Oddo Forum - Lyon January, 2018 - Actusnews
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Oddo Forum - Lyon
January, 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 offer
to 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 or
commitment whatsoever concerning ATEME’s assets, activities or shares.
All statements other than historical facts included in this presentation, including without limitations, those regarding ATEME’s
position, 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 and
assumptions. Such forward-looking statements involve known and unknown risks. For illustrative purposes only, such risks include
but are not limited to impact of external events on customers and suppliers; the effects of competing technologies competition
generally in main markets; profitability of the expansion strategy; litigation; ability to establish and maintain strategic relationships
in 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 this
presentation 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 or
distributed to any other person (whether in or outside your organization) or published, in whole or in part, for any purpose.
2
ATEME © 1991-2017
Presenters
Michel Artières Fabrice Sana
Founder & Chief Executive Officer Chief Financial Officer
Degree in Engineering from Supelec, Degrees from the European Business School
Paris, with a specialization in signal and ESSEC
processing and telecommunications
Management Control Director for Karavel
R&D in Image Processing and Finance Controller for Alstom
Compression for the Manager at Arthur Andersen / BearingPoint
French Ministry of Defense
3
ATEME © 1991-2017
1.ATEME
2. Market Trends
3. Financial Performance
4. Strategy
4
ATEME © 1991-2017
ATEME Factsheet
Public since 2014 ATEME designs software video compression solutions
to enable innovative live or on demand video delivery
services. while preserving picture quality.
37.5 M€ in 2016 (+31%)
220 people in 18 countries
700 clients in 100 countries
Strategic partnerships
22 Patents
5
ATEME © 1991-2017
Over a Century of Combined Domain Leadership
Strategy Yossi Aloni EMEA Sales Emmanuel Boureau
• 20+ years of exec positions with operators. system • 20+ years supporting tier-1 service providers
vendors and technology providers • Led Ericsson & Harmonic sales
Product Remi Beaudouin North America Sales Chad Hassler
• 10+ years in video compression exec management • 20+ years supporting tier-1 service providers
• Lead WW Product Management/Marketing teams • Led Scopus & Harmonic sales
R&D Thierry Marre Latin America Sales Ezio Sanchez
• 20+ years of telecom & video engineering • 20+ years supporting tier-1 service providers
• Led +100p SW agile teams • Led NDS, Thomson & Conax Latam sales
CTO Pierre Larbier APAC Sales Yoann Poizeau
• 20+ years of compression innovation. 10 compression patents • 10+ years supporting tier-1 service providers
• DVB, ASTC, SMPTE, AOM Committees & Standards • Led Dalet APAC sales
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ATEME © 1991-2017
What is Video Compression and Why it Matters
Uncompressed HD
Compressed
Video Decoder
HD Video
~ 4 Mbits/s
~ 2 Gbits/s Encoder
Whatever the network (cable, internet, satellite, terrestrial), digital video has to be compressed 500x typically
• Compression is a Must. Video is 80% of the internet traffic*.
• The encoding technology is key
• ITU (Geneva) defines international standards MPEG-2 (1994), MPEG-4 (2003), HEVC (2013).
• An intelligent encoder (eg. including objects tracking algorithms) requires less bitrate for
the same video quality (or generates a better video quality at a given bitrate).
• The decoder is passive (2 decoders would always display the same video). No innovation
there.
* Cisco Visual Networking Index
7
ATEME © 1991-2017
Technology Leadership through Standardization Activities
Co-Chairmanship of ATEME member of
2 working groups at ITU for HEVC Alliance for Open Media
Television Formats Internet leaders partnering to standardize AV1 in 2018,
a royalty-free alternative to HEVC
Final Performance of the HEVC Standard
ATEME involvement in the standardization activities is unique amongst video compression vendors
8
ATEME © 1991-2017
Video Flow
Primary
Contribution Distribution Distribution
Event Content Provider Service Provider Subscriber
TV Network (Satellite, Cable, Telco)
Video Headend
OTT / Multiscreen
9
ATEME © 1991-2017
ATEME’s Kyrion Leading the Contribution Market
Event TV Station
Kyrion encoders in the trucks and decoders at the TV station
TECHNOLOGY BUSINESS MODEL COMPETITION USPs
Launched in 2007,
used for the most
prestigious events embeds ATEME CAPEX (refresh Ericsson Video Quality,
compression cycle ~ 4 years) + Upgradable
software on a FPGA Annual Support & (Software)
processor Maintenance
CLIENTS
CLIENTS broadcasters and service providers (direct), truck operators (indirect)
10
ATEME © 1991-2017ATEME’s TITAN the Distribution and OTT Challenger
Subscribers
Service Provider
(Cable, Telco, Satellite) TITAN is a virtualized Video Headend software
Video Headend covering all Live and File needs
TECHNOLOGY BUSINESS MODEL COMPETITION USPs
Launched in 2009 100% ATEME Recurring revenues Harmonic, Video Quality,
(VOD) and 2011 software despite perpetual Ericsson, Speed / Density,
(Live) licenses model Cisco 100% Home Grown
+ Annual Support & Software, Flexibility
Maintenance
CLIENTS
11
ATEME © 1991-2017Strategic Partners
Better performance Better exposure,
(video quality / density) lower cost solution
Enabling transition of Service Enabling access to Service
Providers to datacenters Providers datacenters
12
ATEME © 1991-20171. ATEME
2.Market Trends
3. Financial Performance
4. Strategy
13
ATEME © 1991-2017Growing Access to €1B Video Infrastructure Market 2017
€100m €250m €350m €300m
Segment Contribution Primary Distribution Distribution Multiscreen
Access ATEME core segment SW Shift in Progress IPO enabled, Winning now
ATEME
Product
Sources : Frost & Sullivan (2014), Company
14
ATEME © 1991-2017Video Growth Drivers
Continued Demand for High Efficiency Compression
+13%
Daily screen time
from 2011 to 2015
Content Explosion More Screen Time New Distribution Monetization Ultra HD Television
Models Opportunities
Delinearization TV declines but overall screen
More channels, more content time is increasing Multiscreen, OTT Multiplication of distribution 4K, HDR, WCG, HFR
source: eMarketer, Apr. 2015 formats
Ever-growing demand for video requires service providers to upgrade their distribution infrastructure
15
ATEME © 1991-2017Transforming Video Delivery, Reducing Distribution Costs
MPEG2 (1994) H264 (2003) HEVC (2013) AV1 (2018) H266 (2020 ?)
TITAN supports all international video compression standards
Recent involvement of ATEME R&D and deployment successes include:
30% density increase Close partnership with The only compression ATEME’s research team
1st to market with a
without network or vendor part of is working to help
production -ready
decoder/STB upgrade define the next MPEG
HEVC solution
video compression
QAM reclamation Reduce the required standard
Deploying HEVC
enabling new services bandwidth for main-
projects with Tier1
screen & OTT HD
clients worldwide
AV1, the royalty free
Reduce the codec, will be released
solution’s TCO in Q1’18 and supported
by TITAN in 2018
16
ATEME © 1991-2017Industry Shift to Software, the Revolution in Progress
10 years ago, Then, Today,
Video Head Ends consisted in VOD and multiscreen were Service Providers deploy Software Converged
heterogeneous specialized added and managed as Video Headends (Live + VOD, Box + Multiscreen),
hardware for each operation separate operations
in a virtualized environment
Software
Virtualized Headend
Legacy VHE
+ VOD
+ Multi-
Screen = Running on
Private cloud
Legacy Video Headend VOD and Multiscreen Software Virtualized Video Headend
for the linear separated infrastructure running on a private cloud
distribution to the box
17
ATEME © 1991-2017Consolidation Clearing the Way for ATEME
Sept 2015 Sept 2015 Dec 2015 March 2017
acquires
acquires acquires to sell its Media
Business
$300-500M (5-7x) $125M (4x) €69M (1x) $1 Bn sales in 2016
• US service providers • Envivio partners are • Products end of life
running away from Ericsson competitors confusing clients
their competitor • Redundant • Redundant
(Amazon Prime Video) employees (Sales employees (Rennes Ideal
worldwide) R&D)
Scenario
Essentially down from 7 to 4 Players
for ATEME
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ATEME © 1991-2017Towards a New Video Experience
iOs 11 iPhone 8/8+/X, MyCanal App Apple joins
to natively update with 4K Alliance for Open
Apple TV 4K Launch HEVC support Media (AV1)
support HEVC
JUNE 2016 SEPT 2017 Powered by SEPT 2017 JAN 2018
ATEME
Apple embraces 4K/HDR and both HEVC and AV1 video compression standards
19
ATEME © 1991-2017The End of Net-Neutrality - ATEME Opportunity
Increased Demand for High Video Quality at Low Bitrate
Net-Neutrality No Net-Neutrality without Net-Neutrality
Fast Lane Slow Lane Fast Lane Fast &Free
Equal Lanes Toll Free Toll Lane
Traffic
HD
User
Experience Powered
Buffering
by
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ATEME © 1991-20171. ATEME
2. Market Trends
3.Financial Performance
4. Strategy
21
ATEME © 1991-20179M 2017 Revenue : +25.1%
CAGR : +25% €37.5m 9M 2017 :
€32.0m
11 846
€28.6m
€24.8m 11 108
€20.6m
10 632
€17.9m
9M 2017:
10 291
€12.3m +25.1%
7 544
10 646
7 436
2011 2012 2013 2014 2015 2016 2017
Q1 Q2 Q3 Q4 IPO
22
ATEME © 1991-20179M 2017 Regional Performance EMEA
• Recent ramp-up of TITAN
-2% 37% software with leading European
32% of 9M 2017 service providers is gaining
of 9M 2017
revenue traction and should drive growth
over the coming quarters
+24%
USA/Canada
• Continuous Investment 13%
• Stronger presence of 9M 17
(Denver office and lab,
APAC
NYC next)
+29% • Continuous investment
• Tier1 operators won 19%
of 9M 17 • Reorganized sales and
operations (Singapore,
China, Korea)
Latin America • New projects with a major
• Investments made in 2016 to increase market global system integrator
+171% share and footprint are paying off
• Leading service providers deploying TITAN based
software solutions to power their video head ends
• Stronger presence (Mexico, Argentina, Peru next)
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ATEME © 1991-2017H1 2017 P&L
Consolidated data – IFRS –in thousands of euros
S1 2016 S1 2017 % change
Revenue 14,983 20,937 +39.7% +9 points increase in gross
margin notably thanks to the
growth in software sales
Gross profit 7,577 12,472 +64.6%
Gross margin 50.6% 59.6%
R&D expenses (2,640) (2,945) +11.6% Operating expenses
Sales & marketing expenses (5,914) (7,554) +27.7% contained:
Other G&A expenses (655) (843) +28.7% • Increase in R&D investments
• Continued S&M international
Operating profit (1,632) 1,130 ns expansion
Operating margin -10.9% 5.4% • 30 hires
Financial loss (80) (103) +28.8% €1.1m operating profit
Financial profit 8 31 +287.5%
Exchange effect 64 (800) -1 350.0%
Net profit (1,640) 258 ns €0.3m net profit
Net margin -10,9% 1.2%
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ATEME © 1991-2017Successful Strategy Since the IPO
2014 2015 2016 2017
€22.5m €20.9m
€16.3m €15.0m
€11.9m €12.9m €12.3m
Revenues
€3.6m Net Loss/Profit
€-0.9m €-1.1m €-2.5m €0.0m €-1.6m €0.3m
IPO
July 2014
220
165 170
135
Phase 1: Phase 2: Phase 3: Growth acceleration 50 hires in 12 months (R&D in
30 hires in 6 months Design of TITAN 4 and reorganization Commercial in H2 2016: a 2 years France, Support engineers and Sales
(opened Rennes R&D office) of international offices launch ROI since the IPO in all 4 regions)
25
ATEME © 1991-20172017/06/30 Balance Sheet
Consolidated data - IFRS – in thousands of euros
2016/12/31 2017/06/30
Non-current assets 5,068 5,437
Current assets 23,156 26,775
ASSETS
o/w stocks 3,094 3,930
o/w trade receivables 13,052 13,390
o/w cash and cash equivalents 4,096 5,269
28,224 32,211
Shareholders’ equity 13,845 14,282
Non-current liabilities 4,300 4,465
LIABILITIES
o/w non-current financial debt 3,782 3,895
Current liabilities 10,079 13,465
o/w current financial debt 957 1,598
o/w trade payables 4,201 6,272
28,224 32,211
26
ATEME © 1991-2017H1 2017 FCF
Consolidated data - IFRS – in thousands of euros
Increase in self-financing capacity
S1 2016 S1 2017 “CAF”
Net Profit (Loss) (1 640) 258
(-) Elimination of non-cash elements (923) (1 189)
Gross cash flow (717) 1 447
(-) Change in Working Capital (1 419) 321
Cash flow from operations 702 1 126 Positive Operating Cash Flow :
€1.1m
Cash flow from investing activities (1 446) (1 153)
w/o new tangible and intagible fixed assets (819) (718)
w/o capitalisation of development costs (610) (416)
Cash flow from financing activities (268) 1 191
w/o exercice of stock-options 0 684 New mid-term bank loan on H1
w/o new loans and contingent advances 0 700
w/o interest expense (6) (7)
w/o repayment of loans and contingent advances (459) (467)
w/o repayment of financial leases (46) (114)
w/o other financial flows (including factoring) 243 395
Currency effect (147) 10
Net Change in Cash (1 158) 1 174 Cash position end of June 2017:
€5.3m
Opening Cash position 4 222 4 095
Closing Cash position 3 064 5 269
27
ATEME © 1991-20171. ATEME
2. Market Trends
3. Financial Performance
4. Strategy
28
ATEME © 1991-2017Win The Video Headend, Expand to Video Networking
Video Is Clogging The Networks Continued Network Investment ATEME Metro Network
Not Meeting Video Demand Growth Video Processing
à
Enabling Video Growth Using
Video Grows 3-fold 26% CAGR Unveils $14 Billion Infrastructure Plan
Existing Network Infrastructure
• TITAN Video Head End software components can be reused in the Network to enable new video delivery schemes.
• Clients benefit: huge network infrastructure CAPEX and OPEX savings.
• ATEME benefit: huge TAM expansion ($25 Billion) with limited R&D and Sales costs (same clients).
• Similar strategy applied to firewalls proved very successful at Palo Alto Networks.
29
ATEME © 1991-20172017-2018 Plan
Head End
market and
prepare
2017
Win the Video
expanding to
Topline
expected to
keep growing in
the 20-30%
Gross Margin
expected up S&M
(shift to
software)
investments to
win the Video Head
End market and
R&D
investments to
prepare expanding
to Network, but
will not grow as fast
Targeting
double digit
operating
profit in 2018
2018
Network range prepare expanding as the topline
(all regions will to Network, but
contribute) will not grow as fast
as the topline
30
ATEME © 1991-2017Investors Relations
ELIGIBLE
PEA
Shareholder structure 500 000
PME
Number of shares: 10,275,289 19,00 €
450 000
Potential dilution : up to 236,494 shares Market data
17,00 €
400 000
15,00 € 350 000
ISIN: FR0011992700 - Ticker: ATEME
Founders and Business
angels 13,00 € 300 000 Stock price: €16.38 (as of 27 Dec. 2017)
management
250 000
11,00 €
15,6% 8,9% Market cap: €168 m (as of 27 Dec. 2017)
200 000
11,7% VCs 9,00 €
150 000
7,00 €
100 000
5,00 € 50 000
Free float 63,8%
3,00 € 0 Next investor date
Source : company, as of 30 Nov. 2017
February 1st, 2018 : FY 2017 Revenues
Liquidity contract: Gilbert Dupont Stock Price Volume
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