Payments Update: Starbucks Q1 2016 Overview Growth Metrics Commentary 9% increase in comp store sales for the U.S. and 8% globally “We are delivering…record breaking results…despite…the accelerating shift in consumer behavior away from traditional bricks and mortar retailing...” –Howard Schultz, CEO STRONGEST holiday in history Quarterly revenue of $5.4 billion, a 12% increase Over 85 million customer transactions each week “Following China, we went to India where our business with JV partner Tata, already 80 stores strong, is growing faster on a percentage basis than any other region in the world.” –Howard Schultz, CEO “For the full calendar year, Starbucks is now the number eight brand in the liquid refreshment beverage category and ahead of established brands such as PowerAde and Sprite.” –Howard Schultz, CEO Loyalty/My Starbucks Rewards Growth Metrics Commentary 1 in 6 Americans received a Starbucks card this holiday “In Q1, we introduced social gifting to China... We are honored that the Chinese government chose Starbucks to be the first company in China to be authorized to offer customers a stored value card.” –Howard Schultz, CEO In Q1, $1.9 billion was loaded on Starbucks cards in the U.S. and Canada (+19%) Active MSR members in the U.S. reached 11.1 million (+23%) My Starbucks Rewards has grown by over 50% in the last two years Over 40% of transactions in China are on the Starbucks card “This holiday season…we leveraged our digital assets to reward our most loyal customers with five specialized Very Monday offers throughout the holiday season. Those offers, combined with the Starbucks for Life sweepstakes, this year open only to our MSR members, drove customer traffic and increased MSR loyalty membership.” –Howard Schultz, CEO “And we’ve got this robust roadmap for additional features over the course of the rest of this year, including the ability to earn -- to use your earned My Starbucks Rewards in the Mobile Order & Pay flow, the ability at favorite stores and favorite items and of course suggested and recommended selling...” –Adam Brotman, Chief Digital Officer “…we are confident on a pathway of significant new partnerships... we will be announcing in the coming quarters. And it will fulfill our vision to make stars everywhere...” –Matt Ryan, Global Chief Strategy Officer “The loyalty customer [base]…is growing significantly faster than our regular customer base. People using the mobile form of loyalty is growing even faster than that. And people using Mobile Order & Pay is growing even faster than that. So you actually see a cumulative benefit to the ecosystem at play.” –Matt Ryan, Global Chief Strategy Officer U.S. Headquarters Three Park Place, Suite 200 l Annapolis, Maryland 21401 P: 410.855.8500 l info@firstannapolis.com Payments Update: Starbucks Q1 2016 European Office 1 of 2 Keizersgracht 313-I l 1016 EE Amsterdam l The Netherlands P:+31 (0)20 530 0360 © 2016 First Annapolis Consulting, Inc. Payments Update: Starbucks Q1 2016 Mobile/Digital Growth Metrics & Initiatives Commentary Over 21% of total U.S. transactions are done with the mobile app “…we are leveraging proprietary technology, digital engagement and customer loyalty to create a comprehensive integrated digital and mobile ecosystem that will continue to drive our business well into the future.” –Howard Schultz, CEO Over 1 million customers in the U.S. used Mobile Order and Pay in December averaging five mobile orders each that month Over 6 million Mobile Order and Pay transactions per month “…when we roll out Mobile Order & Pay and mobile payment in China, the adoption that we believe we are going to have in China is going to be more significant and quicker than it has been in the U.S., …it’s going to be a runaway success.” –Howard Schultz, CEO Mobile Order and Pay has exceeded 10% of total transactions within select stores Digital expansion focus has four key pillars: Delivery, Personalized Offerings, Global Deployment, and Digital Media (e.g. Spotify, NYT) “…we are constantly at work adding new features, both in the U.S. and around the globe, on both our iOS and Android platform.” –Adam Brotman, Chief Digital Officer Over 7,500 company-operated Starbucks stores in the U.S. are integrated with Spotify through the Starbucks app “Technology innovation is further strengthening our brand, improving our efficiency and in-store execution, increasing our profitability and, most importantly, enabling us to deliver an elevated Starbucks experience to our customers, particularly to Millennials.” –Howard Schultz, CEO Delivery in collaboration with Postmates rolled out in Seattle Apple Pay began pilot programs with Starbucks in 2015 with broader roll-out and rewards integration planned in 2016 Founded in 1991, First Annapolis is a specialized advisory firm focused on electronic payments. Our market coverage is international in scope with a primary focus on North America, Latin America, and Europe. First Annapolis is headquartered in the Baltimore / Washington, D.C. corridor and Europe is served through our office in Amsterdam. In total, we have over 70 professionals across our practice areas giving us one of the largest and strongest advisory teams focused exclusively on electronic payments. Practice Areas Services Credit Card Issuing Payments Strategy & Innovation Merchant Acquiring Retailer Services Mobile / Alternative Payments Commercial Payments Management Consulting Partnership Finance Strategic Sourcing Portfolio Management Strategy Development / Implementation Rewards Program Support M&A Advisory Services End-to-End Transaction Support Valuations Fairness Opinions Diligence / Negotiation Support Source: Starbucks company filings, investor calls, earnings transcript, and First Annapolis Consulting research and analysis. For more information, please contact: John Grund, Partner, john.grund@firstannapolis.com or Aaron Mercurio, Senior Consultant, aaron.mercurio@firstannapolis.com U.S. Headquarters Three Park Place, Suite 200 l Annapolis, Maryland 21401 P: 410.855.8500 l info@firstannapolis.com Payments Update: Starbucks Q1 2016 European Office 2 of 2 Keizersgracht 313-I l 1016 EE Amsterdam l The Netherlands P:+31 (0)20 530 0360 © 2016 First Annapolis Consulting, Inc.