Altigen Communications Investor Presentation June 2019 ATGN Presented by: Jeremiah Fleming, President & CEO
Altigen Communications
Investor Presentation
June 2019
ATGNPresented by:
Jeremiah Fleming, President & CEO
Altigen Communications Overview
Confidential - Not for Distribution
Provider of Unified Communications as a Service (UCaaS) Solutions based on the Microsoft Platform
Engineering:27SG&A:
19
Support:9
Employee Distribution
Revenue Net Income Cash
$10.002
$1.148$3.080
FY18 Financials
CEO, 15%
Management, 12%
Employees, 6%
Private Investors, 67%
Stock Ownership
• Headquartered in Silicon Valley, California
• In Business for 20+ Years
• More than 2,500 Current Customers
Altigen Summary Financials
Category 1H19 2H18 1H18 2H17 1H17
Total Revenue 5,319 5,228 4,774 4,222 4,166
Cloud Revenue 3,004 2,645 2,356 1,827 1,379
Net Income 1,015 9,119 721 310 69
Adj. EBITDA* 1,169 1,071 754 405 151
Adj. EPS $0.05 $0.04 $0.03 $0.02 $0.01
Cash 4,721 3,080 4,243 3,876 3,830
Confidential - Not for Distribution
Net Operating Loss Carryforward:• Federal: $52.6M*• State: $22.7M*
Research & Development Tax Credits: • Federal: $1.1M*• State: :$700K
*expire at various dates through 2038
*Adjusted EBITDA is a non-GAAP measure that adds back non-cash expenses and one-time, non-recurring expenses
New Cloud Business Model Driving Growth
Confidential - Not for Distribution
The “Old” Altigen Revenue Model
• One-time, On Premises Sales
• Hardware-based Phone System
• Hardware Revenue > 90%
• No Recurring Revenue
• No Phone Service Revenue
The “New” Altigen Revenue Model
• Cloud & Monthly Recurring Revenue
• Software-based Phone System
• $0 Hardware Revenue
• 50%+ Cloud & 90% Total Recurring Revenue
• Includes Monthly Recurring Phone Service Revenue
On Premise => Cloud
Glossary of Terms
On Premises: Installed at a Customer Location
Cloud: Hosted in Altigen’s Datacenter
SIP Trunks: Internet-based Phone Service
PBX: Private Branch Exchange (Phone System)
Altigen’s Small to Medium Business (SMB) Cloud Model
Confidential - Not for Distribution
Unified Cloud Communications (UCC) Built on Altigen’s MaxCS Platform
Cloud Unified Communications Targeting the SMB Market
• Altigen MaxCS Deployed in the Cloud, Delivered as a Managed Service
• 3 Cloud Delivery Models Enables Altigen to Address the Large SMB Market
1) Hosted by ATGN
• Sold to End Customers by Altigen Reseller Partners
• Targeting New Customers and Altigen’s 1,750+ On Premises Customers
2) Hosted by Affiliated Technology Solutions
• Sold to Residential Services Companies (Pest Control, Lawn Care, HVAC, etc.)
• Targeting 3,000+ Residential Services Companies
3) Hosted by Fiserv
• Sold to Financial Services Organizations
• Targeting 13,500+ Community Banks and Credit Unions
MaxCS
IP PBX
MaxCS
MaxCS
& IVR
SIP Trunks
Altigen’s Mid-Size Enterprise (MSE) Cloud Model
Confidential - Not for Distribution
MaxACD
Applications
Phone System
SIP Trunks
Cloud Unified Communications Targeting the MSE Market
• Altigen Applications Deployed in the Cloud, Integrated with Microsoft
UC Solutions, Delivered as a Managed Service
1) Hosted Skype for Business
• Hosted and Managed by Altigen
• Sold by joint Altigen / Microsoft Reseller Partners
• Altigen Applications and SIP Trunk Services Add Value to Skype for Business
• Targeting Millions of Skype for Business Online and On Premises Users
2) Microsoft teams Phone System
• Teams Phone System Hosted by Microsoft and Managed by Altigen
• Sold by joint Altigen / Microsoft Reseller Partners
• Altigen Applications and SIP Trunk Services Add Value to Teams Phone System
• Targeting Millions of Office 365 / Teams Users
Unified Cloud Communications (UCC) Integrated with Microsoft’s UC Solutions
Increasing Revenues based on Cloud Growth
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FY15 FY16 FY17 FY18
FY15 – FY18
Cloud SA Software + Services Hardware
Confidential - Not for Distribution
Total Company Revenue by Category
Increasing Cloud Revenues Driving Company Growth
Cloud Subscriber Revenue by Category
Confidential - Not for Distribution
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Skype for Business / Teams
Hosted MaxCS
SIP
Cloud Metrics FY15 FY16 FY17 FY18
# of Customers 156 302 434 576
Avg Revenue per Customer $ 428 $480 $586 $683
# of Subscribers 5,810 8,333 13,828 18,799
Avg Revenue per Subscriber $ 17.06 $17.41 $19.32 $20.92
Total Cloud Revenue by Category
FY15 – FY18
Consistent Growth in:
• Cloud Customers
• Cloud Subscribers
• Avg Revenue per Customer
• Avg Revenue per Subscriber
Altigen Cloud Performance Metrics
Confidential - Not for Distribution
Gross Churn Rate
4.5%GCR = Revenue Churn /
(Beginning ARR + Ending ARR)/2
Lifetime Value
$3,905LTV = ARR x
(Cloud Gross Margin / GCR)
LTV to CAC Ratio
15.7
LTV / CAC
Peer Comparison
Company EV / LTM Sales Cloud Growth Rate
RingCentral 13.3x 33%
8x8 6.2x 18%
Five9 10.9x 27%
Average 10.1x 26%
Altigen 2.2x 28%
Based on FY18 Results
Altigen Business Strategy Summary
Confidential - Not for Distribution
Key Strategies:
• Continue Monetization of Altigen’s on Premises Customer Base (i.e., Cloud Conversion)
• Emphasis on Vertical Market Solution Providers for IP PBX New Customer Acquisition
• Focus on Microsoft Teams / Office 365 to Drive UCaaS Growth (Direct and Channel)
• Execute on our Capital Allocation Framework
Contact UsUnited States
670 N McCarthy BlvdMilpitas, CA 95035
+1 408.597.9000
United Kingdom
11-21 Paul StreetLondon, EC24 4JU
+44 (0) 1582 287613
www.altigen.com
Thank You!