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TRANSCRIPT
Technological Innovation Seminar
ParisDecember 3, 2019
2ATEME © 1991-2019
Disclaimer
This presentation does not constitute or form part of and should not be construed as any offer for sale of or solicitation of any offerto buy any securities of ATEME, nor should it, or any part of it, form the basis of or be relied on in connection with any contract orcommitment whatsoever concerning ATEME’s assets, activities or shares.
All statements other than historical facts included in this presentation, including without limitations, those regarding ATEME’sposition, business strategy, plans and objectives are forward-looking statements.
The forward-looking statements included herein are for illustrative purposes only and are based on management’s current views andassumptions. Such forward-looking statements involve known and unknown risks. For illustrative purposes only, such risks includebut are not limited to impact of external events on customers and suppliers; the effects of competing technologies competitiongenerally in main markets; profitability of the expansion strategy; litigation; ability to establish and maintain strategic relationshipsin major businesses; and the effect of future acquisitions and investments.
ATEME expressly disclaims any obligation or undertaking to update or revise any projections, forecasts or estimates contained in thispresentation to reflect any change in events, conditions, assumptions or circumstances on which any such statements are based,unless so required by applicable law. These materials are supplied to you solely for your information and may not be copied ordistributed to any other person (whether in or outside your organization) or published, in whole or in part, for any purpose.
3ATEME © 1991-2019
Presenters
Michel ArtièresFounder & Chief Executive Officer
Degree in Engineering from Supelec, Paris, with a specialization in signal processing and telecommunications
Fabrice Sana Chief Financial Officer
Degrees from the European Business School and ESSEC
4ATEME © 1991-2019
• Western Europe Regional Manager, Peak Scientific
• First head of sales and in charge of the company’s growth strategy at ATEME from 2001 to 2015
• Automotive market for simulation software editor, MSC Software
• International business development of ModusLink
• HEC, Paris and CEMS.
• Head of Financial Communications, Chief Transformation Officer of Eutelsat Communications
• Partner at the capital markets consultancy, Makinson Cowell (KPMG)
• Head of European equity research at BNP Paribas and head of Pan-European research at ABN AMRO.
• University of Cambridge.
Joanna Darlington Michel Artières Jacques Galloy
Board of Directors
• Co-founder, President and CEO of ATEME.
• R&D Directors in Image Processing and Compression at the French Ministry of Defence (works in the field of progressive lossless compression for very high definition images, and blurred image restoration in noisy environments)
• Supelec Paris
• Founder of Gaudeto, an Advisory and Investment Company focused on small to mid-size technology and media companies.
• Board member and CFO of EVS, worldwide leader in TV Technology niches, a top 30 Belgian listed company.
• Co-founder of Dcinex for 8 years till 2013, European leader in digital cinema.
Benoit Fouchard Laurent Cadieu
Independent Independent Independent Observer/Independent
• Founding Managing Partner of Largam, an investment boutique
• Head of European Equities of BNP Paribas,
• Member of the board of Nasdaq Europe and Easdaq
• Director of small technology companies in Europe.
• Ecole Polytechnique and ENST
5ATEME © 1991-2019
1.ATEME for beginners2. Market Trends
3. More for experts
4. Financial Performance
5. Strategy
6ATEME © 1991-2019
ATEME Factsheet
36 Patents
274 people in 18 countries
700 clients in 100 countries
Public since 2014
56.5 M€ in 2018 (+16%)
ATEME designs software video compression solutions to enable innovative live or on demand video delivery
services while preserving picture quality.
Strategic partnerships
7ATEME © 1991-2019
A Complete Offer for the Complete Video Flow
Service Provider(Satellite, Cable, Telco)
Video Headend
Event
ContributionPrimary
DistributionDistribution
OTT / Multiscreen
Subscriber
CDNContent Provider
TV Network
Kyrion encoders in the trucks and decoders at the TV station
TITAN is a virtualized Video Headend software covering all Live and File needs
8ATEME © 1991-2019
1. ATEME for beginners
2.Market Trends3. More for experts
4. Financial Performance
5. Strategy
9ATEME © 1991-2019
Video Growth DriversContinued Demand for High Efficiency Compression
Content Explosion
DelinearizationMore channels, more content
Monetization Opportunities
Multiplication of distribution formats
New Distribution Models
Multiscreen, OTT
Ultra HD Television
4K, HDR, WCG, HFR
Video content in global Internet traffic :
2018
75%Source : Cisco Visual Networking Index
2022
82%
10ATEME © 1991-2019
Industry Shift to Software, the Revolution in Progress
Today, Service Providers deploy Software Converged Video Headends (Live + VOD, Box + Multiscreen), in a virtualized environment
Legacy Video Headendfor the linear distribution to the box
VOD and Multiscreenseparated infrastructure
Software Virtualized Video Headendrunning on a private cloud
=Software
Virtualized Headend
Running on
Private cloud
+ + Multi-Screen
VOD
10 years ago,Video Head Ends consisted in heterogeneous specialized hardware for each operation
Then,VOD and multiscreen were added and managed as separate operations
Legacy VHE
11ATEME © 1991-2019
Sept 2015
$300-500M(5-7x Sales)
acquires
Sept 2015
$125M (4x Sales)
acquires
Dec 2015
€69M (1x Sales)
acquires
Consolidation Clearing the Way for ATEME
Essentially down from 7 to 4 Players
• Envivio partners are Ericsson competitors
• Redundant employees (Sales worldwide)
• Products end of life confusing clients
• Redundant employees (Rennes R&D) Ideal
Scenario
for ATEME
Jan 2018
acquires 51% of
and becomes
Oct 2018
acquires 100% of SPVTG
and becomes
• US service providers running away from their competitor (Amazon Prime Video)
12ATEME © 1991-2019
1. ATEME for beginners
2. Market Trends
3.More for experts4. Financial Performance
5. Strategy
13ATEME © 1991-2019
30% density increase without network or
decoder/STB upgrade
QAM reclamation enabling new services
ATEME’s research team is working to help
define the next MPEG video compression
standard
Close partnership with
Reduce the required bandwidth for main-
screen & OTT HD
Reduce the solution’s TCO
1st to market with a production -ready
HEVC solution
Deploying HEVC projects with Tier1 clients worldwide
Transforming Video Delivery, Reducing Distribution Costs
MPEG2 (1994)
The only compression vendor part of
AV1, the royalty free codec, will be released in 2018 and supported
by TITAN
H264 (2003) HEVC (2013) AV1 (2018) H266 (2020 ?)
TITAN supports all international video compression standardsRecent involvement of ATEME R&D and deployment successes include:
14ATEME © 1991-2019
ATEME member of Alliance for Open Media
Internet leaders partnering to standardize AV1 in 2018, a royalty-free alternative to HEVC
Technology Leadership through Standardization Activities
Television Formats
Co-Chairmanship of 2 working groups at ITU for HEVC
Final Performance of the HEVC Standard
ATEME involvement in the standardization activities is unique amongst video compression vendors
15ATEME © 1991-2019
Growing Demand For UHD TV
4K TV
+38%CAGR 2017-2022
Source : Dataxis
Growing number of 4K Set-Top Boxes
4K STB
31 millionunits
in 2017
There are now 142 channels and services transmitting in 4K worldwide of which:• 85 coming from IPTV-based services (60%) ;• 55 coming from satellite (39%) ;• 2 coming from terrestrial channels that are making experimental broadcasts (1%).
Source : Eutelsat Report, Oct. 2018
Connected 4K TV sets
162
260
379
514
658
799
2017 2018 2019 2020 2021 2022
Source : CISCO VNI global IP traffic forecast 2017-2022
By 2022, nearly two-thirds
(62%) of connected flat panel
TVs will support 4K.
Un
its
-in
mill
ion
s
16ATEME © 1991-2019
ATEME Honored By Sinclair Broadcast Group
“ATSC 3.0 will be a huge opportunity for broadcasters specifically because of the data they will be able to collect within 3.0’s IP-based delivery system that establishes two-way communication between broadcasters and viewers.” - David Smith, chairman of the Sinclair Broadcast Group.
« Next Gen TV » is based on ATSC 3.0, the new standard for the terrestrial digital broadcasting system in the United States and Korea
Sinclair and its joint venture ONE Media announced 40 U.S. cities getting ATSC 3.0 next-generation TV by the end of 2020.
$6.7B 2018 REVENUE
191 TELEVISION STATIONS
607 CHANNELS
89 US MARKETS
17ATEME © 1991-2019
Others Trends We Monitor
Dec. 1st, 2018 :NHK launched the first 8K channel in the world with a broadcast of “2001: A Space Odyssey.”NHK to broadcast 2020 Olympic Games in 8K.
Numerous Content/Service Providers launch 5G trial5G promises higher quality/faster delivery of entertainmentMay accelerate cord-cutting effect and enable more app-type bundles to succeed
18ATEME © 1991-2019
1. ATEME for beginners
2. Market Trends
3. More for experts
4.Financial Performance5. Strategy
19ATEME © 1991-2019
2011 2012 2013 2014 2015 2016 2017 2018 2019
Q1 Q2 Q3 Q4
Revenues Evolution by Quarter
€37.5m
€28.6m
€12.3m
€17.9m€20.6m
€24.8m
IPO
€48.6m
+18%Organicgrowth
for 9M 2019
+14%at constant
exchange rate
€56.5m
9.6
13.7
13.6
16.5
9M 2019 : €45.5m
15.4
15.2
20ATEME © 1991-2019
9M 2019 Revenue Split and Growth by Region
EMEA34%
USA/Canada39%
LATAM15%
APAC13%
USA/CAN+14%
LATAM+48%
APAC+1%
9M 2019 REVENUE SPLIT BY REGION 9M 2019 REVENUE GROWTH BY REGION
-xx%at constant
exchange rate
+xx%at constant
exchange rate
+xx%at constant
exchange rate EMEA+22%
+7%at constant
exchange rate
+40%at constant
exchange rate
-4%at constant
exchange rate
Successful roll-out of multiyear engagements with key customers
21ATEME © 1991-2019
H1 2019 P&LConsolidated data – IFRS –in thousands of euros
Improved product mix but volume of third-party products, notably servers sold along with TITAN software, remained material, limiting the improvement in Gross Profit
Opex was contained at 12%, less than half the level of topline growth
H1 2018 H1 2019 % change
Revenue 23,236 30,080 +29%
Gross profit 10,454 14,052 +34%
Gross margin 45.0% 46.7% +1.7 points
R&D expenses (3,930) (4,507) +13%
Sales & marketing expenses (8,524) (9,095) +9%
G&A expenses (1,270) (1,706) +34%
Total Opex 13,724 15,308 +12%
Operating profit (3,269) (1,256) na
Financial loss (77) (102)
Financial profit 9 4
Exchange effect 240 159
Tax income (95) 12
Net profit (3,192) (1,182) na
22ATEME © 1991-2019
IPO July 2014
20162015
2014
Growing Profitably Since 20162017
€12.3m
€-2.5m
€15.0m
€-1.6m
€16.3m
€0.0m
€12.9m
€-1.1m
€11.9m
€-0.9m
165
135
170
€22.5m
€3.6m
Revenues
Net Loss/Profit
220
€20.9m
€0.3m
€27.7m
€3.5m
2018
€23.2m
€-3.2m
252
€33.3m
€4.9m
€30.1m
2019
€-1.2m
274
23ATEME © 1991-2019
2019/06/30 Balance SheetConsolidated data - IFRS – in thousands of euros
2018/12/31 2019/06/30
ASS
ETS
Non-current assets 6,757 8,515
Current assets 37,518 37,366
o/w stocks 3,625 3,686
o/w trade receivables 21,865 22,274
o/w cash and cash equivalents 6,254 4,526
44,275 45,881
LIA
BIL
ITIE
S
Shareholders’ equity 21,537 21,045
Non-current liabilities 5,629 6,719
o/w non-current financial debt 4,636 4,154
Current liabilities 17,108 18,117
o/w current financial debt 1,137 1,044
o/w trade payables 8,738 7,828
44,275 45,881
24ATEME © 1991-2019
H1 2019 FCFConsolidated data - IFRS – in thousands of euros
Cash position end of June 2019: €4.5m
2018/06/30 2019/06/30
Net Profit (Loss) (3,192) (1,182)
(-) Elimination of non-cash elements 1,441 1,671
Gross cash flow (1,751) 489
(-) Change in Working Capital (7,836) 923
Cash flow from operations 6,084 (434)
Cash flow from investing activities (1,603) (1,000)w/o new tangible and intangible fixed assets (1,334) (538)w/o capitalisation of development costs (294) (300)
Cash flow from financing activities (122) (269)w/o exercice of stock-options 689 310w/o interest expense (7) (58)w/o repayment of loans and contingent advances (795) (580)w/o repayment of financial leases (156) (393)w/o other financial flows (including factoring) 148 451
Currency effect 34 14
Net Change in Cash 4,394 (1,689)
Opening Cash position 2,439 6,206
Closing Cash position 6,832 4,517
25ATEME © 1991-2019
1. ATEME for beginners
2. Market Trends
3. More for experts
4. Financial Performance
5.Strategy
26ATEME © 1991-2019
The Media Landscape
Studios/Broadcasters/NetworksCreated string brands in the 80’s-90’s
Service Providers (MVPDs) Historically, got the broader access to customer
SVOD or Ad-Supported VOD ServiceImpose Binge Watching as the Way to consume video
Virtual Service Providers (vMVPDs)New content or Skinny cost-effective bundlesNew
Entrants
Digital Native
Traditional Players
TV/STB native
Content ProvidersCreate/Produce/License Content
Service ProvidersAggregate/Distribute Content
27ATEME © 1991-2019
Prepare Expanding to CPs and SPs OTT delivery
Service Provider(Satellite, Cable, Telco)
Video Headend
PrimaryDistribution
Traditional Distribution
SubscriberCDN
Content ProviderTV Network
CDN
2 Enable new decentralized
distribution workflow for SPs
1 Enable CPs’ direct access
to consumers
OTT
Most of ATEME business today
Playout Compression Distribution
28ATEME © 1991-2019
Playout Brings Video Contents To Home
Live Streams
Video Files
Subtitles
Playlist
Graphics
PLAYOUT
Source : ESPN User Interface
29ATEME © 1991-2019
TITAN Business Model
Industry standard : Project based business model New business model : Multi-year Engagement
• TITAN pay-up perpetual licenses (1 license per SD/HD/UHD channel)
• Recurring Annual support 15-20%
• Optionally some clients source the servers from ATEME
ATEME benefit: revenue predictability
Customer benefit: guarantee their move to a new video compression vendor is future proof
Year1 Year2 Year3 Year4 Year5
*
*Optionally some clients source the servers from ATEME
“Recurring CAPEX”:
• Most clients need additional licenses for extensions• Largest clients operate in multiple sites or countries
Each project includes: Largest clients operate multiple video headends
We offer these clients to “drive” ATEME software roadmap against multi-year commitment
30ATEME © 1991-2019
2020
2019Win the Video Head End market and prepare expanding to CPs and SPs OTT delivery
Gross Margin expected up(shift to software)
Increasing operating profit every year
Multi-year contracts leading to increasing predictability in topline growth (+20%), with contribution from all 4 regions
2 Year Plan
S&M investments to
keep developing our
international coverage, but will
not grow as fast as the topline
R&D investments to
develop innovative
Network solutions, but will
not grow as fast as the topline
31ATEME © 1991-2019
Investor Relations
Next investor dates
Market data
ISIN: FR0011992700 - Ticker: ATEME
Stock price: €10.60 (as of November 25, 2019)
Market cap: €110.9m (as of November 25, 2019)
Jan. 30, 2020 2019 Annual Revenues
Concert Artières
12%
Xavier Niel5%
Keren Finance
6%
Axa IM5%
Others < 5%72%
Liquidity contract: Kepler Cheuvreux
Source : Company, as of October 31, 2019
Shareholder structureNumber of shares: 10,463,938Potential dilution : 168,188
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