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Altigen Communications
Investor Presentation
ATGN
Presented by:
Jeremiah Fleming, President & CEO
Altigen Communications Overview
Confidential - Not for Distribution
Provider of Unified Communications as a Service (UCaaS) Solutions based on the Microsoft Platform
Engineering:27SG&A:
19
Support:9
Employee Distribution
Revenue Net Income Cash
$10.002
$1.148$3.080
FY18 Financials
CEO, 15%
Management, 12%
Employees, 6%
Private Investors, 67%
Stock Ownership
• Headquartered in Silicon Valley, California
• In Business for 20+ Years
• More than 2,500 Current Customers
Summary Financials
Confidential - Not for Distribution
Net Operating Loss Carryforward:• Federal: $52.6M*• State: $22.7M*
Research & Development Tax Credits: • Federal: $1.1M*• State: :$700K
*expire at various dates through 2038
*Adjusted EBITDA is a non-GAAP measure that adds back non-cash expenses and one-time, non-recurring expenses
Category 9M FY19 FY18 FY17 FY16 FY15
Revenues $7,970 $10,002 $8,388 $8,431 $9,800
Cost of Revenues $1,455 $1,645 $1,270 $1,451 $1,928
Gross Margin 82% 84% 85% 83% 80%
Operating Expenses
$4,921 $7,208 $6,729 $7,812 $7,218
EBITDA $1,792 $1,822 $545 $55 $1,325
Net Income $1,627 $9,840 $379 $(835) $644
Net Cash $4,614 $3,080 $3,876 $4,490 $4,560
Cloud PBX Business Model Driving Current Growth
Confidential - Not for Distribution
The “Old” Altigen Revenue Model
• One-time, On Premises Sales
• All Software PBX at the Core, but
• Hardware Revenue > 90%
• No Recurring Revenue
• Phone Service Not Included
The “New” Altigen Revenue Model
• Cloud & Monthly Recurring Revenue
• Complete, All Software Solution
• $0 Hardware Revenue
• 50%+ Cloud / 90% Total Recurring Revenue
• Plus Monthly Recurring SIP Revenue
On Premise => Cloud
Glossary of Terms
On Premise: Installed at a Customer Location
Cloud: Hosted in Altigen’s Datacenter
SIP Trunks: Internet-based Phone Service
PBX: Private Branch Exchange (Phone System)
Contact Center: Designated group of people whose job is to take Inbound Customer Calls
Altigen’s Cloud Business Strategy – Phase 1
Confidential - Not for Distribution
Migrate On Premises PBX to the Cloud
MaxCS IP PBX – Targeting SMB Market (10 to 100 employees)
• 3 Unique Delivery Models:
• Hosted by ATGN
• Hosted by ATS: $18M Managed Services Provider
• Hosted by Fiserv: $18B Financial Services Technology Provider
MaxCS
IP PBX
MaxCS
MaxCS
& IVR
SIP Trunks
Leveraging a Captive Audience - Current Customers
Provider Current Cloud Customers Target Audience / Untapped Opportunity
280+ Customers
9,000+ Subscribers
1,750+ Customers
80,000+ total users
250+ Customers
7,200+ Subscribers
3,000 Customers using Integrated CRM
50,000 total users
20+ PBX Customers
1,700+ PBX Subscribers
2,500+ IVR Customers
13,000 Customers using Fiserv Core
500,000+ total users
Microsoft Teams Market Opportunity Overview
Teams Market Opportunity
• Fastest Growing App in MSFT History
• Included in all O365 Enterprise Plans
• 155M+ Commercial O365 Users
• 80M+ SfB Online Users => Teams
• Teams Phone System is the only Solution
that Integrates with Office 365
• Superior Price Points vs All Competition
• Large Global Microsoft Partner Channel
Confidential - Not for Distribution
UCaaS Competitive Landscape
Altigen Opportunity
• Microsoft is the leading UCaaS Provider
• Teams Phone System is the Beachhead
• Altigen Solutions Address “Completeness of Vision”
• Target Microsoft O365 Customers and Partners
• Leverage Altigen Microsoft Communications Expertise
• Add Critical Enterprise Communications Capabilities to
Teams Phone System
• Enable Organizations to Replace their PBX Systems
• Deployment and Support Services Facilitate Customer
and Partner Migration to Teams Phone System
Confidential - Not for DistributionConfidential - Not for Distribution
Altigen’s Cloud Business Strategy – Phase 2
Confidential - Not for Distribution
Integrate Altigen Applications with Microsoft UC
Altigen Contact Center Solutions and SIP Trunk Service
• Target the MSE Market (100 to 1,000 employees)
• Hosted by Altigen, Integrated with Microsoft
Platform Current Cloud Customers Target Audience / Untapped Opportunity
20+ Customers
2,000+ Subscribers
~2,500 On Premises Skype for Business Customers
~125,000+ total users
10+ Customers
1,000+ Subscribers
~10,000 Teams Customers (and growing)
~500,000 total users
Leveraging Microsoft - New Customer Acquisitions
MaxCS
ApplicationsSIP Trunks
Confidential - Not for Distribution
Altigen’s Cloud Business Strategy – Phase 3
Enhancing Microsoft Teams – High Growth Opportunity
Cloud Business Model Revenue Growth
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
FY15 FY16 FY17 FY18
FY15 – FY18
Cloud SA Software + Services Hardware
Confidential - Not for Distribution
Total Company Revenue by Category
Cloud Subscriber Revenue by Category
Confidential - Not for Distribution
0
1000
2000
3000
4000
5000
6000
Skype for Business / Teams
Hosted MaxCS
SIP
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
Total Cloud Revenue by Category
FY15 – FY18
Historical Cloud Performance Metrics
Confidential - Not for Distribution
Gross Churn Rate
4.5%GCR = Revenue Churn /
(Beginning ARR + Ending ARR)/2
Lifetime Value
$3,905LTV = ARR x
(Cloud Gross Margin / GCR)
LTV to CAC Ratio
15.7
LTV / CAC
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%
Based on FY18 Results
Altigen Business Strategy Summary
Confidential - Not for Distribution
Key Strategies:
• Continue Monetization of Altigen’s on Premises Customer Base (i.e., Cloud Conversion)
• Emphasis on Vertical Market Solution Providers to Differentiate Altigen Solutions
• Focus on Microsoft Teams (Office 365) to Drive UCaaS Growth (Direct and Channel)
• Target Global Service Providers with New Teams Solutions
• Execute on our Capital Allocation Framework
Contact UsUnited States
670 N McCarthy BlvdMilpitas, CA 95035
+1 408.597.9000
United Kingdom
11-21 Paul StreetLondon, EC24 4JU
+44 (0) 1582 287613
www.altigen.com
Thank You!
