Altium 365 - Let the Transformation Begin - Technology and Strategy Presentation 6 December 2019 Sydney
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Technology and Strategy Presentation Altium 365 – Let the Transformation Begin 6 December 2019 Sydney Includes guidance and market update on page 52
Industry Transformation Through Market Dominance A Winning Strategy for Long Term Value-Creation Aram Mirkazemi – Chief Executive Officer
Altium’s Journey and Successful Track Record
Rebuilding Performing Leading Dominating & Transforming...
$300M
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
Electronic Design
$250M • Set Revenue
Target of $500M
for FY2025
60-80%
• Surpass $100M Revenue
$200M $172M
Target Set back in 2014 Revenue
23%
• Set Revenue Target of Rev. Growth %
$200M for FY2020
• Altium Acquires
$140M
100,000
• Successful Capital Raise Octopart the #1
26% Subscribers
of $44M on ASX Electronic Part
$150M
• Set Revenue Target of Search $500M *
$100M for FY2017 $111M
18% Revenue
$94M
17%
$80M
$100M 10-20% 10-20%
13%
$71M
15%
$62M $63M EBITDA
$55M 12% 36.5%
14%
EBITDA Margin %
$45M Electronic Parts & Electronic Manufacturing
32.0% Supply chain & Embedded Software
$33M
$50M $27M 30.0%
$23M 29.3%
$18M 28.3%
25.9%
$6M
$0.3M 9.5%
0.5% * The target revenue of $500M may include 5-10% from future acquisitions
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 3
Altium Aims to Unify and Connect Electronics
Industry Segmented Value Chains
Electronic Design
Estimated size: $2 - $5Bn
Electronic Manufacturing
Estimated size: $1,000 - $1,500Bn
PLM
Vendors
Electronic Parts Supply Chain
IC Design
Estimated size: $600 - $800Bn
Electronic Manufacturing Tools Vendors
Equipment Vendors
Simulation Semiconductor
Vendors Manufacturers
Electronic CAD
Vendors
Electronic Testing
Equipment Vendors
PCB Assemblers
Electronic Parts
PCB Fabricators
Manufacturers
Electronic
Manufacturing Electronic Parts
Services (EMS) Distributors
Electronic Electronic
Manufacturing Parts Search & Analytics
Supply Chain Content Aggregators
$2 Trillion
The three segments of the value chain are currently completely
Estimated Industry Size
isolated and digitally disconnected within their own chain 4
Industry Transformation Through Market Dominance
Market Market Industry
Leadership Dominance Transformation
1 LEAD 2 UNIFY 3 TRANSFORM
Altium must target 100,000 active subscribers by 2025 to compel key industry stakeholders to
support its agenda to transform electronic design and its realization
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 5
Phases in Pursuit of Leadership, Dominance and Transformation
LEAD UNIFY TRANSFORM
Building Altium Sharing Design Files Hosting Design Data Manufacturing PCB
Industry Cloud Platform on Altium 365 on Altium 365 on Altium 365
Transformation Altium 365 Light-weight Collaboration Structured Collaboration Industry-wide Collaboration
Extending Reach
Market Building High
and Going Direct Scaling Direct In-App Engagement
Performing Direct Sales for Man-Out-Of-the-Loop
Dominance Sales Force in Key Markets
Dominance
including China
Driving Innovation & Innovating as
Market Building High Establishing Yearly
Closing Capability Market Leader &
Performing R&D Innovation Cycles
Leadership Gaps with High-End Extending Lead
$100M $200M Current Phase $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 6
Executing in Concert and to a Higher Standard on Three Fronts
Channel Cloud
Extreme Reach and Capacity Higher Levels of Service and
(Challenge of Scale) Customer Engagement
(Challenge of Experience)
Leadership
Product & Channel Must Product Product & Cloud
be in Lockstep Maximum Power, Productivity and Coverage Must Work as One
(Challenge of Complexity)
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 7
Evolution of Altium’s “Line and Length” Strategy to the “Rule of 50”
• Consistent Revenue Growth and • % Revenue Growth + EBITDA margin % ≥ 50
Expanding Margin • Altium will provide guidance on Revenue and
• No revenue or guidance provided by the EBITDA margin
company; only analysts’ consensus • Consistently outperforming the Rule of 50 is the
• From 2012 to 2019 Altium has Delivered 8 domain of elite companies
years of consistent Revenue Growth and • Only Altium and Ansys have been able to
Expanding Margin consistently perform at this level
• Appropriate for Organic Growth • Appropriate for Transformational Growth
Optimal Performance Extreme Performance
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 8
An Operating Framework for Dominance and Transformation
Revenue
Performance
• For the next phase of growth, Altium will be thinking of its
business in terms of four zones, each with different
investment and return profiles Transformation Dominance
• Altium Designer, NEXUS, TASKING will be in the Zone Zone
Dominance Zone, while Altium 365 and Octopart will be
Transformational Growth Profitable Growth
in the Transformation Zone
Disruptive Sustaining
• Small acquisitions, such as PCB:NG, Upverter, Gumstix Innovation Innovation
will be in the Incubation Zone
Incubation Productivity
• Productivity Zone will include all systems and business Zone Zone
infrastructure (including Corporate Services)
Breakthrough Innovation Systems & Programs
• Altium will transition its reporting from FY21 to reflect this
framework for greater transparency
Enabling
Investment
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 9
Key Take-aways
• Altium’s next stage of growth will be distinctly different from its previous stages
• Altium will be pursuing Industry Transformation through Market Dominance requiring
execution on two parallel tracks
• In its next stage of growth Altium will be stepping up from Optimal Performance to Extreme
Performance requiring a change to its “Line and Length” strategy
• As a long-term commitment, Altium will be adhering to the Rule of 50 (% Revenue growth +
EBITDA margin % ≥ 50) in every year from FY2021 to FY2025
• Altium is providing annual Revenue and Margin guidance from FY2020
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 10Dominating the PCB Design Market Scaling to 100,000 Subscribers Henry Potts – Chief Sales Officer
A Winning Formula for Dominance in the PCB Market
Altium connects to users at all levels within
an organization providing a user experience
Altium’s Touch 05
that is unique within the industry
Go Direct Everywhere;
Altium’s touch matters
Always Improving 03
Sell what you have – more
will be there tomorrow
Everyone Counts 04
User Focus 01 Every Customer, Every Seat,
Focus on the USER and the Every $ Counts
Customers will follow
Great Product 02
Superior product that is easy
to use and affordable
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 12A Unique Direct Selling Model
01 A Unique Culture
Transactional selling is
01 04 Systematic at its Core
Mapping out flows and
04
an integral part of the establishing process, Automate
culture to eliminate the time sinks
02
05
02 Performance Matters
Every geography – every
One Channel
Engage the users/customers
05
team – every individual as a channel (sales &
measured marketing)
06 03
03 Everything Measured
Track metrics & KPIs, Provide
A Unique Product 06
The PRODUCT is different
real-time transparency via and so is the development
dashboards organization
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 13Scaling to 100,000 Subscribers
Competitive Expanding into Man out-of-the-loop Data driven account
displacement new markets selling approach based Intelligence
Altium’s transactional sales will be leveraged in
multiple ways to reach 100,000 subscribers
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 14Accelerating Growth in China
Vietnam
Beijing Altium’s license compliance
business in China shares many
Shanghai characteristics with Altium’s
systematic approach to sales
Shenzhen
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 15End-to-End Dominance – Every Segment & Every Region
Extreme Enterprises
* From Concept To Realization
Agile Enterprises
• Selling of the NEXUS solution
– Product + Process +
Services -> Customer
Relationships matter
Power Users & PCB
System Product Specialists
Design Assembly • Selling of CONCORD PRO on
the A365 platform at scale ->
User to User Collaboration
Board & Board matters
Circuit Fabrication &
Design Assembly • Selling Subscription & A365
platform services as a product
-> Retention of customers
imperative
Participating in All Design Segments Electronic
Components Makers &
from Simple, low cost products to
Entrepreneurs
Complex Enterprise systems
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 16
* Altium’s ECAD solution is built into Dassault Systemes’ 3DEXPERIENCE platformDomination Mindset
Controlling the narrative All geographies covered –
for PCB centric electronic all users engaged – all
01 02
systems design process – customers heard
What are the right steps?
Scaling sales by adding man-
Altium has captured thought out-of-the-loop processes to
leadership in the design 03 04 focus on retention and
space and needs to keep it product adoption
The product beat Collaborate with the leader
continues and the in the complex systems
05 06
competitor gap is closed development area –
Dassault Systemes.
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 17Altium 365 – Industry Challenges and Transformative Opportunities Electronic Industry is Ready for Disruption Leigh Gawne – Chief Software Architect
The Humble Field Effect Transistor
1E+10 1E+24
Unit cost, billionths of a dollar (Log Scale)
1E+23
1E+09
1E+22
Total transistor count (Log Scale)
1E+08 1E+21
1E+20
1E+07 1E+19
1E+18
1E+06
1E+17
1E+05 1E+16
1E+15
1E+04
1E+14
1E+03 1E+13
1E+12
1E+02 1E+11
1E+10
1E+01
1E+09
1E+00 1E+08
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Since 1960, there have been over 13 sextillion of these devices produced - that is 13 with 21 zeros on the end.
It is the most frequently manufactured human artefact in history. Volumes increase exponentially.
The unit cost has dropped from over dollar to a billionth of a dollar. Costs decrease exponentially. 19The Complex, Connected Digital World
Codebases
Millions of lines of code
Autonomous
0 1 2 3 4 5 6 7 8 9
Unix v 1.0 0.01 Operating System
Control Apple
Space Shuttle
1971
0.4 Machine Car Play
1M 1 10 20 30 40 50 60 70 80 90
Bacteria 1.1 Organism
Syphillis (Treponema pallidum) Cloud
Hubble Space Telescope 2 Computing
10M 1 10 20 30 40 50 60 70 80 90 Google
Boeing 787
total flight software
14 Modern Maps
F-35 Fighter jet
2013
24 Automobile
25M 1 10 20 30 40 50 60 70 80 90
Windows 7 40
50M
2009
Large Hadron Collider 50
Electrification
total code
Facebook 62
Machine
100M
(including backend code)
Vision
Artificial
Car software 100
Average modern high-end car Intelligence
Mouse*
Total DNA basepairs in genome
120
2B billion
Google
all internet services
Relentless pace of innovation underpinned by
2B
*Human Genome ≈ 3,300 billion “lines” of code the electronics industry at large 20Constricted Design & Realization
Innovators
Entrepreneurs Consumers
Dreams Design & Realization Customers
Ideas Users
Today
Tomorrow
Inherent inflexibility hinders progress in the
very world it was designed to support
21The Long Road to Production
The Breadboard
The “Box of Boards” Industry is good at
Prototype The “To-Scale”
Prototype
Prototype supporting this…
The “No Mods”
Working Prototype
The Pre-Production
Run Prototype
The Production
Device
The Confirmation
Prototype
…but not very good
at supporting this
22Siloed, Poorly Connected Value Chain
Hasn’t modernized. The …was to take the analog
internet arrived, but all we world and transplant it
seemed to do… into the digital domain
SUPPLY
DESIGN MANUFACTURE
23Altium 365 Connected Value Chain
Digital continuity enabled …for true digitisation and
by Altium 365 is the automation in the value
foundation… chain
SUPPLY
DESIGN MANUFACTURE
24Inflexible, Inefficient and Expensive
Low-Mix, High-Volume High-Mix, Low-Volume
(High Volume, Consumer Electronics) (Prototyping, Small to Medium Volume)
$ $$$$$
$$$$$ Quotation, $
Supply Chain
Management and Procurement and
$ Logistics Onboarding $$$$$
PCB Fabrication Data Processing,
and Assembly Machine Setup
$$$$$ $ and Configuration
The big things are cost optimised, expensive The expensive things take the time, poor
things amortised over the production cycle automation and efficiency
25Isolated Automation
Today - Human labour, expensive, error prone processes that don’t scale
Programming
Procurement
Inspection
Reporting
Validation
Machine
Quoting
Article
Status
Data
Tomorrow – Automation, digitised, repeatable processes that scale
Quoting Data Validation Procurement Machine Article Status
Programming Inspection Reporting
26Industry Must Advance
Innovation
Entrepreneurs Consumers
Dreams Design & Realization Customers
Ideas Users
Tomorrow
Tomorrow requires industry to adapt to
remove the barriers and widen the channel
27The All-Purpose Engineer
Architecture Scheduling
Overall architecture, bringing Project management elements,
together hardware and software making sure schedule is kept
elements
Costs Tasks
Being mindful of costs and working Juggling all task in efficient way,
to budgets parallel execution expected
Software Creativity
Embedded software and Developing innovative, creative
increasingly application software solutions to problems
Communication Hardware
Keeping stakeholders updated, Electronics design including
ensuring alignment schematic and layout
28Global Collaboration
Engineering Project Management
The all-purpose engineer Project management needs
works flexible hours to to see how things are
Customer Manufacturing
accommodate the customer progressing to keep on top
and meet deadline The customer expects of timing and costs The manufacturer is being
robust communication and asked to deliver faster than
provides continuous ever before
feedback
29Why Customers Choose Altium? Altium’s Unique Product and Customer Experience Ted Pawela– Chief Operating Officer Sergey Kostinsky – Chief Technology Officer
Altium’s Brand Is “B2U” (Business to User)
Competitors Altium
Dry, Logic Driven Sales & ✓ Emotionally Appealing Sales
Marketing Approach & Marketing
Complex Value Proposition ✓ Simple, User Focused Value
Directed to Company Proposition
Focus on Time, Money, and ✓ Focus on User Experience
Resource Savings and Productivity
31Focused On Helping End Users
AltiumLive User Conferences
OnTrack Podcast Series
University Team Sponsorships
32Focused On Helping End Users
Designer Resources Hub
User Forums Brand Advertising
Customer Videos
33Users Have a Say In Product Development
34B2U Philosophy Within The Product Team
35Enabling Deeper User Engagement with Altium 365
Continuous Engagement Through The Product Experience
36
Enhancing Value of SubscriptionThe Market Sees That The Future Of PCB Design Is Altium
Industry Leading Financial Performance Market Share Leader in PCB Design Software
Revenue
EBITDA/ EBITDA Margin
Revenue growth
37Companies Also See Altium As The Future of PCB Design
Based on Open Job Postings On LinkedIn, Indeed, and Monster as of 11/29/19 38Users See Altium As The Future of PCB Design
Competitors
“Everybody that I’ve worked for – and I’ve worked in the
automotive industry, I’ve worked for Fortune 500 companies,
I’ve worked for startups - everybody has wanted Altium.”
-Mark Ross, PCB Designer at Progressive Dynamics
“This is the tool that a lot of people are using, and it’s
becoming more and more a standard in the industry.”
-Dugan Karnazes, Founder & CEO at Velocity Research 39Altium Designer Has Now Passed The Competition
40R&D Focus on User Experience
Competitor’s “Experience”
Altium Experience
41R&D Focus on User Experience
Competitor’s “Experience”
Altium Experience
42A Long History of Innovation In Productivity & User Friendliness
First integrated 3D PCB design
First with 3D STEP model
support
First integration of SCH and
PCB tools within single
application
First with eCAD centric
cloud platform
One of the first
affordable PCB layout
tools on PC
First unified application with
single data model for PCB
design
First PCB layout tool
on Microsoft 43
WindowsKeys to Continuous Innovation
Leveraging the Power of AND
Diverse, Global R&D Organization
Cloud AND CAD 44Keys to Continuous Innovation
Measure Everything
45Innovation Through Partnership
46Key Takeaways – Why Customers Choose Altium
1 Deep User Centricity At The Core Of Altium’s Brand
2 Altium Is Now The Obvious Choice – For Users, For Companies, For The Market
3 Altium’s Products Are The Best In The Industry
4 Altium Has A Proven Ability to “Out-Innovate” The Competition
47Financial Strength Powering a Transformative Journey Investing for Transformational Growth Joe Bedewi – Chief Financial Officer
Altium’s Track Record of Strong Financial Performance…
23% $35
$180M
Revenue $171.8m
$30
EBITDA/ EBITDA Margin 26%
$150M
$140.1m
Revenue growth $25
18%
$120M
17%
$110.9m
$20
13% $93.6m
$90M 15% $62.7m
12% $80.2m 36.5% $15
$71.0m
$44.9m
$61.9m
$60M 32.0%
$33.3m $10
30.0%
$27.4m
$22.7m 29.3% ALU Share Price
$18.3m 28.3%
$30M $5.9m 25.9% $05
9.5%
$0M
р
2013 2014 2015 2016 2017 2018 2019 2012 2013 2014 2015 2016 2017 2018 2019 2020
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 49Financial Strength is a Hallmark of Altium …
• A history of setting and over-achieving aggressive long-term financial targets
• Eight consecutive years of double-digit revenue growth & expanding margin
• Focused execution with the “ingenuity of and” delivering strong operating leverage
• Transparency for stakeholders and all-in reporting (no capitalization of R&D expenses)
• Value creation at every stage from leadership to dominance to industry transformation
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 50Investing for Transformational Growth
On-going Investments:
• Developing our new cloud platform Altium 365
• Building Octopart Parts Data platform to be industry’s single source of truth for all parts data
• Scaling and bringing efficiency to transactional sales (Cyberpods, business intelligence,
analytics & automation)
• Introducing in-app engagement for our growing customer base to accelerate adoption
• Expanding market reach
Future Investments:
• Driving adoption of Altium 365
• Brand advertising for extreme reach
$100M $200M $500M
Revenue Revenue Revenue
35,000 50,000 100,000
Subscribers Subscribers Subscribers
2012 - 2014 2015 – 2017 2018 - 2020 2021 - 2025 51Guidance & Outlook…
• The proliferation of electronics through the rise of smart connected devices continues to drive growth for
our business for the foreseeable future
• Altium is confident of exceeding its 2020 target of US$200 million revenue and is committed to an
EBITDA margin floor of 37% (excluding the positive impact of the new leasing standard)
• Altium is committed to achieving 100,000 subscribers by 2025 for market dominance & to a revenue
goal of US$500 million in 2025 and expects to reach the halfway mark of 50,000 as early as 2020
• As a long-term commitment, Altium will be adhering to the Rule of 50 (% Revenue growth + EBITDA
margin % ≥ 50) in every year from FY2021 to FY2025
• Altium comments on full year FY20:
• Altium’s revenue is historically skewed to the second half, whilst costs are approximately equally
split between the halves
• Due to the global manufacturing downturn and the temporary effects of changes in Google Search
Algorithm Octopart’s growth in the first half is being impacted
• Revenue in the range of US$205 million to US$215 million
• EBITDA margin in the range of 37% to 38% (excluding the positive impact of the new leasing
standard)
52Thank You
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