`Altium Limited ASX Announcement
ALTIUM LIMITED ACN 009 568 772 3 Minna Close Belrose NSW 2085 Australia t +61 2 9410 1005 f +61 2 9410 0509 www.altium.com
Altium Limited - February 2015 Investor Presentation
Sydney, Australia - 26 February 2015 - The executive management of electronics design software company Altium Limited (ASX:ALU) will today hold investor presentations at the offices of Blue Ocean Equities and Bell Potter in Sydney providing an update of the company’s business strategy and financial performance.
The attached presentation will be given. A copy can also be found on the company’s website: www.altium.com.
Investor Relations contact details:
Kim Besharati - VP Investor Relations & Corporate Affairs (US-based) Ph: +1 858 864 1513 Mobile: +1 760 828 3567
Alison Raffin - Company Secretary (Australian-based) Ph: +61 2 9410 1005
ENDS
About Altium
Altium Limited (ASX:ALU) is an Australian multinational software corporation that focuses on electronics design systems for 3D PCB design and embedded system development. Altium products are found everywhere from world leading electronic design teams to the grassroots electronic design community.
With a unique range of technologies Altium helps organisations and design communities to innovate, collaborate and create connected products while remaining on-time and on-budget. Products provided are Altium Designer®, Altium Vault®, CircuitStudio®, CircuitMaker®, PCBWorks® and the TASKING® range of embedded software compilers.
Founded in 1985, Altium has offices worldwide, with US locations in San Diego and Boston, European locations in Karlsruhe, Amersfoort, Kiev and Zug and Asia-Pacific locations in Shanghai, Tokyo and Sydney. For more information, visit www.altium.com. You can also follow and engage with Altium via Facebook, Twitter and YouTube. For personal use only use personal For
Delivering Strong Performance & Building Momentum for Further Growth
Altium Mid-Year Investor Presentation Aram Mirkazemi CEO
For personal use only use personal For 26 February 2015 Richard Leon CFO Sydney & Melbourne Introduction
Disclaimer
Future performance This presentation has been prepared by Altium Limited (ACN 009 568 772) and is for Forward looking statements, opinions and estimates provided in this presentation are based information purposes only. It does not constitute financial product or investment advice on assumptions and contingencies which are subject to change without notice, as are or a recommendation to acquire Altium shares and has been prepared without taking statements about market and industry trends, which are based on interpretations of current into account the objectives, financial situation or needs of individuals. Before making an market conditions. Forward looking statements including projections, guidance on future investment decision prospective investors should consider the appropriateness of the earnings and estimates are provided as a general guide only and should not be relied upon information having regard to their own objectives, financial situation and needs and seek as an indication or guarantee of future performance. An investment in Altium shares is legal and taxation advice appropriate to their jurisdiction. Altium is not licensed to subject to investment and other known and unknown risks, some of which are beyond the provide financial product advice in respect of Altium shares. control of Altium Limited. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of Altium employees, its directors, employees or agents, nor any other person accepts any
Financial data liability, including, without limitation, any liability arising out of fault or negligence, for any
All dollar values are in US dollars (US$) unless as otherwise presented. loss arising from the use of the information contained in this presentation. In particular, no representation or warranty, express or implied is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in this Presentation nor is any obligation assumed to update such information. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and contingencies. Before making an investment decision, you should
consider, with or without the assistance of a financial adviser, whether an investment is For personal use only use personal For appropriate in light of your particular investment needs, objectives and financial circumstances.
INVESTOR PRESENTATION 2 Agenda
1 Company Highlights & Key Focus Areas for the Remainder of FY15
2 Half Year 2015 Financial Performance & Metrics
3 Market Opportunity & Growth Strategy
4 Appendix: Company Overview & Long –Term Outlook For personal use only use personal For IntroductionAltium’s H1 FY15 Financial Highlights
$40 REPORT CARD Expanding Margins EBIT $37.8M Revenue $35 26% $9.6M (up 17% pcp) (up 84% pcp) Maintain top line growth and expand margins. $30 First half 17% revenue growth 5.63 EPS and EBIT margin increased $25 16% (up from from 16% to 26%. 27,000 3.11) Increase subscription $20 renewals rates. Subscribers Renewal rates in key regions $15 (51% of H1 Revenue) AU 8c improved from 81% to 84% (3% Dividend (up 50%) compared to FY14). $10
Acquire New Customers. $5 $59.1M Continued to aggressively $33.7M Sales acquire new accounts at the Net (up 9% pcp) For personal use only use personal For same level as FY14. $0 Cash H1FY13 H1FY14 H1FY15
EXPENSES EBIT EBIT margin %
INVESTOR PRESENTATION 4
Significant Achievements For personal use only use personal For
5 Americas Sales – Furthering Momentum
Successfully transitioning to a leveraged sales model o High value sales through Altium direct o Volume sales through the channel delivering extended reach US sales is regaining full strength o Growing new licences o Increasing subscriptions o Launch of PCBWorks @ SolidWorks World in February generating strong
For personal use only use personal For interest from resellers
6 European Sales – Delivering Solid Performance
Confident we will achieve full year target
○ Additional resources & management focus to ensure targets are achieved ○ Created and filled a new leadership role: VP Sales, EMEA ○ Indirect territories on track to achieve their quotas ○ Underlying demand remains solid
For personal use only use personal For
7 Other Focus Areas for the Remainder of FY15
Accelerate the transition of Close-out China towards strategic value sales Accelerate the partnership roll out of the tracks to begin expanded selling and Mobilise drive revenue resources to product range Aggressively further increase drive new our subscription account rates acquisition
For personal use only use personal For We are confident to achieve our full year FY15 target of double digit growth
8 Agenda
1 Company Highlights & Key Focus Areas for the Remainder of FY15
2 Half Year 2015 Financial Performance & Metrics
3 Market Opportunity & Growth Strategy
4 Appendix: Company Overview & Long –Term Outlook For personal use only use personal For Altium’s Revenue Sources
Subscriptions Attachment to New License Sales
Lapsed Subscriptions Re-joining and upgrades
Altium 51% Altium Software (50% H1FY14) (New Licenses) Subscription (47% H2FY14) (Recurring Revenue)
For personal use only use personal For Tasking Software (New License & Maintenance) Subscription Renewals Other (Services & Hardware) INVESTOR PRESENTATION 10 Altium’s Subscription Pool
2,700
Lapsed Subscriptions +2,230 Non-renewals +1,330
New Subscriptions Re-join Attached to New License Sales Lapsed Subscribers Re-joining and Upgrades
Developed pool = 85% of subscription pool Under-developed pool = 15% of subscription pool H1 FY15 Renewal rate of 84.6% (comprised mainly of China, Russia & Latin America) (up from 81.6% FY14) Subscription Pool H1 FY15 Renewal rate of 30.1%
~ 27,000 at Dec 14 (up from 23.4% FY14) For personal use only use personal For
11 Seasonality Curves - Revenue: Sales: Deferred Revenue
Sustain revenue growth (13% CAGR)
notwithstanding quarterly seasonality For personal use only use personal For
Linear (Deferred Revenue) 12 IntroductionAltium’s H1 Revenue Contribution by Region
Americas EMEA $16 $16 $14 $14 $12 $12 $10 $10 $8 $8 Historical $6 $6 CAGR 13% $4 $4 $2 $2 Across All Regions $0 $0 FY10 FY11 FY12 FY13 FY14 FY15 FY10 FY11 FY12 FY13 FY14 FY15
China APAC $16 $16 $14 $14 $12 $12 $10 $10 Other $8 $8 (Flat last three years)
For personal use only use personal For $6 $6 Tasking (Licenses & Maintenance)
$4 $4 Altium Licenses $2 $2 Altium Subscription $0 $0 FY10 FY11 FY12 FY13 FY14 FY15 FY10 FY11 FY12 FY13 FY14 FY15 INVESTOR PRESENTATION 13 Altium’s Operating Costs
Workforce investment
Investment focus and deployment to drivers of growth: - R&D - Sales & Marketing resources.
Customer success: - Software maintenance - Technical support, - User education Functions Operating leverage increase Research & Development
through growth of subscription Sales & Marketing For personal use only use personal For revenue Customer Success
General & Admin FY14 FY15 projected 14 Altium’s Balance Sheet
Jun-14 Var Dec-14 $ '000 $ '000 $ '000 %
Cash and Cash equivalents Cash and cash equivalents 59,054 22,049 37,005 168% $60 Trade and other receivables 15,535 22,429 (6,894) -31% Capital Other current assets 1,557 1,582 (25) -2% Raising Total current assets 76,146 46,060 30,086 65%
$50 Trade and other receivables 1,115 1,136 (21) -2% Property, plant and equipment 2,331 1,908 423 22% Other non-current assets 3,881 4,898 (1,017) -21% $40 Total non-current assets 7,327 7,942 (615) -8%
Total assets 83,473 54,002 29,471 55%
$30 Trade and other payables 4,002 5,499 (1,497) -27% Borrowings 50 60 (10) -17% Tax liabilities 1,538 338 1,200 355% Provisions 1,939 1,773 166 9% $20 Deferred revenue 25,390 29,727 (4,337) -15% Total current liabilities 32,919 37,397 (4,478) -12%
Borrowings 67 88 (21) -24% $10 Provisions 2,024 2,829 (805) -28% Deferred revenue 4,844 5,981 (1,137) -19% Other liabilities 180 116 64 55% $0 Total non-current liabilities 7,115 9,014 (1,899) -21%
For personal use only use personal For FY11 FY12 FY13 FY14 Dec-14 Total liabilities 40,034 46,411 (6,377) -14%
- Successful capital raising Net assets 43,439 7,591 35,848 472%
- Operating Cash Flow up 16% to $7.4m Contributed equity and reserves 131,280 94,268 37,012 39% - Minimal borrowings - Debt/Equity less than 1% Accumulated losses (87,841) (86,677) (1,164) 1% Total equity 43,439 7,591 35,848 472% 15
Altium’s Cash Flow
Dividends paid/declared H1FY15 H1FY14 Var 16.00 $ '000 $ '000 $ '000 % Cash flows from operating activities Receipts from customers 37,032 35,867 1,165 3% 14.00 Payments to suppliers and employees (29,499) (29,052) (447) 2% Net Interest paid 228 54 174 322% Net income taxes paid (408) (553) 145 -26% 12.00 Operating Cash Flow 7,353 6,316 1,037 16% 10.00 Capital Expenditure Payments for property, plant and (1,195) (407) (788) 194% 8.00 equipment
Free Cash Flow 6,158 5,909 249 4% 6.00 Cash flows from financing activities Proceeds from exercise of options - 2,562 (2,562) 4.00 Proceeds from issue of shares 39,966 - 39,966 Dividends paid (7,941) (8,594) 653 Final Repayment of borrowings (38) (105) 67 2.00
Subtotal 38,145 (228) 38,373 > 100% For personal use only use personal For Interim 0.00 Effects of exchange rate changes (1,140) 17 (1,157) > 100% Increase in cash and cash equivalents 37,005 (211) 37,216 > 100% FY12 FY13 FY14 FY15
Steady increase in dividend payments to shareholders 16 Half Year Results Key Metrics
USD millions H1FY15 H1FY14 Change % H1FY15 H1FY14 Change %
Total Revenue (excl. Interest) 37.6 32.2 17% EPS 5.63 3.11 81%
Reported Expenses 27.5 26.3 5% Dividends (AU cents) 8.00 4.00 100% (excl. D&A & Interest)
EBITDA 10.1 5.9 69% Key Margin Analysis Depreciation 0.4 0.5 EBIT Margin 26% 16% Amortisation - 0.3 EBITDA Margin 27% 18% Net Profit Before Tax Margin 26% 16% EBIT 9.6 5.2 84% Net Profit After Tax Margin 18% 10% Net Interest 0.2 0.02 Return on Equity 27% 3% Debt/Equity 0.3% 1.9% Income tax expense 3.0 1.9
Balance Sheet (USD millions) NPAT 6.8 3.4 >100% Cash & Cash Equivalents 59.1 22.0 >100%
Net Assets 43.5 7.6 >100% For personal use only use personal For
Operating cash flows 7.4 6.3 16%
17 Agenda
1 Company Highlights & Key Focus Areas for the Remainder of FY15
2 Half Year 2015 Financial Performance & Metrics
3 Market Opportunity & Growth Strategy
4 Appendix: Company Overview & Long –Term Outlook For personal use only use personal For Rise of Smart Connected Devices
Information Web 1.0 Search & Discovery is Indexed 1990’s
Web 2.0 Social Networking People are Networked 2000’s Electronics puts Web 3.0 Internet of Things Internet into Things
2010’s For personal use only use personal For
19 Printed Circuit Boards Central to Electronics
For personal use only use personal For At the Heart of All Intelligent Systems Are Electronics and Printed Circuit Boards
20 Increasing Demand in Electronics is the Main Growth Driver
60%
By 2017 For personal use only use personal For
40% Electronic Value (Hines, 2012) 75% Electronic Value (Hines, 2012) Traditional Vehicle Hybrid/Electric 21 Use of Smart Electronics in Everyday Things
The Nest thermostat learns the temps you like, turns itself down when you're away, and has remote control through Wi-Fi
Complex Design with Multiple Printed Circuit Boards
For personal use only use personal For
22 MultidisciplinaryDesigningDesigning Smart Smart Engineering Connected Connected is ProductsProductsDriving Market Convergence
Cloud System Engineering Cloud application development and infrastructure management
Cloud Embedded System Engineering Development of Control Systems in Computing Electromechanical devices
Electronics Engineering Creation of high-performance electronic hardware with complex form factor
Mechanical Engineering Designing complex objects with sophisticated
electromechanical behaviour For personal use only use personal For
Electrical Engineering Development of wire harness and electrical systems in Electromechanical devices Altium - the Next Generation PCB Design Software Company
We support and work with We support specialised go- deep integration to-market plays Our platform of our tools to base provides other agility to partner engineering With over 30 disciplines years of with other engineering (including Altium is the only continuous mechanical design in PCB design tools pure-play PCB CAD) design software software Altium company in the is best in class world For personal use only use personal For
24 Altium’s High Level Strategy
Build Momentum by Expand Market Reach Focusing on Core through Partnership Strengths
Acquisition For personal use only use personal For
Grow Capability Through Acquisition
25 Growing Capability Through Acquisition & Partnership
Altium will Grow by Acquiring/Partnering with Brands that are Associated with the Design of PCB and Smart Devices
Technology Acquisition
based based
Model)
-
Indirect)
MCAD
-
Farnell
ALTIUM
TASKING
(Catalogue
(Enterprise Model) (Enterprise
(Transaction Model Model (Transaction
(Transactional Model) (Transactional
New New Partners
Brand Acquisition Brand For personal use only use personal For
Acquisition Strategy Partnership Strategy 26 Altium’s Core Strengths & Enduring Competitive Advantages
Core Strengths Competitive Advantages
Established Complex Software Altium is the Only Altium has a Brand in Most IP Consisting of “Pure-Play” PCB Strong Countries in the Millions of Lines of Company in the Operating World Code World Leverage
Sustainable Expanding Business Margin
For personal use only use personal For Transactional Sales Customer Stickiness
Value-based Sales with Strong Altium Enjoys a High Level of Operating Leverage Customer Loyalty 27 Agenda
1 Company Highlights & Key Focus Areas for the Remainder of FY15
2 Half Year 2015 Financial Performance & Metrics
3 Market Opportunity & Growth Strategy
4 Appendix: Company Overview & Long –Term Outlook For personal use only use personal For 30 Years of Continuous R&D in PCB Design Software
The company was founded by creating the first version of Altium Designer, Protel PCB
1985 Altium Launches Protel for Windows - World's first Microsoft Windows-based Altium launches Altium 1991 PCB design system Designer 6, the world’s first Native 3D PCB design software 1999 Altium launches PCBWorks introducing a specialized version of its PCB Design Software for SolidWorks 2006
Altium Successfully completes an IPO on 2010 Australian Stock
For personal use only use personal For Now Exchange
Altium launches Altium Designer 13 introducing DXP 2.0, its next generation integration platform opening up Altium Designer to third-party developers 29 Printed Circuit Board Design and Manufacturing Process
Circuit Diagram Layout Film Bare Board Assembled Board For personal use only use personal For
Design Capture Layout Fabrication Assembly
30 Altium Products
3D Printed Circuit Board Design Software Altium Vault Tasking Design Data Management & Embedded Software Collaboration Software Development Tools
For personal use only use personal For Electronic Design Embedded FPGA DesignPrinted Circuit Concept Capture & Software Manufacturing Prototype Board Layout Verification Development
31 Diversity of Applications
Automotive Aerospace & Life Sciences Mobile Devices & Consumer-
Defence Communications Electronics For personal use only use personal For
Electronics & Research & Industrial Controls Computers Semiconductors High-Tech Education Automation 32 High Profile Customers
Automotive Aerospace & Defence Life Sciences Mobile Devices Consumer- Electronics
Electronics & High-Tech Research & Education Industrial Controls Computers Semiconductors For personal use only use personal For
33 Global Reach
Sales and Support Centres Research & Development Centres Main Operations Centres San Diego, Boston, Karlsruhe, Shanghai, Sydney San Diego, Ukraine, Netherlands, Shanghai San Diego, Karlsruhe, Shanghai
Regional HQ Global HQ Karlsruhe San Diego Regional HQ Shanghai
For personal use only use personal For Corporate & Registered Office ASX Listing Sydney
Network of channel partners, with over 50 authorized Value-Added-Resellers 34 PCB Design Software Market Segmentation & Size
Total Market size: High-end $800M Currently Addressable: $500M 57% of market Value Large engineering teams designing complex products
20k+ Price Range High-end Mainstream of market value 36% Moderate to high design complexity, carried out by Low-end small teams of specialist 7% of market engineers value. Simple designs carried
For personal use only use personal For out by multi- skilled engineers Low-end Less than 2k Price Range
35 Industry Consolidation & Competitive Landscape
1960’s & 1970’s 1980’s 1990’s 2000’s 2010’s Cadnetix Daisy Veribest (Intergraph) Expedition Mentor Graphics ( )
end Board Station Mentor Graphics -
High Racal-Redac CR-5000/8000 Zuken (CR-2000) Zuken
ECAD (Cadence Allegro) Allegro Cadence Cooper & Chan
Altium Designer PCAD Altium PADs PADs (Mentor Graphics)
OrCAD OrCAD (Cadence) Mainstream CADStar CADStar (Zuken)
Altium (Protel) For personal use only use personal For
Accel Technology (Tango) end - CADSoft (Eagle) Eagle National Instruments Low Electronic Workbench (Electronic Workbench) Pulsonix 36 PCB Design Software - Global Market Share
Printed Circuit Board Estimated Market Share
(by Revenue) For personal use only use personal For
Source: PCB Market Trends 2014 – Gary Smith EDA 37 Long-Term Outlook
The impact of Altium’s higher- end product Will maintain or release in FY15 is improve operating anticipated to be leverage felt during FY16 Expect to see continuing growth and beyond in revenue The rise of smart (licences & connected devices subscription) is creating new opportunities for PCB Altium’s aspirational goal is to
achieve $100 million in For personal use only use personal For revenue by FY17
38