Altigen Communications Investor Presentation June 2019 ATGN - - PowerPoint PPT Presentation

Altigen Communications Investor Presentation

June 2019

ATGN

Presented 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: 27 SG&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

Max axCS CS IP PBX Max axCS CS Max axCS CS & & IVR

SIP Trunks

Altigen’s Mid-Size Enterprise (MSE) Cloud Model

Confidential - Not for Distribution Max axACD Applicat ations

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

1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 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

1000 2000 3000 4000 5000 6000

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 $3,905

LTV = 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 Us

United States 670 N McCarthy Blvd Milpitas, CA 95035 +1 408.597.9000 United Kingdom 11-21 Paul Street London, EC24 4JU +44 (0) 1582 287613 www.altigen.com IR@altigen.com

Thank You!