Digerati Technologies' "Only in the Cloud™" trademark encapsulates the Company's commitment to providing cutting-edge Unified Communications as a Service (UCaaS) solutions. UCaaS refers to a cloud-based platform that unifies various communication channels, such as voice, video, messaging, and conferencing, into a single, integrated service delivered over the Internet. By leveraging the power of the cloud, Digerati enables small to medium-sized businesses (SMBs) to access enterprise-grade communication tools without the need for significant upfront investments in hardware or infrastructure.

The Company's UCaaS offerings, delivered through its operating subsidiary, Verve Cloud, provide SMBs with a comprehensive suite of services designed to streamline and enhance their communication capabilities. These services include cloud PBX (Private Branch Exchange), which replaces traditional telephone systems with a cloud-based solution; cloud telephony, enabling voice communication over the internet; cloud WAN (Wide Area Network), connecting geographically dispersed offices; cloud call center, providing advanced features for customer service and support; and cloud mobile, allowing seamless communication across devices.

By delivering these services "Only in the Cloud™," Digerati empowers SMBs to focus on their core business activities while benefiting from reliable, flexible, and scalable communication solutions. The cloud-based nature of these services allows businesses to quickly adapt to changing needs, scale their communication infrastructure as they grow, and access advanced features without the complexity and costs associated with traditional on-premises systems. Digerati's UCaaS solutions are designed to provide SMBs with the tools they need to enhance collaboration, improve productivity, and deliver exceptional customer experiences, all while reducing costs and simplifying their communication technology stack.

Source: Company Documents

Digerati Technologies serves a diverse client base spanning various industries and geographical regions, primarily focusing on the small to medium-sized business (SMB) market. The Company's customer portfolio includes businesses from sectors such as healthcare, banking, financial services, legal, and municipalities, among others. This diverse client base shows Digerati's ability to provide for the unique communication needs of a wide range of industries, each with its specific requirements and challenges.

Geographically, Digerati has established a strong presence in Texas, Florida, and California, three of the largest states by nominal GDP in the United States. These states are home to a significant number of SMBs, providing Digerati with a substantial market opportunity. As of July 31, 2023, the Company served nearly 50,000 business users across these regions, demonstrating its success in penetrating these key markets. By focusing on these economically robust states, Digerati is well-positioned to capitalize on the growing demand for cloud communication solutions among SMBs.

Digerati's diverse client base offers several advantages. First, it allows the Company to mitigate the risk associated with relying on a single industry or region, as the impact of any sector-specific or localized economic challenges is minimized. Second, serving a broad range of industries enables Digerati to continuously refine and enhance its UCaaS solutions to meet the evolving needs of different business types, ultimately improving the value proposition for all customers. Third, the Company's strong presence in Texas, Florida, and California provides a solid foundation for future expansion into other regions, as Digerati can leverage its experience and success in serving diverse clients to replicate its growth in new markets.

Source: Company Documents

Digerati Technologies' growth strategy heavily relies on mergers and acquisitions (M&A) to expand its market presence, enhance its product offerings, and acquire new customers in the highly fragmented UCaaS industry. The Company has developed a disciplined approach to identifying, evaluating, and acquiring synergistic businesses that complement its existing operations and align with its long-term objectives.

The strategy focuses on acquiring local and regional UCaaS providers with a solid customer base, recurring revenue stream, and high growth potential. Digerati can effectively consolidate the market by targeting these smaller players, gaining economies of scale, and enhancing its competitive position. Digerati's robust integration platform enables the seamless consolidation of acquired businesses, allowing the Company to realize synergies and drive value creation quickly. Once acquired, Digerati can leverage new acquisitions by rebranding them under its unified brand of Verve Cloud.

In addition to expanding its market share and customer base, Digerati's M&A strategy also aims to enhance its product portfolio and technological capabilities. By acquiring companies with complementary offerings or innovative technologies, Digerati can strengthen its UCaaS solutions, expand its addressable market, and better serve the evolving needs of its customers. Furthermore, strategic acquisitions allow the Company to acquire talented personnel with domain expertise, enhancing its human capital and driving innovation.

Digerati's disciplined approach to M&A is supported by its experienced management team, which has a proven track record of successfully executing and integrating acquisitions. Digerati is well-positioned to continue its growth through strategic acquisitions in the UCaaS market by leveraging its integration platform, financial partnerships, and management expertise.

Source: Company Documents

Digerati Technologies has a proven track record of successfully executing and integrating accretive acquisitions to drive growth and expand its market presence. Since 2017, the Company has completed several notable acquisitions that have significantly enhanced its revenue, customer base, and capabilities in the UCaaS market.

In 2017, Digerati acquired Synergy Telecom, adding $0.7 million in annual revenue. The following year, the Company completed the acquisition of T3 Communications, Inc., increasing its annualized revenue to $6.0 million. In November 2020, Digerati secured a $20 million credit facility with Post Road Group and acquired Nexogy, Inc., and ActivePBX. The two acquisitions increased the Company’s annual revenue to over $14.0 million. In January 2022, the Company acquired SkyNet Telecom, adding $3.4 million in annual revenue.

Transaction Rationale

• Acquisitions provide an increase in revenue and EBITDA contribution via a contracted customer base with recurring revenue stream.

• Provides access to greater pool of small and medium-sized business customers in various industries.

• Combined with T3 Communications, resulted in over 400 channel partners as conduit for sales growth.

Source: Company Reports

Digerati's acquisition momentum continued in 2022 with the purchase of NextLevel Internet, a California-based provider of cloud-based UC&C, Contact Center, and Managed Connectivity services. This acquisition added over $13.0 million in annual revenue, increasing Digerati's annualized consolidated revenue to $31.5 million. The NextLevel Internet acquisition also brought 1,000 new business customers and 12,000 total users to Digerati's platform.

These acquisitions have increased Digerati's revenue and customer base, expanded its service and support capabilities in high-growth markets, enhanced its product offerings, and provided access to a larger pool of small to medium-sized business customers across various industries. With a history of successful integration and value creation, Digerati is well-positioned to continue its growth through strategic acquisitions in the fragmented UCaaS market.

Source: Company Reports

Digerati Technologies offers a comprehensive suite of UCaaS solutions designed to meet the communication needs of small to medium-sized businesses across various industries. The Company's "Only in the Cloud™" portfolio, delivered through its operating subsidiary Verve Cloud, includes a range of products and services that enable seamless, flexible, and reliable communication and collaboration.

At the core of Digerati's offerings is its robust UCaaS application, which supports complete cloud communication capabilities and cloud telephony applications. UCaaS includes features such as voice, visual, and mobile communications, SMS and messaging, videoconferencing, audioconferencing, voicemail to email/text, mobility, and call recording. The platform also integrates with various CRM systems and popular productivity tools like Microsoft Teams, ensuring a seamless user experience.

In addition to its UCaaS solutions, Digerati provides Contact Center as a Service (CCaaS) offerings, enabling businesses to manage customer interactions efficiently and effectively. The Company's CCaaS platform includes features such as call routing, queuing, monitoring, and reporting, enabling businesses to deliver exceptional customer service.

Digerati also offers a range of connectivity solutions which include fiber and wireless services, 4G and 5G connectivity, and SD-WAN (Software-Defined Wide Area Network) technology. These solutions ensure that businesses have access to reliable, high-speed internet connectivity, which is essential for the optimal performance of cloud-based applications.

The Company's products and services are designed to serve the specific needs of various industry verticals, such as healthcare, banking, financial services, legal, and municipalities. By providing tailored solutions and a high-touch customer experience, Digerati enables businesses to streamline their communication infrastructure, improve collaboration, and enhance productivity.

As Digerati continues to innovate and expand its offerings, the Company remains committed to delivering cutting-edge, reliable, and user-friendly UCaaS solutions that help businesses thrive in an increasingly digital world.

Source: Company Documents

Digerati Technologies operates in the rapidly growing UCaaS market, which presents significant opportunities for the Company to expand its customer base and market share. The global UCaaS market is expected to reach $210.07 billion by 2028, growing at a CAGR of 23.6% from 2021 to 2028. This growth is primarily driven by businesses' increasing adoption of cloud-based communicaation services as they seek to leverage the cost-effectiveness and innovative features offered by UCaaS solutions compared to legacy systems.

The SMB segment, Digerati's primary target market, represents a substantial portion of the overall market opportunity. In the United States alone, there are over 32.5 million small and medium-sized businesses, accounting for 99% of all companies in the country. Notably, the states where Digerati has a strong presence – California, Texas, and Florida – are home to many SMBs. California has 4.1 million SMBs, employing 7.2 million workers (48.5% of the state's workforce), while Texas and Florida combined have 6.1 million SMBs.

The UCaaS market is highly fragmented, with numerous local and regional providers competing for market share. Digerati has the opportunity to differentiate itself with a comprehensive, high-quality, and customer-centric UCaaS solution. The Company's "Only in the Cloud™" approach, combined with its focus on providing a high-touch, localized service, positions it well to capture market share in this competitive landscape.

Furthermore, the COVID-19 pandemic accelerated the adoption of remote work and digital transformation initiatives, driving demand for reliable and flexible cloud-based communication solutions. As businesses continue to adapt to the new normal and embrace hybrid work models, the demand for UCaaS solutions is expected to remain strong, providing a tailwind for Digerati's growth.

In addition to the UCaaS market, Digerati also has the opportunity to tap into the growing Contact Center as a Service (CCaaS) market, which is projected to reach $149.58 billion by 2030, expanding at a CAGR of 21.8% from 2020 to 2030. As businesses increasingly prioritize customer experience and seek to optimize their customer service operations, the demand for cloud-based contact center solutions is expected to rise, presenting another avenue for Digerati's growth.

Source: Company Documents

Digerati Technologies operates in a competitive landscape, with several notable players in the UCaaS market. These competitors include well-established companies such as RingCentral, Ooma, Nextiva, Lantronix, 8x8 Inc., CSP, Crexendo, and ClearOne, as identified in the Company's investor presentation.

RingCentral, one of the larger competitors, offers a comprehensive suite of UCaaS solutions and has a strong presence in the enterprise market. Ooma and Nextiva are also significant players that provide cloud-based communication solutions to businesses of various sizes. Lantronix, 8x8 Inc., CSP, Crexendo, and ClearOne offer similar UCaaS products and services, targeting different market segments.

Despite the presence of these competitors, Digerati Technologies has several competitive advantages that position the Company for success in the UCaaS market:

• Digerati's focus on serving the SMB segment allows it to tailor its solutions and customer support to the unique needs of this market, which larger, enterprise-focused competitors often underserve. The Company's high-touch, localized approach to customer service sets it apart from national providers focused on the Fortune 500/1000 segment of the market.

• Digerati's comprehensive "Only in the Cloud™" portfolio, which includes UCaaS, CCaaS, and connectivity solutions, enables the Company to offer a one-stop-shop for SMBs seeking to streamline their communication infrastructure. This integrated approach can be more attractive to SMBs than working with multiple providers for different communication needs.

• Digerati's strategic acquisitions have allowed the Company to expand its market presence, enhance its product offerings, and gain a competitive edge in critical markets such as Texas, Florida, and California. By acquiring local and regional UCaaS providers, Digerati can quickly scale its operations, gain new customers, and leverage the expertise of the acquired companies to improve its solutions and service delivery.

Furthermore, Digerati's commitment to innovation and staying ahead of industry trends position the Company to capitalize on emerging opportunities in the UCaaS market. As the market evolves and businesses increasingly demand cloud-native, integrated, and collaborative communication solutions, Digerati is well-positioned to adapt its offerings and maintain its competitive edge.

While the UCaaS market is highly competitive, Digerati's focus on the SMB segment, comprehensive product portfolio, acquisition strategy, and customer-centric approach differentiate the Company from its competitors and provide a solid foundation for continued growth and success.

Digerati Technologies has demonstrated strong financial performance and growth in recent years, driven by its organic growth initiatives and successful acquisition strategy. The Company's financial highlights underscore its ability to scale its operations, expand its market presence, and improve its profitability.

• Revenue Growth: Digerati has grown significantly over the past few years. The Company's annual revenue increased from $2.0 million in the fiscal year 2018 to $31.6 million in the 12 months ended July 31, 2023, representing a compound annual growth rate (CAGR) of approximately 74% over the five-year period. This impressive growth can be attributed primarily to strategic acquisitions, which have expanded Digerati's customer base and market reach.

• Organic Growth: Digerati has consistently delivered strong organic growth, with a 31% year-over-year revenue increase from fiscal year 2022 to 2023. The Company's focus on enhancing its product portfolio, improving its UCaaS solutions, and implementing a total support model has been key to this organic growth. Digerati continues to target a range of 5% to 10% year-over-year organic revenue growth, leveraging its strong market position and customer-centric approach.

Source: Company Documents

• Acquisition-Driven Growth: Digerati's acquisition strategy has been a significant contributor to its revenue growth and market expansion. The Company has completed several successful acquisitions, including Synergy Telecom, T3 Communications, NextLevel Internet, Skynet Telecom, Nexogy, and ActivePBX, collectively adding over $30 million in annual revenue. These acquisitions have not only increased Digerati's revenue but have also provided access to new markets, customers, and technologies, enhancing the Company's competitive position in the UCaaS industry.

• Profitability: As Digerati continues to scale its operations and realize synergies from its acquisitions, the Company has demonstrated improvements in its profitability. Digerati's operating subsidiary, Verve Cloud, Inc. (f/k/a T3 Communications, Inc.), generated adjusted OPC EBITDA of $4.6 million in the 12 months ended July 31, 2023, up from $3.6 million in the previous fiscal year. The Company's focus on operational efficiency and cost optimization has contributed to this improvement in profitability.

• Strong Balance Sheet: Digerati has maintained a strong balance sheet, with $50 million in enterprise value as of July 31, 2023. The Company's solid financial position, coupled with its access to capital through its financial partners, provides the necessary resources to support its growth initiatives and pursue further strategic acquisitions.

• Recurring Revenue: Digerati's business model is characterized by high-margin recurring revenue from multi-year contracts with business customers. The Company's average contract term is 24 months, with a monthly average revenue per user (ARPU) of $614. This recurring revenue model provides a stable and predictable income stream, enabling Digerati to invest in growth and innovation.

Digerati's strong financial performance, consistent revenue growth, improving profitability, and solid balance sheet position the Company for continued success in the UCaaS market. As Digerati executes its growth strategy and capitalizes on the expanding market opportunity, the Company is well-positioned to create long-term value for its shareholders.

Source: Company Documents

Digerati Technologies boasts a highly experienced and talented management team with a proven track record of success in the telecommunications and technology industries. The team's combined expertise, strategic vision, and leadership skills have been instrumental in driving the Company's growth, executing its acquisition strategy, and positioning it for long-term success in the UCaaS market.

• Craig K. Clement is the Executive Chairman and Interim CEO of Digerati Technologies. Clement has over 25 years of experience in the telecommunications and technology industries, having previously served as the Chief Operating Officer of XPEL, Inc. (Nasdaq: XPEL), a company with a market capitalization of $2.3 billion as of August 21, 2023. Clement's extensive experience in operations, management, and public company leadership brings valuable expertise to Digerati’s executive team and Board of Directors.

• Derek M. Gietzen is the President of Verve Cloud, Inc., the operating subsidiary of Digerati Technologies, and has over 20 years of experience in the telecommunications and technology industries. Gietzen was the President of Digerati’s most recent acquisition, NextLevel Internet, and is now playing a vital role in integrating Digerati’s acquisitions and contributing to Digerati's expansion and market penetration. His leadership skills and industry knowledge have driven the Company's operational excellence and customer-centric approach.

• Antonio Estrada serves as the Chief Financial Officer of Digerati Technologies, bringing over 25 years of experience in the telecommunications, technology, financial, and accounting sectors. Estrada has over 17 years of experience as a CFO in public companies, providing strong financial acumen and strategic planning skills to the management team. His financial management, reporting, and analysis expertise has been crucial in supporting Digerati's growth and acquisition initiatives.

• Arthur L. Smith, the founder and Director of Digerati Technologies, has over 31 years of experience in the telecommunications and technology sectors. He has a successful track record of founding and leading companies, having previously co-founded and served as the Chairman of Globalscape, Inc. (NYSE: GSB). Under his leadership, Digerati has executed 14 successful acquisitions in the telecommunications industry, demonstrating his ability to identify and capitalize on strategic growth opportunities. Mr. Smith is currently on a medical leave of absence from his role as CEO of Digerati Technologies, Inc.

The management team's collective experience, on average more than 25 years, and proven track record of success have been critical factors in Digerati's achievements. Their ability to execute strategic initiatives, integrate acquisitions, and drive organic growth has positioned the Company as a leading provider of UCaaS solutions in the SMB market. As Digerati continues to execute its growth strategy and capitalize on the expanding market opportunity, the management team's expertise and leadership will remain crucial in guiding the Company toward long-term success and shareholder value creation.

Source: Company Documents

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Information, opinions, and estimates contained on this page or in the Company Presentation reflect judgments by the Company as of the original date of publication by the Company and are subject to change without notice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied is made regarding future performance.

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