Altium Limited ASX Announcement

Altium Limited ASX Announcement
`
ALTIUM LIMITED
ACN 009 568 772
3 Minna Close
Belrose NSW 2085
Australia
t +61 2 9410 1005
f +61 2 9410 0509
www.altium.com
Altium Limited - February 2015 Investor Presentation
Sydney, Australia - 26 February 2015 - The executive management of electronics design software
company Altium Limited (ASX:ALU) will today hold investor presentations at the offices of Blue Ocean
Equities and Bell Potter in Sydney providing an update of the company’s business strategy and
financial performance.
The attached presentation will be given. A copy can also be found on the company’s website:
www.altium.com.
Investor Relations contact details:
Kim Besharati - VP Investor Relations & Corporate Affairs (US-based)
Ph: +1 858 864 1513
Mobile: +1 760 828 3567
Alison Raffin - Company Secretary (Australian-based)
Ph: +61 2 9410 1005
ENDS
About Altium
Altium Limited (ASX:ALU) is an Australian multinational software corporation 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 organisations and design communities to innovate, collaborate and create
connected products while remaining on-time and on-budget. Products provided are Altium Designer®, Altium Vault®,
CircuitStudio®, CircuitMaker®, PCBWorks® and the TASKING® range of embedded software compilers.
Founded in 1985, Altium has offices worldwide, with US locations in San Diego and Boston, European locations in Karlsruhe,
Amersfoort, Kiev 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 and YouTube.
Delivering Strong Performance &
Building Momentum for Further Growth
Altium Mid-Year Investor Presentation
26 February 2015
Sydney & Melbourne
Aram Mirkazemi CEO
Richard Leon CFO
Introduction
Disclaimer
Future performance
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.
Financial data
All dollar values are in US dollars (US$) unless as otherwise presented.
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.
INVESTOR PRESENTATION
2
Agenda
1
Company Highlights & Key Focus Areas for the Remainder of FY15
2
Half Year 2015 Financial Performance & Metrics
3
Market Opportunity & Growth Strategy
4
Appendix: Company Overview & Long –Term Outlook
Altium’s H1 FY15 Financial Highlights
Introduction
REPORT CARD
$40
Expanding Margins
26%
$35
(up 84% pcp)
Maintain top line growth and
expand margins.
$30
First half 17% revenue growth
and EBIT margin increased
from 16% to 26%.
$25
Increase subscription
renewals rates.
$20
Renewal rates in key regions
improved from 81% to 84% (3%
compared to FY14).
$15
Acquire New Customers.
Continued to aggressively
acquire new accounts at the
same level as FY14.
EBIT
$9.6M
$37.8M Revenue
(up 17% pcp)
5.63 EPS
(up from
3.11)
16%
27,000
Subscribers
(51% of H1 Revenue)
AU 8c
Dividend
(up 50%)
$10
$59.1M
Net
Cash
$5
$0
H1FY13
EXPENSES
H1FY14
EBIT
$33.7M Sales
(up 9% pcp)
H1FY15
EBIT margin %
INVESTOR PRESENTATION
4
Significant Achievements
5
Americas Sales – Furthering Momentum
Successfully transitioning to a
leveraged sales model
o High value sales through Altium direct
o Volume sales through the channel
delivering extended reach
US sales is regaining full strength
o Growing new licences
o Increasing subscriptions
o Launch of PCBWorks @ SolidWorks
World in February generating strong
interest from resellers
6
European Sales – Delivering Solid Performance
Confident we will achieve full year target
○
Additional resources & management focus to
ensure targets are achieved
○
Created and filled a new leadership role: VP
Sales, EMEA
○
Indirect territories on track to achieve their quotas
○
Underlying demand remains solid
7
Other Focus Areas for the Remainder of FY15
Aggressively
drive new
account
acquisition
Mobilise
resources to
further increase
our subscription
rates
Accelerate the
roll out of the
expanded
product range
Close-out
strategic
partnership
tracks to begin
selling and
drive revenue
Accelerate the
transition of
China towards
value sales
We are confident to achieve our full year
FY15 target of double digit growth
8
Agenda
1
Company Highlights & Key Focus Areas for the Remainder of FY15
2
Half Year 2015 Financial Performance & Metrics
3
Market Opportunity & Growth Strategy
4
Appendix: Company Overview & Long –Term Outlook
Altium’s Revenue Sources
Subscriptions Attachment
to New License Sales
Lapsed Subscriptions Re-joining
and upgrades
Altium
Subscription
(Recurring Revenue)
Altium Software
51%
(New Licenses)
(50% H1FY14)
(47% H2FY14)
Tasking Software
Subscription
Renewals
(New License & Maintenance)
Other
(Services & Hardware)
INVESTOR PRESENTATION
10
Altium’s Subscription Pool
2,700
Lapsed
Subscriptions
+2,230
Non-renewals
+1,330
New Subscriptions
Re-join
Attached to New License Sales
Lapsed Subscribers Re-joining and Upgrades
Developed pool = 85% of subscription pool
H1 FY15 Renewal rate of 84.6%
(up from 81.6% FY14)
Under-developed pool = 15% of subscription pool
(comprised mainly of China, Russia & Latin America)
Subscription Pool
~ 27,000 at Dec 14
H1 FY15 Renewal rate of 30.1%
(up from 23.4% FY14)
11
Seasonality Curves - Revenue: Sales: Deferred Revenue
Sustain revenue growth (13% CAGR)
notwithstanding quarterly seasonality
Linear (Deferred Revenue)
12
Altium’s H1 Revenue Contribution by Region
Introduction
Americas
EMEA
$16
$16
$14
$14
$12
$12
$10
$10
$8
$8
Historical
$6
$6
CAGR 13%
$4
$4
$2
$2
$0
Across All Regions
$0
FY10
FY11
FY12
FY13
FY14 FY15
FY10
FY11
China
FY12
FY13
FY14 FY15
APAC
$16
$16
$14
$14
$12
$12
$10
$10
$8
$8
$6
$6
Tasking (Licenses & Maintenance)
$4
$4
Altium Licenses
$2
$2
$0
Other
(Flat last three years)
Altium Subscription
$0
FY10
FY11
FY12
FY13
FY14 FY15
FY10
FY11
FY12
FY13
FY14 FY15
INVESTOR PRESENTATION
13
Altium’s Operating Costs
Workforce investment
Investment focus and deployment to
drivers of growth:
- R&D
- Sales & Marketing resources.
Customer success:
- Software maintenance
- Technical support,
Functions
- User education
Operating leverage increase
through growth of subscription
revenue
Research & Development
Sales & Marketing
Customer Success
General & Admin
FY14
FY15 projected
14
Altium’s Balance Sheet
Cash and Cash equivalents
Var
$ '000
$ '000
59,054
15,535
1,557
76,146
22,049
22,429
1,582
46,060
37,005
(6,894)
(25)
30,086
168%
-31%
-2%
65%
1,115
2,331
3,881
7,327
1,136
1,908
4,898
7,942
(21)
423
(1,017)
(615)
-2%
22%
-21%
-8%
Total assets
83,473
54,002
29,471
55%
Trade and other payables
Borrowings
Tax liabilities
Provisions
Deferred revenue
Total current liabilities
4,002
50
1,538
1,939
25,390
32,919
5,499
60
338
1,773
29,727
37,397
(1,497)
(10)
1,200
166
(4,337)
(4,478)
-27%
-17%
355%
9%
-15%
-12%
67
2,024
4,844
180
7,115
88
2,829
5,981
116
9,014
(21)
(805)
(1,137)
64
(1,899)
-24%
-28%
-19%
55%
-21%
Total liabilities
40,034
46,411
(6,377)
-14%
Net assets
43,439
7,591
35,848
472%
131,280
(87,841)
43,439
94,268
(86,677)
7,591
37,012
(1,164)
35,848
39%
1%
472%
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
$60
Capital
Raising
$50
Trade and other receivables
Property, plant and equipment
Other non-current assets
Total non-current assets
$40
$30
$20
Borrowings
Provisions
Deferred revenue
Other liabilities
Total non-current liabilities
$10
$0
FY11
-
Jun-14
Dec-14
$ '000
FY12
FY13
FY14
Successful capital raising
Operating Cash Flow up 16% to $7.4m
Minimal borrowings - Debt/Equity less than 1%
Dec-14
Contributed equity and reserves
Accumulated losses
Total equity
%
15
Altium’s Cash Flow
Dividends paid/declared
16.00
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Net Interest paid
Net income taxes paid
14.00
12.00
Operating Cash Flow
H1FY15
$ '000
H1FY14
$ '000
Var
$ '000
%
37,032
(29,499)
228
(408)
35,867
(29,052)
54
(553)
1,165
(447)
174
145
3%
2%
322%
-26%
7,353
6,316
1,037
16%
(1,195)
(407)
(788)
194%
6,158
5,909
249
4%
-
10.00
Capital Expenditure
Payments for property, plant and
equipment
8.00
Free Cash Flow
6.00
Cash flows from financing activities
Proceeds from exercise of options
4.00
Final
2.00
Interim
0.00
FY12
FY13
FY14
FY15
2,562
(2,562)
Proceeds from issue of shares
39,966
-
39,966
Dividends paid
Repayment of borrowings
(7,941)
(38)
(8,594)
(105)
653
67
Subtotal
Effects of exchange rate changes
Increase in cash and cash equivalents
38,145
(1,140)
(228)
17
(211)
38,373
(1,157)
37,216
37,005
> 100%
> 100%
> 100%
Steady increase in dividend payments to shareholders
16
Half Year Results Key Metrics
USD millions
H1FY15
H1FY14
Change %
Total Revenue (excl. Interest)
37.6
32.2
17%
Reported Expenses
(excl. D&A & Interest)
27.5
26.3
5%
EBITDA
Depreciation
Amortisation
10.1
0.4
-
5.9
0.5
0.3
69%
EBIT
Net Interest
Income tax expense
9.6
0.2
3.0
5.2
0.02
1.9
84%
NPAT
6.8
3.4
>100%
H1FY15
H1FY14
Change %
EPS
5.63
3.11
81%
Dividends (AU cents)
8.00
4.00
100%
Key Margin Analysis
EBIT Margin
EBITDA Margin
Net Profit Before Tax Margin
Net Profit After Tax Margin
Return on Equity
Debt/Equity
26%
27%
26%
18%
27%
0.3%
16%
18%
16%
10%
3%
1.9%
Balance Sheet (USD millions)
Cash & Cash Equivalents
59.1
22.0
>100%
Net Assets
43.5
7.6
>100%
Operating cash flows
7.4
6.3
16%
17
Agenda
1
Company Highlights & Key Focus Areas for the Remainder of FY15
2
Half Year 2015 Financial Performance & Metrics
3
Market Opportunity & Growth Strategy
4
Appendix: Company Overview & Long –Term Outlook
Rise of Smart Connected Devices
Web 1.0
Information
is Indexed
Search & Discovery
1990’s
Web 2.0
Social Networking
People are Networked
2000’s
Web 3.0
2010’s
Internet of Things
Electronics puts
Internet into Things
19
Printed Circuit Boards Central to Electronics
At the Heart of All Intelligent Systems Are Electronics and Printed Circuit Boards
20
Increasing Demand in Electronics is the Main Growth Driver
60%
By 2017
40% Electronic Value (Hines, 2012)
Traditional Vehicle
75% Electronic Value (Hines, 2012)
Hybrid/Electric
21
Use of Smart Electronics in Everyday Things
The Nest thermostat
learns the temps you
like, turns itself down
when you're away,
and has remote
control through Wi-Fi
Complex Design with Multiple
Printed Circuit Boards
22
DesigningSmart
Smart
Connected
Products
Multidisciplinary
Designing
Engineering
Connected
isProducts
Driving Market Convergence
Cloud System Engineering
Cloud application development and infrastructure
management
Cloud
Computing
Embedded System Engineering
Development of Control Systems in
Electromechanical devices
Electronics Engineering
Creation of high-performance electronic
hardware with complex form factor
Mechanical Engineering
Designing complex objects with sophisticated
electromechanical behaviour
Electrical Engineering
Development of wire harness and electrical systems
in Electromechanical devices
Altium - the Next Generation PCB Design Software Company
Altium is the only
pure-play PCB
design software
company in the
world
With over 30
years of
continuous
design in PCB
software Altium
is best in class
Our platform
base provides
agility to partner
with other
engineering
design tools
We support
deep integration
of our tools to
other
engineering
disciplines
(including
mechanical
CAD)
We support and
work with
specialised goto-market plays
24
Altium’s High Level Strategy
Build Momentum by
Focusing on Core
Strengths
Expand Market Reach
through Partnership
Acquisition
Grow Capability Through Acquisition
25
Growing Capability Through Acquisition & Partnership
Altium will Grow by Acquiring/Partnering with Brands that are
Associated with the Design of PCB and Smart Devices
New Partners
(Transaction Model
- Indirect)
MCAD
Farnell
(Catalogue-based
Model)
Brand Acquisition
TASKING
Acquisition Strategy
(Enterprise Model)
ALTIUM
(Transactional Model)
Technology Acquisition
Partnership Strategy
26
Altium’s Core Strengths & Enduring Competitive Advantages
Competitive Advantages
Core Strengths
Complex Software
IP Consisting of
Millions of Lines of
Code
Established
Brand in Most
Countries in the
World
Altium has a
Strong
Operating
Leverage
Altium is the Only
“Pure-Play” PCB
Company in the
World
Sustainable
Business
Expanding
Margin
Transactional Sales
Customer Stickiness
Value-based Sales with Strong
Operating Leverage
Altium Enjoys a High Level of
Customer Loyalty
27
Agenda
1
Company Highlights & Key Focus Areas for the Remainder of FY15
2
Half Year 2015 Financial Performance & Metrics
3
Market Opportunity & Growth Strategy
4
Appendix: Company Overview & Long –Term Outlook
30 Years of Continuous R&D in PCB Design Software
The company was founded by
creating the first version of Altium
Designer, Protel PCB
1985
Altium launches Altium
Designer 6, the world’s
first Native 3D PCB
design software
Altium Launches Protel for
Windows - World's first
Microsoft Windows-based
PCB design system
1991
1999
Altium launches PCBWorks
introducing a specialized version
of its PCB Design Software for
SolidWorks
2006
Now
2010
Altium Successfully
completes an IPO on
Australian Stock
Exchange
Altium launches Altium Designer
13 introducing DXP 2.0, its next
generation integration platform
opening up Altium Designer to
third-party developers
29
Printed Circuit Board Design and Manufacturing Process
Circuit Diagram
Design Capture
Layout Film
Layout
Bare Board
Fabrication
Assembled Board
Assembly
30
Altium Products
3D Printed Circuit Board
Design Software
Altium Vault
Tasking
Design Data Management &
Collaboration Software
Concept
Design
Capture &
Verification
Embedded Software
Development Tools
Embedded
Software
Development
FPGA
Prototype
Electronic
Design
Printed Circuit
Board Layout
Manufacturing
31
Diversity of Applications
Automotive
Aerospace &
Defence
Life Sciences
Mobile Devices &
Communications
ConsumerElectronics
Electronics &
High-Tech
Research &
Education
Industrial Controls
Automation
Computers
Semiconductors
32
High Profile Customers
Automotive
Electronics & High-Tech
Aerospace & Defence
Research & Education
Life Sciences
Industrial Controls
Mobile Devices
Computers
Consumer- Electronics
Semiconductors
33
Global Reach
Sales and Support Centres
Research & Development Centres
Main Operations Centres
San Diego, Boston, Karlsruhe, Shanghai, Sydney
San Diego, Ukraine, Netherlands, Shanghai
San Diego, Karlsruhe, Shanghai
Regional HQ
Global HQ
San Diego
Karlsruhe
Regional HQ
Shanghai
Corporate & Registered Office
ASX Listing Sydney
Network of channel partners, with over 50 authorized
Value-Added-Resellers
34
PCB Design Software Market Segmentation & Size
Total Market size: $800M
Currently Addressable: $500M
High-end
57% of market Value
Large engineering teams
designing complex products
High-end
Mainstream
36% of market value
Moderate to high design
complexity, carried out by
small teams of specialist
engineers
Low-end
7% of market
value. Simple
designs carried
out by multiskilled engineers
20k+ Price Range
Low-end
Less than 2k
Price Range
35
Industry Consolidation & Competitive Landscape
1960’s & 1970’s
1980’s
1990’s
2000’s
2010’s
Cadnetix
Daisy
High-end
Veribest (Intergraph)
Expedition
Mentor Graphics (Board Station)
Mentor Graphics
Racal-Redac
CR-5000/8000
Zuken (CR-2000)
Zuken
Allegro
ECAD (Cadence Allegro)
Mainstream
Cooper & Chan
PCAD
PADs
Cadence
Altium Designer
Altium
PADs (Mentor Graphics)
OrCAD
CADStar
OrCAD (Cadence)
CADStar (Zuken)
Low-end
Altium (Protel)
Accel Technology (Tango)
CADSoft (Eagle)
National Instruments
(Electronic Workbench)
Eagle
Electronic Workbench
Pulsonix
36
PCB Design Software - Global Market Share
Printed Circuit Board Estimated Market Share
(by Revenue)
Source: PCB Market Trends 2014 – Gary Smith EDA
37
Long-Term Outlook
The rise of smart
connected devices
is creating new
opportunities for
PCB
Expect to see
continuing growth
in revenue
(licences &
subscription)
Will maintain or
improve operating
leverage
The impact of
Altium’s higherend product
release in FY15 is
anticipated to be
felt during FY16
and beyond
Altium’s aspirational goal is to
achieve $100 million in
revenue by FY17
38