altium half year investor presentation
TRANSCRIPT
ALTIUM HALF YEARINVESTOR PRESENTATION
Aram Mirkazemi CEOJoe Bedewi CFOKim Besharati VP IR
19 – 23 February 2018Sydney & Melbourne
Record Revenue and Profit Growth with Contributions from All Regions and Business Units
2
Future performance - Forward looking statements, opinions and estimates provided
in this presentation are based on assumptions and contingencies which are subject
to change without notice, as are statements about market and industry trends,
which are based on interpretations of current market conditions. Forward looking
statements including projections, guidance on future earnings and estimates are
provided as a general guide only and should not be relied upon as an indication or
guarantee of future performance. An investment in Altium shares is subject to
investment and other known and unknown risks, some of which are beyond the
control of Altium Limited. No representation or warranty, express or implied, is
made as to the fairness, accuracy, completeness or correctness of the information,
opinions and conclusions contained in this presentation. To the maximum extent
permitted by law, none of Altium employees, its directors, employees or agents, nor
any other person accepts any liability, including, without limitation, any liability
arising out of fault or negligence, for any loss arising from the use of the information
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
and contingencies. Before making an investment decision, you should consider, with
or without the assistance of a financial adviser, whether an investment is
appropriate in light of your particular investment needs, objectives and financial
circumstances.
Financial data
All dollar values are in US dollars (US$) unless as otherwise presented.
This presentation has been prepared by Altium Limited (ACN 009 568 772) and
is for information purposes only. It does not constitute financial product or
investment advice or a recommendation to acquire Altium shares and has
been prepared without taking into account the objectives, financial situation or
needs of individuals. Before making an investment decision prospective
investors should consider the appropriateness of the information having
regard to their own objectives, financial situation and needs and seek legal
and taxation advice appropriate to their jurisdiction. Altium is not licensed to
provide financial product advice in respect of Altium shares.
Altium, Altium Designer, Altium Vault, Ciiva, Circuitmaker, Circuistudio,
Octopart, PCBWorks, Protel, Tasking and Upverter, and their respective logos,
are trademarks or registered trademarks of Altium Limited, or its subsidiaries.
All other registered or unregistered trademarks mentioned in this presentation
are the property of their respective owners, and no trademark rights to the
same are claimed
Disclaimer
Agenda
2018 Half Year Financial Performance & Metrics
3 Leading and Transforming the Electronic Design Industry
Appendix: Company Overview
Company Highlights & Significant Achievements
2
1
4
Strong net profit growth of 51%
Record revenue growth of 30%
4% increase in subscriber seats to 35,977
22% increase in Altium Designer seats with 2,650 new licenses sold
Altium's Half Year FY18 Financial Highlights
Record EBITDA Margin of 30%(33.1% underlying)
H1 Revenue
H1 Revenue growth
H1 EBITDA Margin
2012
$100M
$70M
$50M
$30M
$90M
$60M
$40M
$20M
$10M
$48,342$26.4M
20%H1
$55.1M
H1 FY
2013
H1 FY
$29.0M
10%H1
$61.9M
2014
H1 FY
11%H1
$71.0M
2015
H1 FY
$37.6M
16%H1
$80.2M
2016
H1 FY
$42.6M
13%H1
$93.6M
2017
H1 FY
$48.7M
$80M
-16.3%
9.6%
18.4%
26.7% 25.0% 25.8%
$0M
$32.3M
$110M
2018
H1 FY
14%H1
$110.9M
30%H1
$63.2M
30.0%
Full Year Revenue
5
2,650Altium Designer seats
(Up 22%)
$63.2M Revenue (Up by 30%)
$36MCash
AU13cDividend
(Up by 18%)
DebtFree
A$1.95BMarket Cap
30%EBITDA Margin(Up from 25.8%)
35,977Subscribers
(Up by 4%)
$19.0MEBITDA(Up 51%)
$60.3M Sales (Up 28%)
11.48cEPS
(Up by 50%)
Altium’s H1 FY18 Financial Metrics
$14.9M Op Cash Flow(Up by 8%)
$14.9M
NPAT(Up 51%)
Driving Performance from a Position of Financial Strength
6
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
Progress Update - First Half Significant Achievements
7
A New Organizational Structure to Scale
Corporate Services (Finance, HR, IT, Sales Ops)
Marketing SalesR&DBrand & Program
Management
Biz Dev
Aram Mirkazemi
CEO
Joe Bedwi
CFO
Ted Pawela
COO
Henry Potts
CSOSergey Kostinsky
CTO
Altium Org 2.0 – a new organizational structure to scale and deliver multi-product,
multi-channel strategy while maintaining strong operating leverage
XpedyzeHigh-end Channel
AltimyzeMainstream Channel
OctomyzeLongtail Channel
BSD - EMEA
Achieving Market Leadership by 2020
8
2015
2017
2020
2025
Strong Strategy, Leading Technology
& Revenue Momentum
$100 + MillionRevenue &
Expansion of Market Opportunity
PCB Market Leadership &
Emerging Leader in Systems
Design
BSD - Americas
Octopart
TASKING
NEXUS
BSD – Rest of World
30-35%
7.5-10%
7.5-10%
7.5-10%
Transforming Electronic Design
and its Realization
$200M -Revenue
35% --EBITDA Margin
15-20%
20-25%
* The target revenue of $200M may include 5-10% from future acquisitions** 35% reported EBITDA margin or better in fiscal year 2020 BSD – Board and Systems Division (accounts for all PCB products excluding NEXUS)
*
2020 Target Revenue Breakdown
**
Agenda
2018 Half Year Financial Performance & Metrics
3 Leading and Transforming the Electronic Design Industry
Appendix: Company Overview
Company Highlights & Significant Achievements
2
1
4
Revenue Sources – FY18 H1
Altiu
m D
esig
ne
r S
ub
scriptio
n
Octo
pa
rt
TA
SK
ING
Ma
inte
na
nce
Altiu
m D
esig
ne
r T
erm
-ba
sed
Lice
nse
s
TA
SK
ING
Te
rm-b
ase
d L
icen
ses
Oth
er R
ecu
rring
Altiu
m D
esig
ne
rN
ew
Pe
rpe
tua
l Lice
nse
s
TA
SK
ING
Ne
w P
erp
etu
al L
icen
ses
Oth
er N
on
-recu
rring
* Services includes revenue for TASKING, Altium Designer and NEXUS
Se
rvice
s *
10
20
10
30
40
50
60
$25.4(40.2%)
US Millions
$20.1(31.8%)
$4.9(7.8%)
$2.3(3.6%)$0.9
(1.4%)
$0.2(0.3%)
$0.6(0.9%)
$3.0(4.7%)$3.4
(5.4%)
$0.9(1.4%)
To
tal R
ev
en
ue
$63.2(100%)
Recurring Revenue
$35.8(56.6%)
Non-recurring Revenue
$27.4(43.4%)
NE
XU
S
Te
rm-b
ase
d L
icen
ses
$1.5(2.4%)
Revenue – Board and Systems [Martin]
BSD - Americas 5 Yr Revenue CAGR: 17%
5 Yr Recurring CAGR: 16%
$5m
$10m
$15m
$20m
$40m
2014 2015 2016 2018
H1
H1 Revenue: 17%
$25m
$30m
$35m
BSD – EMEA USD5 Yr Revenue CAGR: 15%
5 Yr Recurring CAGR: 17%
H1 Revenue: 38%
$5m
$10m
$15m
$20m
$25m
BSD – Rest of World 5 Yr Revenue CAGR: 11%
5 Yr Recurring CAGR: 11%
$3m
$5m
$7m
$9m
$17m
H1 Revenue: 32%
$11m
$13m
$15m
BSD – Total 5 Yr Revenue CAGR: 15%
5 Yr Recurring CAGR: 16%
H1 Revenue: 27%
$20m
$40m
$60m
$80m
Revenue
Recurring
H1 FY H1 FY H1 FY
2014 2015 2016 2018
H1H1 FY H1 FY H1 FY
2014 2015 2016
H1 FY H1 FY H1 FY2014 2015 2016 2018
H1H1 FY H1 FY H1 FY
2017
H1 FY
2017
H1 FY
2018
H1
2017
H1 FY2017
H1 FY
$100m
Revenue – Board and Systems
2013
H1 FY
2013
H1 FY
2013
H1 FY
2013
H1 FY
Revenue – TASKING and Octopart
12
MES (TASKING) Octopart
$2m
$4m
$6m
5 Yr Revenue CAGR: 15%
5 Yr Recurring CAGR: 12%
$2m
$4m
$8m
2014 2015 2016 2018
H1
H1 Revenue: 21.3%
$6m
H1 FY H1 FY H1 FY
2017
H1 FY
$12m
$10m
RevenueRecurring
$8m
2014 2015 2016 2018
H1H1 FY H1 FY H1 FY
2017
H1 FY
5 Yr Revenue CAGR: 44%H1 Revenue: 42%
2013
H1 FY
2013
H1 FY
13
Board and Systems – Underlying Metrics
Subscription Pool
Americas EMEA Rest of World
24,821
35,977 (+1,455)
15,378 (+ 1,387)
7,351 (+ 988)
25,000
15,000
10,000
5,000
20,000
-
30,00013,248 (+ 1,281)
FY14 FY15 FY16 FY18
Dec
26,943 (+2,122)
FY17
чDec Jun
Americas EMEA Rest of World
Altium Designer New Seats Sold
1,000
2,000
3,000
771 (+124)
755 (+83)
1,124 (+266)
1,916 1,756(-160)
2,162(+406)
2,650(+473)
2,177(+15)
2014 2015 2016 2018
H1
2017
H1 FYH1 FYH1 FYH1 FY
5,520(+339)
5,181(+863)
4,318(-337)4,655
35,00032,321
(+1,187)29,320
(+2,377)
Dec Jun Dec Jun Dec Jun
4,000
5,000
6,000
Altium’s Subscription Pool
14
20,000
10,000
5,000
0
15,000
25,000
30,000
35,000
40,000 +3,024+1,340
-2,90935,977
+6,269
+2,724 -5,605
31,134
34,522
June 2016
Ne
w
June 2017 Dec 2017
Growth pool ~ Developed Countries86% of subscription pool 87.7% renewal rate (FY17 - 86.6%)
Re
join
s &
Up
gra
de
s
La
pse
d
Constant pool ~ Developing Countries14% of subscription pool 30.1% renewal rate (FY17 - 35.8%)
Ne
w
Re
join
s &
Up
gra
de
s
La
pse
d
Su
bsc
rip
tio
n P
oo
l S
ize
15
Operating expenses
We support a Value-Based Market but, we service this market with a commodity selling model
R&D spend efficiency due to impact of restructured Tasking operations – R&D spending is aligned with our new release drumbeat
Sales and Marketing spending aligned to growth projections FY2017. Positioning reflected in FY2018 spends. We expect to experience positive impact moving forward
R&D
Sales
G&A
17.3 %
2015 2016 2018
100%
H1H1 H1
80%
60%
40%
20%
2017
H1
What Drives Altium’s UniqueOperating Leverage?
36.4 %
19.6 %
26.7 %
17.6 %
33.1 %
24.4 %
25.0 %
18.5 %
32.3 %
23.4 %
25.8 %
16.1 %
32.8 %
19.9 %
30.0 %
1.2 %
Acquisitions
EBITDA
Balance Sheet
16
FY14 FY15 FY18 H1FY16
$10m
$20m
$30m
$40m
$50m
$60m
$70m
$0
22,049
61,906
38,139
44,273
Dec-17 Jun-17 Jun-16 Jun-15
$ '000 $ '000 $ '000 $ '000
Cash and cash equivalents 36,025 44,273 38,139 61,906
Trade and other receivables 32,770 32,672 30,406 20,704
Other current assets 3,117 2,861 1,548 1,955
Total current assets 71,912 79,806 70,093 84,565
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
Other non-current assets 82,165 82,946 82,301 81,622
Total non-current assets 134,518 130,990 126,279 87,007
Total assets 206,430 210,796 196,372 171,572
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
Deferred revenue 37,378 38,436 32,234 28,773
Total current liabilities 50,250 57,223 45,703 41,718
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
Total non-current liabilities 14,394 13,611 19,874 8,252
Total liabilities 64,644 70,834 65,577 49,970
Net assets 141,786 139,962 130,795 121,602
Contributed equity and reserves 136,936 137,452 135,571 131,767
Accumulated profits (losses) 4,850 2,510 (4,776) (10,165)
Total equity 141,786 139,962 130,795 121,602
FY17
36,025
Cash and cash equivalents
FY18 H1 Cash includes payments for Upverter Acquisition ($US2.8M),
increased dividend ($US2.7M) and a contingent consideration payout of ($US6.2M)
17
Cash Flow
Dividends paid/declared
FY14 FY15 FY16
5AUD¢
10AUD¢
15AUD¢
20AUD¢
25AUD¢
0
8
4
8
8
10
10
13
Final
Interim
H1FY18 H1FY17 H1FY16 H1FY15
$ '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)
Payments for expenses relating to acquisitions (347) (72) (839) -
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
Payments for property, plant and equipment
(1,592) (2,548) (1,779) (1,195)
Payments for intangibles (231) - - -
Proceeds on sale of assets - - - -
Free Cash Flow 13,050 11,168 3,111 6,158
Cash flows from investing activities
Purchase of subsidiary and contingent considerations (9,048) (2,939) (10,767) -
Cash flows from financing activities
Proceeds from issue of shares - - - 39,966
Dividends paid (12,534) (9,830) (7,644) (7,941)
Repayment of borrowings (6) (28) (30) (38)
Net cash used (8,538) (1,629) (15,330) 38,145
Effects of exchange rate changes 290 (162) (223) (1,140)
Decrease in cash and cash equivalents (8,248) (1,791) (15,553) 37,005
FY17 FY18 H1
12
11
18
Half Year Results Key Metrics
USD millionsH1
FY18
H1
FY17
+/-
%
H1
FY16
H1
FY15
Revenue (excl. interest) 63.2 48.6 30% 42.6 37.6
Reported expenses 44.2 36.1 23% 31.9 27.5
• Business expenses 42.3 34.2 24% 30.9 27.5
• One-off expenses 1.9 1.9 N/A 1.0 -
EBITDA 19.0 12.5 51% 10.7 10.1
Depreciation and
amortization2.5 1.7 47%
1.0 0.5
EBIT 16.4 10.8 52% 9.7 9.6
Net interest 0.1 - N/A - 0.2
Profit before income
tax16.5 10.8 53%
9.7 9.8
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
H1
FY18
H1
FY17
H1
FY16
H1
FY15
EPS 11.48 7.64 7.12 5.63
Dividends (AU cents) 13 11 10 8
Key Margin Analysis
EBITDA Margin
Underlying EBITDA Margin
Net profit before tax margin
Net profit after tax margin
Effective tax rate
30.0%
33.1%
26%
24%
9.7%
25.8%
29.7%
22%
20%
8.6%
25.0%
27.5%
23%
21%
6.1%
26.7%
26.7%
26%
18%
30.6%
Balance Sheet (USD millions)
Cash and equivalents
Net assets
36.0
141.8
36.3
131.6
46.4
125.8
59.1
43.4
Operating cash flows 14.9 13.7 4.9 7.4
Agenda
2018 Half Year Financial Performance & Metrics
3 Leading and Transforming the Electronic Design Industry
Appendix: Company Overview
Company Highlights & Significant Achievements
2
1
4
Rise of Smart Connected Devices
20
Internet of Things is driving the proliferation of electronics
Electronics at the Heart of All Intelligent Systems
21
Printed Circuit Boards are central to the design & realization of electronics
22
Success depends on the ability to move quickly
through innovation cycles
IOT is Driving the Pace of Innovation
Existing tools do not
adequately address the
needs of high-tech products
Electronics is critical
to speeding up cycles
of innovation
23
Current Engineering Tools Fall Short
The current model for tool integration is old and
has evolved around the notion of “tool-chains”
CA
M
CA
E
PLM
MCAD - Mechanical Computer Aided Design
ECAD - Electronic Computer Aided Design
CAE - Computer Aided Engineering - Analysis and Simulation
CAM - Computer Aided Manufacturing
PLM - Product Lifecycle Management
24
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
25
IOT is Driving Change in Engineering Tools
TECHNOLOGY TRIGGER
PEAK OF INFLATED
EXPECTATIONS
TROUGH OF DISILLUSIONMENT
SLOPE OF ENLIGHTENMENT
PLATEAU OF PRODUCTIVITY
• Benefits better understood• New methodologies developed• Best Practices identified
• Startups formed• Early adopters found• First generation
products produced
• Next generation products are produced
• Mainstream adoption• Unfulfilled promises• Only a few successes• Scores of failure
Transformation of electronic design & its realization is critical to success
Gartner's Hype Cycle for IOT
Transforming Electronic Design & its Realization…
Global Printed Circuit
Board Market
Estimated size: $80 - $100Bn
Electronic Design
Automation Tools
Estimated size: $2 - $5Bn
Electronic Design &
Manufacturing Services
Estimated size: $1,000 - $1,500Bn
Global Semiconductor and Electronic
Parts Manufacturing & Distribution
Estimated size: $600 - $800Bn
Electronic
Components
System
Design
Board &
Circuit
Design
Board
Fabrication &
Assembly
Product
Assembly
Requirements Validation
Concept Realization
$2 TrillionEstimated Industry Size
26
The Two Circles of Transformation…
Electronic
Components
System
Design
Board &
Circuit
Design
Board
Fabrication &
Assembly
Product
Assembly
Requirements Validation
Concept Realization
27
Digital
Model
Continuity
Business
Model
Continuity
Two Domains of Transformation
Transformation must be pursued in two domains – Business & Technology
Agenda
2018 Half Year Financial Performance & Metrics
3 Leading and Transforming the Electronic Design Industry
Appendix: Company Overview
Company Highlights & Significant Achievements
2
1
4
1985
1991
Altium's Journey - a Long History and a Promising Future
1999
29
2006
2010
20142015
2016
Now
The company was founded by creating the first version of Altium Designer, Protel PCB
Altium Launches Protel for Windows - World's first Microsoft Windows-based PCB design system
Altium Successfully completes an IPO on Australian Stock Exchange
Altium launches Altium Designer 6, the world’s first Native 3D PCB design software
Altium launches Altium Designer 13 introducing DXP 2.0, its next generation integration platform opening up Altium Designer to third-party developers
2- Altium relocated its HQ to California USA
1- Successful capital raising of $44M on ASX
1- Altium acquires Octopart, the #1 electronic parts searchengine in the world
2- Altium acquires Ciiva a cloud based electronic components management system
Altium partners with Dassault Systemes SOLIDWORKS to deliver a specialized version of its PCB design software for SolidWorks users
1- Altium surpasses $US100 million revenue target and delivers $US110 million for financial year 20172- Altium acquires Upverter, the developer of the world’s first fully cloud, fully collaborative electronics design systems3- Altium releases Altium Designer 18 and launches NEXUS
Altium's Journey - a Long History and a Promising Future
30
Printed Circuit Board Design and Manufacturing Process
Bare BoardLayout Film Assembled BoardCircuit Diagram
Design Capture Layout Fabrication Assembly
Printed Circuit Board Design and Manufacturing Process
31
Altium Has Always Been Easy to Do Business With
Uncomplicated Value Proposition
Direct Sales Force
Free Technical Support
Easy to Get Up and Running
Easy to Learn, Easy to Use
Easy to Maintain with No Hidden Costs
Altium’s DNA
Altium the “Easy to” Company
A Unique PCB Solution For Every Usage Profile
32
Altium Products
33
Diversity of Application
34
Diversity of Application
35
High Profile Customers
Automotive
Electronics & High-Tech
Life SciencesAerospace & Defence Consumer- Electronics
SemiconductorsIndustrial ControlsResearch & Education
Mobile Devices
Computers
High Profile Customers
Global Reach
36
Global Reach
7.82
21.635.09
13.26
2.37
4.52
2.81
6.34
1.9
4.6
2014 2022
0
10
20
30
40
50
60
Tota
l R
evenue (
Bill
ions)
CAD CAE CAM AEC EDA
13.9%
13.0%
8.3%
10.6%
11.8%
37
Global Engineering Software Market revenue, 2014 and 2022
Computer Aided
Design (CAD)
Electronic Design
Automation (EDA)
Computer Aided
Engineering (CAE)
Computer Aided
Manufacturing (CAM)
Architecture
Engineering &
Construction (AEC)
Segments CAGRRevenue
Source: Transparency Market Research
38
The Altium Advantage
Transformational Leadership
Established Global Business User-Centric DNA
Altium’s Strategy for Success
Building Strong
Strategic
Partnership
Transforming
Electronic
Design & Its
Realization
Disciplined
Execution to
Achieve Market
Leadership
Building a Strong Partnership with Leading Engineering
Software Companies to Connect ECAD with MCAD & PLM
Maintaining Disciplined Execution and Remaining Single-Minded About PCB
Market Leadership
Being True to Our Deep Conviction that Altium’s Journey Will Bring About Transformation of the Electronics Industry
39
Altium Values…
“Growing Revenue Strongly” and“Expanding Profit Margin”
“Regular Product Releases” and“Delivering Next Generation Products”
“High Volume Selling” and“Sophisticated Value Proposition”
Sales
PeopleFinance
Product
0
4
“the Genius of AND”
“Diversity in Thinking” and“Aligned in Action and Purpose”
Diversity in Thoughts
Perseverance
Adaptability Agility
Ingenuity
Transparency
40
Altium’s Long-Term Outlook
Altium’s goal is to achieve $200 million in revenue by 2020
✓ 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