Potential Risks and Other Considerations

Potential Risks
 Government intervention in international markets
 Dominant ecosystem owners (Apple, Google) may steal market share
 Cancer concerns with RF radiation emitted from smart home devices
 Company may not survive industry consolidation if hub sales is the only near-term cash flow source

Other Considerations
 Monetization of consumer behavioral data is a potential game changer
– High margin business line
– $36M revenue per year currently, possible to ramp up to $600M+ with global penetration
 Dominant ecosystem owners (Apple, Google) may steal market share
 Samsung’s existing smart appliance line provides an instant market share boost to SmartThings hub

WBS11111-Prez-Date
Client
logo
Client logo
1
 Appendix I

 Highlighted Item

CAGR 2014 2017 2019

US Global ex-US Total US Global ex-US Total US Global ex-US Total
0.72% Households 117,538,000 2,215,795,333 2,333,333,333 120,095,144 7,186,680,318 7,306,775,462 121,830,740 7,273,316,201 7,395,146,941
52% Penetration 6.5% 1.0% 23.0% 1.0% 50.0% 1.1%
# of hubs out 7,639,970 22,157,953 29,797,923 27,621,883.16 71,866,803.18 99,488,686 60,915,369.99 80,006,478.21 140,921,848
Market share 12% 3% 20% 5% 20% 6%
ST hubs out now 916,796.40 664,739 1,581,535 5,524,377 3,593,340 9,117,717 12,183,074 4,800,389 16,983,463

Per user data sales $ $ 40.00 $ 25.00 $ 40.00 $ 25.00 $ 40.00 $ 25.00
Annual data sales revenue $ 36,671,856 $ 16,618,465 $ 53,290,321 $ 220,975,065 $ 89,833,504 $ 310,808,569 $ 487,322,960 $ 120,009,717 $ 607,332,677

$/user per yr
Twitter $ 0.42
Nest $ 40.00

Sources: Berg Insights, BSRIA, Strategy Analytics

WBS11111-Prez-Date
Client
logo
Client logo
2