Investor Presentation ATGN Jeremiah Fleming, President & CEO Carolyn David, Vice President, Finance
Altigen Communications Overview Provider of Unified Communications as a Service (UCaaS) Solutions based on the Microsoft Platform • Headquartered in Silicon Valley, California • In Business for 20+ Years • More than 2,500 Current Customers FY18 Financials Employee Distribution Stock Ownership CEO, Support: $10.002 15% 9 Management, 12% Engineering: Employees, Private Investors, SG&A: 27 $3.080 67% 6% 19 $1.148 Revenue Net Income Cash Confidential - Not for Distribution
Summary Financials Category 1H19 2H18 1H18 2H17 1H17 Total Revenue 5,319 5,228 4,774 4,222 4,166 Cloud Revenue 3,004 2,645 2,356 1,827 1,379 Adj. EBITDA* 1,169 1,071 754 405 151 Net Income 1,015 9,119 721 310 69 Cash 4,721 3,080 4,243 3,876 3,830 *Adjusted EBITDA is a non-GAAP measure that adds back non-cash expenses and one-time, non-recurring expenses Net Operating Loss Carryforward: Research & Development Tax Credits: • Federal: $52.6M* • Federal: $1.1M* • State: $22.7M* • State: :$700K *expire at various dates through 2038 Confidential - Not for Distribution
Historical Business Model Proprietary, Hardware-based, On Premises PBX Systems Computer Telephony Server AltiGen AltiServ PBX System • Based on Proprietary Hardware • Use 3 rd Party PSTN Phone Service PSTN VoIP • Altigen Software PBX at the Core Public Switched Access Boards Processing Board Telephone Network AltiGen Revenue Model • One-time, On Premises Sales Telephone Extension Board • No Software Maintenance • Hardware Revenue > 90% AltiGen IP Phones Confidential - Not for Distribution
The New Altigen Business Model All Software, Cloud Communications Solutions Altigen Cloud Altigen Value Add Applications Altigen All Software IP PBX New Altigen Revenue Model • MaxCS: Conversion to Monthly Recurring Revenue SIP Trunks • Skype: New Monthly Recurring Revenue Stream Internet-based Phone Service • Plus Monthly Recurring SIP Revenue • No Hardware Revenue • 50%+ Cloud Recurring Revenue • 90%+ Total Recurring Revenue Industry Standard IP Phones Confidential - Not for Distribution
The New Altigen Business Model Extensible Cloud Communications Application Suite Valu alue Add dd Common Platform built on Altigen Applications Appl pplic icatio ions 1) MaxCS IP PBX • Target the SMB Market (10 to 100 employees) MaxC axCS • Hosted by ATGN & our Cloud Partners SI SIP Tru runks MaxC axCS CTI CTI Serv Server IP PBX 2) Altigen Value Add Solutions for Microsoft • Target the MSE Market ( 100 to 1,000 employees) • Hosted by Altigen, Integrated with Microsoft MaxC axCS & IVR Phone System Inte ntegrated Conta Co ntact Center Cen Confidential - Not for Distribution
1) The IP PBX Market Opportunity Leveraging a Captive Audience - Current Customers Solution Provider Current Cloud Customers Target Audience / Untapped Opportunity 280+ Customers 1,750+ Customers 9,000+ Subscribers 80,000+ total users Altigen MaxCS 250+ Customers 3,000 Customers using Integrated CRM IP PBX 7,200+ Subscribers 50,000 total users 20+ PBX Customers 13,000 Customers using Fiserv Core 1,700+ PBX Subscribers 500,000+ total users 2,500+ IVR Customers Confidential - Not for Distribution
2) The Office 365 / Teams Market Opportunity Leveraging Microsoft’ Office 365 – Net New Customers Confidential - Not for Distribution
UCaaS Competitive Landscape Landscape Summary • Global Software/Telecom Companies • No Specific Vertical Market Focus • All View Microsoft as their Primary Competitor Altigen Opportunity • ATGN Views Microsoft as the Beachhead Opportunity • Target the Large Office 365 / Teams Customer Base • Deliver Unique Value Add Solutions for O365 / Teams Confidential - Not for Distribution
New Business Model Driving Revenue Growth Total Company Revenue by Category FY15 – FY18 10000 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 FY15 FY16 FY17 FY18 Cloud SA Software + Services Hardware Confidential - Not for Distribution
Cloud Subscriber Revenue by Category Total Cloud Revenue by Category FY15 – FY18 6000 Skype for Business / Teams 5000 Hosted MaxCS SIP 4000 3000 2000 1000 0 Cloud Metrics FY15 FY16 FY17 FY18 # of Customers 156 302 434 576 Avg Revenue per Customer $ 428 $480 $586 $683 # of Subscribers 5,810 8,333 13,828 18,799 Avg Revenue per Subscriber $ 17.06 $17.41 $19.32 $20.92 Confidential - Not for Distribution
Cloud Performance Metrics Based on FY18 Results Gross Churn Rate Lifetime Value LTV to CAC Ratio 4.5% $3,905 15.7 GCR = Revenue Churn / LTV = ARR x LTV / CAC (Beginning ARR + Ending ARR)/2 (Cloud Gross Margin / GCR) Peer Comparison Company EV / LTM Sales Cloud Growth Rate RingCentral 13.3x 33% 8x8 6.2x 18% Five9 10.9x 27% Average 10.1x 26% Altigen 2.2x 28% Confidential - Not for Distribution
Altigen Business Strategy Summary Key Strategies: • Continue Monetization of Altigen’s on Premises Customer Base (i.e., Cloud Conversion) • Emphasis on Vertical Market Solution Providers for IP PBX New Customer Acquisition • Focus on Microsoft Teams / Office 365 to Drive UCaaS Growth (Direct and Channel) • Execute on our Capital Allocation Framework Confidential - Not for Distribution
Thank You! Contact Us United States United Kingdom 670 N McCarthy Blvd 11-21 Paul Street Milpitas, CA 95035 London, EC24 4JU +1 408.597.9000 +44 (0) 1582 287613 www.altigen.com IR@altigen.com
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