Record Revenue and Profit Growth with Contributions from All Regions and Business Units
ALTIUM HALF YEAR INVESTOR PRESENTATION
Aram Mirkazemi CEO 19 – 23 February 2018 Joe Bedewi CFO Sydney & Melbourne Kim Besharati VP IR Disclaimer
Future performance - Forward looking statements, opinions and estimates provided This presentation has been prepared by Altium Limited (ACN 009 568 772) and in this presentation are based on assumptions and contingencies which are subject is for information purposes only. It does not constitute financial product or investment advice or a recommendation to acquire Altium shares and has to change without notice, as are statements about market and industry trends, been prepared without taking into account the objectives, financial situation or which are based on interpretations of current market conditions. Forward looking needs of individuals. Before making an investment decision prospective statements including projections, guidance on future earnings and estimates are investors should consider the appropriateness of the information having provided as a general guide only and should not be relied upon as an indication or regard to their own objectives, financial situation and needs and seek legal guarantee of future performance. An investment in Altium shares is subject to and taxation advice appropriate to their jurisdiction. Altium is not licensed 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, Altium, Altium Designer, Altium Vault, Ciiva, Circuitmaker, Circuistudio, opinions and conclusions contained in this presentation. To the maximum extent Octopart, PCBWorks, Protel, Tasking and Upverter, and their respective logos, permitted by law, none of Altium employees, its directors, employees or agents, nor are trademarks or registered trademarks of Altium Limited, or its subsidiaries. any other person accepts any liability, including, without limitation, any liability All other registered or unregistered trademarks mentioned in this presentation arising out of fault or negligence, for any loss arising from the use of the information are the property of their respective owners, and no trademark rights to the same are claimed 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 Financial data and contingencies. Before making an investment decision, you should consider, with All dollar values are in US dollars (US$) unless as otherwise or without the assistance of a financial adviser, whether an investment is presented. appropriate in light of your particular investment needs, objectives and financial circumstances. 2 Agenda
1 Company Highlights & Significant Achievements
2 2018 Half Year Financial Performance & Metrics
3 Leading and Transforming the Electronic Design Industry
4 Appendix: Company Overview Altium's Half Year FY18 Financial Highlights
$110M $110.9M $100M Record revenue growth of 30% $90M $93.6M Record EBITDA Margin of 30% $80M (33.1% underlying) $80.2M 30% $70M H1 Strong net profit growth of 51% $71.0M $60M 14% 4% increase in subscriber seats $61.9M H1 $63.2M 13% to 35,977 H1 $50M $55.1M 16% 11% H1 22% increase in Altium Designer $48.7M $40M 10% H1 seats with 2,650 new licenses sold 20% H1 $42.6M H1 $30M $37.6M $32.3M 30.0% $29.0M H1 Revenue $20M $26.4M 26.7% 25.0% 25.8% $48,342 Full Year Revenue 18.4% $10M H1 Revenue growth 9.6% H1 EBITDA Margin $0M -16.3%
H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY 2012 2013 2014 2015 2016 2017 2018 Driving Performance from a Position of Financial Strength
Altium’s H1 FY18 Financial Metrics
$36M AU13c $60.3M Sales 11.48c Cash Dividend (Up 28%) EPS (Up by 18%) 35,977 (Up by 50%) Subscribers $63.2M Revenue (Up by 4%) A$1.95B 30% (Up by 30%) Market Cap EBITDA Margin (Up from 25.8%)
Debt $14.9M Op Cash Flow 2,650 $19.0M $14.9M Altium Designer seats EBITDA NPAT Free (Up by 8%) (Up 51%) (Up 22%) (Up 51%)
5 Progress Update - First Half Significant Achievements
Record 30% revenue growth – with all regions and business segments delivering double-digit revenue growth
China continued its rise and significance – delivering 30% revenue growth and expanding further by opening a new sales office in Shenzhen
Octopart continued to outperform - through increased traffic and improved search experience delivering 42% revenue growth
TASKING is building momentum – through organizational strength and growing market opportunity
Release of Altium Designer 18 - a major software release with high-speed engine, multi-board design capability & new user interface/user experience
Launch of NEXUS high-end solution selling – released Altium’s high-end PCB design tool and established a separate internal sales channel focused on high-end solutions
6 A New Organizational Structure to Scale
Aram Mirkazemi CEO
Sergey Kostinsky Henry Potts CTO CSO Biz Dev Joe Bedwi CFO
Ted Pawela Xpedyze COO High-end Channel Altimyze Mainstream Channel Octomyze R&D Marketing Sales Longtail Channel Brand & Program Management
Corporate Services (Finance, HR, IT, Sales Ops)
Altium Org 2.0 – a new organizational structure to scale and deliver multi-product, multi-channel strategy while maintaining strong operating leverage 7 Achieving Market Leadership by 2020
2020 Target Revenue Breakdown
Octopart
TASKING 7.5-10% BSD - Americas
7.5-10% 30-35% $200M *- Revenue 2025 7.5-10% NEXUS 35% --** 2020 EBITDA Margin 2017
15-20% 2015 20-25%
BSD – Rest of World Strong Strategy, $100 + Million PCB Market Transforming Leading Technology Revenue & Leadership & Electronic Design BSD - EMEA & Revenue Expansion of Emerging Leader and its Momentum Market Opportunity in Systems Realization * The target revenue of $200M may include 5-10% from future acquisitions Design ** 35% reported EBITDA margin or better in fiscal year 2020 BSD – Board and Systems Division (accounts for all PCB products excluding NEXUS) 8 Agenda
1 Company Highlights & Significant Achievements
2 2018 Half Year Financial Performance & Metrics
3 Leading and Transforming the Electronic Design Industry
4 Appendix: Company Overview Revenue Sources – FY18 H1
US Millions $63.2 $0.9 $3.0 (100%) (1.4%) $3.4 (4.7%) $20.1 (5.4%) 60 (31.8%) Non-recurring Revenue 50 $27.4 $4.9 $0.6 (43.4%) 40 (7.8%) (0.9%) $2.3 $0.2 $1.5 $25.4 $0.9 (3.6%) (0.3%) (2.4%) 30 (40.2%) (1.4%) Recurring 20 Revenue $35.8
10 (56.6%)
Services Services
Subscription DesignerAltium Term DesignerAltium Maintenance TASKING Other Recurring New Perpetual Licenses DesignerAltium New Perpetual TASKING Other Non
Octopart
Term TASKING
Term NEXUS Total Total Revenue * Services includes revenue for
TASKING, Altium Designer and
- -
- NEXUS
based based Licenses
based based Licenses
based based Licenses
*
-
recurring Licenses
10 Revenue – –BoardBoard and and Systems Systems [Martin]
BSD - Americas H1 Revenue: 17% 5 Yr Revenue CAGR: 17% BSD – EMEA USD H1 Revenue: 38% 5 Yr Revenue CAGR: 15% 5 Yr Recurring CAGR: 16% 5 Yr Recurring CAGR: 17%
$40m $25m $35m $20m $30m $25m $15m $20m $15m $10m $10m $5m $5m
H1 FY H1 FY H1 FY H1 FY H1 FY H1 H1 FY H1 FY H1 FY H1 FY H1 FY H1 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Recurring H1 Revenue: 27% 5 Yr Revenue CAGR: 15% H1 Revenue: 32% 5 Yr Revenue CAGR: 11% BSD – Total BSD – Rest of World 5 Yr Recurring CAGR: 16% Revenue 5 Yr Recurring CAGR: 11% $100m $17m $15m $80m $13m $60m $11m $9m $40m $7m $5m $20m $3m
H1 FY H1 FY H1 FY H1 FY H1 H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 2013 2014 2015 2016 2018 2017 2013 2014 2015 2016 2017 2018 Revenue – TASKING and Octopart
MES (TASKING) H1 Revenue: 21.3% 5 Yr Revenue CAGR: 15% Octopart H1 Revenue: 42% 5 Yr Revenue CAGR: 44% 5 Yr Recurring CAGR: 12%
$12m
$10m $8m
$8m $6m $6m
$4m $4m
$2m $2m
H1 FY H1 FY H1 FY H1 FY H1 FY H1 H1 FY H1 FY H1 FY H1 FY H1 FY H1 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Recurring Revenue 12 Board and Systems – Underlying Metrics
Altium Designer New Seats Sold Subscription Pool
35,977 (+1,455) 5,520 6,000 (+339) 32,321 7,351 (+ 988) 5,181 35,000 (+1,187) (+863) 29,320 26,943 (+2,377) 30,000 5,000 4,318 (+2,122) 4,655 13,248 (+ 1,281) (-337) 24,821 25,000 4,000
2,650 20,000 (+473) 3,000 2,162 2,177 1,124 (+266) 15,378 (+ 1,387) (+406) (+15) 15,000 1,916 1,756 2,000 (-160) 10,000 755 (+83)
1,000 771 (+124) 5,000
- ч H1 FY H1 FY H1 FY H1 FY H1 Dec Jun Dec Jun Dec Jun Dec Jun Dec 2014 2015 2016 2017 2018 FY14 FY15 FY16 FY17 FY18
Americas EMEA Rest of World Americas EMEA Rest of World
13 Altium’s Subscription Pool
+2,724 -5,605 +1,340 40,000 +6,269 +3,024 -2,909 35,977 34,522 35,000 31,134
30,000 New
Lapsed Growth pool ~ Developed Countries Lapsed
New 86% of subscription pool
25,000 87.7% renewal rate (FY17 - 86.6%)
Rejoins Rejoins & Upgrades Rejoins Rejoins & Upgrades 20,000 Constant pool ~ Developing Countries 14% of subscription pool 15,000 30.1% renewal rate (FY17 - 35.8%)
Subscription Pool Size 10,000
5,000
0
June 2016 June 2017 Dec 2017
14 Operating expenses
What Drives Altium’s Unique 100% Operating Leverage?
25.8 % 30.0 % We support a Value-Based Market but, we 26.7 % 25.0 % 80% service this market with a commodity selling model 1.2 % EBITDA 60% 19.9 % R&D spend efficiency due to impact of 24.4 % 23.4 % 19.6 % Acquisitions restructured Tasking operations – R&D
G&A spending is aligned with our new release 40% drumbeat Sales 32.8 % 36.4 % 33.1 % 32.3 % R&D Sales and Marketing spending aligned to growth projections FY2017. Positioning 20% reflected in FY2018 spends. We expect to experience positive impact moving forward 17.3 % 17.6 % 18.5 % 16.1 %
H1 H1 H1 H1 2015 2016 2017 2018
15 Balance Sheet
Dec-17 Jun-17 Jun-16 Jun-15 Cash and cash equivalents $ '000 $ '000 $ '000 $ '000
Cash and cash equivalents 36,025 44,273 38,139 61,906 $70m Trade and other receivables 32,770 32,672 30,406 20,704 Other current assets 3,117 2,861 1,548 1,955 61,906 Total current assets 71,912 79,806 70,093 84,565 $60m Trade and other receivables 1,030 2,531 5,379 1,499 Property, plant and equipment 5,524 5,054 5,091 3,886 Intangible assets 45,799 40,459 33,508 0 $50m Other non-current assets 82,165 82,946 82,301 81,622 44,273 Total non-current assets 134,518 130,990 126,279 87,007
Total assets 206,430 210,796 196,372 171,572 $40m 38,139 36,025 Trade and other payables 7,307 10,179 7,188 6,048 Tax liabilities 1,863 1,008 2,713 4,989 Provisions 3,702 7,600 3,568 1,908 $30m Deferred revenue 37,378 38,436 32,234 28,773 Total current liabilities 50,250 57,223 45,703 41,718 22,049 $20m Deferred tax liability 5,923 5,276 4,793 0 Provisions 188 703 4,230 1,202 Deferred revenue 6,000 6,958 9,038 6,091 Other liabilities 2,283 674 1,813 959 $10m Total non-current liabilities 14,394 13,611 19,874 8,252
Total liabilities 64,644 70,834 65,577 49,970
$0 Net assets 141,786 139,962 130,795 121,602
Contributed equity and reserves 136,936 137,452 135,571 131,767 FY14 FY15 FY16 FY17 FY18 H1 Accumulated profits (losses) 4,850 2,510 (4,776) (10,165) Total equity 141,786 139,962 130,795 121,602 FY18 H1 Cash includes payments for Upverter Acquisition ($US2.8M), increased dividend ($US2.7M) and a contingent consideration payout of ($US6.2M) 16 Cash Flow
H1FY18 H1FY17 H1FY16 H1FY15 Dividends paid/declared $ '000 $ '000 $ '000 $ '000 Cash flows from operating activities Receipts from customers 64,501 54,397 43,919 37,032 Payments to suppliers and employees (48,965) (39,268) (37,366) (29,499) Final Payments for expenses relating to acquisitions (347) (72) (839) - Interim Net Interest received/(paid) 32 (21) 38 228 Net income taxes paid (348) (1,320) (862) (408)
Operating Cash Flow 14,873 13,716 4,890 7,353
Capital Expenditure 25AUD¢ Payments for property, plant and (1,592) (2,548) (1,779) (1,195) equipment 12 Payments for intangibles (231) - - - Proceeds on sale of assets - - - - 20AUD¢ 10 Free Cash Flow 13,050 11,168 3,111 6,158 8 15AUD¢ Cash flows from investing activities Purchase of subsidiary and contingent considerations (9,048) (2,939) (10,767) - 13 8 11 10AUD¢ 10 Cash flows from financing activities Proceeds from issue of shares - - - 39,966 8 Dividends paid (12,534) (9,830) (7,644) (7,941) Repayment of borrowings (6) (28) (30) (38) 5AUD¢ 4 Net cash used (8,538) (1,629) (15,330) 38,145 Effects of exchange rate changes 290 (162) (223) (1,140) 0 Decrease in cash and cash equivalents (8,248) (1,791) (15,553) 37,005
FY14 FY15 FY16 FY17 FY18 H1 17 Half Year Results Key Metrics
H1 H1 +/- H1 H1 H1 H1 H1 H1 USD millions FY18 FY17 % FY16 FY15 FY18 FY17 FY16 FY15
Revenue (excl. interest) 63.2 48.6 30% 42.6 37.6 EPS 11.48 7.64 7.12 5.63
Reported expenses 44.2 36.1 23% 31.9 27.5 Dividends (AU cents) 13 11 10 8
Key Margin Analysis • Business expenses 42.3 34.2 24% 30.9 27.5 EBITDA Margin 30.0% 25.8% 25.0% 26.7% Underlying EBITDA Margin 33.1% 29.7% 27.5% 26.7% One-off expenses 1.0 - • 1.9 1.9 N/A Net profit before tax margin 26% 22% 23% 26% Net profit after tax margin 24% 20% 21% 18% EBITDA 19.0 12.5 51% 10.7 10.1 Effective tax rate 9.7% 8.6% 6.1% 30.6%
Depreciation and 1.0 0.5 Balance Sheet (USD millions) 2.5 1.7 47% amortization Cash and equivalents 36.0 36.3 46.4 59.1 Net assets 141.8 131.6 125.8 43.4 EBIT 16.4 10.8 52% 9.7 9.6 Operating cash flows 14.9 13.7 4.9 7.4
Net interest 0.1 - N/A - 0.2
Profit before income 9.7 9.8 16.5 10.8 53% tax
Income tax expense 1.6 0.9 N/A 0.6 3.0
Profit after income tax 14.9 9.9 51% 9.1 6.8
18 Agenda
1 Company Highlights & Significant Achievements
2 2018 Half Year Financial Performance & Metrics
3 Leading and Transforming the Electronic Design Industry
4 Appendix: Company Overview Rise of Smart Connected Devices
Internet of Things is driving the proliferation of electronics
20 Electronics at the Heart of All Intelligent Systems
Printed Circuit Boards are central to the design & realization of electronics
21 IOT is Driving the Pace of Innovation
Electronics is critical to speeding up cycles of innovation
Existing tools do not adequately address the needs of high-tech products
Success depends on the ability to move quickly
through innovation cycles 22 Current Engineering Tools Fall Short
MCAD - Mechanical Computer Aided Design ECAD - Electronic Computer Aided Design CAE - Computer Aided Engineering - Analysis and Simulation
CAM CAM - Computer Aided Manufacturing
PLM PLM - Product Lifecycle Management CAE
The current model for tool integration is old and has evolved around the notion of “tool-chains” 23 The Future of Engineering Tools is Multi-disciplinary…
Cloud System
Embedded Software
Electronic CAD
Mechanical CAD
Electrical CAD ECAD and MCAD tools must communicate natively and operate at the same level of abstraction 24 IOT is Driving Change in Engineering Tools
Gartner's Hype Cycle for IOT PEAK OF INFLATED EXPECTATIONS • Next generation products are produced • Unfulfilled promises • Mainstream adoption • Only a few successes • Scores of failure • Benefits better understood • New methodologies developed • Best Practices identified • Startups formed • Early adopters found • First generation PLATEAU OF products produced PRODUCTIVITY SLOPE OF ENLIGHTENMENT TECHNOLOGY TRIGGER TROUGH OF DISILLUSIONMENT
Transformation of electronic design & its realization is critical to success
25 Transforming Electronic Design & its Realization…
Electronic Design & Manufacturing Services Estimated size: $1,000 - $1,500Bn Concept Realization Requirements Validation
System Product Design Assembly
Electronic Design Board & Board Global Printed Circuit Automation Tools Circuit Fabrication & Board Market Estimated size: $2 - $5Bn Design Assembly Estimated size: $80 - $100Bn
Electronic Components
$2 Trillion Global Semiconductor and Electronic Estimated Industry Size Parts Manufacturing & Distribution Estimated size: $600 - $800Bn 26 TwoThe DomainsTwo Circles of ofTransformation Transformation…
Business Digital Model Concept Realization Model Continuity Requirements Validation Continuity
System Product Design Assembly
Board & Board Circuit Fabrication & Design Assembly
Electronic Components
Transformation must be pursued in two domains – Business & Technology
27 Agenda
1 Company Highlights & Significant Achievements
2 2018 Half Year Financial Performance & Metrics
3 Leading and Transforming the Electronic Design Industry
4 Appendix: Company Overview Altium'sAltium'sJourney Journey - -aa Long Long History History and and a aPromising Promising Future Future
The company was founded by creating the first version of Altium 1- Altium surpasses $US100 million Designer, Protel PCB revenue target and delivers $US110 million for financial year 2017 Altium Launches Protel for 2- Altium acquires Upverter, the developer Windows - World's first of the world’s first fully cloud, fully Microsoft Windows- 1985 collaborative electronics design systems based PCB design system 3- Altium releases Altium Designer 18 and launches NEXUS Now 1991 1999
Altium Successfully completes an IPO 2006 on Australian Stock Exchange
2016 Altium launches Altium 2010 Designer 6, the world’s first Native 3D PCB design software Altium partners with Dassault Systemes SOLIDWORKS to 2014 deliver a specialized version of Altium launches Altium Designer its PCB design software for 2015 13 introducing DXP 2.0, its next SolidWorks users generation integration platform opening up Altium Designer to third-party developers 1- Altium acquires Octopart, the #1 electronic parts search 1- Successful capital engine in the world raising of $44M on ASX 2- Altium acquires Ciiva a cloud 2- Altium relocated its HQ to 29 based electronic components California USA management system Printed Circuit Board Design and PrintedManufacturing Circuit Board Process Design and Manufacturing Process
Circuit Diagram Layout Film Bare Board Assembled Board
Design Capture Layout Fabrication Assembly
30 AltiumAltium theHas “Easy Always to” Been Company Easy to Do Business With
Altium’s DNA
Uncomplicated Easy to Get Up Value Proposition and Running
Direct Sales Easy to Learn, Force Easy to Use
Free Technical Easy to Maintain Support with No Hidden Costs
31 A Unique PCB Solution For Every Usage Profile
32 Altium Products
33 DiversityDiversity ofof ApplicationApplication
34 HighHigh Profile Profile Customers Customers
Automotive Aerospace & Defence Life Sciences Mobile Devices Consumer- Electronics
Electronics & High-Tech Research & Education Industrial Controls Computers Semiconductors
35 GlobalGlobal ReachReach
36 Global Engineering Software Market revenue, 2014 and 2022
Revenue Segments CAGR 60 Electronic Design Automation (EDA) Computer Aided 50 4.6 Design (CAD) 6.34 11.8% 13.9% 40 4.52
30 13.26 1.9 20 2.81 Architecture 10.6% 2.37 Engineering & Construction (AEC) 13.0% 21.63 Total Revenue (Billions) Revenue Total 10 5.09 8.3% Computer Aided 7.82 Engineering (CAE) 0 2014 2022 Computer Aided CAD CAE CAM AEC EDA Manufacturing (CAM)
Source: Transparency Market Research 37 The Altium Advantage
Transformational Leadership
Established Global Business User-Centric DNA
38 Altium’s Strategy for Success
Maintaining Disciplined Disciplined Transforming Being True to Our Deep Execution and Remaining Execution to Electronic Conviction that Altium’s Journey Single-Minded About PCB Achieve Market Design & Its Will Bring About Transformation Market Leadership Leadership Realization of the Electronics Industry
Building Strong Strategic Partnership
Building a Strong Partnership with Leading Engineering Software Companies to Connect ECAD with MCAD & PLM 39 Altium Values…
Diversity in Thoughts Transparency
Product Sales
“Regular Product Releases” and “High Volume Selling” and “Delivering Next Generation “Sophisticated Value Proposition” Products” Perseverance Ingenuity Finance 0 People
“Growing Revenue Strongly” and 4 “Diversity in Thinking” and “Expanding Profit Margin” “Aligned in Action and Purpose”
“the Genius of AND”
Adaptability Agility 40 Altium’s Long-Term Outlook
✓ The proliferation of electronics through the rise of smart connected devices continues to drive growth for our business in the foreseeable future
✓ Altium will continue to drive top line growth and expand operating margin
✓ Altium remains confident in its business momentum and its ability to achieve its 2020 revenue target of US$200 million
✓ Altium will grow its reported EBITDA margin steadily and aim at achieving 35% or better by 2020
✓ Altium will continue to pursue partnership and M&A opportunities to support its long-term vision of creating a product design and realization platform that is centered around electronics
Altium’s goal is to achieve $200 million in revenue by 2020