Investor Presentation ATGN Jeremiah Fleming, President & CEO - - PowerPoint PPT Presentation

Investor Presentation

ATGN

Jeremiah Fleming, President & CEO Carolyn David, Vice President, Finance

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

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

• Adj. EBITDA*

1,169 1,071 754 405 151 Net Income 1,015 9,119 721 310 69 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

Historical Business Model

Confidential - Not for Distribution

Proprietary, Hardware-based, On Premises PBX Systems

AltiGen AltiServ PBX System

• Based on Proprietary Hardware
• Use 3rd Party PSTN Phone Service
• Altigen Software PBX at the Core

Public Switched Telephone Network

AltiGen Revenue Model

• One-time, On Premises Sales
• No Software Maintenance
• Hardware Revenue > 90%

Telephone Extension Board PSTN Access Boards VoIP Processing Board Computer Telephony Server AltiGen IP Phones

Altigen Cloud

The New Altigen Business Model

Confidential - Not for Distribution

All Software, Cloud Communications Solutions

Altigen All Software IP PBX

New Altigen Revenue Model

• MaxCS: Conversion to Monthly Recurring Revenue
• Skype: New Monthly Recurring Revenue Stream
• Plus Monthly Recurring SIP Revenue
• No Hardware Revenue
• 50%+ Cloud Recurring Revenue
• 90%+ Total Recurring Revenue

Industry Standard IP Phones SIP Trunks Internet-based Phone Service Altigen Value Add Applications

The New Altigen Business Model

Confidential - Not for Distribution

Extensible Cloud Communications Application Suite

Common Platform built on Altigen Applications

1) MaxCS IP PBX

• Target the SMB Market (10 to 100 employees)
• Hosted by ATGN & our Cloud Partners

2) Altigen Value Add Solutions for Microsoft

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

Inte ntegrated Co Conta ntact Cen Center Valu alue Add dd Appl pplic icatio ions SI SIP Tru runks MaxC axCS IP PBX MaxC axCS MaxC axCS & IVR CTI CTI Serv Server

Phone System

1) The IP PBX Market Opportunity

Solution Provider Current Cloud Customers Target Audience / Untapped Opportunity

Altigen MaxCS IP PBX 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

Confidential - Not for Distribution

Leveraging a Captive Audience - Current Customers

Confidential - Not for Distribution

2) The Office 365 / Teams Market Opportunity

Leveraging Microsoft’ Office 365 – Net New Customers

UCaaS Competitive Landscape

Landscape Summary

• Global Software/Telecom Companies
• No Specific Vertical Market Focus
• All View Microsoft as their Primary Competitor

Altigen Opportunity

• ATGN Views Microsoft as the Beachhead Opportunity
• Target the Large Office 365 / Teams Customer Base
• Deliver Unique Value Add Solutions for O365 / Teams

Confidential - Not for Distribution

New Business Model Driving 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

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!