AUDINATE GROUP LIMITED — AGM Information 2020

Oct 14, 2020

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2020 Annual General Meeting

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Approved for distribution by the Board of Audinate Group Limited

Audinate Group Limited 2020 ANNUAL GENERAL MEETING Thursday, 15 October 2020 at 9.30am (Sydney time).

Chairman’s Address

Before our CEO Aidan Williams addresses us, I would like to welcome our directors that have joined us here virtually today, and would like to make a few comments.

There is little doubt that the COVID-19 crisis has made financial year 2020 a particularly tumultuous period for even the most seasoned CEOs. However, even with all the operational and day-to-day challenges that have arisen from this once in a generation event, Aidan has done a fantastic job continuing to progress Audinate’s growth trajectory.

The Board have all been impressed by the mature and calm manner in which Aidan has balanced the immediate tactical demands of the business with an ongoing focus on strategic imperatives. We are also fortunate to have a level of depth, experience and expertise within our Executive Leadership team that have made an invaluable contribution in supporting Audinate’s growth. On behalf of the Board, I would like to recognise and thank Aidan, the Executive Leadership Team, and the entire staff of Audinate for their persistence, dedication and teamwork in the extremely challenging and demanding environment that we have experienced this year.

I would also like to thank all our shareholders for their continued commitment and support. After year-end, Audinate completed a $40 million equity raise which has provided growth capital and de-risked the business from the ongoing uncertainties and impacts of COVID-19. This capital injection also enhances our ability to consider strategic acquisitions. The placement raised $28 million at a 5.1% discount to the 5-day VWAP and a further $12 million was raised via an SPP at a 2.0% discount to the VWAP, both representing low levels of dilution for shareholders and strongly oversubscribed.

During the year, the business has continued to make good progress in achieving its mediumterm objectives despite the challenging environment in the second half. The uptake of our new Dante products has been particularly encouraging with the number of design wins across Dante video, Dante Embedded Platform, Dante Application Library and IP core representing a strong market endorsement of these products. Notably, the Dante Embedded Platform introduces the capability for an end-user to add Dante to an existing AV product in the field. This is a significant step in the evolution of our business model and something we expect will aid the proliferation of our technology.

• 2 -

Product development requires new business infrastructure to enable and support it. Accordingly, it is pleasing to see the progress Audinate has made this year in terms of code protection and in-field licensing and enablement. The fulfilment of these capabilities is an essential strategic objective for the year ahead.

The establishment of a manufacturing line in Malaysia was initiated to address the imposition of US tariffs on Chinese imports. Following the emergence of the COVID-19 crisis, this provided critical business continuity and allowed us to maintain supply as many others experienced disruption. The opening of our office in the Philippines, amid COVID-19, was another important step in building out the business platform to support growth and achieve operational efficiencies.

We have made important progress in the video market this year, delivering our Dante AV Product Design Suite to customers in April, securing several design wins, facilitating a demo of the first Dante video camera by Bolin, and launching the Authorised Implementer Program to enable the production of white-labelled Dante video products. The launch of the first Dante video products by our customers will be another milestone we expect to achieve in the year ahead.

The milestones Audinate achieves in the near term will position the Company and our stakeholders to benefit from the economic recovery to come. We retain a strong conviction in our business and strategy to enable a transformation of the AV industry. Again, I would like to express my gratitude to the Audinate team and all our shareholders for their continued commitment and support throughout this challenging year.

I would now like to welcome Aidan Williams, our Chief Executive Officer, to address you.

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15 October 2020

Aidan Williams – Chief Executive Officer

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Audinate: pioneering the future of the AV industry

Dante technology distributes audio & video signals across computer networks Audinate is the leading supplier of digital audio & video networking for the Professional AV industry

Melbourne Convention Centre Melbourne, Australia

The Dante platform is used in thousands of installations globally

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2020 Annual General Meeting

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Audinate is driving the transformation of the AV industry

• Networked digital connectivity is replacing traditional, point-to-point analogue cabling in the AV industry

• Software-based AV systems are replacing hardware AV systems, in the next wave of industry transformation

• Transformation analogous to the impact of VOIP on the telecom industry

Audinate Total Addressable Market (‘TAM’)[*]

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The TAM for digital Audinate share
audio networking is of Audio Market
A$400m annually for estimated at 7%
chips, cards, modules
& software
Digital Audio
Networking
A$400m
Video
Software Services
Networking
for Pro-AV
Software Service
Software * for Pro-AV
Management estimate total
addressable market exceeds A$1bn
A$400m
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2020 Annual General Meeting

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FY20Highlights

Financial

A$30.3m

Revenue (US$20.4m)

A$2.0m

EBITDA

76.6%

Gross profit margin

A$29.3m

Cash on hand at 30 June 2020

Operational

2,804

Dante-enabled products on the market

57,000

Professionals trained on Dante during FY20

21% Increase in OEMs shipping Dante product

A$40.0m Capital raised via placement & SPP post year end

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2020 Annual General Meeting

Leading global supplier of digital media networking

Highlights

Increasing market awareness and adoption of Dante

Total addressable market[(1)] OEM customers shipping Dante enabled products

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A$1bn
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328

2,804 Dante enabled products available on the market

Market adoption of closest competitor

8x

120,000 Dante trained and certified individuals globally

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3000
2,804
2500
Dante has 8x
2000 the adoption versus closest
competitor
1500
1000
500
343
166
77
29
0
2013 2014 2015 2016 2017 2018 2019 2020
Dante Cobranet (2) Ravenna AVB Others
(1)
Total audio products per protocol
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• 1) RH Consulting, Networked Audio Products 2020 and Audinate company data

• 1) Management estimate of total addressable market of audio, video and Pro-AV software products

• 2)

• RH Consulting stopped counting Cobranet products in 2020 and noted that it is impossible to get reliable data on available products, with only a small number of manufacturers selling some equipment. RH Consulting further noted that Cobranet is not a consideration in forward looking statements about the audio industry

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Laying the foundation for accelerated adoption

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Lead over closest competitor People trained on Dante [1]
Dante Certification Training (up 39%) (up 185%)
57k
• Free training for industry
8.2x
professionals – including
designers, system integrators &
end users 27k
• Conducted online, via webinar 6.2x
& in person
• Three levels of certification
from introductory thru to FY19 FY20 FY19 FY20
advanced network trouble-
shooting Retail Software # sold Webinars conducted
• (up 49%) (up 1,267%)
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Unique website visitors
(up 65%)
1,095k
664k
FY19 FY20
Marketing Database
(up 39%)
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• Industry accredited for CPD

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47k
332k
82
32k
239k
6
FY19 FY20 FY19 FY20 FY19 FY20
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• Training now offered in 9 languages

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• 8 Audinate trainers based in 5 countries

• Our research shows training = more Dante purchases

• Training content also applies to Dante video

• 1Represents people trained on Dante during the year, total people trained on Dante now 120,000

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Independent Forecast of Networked Audio Units

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Networked Audio Units
(Thousands)
1597
1354
1097
785 790
643
514 490
2017 2018 2019 2020 2021 2022 2023 2024
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Source: FutureSource Consulting – Audio Over Ethernet Research

• Audinate:

• Market data forecasts Networked Audio Unit volume to triple over the five-year period from 2020 to 2024 Pioneering the

• Research does not factor in impact of cheaper technology accelerating the adoption of AoIP

• During COVID-19 the biggest impact is on higher end, more expensive products

• Reflects Audinate’s experience with Brooklyn revenue

• Penetration of audio networking

• estimated <1% for speakers & microphones

• other product penetration estimated at 17%

• fastest growing categories forecast to be speakers & amplifiers

• The “installed commercial” vertical (corporate, education, retail, etc) is the fastest growing vertical for adoption of AoIP

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2020 Annual General Meeting

1Q21 Trading Performance

• Steady improvement in trading conditions since May

Revenue USD $'000

• Customer and market segments impacted differently

• Good momentum in corporate conferencing & higher education

• Challenging conditions in live sound & large events

• Sales backlog circa pre-COVID19 level

• Unaudited Revenue for 1Q21 amounted to USD $5.2m

• Selected products experiencing strong growth (relative to FY20), including Adaptors, Ultimo, Broadway and Retail Software Sales

• Brooklyn revenue down on pcp reflecting exposure to live sound

• Unaudited EBITDA for 1Q21 of AUD $0.3m

• Prudent return to investing for growth

• Expecting to add around 10 roles globally over FY21

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2,000
1,800
1,600
1,400
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1,200
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1,000

800 600

400

200

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A$400m
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Jan-20 Feb-20 Mar-20 Apr-20 May-20Software Service Jun-20 Jul-20 Aug-20 Sep-20

• Further incremental opex expected to amount to around $1.5m over FY20

• Additional updates, as relevant, over the remainder of FY21

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Focus areas for FY21

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Medium-term strategic priorities

Investing to double Audinate’s engineering and R&D functions over two years (from July 2019)

Putting in place the business infrastructure platform to support long term growth

Developing next generation Dante audio and video software implementations

FY21 objectives

• Drive designs wins during economic downturn & prime the pump for economic recovery

• DigitalAudio

• Broaden Dante video product offerings Networking

• Validate new business models, e.g. in-field activation

• Expand training offerings to include Dante video and a Video

• wider range of languages SoftwareServices Networking

• Build business systems & development capability

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Make Dante video the technology of choice for OEMs

Expand its Total Addressable Market with the addition of video & software products

• Explore M&A opportunities to accelerate growth

• Drive short term revenue opportunities

• Manage total net cash expenditure

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2020 Annual General Meeting

Important notice and disclaimer

Disclaimer

To the maximum extent permitted by law, none of the Audinate Group Limited or its subsidiaries or their directors, employees or agents accepts any liability, including, without limitation, any liability arising out of fault or negligence, for any loss arising from the use of the information contained in this presentation. In particular, no representation or warranty, express or implied, is given as to the accuracy, completeness or correctness, likelihood of achievement of reasonableness of any forecasts, prospects, statements or returns contained in this presentation. Such forecasts, prospects, statements or returns are by their nature subject to significant uncertainties and contingencies. Actual future events may vary from those included in this presentation.

Summary information

This presentation is for information purposes only is not a recommendation or advice in relation to Audinate or any product or service offered by Audinate or any of its subsidiaries. The information in the presentation is of a general nature only and is not intended to be relied upon as advice to investors or potential investors.

Currency

All amounts in this presentation are in Australian dollars unless otherwise stated.

Past performance

Past performance information, including past share price information, given in this presentation is given for illustrative purposes only and should not be relied upon as an indication of future performance.

Future performance

Forward-looking statements, opinions and estimates provided in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions.

Financial information

Certain financial data included in this presentation is 'non IFRS financial information.' These measures are used internally by management to assess the performance of the business and make decisions on the allocation of resources and are included in this presentation to provide greater understanding of the underlying financial performance of the Group's operations. When reviewing business performance, this non-IFRS information should be used in addition to, and not as a replacement of, measures prepared in accordance with IFRS. Readers are cautioned not to place undue reliance on any non-IFRS financial information and ratios included in this presentation. The non-IFRS information has not been subject to audit or review by Audinate's external auditor. The

non-IFRS measures do not have any standard definition under IFRS and may be calculated differently by other companies.

Market share information

All market share information in this presentation is based on management estimates and internally available information, unless otherwise indicated.

No offer of securities

Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy or sell Audinate securities in any jurisdiction.

Reliance on third party information

The views expressed in this presentation contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This presentation should not be relied upon as a recommendation or forecast by Audinate.

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