APX Group Holdings, Inc. 1st Quarter 2017 Results

May 10, 2017

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APX Group Holdings, Inc. (the ”Company”, “Vivint”, “we”, “our”, or “us”) obtained the industry, market and competitive position data included in this presentation from its estimates and research

as well as from industry publications, surveys and studies conducted by third parties. Industry publication studies and surveys generally state that the information contained therein has been

obtained from sources believed to be reliable but there can be no assurance as to the accuracy or completeness of such information. While APX Group, Inc. believes that each of the

publications, studies and surveys is reliable, We have not independently verified industry, market and competitive position data from third-party sources. While we believe our internal business

research is reliable and the market definitions are appropriate, neither such research nor these definitions have been verified by any independent sources. Accordingly, you should not place

undue weight on the industry and market share data in this presentation.

This presentation includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, including but not limited to, statements 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 this date hereof. You should understand that the

following important factors, in addition to those discussed in “Risk Factors” in our most recent annual report on Form 10K, and other reports filed with the Securities Exchange Commission

(“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) risks of the

security and smart home industry, including risks of and publicity surrounding the sales, subscriber origination and retention process; (2) the highly competitive nature of the security and smart

home industry and product introductions and promotional activity by our competitors; (3) litigation, complaints or adverse publicity; (4) the impact of changes in consumer spending patterns,

consumer preferences, local, regional, and national economic conditions, crime, weather, demographic trends and employee availability; (5) adverse publicity and product liability claims; (6)

increases and/or decreases in utility and other energy costs, increased costs related to utility or governmental requirements; (7) cost increases or shortages in security and smart home

technology products or components; and (8) the introduction of unsuccessful new products and services; (9) privacy and data protection laws, privacy or data breaches, or the loss of data; and

(10) the impact to our business, results of operations, financial condition, regulatory compliance and customer experience of the Vivint Flex Pay plan. 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. These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this presentation are more

fully described in the “Risk Factors” section of our most recent annual report on Form 10-K, as such factors may be updated from time to time in our periodic filings with the SEC. These risk

factors should not be construed as exhaustive. We disclaim any obligations to and do not intend to update the above list or to announce publicly the results of any revisions to any of the forward-

looking statements to reflect future events or developments. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the

foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether a result of new information, future events, or otherwise.

forward-looking statements

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non-GAAP financial measuresThis presentation includes Adjusted EBITDA which is a supplemental measure that is not required by, or presented in accordance with, accounting principles generally accepted in the United

States (“GAAP”). Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income or any other measure derived in

accordance with GAAP or as an alternative to cash flows from operating activities as a measure of our liquidity. We believe the presentation of Adjusted EBITDA is appropriate to provide useful

information about the flexibility we have under our covenants to investors, lenders, financial analysts and rating agencies since these groups have historically used EBITDA-related measures in

our industry, along with other measures, to estimate the value of a company, to make informed investment decisions, and to evaluate a company’s ability to meet its debt service requirements.

Adjusted EBITDA eliminates the effect of non-cash depreciation of tangible assets and amortization of intangible assets, much of which results from acquisitions accounted for under the purchase

method of accounting. Adjusted EBITDA also eliminates the effects of interest rates and changes in capitalization which management believes may not necessarily be indicative of a company’s

underlying operating performance. Adjusted EBITDA is also used by us to measure covenant compliance under the indenture governing our senior secured notes, the indenture governing our

senior unsecured notes and the credit agreement governing our revolving credit facility.

We caution investors that amounts presented in accordance with our definition of Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers

and analysts calculate Adjusted EBITDA in the same manner.

See Annex A of this presentation for a reconciliation of Adjusted EBITDA to net loss for the Company, which we believe is the most closely comparable financial measure calculated in accordance

with GAAP. Adjusted EBITDA should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with GAAP.

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participants

Todd Pedersen

Chief Executive Officer

Alex Dunn

President

Mark Davies

Chief Financial Officer

Dale R. Gerard

SVP, Finance & Treasurer

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first quarter 2017 company overview

Business Model Transition – Vivint Flex Pay

Separating the purchase of equipment and installation from service offerings

Customer optionality on smart home configuration with zero-percent financing

Citizens Bank, N.A. consumer funding provides incremental cash flow to Vivint

Channel Expansion – Buy Best Strategic Partnership

Broad scale big box retail format… initial rollout of approximately 400 stores

Co-branded partnership... Access to millions of customers, brand awareness

Favorable subscriber economics… IRR, SAC Multiple, and breakeven months

Operational Focus

Increased run-rate in Engineering to focus on product reliability and continued cloud

capabilities in order to drive customer experience and service cost scaling

IT and process development for Flex Pay and retail/BBY capabilities

New channel expansion… Sales, start-up and capital resources for BBY partnership

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$89.5

$102.8

$115.4

2015 2016 2017

$152.2

$174.3

$205.4

2015 2016 2017

revenue and adjusted EBITDA(1)

Quarters Ended March 31, ($ in Millions)

Adjusted EBITDA (1)

Growth: 14.5% 17.8% Growth: 14.9% 12.3%

Total Revenues

(1) A reconciliation of Adjusted EBITDA to GAAP Net Loss is included in Annex A of this presentation

Total RPU represented 95.9% of Q1 2017 Total Revenues

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$14.41

$15.95

2016 2017

service and subscriber acquisition costs(1)

Net Subscriber Acquisition Cost MultipleLTM Ended March 31,

Net Service Cost and Margin per SubscriberQuarter Ended March 31,

(1) Excludes wireless internet business

Ne

tS

erv

ice

Co

sts

Net Service Margin 73.8% 72.3%

30.9x

29.8x

2016 2017

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2017: Includes $1.8 million of equipment cost for 2G to 3G upgrades 2017: Lower SAC multiple driven by higher ARPNU and higher upfront collections

$61.46 $62.01

$67.99

2015 2016 2017

13,921

19,377 14,794

11,888

22,453

24,498

2015 2016 2017

IS

DTH

25,809

new smart home subscriber originations(1)

(1) All subscriber portfolio data presented excludes wireless internet business

(2) RPU is stated as of the end of each period

As of March 31,

New Subscribers Avg. RPU Per New

Subscriber(2)

Smart Home Adoption Rate

Growth: 0.9% 9.6% Growth: 1,440bps 440bpsGrowth: 62.1% (6.1%)

39,29241,830

66.9%

81.3%85.7%

2015 2016 2017

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$54.26 $55.27

$57.49

2015 2016 2017

$48.3

$56.3

$66.2

2015 2016 2017

smart home subscriber portfolio data(1)

(1) All subscriber portfolio data presented excludes wireless internet business

(2) RPU is stated as of the end of each period

As of March 31,

($ in Millions)

Total RPU(2)

Total Subscribers Avg. Revenue Per User(2)

Growth: 16.5% 17.6% Growth: 14.4% 13.1% Growth: 1.9% 4.0%

890,125

1,018,397

1,151,453

2015 2016 2017

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12.0%

Annualized

Attrition

13.6%

Annualized

Attrition

(# of Subscriber Accounts)

12.6%

Annualized

Attrition

subscriber account attrition(1)

~ 6% of portfolio reaching initial end of

contract term in 2017

2013 42-mo contracts (4Q16 – 1Q17)

2014 42-mo contracts (4Q17 – 1Q18)

(1) All subscriber attrition data presented excludes the wireless internet business for all periods presented

LTM Quarterly Attrition

12.0% 12.0%

12.2%

12.6%

12.9% 12.9%

12.6%

12.0%

Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017

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vivint flex pay & BBY status

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Vivint Flex Pay

Customers have two options when purchasing the products and related installation

Pay-in-Full: customers pay with credit card or check at time of installation

Consumer Credit: Citizens installment loan or Vivint Retail Installment Contract (RIC)… 42 or 60 month terms, 0% interest

Significant IT and process changes required for implementation

RIC offered to all new customers beginning late-February

Citizens initial implementation late-March

Customers appear to readily accept the new pricing model… similar to recently promoted cell phone plans

Both sales channels have shown an initial drop in productivity as training and experience is internalized at the representative level

Financial / Operation Metrics: too early to provide details, but key metrics appear to be in-line with relevant range of estimated results

Financial statement impact included in Appendix

Best Buy Program

Initial plan is to open approximately 400 stores, with as many as possible prior to holiday sales season

Product package and service offering is consistent with existing channels

Infrastructure, sales and management are currently being developed and acquired. Rollout expected end-of-summer.

Sales productivity is expected to follow a typical experience curve, including a pre-opening hiring and training phase

Q&A

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APX Group Holdings, Inc.

Quarters Ended March 31, 2017 and 2016

Consolidated Financial Statements

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condensed consolidated balance sheetsAPX Group Holdings, Inc. and Subsidiaries

(In thousands)

(Unaudited)

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March 31, December 31,

2017 2016

ASSETS

Current Assets:

Cash and cash equivalents 37,225$ 43,520$

Accounts and notes receivable, net 11,759 12,891

Inventories 80,845 38,452

Prepaid expenses and other current assets 12,426 10,158

Total current assets 142,255 105,021

Property and equipment, net 67,258 63,626

Subscriber acquisition costs, net 1,064,050 1,052,434

Deferred financing costs, net 3,914 4,420

Intangible assets, net 450,788 475,392

Goodwill 835,491 835,233

Long-term investments and other assets, net 24,654 11,536

Total assets 2,588,410$ 2,547,662$

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities:

Accounts payable 92,757$ 49,119$

Accrued payroll and commissions 30,027 46,288

Accrued expenses and other current liabilities 87,322 34,265

Deferred revenue 48,820 45,722

Current portion of capital lease obligations 9,134 9,797

Total current liabilities 268,060 185,191

Notes payable, net 2,510,210 2,486,700

Capital lease obligations, net of current portion 6,039 7,935

Deferred revenue, net of current portion 73,715 58,734

Other long-term obligations 49,945 47,080

Deferred income tax liabilities 7,277 7,204

Total liabilities 2,915,246 2,792,844

Total stockholders’ deficit (326,836) (245,182)

Total liabilities and stockholders’ deficit 2,588,410$ 2,547,662$

consolidated statements of operationsAPX Group Holdings, Inc. and Subsidiaries

(In thousands)

(Unaudited)

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2017 2016

Revenues:

Recurring and other revenue 196,858$ 167,446$

Service and other sales revenue 5,391 5,011

Activation fees 3,104 1,796

Total revenues 205,353 174,253

Costs and expenses:

Operating expenses 71,352 57,991

Selling expenses 34,798 28,880

General and administrative expenses 38,861 30,441

Depreciation and amortization 76,869 60,571

Restructuring and asset impairment charges - 45

Total costs and expenses 221,880 177,928

Loss from operations (16,527) (3,675)

Other expenses (income):

Interest expense 53,681 45,418

Interest income (57) (12)

Other loss (income), net 12,066 (5,108)

Total other expenses 65,690 40,298

Loss before income taxes (82,217) (43,973)

Income tax expense 419 1,120

Net loss (82,636)$ (45,093)$

Three Months Ended March 31,

summary of consolidated statements of cash flowsAPX Group Holdings, Inc. and Subsidiaries

(In thousands)

(Unaudited)

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2017 2016

Net cash used in operating activities (6,153)$ (12,505)$

Net cash used in investing activities (8,036) (2,442)

Net cash provided by financing activities 7,901 14,026

Effect of exchange rate changes on cash (7) (1,126)

Net decrease in cash (6,295)$ (2,047)$

Cash:

Beginning of period 43,520 2,559

End of period 37,225$ 512$

Three Months Ended March 31,

APX Group Holdings, Inc.

Annex A

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reconciliation of non-GAAP financial measures – APX Group($ in Millions)

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i. Reflects costs associated with the restructuring charges and asset impairments related to the transition of our Wireless Internet

business and the 2016 Contracts Sales

ii. Excludes loan amortization costs that are included in interest expense

iii. 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 subscribers contracts, as compared to our organic generation of new

subscribers, which requires us to expense a portion of our subscriber acquisition costs under GAAP.

iv. Reflects non-cash compensation costs related to employee and director stock and stock option plans

v. Other adjustments including items such as product development costs, subcontracted monitoring fee savings, non-recurring gain,

and other similar adjustments

2017 2016 2015

Net loss (82.6) (45.1) (48.0)

Interest expense, net 53.6 45.4 38.3

Other expense, net 12.0 (5.1) -

Income tax expense 0.4 1.1 0.1

Restructuring and asset impairment (i)

- - -

Depreciation and amortization (ii)

30.0 33.2 37.7

Amortization of capitalized creation costs 46.9 27.4 19.4

Non-capitalized subscriber acquisition costs (iii)

43.3 36.0 34.9

Non-cash compensation (iv)

0.4 0.4 0.8

Other Adjustments (v)

11.4 9.5 6.5

Adjusted EBITDA $ 115.4 $ 102.8 $ 89.5

Three Months Ended March 31,

% of New Subscribers Service RPU Equipment Total RPU Service Margin Equipment

Blended

Margin /

Contribution SAC$ SACx

10% Smart Home $39.99 $0.00 $39.99 $24.99 N/A $24.99 $800 20.0x

Margin % 62.5% 62.5%

90% Smart Home + Video $49.99 $0.00 $49.99 $34.99 N/A $34.99 $750 15.0x

Margin % 70.0% 70.0%

Blended $48.99 $0.00 $48.99 $33.99 N/A $33.99 $755 15.5x

Margin % 69.4% 69.4%

Monthly Amount Billed to

Subscriber (Cash Received)

Margin per User during Initial

Contract Term

Subscriber

Acquisition Cost

Blended Total Retail Sale (1)

1,315$

Blended Service RPU 48.99$

Monthly Service Cost/Sub 15.00$

Initial Term (months) 60

Recurring and Other Revenue - P & L Monthly Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Monthly Service RPU 48.99$ 588$ 588$ 588$ 588$ 588$

Equipment Revenue 17.53$ 210$ 177$ 148$ 125$ 105$

Total Recurring and Other Revenue 66.52$ 798$ 765$ 736$ 713$ 693$

paid-in-full contract (for illustration purposes only)

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Assumptions Balance Sheet ViewIncome Statement View – Initial 5-years

(a)

(a)

(a)

(1) Includes all the equipment and installation paid for

at installation

Company receives cash for the full amount of the purchase of products and related installation

Revenue from the purchase of the products and related installation is deferred (reference item a)

Deferred revenues (equipment revenue) are amortized over 15 years using a 240% declining balance method, which converts to a

straight-line methodology after approximately nine years when the resulting amortization exceeds that from the accelerated method

NOTE: Actual results and accounting treatment may differ from the above Illustration

Payment from Customer is

netted against gross SAC

*

Assets

Time of

Installation

Cash $1,315

Total Assets $1,315

Liabilities

Deferred revenue (Current Liabilities) $210

Deferred revenue, net of current portion $1,105

Total Liabilities $1,315

* Monthly amounts shown are for year 1 only

% of New Subscribers Service RPU

Customer

Payment to

Citizens Total RPU

Service

Margin

Citizens

Contribution

Blended

Margin /

Contribution SAC SACx

10% Smart Home $39.99 $16.67 $56.66 $24.99 N/A $24.99 $800 20.0x

Margin % 62.5% 62.5%

90% Smart Home + Video $49.99 $22.50 $72.49 $34.99 N/A $34.99 $750 15.0x

Margin % 70.0% 48.3%

Blended $48.99 $21.92 $70.91 $33.99 N/A $33.99 $755 15.5x

Margin % 69.4% 69.4%

Monthly Amount Billed to

Subscriber (Cash Received)

Margin per User during Initial

Contract Term

Subscriber

Acquisition Cost

Assets

Time of

Installation

Cash $1,315

Total Assets $1,315

Liabilities

Deferred revenue (Current) $168

Accrued Expenses and other current liabilities $53

Deferred revenue, net of current portion $884

Other Long-term Obligations $210

Total Liabilities $1,315

Recurring and Other Revenue - P & L Monthly Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Monthly Service RPU 48.99$ 588$ 588$ 588$ 588$ 588$

Equipment Revenue 14.03$ 168$ 141$ 119$ 100$ 84$

Total Recurring and Other Revenue 63.02$ 756$ 729$ 707$ 688$ 672$

consumer financing: Citizens (for illustration purposes only)

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Assumptions Balance Sheet ViewIncome Statement View – Initial 5-years

(a)

(a)

(a)

(a)

Company receives cash from Citizens for the full amount of the customer’s purchase of products and related installation

Revenue from the purchase of the products and related installation, less the present value expected amount to be paid to Citizens for MDR

fees and loss share is deferred (reference item a)

Deferred revenues (equipment revenue) are amortized over 15 years using a 240% declining balance method, which converts to a straight-

line methodology after approximately nine years when the resulting amortization exceeds that from the accelerated method

NOTE: Actual results and accounting treatment may differ from the above Illustration

Payment from Citizens is

netted against gross SAC

Blended Total Retail Sale (1) 1,315$

Derivative (263)$

Blended Total Revenue - Deferred 1,052$

Blended Service RPU 48.99$

Monthly Service Cost/Sub 15.00$

Initial Term (months) 60

*

(1) Includes all the equipment and installation paid for

at installation ($21.92 x 60 months)* Monthly amounts shown are for year 1 only

Recurring and Other Revenue - P & L Monthly Yr 1 Yr 2 Yr 3 Yr 4 Yr 5

Monthly Service RPU $48.99 $588 $588 $588 $588 $588

RIC Revenue Components

Interest revenue $8.31 $100 $83 $65 $46 $24

Equipment Revenue $13.29 $160 $134 $113 $95 $79

Total RIC Revenue $21.60 $259 $217 $178 $140 $103

Total Recurring and Other Revenue $70.59 $847 $805 $766 $728 $691

retail installment contract (for illustration purposes only)

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Assumptions Balance Sheet ViewIncome Statement View – Initial 5-years

(1) Includes all the equipment and installation paid for

at installation ($21.92 x 60 months)

(a)

(a)

(b)

(b)

(b)

(a)

Company records a notes receivable from the customer for the purchase of products and related installation less the imputed interest

Revenue from the purchase of the products and related installation less the imputed interest is deferred (reference item a and b)

Deferred revenues (equipment revenue – refer to item b) are amortized over 15 years using a 240% declining balance method, which converts to a straight-line methodology after

approximately nine years when the resulting amortization exceeds that from the accelerated method

The imputed interest (interest revenue – refer to item a) are amortized over the initial term of the RIC

No Customer bad debt assumption in example

Loan discount amount is subject to market interest rates changes and the customer credit profile

NOTE: Actual results and accounting treatment may differ from the above Illustration

(a) (b)+

(1) RIC Contribution excludes SAC

*

* Monthly amounts shown are for year 1 only

Assets

Time of

Installation

Accts and notes rec, net (Current Assets) $163

Long-Term investments and other assets, net $834

Total Assets $997

Liabilities

Deferred revenue (Current Liabilities) $160

Deferred revenue, net of current portion $837

Total Liabilities $997

Blended Total Retail Sale (1) 1,315$

Loan Discount (318)$

Blended Total Revenue - Deferred 997$

Blended Service RPU 48.99$

Monthly Service Cost/Sub 15.00$

Initial Term (months) 60

Discount Rate (imputed interest) 10%

% of New Subscribers Service RPU RIC Total RPU Service Margin

RIC (1)

Contribution

Blended

Margin /

Contribution SAC$ SACx

10% Smart Home $39.99 $16.67 $56.66 $24.99 $16.67 $41.66 $1,800 31.8x

Margin % 62.5% 100.0% 73.5%

90% Smart Home + Video $49.99 $22.50 $72.49 $34.99 $22.50 $57.49 $2,100 29.0x

Margin % 70.0% 100.0% 79.3%

Blended $48.99 $21.92 $70.91 $33.99 $21.92 $55.91 $2,070 29.2x

Margin % 69.4% 100.0% 78.8%

Monthly Amount Billed to

Subscriber (Cash Received)

Margin per User during Initial

Contract Term

Subscriber

Acquisition Cost

certain definitions

Total Subscribers - The aggregate number of active smart home and security subscribers at the end of a given period.

Monthly Revenue per User ("RPU") - The recurring monthly revenue billed to a smart home and security subscriber.

Total RPU - The aggregate RPU billed to all smart home and security subscribers.

Average RPU ("ARPU") - The total RPU divided by total subscribers.

Average Revenue per New User ("ARPNU") - The aggregate RPU for new subscribers originated during a period divided by the number of new subscribers originated during

such period.

Attrition - The aggregate number of canceled smart home and security subscribers during a period divided by the monthly weighted average number of total smart home and

security subscribers for such period. Subscribers are considered canceled when they terminate in accordance with the terms of their contract, are terminated by us or if payment

from such subscribers is deemed uncollectible (when at least four monthly billings become past due). Sales of contracts to third parties, certain moves and takeovers are

excluded from the attrition calculation.

Net Subscriber Acquisition Costs - The direct and indirect costs to create a new smart home and security subscriber. These include commissions, equipment, installation,

marketing and other allocations (general and administrative and overhead); less activation fees, installation fees and upsell revenue. These costs exclude residuals and long-

term equity expenses associated with the direct-to-home sales channel.

Net Subscriber Acquisition Cost Multiple - The total net subscriber acquisition costs, divided by the number of new subscribers originated, and then divided by the ARPNU.

Net Service Cost per Subscriber- The total service costs for the period, including monitoring, customer service, field service and other allocations (general and administrative

and overhead) costs, less total service revenue for the period divided by total subscribers.

Net Service Margin - The ARPU for the period less net service costs divided by the ARPU for the period.

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