Altium's Journey and Its Vision of Industry Transformation
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A Winning Strategy for Value-Creation ALTIUM’S JOURNEY AND ITS VISION OF INDUSTRY TRANSFORMATION 18 June 2021 Agenda 1 Altium’s Journey of Transformation 2 Uniqueness of Altium in the Engineering Software Ecosystem 3 Altium’s Confidence in its Ability to Execute 4 Our Flight Path to Dominance Outstanding Value-Creation Track-Record Over Time ALU Set in 2019 and confident of achieving $500M * Stock Price Revenue Target Set in 2016 and fell short with COVID, $189M ** Delivering Value for our Shareholders $200M is a Hallmark of Altium… Revenue Target • A history of setting and over-achieving Set in 2014 and overachieved, $110M $100M aggressive long-term financial targets Revenue Target • Eight consecutive years of double-digit revenue growth & expanding margin ? • Focused execution with the “ingenuity of and” A$41.60 delivering strong operating leverage A$10.15 • Transparency for stakeholders and all-in reporting (no capitalization of R&D expenses) A$4.36 • Value creation at every stage from leadership to dominance to industry transformation A$0.76 Performing Leading Dominating Transforming 2012 2015 2017 2020 2025 * The target revenue of $500M may include 10-20% from future acquisitions. 3 ** Three months out analysts’ consensus pointed to a revenue target of $208M for FY2020 Pursuing Dominance and Transformation from a Position of Strength Financial Altium Designer Altium 365 Performance Dominance Adoption Altium is the fastest growing EDA company Altium Designer is the most widespread The world’s first digital platform for with 8 consecutive years of double-digit growth professional PCB design tool used by design and realization of electronics (prior to COVID) and expanding margin over 100,000 engineers worldwide hardware gaining strong early adoption $88.3m $20.7m $27.0m 3,590 Altium Designer Twice Yearly Cash PBT EBITDA New Seats Sold Software Updates (Down 5%) (Down 23%) (Down 15%) (Down 15%) Over 13,000 Over 6,300 Active Users Active Accounts No R&D A$4B 33.8% EBITDA Margin Total (Up 40%) * (Up 43%) * Expense Market Dominance (Down from 38.3%) Capitalization Cap in China 52,157 Seats on Subscription 17% 5 Year Over 30 (Up 12%) $80.0m Revenue Years of Revenue CAGR (Down 4%) R&D Launched AU19c Direct Altium Designer is Used Debt 65% Presence in 1 May 2020 Dividend by over 30,000 Free Recurring Revenue Most (Down 5%) Markets Companies All figures relate to first half results presentation, Feb 2021 * As of June 2021, and compared to Feb 2021 data 4 Altium’s Market-Leading Products and Cloud Platform Altium 365 Altium Nexar Altium’s Cloud Platform for Electronic Cloud-based Integration Platform for Design & Manufacturing Altium 365 and Parts Ecosystem Altium NEXUS Altium CircuitMaker PCB Design Software for the Last PCB Design Software for Makers, Mile of Digital Transformation Open Source and Non-profit Altium Designer Most Widely Used PCB Design Software Altium has the best PCB design tools and cloud platform for the electronics industry with a deep user-centricity and a proven ability to “Out-Innovate” the competition 5 Mainstream Dominance with Diversity of Applications & High-Profile Customers Automotive Aerospace & Defence Life Sciences Mobile Devices Consumer- Electronics Electronics & High-Tech Research & Education Industrial Controls Computers Semiconductors Altium is the differentiated category leader of PCB design and empowers innovation for a diverse array of leading customers 6 Agenda 1 Altium’s Journey of Transformation 2 Uniqueness of Altium in the Engineering Software Ecosystem 3 Altium’s Confidence in its Ability to Execute 4 Our Flight Path to Dominance Electronics at the Heart of All Intelligent Systems Nasa’s Mars Ingenuity Copter’s electronics were designed using Altium software Printed Circuit Boards are central to the design & realization of electronics and smart connected products 8 Electronics are Responsible for 40% of a New Car’s Total Cost Inverter Board Central Information Display Where the PCBs go in Automobiles • Engine Control System • Battery Control System • ECL/ECU control modules • Antilock brake systems • Digital displays • Dashboard • Transmission sensors • Radar • Audio systems • DC/AC power converters • Engine timing systems • Electronic mirror controls • Power relays • Airbag • LED lighting systems • Steering • Air Conditioner System Visual Compute Module Deloitte (2019) - Semiconductors – the Next Wave Self-driving computer and its AI brain Motor Controller 9 The Economic Forces Shaping the Future of Smart Products… • Safety • Performance System Modelling & iRobot • Compliance Engineering Analytics Smart Vacuum Cleaner • Engineering Expertise • Need for Intelligence • Need for Connectivity Electronic Design • Electronic Components & Manufacturing • PCB Fab & Assembly • Form, Fit & Function • Experience Product Design & • Time to Market Manufacturing • Material • Manufacturing • AI/ML • Security Software, Silicon • Scalability & Computing • Cloud Computing • 5G 10 The Emergence of Cloud-Based Digital Ecosystems around Smart Products… Electronic Design & System Modelling & Manufacturing Engineering Analytics Minerva • Ansys’ pervasive simulation • Altium has the only digital platform aims to make platform connecting simulation relevant at all electronic design to stages of a product lifecycle realization in the mainstream – from ideation to utilization engineering market • AWS and Azure are most • The emerging platforms in likely to be the two Product Design and dominant infrastructure Manufacturing while layers for managing the competing they target data and processes for different market segments smart products Atlas Software, Silicon Product Design & & Computing Manufacturing 11 Industry Solutions are Moving to the Cloud and Giving Rise to a System of Ecosystems It is expected that the engineering software industry will follow the same trends as business productivity and enterprise software in the way that the tool/system integration has moved onto the cloud Best-of-breed wins in the cloud and requires unbundling on the desktop and rebundling on the cloud 12 Altium 365 and Nexar Connect Electronic Design to Manufacturing and the Wider Engineering Software Ecosystem Product Design Atlas System Modelling & & Manufacturing Minerva Engineering Analytics • Nexar - is a cloud-based integration • Altium 365 - connects the Electronics platform to connect the growing Industry fragmented value chains to community of Altium 365 PCB drive productivity and manage design users with the software, production risk suppliers, and manufacturers needed to transform ideas into Electronic Design • Octopart – allows electronic designers smart & connected products to research parts availability and pricing while providing opportunity for • Platform Adoption - Over 6,000 component manufacturers to influence companies have already adopted early design decisions the Altium 365/Nexar cloud platform for electronics design. • Altimade – provides cloud based smart manufacturing that will improve productivity and manufacturability of Electronic Electronic Parts electronics hardware and manage Fab & Assembly Supply Chain production risk and supply chain $2 Trillion Estimated Size of the Electronic Industry 13 Customer Focus Areas for Strategic Alliance Altium will build strategic partnerships to focus on customers who are highly motivated to pursue digital transformation but with low organizational capability to implement enterprise software for electronics Highly motivated but low organizational High Highly capable but economically capability to implement digital constrained to implement digital transformation for electronics transformation for electronics • The rise of smart connected devices • The implementation of an enterprise-wide has brought electronics into many platform for the design and realization for organizations where previously they electronics hardware is economically unviable would outsource the design and Centralized fully integrated for most companies where electronics is manufacturing of electronics hardware solution to deliver a singular required but not central to their core activities platform for Digital Transformation Minerva • The last mile of digital transformation is • A SaaS based business model makes digital difficult for most companies with low Atlas transformation a viable proposition for large organizational capability to manage an Bringing Digital Transformation companies where electronics is required but enterprise-wide design and realization to the mainstream through secondary to their core competency platform Cloud and SaaS offerings • A cloud-based approach is ideal to facilitate and help the implementation Bringing Digital Transformation to the masses of digital transformation for this class of to TransformAbility Customer through “long-haul” collaboration between organizations design, manufacturing and supply chain Low Low Customer Motivation to Transform High 14 Electronic Industry is Ripe for Disruption… Altium is Well Positioned to Disrupt the Way Electronic Products are Designed and Manufactured World‘s would-be- largest manufacturer of Electronics * Owns No Owns No Owns No Owns No Owns No Owns No Telco Owns No Owns No Taxis Real Estate Cinema Content Inventory Infrastructure Apps Factory What they all have in common is their ability to simultaneously bring data, processes and commercial transactions together on a singular cloud-based digital platform at a large scale * This is an aspirational future state. 15 Agenda 1 Altium’s Journey of Transformation 2 Uniqueness