ATOMOS LIMITED — Investor Presentation 2024

Sep 2, 2024

Atomos Ltd (ASX:AMS)

Hardware. Software. Cloudware.

Atomos FY24 Results Presentation

Important Notice and Disclaimer

The information contained in this document (“Document”) has been prepared by Atomos Limited ACN 139 730 500 (referred to as “Atomos” or “Company”). The information contained in this Document is current as at the date of this Document and should be read in conjunction with other Atomos periodic and continuous disclosure announcements filed with the Australian Securities Exchange (ASX), available at www.asx.com.au.

The information in this Document is not intended to form the basis of any investment decision in relation to the Company or its assets and should not be considered as a recommendation to the Recipient to acquire securities in the Company. This Document is not a prospectus, profile statement or disclosure document and does not constitute an offer or invitation to acquire securities or otherwise invest in the Company, and no agreement to subscribe for securities will be entered into on the basis of this Document.

No representation or warranty, expressed or implied, is or will be made, and no responsibility or liability is or will be accepted by the Company, any of their respective officers, servants, agents or advisers (collectively “Limited Parties”) as to or in relation to the accuracy, reasonableness, completeness or reliability of the information in this Document or any other written or oral information made available to any Recipients or their advisers. Any liability therefore is hereby expressly disclaimed. In particular, no representation or warranty is given as to the achievability or reasonableness of any future projections, management estimates or plans, prospects, returns or forecasts.

To the fullest extent permitted by law, the Limited Parties will not have any responsibility or liability for any loss or damage (whether foreseeable or not), however arising (including as a result of negligence), in relation to or in connection with the provision of this Document, the Recipient’s or any other person’s purported reliance on this Document, the failure to provide information of which any of the Limited Parties becomes aware or any errors in or omissions from this Document.

None of the Limited Parties makes or gives any representation, warranty or guarantee, express or implied, that the information in this Document is accurate, current, reliable or complete, has been or will be audited or independently verified, or that reasonable care has been taken in compiling, preparing or furnishing it. Various statements in this Document constitute statements relating to intentions, future acts and events including forecast financial information (“Forward Looking Statements”). Forward Looking Statements involve subjective judgment and analysis, known and unknown risks, uncertainties and other important factors that may cause those future acts, events and circumstances to differ from the way or manner in which they are expressly or impliedly portrayed herein. The Limited Parties do not make or give any representation, warranty or guarantee, express or implied, that any Forward Looking Statements will be achieved or proven correct, or that any assumptions or projections on which the Forward Looking Statements are based are reasonable. No historical financial information, forecast financial information, estimates or projections contained in this Document or any other financial information derived from that information, can be relied upon as a promise or representation, as to the past, present or the future. Past performance is not necessarily a guide to future likelihood of achievement or reasonableness of any Forward Looking Statement, forecast financial information or other forecast.

The Limited Parties do not undertake any obligation to (and expressly disclaim any obligation to) provide the Recipients with access to any additional information or to correct any inaccuracies herein which may become apparent or to disseminate any updates or revisions to any Forward Looking Statements in this Document to reflect any change in expectations in relation to any such statements or any change in events, conditions or circumstances on which any such statement is based.

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any person in connection with a proposed investment in the Company constitutes, or is to be taken as constituting, the giving of investment or financial product advice (or any other advice) to any such person. Each such person should make their own independent assessment of the merits or otherwise of investing in the Company and should seek their own professional advice in respect of any future investment opportunity and not act on the basis of any matter contained in this Document. In providing this Document, the Company has not considered the objectives, financial position, taxation situation or other needs of any particular Recipient.

The distribution of this document in jurisdictions outside Australia may be restricted by law. Persons who come into possession of this document who are not in Australia, should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. In particular, this document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The securities being offered by the Company under the Prospectus lodged with ASX on or about the date of this Document have not been, and will not be, registered under the US Securities Act or the securities laws of any state or other jurisdiction of the United States Accordingly, the securities being offered by the Company under the Prospectus may not be offered or sold in the United States except in a transaction exempt from, or not subject to, the registration requirements of the Securities Act and other applicable US state securities laws.

Non-IFRS financial measures

Recipients should note that certain financial data included in this Document is not recognised under the Australian Accounting Standards (AAS) and is classified as ‘non-IFRS financial information’ under Regulatory Guide 230 ‘Disclosing non-IFRS financial information’ published by ASIC. The Company believes that this non-IFRS financial information provides useful information to users in measuring the financial performance and condition of Atomos. The non-IFRS financial measures do not have standardised meanings under AAS, and therefore may not be comparable with similarly titled measures presented by other entities, nor should these be interpreted as an alternative to other financial measures determined in accordance with AAS. Investors are cautioned not to place undue reliance on any non-IFRS financial information, ratios and metrics included in this Document.

Non-IFRS information descriptors:

EBITDA (before R&D expenditure) is earnings before research and development expenditure, interest, taxation, depreciation, amortisation and impairment charges;

• EBITDA is earnings before interest, taxation, depreciation, amortisation and impairment charges;

• EBIT is earnings before interest, taxation and impairment charges;

Working capital is defined by the Company as trade and other receivables, inventory and other current assets less trade and other payables and other current liabilities;

• Net cash flows from operations: the operating cash flows generated by the Company calculated as EBITDA excluding non-cash items and allowing for changes in working capital; and

• Net cash flows before financing activities: being net cash flows from operations less capital expenditure and other investing expenditure.

This document also contains statistics, data and other information relating to markets, market sizes, market shares, market positions and other industry data pertaining to the Company's business and markets. Such information is generally based on independent market and industry data or research. The Company has not independently verified, and cannot give any assurances as to the accuracy and completeness of the information sourced from market and industry data or research contained herein. Accordingly, the accuracy and completeness of such information is not guaranteed. There is no assurance that any of the forecasts or projections contained in the independent market and industry data or research will be achieved. Forecasts and projections involve risks and uncertainties and are subject to change based on various factors. You should note that market data and statistics are inherently predictive and subject to uncertainty and not necessarily reflective of actual market conditions.

Neither the receipt of this Document by any person nor any information contained in it or supplied with it or subsequently communicated to

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Atomos is known for world class product innovation and design…

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Over 100,000+ active users 500,000 units sold lifetime Automated production is the future

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Our flagship products are used all across the content creator universe…

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Ninja Phone

Turns your smartphone into a high-end recorder, monitor and streamer

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Shinobi II

Lightweight and high brightness monitor; perfect for vloggers and photographers

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Ninja

Flagship monitor recorder that connects to almost every camera in the world

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Sun Dragon

World’s first sun spectrum, waterproof, lightweight flexible production and cinema strip light

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The Vision

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Partnering with the Best

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Focus on the Art

Industry Standard Brand

FY24 – Executive Summary

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Renewed focus on leveraging our core strengths to rebuild into a growth business

• H2’24 sales of $18.3m, up 5.1% on H1 with underlying gross margin improving to 39% in Q4’24 (40% in June 2024)

• Right-sized fixed operating costs – reduced headcount from ~150 (during FY22) to 90 (Dec-23) and now 70 (Jun-24)

Stabilised Operations & Balance Sheet

• Debt free as of 30 June - $8.3m being repaid as part of capital raise in April 2024 and relisting to ASX on 21 May 2024

• Inventory balance reduced to reflect current sales (thorough review resulted in write-down for stock obsolesce in FY24)

• Full realisation of cost restructuring initiatives expected in Q1 FY25; targeted EBITDA breakeven of ~$45m in sales

• • $2.9m cash as at 30 June, with further access to capital via exercise of options

• Bottom-up review of business has facilitated the development of a clear product and growth strategy roadmap

Refreshed Product Roadmap

• Ninja Phone: new video-coprocessor for the latest iPhone; shipped in June-24

• SunDragon: unique ‘sun-spectrum’ range of LED lights; shipping in September-24

• Shinobi II: upgrade to existing core product line; shipped in July-24

• Expect to build upon new product momentum over H1’25 to generate uplift in sales

• In Jan-24, return of co-founder Jeromy Young as CEO and MD, to drive new momentum to product and operations

Refreshed Board & Management

• In Feb-24, appointed Peter Barber as Exec Director and COO; co-founder of Blackmagic Design

• In Jan-24, appointed Ben McAlister as financial advisor to the Board; assuming CFO duties to stabilise operations

• • Appointment of new auditors (Moore Australia)

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Capital Structure

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Corporate Structure AS AT 30 August 2024*			Atomos Ltd (ASX:AMS) Stock Chart
Shares on Issue 1,213,662,308 Share Price $0.043 Market Capitalisation ($) $52.2M Options on Issue (listed, ex Nov-25, $0.03) 551,115,526 0040 $0.045 $0.050 $0.055 $0.060 Share Price ($)
	0040 $0.045 $0.050 $0.055 $0.060 Share Price ($)									0 2m 4m 6m 8m 10m 12m 14m Volume Share Price
			Volume
Share Rights 170,378 Options (Various ex dates and prices) 1,637,312 Top 5 Shareholders Shares (m) % Held* Domazet FT3 P/L 210.5 17.4% Jeromy Young (CEO) 100.0 8.2%	$0.010 $0.015 $0.020 $0.025 $0.030 $0.035 $.
Peter Barber (COO) 100.0 8.2% Regal Funds Mgmt 87.1 7.2% Ellerston 83.1 6.9% Top 5 Shareholders 580.7 47.8%

(*) As disclosed based on public filings, unless otherwise stated

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FY24
Financials
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FY24 – Revenue & Gross Profit margins

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12.0 50%
10.1
10.0
8.8 8.7 40%
8.2
39%
8.0 37%
33% 30%
6.0
25%
20%
4.0
10%
2.0
- 0%
1Q FY24 2Q FY24 3Q FY24 4Q FY24
Revenue Underlying Gross Margin
A$m
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• $18.3m in H2 FY24, up 5.1% on H1 FY24

• Driven in part by new management reinvigorating sales & marketing of existing products and launching new innovative products creating demand across other product categories

• Higher gross margins in FY24 attributed to the cessation of product discounting

• Underlying gross margin improved to 34% in FY24 (20% FY23)

• H2’24 Underlying gross profit margin of 36% vs 31% in H1’24

• Q4 FY24 gross margins consistently just under 40%; June reaching 40%

• Taken longer than expected to unwind previous management’s strategies

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Underlying Proforma Profit & Loss

	A$m	FY23	FY24
	30 June Year End	(Proforma)1	(Proforma)1
	Revenue	42.8	35.7 1
	COGS	(34.1)	(23.7)
	Gross Profit	8.7	12.0 2
	Gross Profit Margin %	20%	34%
	Variable operating costs	(4.0)	(3.2) 3
	Fixed operating costs	(27.2)	(21.3) 4
	Other Income / Forex	0.6	0.7
	EBITDA	(22.0)2	(11.8)
	Depreciation & amortisation	(3.0)	(1.6)
	Finance costs	(2.1)	(1.2) 5
	Profit (Loss) before tax	(27.1)	(14.7)

1. Refer Appendix for bridge between statutory P&L and proforma P&L

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• 1 FY24 sales of 35.7m, down 16% pcp

• 2 Underlying (proforma) gross profit margin of 34%, up from 20% pcp

• Reported gross profit margin of 31% (vs 11% in FY23)

• 3

  • Variable operating costs remain consistent at ~9% sales, subject to product mix

• 4 New management initially targeted to reduce fixed operating cost base to a run-rate of $16m pa by Jun-24; unforeseen challenges have resulted in longer than expected implementation of restructuring initiatives.

  • Full run-rate benefit of restructuring initiatives will be seen from beginning of Q3 FY25

• Proforma fixed operating costs reduced by $5.9m (22%) in FY24 vs. FY23

  • Reduced from 90 people at Dec-23 to 70 people at Jun-24

  • All R&D / product development costs expensed in FY24

  • Refer Appendix and FY24 4E accounts for breakdown of one-offs

  • Financed costs to reduce materially with all now debt repaid post raise

• 5

• Underlying FY23 EBITDA of ($19.5m) plus FY23 capitalised R&D costs of ($2.5m) equals FY23 Underlying Proforma EBITDA of ($22.0m)

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Balance Sheet

A$m - 30 June Year End	FY23 Audited	FY24 Proforma
Cash	2.9	2.9 1
Trade and other receivables	5.2	5.0
Inventories Other current assets	15.4 5.3	8.7 3.3 2
Other current assets	28.7	19.9
PPE	1.4	0.9
Right of use assets Financial assets	5.3 1.8	4.2 - 3
Total assets	37.2	25.0
Trade and other payables	13.0	11.3 4
Borrowings Provisions	3.4 2.5	0.1 4.6 5 6
Lease liabilities	1.0	0.9
Income taxes payable	0.9	1.5
Current liabilities	20.8	18.4
Provisions	0.1	0.1
Lease liabilities	5.2	4.1
Income taxes payable	1.3	-
Total liabilities	27.4	22.6
Net assets	9.8	2.4

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• 1 $2.9m cash as at 30 June

• Potential additional cash inflow of $16.5m if all listed options (exercise price of $0.03) were exercised

Excessive inventory balance in FY23 progressively turned into cash with thorough review in FY24 resulting in modest write-down of $0.8m for stock obsolesce

• 2

Impairment of Mavis investment

• 3

Trade payables being progressively reduced with various payment plans due to be paid off over next 6 months

• 4

No debt, outside of corporate credit cards, following completion of capital raise in May 2024

• 5

• Includes various provisions, such as onerous contracts provision (for legacy purchase orders) and Ex-CEO separation claim

• 6

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Outlook

Summary – Next chapter in the Atomos journey ...

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Grow from Strength

New Adjacent Markets

• Atomos core monitor-recorder market stable

• Enter adjacent LED On-Set & Studio Lighting - NEW unique tech

• Maintain revenue $40m+ at 40%+ gross profit margins

• Products announced and shipping in September 2024

• Global respected brand

• Large TAM opportunity – US$1.5bn, CAGR 13%[1]

• Right-sized - restructured to match core revenues and margins

• Same customers through the same sales channels

Return to Innovation

Financial Stabilisation and Growth

• New products that are ready to announce

• Restructure expected to be complete by Q1 FY25 with targeted EBITDA breakeven around $45m of sales

• Next generation Ninja, Shogun and Sumo lines

• Market Cloud Services as essential value-add to devices

• Targeting increasing sales momentum in Q1 FY25

• Launch of new products including Shinobi II, Sun Dragon and Ninja Phone with significant roadmap of products in development

• Report by 360iresearch: LED Light for Camera Market by Product (Panel Light, Ring Light, Rope Light), Model (OffCamera, On-Camera), Device Type, Application, Sales Channel, End-User - Global Forecast 2023-2030.

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Appendix

P&L - Statutory to Proforma Bridge

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A$m 30 June Year End FY23 (Statutory) One-offs Capitalised R&D costs FY23 (Proforma) Revenue 42.8 42.8 COGS1 (38.1) 3.9 (34.1) Gross Profit 4.7 3.9 8.7 Gross Profit Margin % 11% 20% Variable operating costs (4.0) (4.0) Fixed operating costs (26.8) 2.1 (2.5) (27.2) Other Income / Forex 0.6 0.6 EBITDA (25.5) 6.0 (2.5) (22.0) Depreciation & amortisation (3.0) (3.0) Finance costs (2.1) (2.1) Impairments (30.7) 30.7 - Profit (Loss) before tax (61.3) 36.7 (2.5) (27.1)	FY24 (Statutory) One-offs FY24 (Proforma)
	35.7 - 35.7 (24.5) 0.8 (23.7)
	11.2 0.8 12.0
	31% 34% (3.2) - (3.2) (26.0) 4.7 (21.3) 0.7 - 0.7
	(17.3) 5.5 (11.8)
	(1.6) - (1.6) (1.2) - (1.2) (1.8) 1.8 -
	(22.0) 7.3 (14.7)

1. One-offs shown within COGS relate to inventory obsolescence write-downs

2. Refer Page 12 of FY24 Appendix 4E report for breakdown of one-offs items

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Ninja Phone – Now phones can be Ninjas too

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Expanding upon existing market opportunity

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• Video co-processor for the latest iPhones that lets you record from professional cameras onto the iPhone’s storage

• Unique HDMI to USB-C, professional adaptor that securely attaches to the back of an iPhone 15 Pro or iPhone 15 Pro Max to create the world’s first Apple ProRes driven high resolution monitor-recorder.

• Enable connection to any professional camera (Nikon, Panasonic, Canon, Fuji, Sony, etc) with an uncompressed HDMI output to Apple’s magnificent OLED screen.

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The 'Light Bulb/LED Moment’ – introducing Ninja Dragon

New Adjacent Markets

Expand into LED On-Set & Studio Lights

• Unique sun spectrum, Ninja controllable camera LED lights

• Waterproof, flexible strip light design

• Place anywhere, bend, shape and mount technology

• Achievable adjacent market penetration

• Able to leverage existing sales infrastructure and customer relationships

• Large addressable market opportunity ~US$1.5bn[1]

3m light strip ships in a case that facilitates rolling up into a Light Panel with included diffuser - Replacing Light Panels

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1. Report by 360iresearch: LED Light for Camera Market by Product (Panel Light, Ring Light, Rope Light), Model (OffCamera, On-Camera), Device Type, Application, Sales Channel, End-User - Global Forecast 2023-2030.

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New Products and Markets: LED On-Set & Studio Lighting

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Portfolio of new products and market – complementary to Atomos' existing flagship products

Atomos brings innovation and creative flexibility to simple LED lighting Ninja Dragon can be LED panel, striplight or focused beam light

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Various competitor designs can be heavy, with a dated design

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Competition can be up to ~350% more expensive with minimal flexibility or adjustable features

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Control lights, cameras and monitors from your Ninja!

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A suite of intuitive cloud-based production services to allow creators to focus on their art, not on the tech Simpler, Faster and Higher Quality production workflows Atomos Technology makes this possible

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Hardware. Software. Cloudware.