Altigen Communications Investor Presentation Presented by: - - PowerPoint PPT Presentation

Altigen Communications Investor Presentation

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

Summary Financials

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

Category 9M FY19 FY18 FY17 FY16 FY15

Revenues $7,970 $10,002 $8,388 $8,431 $9,800 Cost of Revenues $1,455 $1,645 $1,270 $1,451 $1,928 Gross Margin 82% 84% 85% 83% 80% Operating Expenses $4,921 $7,208 $6,729 $7,812 $7,218 EBITDA $1,792 $1,822 $545 $55 $1,325 Net Income $1,627 $9,840 $379 $(835) $644 Net Cash $4,614 $3,080 $3,876 $4,490 $4,560

Cloud PBX Business Model Driving Current Growth

Confidential - Not for Distribution

The “Old” Altigen Revenue Model

• One-time, On Premises Sales
• All Software PBX at the Core, but
• Hardware Revenue > 90%
• No Recurring Revenue
• Phone Service Not Included

The “New” Altigen Revenue Model

• Cloud & Monthly Recurring Revenue
• Complete, All Software Solution
• $0 Hardware Revenue
• 50%+ Cloud / 90% Total Recurring Revenue
• Plus Monthly Recurring SIP Revenue

On Premise => Cloud Glossary of Terms

On Premise: Installed at a Customer Location Cloud: Hosted in Altigen’s Datacenter SIP Trunks: Internet-based Phone Service PBX: Private Branch Exchange (Phone System) Contact Center: Designated group of people whose job is to take Inbound Customer Calls

Altigen’s Cloud Business Strategy – Phase 1

Confidential - Not for Distribution

Migrate On Premises PBX to the Cloud

MaxCS IP PBX – Targeting SMB Market (10 to 100 employees)

• 3 Unique Delivery Models:
• Hosted by ATGN
• Hosted by ATS: $18M Managed Services Provider
• Hosted by Fiserv: $18B Financial Services Technology Provider

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

SIP Trunks

Leveraging a Captive Audience - Current Customers

Provider Current Cloud Customers Target Audience / Untapped Opportunity

280+ Customers 9,000+ Subscribers 1,750+ Customers 80,000+ total users 250+ Customers 7,200+ Subscribers 3,000 Customers using Integrated CRM 50,000 total users 20+ PBX Customers 1,700+ PBX Subscribers 2,500+ IVR Customers 13,000 Customers using Fiserv Core 500,000+ total users

Microsoft Teams Market Opportunity Overview

Teams Market Opportunity

• Fastest Growing App in MSFT History
• Included in all O365 Enterprise Plans
• 155M+ Commercial O365 Users
• 80M+ SfB Online Users => Teams
• Teams Phone System is the only Solution

that Integrates with Office 365

• Superior Price Points vs All Competition
• Large Global Microsoft Partner Channel

Confidential - Not for Distribution

UCaaS Competitive Landscape

Altigen Opportunity

• Microsoft is the leading UCaaS Provider
• Teams Phone System is the Beachhead
• Altigen Solutions Address “Completeness of Vision”
• Target Microsoft O365 Customers and Partners
• Leverage Altigen Microsoft Communications Expertise
• Add Critical Enterprise Communications Capabilities to

Teams Phone System

• Enable Organizations to Replace their PBX Systems
• Deployment and Support Services Facilitate Customer

and Partner Migration to Teams Phone System

Confidential - Not for Distribution Confidential - Not for Distribution

Altigen’s Cloud Business Strategy – Phase 2

Confidential - Not for Distribution

Integrate Altigen Applications with Microsoft UC

Altigen Contact Center Solutions and SIP Trunk Service

• Target the MSE Market (100 to 1,000 employees)
• Hosted by Altigen, Integrated with Microsoft

Platform Current Cloud Customers Target Audience / Untapped Opportunity

20+ Customers 2,000+ Subscribers ~2,500 On Premises Skype for Business Customers ~125,000+ total users 10+ Customers 1,000+ Subscribers ~10,000 Teams Customers (and growing) ~500,000 total users

Leveraging Microsoft - New Customer Acquisitions

Max axCS Appli licat ations

SIP Trunks

Confidential - Not for Distribution

Altigen’s Cloud Business Strategy – Phase 3

Enhancing Microsoft Teams – High Growth Opportunity

Cloud Business Model Revenue 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

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

Historical 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 to Differentiate Altigen Solutions
• Focus on Microsoft Teams (Office 365) to Drive UCaaS Growth (Direct and Channel)
• Target Global Service Providers with New Teams Solutions
• 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!