Altigen Communications Investor Presentation June 2019 ATGN Presented by: Jeremiah Fleming, President & CEO
Altigen Communications Overview Provider of Unified Communications as a Service (UCaaS) Solutions based on the Microsoft Platform • Headquartered in Silicon Valley, California • In Business for 20+ Years • More than 2,500 Current Customers FY18 Financials Employee Distribution Stock Ownership CEO, Support: $10.002 15% 9 Management, 12% Engineering: Employees, Private Investors, SG&A: 27 $3.080 67% 6% 19 $1.148 Revenue Net Income Cash Confidential - Not for Distribution
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 *Adjusted EBITDA is a non-GAAP measure that adds back non-cash expenses and one-time, non-recurring expenses Net Operating Loss Carryforward: Research & Development Tax Credits: • Federal: $52.6M* • Federal: $1.1M* • State: $22.7M* • State: :$700K *expire at various dates through 2038 Confidential - Not for Distribution
New Cloud Business Model Driving Growth On Premise => Cloud The “Old” Altigen Revenue Model The “New” Altigen Revenue Model • One-time, On Premises Sales • Cloud & Monthly Recurring Revenue • Hardware-based Phone System • Software-based Phone System Glossary of Terms • Hardware Revenue > 90% • $0 Hardware Revenue On Premises: Installed at a Customer Location • No Recurring Revenue • 50%+ Cloud & 90% Total Recurring Revenue Cloud : Hosted in Altigen’s Datacenter • No Phone Service Revenue • Includes Monthly Recurring Phone Service Revenue SIP Trunks: Internet-based Phone Service PBX: Private Branch Exchange (Phone System) Confidential - Not for Distribution
Altigen’s Small to Medium Business (SMB) Cloud Model 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 Max axCS CS • Sold to End Customers by Altigen Reseller Partners • Targeting New Customers and Altigen’s 1,750+ On Premises Customers Max axCS CS SIP Trunks IP PBX 2) Hosted by Affiliated Technology Solutions • Sold to Residential Services Companies (Pest Control, Lawn Care, HVAC, etc.) • Targeting 3,000+ Residential Services Companies Max axCS CS & & IVR 3) Hosted by Fiserv • Sold to Financial Services Organizations • Targeting 13,500+ Community Banks and Credit Unions Confidential - Not for Distribution
Altigen’s Mid -Size Enterprise (MSE) Cloud Model Unified Cloud Communications (UCC) Integrated with Microsoft’s UC Solutions 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 Max axACD • Altigen Applications and SIP Trunk Services Add Value to Skype for Business SIP Trunks Applicat ations • 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 Phone System • 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 Confidential - Not for Distribution
Increasing Revenues based on Cloud Growth Total Company Revenue by Category FY15 – FY18 10000 9000 8000 7000 6000 5000 Increasing Cloud Revenues Driving Company Growth 4000 3000 2000 1000 0 FY15 FY16 FY17 FY18 Cloud SA Software + Services Hardware Confidential - Not for Distribution
Cloud Subscriber Revenue by Category Total Cloud Revenue by Category FY15 – FY18 6000 Skype for Business / Teams 5000 Hosted MaxCS Consistent Growth in: SIP 4000 • Cloud Customers 3000 • Cloud Subscribers 2000 • Avg Revenue per Customer • Avg Revenue per Subscriber 1000 0 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 Confidential - Not for Distribution
Altigen Cloud Performance Metrics Based on FY18 Results Gross Churn Rate Lifetime Value LTV to CAC Ratio 4.5% $3,905 15.7 GCR = Revenue Churn / LTV = ARR x LTV / CAC (Beginning ARR + Ending ARR)/2 (Cloud Gross Margin / GCR) 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% Confidential - Not for Distribution
Altigen Business Strategy Summary 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 Confidential - Not for Distribution
Thank You! Contact Us United States United Kingdom 670 N McCarthy Blvd 11-21 Paul Street Milpitas, CA 95035 London, EC24 4JU +1 408.597.9000 +44 (0) 1582 287613 www.altigen.com IR@altigen.com
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