2017 fy results - actusnews wire · content explosion delinearization more channels, more content...
TRANSCRIPT
2017 FY Results
March 28, 2018
2ATEME © 1991-2018
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 © 1991-2018
Presenters
Michel ArtièresFounder & Chief Executive Officer
Degree in Engineering from Supelec, Paris, with a specialization in signal processing and telecommunications
R&D in Image Processing and Compression for the French Ministry of Defense
Fabrice Sana Chief Financial Officer
Degrees from the European Business School and ESSEC
Management Control Director for KaravelFinance Controller for AlstomManager at Arthur Andersen / BearingPoint
4ATEME © 1991-2018
1.ATEME2. Market Trends
3. Financial Performance
4. Strategy
5ATEME © 1991-2018
ATEME Factsheet
22 Patents
220 people in 18 countries
700 clients in 100 countries
Public since 2014
48.6 M€ in 2017 (+30%)
ATEME designs software video compression solutions to enable innovative live or on demand video delivery
services while preserving picture quality.
Strategic partnerships
6ATEME © 1991-2018
A Complete Offer for 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
7ATEME © 1991-2018
1. ATEME
2.Market Trends3. Financial Performance
4. Strategy
8ATEME © 1991-2018
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 :
2017
75%
2019
80%
2020
84%
Source : Cisco
9ATEME © 1991-2018
Modern TV Networks are Growing Fast
Netflix Subscribers (in millions)
0
20
40
60
80
100
120
140
2012 2013 2014 2015 2016 2017
Source : Statista
0
2
4
6
8
10
12
14
16
18
2012 2013 2014 2015 2016 2017
Hulu Subscribers (in millions)
Source : Hulu
10ATEME © 1991-2018
Growing Demand For UHD TV
Western Europe UHD TV household forecast UHD TV
+32%by 2020
11ATEME © 1991-2018
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
12ATEME © 1991-2018
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:
13ATEME © 1991-2018
Sept 2015
$300-500M (5-7x)
acquires
Sept 2015
$125M (4x)
acquires
Dec 2015
€69M (1x)
acquires
Consolidation Clearing the Way for ATEME
Essentially down from 7 to 4 Players
• US service providers running away from their competitor (Amazon Prime Video)
• 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
14ATEME © 1991-2018
1. ATEME
2. Market Trends
3.Financial Performance4. Strategy
15ATEME © 1991-2018
2017 in Short
2017REVENUES
€48.6m
+30%
NET PROFIT
X2NET MARGIN :
8%
OPERATING PROFIT
x2.5OPERATING MARGIN :
10%
16ATEME © 1991-2018
7 436 10 646
7 544
10 291
10 632
11 108
11 846
16 554
2011 2012 2013 2014 2015 2016 2017
Q1 Q2 Q3 Q4
Consistent Organic Growth
€37.5m
€28.6m
€12.3m
€17.9m€20.6m
€24.8m
IPO
€48.6m
+30%CAGR
17ATEME © 1991-2018
2017 Revenue Split and Growth by Region
EMEA38%
USA/Canada32%
LATAM17%
APAC13%
USA/CAN+31.4%
LATAM+90.4%
EMEA+14.1%
APAC+25.8%
2017 REVENUE SPLIT BY REGION 2017 REVENUE GROWTH BY REGION
18ATEME © 1991-2018
Increasing Number of Customers, No Dependency
279327
378
2015 2016 2017
65,0%
35,0%
23,4%
6,5%
Others
Top 10 customers
Top 5 customers
1st customer
NUMBER OF CUSTOMERS INVOICED PER YEAR WEIGHT OF CUSTOMERS INVOICED IN 2017
+35%
19ATEME © 1991-2018
2017 P&LConsolidated data – IFRS –in thousands of euros
2016 2017 % change
Revenue 37,462 48,599 (1) +29.7%
Gross profit 22,083(2) 29,098 +31.8%
Gross margin 58.9% 59.9% +1.1 pt
R&D expenses (5,695) (6,158) +8.1%
Sales & marketing expenses(2) (12,490) (15,633) +25.2%
Other G&A expenses(2) (1,981) (2,416) +22.0%
Operating profit 1,918(3) 4,890 +155.0%
Operating margin 5.1% 10.1% +5.0 pts
Financial loss (207) (200) -3.4%
Financial profit 10 1 -90.0%
Exchange effectTax income
2470
(1,325)453
-100.5%
Net profit 1,968 3,819 +94.1%
Net margin 5.3% 7.9% +2.5 pts
+1.1 point increase in gross margin despite significant investment in the customer services team, thanks to the growth in software sales
Operating expenses contained:
• Increase in R&D investments
• Continued S&M international expansion
• Rise in total headcount from 170 to 220
Net profit x2
Operating profit x2.5
(1) 48 599 k€ vs 48 423 K€ published figures after consolidation of ATEME Singapore revenue (APAC) recognized on December 2017(2) Reclassification of « legal fees » from « cost of sales » to « G&A expenses »: positive impact of 52 k€ on growth margin 2016 versus published figures, no impact on operating profit and net profit.(3) At 31 December 2016 the level of amortization of capitalized development costs in conformity with the IAS 38 norm stood at 2 980 k€ against 2 736 k€ in the company’s accounts accounted under the R&D charge. The correction of this error impacted the 2016 operating profit and net profit for an amount of 244 k€.
Incl. deferred tax credit on loss carryover
20ATEME © 1991-2018
IPO July 2014
20162015
2014
Successful Strategy Since the IPO 2017
50 hires in 12 months (R&D in France, Support engineers and Sales in all 4 regions)
€12.3m
€-2.5m
€15.0m
€-1.6m
€16.3m
€0.0m
€22.5m
€12.9m
€-1.1m
€11.9m
€-0.9m
Phase 2:Design of TITAN 4 and reorganization of international offices
Phase 3: Commercial launch
165
135
170
€3.6m
Revenues
Net Loss/Profit
Growth acceleration in H2 2016: a 2 years ROI since the IPO
€20.9m
220
€0.3m
Phase 1: 30 hires in 6 months (opened Rennes R&D office)
€27.7m
€3.5m
21ATEME © 1991-2018
2017/12/31 Balance Sheet
Consolidated data - IFRS – in thousands of euros
2017/06/30 2017/12/31
ASS
ETS
Non-current assets 5,437 6,310
Current assets 26,775 32,591
o/w stocks 3,930 2,660
o/w trade receivables 13,390 23,718
o/w cash and cash equivalents 5,269 2,451
32,211 38,901
LIA
BIL
ITIE
S
Shareholders’ equity 14,282 18,917
Non-current liabilities 4,465 4,787
o/w non-current financial debt 3,895 4,222
Current liabilities 13,465 15,197
o/w current financial debt 1,598 1,622
o/w trade payables 6,272 6,72232,211 38,901
o/w 13.5 M€ not yet due linked to strong activity in Q4
22ATEME © 1991-2018
2017 FCFConsolidated data - IFRS – in thousands of euros
Increase in trade receivable (+10,3 M) linked
to the robust activity in Q4 (+38% in
revenue), especially in December
Cash position end of December 2017: €2.4m
Increase in self-financing capacity “CAF”
New mid-term bank loan on H1 (0.7 M) and H2 (1 M)
2016 2017
Net Profit (Loss) 1,968 3,819
(-) Elimination of non-cash elements (2,086) (1,937)
Gross cash flow 4,053 5,756
(-) Change in Working Capital 1,690 6,607
Cash flow from operations 2,363 (851)
Cash flow from investing activities (1,635) (1,756)w/o new tangible and intangible fixed assets (816) (1,110)w/o capitalisation of development costs (787) (607)
Cash flow from financing activities (795) 979w/o exercice of stock-options 0 905w/o new loans and contingent advances 0 1,700w/o interest expense (13) (14)w/o repayment of loans and contingent advances (907) (848)w/o repayment of financial leases (122) (241)w/o other financial flows (including factoring) 247 (523)
Currency effect (61) (27)
Net Change in Cash (128) (1,656)
Opening Cash position 4,222 4,094
Closing Cash position 4,094 2,439
23ATEME © 1991-2018
1. ATEME
2. Market Trends
3. Financial Performance
4.Strategy
24ATEME © 1991-2018
New Video Delivery Schemes Enabling Major TAM Increase
€250mPrimary
Distribution
€100mContribution
€300mOTT / Multiscreen
€350mDistribution
Sources : Frost & Sullivan (2014), Company
Video Delivery Infrastructure
WIN THE VIDEO HEADEND EXPAND TO VIDEO NETWORKING
• TITAN Video Head End software components can be reused in the Network to enable new video
delivery schemes• Limited R&D investment (reusing TITAN
components)• No go to market investment (same clients)
Traditional Video Compression Market = $1B Network Infrastructure Market = $25B
25ATEME © 1991-2018
Service Providers To Upgrade Their Distribution Infrastructure
à
CONTINUED NETWORK INVESTMENT NOT MEETING VIDEO DEMAND GROWTH
VIDEO IS CLOGGING THE NETWORKS
Unveils $14 Billion Infrastructure Plan
26ATEME © 1991-2018
New Video Delivery Schemes
Traditional distribution schemeA centralized Video Headend provides 1000 contents X 10 formats to the whole network
Video Headend
Adding video processing capabilities closer to the subscribers enables multiple benefits for the Service Provider:• Incremental revenues with targeted add
insertion at the Metro Network• Network CAPEX savings: TITAN’s JITT
(Just In time Transcoding) consists in sending into the network only 1 format per content. TITAN then generates specific formats upon request and available bandwidth, leading to 75% last mile bandwidth savings (1 format vs 10)
LAST MILE
ACCESS NETWORK
WIDE AREA AND METRO NETWORK
BACKBONE OR CORE NETWORK
27ATEME © 1991-2018
20202018Win the Video
Head End market and prepareexpanding to Network
Gross Margin expected up(shift to software)
Increasing operating profit every year
Toplineexpected to grow min 20%per year, with contribution from all 4 regions
3 Years 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
28ATEME © 1991-2018
Investors Relations
Next investor dates
Market data
ISIN: FR0011992700 - Ticker: ATEME
Stock price: €18.20 (as of 26 March 2018)
Market cap: €187 m (as of 26 March 2018)
Shareholder structureNumber of shares: 10,284,539Potential dilution : up to 227,244 shares
8,9%
11,7%
64,5%
14,9%
ELIGIBLE PEA PME
Business angels
Free float
Founders and management
VCs
Liquidity contract: Gilbert Dupont
Source : company, as of 31 Dec. 2017
May 4, 2018 2018 First Quarter Revenues
June 7, 2018 Annual Shareholders Meeting
July 25, 2018 2018 Half-Year Revenues
Sept. 27, 2018 2018 Half-Year Results
Nov. 8, 2018 2018 Third Quarter Revenues0
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