Announcement PDF ThePress Investor 1H Presentation FY21 Results 15 February July 2020 2021 Presentation Template Atomos unlocks creativity and profit for video content creators Democratising creativity in the video age Advanced technology allows faster, higher quality, more flexible productions Cupcake ipsum dolor sit amet. Sweet chupa chups cheesecake sugar plum. Sesame snaps cotton candy pie pie lemon drops ice cream croissant cheesecake. Tootsie roll tiramisu candy sesame snaps caramels halvah. Jujubes tiramisu fruitcake bear claw tiramisu wafer lemon drops candy canes dragée. “ Inventing and delivering ground-breaking technologies and products that democratise the creativity of content in the video age ” © ATOMOS 2021 | 1H FY21 RESULTS Agenda 1H FY21 Summary > Chris Tait, Exec Chair Financial Review > James Cody, CFO Group Strategy & Outlook > Chris Tait, Exec Chair 3 7 13 Q&A 22 Appendices 25 2 | 1H FY21 Summary Key Highlights Sales • $32.8m – strongest half in Atomos history Margin • 44.9% - ahead of expectations, in line with 1H FY20 (45.6%) ex COVID July sales promotions EBITDA • $3.0m1 – most profitable six months ever, 210% up on pcp2 Cash • $4.3m of cash generated (-$12.1m pcp) Strong Balance Sheet • $23.3m cash at 31 December 2020, access to undrawn $5m facility Scale Up Structure 1. 2. • Structured for rapid expansion - address global video phenomenon EBITDA excludes a one-off gain of $0.5m resulting from the renegotiation of the Melbourne head office lease PCP: prior corresponding period © ATOMOS 2021 | 1H FY21 RESULTS 3 | 1H FY21 Summary Macro COVID Global environment • Whole of business review: structure, cost base, processes • Leaner, stronger, more efficient • COVID ‘video growth phenomenon’ • Forex - natural USD hedge • Component supply – tight management, buffer inventory • Improved allocation of scarce resources • Harness / protect entrepreneur-led innovation heritage • Investment in capability – experienced, sector expertise • New website, ERP system, process disciplines • Strong and growing core: sales/margin, leverage fixed costs • Structured for scale – exploit the extensive opportunities Internal Organisation Scale-up Momentum © ATOMOS 2021 | 1H FY21 RESULTS 4 | 1H FY21 Summary Best-ever sales… building a new standard ProRes RAW ProRes RAW Enabled Camera Market • Oscar & Emmy awarded Apple video format launched in 2018 • Longstanding relationship with Apple - only Atomos licensed to record natively in ProRes RAW 2683 • Monthly activations of ProRes RAW increased fivefold in 12 months • Supported by major video editing platforms (Adobe, Avid & Apple) RAW Enabled Cameras • 10 major camera partners have now embraced the RAW ecosystem • RAW enabled cameras increased by 175% in 12 months 39 • Downward price pressure ecosystem affordability to a broader market • As ProRes RAW increasingly becomes the industry standard, the market for Atomos devices grows too 12 489 19 12 12 21 22 26 28 28 13 RAW Enabled Cameras © ATOMOS 2021 | 1H FY21 RESULTS 22 24 Monthly ProRes RAW Activations 5 | 43 Agenda 1H FY21 Summary > Chris Tait, Exec Chair Financial Review > James Cody, CFO Group Strategy & Outlook > Chris Tait, Exec Chair 3 7 13 Q&A 22 Appendices 25 © ATOMOS 2021 | 1H FY21 RESULTS 6 | 1H FY21 Financial Summary (For the 6 months ending, 31 December 2020) Sales Gross Profit / Expenses Earnings Cash Flow 1. 2. • 1H FY21 revenue of $32.8m, up 0.6% on pcp1 (1H’20: $32.6m) • Record first half revenue a strong recovery from COVID impact • Gross profit of $14.7m (44.9%), down slightly on pcp but in line (45.6%) ex. COVID July promotion • Fixed opex of $9.3m (down 22% on pcp) • Record first half EBITDA2 of $3.0m up 210% on pcp (1H’20: $1.0m) • NPAT2 of $1.3m for the half, up $2.4m on pcp (1H’20: -$1.1m) • Generated $4.3m of cash - significant improvement on past performance (1H’20: -$12.1m) • Cash flow positive - $23.3m of cash and access to $5m working capital facility Previous corresponding period Excludes a one-off gain of $0.5m resulting from the renegotiation of the Melbourne head office lease © ATOMOS 2021 | 1H FY21 RESULTS 7 | 1H FY21 Financial Snapshot Revenue by Market Segment (FY20 vs. 1H FY21) Pro Forma Revenue ($m)1 1H'20 54.0 44.4 31.1 16.7 2H 35.6 29.7 2H 17.3 2H 14.4 1H 18.4 1H FY17 FY18 $2.6m 11.8 2H 32.6 1H 1H'21 $6.5m $2.9m Social $7.0m Pro Video Entertainment 32.8 1H 24.2 1H $23.4m FY19 FY20 $22.6m 1HFY21 Pro Forma EBITDA ($m)1 H1 FY21 Revenue by Region 3.0 1.6 0.2 FY17 FY18 FY19 FY20 1HFY21 Asia 24% US 43% EMEA 33% (4.5) (7.1) 1 1H17, 2H17, 1H18 & 2H18 Unaudited © ATOMOS 2021 | 1H FY21 RESULTS 8 | 1H FY21 Financials - Pro Forma Income Statement Pro Forma (A$m) 1H'20 1H'21 ∆ pcp Key Insights: 32.6 32.8 (17.7) (18.0) (0.3) Gross Profit 14.9 14.7 (0.2) Gross Profit Margin 45.7% 44.9% • Gross profit margins down sightly due to tail of COVID promotion in July (impacted 1H’21 gross profit by 0.7%) Variable Operating Expense (2.0) (2.4) (0.4) Wages & Salaries (4.4) (4.6) (0.1) • Variable operating expenses up slightly, attributed to higher freight costs due to COVID Marketing (2.7) (0.9) 1.8 General & Administration (2.7) (1.8) 0.9 Other 0.0 0.1 0.1 Operating Expenses (11.9) (9.6) 2.3 EBITDA (pre R&D) 3.0 5.1 2.1 R&D Expenses (2.1) (2.1) (0.0) EBITDA 1.0 3.0 2.1 Depreciation & Amortisation (1.6) (1.5) 0.1 EBIT (0.6) 1.6 2.2 1. 2. 0.1 • Record 1H’21 revenue of $32.8m up slightly on pcp, 176% up on 2H’20 Revenue COGS • Fixed operating expenses down $2.5m (21%) due to: • Employee cost savings, offset by higher FY21 incentive accruals • Significantly reduced trade show activity • Lower travel and occupancy costs • These savings achieved whilst maintaining R&D expenditure • Pro forma EBITDA of $3.0m2, a record result, $2.1m (210%) up on pcp Previous corresponding period Excludes a one-off gain of $0.5m resulting from the renegotiation of the Melbourne head office lease © ATOMOS 2021 | 1H FY21 RESULTS 9 | 1H FY21 Financials - Pro Forma Balance Sheet Pro Forma (A$m) Cash and cash equivalents Key Insights: 30-Jun-20 18.8 31-Dec-20 23.3 Trade and other receivables 4.7 6.1 Inventories 16.8 15.2 • Receivables increase a reflection of higher sales in 1H’21 Other assets 2.6 5.4 • Other assets reflects higher supplier deposits Plant and equipment 2.7 2.6 Right of use asset 9.0 2.9 Intangible assets 25.1 25.3 • Renegotiation of head office lease driving reduction in right of use asset and lease liabilities Total assets 79.6 80.8 Trade and other payables (10.7) (15.5) Borrowings (0.1) (0.1) Provisions (0.9) (1.4) Lease liabilities (9.4) (3.1) (1.0) (1.0) Total liabilities Deferred tax liability (22.2) (21.2) Net assets 57.4 59.6 Issued capital 101.5 101.7 1.0 1.3 Accumulated losses (45.1) (43.4) Equity 57.4 59.6 Reserves © ATOMOS 2021 | 1H FY21 RESULTS • Strong balance sheet with $23.3m cash as at 31 December 2020 • Higher payables reflective of growth in inventory orders • $37m of tax losses and R&D tax credits unrecognized and available to offset future tax payable 10 | 1H FY21 Financials - Cash Flows Cash Flows (A$m) 1H'20 1H'21 Key Insights: EBITDA (0.3) 3.5 Gain on modification of lease 0.0 (0.5) • Operating cash flow positively impacted by: Transaction costs 1.2 0.0 Other non-cash items 0.1 0.3 Taxation (0.1) (0.1) (5.3) 1.7 Movements in Working Capital: Inventory Trade and other receivables (5.1) (1.4) Other assets (0.8) (2.8) Trade and other payables 3.4 5.4 Movement in Working Capital (7.7) 2.8 Operating Cash Flow (6.8) 5.9 Capex (4.7) (1.1) Interest (0.2) (0.2) Lease liabilities (0.3) (0.3) Financing/Investing 23.0 0.2 Total Cash Flow 10.9 4.5 5.1 18.8 16.0 23.3 Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period © ATOMOS 2021 | 1H FY21 RESULTS – EBITDA improvement; and – Reduced growth in working capital (inventory and debtors) • Significantly reduced capex in FY21 (FY20 capex predominately related to development of NEON and new office fit-out) • Total free cash flow (pre financing / investing) of $4.3m compares to an outflow during 1H’20 of $12.1m – a $16.4m improvement • Atomos is now cash generative, well-funded and has no foreseeable requirement to raise additional capital 11 | Agenda 1H FY21 Summary > Chris Tait, Exec Chair Financial Review > James Cody, CFO Group Strategy & Outlook > Chris Tait, Exec Chair 3 7 13 Q&A 22 Appendices 25 © ATOMOS 2021 | 1H FY21 RESULTS 12 | Where We Came From Video is the most pervasive and expressive medium for recording & sharing of stories, events & memories… • Ten years ago, with a vision to connect the imaging and computer worlds1 Atomos invented the video processing computer which delivered affordable high-quality video • Core to Atomos’ know-how is “video processing” - algorithms operate on video streams to manipulate, enhance and store such content in order to enable the optimal workflow • By bringing the computer to the camera in this way Atomos invented the ‘Video Computer’, initially a recorder/monitor, but now much more • Atomos enables content creators to deliver stunning quality video cost-effectively and with ease 1. The imaging world refers mainly to Japanese camera makers whilst the computer world refers mainly to US software companies © ATOMOS 2021 | 1H FY21 RESULTS 13 | Building & Supporting Ever-Expanding Video Ecosystem • Atomos is building an ecosystem through collaboration with key industry players who bring products and tools to help video content creators • Atomos invents its own and supports partner standards that help interoperability across relevant products • As an example, Atomos recognised the need for wireless synchronisation of multiple devices, acquiring TCS to deliver such technology to support/grow the ecosystem • Atomos believes video processing demands continuous innovation for delivering quality, efficiency and ease-of-use, making the “Video Computer” or an “Atomos” the necessary element in video content creation • Atomos seeks to bring these innovations to the video computer, partnering with likeminded companies and building the supportive ecosystem to democratize creativity in this video age © ATOMOS 2021 | 1H FY21 RESULTS 14 | Our Unique Offer Key Products More Products Shogun S2 Sumo S2 Neon S2 Studio S2 Ninja Stream Apps Ninja V AtomX Modules Neon Sumo Shogun 4K60 Shogun Samurai Ninja 1/2 Video Industry Standard Technology More Standards More Technology 2030 Rapidly Increasing Consumption & Production of HighQuality Video 2025 Internet Streaming NDI HDMI 2.1 Series 2 Platform (S2) V3.0 Video Soc TCS Sync ProRes RAW HDMI 2.0 SDI 12G Dolby Vision Series 1 Platform RAW Codec Zone Backlight HDR Screen V2.0 Video Soc ProRes DNX SDI HDMI 2020 2015 ProRes/DNX Codec V1.0 Video SoC Live Streaming Social Media (Facebook Live, Instagram, TikTok) COVID Video Phenomenon (Zoom, MS Teams, Webex) Video Streaming (Netflix, YouTube) Atomos Markets 2010 © ATOMOS 2021 | 1H FY21 RESULTS Pro Video Social Entertainment Gaming Other industries 15 | Scalability from Expansion of Atomos Series 2 Technology Platform Solid Base • 10 years designing & manufacturing ground-breaking video capture and processing computers • Typical product lifespan of 3-4 years – Atomos provides continuous product upgrades and replacement • But… Atomos products have historically been designed as individual standalone devices Adoption of Single Unified Technology Platform for all Products • Ninja V was developed on an expandable ‘platform’ which will spawn a replacement lineup of larger products in FY22 • Enhanced features will include built in timecode sync, streaming & the ability to ‘plug-in’ software apps • Material growth in volumes, appropriate pricing and margins anticipated Introduction of Atomos App Marketplace • Apps which ‘plug-in’ to Atomos products offer new revenue opportunity - one-off or subscription based • Expected to be attractive to third party companies • SDI RAW upgrade for Ninja V, is downloadable NOW from the Atomos website for $99 © ATOMOS 2021 | 1H FY21 RESULTS 16 | ATOMOS PARTNERSHIPS ATOMOS CORE IP Best of breed Camera Makers Sony, Canon Panasonic, Nikon, Fujifilm Olympus, Sigma, Z Cam ATOMOS PARTNERSHIPS EDIT IMAGE CAPTURE Apple, Adobe, Avid CONNECTIVITY Opportunity CAPTURE Video Cameras Gaming Presenting © ATOMOS 2021 | 1H FY21 RESULTS Best of breed Post Production Edit Software Tools VIDEO SOURCES Image Processing Record, Monitor, Play Simplify & Automate Process Sync & Connect Switching Audio/Video Sync Highly evolved simple and rewarding user experience Live Streaming Remote Production AI Cloud Services Atomos App Marketplace Software LICENCING Opportunity Atomos Video Tech Atomos Sync Tech Atomos IC Tech 17 | Outlook Continue to focus on enabling content creators to deliver stunning quality, cost-effectively, with ease • Sales momentum has continued into 2H’21, and whilst cautious regarding COVID, we expect continued good progress during the second half • New products within our planned roadmap, including further ProRes Raw integrations, remain on schedule with several new releases targeted for 2H’21 • To align the operational structure of the business more closely, Jeromy Young is moving to the role of Founder, focusing on future products, partnerships and growth opportunities. Chris Tait will continue in his role as Executive Chairman - - - - - 0 – 6 Months - - - - > - - - - - 6 – 18 Months - - - - > - - - - - 18 Months + - - - - > Leverage the core business Build out the core Building new businesses • Existing products • Series 2 product range • New services • ProRes RAW tailwinds • New categories (e.g. Gaming) • Storage & analysis • Software • 3rd party software • Licensing • Incremental product launches • Potential M&A • Potential M&A © ATOMOS 2021 | 1H FY21 RESULTS 18 | Outlook – Potential M&A Atomos will carefully consider acquisitions in the following areas: Technology Standards Selective businesses with an industry standard technology or which has the potential to define future standards Complimentary Tech Businesses with great technology / capability which will accelerate Atomos own organic plans New Complementary Markets Businesses which provide access to selective new markets: • Products • Services • Geographies © ATOMOS 2021 | 1H FY21 RESULTS 19 | Atomos Board & Senior Management Board Executive Team Chris Tait Mark Harland Appointed: 2017 Shares: 1,597k Appointed: 2020 Shares: nil Executive Chairman Chief Operating Officer Average tenure of the Board and senior management team is 5 years. Together they hold 10.9% of shares in the company (11.6% with all staff) Jeromy Young Trevor Elbourne Rodney Block Founded Atomos: 2010 Shares: 17,827k Appointed: 2012 Shares: 482k Appointed: 2020 Shares: nil Co-Founder Chief Technology Officer Head of Global Business Development Paul Scurrell Sir Hossein Yassaie James Cody Appointed: 2016 Shares: 1,739k Appointed: 2016 Shares: 410k Stephen Stanley Stephan Kexel Richard Salib Appointed: 2019 Shares: 401k Appointed: 2012 Shares: 42k Appointed: 2012 Shares: 117k Non-Executive Director Non-Executive Director © ATOMOS 2021 | 1H FY21 RESULTS Chief Financial Officer Global Sales Director Head of Product Development Appointed: 2019 Shares: 1,278k Head of Engineering 20 | Corporate Snapshot Pricing Snapshot Ticker Share Price Shares on Issue (m) Market Capitalisation (m) Major Shareholders AMS $0.935 218.5 $204.3m Ms Claire Louise Young (Jeromy Young) 8.2% Ellerston Capital Ltd 7.5% Domazet FT3 P/L 6.4% Top 6 shareholders ~35% Board of Directors Chris Tait Executive Chairman Jeromy Young Executive & Co-Founder Sir Hossein Yassaie Non-Executive Director Stephen Stanley Non-Executive Director Senior Management Team Share Price History $1.4 7.0m $1.2 6.0m $1.0 5.0m Mark Harland COO $0.8 4.0m James Cody CFO $0.6 3.0m Global Sales Director $0.4 2.0m CTO $0.2 1.0m Paul Scurrell Head of Product Development $- 0 Rodney Block Head of Business development Richard Salib Head of Engineering Stephan Kexel Trevor Elbourne © ATOMOS 2021 | 1H FY21 RESULTS 21 | Strong, sustainable, sales growth driving record EBITDA and cash generation • • • • Record $32.8m of half-year sales despite the impact of COVID Sales driven by expansion of ProRes RAW ecosystem - 28 RAW enabled cameras from 10 camera makers Record EBITDA of $3.0m, $4.5m positive cash flow, $23.3m cash on hand Continue to invest in product development, new product announcements anticipated including ‘paid for’ software upgrades • Sales momentum continuing into 2H’21, and whilst cautious given the global COVID situation, AMS expects continued good progress during the second half Inventing and delivering ground-breaking technologies and products that democratise the creativity of content in the video age Q&A © ATOMOS 2021 | 1H FY21 RESULTS 22 | Contacts James Cody Simon Hinsley Chief Financial Officer Investor / Media Relations +61 407 048 514 +61 401 809 653 james@atomos.com simon@atomos.com July 2020 Presentation Template Our vision is to invent and deliver ground breaking and disruptive technologies that Cupcake ipsum dolor sit amet. Sweet chupa chups cheesecake sugar plum. Sesame snaps cotton candy pie pie lemon drops ice cream croissant cheesecake. Tootsie roll tiramisu candy sesame enhance, simplify and ultimately democratise video content creation For more information please visit www.atomos.com © ATOMOS 2021 | 1H FY21 RESULTS snaps caramels halvah. Jujubes tiramisu fruitcake bear claw tiramisu wafer lemon drops candy canes dragée. 23 | Agenda 1H FY21 Summary > Chris Tait, Exec Chair Financial Review > James Cody, CFO Group Strategy & Outlook > Chris Tait, Exec Chair 3 7 13 Q&A 22 Appendices 25 © ATOMOS 2021 | 1H FY21 RESULTS 24 | Atomos Core IP – Why We Can Democratise Creativity in Video + + Deep Tech Deep Relationships Brand • Custom video SoC • Camera companies • 10+ years old • Proprietary operating system • Hollywood • Deep customer engagement • Industry leading Codecs – smallest, cheapest, fastest • Video tech companies • High level of credibility • Silicon Valley software companies • Democratiser (affordable, easier and high quality) • Image processing & screen technology • Standards • 100+ years of engineering investment • Innovative marketing = competitive edge for new opportunities © ATOMOS 2021 | 1H FY21 RESULTS 25 | Atomos Product Suite 4K Monitor Recorders NINJA + SHINOBI Ranges • Ninja HDMI only – includes AtomX adaptor range • Broad market application due to portability • Both 5” and 7” screen options • Record ProRes®, DNxHR at 60p frame rates • AtomHDR monitoring • Includes recently released 5” Shinobi monitor only SHOGUN Range • HDMI & Quad SDI inputs • Broad market application due to portability Production / Studio SUMO Range • Larger format 19” monitor recorder – targeting studio usage • 7” high brightness screen • Quad SDI & HDMI in/out • Record ProRes, DNxHR at 60p frame rates • Record ProRes/ProRes RAW, DNxHR, among others • ProRes RAW capability NEON Cinema Series Shogun Studio + Converters + Accessories • HDR Professional monitorrecorder range for on-set and in-studio usage Shogun Studio • Four screen size options – 17”, 24”, 31” and 55” • Dual 7” screens with touchscreen interface • Bluetooth controlled by using Atomos iOS App • Rack mount 4K monitor recorder solution Converters • SDI to HDMI or vice versa • AtomHDR monitoring Accessories • Touch Screen Switching • Cables, Caddies & Adaptors • Shinobi available in both HDMI & SDI capability Social / Pro-Video Segment Broadcast & Accessories Pro-Video / Entertainment Pro-Video / Entertainment Entertainment Various Streaming © ATOMOS 2021 | 1H FY21 RESULTS 26 |