Altium Limited ASX Announcement
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`Altium Limited ASX Announcement 6 December 2019 ALTIUM LIMITED ACN 009 568 772 Level 6, Tower B The Zenith 821 Pacific Highway Chatswood NSW 2067 Australia Investor Relations Contact Details: Kim Besharati VP Investor Relations & Corporate Affairs Phone: +1 858 864 1513 Mobile: +1 760 828 3567 2019 Technology Presentation Sydney, Australia, 6 December 2019 – Please find attached a copy of the 2019 Technology Presentation to be given today at 10am at the Sheraton Grand Sydney Hyde Park, 161 Elizabeth St, Sydney NSW 2000, Australia as advised in the 2019 Notice of Annual General Meeting to Shareholders. Note: The Presentation includes guidance and market update on page 52 This presentation has been authorised by Samuel Weiss, Chairman of the Board, Altium Limited. Investor Relations contact details: Kim Besharati Alison Raffin VP Investor Relations & Corporate Affairs (US based) Company Secretary (Australia based) Ph:+1 858 864 1513 Ph:+61 2 9474 7890 Mobile: +1 760 828 3567 Mobile: 0413 528120 About Altium Altium (ASX:ALU) is a multinational software corporation headquartered in San Diego, California, 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 organizations and design communities to innovate, collaborate and create connected products while remaining on time and on budget. Products provided are ACTIVEBOM®, ActiveRoute®, Altium 365® , Altium Concord Pro™, Altium Designer®, Altium NEXUS®, Altium Vault®, Autotrax®, Camtastic®, Ciiva™, CIIVA SMARTPARTS®, CircuitMaker®, CircuitStudio®, Common Parts Library™, Draftsman®, DXP™, Easytrax®, EE Concierge®, NanoBoard®, NATIVE 3D™, OCTOMYZE®, Octopart®, P-CAD®, PCBWORKS®, PDN Analyzer™, Protel®, Situs®, SmartParts™, the TASKING® range of embedded software compilers, Upverter® and X2®, XSignals®. Founded in 1985, Altium has offices worldwide, with US locations in San Diego, Boston, Dallas and New York City, European locations in Karlsruhe, Amersfoort, Kiev, Munich, Markelo 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, LinkedIn and YouTube. www.altium.com Page 1 Technology and Strategy Presentation Altium 365 – Let the Transformation Begin 6 December 2019 Sydney Includes guidance and market update on page 52 Industry Transformation Through Market Dominance A Winning Strategy for Long Term Value-Creation Aram Mirkazemi – Chief Executive Officer Altium’s Journey and Successful Track Record Rebuilding Performing Leading Dominating & Transforming... $300M $100M $200M $500M Revenue Revenue Revenue 35,000 50,000 100,000 Subscribers Subscribers Subscribers Electronic Design $250M • Set Revenue Target of $500M for FY2025 60-80% • Surpass $100M Revenue $172M $200M Target Set back in 2014 23% Revenue • Set Revenue Target of Rev. Growth % $200M for FY2020 • Altium Acquires $140M 100,000 • Successful Capital Raise Octopart the #1 26% Subscribers of $44M on ASX Electronic Part $150M • Set Revenue Target of Search $500M * $100M for FY2017 $111M 18% Revenue $94M 17% $80M 10-20% $100M 13% 10-20% $71M 15% $62M $63M EBITDA $55M 12% 36.5% EBITDA Margin % 14% $45M Electronic Parts & Electronic Manufacturing 32.0% $33M Supply chain & Embedded Software $50M $27M 30.0% $23M 29.3% $18M 28.3% 25.9% $6M $0.3M 9.5% 0.5% * The target revenue of $500M may include 5-10% from future acquisitions 2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 3 Altium Aims to Unify and Connect Electronics Industry Segmented Value Chains Electronic Design Estimated size: $2 - $5Bn Electronic Manufacturing Estimated size: $1,000 - $1,500Bn PLM Electronic Parts Supply Chain Vendors IC Design Estimated size: $600 - $800Bn Electronic Manufacturing Tools Vendors Equipment Vendors Simulation Semiconductor Vendors Manufacturers Electronic CAD Vendors Electronic Testing Equipment Vendors PCB Assemblers Electronic Parts PCB Fabricators Manufacturers Electronic Manufacturing Electronic Parts Services (EMS) Distributors Electronic Electronic Manufacturing Parts Search & Analytics Supply Chain Content Aggregators $2 Trillion The three segments of the value chain are currently completely Estimated Industry Size isolated and digitally disconnected within their own chain 4 Industry Transformation Through Market Dominance Market Market Industry Leadership Dominance Transformation 1 LEAD 2 UNIFY 3 TRANSFORM Altium must target 100,000 active subscribers by 2025 to compel key industry stakeholders to support its agenda to transform electronic design and its realization $100M $200M $500M Revenue Revenue Revenue 35,000 50,000 100,000 Subscribers Subscribers Subscribers 2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 5 Phases in Pursuit of Leadership, Dominance and Transformation LEAD UNIFY TRANSFORM Building Altium Sharing Design Files Hosting Design Data Manufacturing PCB Industry Cloud Platform on Altium 365 on Altium 365 on Altium 365 Transformation Altium 365 Light-weight Collaboration Structured Collaboration Industry-wide Collaboration Building High Extending Reach Market and Going Direct Scaling Direct In-App Engagement Performing Direct Sales for Man-Out-Of-the-Loop Dominance Sales Force in Key Markets including China Dominance Driving Innovation & Innovating as Building High Establishing Yearly Market Closing Capability Market Leader & Performing R&D Innovation Cycles Leadership Gaps with High-End Extending Lead $100M $200M Current Phase $500M Revenue Revenue Revenue 35,000 50,000 100,000 Subscribers Subscribers Subscribers 2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 6 Executing in Concert and to a Higher Standard on Three Fronts Channel Cloud Extreme Reach and Capacity Higher Levels of Service and (Challenge of Scale) Customer Engagement (Challenge of Experience) Leadership Product & Channel Must Product Product & Cloud be in Lockstep Maximum Power, Productivity and Coverage Must Work as One (Challenge of Complexity) $100M $200M $500M Revenue Revenue Revenue 35,000 50,000 100,000 Subscribers Subscribers Subscribers 2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 7 Evolution of Altium’s “Line and Length” Strategy to the “Rule of 50” • Consistent Revenue Growth and • % Revenue Growth + EBITDA margin % ≥ 50 Expanding Margin • Altium will provide guidance on Revenue and • No revenue or guidance provided by the EBITDA margin company; only analysts’ consensus • Consistently outperforming the Rule of 50 is the • From 2012 to 2019 Altium has Delivered 8 domain of elite companies years of consistent Revenue Growth and • Only Altium and Ansys have been able to Expanding Margin consistently perform at this level • Appropriate for Organic Growth • Appropriate for Transformational Growth Optimal Performance Extreme Performance $100M $200M $500M Revenue Revenue Revenue 35,000 50,000 100,000 Subscribers Subscribers Subscribers 2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 8 An Operating Framework for Dominance and Transformation Revenue Performance • For the next phase of growth, Altium will be thinking of its business in terms of four zones, each with different investment and return profiles Transformation Dominance • Altium Designer, NEXUS, TASKING will be in the Zone Zone Dominance Zone, while Altium 365 and Octopart will be Transformational Growth Profitable Growth in the Transformation Zone Disruptive Sustaining Innovation • Small acquisitions, such as PCB:NG, Upverter, Gumstix Innovation will be in the Incubation Zone Incubation Productivity • Productivity Zone will include all systems and business Zone Zone infrastructure (including Corporate Services) Breakthrough Innovation Systems & Programs • Altium will transition its reporting from FY21 to reflect this framework for greater transparency Enabling Investment $100M $200M $500M Revenue Revenue Revenue 35,000 50,000 100,000 Subscribers Subscribers Subscribers 2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 9 Key Take-aways • Altium’s next stage of growth will be distinctly different from its previous stages • Altium will be pursuing Industry Transformation through Market Dominance requiring execution on two parallel tracks • In its next stage of growth Altium will be stepping up from Optimal Performance to Extreme Performance requiring a change to its “Line and Length” strategy • As a long-term commitment, Altium will be adhering to the Rule of 50 (% Revenue growth + EBITDA margin % ≥ 50) in every year from FY2021 to FY2025 • Altium is providing annual Revenue and Margin guidance from FY2020 $100M $200M $500M Revenue Revenue Revenue 35,000 50,000 100,000 Subscribers Subscribers Subscribers 2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 10 Dominating the PCB Design Market Scaling to 100,000 Subscribers Henry Potts – Chief Sales Officer A Winning Formula for Dominance in the PCB Market Altium connects to users at all levels within an organization providing a user experience that is unique within the industry Altium’s Touch 05 Go Direct Everywhere; Altium’s touch matters Always Improving 03 Sell what you have – more will be there tomorrow Everyone Counts 04 User Focus 01 Every Customer, Every Seat, Focus on the USER and the Every $ Counts Customers will follow Great Product 02 Superior product that is easy to use and affordable $100M $200M $500M Revenue Revenue Revenue 35,000 50,000 100,000 Subscribers Subscribers Subscribers 2012 - 2014 2015