Q4 2018 and Capital Markets Update 5 March 2019 | Aalborg, Denmark
Agenda Lunch 1200-1230 Building a gaming and enthusiast brand Strategic development, André Sloth Eriksen, CEO 1230-1300 Driven by the end-user experience The renamed Gaming and Enthusiast business segment, John Hamill, COO 1300-1330 Maintaining position in the data center market Data center segment , John Hamill, COO and André Sloth Eriksen, CEO 1340-1400 Solid financial platform for long-term growth Financial development and outlook, Peter Madsen, CFO 1400-1430 Sum-up and Q&A 2 Q4 2018 and CMU
Building a gaming and enthusiast brand Strategic development André Sloth Eriksen, CEO 3 Q4 2018 and CMU
Introducing our new branding strategy 4 Q4 2018 and CMU
Our new identity represents us in the world 5 Q4 2018 and CMU
Building a gaming and enthusiast brand Currently Going forward • We will put our brand forward without compromising our customers’ brand Asetek’s OEM • Dual-branding and brand-behind-the-brand strategies customers’ brands available are promoted while the Asetek brand • Introducing new and high-end products to live the brand and have become more go back to our roots anonymous • In-house PC-enthusiasts and branding experts hired • Largest ever marketing department • Establishing eSports Academy… 6 Q4 2018 and CMU
7 Q4 2018 and CMU
The adoption of our liquid cooling solutions Asetek liquid cooling units shipped Cumulative total number of units 6 million 3 million 1 million Q1 2007 Q2 2012 Q1 2016 Q4 2018 8 Q4 2018 and CMU
We deliver the best performance, quality and reliability 9 Q4 2018 and CMU
Market leadership generating revenue growth Asetek last 12 months revenue on a quarterly basis USD thousands 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q4 2018 Data center Gaming and Enthusiast 10 Q4 2018 and CMU
Since the beginning, innovation has been a core tenet we live by 2000 2007 2009 2013 2019 • Our innovations deliver the best performance so that • This commitment to innovation has also brought GPUs and CPUs can work even harder in favorite games performance advancements and increased density for data and applications centers 11 Q4 2018 and CMU
Solving complex thermal challenges is our passion For Asetek it’s a matter of performance… We’re focused on new ways to meet complex thermal challenges… researching new pump d esigns, new fluid types, new radiator technologies and topologies… and much more… Asetek is constantly inventing… to improve high -performance systems. Solving complex thermal challenges is our passion… researching… thinking outside the box… because that’s what it takes t o change the game. 12 Q4 2018 and CMU
Drive preference for our technology We’re building on our undeniable market leadership in liquid cooling. We’re focused on being recognized as THE standard in liquid cooling. Innovation is in our DNA. We’re ramping up research efforts to bring meaningful innovations to market while maintaining focus on delivering the best performance, We’re doubling down our effort on gamers and quality and reliability. enthusiasts, engaging the community and implementing marketing initiatives to increase awareness of Asetek and our story. 13 Q4 2018 and CMU
Two business segments “Desktop” renamed to: Same name: Gaming and Enthusiast Data center 95% of revenue, EBITDA margin of >30% 5% of revenue, investing for long-term growth Strategic position: Large and long-term growing markets | Supplying global brands | Market leading solutions IP platform: Applications | Technology | Systems | Products | Patents | High-volume manufacturing | World wide hub infrastructure 14 Q4 2018 and CMU
Revenue development Goals Annual revenue USD thousands 67,314 Maintain position and create a meaningful and profitable 58,194 business over time 50,921 35,982 Continue to dominate the gaming and enthusiast 20,729 20,847 liquid cooling market 18,681 2012 2013 2014 2015 2016 2017 2018 Data center Gaming and Enthusiast 15 Q4 2018 and CMU
Strong platform for long-term growth Company facts 31 OEM customers | 6 million units shipped | ~100 employees FY’18 revenue of USD 67m , profitable and strong balance sheet Publicly listed company on Oslo Børs Aalborg (Denmark) R&D and Engineering In-house manufacturing Quality Xiamen (China) Management Engineering Outsourced manufacturing Quality Texas (USA) Silicon Valley (USA) Munich (Germany) Sales and marketing Sales and marketing Taipei (Taiwan) Sales Government relations Sales Integrated value chain End-user brand R&D Manufacturing Sales & OEM IP – proprietary & and white label Engineering Quality control marketing clients patented technology solutions 16 Q4 2018 and CMU
Driven by the end-user experience The renamed Gaming and Enthusiast business segment John Hamill, COO 17 Q4 2018 and CMU
Our Gaming and Enthusiast business OEM Gaming/ Enthusiasts and Performance PCs do-it-yourself (DIY) 20% of sales 80% of sales >220,000 units shipped in 2018 >880,000 units shipped in 2018 18 Q4 2018 and CMU
Our core customers Hardware Gamers Enthusiasts 19 Q4 2018 and CMU
Multiple end-user benefits of liquid cooling Increasingly immersive experiences Additional features Improved overclocking Handles high-end GPUs More customization opportunities 4K and UHD Virtual reality Higher efficiency Aesthetics Less noise Less space Less weight on CPU and motherboard Triple-A games eSports 20 Q4 2018 and CMU
Strong market fundamentals Global video games and Global eSports revenue Global VR headsets eSports revenue USD million million units USD billion 151 +21% +36% +7% 1,600 175 CAGR CAGR CAGR 106 624 38 2017 2022 2017 2022 2017 2022 1) Source: PWC Global Entertainment & Media Outlook 2018-2022 21 Q4 2018 and CMU
Positive Trend for High-End Gaming PC Systems High-end gaming PC system sales 1 1,000 units, price USD > 1.8k • Complete gaming PC systems sold to end-users by 1,305 1,273 1,237 OEMs 120 195 +13% +63% 106 ‒ Many gaming PC OEMs still do not use liquid cooling due to low willingness to pay among mainstream end-users • Annual volume growth of ~3% 631 682 +8% +1% 688 • Trend towards more expensive systems • More than 2/3 of unit sales are sold into the high-end segment • Estimated market share of 10-15% in the high-end -6% -11% 500 471 421 segment ‒ Remaining market relying mainly on traditional air cooling 2016 2017 2018 1.8k < 2.0k 2.0k < 3.0k 3.0k < 1) Source: IDC Worldwide Quarterly Gaming Tracker 22 Q4 2018 and CMU
Untapped high-end Gaming and Enthusiast market potential High-end gaming population 1 High-end desktop market ASP > USD 1,800 Million people Million units 26.2 Estimated Gaming and Enthusiast TAM for 20-25% desktops with ASP above USD 1,800 >USD 320 million 5.5 - 6.0 20 Assuming one Assuming at least unit each and 75-80% 2/3 shipped to high-end replacement rate segment ~13-19% market of ~3.5 years 1 penetration 1.1 million units Market size in units Asetek shipments High-end gaming/DIY Notebook Desktop population 1) Source: John Peddie Reaserch, The High-End PC Gaming Hardware market 2018, Asetek 23 Q4 2018 and CMU
Enthusiasts driving revenue Quarterly Gaming and Enthusiast revenue 18,287 USD thousands 16,412 16,322 16,104 15,614 15,430 13,208 12,431 11,615 11,054 10,147 9,440 9,414 7,679 7,585 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Enthusiast/DIY Gaming/Performance PCs 24 Q4 2018 and CMU
Diversifying the revenue base Top 5 Gaming and Enthusiast customers Top 5 Gaming and Enthusiast customers revenue split 100% 80% 60% 40% 20% 0% 2016 2017 2018 H2 2018 Customer A Customer B Customer C Customer D Customer E • • Contributes approximately 85% of total Gaming and Continued focus on widening base of customers offering Enthusiast revenues Asetek liquid cooling • +20 additional Gaming and Enthusiast customers • Reducing dependency on one single customer 25 Q4 2018 and CMU
Strategy and outlook Goal Outlook Strategy Visibility reduced by U.S.- Establish Asetek as a China relations, Brexit and strong end-user brand other markets. 2019 revenue OEM Gaming/ growth to be tempered Performance PCs compared to recent years’ 20% sales Continue to strong growth. Q1 2019 dominate the Develop and introduce revenue is expected to decline gaming and high-end branded compared to Q1 2018 products enthusiast liquid Increased R&D, product cooling market development and marketing Business segment is the main Enthusiasts and DIY Drive innovation driver behind Group revenue 80% sales expectation of 0-10% growth 26 Q4 2018 and CMU
Maintaining position in the data center market Data center segment John Hamill, COO and André Sloth Eriksen, CEO 27 Q4 2018 and CMU
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