defined as net income (loss) before interest, taxes, depreciation, amortization, stock-based compensation (or non-cash compensation), certain financing fees, and certain other non-recurring expenses or gains. Management believes that the presentation of Adjusted EBITDA is appropriate to provide additional information to investors because it is frequently used by securities analysts, investors, and other interested parties in their evaluation of the operating performance of companies in industries similar to Vivint's. In addition, targets based on Adjusted EBITDA are among the measures Vivint uses to evaluate its management's performance for purposes of determining their compensation under its incentive plans.

Adjusted EBITDA and other non-GAAP financial measures have important limitations as analytical tools.

"Covenant Adjusted EBITDA" is defined as net income (loss) before interest expense (net of interest income), income and franchise taxes and depreciation and amortization (including amortization of capitalized subscriber acquisition costs), further adjusted to exclude the effects of certain contract sales to third parties, non-capitalized subscriber acquisition costs, stock based compensation and certain unusual, non-cash, nonrecurring and other items permitted in certain covenant calculations under the agreements governing Vivint's notes, the credit agreement governing the term loan and the credit agreement governing the revolving credit facility. Management believes that the presentation of Covenant Adjusted EBITDA is appropriate to provide additional information to investors about the calculation of, and compliance with, certain financial covenants contained in the indentures governing Vivint's notes, the credit agreements governing the revolving credit facility and the term loan.

Adjusted EBITDA and Covenant Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers and analysts calculate Adjusted EBITDA and Covenant Adjusted EBITDA in the same manner.

Adjusted EBITDA and Covenant Adjusted EBITDA are not measurements of Vivint's financial performance under GAAP and should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as a measure of Vivint's liquidity.

See Annex A of this presentation for a reconciliation of Adjusted EBITDA and Covenant Adjusted EBITDA, for periods presented, to net loss for Vivint, which management believes is the most closely comparable financial measure calculated in accordance with GAAP.

A reconciliation of Adjusted EBITDA to the closest GAAP financial measure is not available on a forward-looking basis without unreasonable efforts due to the high variability, complexity and uncertainty with respect to forecasting and quantifying certain amounts that are necessary for such reconciliation, including net income (loss) and adjustments that could be made for impairment charges, restructuring charges and the timing and magnitude of other amounts included in the reconciliation. For the same reasons, we are unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant impact on our future GAAP financial results.

Adjusted EBITDA and Covenant Adjusted EBITDA should be considered in addition to and not in isolation from, or as a substitute for, or superior to, financial measures presented in accordance with GAAP, and non- GAAP financial measures as used by Vivint may not be comparable to similarly titled amounts used by other companies.

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participants

Todd Pedersen

Chief Executive Officer

Dale R. Gerard

Chief Financial Officer

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Vivint is uniquely positioned as individuals & families reconnect with their homes

• We provide the peace of mind & security that people demand during uncertain times
• Our innovative products allow our customers to seamlessly manage and protect their homes, whether they're at home or away
• Proprietary cloud platform allows for a superior customer experience and the resolution of most customer issues without requiring in-hometechnical service
• Direct to Home sales resumed in early May, and our summer sales teams are performing well
• National Inside Sales has continued with very minimal interruption, posting strong year-over-yeargrowth. NIS represents roughly half of all new subscribers.
• Our high-margin recurring revenue model is steady & predictable: ~90% of 2020 revenue was contractually booked at the beginning of the year
• Significant improvements in Net Service Cost, Net Subscriber Acquisition Cost, and G&A have us tracking to be cash flow positive for 2020 - well ahead of our previously stated timeline

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key operational / financial performance highlights for the quarter

• Total Revenue of $306.0 million, up 9% YoY
• Adjusted EBITDA grew 73% YoY to $152.7 million, representing nearly a 50% margin
• Originated ~108K New Subscribers in the quarter; material reduction in RICs (down 89% YoY) to only 1% of mix
• Net Service Cost per Subscriber decreased to $9.93 for the period, a 24% reduction YoY
• Net Subscriber Acquisition Cost per New Subscriber decreased to $630 for the LTM period, a 41% reduction YoY
• Subscriber attrition rate declined by nearly half a point on a sequential QoQ basis; leading portfolio indicators are performing better than expected
• Net cash provided by operating activities was $111 million for the quarter, up approximately $200 million YoY; liquidity as of June 30, 2020 was ~$478 million

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revenue

($ in Millions)

Quarters ended June 30,

$306.0

$281.1

$255.0

2018

2019

2020

Six months ended June 30,

$609.2

$557.3

$501.6

2018

2019

2020

Growth:

10.2%

8.9%

Growth:

11.1%

9.3%

Achieved ~9% YoY revenue growth during the 2nd quarter and YTD 2020

Demonstrates strength of our recurring revenue model

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adjusted EBITDA and covenant adjusted EBITDA

Quarters ended June 30,

($ in Millions)	Six months ended June 30,
= Margin %

$152.7

$287.6

$45.2

17.7% 2018

Growth:

$137.2

53.8%

2018

Growth:

$88.3

49.9%

31.4%

20192020

95.4%72.9%

$200.5

$155.3

65.5% 55.2%

20192020

13.2%29.1%

Adjusted

EBITDA

Covenant

Adjusted

EBITDA

$99.3

19.8%

2018

Growth:

$260.1

51.9%

2018

Growth:

$195.6

47.2% 35.1%

20192020

97.0%47.0%

$390.5

$305.0

64.1% 54.7%

20192020

17.3%28.0%

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smart home subscriber portfolio data

As of and for the quarter ended June 30,

Total Subscribers	Total Monthly Revenue	AMRU
(in Millions)	($ in Millions)

		1.61			$102.0			$64.66
					$63.35
					$62.49
	1.51			$93.7
1.39			$85.0
2018	2019	2020	2018	2019	2020	2018	2019	2020
Growth:	8.2%	6.8%	Growth:	10.2%	8.9%	Growth:	1.4%	2.1%

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new smart home subscribers(1)

New Smart Home Subscribers

Quarters ended June 30,

117,875	111,581	107,980
5,367
33,160	33,360	41,561
79,348	78,221	66,419
2018	2019	2020

Six months ended June 30,

173,377				159,117	158,033
13,350
64,268				64,141		75,016
95,759				94,976		83,017
2018				2019		2020
			DTH			NIS		Retail

Vivint Flex Pay Mix(2) (US Only)

	16%	16%	15%	9%	9%	10%	7%	1%
20%	20%
13%	14%
8%	11%			26%	29%
20%	20%

72%	73%		78%	77%		79%
64%	65%		64%	64%

Q2-18	Q3-18		Q4-18	Q1-19	Q2-19		Q3-19	Q4-19	Q1-20	Q2-20
			External Financing Partners		Paid in Full			RIC

• 99% of new subscribers paid upfront in Q2 2020 (External Financing Partners & PIF)
• RICs in 2Q20 decreased by 89% YoY - 1% of new subscriber mix

25% growth YoY in NIS | New subscriber growth down only slightly despite ~6-week pause in Direct to Home sales

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1. All periods exclude wireless internet business and pilot sales channel initiatives
2. Paid in Full excludes New Subscribers from Retail Sales Channel

service and subscriber acquisition costs(1)

Net Service Cost per Subscriber

Quarters ended June 30,

$16.71

(40.6%)

$13.13

(24.4%)

$9.93

	2018	2019	2020
Net Service Margin:	68.6%	75.2%	80.2%

Net Subscriber Acquisition Costs per New Subscriber

LTM ended June 30,

$1,375

(54.2%)

$1,064

(40.8%)

$630

2018

2019

2020

• Advantage of vertically integrated model - we own the hardware, software & firmware
• Owning the technology stack improves our ability to quickly address system issues while reducing service calls and in-home visits

~24% YoY improvement in Net Service Cost

• $1,485 average proceeds collected at point of sale in period - driven by increase in pricing for starter pack
• $434 decrease in Net SAC YoY

~69% reduction in Net SAC since rollout of Vivint Flex Pay

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1. All periods exclude wireless internet business and sales channel pilot initiatives

attrition rate(1)

	11.1%	13.4%	13.7%
	Annualized	Annualized	Annualized
	Attrition	Attrition	Attrition

11.1%	11.8%	12.3%

12.9%	13.4%	13.9%	13.9%	14.1%	13.7%

• Subscriber attrition was favorable and came in lower than the company's expectations
• Demonstrates Vivint's value proposition, particularly during times of uncertainty

	Q2-18	Q3-18	Q4-18	Q1-19	Q2-19	Q3-19	Q4-19	Q1-20	Q2-20
% base at end	12.2%	15.9%	17.1%	18.8%	19.3%	19.4%	19.8%	19.8%	19.4%
of term(1)	12

1. All periods exclude wireless internet business and sales channel pilot initiatives

financial outlook for 2020

Fundamental characteristics of Vivint's model remain strong and continue to improve

• >95% of revenue is recurring; provides long-term visibility and predictability
• Continuous improvement in key metrics leading to higher margins and better cash flow dynamics
• Average subscriber life is ~8 years, driving significant lifetime margin dollars

Updated full-year 2020 guidance based on better than expected second quarter results

• Total subscribers of 1.62 to 1.68 million vs. previous guidance of 1.55 to 1.62 million
• Total revenue of $1.23 to $1.28 billion vs. previous guidance of $1.20 to $1.25 billion
• Adjusted EBITDA of $555 to $565 million vs. previous guidance of $525 to $535 million

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Vivint Smart Home at a glance… during this earnings call:

61M	107K	32K	13K	37K	91K
events processed in	live video views from	views of home	changes to locks and	actions performed	home state changes to
the cloud by the Vivint	apps and panels, plus	activity history from	thermostats via apps,	automatically by the	Away decided by
Smart Home OS1	another 78K views of	mobile apps1	panels, and voice1	Vivint Smart Home	Vivint Assist, plus over
	recorded video1			OS / Vivint Assist1	1K automated state
					changes to Vacation
	D ATA  K N O W L E D G E 	A C T I O N =
					14

1. Based on the average rate between 6am and 10pm Mountain Time for the 2-week period ending June 30, 2020

Q&A

Vivint Smart Home, Inc.

Consolidated Financial Statements

For Quarters Ended June 30, 2020 and 2019

consolidated statements of operations

Vivint Smart Home, Inc. and Subsidiaries

(In thousands; unaudited)

	Three Months Ended June 30,		Six Months Ended June 30,
	2020		2019		2020		2019

Revenues:

Recurring and other revenue	$
Costs and expenses:
Operating expenses
Selling expenses
General and administrative expenses
Depreciation and amortization
Restructuring expenses
Total costs and expenses
Loss from operations
Other expenses (income):
Interest expense
Interest income
Other (income) expenses, net
Total other expenses
Loss before income taxes
Income tax expense (benefit)
Net loss	$

306,002	$	281,053	$	609,234	$	557,302
82,011		92,013			165,351			175,089
64,733		57,926			118,960			101,517
59,383		47,439			112,401			93,778
140,175		134,504			279,424			265,725
-		-			20,941			-
346,302		331,882			697,077			636,109
(40,300)		(50,829)			(87,843)			(78,807)
54,515		65,817			119,808			129,565
(32)		-			(261)			(23)
(8,638)		(198)			17,667			(2,444)
45,845		65,619			137,214			127,098
(86,145)		(116,448)			(225,057)			(205,905)
882		(552)			94			(853)
(87,027)	$	(115,896)	$	(225,151)	$	(205,052)

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condensed consolidated balance sheets

Vivint Smart Home, Inc. and Subsidiaries

(In thousands; unaudited)

June 30, 2020

December 31, 2019

ASSETS
Current Assets:
Cash and cash equivalents	$
Accounts and notes receivable, net
Inventories
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment, net
Capitalized contract costs, net
Deferred financing costs, net
Intangible assets, net
Goodwill
Operating lease right-of-use assets
Long-term notes receivables and other assets, net
Total assets
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable
Accrued payroll and commissions
Accrued expenses and other current liabilities
Current portion of notes payable, net
Deferred revenue
Current portion of operating lease liabilities
Current portion of finance lease liabilities
Total current liabilities
Notes payable, net
Revolving credit facility
Finance lease liabilities, net of current portion
Operating lease liabilities
Deferred revenue, net of current portion
Other long-term obligations
Deferred income tax liabilities
Total liabilities
Total stockholders' deficit
Total liabilities and stockholders' deficit	$

248,950						$	4,549
70,879							64,216
82,570							64,622
16,007							18,063
418,406							151,450
53,518							61,088
1,237,418							1,215,249
1,867							1,123
142,768							177,811
835,227							836,540
61,496							65,320
79,248							95,827
2,829,948							2,604,408
90,708							86,554
75,349							72,642
178,196							139,389
9,500							461,420
265,283							234,612
12,099							11,640
5,241							7,708
636,376							1,013,965
2,819,102							2,575,293
105,200							245,000
3,928							5,474
58,830							63,477
501,743							405,786
108,684							80,540
959							2,231
4,234,822							4,391,766
(1,404,874)							(1,787,358)	18
2,829,948						$	2,604,408

summary of consolidated statements of cash flows

Vivint Smart Home, Inc. and Subsidiaries

(In thousands; unaudited)

			Three Months Ended June 30,			Six Months Ended June 30,
			2020			2019			2020			2019
Net cash provided by (used in) operating activities	$	111,027		$	(87,973)		$	77,496		$	(130,990)
Net cash (used in) provided by investing activities		(3,411)			1,939			(5,666)			128
Net cash provided by financing activities		9,904			85,489			172,576			121,210
Effect of exchange rate changes on cash		341			(13)			(5)			12
Net increase (decrease) in cash and cash equivalents		117,861			(558)			244,401			(9,640)
Cash and cash equivalents:
Beginning of period		131,089			3,691			4,549			12,773
End of period		$	248,950		$	3,133		$	248,950		$	3,133

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Vivint Smart Home, Inc.

Annex A

reconciliation of non-GAAP financial measures - Adjusted EBITDA

($ in Millions)

Three Months Ended

			June 30, 2019			September 30, 2019		December 31, 2019			March 31, 2020			June 30, 2020
	Net loss	$	(115.9)		$	(102.4)		$	(88.5)		$	(138.1)		$	(87.0)
	Interest expense, net		65.8				65.2			65.2			65.1			54.5
	Income tax (benefit) expense, net		(0.6)				0.2			1.9			(0.8)			0.9
	Depreciation		7.1				6.3			6.2			5.7			5.2
	Amortization (i)		127.4				131.2			134.0			133.6			135.0
	Stock-based compensation (ii)		0.9				1.3			0.8			17.0			46.8
	MDR fee (iii)		3.8				4.6			5.0			5.2			6.0
	Restructuring expenses (iv)		-				-			-			20.9			-
	Other (income) expense, net (v)		(0.2)				(5.7)			0.5			26.3			(8.7)
	Adjusted EBITDA	$	88.3	$	100.7	$	125.1	$	134.9	$	152.7

1. Excludes loan amortization costs that are included in interest expense.
2. Reflects non-cash compensation costs related to employee and director stock incentive plans.
3. Costs related to financing fees incurred under the Vivint Flex Pay program.
4. Employee severance and termination benefits expenses associated with restructuring plans.
5. Amounts for the three months ended March 31, 2020 include adjustment to eliminate $16.9 million from expenses included in debt modification and extinguishment.

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reconciliation of non-GAAP financial measures - Covenant Adjusted EBITDA

($ in Millions)

LTM Period Ended

		June 30, 2019		September 30, 2019		December 31, 2019			March 31, 2020			June 30, 2020
Net loss	$	(445.1)		$	(427.1)		$	(395.8)		$	(444.9)		$	(416.0)
Interest expense, net		255.2			258.5			259.9			261.3			250.0
Other expense (income), net		20.8			0.6			(7.6)			20.9			12.4
Income tax (benefit) expense, net		(1.1)			(0.7)			1.3			0.8			2.3
Restructuring expenses (i)		0.5			-			-			20.9			20.9
Depreciation and amortization (ii)		111.5			108.8			106.2			103.1			98.3
Amortization of capitalized contract costs		417.1			426.8			437.2			448.4			458.8
Non-capitalized contract costs (iii)		260.2			273.2			273.9			277.6			259.3
Stock-based compensation (iv)		3.5			3.9			3.8			20.0			65.9
Other adjustments (v)		54.5			52.8			53.1			65.0			62.9
Adjustment for change in accounting principle (Topic 606) (vi)		(94.5)			(84.1)			(88.8)			(89.6)			(86.1)
Covenant Adjusted EBITDA	$	582.6	$	612.7	$	643.2	$	683.5	$	728.7

1. Employee severance and termination benefits expenses associated with restructuring plans.
2. Excludes loan amortization costs that are included in interest expense.
3. Reflects subscriber acquisition costs that are expensed as incurred because they are not directly related to the acquisition of specific subscribers. Certain other industry participants purchase subscribers through subscriber contract purchases, and as a result, may capitalize the full cost to purchase these subscriber contracts, as compared to our organic generation of new subscribers, which requires us to expense a portion of our subscriber acquisition costs under GAAP.
4. Reflects non-cash compensation costs related to employee and director stock incentive plans.
5. Other Adjustments includes certain items such as product development costs, subcontracted monitoring fee savings, certain legal and professional fees, expenses associated with retention bonuses, relocation and severance payments other than those paid as part of restructuring plans, and certain other adjustments.
6. Adjustments to eliminate the impact of the Company's adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers.

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certain definitions

Total Subscribers - is the aggregate number of active Smart Home and security subscribers at the end of a given period. Total Monthly Revenue (MR) - is the average monthly total revenue recognized during a given period.

Average Monthly Revenue per User (AMRU) - is the average monthly total revenue recognized during a given period.

Total Monthly Service Revenue (MSR) - is the contracted recurring monthly service billings to our smart home and security subscribers, based on the Total Subscribers number as of the end of a given period. Average Monthly Service Revenue per User (AMSRU) - is Total MSR divided by Total Subscribers at the end of a given period.

Attrition Rate - is the aggregate number of canceled Smart Home and security subscribers during the prior 12-month period divided by the monthly weighted average number of Total Subscribers based on the Total Subscribers at the beginning and end of each month of a given period. Subscribers are considered canceled when they terminate in accordance with the terms of their contract, are terminated by Vivint or if payment from such subscribers is deemed uncollectible (when at least four monthly billings become past due). If a sale of a service contract to third parties occurs, or a subscriber relocates but continues their service, Vivint does not consider this as a cancellation. If a subscriber transfers their service contract to a new subscriber, Vivint does not consider this a cancellation.

Average Subscriber Lifetime - in number of months, is 100% divided by Vivint's expected long-term annualized attrition rate (which is currently estimated at 13%) multiplied by 12 months.

Net Service Costs - is the average monthly service costs incurred during the period (both period and capitalized service costs), including monitoring, customer service, field service and other service support costs, less total non-recurring Smart Home services billings for the period.

Net Service Cost per Subscriber - is the average monthly service costs incurred during the period (both period and capitalized service costs), including monitoring, customer service, field service and other service support costs, less total non-recurring Smart Home services billings for the period divided by average monthly Total Subscribers for the same period.

Net Service Margin - is the monthly average MSR for the period, less total average net service costs for the period divided by the monthly average MSR for the period.

New Subscribers - is the aggregate number of net new Smart Home and security subscribers originated during a given period. This metric excludes new subscribers acquired by the transfer of a service contract from one subscriber to another.

Net Subscriber Acquisition Costs - is the net cash cost to create new Smart Home and security subscribers during a given 12-month period. These costs include commissions, Products, installation, marketing, sales support and other allocations (general and administrative and overhead) less upfront payment received from the sale of Products associated with the initial installation, and installation fees. These costs exclude capitalized contract costs and upfront proceeds associated with contract modifications.

Net Subscriber Acquisition Costs per New Subscriber - is the net cash cost to create new Smart Home and security subscribers during a given 12-month period divided by New Subscribers for that period. These costs include commissions, Products, installation, marketing, sales support and other allocations (general and administrative and overhead) less upfront payment received from the sale of Products associated with the initial installation, and installation fees. These costs exclude capitalized contract costs and upfront proceeds associated with contract modifications.

Total Monthly Service Revenue for New Subscribers - is the contracted recurring monthly service billings to Vivint's New Subscribers during the prior 12-month period.

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