Altium Limited ASX Announcement

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Clare Edwards
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1 Altium Limited ASX Announcement ACN Altium Limited - Investor Presentation Sydney, Australia - 19 March The executive management of electronics design software company Altium Limited (ASX:ALU) will today hold an investor presentation in Sydney at the office of Bell Potter providing an update of the company s corporate and business strategy. The attached presentation will be given. A copy can also be found on the company s website: Investor Relations contact details: Alison Raffin - Company Secretary Ph: ENDS About Altium Altium Limited (ASX:ALU) creates electronics design software. Altium s unified electronics design environment links all aspects of electronics product design in a single application that is priced as affordable as possible. This enables electronics designers to innovate, harness the latest devices and technologies, manage their projects across broad design ecosystems, and create connected, intelligent designs. Founded in 1985, Altium operates worldwide. For more information, visit Altium, Altium Designer and LiveDesign, and their respective logos, are trademarks or registered trademarks of Altium Limited, or its subsidiaries. All other registered or unregistered trademarks mentioned in this release are the property of their respective owners, and no trademark rights to the same are claimed.

3 Disclaimer This Presentation has been prepared by Altium Limited (ACN ) 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 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. Past performance Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Copyright 2013 Altium Limited Page 2

5 Altium s Vision To enable engineers to design and build intelligent products to make for a better world Our vision is underpinned through recognizing that: Electronics is at the heart of building a smarter planet Future of electronic design is defined by smart connected devices Copyright 2013 Altium Limited Page 4

6 What We Do Altium enables engineers to design and build intelligent products to make for a better world Altium Electronic Design Automation Software Altium Content Altium NanoBoard Prototyping Boards Altium Community Altium Ecosystem Altium Design Data Management Altium Vault Copyright 2013 Altium Limited Page 5

China, Germany, Russia, Switzerland and the United States Rapidly growing network of

7 Growing Global Reach Headquarters in Shanghai, China Research & Development Centers in Amersfoort, Netherlands and Shanghai, China Sales and Support Offices in Australia, China, Germany, Russia, Switzerland and the United States Rapidly growing network of channel partners, with over 50 authorized Value-Added Resellers Copyright 2013 Altium Limited Page 6

8 Diversity of Applications Altium tools are widely used in a variety of industries Aerospace & Defense Electronics & High-Tech Life Sciences Automotive Consumer Electronics Semiconductors Industrial Controls & Automation Computers Mobile Devices & Communications Research & Education Copyright 2013 Altium Limited Page 7

Smart Connected Devices Parking aid - operates warning signal to let driver know how close they are to object behind them Airbag - triggers front and side airbags in event of crash or impact GPS

9 Smart Connected Devices Parking aid - operates warning signal to let driver know how close they are to object behind them Airbag - triggers front and side airbags in event of crash or impact GPS acquires position data from satellite and using road database provides direction to driver Alarm and immobiliser - controls security. Engine starts when two codes sent wirelessly via aerial in steering wheel Climate control unit - allows driver to control temperature with thermostat. Also detects pollutants and shuts off air intake accordingly` Automatic transmission - monitors weather, load, incline and position of accelerator to select best gear Engine management - controls fuel injection, engine temperature, ignition ABS - controls brakes in emergency and can brake any of four wheels to correct a potential skid Copyright 2013 Altium Limited Page 8

10 Diversity of Accounts Engineers worldwide in multiple industries of all sizes design with Altium Aerospace & Defense Electronics & High-Tech Life Sciences Automotive Consumer Electronics Semiconductors Industrial Controls & Automation Computers Mobile Devices & Communications Research & Education The trademarks and logos presented here are those of the respective companies and Altium makes no claim of trademark or other rights therein Copyright 2013 Altium Limited Page 9

11 Why Our Customers Buy Altium Capability to develop smarter devices with strong differentiation Shorter time-to-market Maximising return by hitting the market window Development cost reduction Hitting release targets 90% of the time or better Copyright 2013 Altium Limited Page 10

13 Altium s Corporate Strategy Mandate to pursue sustainable, long-term profitability Strong revenue growth Value discipline A rolling three-year strategic plan supported by: Openness in all pursuits technology platform & business model Customer centricity Focusing on our core competency Building financial strength Strategic partnerships Right balance Copyright 2013 Altium Limited Page 12

14 Growth Drivers PCB Design Software Market Expansion to upper and lower market segments Need More Design Capability Need Lower Total Cost of Ownership (TCO) (According to recent research by Gary Smith EDA) Copyright 2013 Altium Limited Page 13

15 Growth Drivers Sustainable organic revenue growth underpinned by robust market segment growth in Lower Mainstream Altium s sweet spot Expansion to the upper market segment through a new product structure & closing the technical capability gap Expansion to the lower market segment through partnership with component suppliers China opportunities large user base & Internet of Things (IoT) opportunities Copyright 2013 Altium Limited Page 14

16 Growth Drivers Product Development Strategy Focus our product development efforts around Board-Level design Close the capability gaps between Altium and our competitors Board-Level Design Emphasise system integration and openness with design tools Copyright 2013 Altium Limited Page 15

FY 2012 Highlights Strong sales performance Sales up 21% to $61m, Revenue up 14% to $55m Strong performance in subscription revenue Disciplined cost management Operating expenses^ down 2% to $47m

18 FY 2012 Highlights Strong sales performance Sales up 21% to $61m, Revenue up 14% to $55m Strong performance in subscription revenue Disciplined cost management Operating expenses^ down 2% to $47m Profit improvement Underlying profit^ $13m up from $2m Improvement in reported results Improved Balance Sheet Net cash doubled to $13m No debt Unfranked dividend of AUD 5 cents/share (Interim FY13 dividend of AUD 3 cents/share) Strong Performance (1st half) ^ Operating expenses & Underlying profit excludes one-off costs and non-cash expenses as reported ^ Operating (refer appendix) expenses & Underlying profit excludes one-off costs and non-cash expenses as reported Copyright 2013 Altium Limited Page 17

Continued Growth Predictable subscription sales 44% of sales derived from subscriptions and continues to grow High subscription attachment to

license sales Other revenue streams Embedded software compiler licenses and services contribute reliable and ongoing revenue $5m-$6m annually

19 Continued Growth Predictable subscription sales 44% of sales derived from subscriptions and continues to grow High subscription attachment to license sales contributes to growth Solid license sales Disciplined product development to reduce impact of irregular releases and to support license sales Other revenue streams Embedded software compiler licenses and services contribute reliable and ongoing revenue $5m-$6m annually Training revenue growth ~5% delivering $3m-$4m annually Continued sales & revenue growth supported by subscription model Copyright 2013 Altium Limited Page 18

Expanding into Addressable Market Addressable Market estimated >$700m market for 2013 Altium is currently positioned and performs strongly in the Lower Mainstream segment Forecast seat growth CAGR

21 Expanding into Addressable Market Addressable Market estimated >$700m market for 2013 Altium is currently positioned and performs strongly in the Lower Mainstream segment Forecast seat growth CAGR 10% in Lower Mainstream as opposed to CAGR 2%-3% growth in other segments* Expansion into other segments Already see success in expanding into other segments driven by our product s ability to address customers changing needs Targeted product development to achieve further commercial expansion into other segments Leading position in fastest growing segment * Gary Smith * According to recent research by Gary Smith EDA Copyright 2013 Altium Limited Page 20

Growth in Operating Regions Global coverage Expanded reach in Americas through sales channel development Europe return of business confidence Strategic move to

22 Growth in Operating Regions Global coverage Expanded reach in Americas through sales channel development Europe return of business confidence Strategic move to China to capitalise on large user base and access to larger talent pool Strong sales across all operating regions 1 st half Copyright 2013 Altium Limited Page 21

Content Driven Subscription Strong subscription attachment rates on license sales paired with high renewal rates support predictable ongoing revenue streams Meeting customer needs through continuous

23 Content Driven Subscription Strong subscription attachment rates on license sales paired with high renewal rates support predictable ongoing revenue streams Meeting customer needs through continuous stream of up-to-date content to match the fast pace of change Continue R&D investment to deliver subscription value to customers Continuing growth in subscription base from high attachment & renewal rates $25m FY12 subscription sales $25m up 27% from previous year Copyright 2013 Altium Limited Page 22

Disciplined Cost Management Discontinuation of non-core projects in 1 st half FY13 Savings up to $1m annually Other costs one-off relocation and restructuring costs completed in 1 st half FY13

24 Disciplined Cost Management Discontinuation of non-core projects in 1 st half FY13 Savings up to $1m annually Other costs one-off relocation and restructuring costs completed in 1 st half FY13 non-cash items include onerous lease provision (FY12) & share based payments (FY13) Value Framework Rigorous cost management process Disciplined cost approvals Low capital expenditure requirements Commercially focused R&D spend Value based cost management Copyright 2013 Altium Limited Page 23

25 Summary Expect continued sales growth New product released in early February expected to drive license sales Continued investment in content delivery to support subscription growth Mixed macro economic environment Americas expected to grow with early signs of recovery Europe may be impacted by slower growth Commercially focused R&D Sustainable profitability to support continued return of value to shareholders Discipline in product delivery and customer centricity to support business growth Copyright 2013 Altium Limited Page 24