Altigen Communications, Inc. (ATGN) research, news, and more from GeoInvesting

Company description

Fri, 19 Aug 2022 16:11:26 GMT

AltiGen Communications, Inc. designs, delivers, and supports VoIP phone systems and call center solutions worldwide. The company offers MaxCommunications Server (MaxCS) IP-PBX, a software-based phone system that provides customers with business communications solutions; MaxACD VoIP Contact Center, a software-based automatic call distribution(ACD) engine, which offers call routing and call distribution options; IP720 Voice over IP Telephone, a SIP-compatible IP telephone; IP805 Voice over IP Telephone, a mid-level SIP-based VoIP phone; MaxMobile, which extends a set of business PBX functionality to smartphone devices; and MaxCommunicator, a Windows-based desktop application that provides call control and visual voice mail management to the desktop. It also provides MaxAgent, a Windows-based desktop application to bring call control and workgroup information to call center agents; MaxSupervisor, a Windows-based desktop application for call center supervisors; MAX1000 and MAX2000 servers that are all-in-one PBX solutions, which come preloaded with MaxCS IP PBX software; and MaxACD for Lync, a call center solution. In addition, the company offers MAX 4x4xT1 Access Board, MAX 4x8 Access Board, MAX 8x4 Access Board, and MAX 0x12 Access Board, which are a microprocessor-controlled boards; and iFusion SmartStation, a docking station for unified mobile convergence. Further, it provides single base circuit board with digital signal processing technology; modular software components; and service support programs, including software assurance programs that provide customers with updates, new releases, and technical support for the applications they are licensed to use. The company sells its products to small-to-medium sized and multi-site businesses, corporate branch offices, call centers, credit unions, and community banks through distributors and resellers. AltiGen Communications, Inc. was founded in 1994 and is headquartered in San Jose, California.

Research

Wed, 04 Feb 2026 15:28:18 GMT

Altigen Technologies (OTCQB:ATGN) ($0.41; $10.7M market cap) announced Q1 2026 results:

Q1 sales of $3.2 million vs. $3.4 million in the prior year
Q1 2026 EPS: $0.00 vs. $0.00 in the prior year

Management Commentary:

"Our fiscal first quarter represented our 7th consecutive quarter of profitability," said Jeremiah Fleming, Altigen Chairman & CEO. "This demonstrates our commitment to maintaining profitability through short term revenue declines driven by our transition to new technology platforms. We believe the majority of this impact is now behind us and are well positioned for growth in the second half of fiscal 2026.”

Our Quick Take:

The company continues to be stuck in the same levels of quarterly revenue, we will see if the new CXDO collaboration can begin to drive top line growth. Our sentiment has not changed from our takeaway of the ATGN’s Q4 report you can see here.

Altigen Technologies offers integrated cloud-based communications and digital transformation solutions, including VoIP/Teams Phone systems, unified communications, omni-channel contact center platforms, and desktop/mobile apps, and serves a range of industries such as financial services, healthcare, retail, and business services.

Research

Fri, 19 Dec 2025 05:00:00 GMT

Altigen Communications, Inc. (OTCQB:ATGN) ($0.52; $13.5M market cap) announced Q4 2025 results:

Q4 2025 sales of $3.5 million vs. $3.7 million in the prior year
Q4 2025 adjusted EPS: $0.02 vs. $0.01 in the prior year
FY 2025 sales of $13.9 million vs. $13.6 million in FY 2024
FY 2025 adjusted EPS: $0.03 vs. loss of ($0.01) in FY 2024

Management Commentary:

"Our fiscal fourth quarter represented our sixth consecutive quarter of profitability," said Jeremiah Fleming, Altigen President & CEO. "Our business transformation initiative began with operational improvements which significantly improved our bottom line. In FY25 we introduced an all-new solutions portfolio, the success of which has continued to grow throughout the year. We expect to realize increasing growth as our solutions continue to gain market adoption."

Our Quick Take:

Altigen continues to talk endlessly about this being a transformative time, and on the path to strong growth, with goals of 20% top and bottom line growth. However, in the Q&A of the conference call, when asked when this could be a reality, management says possibly in 2027, likely by 2028. We have been waiting for a transformative growth trajectory for a long time already, this newly stated goal shows the process is much slower than we had hoped.

The positive takeaway is that the company is profitable, potentially at an $0.08 run rate. In theory, this should put a nice bottom in the stock of anywhere between a 5x and 10x P/E ($0.40 to $0.80) as we wait for growth to materialize or for management to finally realize they should sell the company.

Altigen Communications, Inc. provides integrated and cloud-based communications solutions, including VoIP systems, unified communications, contact center platforms, and desktop and mobile applications, primarily serving industries like financial services, healthcare, retail, and business services.

Research

Fri, 01 Aug 2025 04:00:00 GMT

Altigen Technologies (OTCQB:ATGN) ($0.61; $15.7M market cap) announced Q3 2025 results:

Q3 sales of $3.52 million vs. $3.28 million in the prior year
Q3 adjusted EPS: $0.00 vs. $0.01 in the prior year
Gross margin rose to 63% from 61%

Management Commentary:

“Our fiscal third quarter marked Altigen's fifth consecutive quarter of profitability,” said Jeremiah Fleming, President and CEO of Altigen Technologies. “Compared to the same period last year, we delivered improvements across nearly every key financial metric, demonstrating that our digital transformation strategy is clearly taking hold.”

Key Takeaways:

After reading the related conference call, Altigen's relationship with the Connecticut Department of Transportation (CT DOT) continues to deepen, with a federally funded AI project now underway that the company believes could scale to other state DOTs.

“This quarter, we are beginning a new AI project with CT DOT, which has been funded by the federal government. While we're not in a position to disclose the specific objectives for this project, I can say that we expect the deliverables to be applicable to most state departments of transportation.”

Further conference call comments elaborated on this:

“In Q3, we were honored to attend the AIDC Conference in Harrisburg, Pennsylvania, alongside CT DOT to share our digital transformation success story with other state Department of Transportation.”

“That event has already led to follow-up engagements with several interested states. We'll continue this momentum with a participation in the state of Oklahoma State Expo this month, followed by HEAT Conference in Myrtle Beach in October, one of the largest highway and infrastructure tech events of the year.”

–

Research

Wed, 30 Apr 2025 15:00:40 GMT

Altigen Technologies (OTCQB:ATGN) ($0.51; $12.7M market cap) announced Q2 2025 results:

Q2 sales of $3.5 million vs. $3.4 million in the prior year
Q2 EPS of $0.01 vs. loss of $0.01 in the prior year

Management Commentary:

"Our fiscal second quarter represented our 4th consecutive quarter of profitability," said Jeremiah Fleming, Altigen President & CEO. "On a year over year basis our results improved in virtually every category. Overall, our digital transformation efforts are gaining traction as evidenced by our reduction in operating expenses. Going forward we expect to see similar improvements in our top line revenue."

The story remains the same at ATGN: subpar performance, while we wait for its current customers to upgrade their cloud communications services to ATGN's new platform, which it finally says is ready for primetime. The most frustrating part of the story at this juncture is that the company has not put a buyback program in place, despite its opinion that shares are undervalued.

Altigen Technologies provides integrated communications solutions, primarily through software and cloud-based products.

Research

Fri, 28 Feb 2025 15:07:25 GMT

Altigen Communications (OOTC:ATGN) ($0.74; $18.6M market cap) announced Q1 2025 results:

Sales of $3.3 million vs $3.2 million in the prior year
EPS of $0.01 vs a loss of $0.01 in the prior year

“On a year over year basis our results improved in virtually every category. Although our cloud services revenue decreased on a year over year basis, we did experience modest growth on a sequential quarterly basis. Overall, our digital transformation efforts are gaining traction as evidenced by our reduction in operating expenses. Going forward we expect to see similar improvements in our top line revenue."

Takeaway from conference call

Halted development on their own UCaaS platform that the company has been working on for years, opting to use a third party solution. According to the company, they will now be able to migrate customers to that UCaaS platform. Quite honestly, we think this is the right move, because the company has a strong legacy customer base, which includes Fiserv’s banking clients that will hopefully want the transition to the new UCaaS solution. We are not holding our breath, but getting customers on the new UCaaS platform accelerates ATGN’s ability to gain more revenue from current customers and upsell them to new offerings.
The most tangible growth opportunities we see is the company continuing to expand its IT relationship with the CT Department of Transportation and cultivating their new British Telecom relationship, which has yielded some early success.

ATGN is a SaaS/Cloud communications management/call center solutions provider.

Research

Fri, 13 Dec 2024 05:00:00 GMT

Altigen Communications (OOTC:ATGN) ($0.74; $18.6M market cap) announced full year and Q4 2024 results ended September 30, 2024:

Sales of $3.7 million vs $3.5 million in the prior year
Non-Gaap EPS of $0.02 vs $0.01 in the prior year

The conference call was yesterday at 5 p.m. Eastern, so we will work to analyze and share key takeaways from the call as soon as possible.

Call to Action

Thu, 14 Nov 2024 05:00:00 GMT

Portfolio Action: Removing ATGN from Top 5 Favorite Model Portfolio

Closing from the Top Five Favorites Model Portfolio at $0.58, with a final return of 1.75% and high return of 391.22%.

ATGN's challenges in achieving growth have stemmed from management’s inability to execute its stated strategy to finish building a revamped cloud communication platform that its customers have been waiting for over the past several years. With the addition of Joe Hamblin as Chief Digital and Transformation Officer in February 2024, we are hopeful that the changes he's implementing will begin to take hold (source). We believe these adjustments will at least bear fruit to improve profitability by reducing expenses. However, we remain less confident about the company’s prospects for revenue growth within its cloud communication software business. Like KTEL, given the current stock weakness, we still view shares as a speculative but worthwhile bet.

Research

Tue, 30 Apr 2024 14:43:29 GMT

Altigen Communications (OOTC:ATGN) ($0.74; $18.6M market cap) announced Q2 2024 results:

Sales of $3.36 million vs $3.37 million in the prior year
EPS of $0.00 vs $0.00

“We view this quarter as a pivotal moment in Altigen's business transformation. Our expenses are on a downward trajectory, and our new solutions are transitioning into the launch and monetization phases. Although there's still a lot of work to be done, the business is progressing in the right direction."

ATGN is a SaaS/Cloud communications management/call center solutions provider.

Research

Fri, 23 Feb 2024 18:18:06 GMT

Altigen Communications (OOTC:ATGN) ($0.73; $18.2M market cap) announced Q1 2024 results:

Sales of $3.2 million vs $3.4 million in the prior year
Cloud revenue increased 4% to $1.9 million
Non-GAAP net loss of $0.01 vs $0.00 in the prior year

"Our first quarter results were impacted by a number of issues related to new product rollouts, new internal systems and changes in our organization structure to better align with our business objectives", said Jeremiah Fleming, Altigen President & CEO. "Appropriately dealing with many of these issues required an increase in expenses on a short term basis. The majority of the issues, and associated expenses, have now been addressed with plans to deal with any remaining items this quarter. With the short term expense increases largely behind us along with our new solutions beginning to roll out, Altigen is in a much stronger position to execute than ever before."

"Joe Hamblin's return to the company is also a very exciting development. Joe's experience in the industry, knowledge of the Altigen business, leadership skills and passion for success will be an impactful force in driving the company forward."

We are very excited that Joe Hamblin has decided to return to the company after leaving the company on March 7, 2022. We think this is a positive sign that Joe thinks the company is back on track and close to a growth inflection point.

We do think that the knee-jerk reaction from investors who are just reading the press release may hit the sell button this morning.

However, while the first quarter press release offered nothing special on the company’s growth outlook, the conference call contained a good bit of information arbitrage. Management gave some hardline dates on when its partner, Fiserv, will finally start offering ATGN’s services to its banking customers. Basically, these initiatives will begin in April.

Equally as Important, the company talked about initiatives that are going to save the company about $1.2 million a year, which equates to about five cents a year in earnings per share.

The company also reiterated that it will be profitable for the full year. Finally, management disclosed that the 5-year $12 million contract ATGN just inked with the Connecticut Department of Transportation could be worth up to $18 million.

While the company still has to demonstrate that it can grow profitably, placing a 25 P/E on five cents would equate to a baseline price target of $1.25. (company is currently near breakeven on an adjusted earnings per share basis)

ATGN is a SaaS/Cloud communications management/call center solutions provider.

Research

Fri, 15 Dec 2023 15:23:13 GMT

Altigen Communications (OOTC:ATGN) ($0.71; $17.3M market cap), a SaaS/Cloud communications management/call center solutions provider announced Q4 2023 results:

Sales of $3.5 million vs $3.6 million in the prior year
Cloud revenue of $1.98 vs $1.94 in the prior year
Non-GAAP EPS of $0.01 vs $0.01 in the prior year

“Fiscal 2023 was a pivotal year for Altigen during which we launched a number of new cloud solutions while integrating the ZAACT Consulting acquisition into the company", said Jerry Fleming, Altigen President and CEO. "We now have the foundation firmly in place for our new UCaaS and CCaaS solutions, enabling the rollout of these solutions to both current and new prospective customers. During the latter part of the year we also kicked off development of the first of several AI initiatives, principally targeting financial services institutions. In summary, I believe the company is well positioned to drive business growth as we head into fiscal 2024”

Conference call highlight on new product offerings:

“Our FY 2023 cloud revenues were essentially flat compared to FY 22. This can primarily be attributed to the relatively late in the quarter release dates of our new solutions. As a result, we did not experience substantial revenue contribution from those solutions in FY 23. We do expect that to change and realize a much more significant revenue contribution in FY 24”

Research

Wed, 23 Aug 2023 15:33:53 GMT

Altigen Communications (OOTC:ATGN) ($0.98; $23.8M market cap), a SaaS/Cloud communications management/call center solutions provider announced Q3 2023 results:

Sales of $3.4 million vs $3.0 million in the prior year
Cloud revenue of $1.95 vs $1.90 in the prior year
Non-GAAP EPS of $0.00 vs $0.01 in the prior year

"Our cloud services revenues, which are still largely concentrated in our legacy solutions, continued to show an incremental increase quarter over quarter", said Jeremiah Fleming, Altigen President & CEO. "In addition, just after the quarter closed, the contract with our largest consulting services customer was extended, which represents a significant increase to the prior contract value. We're pleased to see that our investments are starting to pay off and are looking forward to accelerating our growth as we continue to execute on our business plan."

The quarter came in around what we expected. If there’s one positive to take away from the results, it's that it appears cloud revenue has finally stabilized and is starting to see a little bit of growth, driven by legacy customers.

We expect this to continue to be the case until the company is able to start generating revenue from its new software rollout to Fiserv which they addressed during the conference call.

It was also nice to see that the company actually referred to its new $12 million contract secured by its subsidiary, ZAACT. We would have preferred for the company to mention the actual value of the contract in the press release, but at least they go over the contract in detail in the conference call and actually served up a surprise around the contract.

Given the recent rise in the stock price, it remains to be seen if investors will react positively to some of these encouraging developments or focus more on the company’s earnings per share results. Since the numbers are still flirting with breakeven. We assume there might be some impulse selling based on the headline news.

However, because the company only discussed the most important information to the quarter in the conference call and not its related press release, it may take time for investors to digest what was mentioned on the call.

With all this being said, the next few months are going to be a very critical time for ATGN to start delivering on some of the initiatives it’s been talking about. If the company does fail to deliver, we would push the management to put it up for sale.

Conference call highlights:

The company is to launch an AI product for its major customer Fiserv

“Specifically, we're in discussions with Fiserv regarding introducing a conversational AI solution built on the newly announced Azure Chat GPT service, which is a private version of Chat GPT offered by Microsoft tailored specifically for enterprise organizations.”

Aside from this being a new product the company has not talked about yet, it could help with the stickiness of the Fiserv relationship which some investors may be questioning due to the delay in the rollout of its new cloud communication software platform for Fiserv’s financial institution customers.

The CEO mentioned that Fiserv is still on track for completing its data center migration initiatives by the end of the year. In theory, this implies Fiserv should be more aggressive in forcing its customers to adopt ATGN’s new higher margin solutions.

Below is a Q&A exchange:

Neil Cataldi

"Okay. Great. I just have two other quick ones. So in terms of Fiserv, I think you touched a little bit on the customer migrations that are -- that should be coming by year-end. That's been a topic that's come up in the past. Should we expect to see incremental revenue growth sort of from today through year-end as those migrations take place? And is there a drop-dead sort of date at the end of the year that's going to push these to happen over the next few months?"

Jeremiah J. Fleming, Altigen Communications, Inc. - Chairman, President & CEO

"Those are good questions. Let me address your last question first. Yes, there's a drop dead date and the drop dead date is the end of the calendar year. And this time, we understand if they don't make their date, they're going to have to pay for the data center, all the data center costs that they do not migrate out of.

Now Neil, you've been around for a while, so you know that there was a drop dead date last year, too. right? But I think this year, there's a bigger onus. But the nice thing now because we have advanced both our UCaaS platform and our CCaaS platform when they migrate these customers from their old data center that they're shutting down to the new data center, the plan is for them to upgrade to our new platforms and that will represent an incremental revenue opportunity for us. So it's not just like-for-like. They -- when they upgrade to our new platforms, they'll take on the additional functionality that we deliver.

So even though I'd rather have them getting a whole bunch of new customers, even converting their existing customers will -- well, it's expected, I should say, expected to generate additional incremental revenue for us."

The CEO confirmed InfoArb we mentioned in a previous email about a new contract win.

“We did recently extend a contract with our largest services customer, a state Department of Transportation, in the amount of $3.5 million for their current fiscal year, which began July 1.

That same state agency has also just awarded us the bid to further expand and accelerate that project based on an initial budget and -- I'm sorry, award -- bid award of $12 million over 5 years. That contracting process will get started a little bit later this calendar year.”

This news was even better than we originally thought, as we were not aware of the $3.5 million extension on the original contract award for the current year.

Caveats:

We know very little about the AI product and if it will be successful. And/or if the company will be able to stick to its timeline.
We also do not know the margin picture of the new contract, but assume it will be in line with the current margins of the previous contract.

Research

Mon, 14 Aug 2023 18:31:06 GMT

Altigen Communications (OOTC:ATGN) ($0.87; $21.1M market cap), a SaaS/Cloud communications management/call center solutions provider recently received a large renewal contract from the Connecticut Department of Transportation. Contract value for up to $12.0 million, 5 times larger than original contract from 2016.

Research

Thu, 29 Jun 2023 14:20:46 GMT

Altigen Communications (OOTC:ATGN) ($0.67; $16.2M market cap), a SaaS/Cloud communications management/call center solutions provider, put out some information on a new AI chatbot the company has released.

The company’s most recent LinkedIn post states:

“Ready to take your customer service to the next level? Let us introduce Aigo - the first and only chatbot with a brain. Crafted by top AI psychologists, Aigo delivers hyper-personalized conversations and understands context like no other. Find out how businesses are saving money, enhancing loyalty, and offering superior service while significantly reducing call center agents. Dive into this video to learn more.” (Linked below)

Upgrade Your Customer Service with Aigo - The Only Chatbot with a Brain

Research

Thu, 18 May 2023 18:40:50 GMT

Altigen Communications (OOTC:ATGN) ($0.59; $14.3M market cap), a SaaS/Cloud communications management/call center solutions provider announced Q2 2023 results:

Sales of $3.3 million vs $2.5 million in the prior year
Non-GAAP EPS of $0.00 vs $0.01 in the prior year

"We're pleased to report that our cloud services revenues increased quarter over quarter", said Jeremiah Fleming, Altigen President & CEO. "While our gross margins were down a bit due to the higher concentration of professional services revenue in the quarter, we do expect a return to normal levels as our cloud services revenues increase as a percentage of overall revenues. We also continued to remain cash flow positive even though we have been heavily investing in our new solutions. As we get closer to exiting this investment phase and start moving into our planned growth phase, we expect to see continued growth in our cloud services business."

Some takeaways from conference call:

Fiserv seems to be finally moving it’s clients (that have been using ATGN’s legacy solutions) to ATGN’s new suite of products

“Fiserv plans to migrate their approximately 30 hosted MaxCS customers to the new MaxCloud UCaaS platform because these customers need to be moved to a new Fiserv data center by the end of the year as the current data center is going to be shut down. In the second wave, they would be targeting their base of 60 or so legacy on-premise MaxCS PBX customers also to migrate to the new MaxCloud platform.”

The monthly incremental monthly subscription fees associated with the migration will be anywhere from $5,000 to $25,000. So, at the low end of this range, the initial initial migration of 30 customers works out to about $1.8M per year. The company estimates that the entire migration can yield annual revenue of between $3.5 and $4 per year.
New reseller agreements in the works:

“And yes, we are working on some very large resellers. And we have some very nice resellers now. Most of the resellers we have, I'll call them regional providers, and they're typically Microsoft and provide Microsoft services to regional customers. We have -- and it takes a while, but we have been pursuing some very large resellers. And I think we're very close to closing at least one, if not more. And I'll just -- I can at least tell you that these resellers are some of the world's largest service provider companies or telcos as you might consider them.”

Research

Mon, 10 Apr 2023 17:43:14 GMT

Altigen Communications Inc (OOTC:ATGN) ($0.49; $11.8M market cap), a SaaS/Cloud communications management/call center solutions provider, disclosed that its lawsuit with Intellitalk, a former reseller of the company, has been dismissed. Via the Q1 2023 10-Q:

“In February 2019, the Company was served with a cross-complaint filed by Intellitalk, Inc. (“Intellitalk”), a former reseller of the Company. The cross-complaint was filed in the Superior Court of the State of California, County of Riverside in January 2019. The complaint alleges interference with prospective economic advantage and unfair competition. The Company filed a motion to dismiss all claims in the complaint. On March 10, 2023, the court dismissed the Company with prejudice.”

It is quite possible that the lawsuit put some pressure on the stock over the past few weeks.

Research

Tue, 31 Jan 2023 05:00:00 GMT

Altigen Communications (OOTC:ATGN) ($0.66; $16.0M market cap), a SaaS/Cloud communications management/call center solutions provider announced Q1 2023 results:

Sales of $3.5 million vs $2.7 million in the prior year
Non-GAAP EPS of $0.00 vs $0.01 in the prior year

“Our first quarter results reflected the continuation of our efforts to manage our existing business at a break-even run rate, as we roll out new and updated products that we expect to drive future revenue and profit growth. During the quarter we have now launched our new UCaaS platform, MaxCloud, which is deployed in both Altigen's and Fiserv's datacenters, to serve our respective customers. We also launched a new version of our FrontStage CCaaS solution in conjunction with Fiserv, targeting financial services institutions. Finally, just after quarter close, we released a major new version of CoreInteract for Microsoft Teams enabling us to address our customer's requirements for a cost-effective departmental customer engagement platform.

In summary, our business has remained stable while we've been working hard on the introduction of multiple new products. We are positioned to see a return to revenue growth, margin expansion and higher profits as these ramp."

The quarter played as we expected. However, we wish the company would provide more color on its growth initiatives in the press release, rather than just discussing them in the conference call.

If there was a positive take away from the call, it appears that ATGN has finally deployed its new suite of products to both Fiserv/Microsoft Team customers and legacy customers that still have not converted to its cloud offerings.

Management also noted that it intends to focus on growing profitably moving forward. We highly encouraged the company to employ shareholder friendly initiatives to restore confidence in the stock.

Research

Fri, 16 Dec 2022 15:43:57 GMT

Altigen Communications (OOTC:ATGN) ($0.77; $18.8M market cap), a SaaS/Cloud communications management/call center solutions provider announced Q4 2022 results:

Sales of $3.6 million vs $2.8 million in the prior year
Non-GAAP EPS of $0.01 vs Non-GAAP EPS of $0.01

"During the year we made significant enhancements to our CoreInteract Customer Engagement as a Service (CEaaS) platform, established a beachhead base of CoreInteract customers, launched the new FrontStage Contact Center as a Service (CCaaS) solution for our FinTech Customers, and deployed our new geo-redundant MaxCloud Unified Communications as a Service (UCaaS) platform to over 30 customers."

"In addition, we also acquired ZAACT Consulting, a leading Microsoft solutions partner, which added valuable Microsoft technical expertise required by our enterprise customers. All in all, I believe the steps taken during fiscal 2022 mark a key catalyst in our evolution that will enable Altigen to take advantage of today's Digital Transformation market opportunities within the Microsoft Teams platform, Fiserv's significant customer base and our third-party channel."

Conference call indicates the company will strongly consider a stock buyback:

“My attitude, I can speak for myself here, is that if we believe the stock is significantly undervalued, the company should participate in some sort of a buyback program, but this is -- has to be, as you know, has to be a Board decision. I think it kind of depends on where the stock price is. And there's also, as you know, a bit of a volume question as well if the company did participate, can we buy enough shares to make it worthwhile. But I can tell you that will be a topic at our next meeting.”

Our takeaways:

It was finally nice to see the company post a decent quarterly growth. All of the growth in the quarter came from the ATGN’s recent acquisition, ZAACT. Now, moving forward, the company is going to have to show that it can grow its cloud revenue from a bunch of new offerings it’s been working on for several years.
The new revenue from ZAACT should hopefully continue to allow ATGN to post solid year-over-year quarterly revenue growth for the next few quarters as it waits for the cloud businesses to contribute to overall growth.
One thing we need to keep in mind is that ZAACT revenue can be lumpy because it does include some project revenue.
The company needs to improve its profitability. One thing the company could have done better in the press release was to communicate that the primary reason for reduced profitability - the increased expenses associated with getting its product line ready to sell into Fiserv. This is a potentially huge revenue opportunity that we’re very eager to see contribute to the company's financials. This was only discussed in a conference call.
We are not quite sure how the stock is going to react to these numbers, as investors still may be a little cautious, as organic cloud growth is still low.
We are on the lookout for insider buying activity from the CEO.
Barring any severe negative impacts to the business by a potential recession, we still think that the company could find a suitor to buy it at around $1.50 to $2.00.

Research

Fri, 19 Aug 2022 04:00:00 GMT

Altigen Communications (OOTC:ATGN) ($1.11; $26.6M market cap), a SaaS/Cloud communications management/call center solutions provider announced Q3 2022 results:

Sales of $3.0 million vs $2.8 million in the prior year
Non-GAAP EPS of $0.01 vs Non-GAAP EPS of $0.02

"I'm excited to say that customer interest in our new UCaaS, CCaaS and CEaaS platforms has been substantial, and, in fact, we signed our first customers for each during the second quarter," said Jerry Fleming, chairman and CEO of Altigen. "Additionally, we made great strides towards building a robust pipeline of opportunities and further advancing our new product roadmap, both of which we believe will drive higher revenue growth and profitability in fiscal 2023 and beyond.

Looking to the future, we have a tremendous opportunity ahead in the UCaaS, CCaaS and CEaaS markets. In addition to CoreInteract (CEaaS) recently being named a Microsoft Preferred Solution, to date, we have closed over a dozen customers for our CoreInteract products for Microsoft Teams. Additionally, our pipeline continues to grow, and we now have about 50 potential opportunities for which we have submitted proposals. We are also continuing to enhance CoreInteract with new features and functionality that customers are requesting for this market.

I am also very optimistic about our relationship with fintech giant Fiserv for our MaxCloud (UCaaS) and FrontStage (CCaaS) platforms, both of which were recently deployed for a mid-size regional bank. There is a large opportunity here to upgrade existing Fiserv customers to MaxCloud as well as introduce these new solutions to new customers. Additionally, there is a strong demand for contact center solutions by Fiserv customer base, presenting a large upsell opportunity for FrontStage over time.”

Excerpt from conference call:

“It is important to note that the majority of Altigen's fiscal third quarter revenue was based on Altigen's legacy solutions with a partial quarter contribution from the ZAACT business. But that situation is now starting to change. Moving forward, as we get full quarter revenue contribution from our ZAACT business unit and increasing contribution from our new customer experience solutions, we do expect to see accelerating profitable growth.”

Research

Tue, 16 Aug 2022 04:00:00 GMT

CoreInteract has been selected as preferred Microsoft solution

Altigen Communications (OOTC:ATGN) ($1.13; $27.0), a SaaS/Cloud communications management/call center solutions provider, announced its CoreInteract Suite has been selected as a Microsoft preferred solution in the Microsoft Commercial Marketplace.

"We are very pleased that CoreInteract has been recognized by Microsoft as a Preferred Solution," said Mark Allen, Altigen's Chief Product Innovation Officer. "This is certainly a testament to the great work our development team has done to build applications that enhance the capabilities of Microsoft Teams Phone System. We're also excited about the opportunities we see in the market for the entire CoreInteract suite of solutions, which includes the CoreInteract digital customer engagement platform, the CoreEngage app for enterprise users, the Workgroup Insights real-time reporting application and CoreAttendant application for company operators and receptionists."

Research

Mon, 11 Jul 2022 15:25:17 GMT

Altigen Communications (OOTC:ATGN) - shares have been inching higher for this SaaS/Cloud communications management/call center solutions provider, possibly on the heels of a recent downgrade of Ringcentral, Inc. (NYSE:RNG).

On July 6, 2022 Needham analyst Ryan Koontz downgraded RNG to hold from a buy. In the report Ryan states:

“We believe senior management changes at RNG have set back strategic efforts to respond to competitive threats and revisions to product and company strategy."

“It has become clear that Microsoft Corp (NASDAQ: MSFT) Teams' enterprise footprint up-sell to voice represents an "increasing headwind" to RingCentral's growth.”

It’s no secret that ATGN CEO Jeremiah Fleming stated on numerous occasions that he felt the increased industry trend and expectations to integrate into Microsoft Teams could significantly challenge the growth outlook of RNG and other UCaaS providers.

ATGN has a suite of products designated to deliver integrated solutions and services for Microsoft Teams.

From last years Q2 conference call:

“We plan to take advantage of the tremendous growth in Microsoft Teams with both our current and new end-to-end Teams solutions and services.

Shares have been decimated in the recent market downturn, hitting new lows of $0.70 on June 23, 2022. Shares have begun recovering and now sit at around $1.25.

We have scheduled a Morning Management Briefing with the CEO, Jeremy Flemming, to further discuss this development.

See you tomorrow morning at 11 AM EST. You are not going to want to miss this one!

Topic: Altigen Communications, Inc. Management Morning Briefing

Time: Jul 12, 2022 11:00 AM Eastern Time (US and Canada)

Join Zoom Meeting:

https://us02web.zoom.us/j/81138371940?pwd=RUl0eU11cjlaNVlOZjZBeUZUb0dPQT09

Meeting ID: 811 3837 1940

Passcode: 957179

Dial by your location

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Find your local number: https://us02web.zoom.us/u/kdNL96pRC

Research

Wed, 06 Jul 2022 04:00:00 GMT

Altigen Communications (OOTC:ATGN) ($0.99; $23.7M market cap) - Thanks to extensive due diligence from one of our premium members, we received some good intel on certain aspects of ATGN’s products, their competitive advantages and how resellers/customers feel about the product lineup.

Below are responses from one of ATGN’s resellers to the following questions:

Question 1: CoreInteract is a contact center solution fully integrated in Teams?

That is correct

Question 2: They say that they are unique in that they have the native integration within Teams because their solution has been built on the Microsoft Bot Framework, deployed in Azure and uses Azure Cognitive Services. True?

That is correct

Question 3: As a result, CoreInteract has a native Teams architecture?

That is correct

Question 4: That means the customer can use Microsoft as the originating voice carrier or through Altigen direct routing to Teams, which ATGN considers to be a competitive advantage?

That is correct – the customer can use CI independently of Microsoft or a sip trunk supplier

Question 5: Please could you give your feedback about this Altigen native integration and if there are more peers who implement this integration with Microsoft Teams?

Due to CI being native to Teams the solution can be bought or sold by any type of company. Altigen is NOT the only company offering this type of solution. Altigen is one of the few that I know of that made the decision to start from scratch approx. 2 years ago. ATGN has therefore no legacy challenges that other peers in the marketplace have.

Question 6: I’m also wondering if once a company has implemented CoreInteract if it’s difficult to migrate to another contact center solution

Why would one do this?

Question 7: or if customers data saved in their dashboard is not recommended to move to another cloud like AWS

AWS is not in the picture.. one wants to be in Azure as one has chosen to go for Microsoft…

Question 8: Could it be complicated if the migration from CoreInteract to another contact center solution takes place into Azure too?

A customer is always free to move to another supplier – moving to another supplier that is using Azure as well is ‘not complicated’. So there is opportunity on both sides of the coin:)

Question 9: On the other hand, they say that CoreInteract is in the middle between a unified communications solution and contact center solution.

I share their view.

Question 10: As Altigen says, CoreInteract is not for the general employees and not for contact center agents. The solution is focused on customer-facing employees with a lower price than the contact center solution.

This is how we describe the solution on our website and market the solution in Europe. Our native to Teams CoreInteract Contact Center service is a unique cloud based Contact Center application for businesses (SMEs + corporations) that have a sales department, helpdesk or information desk. One central point within the company from which telephone customer contacts are managed.

Question 11: I would like to know If companies are requiring this kind of solution and functionalities.

If the Call Queues and Call Menus of Microsoft do not offer enough functionality CI is a great contender (too many suppliers offer a solution that is too expensive – ATGN being under 25$ is key).

—

Below are responses from a Systems Integrator:

Question 1: Are companies requiring these kinds of solutions and functionalities?

We have been working with AltiGen for almost one year. We are a systems integration company that provides sound IT solutions to our customers and clients. We researched about ten Unified Communication as a Service (UCaas) vendors that claimed they had a Teams integrated UCaaS solution that worked within Microsoft's GCC environment. The GCC platform is required for our government customers for compliance reasons. The only vendor that met the criteria at that time was AltiGen. We have since standardized on their solution set of products for both government and commercial clients.

Question 2: Is CoreInteact demanded by your customers?

It is absolutely in demand. We have targeted ALL of our customers that are within three years of replacing their telephone systems as candidates for the Altigen solution. As I had mentioned before, we initially found Altigen because of its unique integration to the Microsoft GCC cloud platform. We will now be deploying it in general for all our customers.

The more I learn about Altigen and its direction and "untouched potential" the more I am assured we have made the correct strategic vendor alignment decision. They have yet to tap into the API integration capability that lies before them. They are better poised to do so than most other vendors in the UCaaS marketplace.

Thank you for you answers

You are most welcome. I don't usually engage with inquiries about vendors, but as you can see I am excited about Altigen's business trajectory.”

Research

Thu, 16 Jun 2022 13:23:30 GMT

Altigen Communications (OOTC:ATGN) ($0.86; $20.5M market cap), a SaaS/Cloud communications management/call center solutions see CEO Jeremiah Fleming buy 28,000 shares on the open market at average price of $0.91. After years of no insider transactions, this marks the second buy in the past 3 months.

Research

Fri, 13 May 2022 17:25:20 GMT

Altigen Communications (OOTC:ATGN) ($1.20; $28.6M market cap), a SaaS/Cloud communications management/call center solutions announced second quarter 2022 results:

Sales of $2.5 million vs $2.6 million in the prior year

Non-GAAP EPS of $0.01 vs $0.01

"While not yet showing up in our financials, we achieved a number of milestones in the second quarter that will help drive the next leg of our growth," said Jerry Fleming, chairman and CEO of Altigen. "We introduced several of our next-generation CXaaS solutions that will enhance the customer experience for both Microsoft Teams and Fiserv customers. In addition, we announced the acquisition of ZAACT Consulting, which we subsequently closed in early May. This acquisition well positions Altigen to successfully deliver our solutions to the enterprise market by offering the professional services needed to support these businesses. This, in turn, will drive revenue and profits on a stand-alone basis, in addition to the synergies available to cross-sell to each other's customers."

Research

Tue, 10 May 2022 19:18:49 GMT

Altigen Communications (OOTC:ATGN) ($1.11; $27.4M market cap), a SaaS/Cloud communications management/call center solutions, announced the closing of its ZAACT Consulting acquisition and related financials, showing ZAACT had 2021 revenues of $5.3 million and net income $500,000. The additional revenue equates to nearly 50% top line addition for ATGN and roughly $0.02 per share.

Interviews

Tue, 22 Mar 2022 15:08:07 GMT

3/22/2022 ATGN Morning Briefing with Jerry Fleming, CEO

Research

Tue, 22 Mar 2022 04:00:00 GMT

Jerry discusses the need for both Core Interact and Front Stage, how they are similar and how they are different

Research

Wed, 09 Mar 2022 18:21:45 GMT

Altigen Communications (OOTC:ATGN) ($1.19; $28.2M market cap), a SaaS/Cloud communications management/call center solutions held its virtual investor day yesterday, providing an overview of the number of new product launches the company has recently released, as well as briefly discussing the acquisition of ZAACT Consulting, a Microsoft Gold Partner based in Sandy, UT that it announced yesterday morning.

We continue to attribute the recent weakness in the stock to market volatility and an overreaction to short term operational softness over the last few quarters as an opportunity for long term oriented investors.

While no details of the deal were announced in the press release, there was some Information Arbitrage (InfoArb) on the call:

ZAACT has grown 20% a year the last few years
It has high recurring revenue stream
The company is nicely profitable and accretive:
“And so yes, this company, I can assure you, they're nicely profitable. And yes, it will absolutely be accretive. We wouldn't do a deal that was not accretive, and it will be nicely accretive to our shareholders.”
The transaction will be executed with 80% cash and 20% stock, with the stock doled out over 3 years - one-third at the end of each year after deal closes
ZAACT is slightly less than half the size of ATGN

While the discussion of new product offerings and the acquisition lasted for 99% of the call, maybe the most important clue from the call that ATGN is at a growth inflection point was delivered during the closing remarks from CEO Jeremiah Fleming when he opined on how, two times in his career, investors have hastily given up on him:

“I'm going to just divert from my script for a moment. One other time in my career here at Altigen, shareholders gave up on the company, and that was back in about 2014, and I made millions when they gave up. And I think we may be seeing some of the same today, and we believe that this is going to be -- we're going to be doing very well going forward. So I can only say for the shareholders that have exited, thank you. And for the shareholders hanging in there, I believe we're going to deliver a nice return. So -- and I'm going big, I can tell you that as well.”

We’ve stood by Jerry since we first highlighted the stock in February 2015 and expressed our opinion that it carried multibagger potential. The stock has gone up 450% since then and rose as much as 1200% when it climbed to $2.75 in January 2021. Our confidence in Jerry’s strategy and commitment to grow the company remains intact. Now, we are betting that Jerry can deliver another multibagger run on the heels of the company’s new product launches, the ZAACT acquisition and Microsoft’s Teams increased penetration into the cloud communications market.

Research

Tue, 08 Mar 2022 16:50:37 GMT

Altigen Communications (OOTC:ATGN) ($1.05; $24.9M market cap), a SaaS/Cloud communications management/call center solutions announced the definitive agreement to acquire ZAACT Consulting, a Microsoft Gold Partner based in Sandy, UT.

"This strategic acquisition is an integral component of Altigen's strategy to deliver the industry's most complete suite of integrated solutions and services for Microsoft Teams," said Jerry Fleming, Chairman and CEO of Altigen. "The synergies between our companies are nothing short of amazing. The capabilities offered by ZAACT are absolute requirements for any mid-size or enterprise customer engagement. In addition to their deep expertise in Microsoft technologies, ZAACT has also developed strong experience and relationships in the Financial Services and Healthcare verticals, which are the top two target markets that Altigen is pursuing. Together with ZAACT, Altigen is in a significantly enhanced position to drive increased sales of our CXaaS solutions."

Fleming further said, "It's also important to note ZAACT is not a Microsoft reseller, which is in line with Altigen's philosophy that reselling Microsoft licenses is something our channel business partners do. Instead ZAACT delivers custom applications and services that enhance the value of those Microsoft licenses for both customers and Microsoft business partners."

Ryan Day, CEO of ZAACT:

“The technical and business process expertise that ZAACT provides combined with Altigen's customer experience software is not only just what our customers are looking for, but also provides the foundation for accelerated business growth."

Consummating an accretive acquisition has been a big part of the company's narrative over the last few quarterly conference calls. However, terms of the deal and/or financials have not been provided yet, but we are hoping management can provide some color during today’s investor call scheduled for 11:30 AM EST. The company plans to cover the following areas:

Introduction and Overview
Microsoft Modern Workplace
Fiserv Altigen Strategic Partnership
Microsoft Teams Market Overview
Altigen Strategic Positioning
The Enterprise Opportunity with ZAACT Consulting
Altigen Product Portfolio: Roadmap & Demonstrations
US & UK Go to Market Strategies
Altigen Financial Metrics Discussion
Q&A Session

Research

Mon, 07 Mar 2022 11:33:17 GMT

Altigen Communications (OOTC:ATGN), a SaaS/Cloud communications management/call center solutions, announced it is moving into public preview of FrontStage for Microsoft Teams, a native Microsoft Teams contact center solution.

"The cloud-based FrontStage omni-channel contact center solution is yet another differentiated offering in the current wave of Altigen's new applications being released through our various channels," said Jerry Fleming, president and CEO of Altigen. "Altigen's strategic focus is to provide best-in-class, cloud-first solutions to improve the customer experience, and FrontStage is a key component of this strategy as it allows our customers to differentiate their customer service interactions and improve employee productivity."

The company also announced the availability of CoreEngage user interface for CoreInteract a native Teams Customer Experience suite of solutions for mid-size and large enterprise organizations.

“CoreInteract and its suite of applications brings new capabilities to the Customer Experience journey", said Mark Allen, Altigen's Chief Technology Officer. "CoreEngage provides end users with views, capabilities, screens and information about incoming calls, SMS messages, emails and other modalities, as well as some other functionality to meet our vision of improving customer engagement through our solutions."

ATGN has rolled out 5 new product offerings in the past month, the company will be hosting its investor day on March 8, 2022.

Research

Tue, 15 Feb 2022 17:41:13 GMT

Altigen Communications (OOTC:ATGN) ($1.24; $29.4M market cap), a SaaS/Cloud communications management/call center solutions, announced the release of enhanced financial service solutions with voice print technology.

“Our IVR is sold by Fiserv and has been deployed at thousands of banks and credit unions. As the level of fraud attempts continue to rise, our team went to work evaluating technologies which could be implemented while leveraging our customer's existing investment. This is an exciting development that enhances security and the customer experience at the same time."

This marks the second product rollout since the company reported Q1 2022 in late January. This is an important step in the ATGN story because the catalyst for the next leg of the company’s growth depends on new product launches which have been delayed for several quarters.

Research

Thu, 10 Feb 2022 19:01:48 GMT

Altigen Communications (OOTC:ATGN) ($1.20; $28.4M market cap), a SaaS/Cloud communications management/call center solutions, announced the availability of CoreAttendant for Microsoft Teams.

“CoreAttendant enhances the capabilities of Microsoft Teams Phone System by enabling company operators, receptionists and administrative personnel to quickly answer and distribute phone calls to employees and departments directly within the Microsoft Teams interface.”

Comments from CEO:

“The beauty of CoreAttendant is that every company needs an operator console. When companies migrate to Teams Phone System, an operator console is one of the first applications customers look to deploy. Not only does CoreAttendant represent a new revenue opportunity, but it also opens the door for us to introduce our complete suite of Teams Phone System applications to drive increased value for our customers.

Perhaps more importantly, CoreAttendant marks the first of the new wave of applications we've been diligently working on for some time. These additional applications, which are in various stages of quality assurance and user acceptance testing, are scheduled to be released during the remainder of this quarter."

In our last update, covering the Q1 2022 results, we stated:

“Long awaited new product rollouts and a possible acquisition are slated to fuel growth in 2022. While the contribution to revenue may not happen as fast some investors are hoping for, it seems like the company is finally on the cusp to experiencing the next leg of transformational growth.”

This is an important step in the ATGN story because the catalyst for the next leg of the company’s growth depends on new product launches which have been delayed for several quarters. To us, the news is an indication that they are on the way to commercializing its products, and is not just a conversation piece. On February 28, 2022, we tweeted the following on ATGN.

If you asked us what stock in our coverage universe is the most misunderstood and most under-appreciated multi-bagger opportunity right now - that feels like an “all in moment” - it would be Altigen Communications Inc (OTC:ATGN).

This sentiment still currently exists and is reinforced by their latest announcement.

Research

Fri, 28 Jan 2022 17:28:34 GMT

Altigen Communications (OOTC:ATGN) ($1.12; $26.5M market cap), a SaaS/Cloud communications management/call center solutions, announced Q1 2022 results:

Sales of $2.7 million vs $2.6 million in the prior year
Non-GAAP EPS of $0.01 vs $0.01

"This quarter was generally consistent with our past few quarters", said Jerry Fleming Altigen's President & CEO. "More importantly we made substantial progress toward the release of our next generation cloud solutions. I expect these solutions, which are in the process of being released, to be significant revenue drivers for Altigen as they start gaining traction in the market."

Long awaited new product rollouts and a possible acquisition are slated to fuel growth in 2022. While the contribution to revenue may not happen as fast some investors are hoping for, it seems like the company is finally on the cusp to experiencing the next leg of transformational growth. Ultimately, we think patient investors will be rewarded.

The conference call was very bullish, in line with past calls, highlighting its growing Fiserv relationship, new product launches (most of which are slated in next month), as well acquisition opportunities. We will not highlight each one, as many have been covered before. We did want to point out one quote from CEO Jeremiah Fleming:

“although we are a bit later in the market than we had hoped to be, I can assure you the market opportunity is still wide open. In fact, a few years ago, a very well-respected investor and Altigen shareholder asked the question on our earnings call with me as we're going through our first transformation from hardware to software to cloud. The question was, what inning are you in? Now I would like to answer that question now as it relates to the new Altigen. And the answer is the game has just started. We're in the top of the first. Altigen is the home team, and we're getting ready to come up to bat.”

That investor he is talking about was Maj, our Co-founder, and at that time, the stock went from $0.17 to over $3.00, after which delayed new product launches took longer than expected and weighed on ATGN’s price. So, it is encouraging to hear Jeremiah state that they are now in the top of the 1st inning of this new phase in the Altigen story.

Research

Wed, 08 Dec 2021 19:01:14 GMT

Altigen Communications (OOTC:ATGN) ($1.76; $41.1M market cap), a SaaS/Cloud communications management/call center solutions announced Q4 2021 results:

Sales of $2.8 million vs $3.0 million in the prior year
Non-GAAP EPS of $0.01 vs $0.03

As usual, there was little to no commentary in the press release. The conference call offered some outlook from management and also acknowledged its lack of execution in some areas.

It seems like the ATGN story has been a broken record of “wait one more quarter,” but we still have confidence that the company will deliver. Furthermore, recall in our special report, “A Cloud Communication Stock Trio With Multibagger Returns Written All Over It”, we mentioned that ATGN is probably still a few quarters away from its growth inflection point, so we were not surprised by the results. We would not be surprised to see the stock pullback, but we may view it as a good opportunity to add shares to our position

With this subpar quarter, the CEO explained that 2021 did not hit expectations due to product delays, some which were out of their control, like delays in Microsoft API UCaaS rollout. Furthermore, on an apples to apples basis, if you eliminate the non-cloud revenues that the company is in the last stages of phasing out, revenues for full year 2021 would have matched 2020 at $11 million. This is an important stat because it shows the company’s core cloud revenue legacy business is not expecting any attrition.

Viewing the story from a half glass full point of view, there were some positives takeaways to digest from the conference call:

The company offers bullish guidance about doubling revenues in the next 2 to 3 years
The CEO believes all product delays are behind them and that the company is on the cusp of accelerated growth
Cost cutting measures in place combined with more normalized R&D is expected to boost 2022 net income. We believe these measures will translate to at least a $0.03 EPS for the coming year.
After several months of analyzing acquisition targets, the company seems to be on the verge of completing an accretive acquisition that can increase its revenue run rate by $5 million per year

Quotes from call:

Lack of execution and outlook:

"These results are simply not acceptable. In the past several years, I think we did a fairly good job of saying what we're going to do and then doing what we said. In FY '21, we did not do a good job of this. This is going to change. I want to reiterate our commitment and expectation that we will double our revenues in the next 3 years. And by the way, that clock started ticking on October 1. "

Product delays resolved:

"All of these issues have been identified and are actively in development are going through quality assurance and will be sequentially released over the course of the next 30 to 60 days."

Acquisition pipeline:

“I would call these companies that we're looking at in the mid-single-digit millions of dollars in revenue, employees. And it depends on the company, 20 to 30 , I think, is probably a good number. And absolutely, there are no companies that would even make our short list if it wasn't profitable and would not be accretive. Obviously, from a revenue perspective, it will be immediately accretive, but also from a net income and EPS perspective.”

Transparency and being on the cusp:

“We try to be more transparent on this call than on prior calls, and we'll try to continue that going forward. And we're certainly looking forward to providing more business metrics. I know we couldn't answer some of the questions as much as I'd like. I really want to be able to tell you guys these are the deployments. This is the backlog. Here's the average revenue per user as we roll these things out. And I can assure you we will do that as soon as we start these rollouts. I think we're real close to these deployments. We've been working on them a long time. Yes. Admittedly, we haven't hit those dates. But based on the changes Mark discussed, we're right on the cusp. So I think we're actually expecting very big things ahead. “

PodClips

Wed, 06 Oct 2021 12:54:26 GMT

Since the most recent forum covering the month of September 2021 cover some companies that were experiencing some supply chain issues across a broad spectrum of microcap companies, Maj, decided to follow the forum up with a PodClip disucssing how they might also be affecting ATGN.

Research

Wed, 28 Jul 2021 15:39:35 GMT

Altigen Communications (OOTC:ATGN) ($2.08; $48.5M market cap), a SaaS/Cloud communications management/call center solutions announced Q3 2021 results:

Sales of $2.8 million vs $3.0 million in the prior year
Non-GAAP EPS of $0.02 vs $0.03

The growth catalyst we have been waiting on has still not occurred as product roll outs with Microsoft and Fiserv have been delayed. The good news is that it appears previous delays were in part due to ATGN not having an advanced enough product suite to offer Microsoft and Fiserv. Now, it looks like they are just waiting for the companies to implement ATGN’s products into their offerings.

Regarding Microsoft, the delays that are impacting ATGN are also impacting a host of other companies waiting on Microsoft to make available the API’s necessary for companies like ATGN to integrate into their ecosystem. Interestingly, ATGN CEO, Jeremiah Fleming, continues to stress that no other competitor has the robust solution that ATGN has for Microsoft integration.

One of the issues with Fiserv is that it’s making changes to its server infrastructure, which was not a delay we had anticipated due to its merger with First Data.

Quotes from the conference call continue to showcase the company’s progress with these partnerships and the revenue opportunities:

“We just leveraged Microsoft's cloud and focused on the feature set. So while it's not quite ready for prime time or it's just now ready for prime time, is probably a better way to put it. Yes, we expect -- and we expect that this is going to be quite a large opportunity for us.”

“Fiserv will also be launching our new cloud PBX and UC solution or UCaaS, which we call Max Cloud. This will be deployed in the Fiserv data centers and will be exclusively offered to Fiserv customers. The FrontStage contact center is actively being integrated with Max Cloud, which Fiserv will also be offering to their customers. And this solution, the PBX, along with the contact center features unique integrations that are only available to Altigen that are sold into the Fiserv base. Now we expect these solutions, Max Cloud and FrontStage to be ready for sale by Fiserv in calendar Q4 of this year.”

“as I mentioned, we're right there on the doorstep of these releases. Because of that, we're certainly excited about the future that these solutions hold and our revenue opportunities and business growth holds, and we certainly look forward to updating you on our progress during our fiscal year-end earnings call in December.”

While a good deal of ATGN’s growth plan has to do with developing channel partner relationships, this strategy has risks associated with it. However, on the positive side, once these types of relationships get going, the earrings' leverage can be enormous because of what the company is saving on its sales and marketing expenses.

We encourage you to listen to this PodClip where Maj talks about company sales and marketing strategies in general.

Research

Tue, 22 Jun 2021 17:12:04 GMT

Altigen Communications (OOTC:ATGN) ($2.31; $53.2M market cap), a SaaS/Cloud communications management/call center solutions, announced the release of CoreInteract, the first AI-based enterprise customer engagement platform for Microsoft.

“Over the next several months Altigen will be adding SMS, Web Chat, Email, Social Media and analytics to CoreInteract's routing, queuing, and reporting engine.

The true elegance of CoreInteract's design is that it does not require a separate desktop application, as all communications channels are delivered natively through the Microsoft Teams client already in place", said Mark Allen, Altigen's Chief Technology Officer. Allen goes on to explain, "One of our key design goals was to remove the need for Teams users to constantly switch between multiple applications to interact and engage with their customers. CoreInteract also integrates with Microsoft Dynamics 365 to further enhance employee productivity and customer service."

Research

Fri, 23 Apr 2021 14:36:13 GMT

Altigen Communications (OOTC:ATGN) ($2.36; $54.5M market cap), a SaaS/Cloud communications management/call center solutions announced Q2 2021 results:

Sales of $2.7 million vs $2.9 million in the prior year
Cloud service revenue of $1.85 million vs $1.84 million in the prior year
Non-GAAP EPS $0.01 vs $0.02 in the prior year

The company has once again reported a sub par quarter. As has been the case for a while, we have been waiting for the company to experience an accelerated rate of growth from an expansion of its relationships with its Microsoft and Fiserv.

More specifically, the company has been beefing up its product so that it meets the standards required by its partners to make it more attractive for its current customers to upgrade to the company's new cloud offering. Apparently, per the related earnings conference call, the company has reached that inflection point where its product line is now ready for deployment, which should lead to an acceleration of growth in future quarters.

There were no comments in the press release, but below are some remarks taken from the conference call:

“As we said on prior calls, this was expected as our focus has shifted to a cloud-based monthly recurring revenue model, and our cloud revenue actually increased by 1%. It was an increase versus the prior year quarter. The majority of the revenue and the impact in the quarter largely comes from our small business customers, which have clearly been impacted by COVID due to the challenges many small businesses have faced over the past year.”

Microsoft Teams update:

“Once Microsoft delivers its final version of the graft APIS, we will introduce a new contact center application FrontStage. Our plan is to have all of these solutions available for release later this quarter, which will finally put us in a position to begin accelerating our cloud revenue growth as we move into fiscal 2022.

From a go-to-market perspective, our Teams solutions are primarily delivered through our network of certified Microsoft partners. In the past year, despite COVID, we've signed on more than 30 new Microsoft partners. While these companies are getting ramped up on our solutions, they have already brought us in on over 70 new customer opportunities. Of course, we can't expect to win each and every one of these deals, but the sheer activity bodes well for our new solutions.

In addition to our partner relationships, we also directly engage with larger customers, targeting companies of 500 to 5,000 employees. Overall, we are actively building both pipelines in anticipation of the release of our new Teams solutions.”

Fiserv relationship:

"Fiserv trunk communication services, which enable our customers to replace more costly traditional phone service, and all of these solutions, are sold to Fiserv service bank and credit union customers...

...I should also point out that we have successfully completed our first contact center project, the large Fiserv banking customer, and have a number of additional contracts in the works. Now, given that Fiserv generates $15 billion in annual revenue and has more than 10,000 bank and credit union customers, this business opportunity is very significant, although it is somewhat difficult to forecast as Fiserv is driving the overall strategy and the sales engagements."

Summary:

“We plan to take advantage of the tremendous growth in Microsoft Teams with both our current and new end-to-end Teams solutions and services. Second, we are looking to accelerate our business with Fiserv based on many of the same solutions we discussed with Teams, plus several new solutions and services, which will be exclusively sold by Fiserv.

I also should point out that in anticipation of our business returning to, and in fact, accelerating our growth over the next few quarters, we have retained the services of Hayden IR”

Research

Tue, 26 Jan 2021 18:27:13 GMT

Altigen Communications (OOTC:ATGN) ($2.68; $61.6M market cap), a SaaS/Cloud communications management/call center solutions announced Q1 2021 results:

Sales of $2.7 million vs $2.8 million in the prior year
Cloud service revenue of $1.8 million vs $1.7 million in the prior year
Non-GAAP EPS of $0.01 vs $0.02 in the prior year

As usual, the press release offers no comments. We do believe that the headline numbers in the press release could put some short term pressure on shares. However, the conference call once again sheds some light on temporary issues impacting near term growth and the broad outlook for 2021. Management set the stage for what seems to be a ramp-up starting in Q3 2021.

Conference call highlights:

New UC platform for small businesses:

“I want to discuss that while we have seen slowing growth for our MaxCS cloud platform, we are working on the rollout of a next-generation cloud unified communications platform. I'll transition to that because this -- we are going to be rolling out a new UC platform. The reason that we're doing this is we found that despite the rapid growth in Microsoft Teams or, in addition, I should say, to the rapid growth of Microsoft Teams, we're still seeing a lot of opportunities in the PBX and unified communications space for well-positioned solutions.”

Progress with Fiserv:

“...our plan with Fiserv, which leverage the success and this is Fiserv's plan with us as well, leverage the success of this current deployment to drive the same solution set, contact center, SIP Trunks, interactive voice response, TRUSTID, caller verification throughout their community bank and credit union customer bases. Now how quickly this happens will be up to Fiserv as they have the customers and they're the ones driving the strategy. But I would like to note that from a revenue perspective, Fiserv is nearly 1,500x bigger than Altigen. So having them in the driver's seat is a very good thing for our long-term success.”

Microsoft Teams:

we recorded $236,000 in revenue in the current quarter or in fiscal 2021 first quarter compared to $124,000 in the same period a year ago. So we're continuing to grow that business nicely.

Now while we are pleased to see the continued growth in this business segment, we do expect the real growth to kick in once we release and deploy our new Teams solutions which are FrontStage and CoreInteract.

FrontStage Integration:

we expect the long-awaited integration to be finally completed for Microsoft Teams. To clarify, this integration with Microsoft Teams is completely separate than the effort that we've been working with FrontStage on to integrate to our MaxCS PBX system, so both will have been completed in this current quarter. Once the Teams integration has been completed, we can finally commence with customer pilots that are deploying -- customers deploying Teams and Teams phone system. And if all goes well, we will be in a position to start initial customer billings in fiscal Q3.

Uplist plans:

“So we do plan to uplist to NASDAQ, providing that we're qualified to do so. I do expect -- I don't have a -- I can't make a firm commitment to you but I do expect to initiate that process in 2021, so this calendar year. And so we'll see how that goes as far as market conditions, et cetera, but that is the game plan.”

You can learn more about our take on ATGN's valuation in one of our recent 2020 recap videos.

Research

Fri, 04 Dec 2020 16:54:29 GMT

Altigen Communications (OOTC:ATGN) ($2.20; $50.5M market cap), a SaaS/Cloud communications management/call center solutions announced Q4 2020 results:

Sales of $2.98 million vs $2.7 million in the prior year
Cloud revenue of $2.1 million vs $1.5 million in the prior year
Non-GAAP EPS of $0.03 vs $0.02 in the prior year

The story continues to slowly play out as the company focuses on its cloud revenue growth. Per the conference call, new product offerings with Fiserv and Microsoft teams should begin to contribute in Q2 2021.

Some quick quotes from the call:

“...

Our fiscal 2020 cloud revenues from Fiserv grew by just over 40% in fiscal 2020 compared to fiscal 2019 cloud revenues.

We're now in the final phases of our first MaxCS FrontStage deployment at a fairly large Fiserv banking customer and expect to go live next month. Because this is a completely new solution for us, I'm referring to FrontStage, there has been a learning curve on both sides, Fiserv and Altigen, but we're getting close to the end of that curve, and we're looking forward to a full launch of the FrontStage solutions -- solution to the Fiserv customer base in calendar Q1.

In fiscal 2020, we recorded $793,000 in revenue for our Teams solutions, which is 150% increase over fiscal 2019

Next quarter, we plan to launch FrontStage for Microsoft Teams, which will enable us to address the growing market for integrated Teams contact center solutions.

So, the timing of the release of our multiple new Teams applications and services really couldn't be better, given that Teams is continuing its rapid growth in the corporate enterprise. In fact, Microsoft recently reported that there are now more than 115 million Teams corporate subscribers, up from approximately 20 million subscribers just a year ago.

…”

Research

Wed, 09 Sep 2020 19:29:44 GMT

Altigen Communications (OOTC:ATGN) ($2.20; $50.5M market cap), a SaaS/Cloud communications management/call center solutions announced the hiring of Joe Hamblin, who comes off 30 years of working for Sprint, where he was responsible for driving business process improvements and cost reductions.

“Amassing a broad base of experience, Hamblin has most recently been responsible for Sprint's IT infrastructure, cloud services and end user experience solutions. Hamblin also managed the rollout of one of the world's largest Skype for Business deployments, and subsequently drove the migration of that platform to Microsoft Teams.”

Jerry Fleming, Altigen's President & CEO,

"Having worked with Joe as an Altigen customer for over ten years I've had the opportunity to work closely with him not only with respect to Altigen's Microsoft solutions, but also to collaborate and share ideas on the overall Unified Communications market.”

You can listen to a recent interview that Maj conducted with Joe Hamblin for Little Grapevine (https://littlegrapevine.com). Scroll down to the bottom of the site’s home page and it is currently the first video in the Expert Insights section.

Research

Thu, 03 Sep 2020 18:01:05 GMT

Altigen Communications (OOTC:ATGN) ($2.15; $49.3M market cap), a SaaS/Cloud communications management/call center solutions announced it has acquired certain assets of Blue Panda Communications, including their CoreInteract platform, a cloud-based digital customer engagement solution for Microsoft Teams. This strategic acquisition is an integral component of Altigen's strategy to deliver the industry's most complete suite of integrated solutions and services for Microsoft Teams.

“Blue Panda, headquartered in the greater Salt Lake City area, has developed a next generation digital customer engagement solution built on Microsoft's Bot Framework, deployed in Azure, and utilizing Microsoft Cognitive Services. CoreInteract was developed from the ground up as a scalable, multi-tenant cloud solution, natively integrated with Microsoft Teams to automate the routing and queuing of inbound customer requests using the customer's preferred communications channels, including voice, SMS, web chat, email, and social media. CoreInteract further employs Microsoft Cognitive Services to deliver advanced analytics, including keyword detection and sentiment analysis, enabling organizations to gain valuable insights into their customer interactions. Delivered as a managed cloud service, CoreInteract processes and delivers inbound customer requests directly to Teams users, with no additional desktop software required.”

The solution is expected to be made available in calendar Q4 2020. The terms of the agreement call for ATGN to pay an annual royalty in the form of cash and ATGN stock over a 3 year period.

ATGN CEO Jerry Fleming

“Our business objective is to become the leading provider of cloud communications solutions and services for Microsoft Teams...Mark Allen stands out as a true industry visionary. We're really pleased that Mark and his Blue Panda ownership group decided to join the Altigen team. The CoreInteract platform is spot on as the enterprise digital customer engagement platform for Microsoft Teams. Combined with our FrontStage Teams Contact Center solution Altigen will now uniquely be able to offer the most complete and progressive suite of advanced communications solutions for Teams - addressing the requirements of office personnel, work at home employees and corporate contact center agents."

Research

Fri, 21 Aug 2020 18:16:25 GMT

Altigen Communications (OOTC:ATGN) ($2.36; $54.1M market cap), a SaaS/Cloud communications management/call center solutions announced a partnership with Code Software, a UK based software management company with over 50+ strategic partners and 3000+ customers around the world. ATGN and Code will team up to deliver advance call reporting and recording for Microsoft Teams.

Code Software CEO, Mark Armstrong:

“We're particularly pleased to partner with Altigen in order to expand our mutual business opportunities with Teams in the US, UK and Europe...We've certainly seen significant increases in the adoption of Microsoft Teams due to its ability to transform the modern workplace, enable remote working, and drive business collaboration.”

ATGN CEO, Jerry Fleming:

“We're excited about the partnership opportunity with Code Software. Virtually every Teams customer needs to report on such issues as application usage, call quality and employee productivity, all of which are provided by Clobba MT. The ability to offer Clobba MT in conjunction with our Direct Routing SIP trunk service helps to set us apart from the competition. Just as importantly these solutions fit very nicely with our own growing Teams solutions portfolio, which include advanced call routing and queuing applications along with our FrontStage omni-channel contact center solution, all deployed in Azure and delivered as fully managed cloud services."

The most important and subtle part of this agreement shows that ATGN is a premiere or “the” premier partner that Microsoft will use to grow its UcaaS initiatives.

Call to Action

Thu, 13 Aug 2020 18:25:28 GMT

**Call To Action - Added to Our Long Position In ATGN

Despite Altigen Communications Inc (OOTC:ATGN) shares hitting new 52 week highs and up over 800% since our initial long disclosure in January 2015, we added to our long position. We still feel it is one of the cheapest UCaaS stocks on the market and is in the early innings of what could be a robust growth cycle. Furthermore, we think that investor appetite for UCaaS stocks is increasing. For example, Crexendo, Inc. (OOTC:CXDO) has risen 100% over the past few weeks and Audiocodes Ltd. (NASDAQ:AUDC), Ringcentral, Inc. (NYSE:RNG) and Five9, Inc. (NASDAQ:FIVN) have all recently attained new highs. With just a little good news from the company, we think we could see ATGN doubling from current levels.

Research

Fri, 24 Jul 2020 19:29:59 GMT

Altigen Communications (OOTC:ATGN) ($1.35; $31.0M market cap) a SaaS/Cloud communications management/call center solutions announced Q3 2020 results:

Sales of $3.0 million vs $2.7 million in the prior year
Cloud services revenue of $1.98 million, representing an increase of 7% and 24% compared to the preceding quarter and the prior year period, respectively.
Non-GAAP EPS of $0.03 vs $0.02 in the prior year

Cloud revenue growth continues to be the key metric we are monitoring as the company carries on its multi-year plan of phasing out its lumpy on-premise licensing revenue to concentrate on on-boarding new and legacy customers to its cloud solution. So, we were happy to see that the quarter delivered healthy cloud revenue growth.

The company still has a meaningful amount of on-premise customers that have not migrated to its cloud platform, which offers a good runway for steady growth as conversions continue to occur.

With that being, COVID-19 has placed some near-term uncertainty on the pace of new customer growth. Also, the company has not really talked abouy whether Fiserv is progressing ATGN’s marketing solutions.

Regardless, the company’s long-term growth plan is still intact and it seems that the Microsoft Corporation (NASDAQ:MSFT) Teams product rollout is on the cusp of providing investors with an inflection point, only delayed by COVID-19. We continue to believe that the company is the cheapest unified communication solutions provider in the microcap universe

Conference call highlights:

On Microsoft Teams deployments:

“Regarding our Microsoft Teams Solutions, new deployments have generally been delayed by COVID-19. However, the good news is that Microsoft Teams deployments have rapidly expanded. And I'm talking about the core Teams deployments, have rapidly expanded from 10 million subscribers a year ago to more than 80 million subscribers today, which represents users at more than 500,000 organizations. Now, what this means is that we have a much larger pool of companies to target with our Teams solutions going forward, despite the -- let's say temporary delay due to COVID-19.”

Omni-channel solution:

“Regarding the status of our FrontStage omni-channel contact center solution, we've completed the stage Altigen's MaxCS PBX solution, which we did first based on our requirement to support the FiServ MaxCS customer base. We're now actively engaged with a number of those customers to begin planning their migrations to FrontStage based on the MaxCS platform.”

New offerings:

“By the end of this quarter, we expect to have a beta version of FrontStage available for Microsoft Teams. Now, once we have this ready, we'll submit the FrontStage product to the new connected contact center for Microsoft Teams Certification program, which means once we complete that process, FrontStage will be officially certified by Microsoft in the top tier of that program.

we're also just about to launch our new Teams service delivery portal. And this is an online portal which greatly simplifies the setup and configuration of Altigen's Teams, direct routing SIP service, our SIP communication service. And it also provides a single pane of glass management for customers or partners to manage their entire team's phone system environment.”

Covid-19 Impact:

many of our small business customers have been hit hard by the economic shutdown as a result of COVID and likely a number of these organizations will not be able to survive the negative effects on their business.

However, on the other hand, the dramatic growth in Microsoft Teams deployments among the larger organizations will be a positive contributing factor for overall, for our Teams solutions, driving company growth. So, it's a very difficult right now with just to have the visibility based on the sort of uncertainty when the economy is going to really reopen again. But our expectation certainly is once we get back to business that our Teams solutions will kick in and we will start seeing accelerated company growth.

And I do want to remind everybody that our focus does continue to be squarely on growing our cloud revenues. And this includes organic growth, continued development of strategic partners to drive product sales and growth, and also acquisitions of companies offering interesting Teams technologies, or related Teams services.

Research

Mon, 04 May 2020 15:55:20 GMT

Altigen Communications Inc (OOTC:ATGN) (Cloud Communication Software/Cloud Solutions) – Last week we highlighted ATGN’s Q2 2020 financials results and conference call summary. You can see that recap here. One area of focus we have been watching which management has been discussing has been the rapid growth of Microsoft Teams and how ATGN will benefit from this growth. On the ATGN conference call, management highlighted that a year ago, there were approximately 10 million active business Teams users and that business users had recently reached 44 million.

Microsoft reported strong earnings this week and provided a bullish Teams update:

“Microsoft said last month that Teams usage had grown to 44 million daily active users during the coronavirus pandemic, and it’s now jumped another 70 percent. During an investor call today, Microsoft CEO Satya Nadella revealed that Teams usage has increased to more than 75 million daily active users.”

In our last ATGN note we highlighted that despite claims being made by many other cloud communication companies touting that the adoption of teams by organizations will benefit them, ATGN’s CEO, Jerry Fleming, was very clear in his opinion that a lot of these claims are fluff in terms of offering a complete UCaaS solution that can be integrated with MSFT:

“I will tell you is that the Teams APIs are not general availability, no one can deliver the capabilities we’re talking about with Microsoft Teams . So regardless of what their press releases say, and I know I’ve seen some of them. You have to be potentially in this industry or somewhat technical to read between the lines to see what they’re really saying. These are the fact that you can open a schedule and meeting and outlook. Doesn’t make you integrated with Teams, for example, and I’ll just give you — that’s what rings central states. And so there are — most companies like that, that put these releases out that what they’re able to do are not native Teams integration .”

Research

Fri, 24 Apr 2020 13:15:22 GMT

Altigen Communications (OOTC:ATGN) ($1.35; $31.0M market cap) , a SaaS/Cloud communications management/call center solutions.

Over the last couple months we have been reinforcing our bullish view on cloud communication stocks CXDO and ATGN. Is our belief that Covid-19 will accelerate the already bullish outlook for the industry in the mid to long term, even though there may be some short term negatives, as current customers or new customers delay some IT development. Overall, we believe Covid-19 is causing customers to adopt cloud communication solutions or expedite their plans to upgrade their communication infrastructure away from on-premise to the cloud.

Our optimism led us to issue a Call to Action update that we were increasing our position in the stock.

CXDO reports its Q1 2020 results on May 5, which we think will be accompanied by an up-listing to NASDAQ. We are pretty sure the company will provide some color on the current status of the industry.

We are now also comfortable in potentially adding to our ATGN position.

Yesterday ATGN reported earnings after the close announced Q2 2020 results:

Sales of $2.9 million vs $2.5 million in the prior year
Non-GAAP EPS of $0.02 vs $0.02 in the prior year
Cloud revenue growth year over year of 20%
Cloud revenue grew sequentially by 8%

This quarter was the company’s highest quarterly revenue and cloud revenue performance since the company began its transition to de-emphasize its on-premise communication platform and offer its new cloud communication platform.

During the conference call, management provided some good intel that was not in the related press release:

Microsoft Teams momentum continues to grow. A year ago, there were approximately 10 million active business Teams users. Microsoft announced earlier this month, that number had grown to more than 44 million active Teams business users.
Despite claims being made by many other cloud communication companies touting that the adoption of teams by organizations will benefit them, ATGN's CEO, Jerry Fleming, was very clear in saying:

“I will tell you is that the Teams APIs are not general availability, no one can deliver the capabilities we're talking about with Microsoft Teams . So regardless of what their press releases say, and I know I've seen some of them. You have to be potentially in this industry or somewhat technical to read between the lines to see what they're really saying. These are the fact that you can open a schedule and meeting and outlook. Doesn't make you integrated with Teams, for example, and I'll just give you -- that's what rings central states. And so there are -- most companies like that, that put these releases out that what they're able to do are not native Teams integration .”

Here are some additional comments from the conference call:

“we are continuing to focus on growing our cloud revenues organically, through strategic partnerships and via opportunistic acquisitions. We do remain encouraged by the momentum we're seeing with Microsoft Teams and our Microsoft UC and Team Solutions. But this is really just the tip of the icebergs -- iceberg .”

“In addition to our pending launch of the front stage omnichannel contact center, we are working on a number of solutions, which will expand our cloud service offerings. Later this quarter, we'll be launching our new team's service delivery portal providing the ability for partners and customers to easily set up and configure Altigen's direct routing SIP service for Microsoft Teams.”

Covid-19 positive and negative impact on business:

“On the downside, we did have a number of -- they're pretty small businesses cancel their service because COVID-19 pretty much put them out of business. And so it's not a great number. It's a single-digit number. But -- so we saw the downside impact on that side.”

“Now longer term, all of those things, I believe, are going to work to Altigen's advantage as we see more work at home, companies need to pay advantage to distributed workforces and the kinds of capabilities we can help them with when they deliver that type of service, kind of forces them to the cloud because it's difficult to deliver it from your on prem solution.”

We also want to point out that the company issued a press release right before the earnings.

"Neustar Inbound Authentication solutions will be fully integrated with Altigen's SIP-based telecommunications service and delivered as a managed cloud service by Altigen across the U.S. to help customers manage consumer identity more effectively and authenticate consumers quickly and reliably.

In a world where cyberattacks and communications fraud are becoming more sophisticated and complex, it's critical for businesses to know as much as possible about the person on the other end of each interaction. Neustar Inbound Authentication identifies and authenticates callers, mitigating the risk of fraudsters obtaining sensitive consumer information, while giving agents the benefit of a single, authoritative view of the customer while servicing requests."

On the surface, this release may not seem like a big deal. However, ensuring that cloud communications solutions are secure are going to be a top priority for organization's when they're choosing a solution, Especially considering some of the negative press that $ZX has been receiving, due to security breaches while using its platform. So, we do see this new relationship as a value add to Altigen's product offering.

We were surprised that the company did not provide an update on the status of Fiserv's (FISV) rollout of ATGN's call center solution to FISV customers.

Research

Mon, 30 Mar 2020 14:28:16 GMT

Altigen Communications (OOTC:ATGN) ($1.06; $24.2M market cap), a SaaS/Cloud communications management/call center could see positive impact from the surge in Microsoft Teams activity. In its Q1 2020 conference call (December end) CEO Jeremiah Fleming stated:

“We are beginning to see some traction with Microsoft Teams phone system with approximately 10 customers now in production as of the end of December and dozens more in our sales pipeline.”

Microsoft announced it has been seeing a massive increase in its cloud services during the ongoing coronavirus pandemic.

“We have seen a 775% increase of our cloud services in regions that have enforced social distancing or shelter-in-place orders,” explains a Microsoft Azure blog post. This increase in demand includes Windows Virtual Desktop usage growing more than three times, and record numbers across Microsoft Teams, Xbox Game Pass, Xbox Live, and Mixer.

Last week we published a brief note on how ATGN and CXDO could possibly benefit from the ongoing surge in cloud/UCaaS demand.

While this is potentially very good news for ATGN, we would need confirmation from the company that they are seeing a lift in sales from The acceleration of Teams adoption. For example, Unify communication provider, AUDC has been publicly talking about how the surge in Teams adoption has been significantly benefiting their business since Q4 2019.

Research

Mon, 10 Feb 2020 16:13:57 GMT

Altigen Communications Inc (OOTC:ATGN) (SaaS Cloud Communications) - On the company’s recent Q1 2019 conference call, the CEO mentioned that he could not expand on ATGN’s relationship with Fiserv due to confidentiality agreements. However, a recent job posting offers some information arbitrage for investors in regards to the relationship. Thanks to a conversation we had with microcap investor Ian Cassel, we were able to observe a recent Fiserv job posting showing that the candidates should be familiar with ATGN’s products.

It is our opinion that this basically proves that Fiserv is expanding its call center business using ATGN’s solutions, an initiative we highlighted in the past as being a key catalyst for future growth.

Research

Thu, 23 Jan 2020 16:13:46 GMT

Altigen Communications (OOTC:ATGN) ($1.61; $36.8M market cap), a SaaS/Cloud communications management/call center solutions announced Q1 2020 results:

Sales of $2.8 million vs $2.7 million in the prior year
Non-GAAP EPS of $0.02 vs $0.03 in the prior year

As we stated in the last quarterly update, the real growth story is the revenue growth that's expected to come from new partner/customer relationships or the strengthening of current relationships with Microsoft and Fiserv.

We are confident that the company is nearing an inflection point on some of these initiatives. Furthermore, the headline revenue number is not the appropriate data set to reference in order to gauge the success the company is achieving.

As explained in the Q1 2020 conference call, Altigen's revenue comes from 4 sources.

Two of these sources of revenue...

Software Assurance
Software maintenance

...come from the company's legacy business model of selling on-premise perpetual licenses and related support services. Growth in these segments were flat to down.

However, the company has been phasing this business out in favor of its recurring revenue cloud-based business model. So, the major revenue line we should be looking at is the one related to this particular initiative, which represents monthly recurring revenue from hosted MaxCS PBX, Skype for Business and Teams revenues.

Cloud revenue growth has been increasing nicely between 20 to 30% a quarter, year over year. These revenues were $1.7 million, up 17% year-over-year and actually up 7% sequentially.

The company also generates support service revenue for the cloud business. However, this revenue is small compared to the overall revenue of the company and can be lumpy.

Part of the reason for the company's low valuation compared to other UcaaS companies is that the market may be unwilling to place a premium price to sales multiple on all of the company's revenue. However, we think this is a mistake for two reasons.

First, based on the success of the company's turnaround strategy that's been in place for about seven years, we are confident that a good deal of the legacy revenue from its current customer base will be converted to cloud revenue.

Secondly, if just a fraction of success is realized from ATGN's Microsoft and Fiserv relationships, cloud revenues could quickly enter a transformational leg up.

Accordingly, we would still be comfortable adding shares at current levels and on pullbacks.

As in prior conference calls, yesterday’s call touched upon where the company is with regards to its Microsoft and Fiserv relationships. It is our opinion that the company is entering a threshold to some nice inflection points. Regarding its Microsoft initiatives:

“We are beginning to see some traction with Microsoft Teams phone system with approximately 10 customers now in production as the end of -- as of the end of December and dozens more in our sales pipeline.

We also successfully migrated the workspace customers we acquired in August on to our hosted Skype for Business platform during the first quarter. However, due to deployment times and billing cycles, we recorded only about $15,000 in associated cloud revenue during the first quarter from that transaction.

Regarding the status of our FrontStage omni-channel contact center solution, we are continuing to work with our business partner Atlantis Telecom to integrate FrontStage to our MaxCS PBX and Skype for Business. And when the Microsoft Teams APIs are finally available, we will be integrating with Teams as well. We are currently looking to launch FrontStage as a managed cloud service in calendar Q2.”

It is our belief that we will see some minor contributions from the above initiative in Q2 2020 with more of ramp up coming in Q3 and Q4 2020.

As for the Fiserv initiative, the company couldn't say much, but insinuated that things are going really well with Fiserv strengthening its relationship with Altigen to help grow Fiserv's call center business.

Below is a notable exchange that discussed Fiserv during the Q&A on conference call:

Investor:

Hi, Jerry. I just have one question. I was wondering if you could provide any color on Fiserv relationship and how that’s progressing?

Jerry Fleming, CEO

Yes, hi. Yes, I -- well, I can disclose what gets us as much as possible since we’re under NDA with Fiserv. I will just say that its progressing very well. And the FrontStage is a critical component of that relationship and a lot of the work we are doing as mentioned, we are doing integration to our MaxCS IP-PBX with the FrontStage platform. Although as I’ve mostly been talking about we’re going to be selling this with teams. And the reason we are doing the markets. CS integration which is AltiGen PBX, because that’s what Fiserv sells as their core PBX platform. So that may give you some idea that we are heading down the path for the Fiserv and thank you. I can't. This is a big shift. More than a $10 billion company so it takes little time to get the oars in the water. But once it takes off and its quite large, and certainly moving in the right direction

Research

Wed, 04 Dec 2019 18:41:53 GMT

Altigen Communications (OOTC:ATGN) ($1.21; $27.6M market cap), a SaaS/Cloud communications management/call center solutions announced Q4 and full year 2019 results:

Q4 sales of $2.7 million vs $2.7 million in the prior year
Q4 Non-GAAP EPS of $0.02 vs $0.02 in the prior year
Full year sales of $10.6 million vs $10.0 million in the prior year
Full year non-GAAP EPS of $0.10 vs $0.07 in the prior year
EV/S of 2.2
P/E of 12

ATGN's current valuation is one of the lowest, if not the lowest, compared to stocks that we track in the unified communications space. We believe that the stock should at least double from current levels, once the market becomes more aware of the steps ATGN is taking to advance its cloud model.

"Fiscal 2019 represented a strong financial performance and marked our 3rd consecutive year of profitable growth. As we continued our transition to the cloud, we experienced a 31% decline in one-time revenue. Despite those headwinds, which are a natural by-product of a conversion to monthly recurring revenue, overall company revenue grew by 6%, primarily as a result of our 24% increase in cloud revenue."

"We also achieved a number of important milestones during the year, including extending our service and support agreement with our largest strategic partner, Fiserv; acquiring the customer base of WorkSpace Communications, which will contribute to our growth in the Microsoft UC space; and the launch of a new Direct Routing (SIP trunk) service, the first of many new solutions for Microsoft Teams."

If only reading the press release, investors would not glean the full breadth of the transformation the company has been going through over the past several years, and would likely not be too excited about the Q4 results.

We don't expect growth from the assurance on-premises licensing part of the business. The company is transitioning its on-premises legacy customers to a recurring revenue cloud platform. Because the assurance revenue consists of larger upfront fees, ATGN's consolidated year-over-year revenue growth could appear lackluster until the cloud revenue becomes a bigger part of its overall revenue. In the end, it’s the cloud revenue growth that is vitally important to track.

For the first three quarters of 2019, the Company had been growing cloud revenue at a clip of nearly 30%. In general, we want to see the company maintain a consistent 20%+ cloud revenue growth rate. However, Q4 cloud revenue growth was 15%.

We think the company has probably captured a lot of the low-hanging fruit from transitioning some of its legacy customers over to the cloud. So, it may take a little more effort to convert the rest of its legacy customers over to the cloud. But we already knew this, and we're not that worried about the Q4 dip in cloud revenue growth.

The real growth story is the revenue growth that's expected to come from new partner/customer relationships or the strengthening of current relationships with Microsoft and Fiserv. And, we are confident that the company is nearing an inflection point on some of these initiatives.

The press release did not provide as much color as the conference call with respect to where the company is on these initiatives. In our opinion, we believe the company is beginning to gain traction on new areas of growth, setting up ATGN for a strong fiscal 2020.

Key takeaways from the call:

In July, we announced the availability of our new Team's Direct Routing service, which is a Microsoft certified IP-based phone service for Microsoft Teams phone system. To date, we have contracted with approximately 10 customers who are in various stages of deployment through production. Due to billing cycles, there was very little contribution of revenue in our fiscal 2019 fourth quarter, but we will start seeing the impact of direct routing in the current quarter which we expect to continue to grow throughout fiscal 2020 and beyond.

In August, we entered into a definitive agreement with Workspace Communications to acquire their hosted Skype for Business customer base. Since that time, we've migrated approximately 40 customers to either our Skype for Business platform or the Teams platform, which collectively represents approximately 1,400 subscribers. Given the migration times, none of the associated revenue was recognized in fiscal 2019. However, we will report partial quarter revenue for most of these customers in the current quarter, with the full impact of that revenue being realized in the second fiscal quarter of 2020.

And earlier today, we issued a press release announcing the strategic partnership between AltiGen and Atlantis Telecom was based in the Czech Republic. We selected Altigen in their industry-leading omni-channel contact center solution called Front Stage due to its comprehensive functionality, alignment of vision between our companies regarding the market opportunities and the ability for AltiGen to exclusively distribute Front Stage in both the U.S. and U.K. markets. We still have some work to do to integrate front stage with our MaxCS IP PBX, Skype for Business and the Microsoft APIs available Teams phone system. That being said, we do expect Front Stage to start contributing to our cloud revenue stream over the next couple of quarters.

The current price setup reminds us of the Tss Inc (OOTC:TSSI) Q3 2019 earnings report, where the press release did not fully talk about significant advancements, but discussed them in more detail on the Q3 conference call. Shares slowly rose from $0.79 to current levels of around $1.10 once the market slowly digested the information from the call. We think the same scenario could occur with ATGN, especially since investors currently have a broad appetite for microcap value stocks, something we haven't seen in years.

Research

Tue, 03 Dec 2019 13:48:44 GMT

Altigen Communications (OOTC:ATGN) - SaaS/Cloud phone management/call center solutions announced that it has selected Atlantis Telecom as its strategic partner for Omni-Channel Cloud Contact Center. The solution will be fully integrated with Altigen's MaxCS IP PBX, Microsoft Skype for Business and Teams Phone System and exclusively delivered as a managed cloud service by Altigen in the US and UK markets.

"We've evaluated many, many omni-channel contact center solutions for well over a year", said Jeremiah Fleming, President & CEO of Altigen. "Our objective was to identify an organization with which we could establish a true strategic partnership based on industry leading product functionality, alignment of vision and the ability to exclusivity distribute a solution in our core markets. Atlantis Telecom met all of those key requirements."

"The FrontStage solution offers an extremely comprehensive feature set, provides extensive customization capabilities, and integrates with all of our targeted UC platforms. Better yet Atlantis and Altigen share a similar vision of the Unified Communications and Omni-Channel Contact Center markets, which has served to foster a very tight working relationship between our companies."

Under the agreement Altigen will exclusively offer FrontStage to end user organizations and reseller partners as a Microsoft Azure-based managed cloud service in the US and UK markets. In addition, Atlantis Telecom will incorporate Altigen's MaxCS IP PBX into FrontStage as a core call processing platform. The companies have also agreed to perform joint development on the integrated solution as well as to conduct joint sales and marketing activities.

Research

Tue, 08 Oct 2019 15:17:17 GMT

Ringcentral, Inc. (NYSE:RNG) ($172.72; $13.6B market cap) saw its shares skyrocket the last 3 trading days on the heels of news that it has become the exclusive provider of unified communication as a service solutions (UCaaS) to Avaya (NYSE:AVYA) ($14.09; $1.5B market cap), which many analysts are calling a game changing partnership. RNG is a major player in the same space as Altigen Communications (OOTC:ATGN) ($1.18, $19.7m market cap), a SaaS/Cloud communications management/call center solutions which has been one of our favorites for years.

Avaya Holdings Corp., through its subsidiaries, provides digital communications products (such as IP desktop phones), solutions, and services for businesses worldwide.

Shares of RNG jumped from $121.51 to new highs of $177.99 in 3 trading days, following the announcement.

We view RNG’s decision to partner with AVYA as a strategic move to get ready for the intense competition it's going to soon be faced with when Microsoft Corporation (NASDAQ:MSFT) turns on the heat to aggressively offer UCaaS to its enormous Office 365 user base of over 180 million monthly active users. ATGN is well positioned to greatly benefit, if MSFT is successful in its pursuit, since ATGN is currently an integral piece of MSFT's UCaaS goals.

Furthermore, this development shows that that the shift for enterprises to move communication activities and services to the cloud has accelerated. ATGN has two major partner/reseller relationships worth noting, one with Microsoft and one with Fiserv, Inc. (NASDAQ:FISV). If either of these relationships expand to where more customers will be encouraged to adopt ATGN's UCaaS solutions, we believe it would be game changing.

Research

Tue, 17 Sep 2019 18:23:09 GMT

Altigen Communications (OOTC:ATGN) ($1.11; $25.4M market cap), a SaaS/Cloud communications management/call center solutions, which has been one of our favorites for years, was highlighted today on Seeking Alpha in an article, titled “Altigen: An Overlooked Gem In The UCaas Market” by ValueZen. We feel this article does a good job discussing the multi-year moves the CEO has put in place to transform the company from an on-premise lumpy hardware driven business to a recurring revenue Cloud SasS business. The author begins:

This stock idea is for investors willing to accept illiquidity risks. Stock is thinly traded on the OTCQB.

It may take weeks to build up a significant position.
The company has transformed itself in 3 years and is ready to ride on the back of Microsoft Teams.
Significant operating leverage can compound EPS growth

If you are new to GeoInvesting, you can view our slide deck presentation that summarizes our multi-year coverage on the company.

You can also view a virtual presentation by the CEO, Jeremiah Felming and a follow-up webcast presentation here, where he also discusses his history with the company and takes deep dive questions from investors. A transcript of the webcast is also available here.

Research

Tue, 06 Aug 2019 14:35:38 GMT

Altigen Communications (OOTC:ATGN) ($1.20; $27.4M market cap), a SaaS/Cloud communications management/call center solutions, announced it has acquired all of the rights to the customer relationships of WorkSpace Communications, LLC, a cloud provider of Microsoft Unified Communications and Modern Workplace solutions. The strategic purchase is part of Altigen’s capital allocation strategy to drive its cloud growth.

"WorkSpace, based in the Midwest, delivers a suite of hosted Microsoft Modern Workplace technologies that include Unified Communications and Collaboration, Office 365, Teams and integrated cloud-based Contact Center solutions. WorkSpace counts over 2,000 cloud subscribers among its customers, which Altigen plans to migrate to its hosted Microsoft platforms. The migration will consolidate services, simplify management, streamline customer support, and enable Altigen to achieve greater economies of scale.

Under terms of the agreement, Altigen has acquired all of WorkSpace’s right, title, and interest in, to and under its customer relationships. The transaction is valued at 1.6 times the annual revenues for each WorkSpace cloud customer transitioned to Altigen, which is expected to be accretive to Altigen’s current revenue multiple and net income."

This development seems bullish for ATGN, as it could potentially add 11% to its cloud subscriber base. However, we would like to gain a little more clarity into the terms of the transaction. Paying 1.6 times annual sales is a great price to pay in the cloud space. It seems the company is only paying for customers that convert to ATGN's platform, which would be an attractive deal structure.

Research

Thu, 25 Jul 2019 04:00:00 GMT

Altigen Communications (OOTC:ATGN) ($1.20; $27.4M market cap) a SaaS/Cloud communications management/call center solutions announced Q3 2019 results:

Q3 sales of $2.7 million vs $2.6 million in the prior year
Non-GAAP EPS of $0.03 vs $0.02 in the prior year

As usual, there was little to no commentary in the press release. We were on the conference call which can be read in full here. As you will see and as we've been talking about in previous messages to you, it's extremely important to listen to earnings conference calls because information is often provided on them that is not provided in related press releases. Below are some quotes from the call:

Microsoft opportunity:

“as Microsoft continues to migrate customers to Teams and Teams phone system, Altigen will be increasingly able to target these customers with our direct routing service and unified communication applications.”

Fiserv partnership:

“I'll just say there have been some internal changes that have created opportunities for us to be more strategic with Fiserv. So -- I'm sorry, I can't give you more details on that, but it's certainly moving in the right direction.”

Shareholder Rights:

“Altigen's longtime shareholder rights plan, which essentially was -- can refer to as a poison pill. For (inaudible) ownership of more than 15% of Altigen shares that expired this past night. So this opens the door for largest shareholders to increase their ownership of Altigen's stock without any fear for appraisal, shall we say.”

Overall, the conference call was very informative because the CEO took some time to explain ATGN's business model and some of the opportunities the company is attacking.

One of the things we thought was important going into this quarter was to see if the company could resume some healthy top line growth on a consolidated basis to make the stock "cosmetically appealing" to investors who don't dig deeper into the company. After a strong Q1 2019 consolidated revenue outing, Q2 consolidated revenue growth was weak. However, the important metric to judge the company by right now is cloud revenue growth.

Unfortunately, the company did not provide this information in the earnings press release, but management did break out revenue on the conference call. Q3 Cloud Revenue grew 27% ( Q2 grew 28%)

Remember, the company has been going through a multi-year transition which includes:

Phasing out hardware revenue
Transitioning its large legacy customer base to the company's recurring revenue cloud solutions, as opposed to selling large licensing fee arrangements where the customer would install software and hardware on premise.

The first phase of the transition is largely complete. However, when the company was going through that transition, consolidated revenue did not look strong because the company was still going up against quarters with a substantial amount of hardware and licensing revenue. You would have had to look underneath the hood to find out that the cloud revenue was growing nicely, but it took a significant amount of time for the market to finally start recognizing the positive trends going on in the company.

The stock didn't really start moving upward until the hardware revenue was essentially phased out and consolidated revenue growth started looking very favorable by Q2 2018. Essentially, the cloud revenue was growing fast enough to make up for the decline or lack of growth in the licensing fee revenue that is being phasing out. However, ATGN still generates a good amount of on-premise licensing revenue that it still has to phase out overtime. This means, at times, it's going to be difficult for the company to consistently "show" growth in its consolidated revenue. From our perspective, the consolidated revenue line does not matter much. As long as cloud revenue growth is running at 15 to 20%, we will be fairly satisfied with the progress the company is making. The keys for the company going forward will be to:

Continue to transition it's legacy customers to the cloud.
Start experiencing an acceleration in revenue from its relationships with Fiserv and Microsoft. It appears that things are going on at Fiserv and Microsoft that have positioned the company to start capitalizing on this opportunity in a bigger way.

It was also very nice to see adjusted earnings per share take another leg up. We're going to view any significant pullback in the stock as a potential buying opportunity.

You can see our full ATGN research coverage here.

Research

Tue, 23 Jul 2019 15:39:03 GMT

Altigen Communications (OOTC:ATGN) ($1.23; $28.1M market cap) a SaaS/Cloud communications management/call center solutions company.

Altigen is another top performer for 2019 on our model favorite portfolio, rising 120% YTD. Shares broke through $1.00 in March 2019 after the CEO presented at the LD microcap conference on March 12, 2019. The stock touched a high of $1.47, but recently had a pull back to as low as $0.88, probably due to the last quarter where their year-over-year growth was probably not as aggressive as the market wanted. The reason for this is that the company still services legacy customers that use ATGN's on premise license solutions who have not converted to ATGN's recurring revenue cloud solution. The old licensing model carries higher initial revenue compared to smaller recurring annual cloud fees. So, once in a while, the company will be going up against legacy revenue.

Some of the things that we're looking for in this quarter are to see if customer cloud migration has accelerated, to see if ATGN expanded its relationships with Fiserv and Microsoft and to see if Fiserv and Microsoft are more aggressively pushing Altigen's products to their customers.

As far as valuation goes, at an EV/Sales of 2.3, we believe the company has significant upside potential from here and that it will be an ideal acquisition target at some point. The company still has a significant amount of customers from its current base that need to transition from on-premise software solutions to the cloud. Furthermore, the company is targeting small & medium enterprises (SMEs) which are in the early innings of migrating their businesses to the cloud. Like REPR, we think the end-game for Altigen will be that it becomes an acquisition target at some point in the future.

As a reminder, when we are valuing software-as-a-service (SaaS) and cloud models with a high recurring revenue component to them, we often lean more on enterprise value to sales and price to sales ratios than we do on P/E ratios and EV/EBITDA multiples. However, it's worth noting that ATGN also has a modest trailing adjusted P/E ratio of 13.8.

Research

Wed, 17 Jul 2019 04:00:00 GMT

Altigen Communications (OOTC:ATGN) ($1.21; $27.6M market cap) will be hosting its Q3 2019 earnings call on Wednesday, July 24, 2019 after the market close (5pm EST).

Dial (888) 645-4404 (domestic) or (862) 298-0702 (international) to listen in to the call.

If you have some free time, we encourage you to be on the conference call in case the archive is not immediately available, the company encounters recording complications or the archive becomes unavailable.

Participating in live earnings conference calls allows you to access information before the rest of the market gets around to listening to a recorded archive of the call or reading the related transcript. Investor calls are one of the best information arbitrage opportunities left for the retail investor who agree that participating in an ignored microcap space offers an incredible edge.

If you have questions for ATGN's CEO, please send them to us so we can make sure they are addressed. Of course, feel free to ask questions on the live call. Regardless, it's a good Idea to prepare your questions ahead of time so you are not rushed.

One of the best examples of missed opportunities for us was the Q3 2017 Intrusion Inc (OOTC:INTZ) conference call we failed to attend, where management offered insights into how the new levels of revenues they were expecting would finally “solidly move them into profit”. The stock was trading $0.30 at that time.

It wasn't until later when we initiated our long position in INTZ at $1.35, when more InfoArb was presented in its Q1 2018 call where management discussed two major contracts it expected to land that. Luckily, the stock has still performed nicely, currently trading at around $5.00.

ATGN itself has offered similar valuable information in past calls. Thus, we feel each call represents an opportunity for insights the rest of the market may be delayed in retrieving.

Research

Tue, 09 Jul 2019 15:00:37 GMT

Altigen Communications (OOTC:ATGN) ($1.06; $24.2M market cap), a SaaS/Cloud phone management/call center solutions announced that the company will be participating in Microsoft's Inspire Worldwide Partner Conference July 14-18, 2019.

During the conference Altigen will be conducting one-on-one meetings with Microsoft partners who focus on Office 365 and Microsoft Teams. According to Mark Sexauer, Altigen's Director of Microsoft UC Solutions, "Our new solutions for Microsoft Teams, including Direct Routing and Omni-Channel Contact Center, deliver the advanced functionality businesses require in order to migrate from their on premises PBX platforms to Microsoft Teams Phone System. Inspire provides a great forum to meet with Microsoft's top partners from around the world to discuss how Altigen's solutions can help Microsoft partners grow Office 365 and Teams lines of business."

While we have highlighted and have been familiar with ATGN’s Microsoft relationship, it’s possible this partner conference press release could bring awareness to others in the investing community.

Furthermore, it's good to see that the company is taking a more active role in attempting to onboard Microsoft relationships to the company's Cloud solution. Recall, Altigen generates a lot of its business from relationships that it has with partners and resellers like Microsoft and Fiserv. That means, in theory, that Altigen has access to a significant amount of customers without having to spend as much marketing dollars as some of its competitors spend. Still, ATGN needs to pound the pavement to secure new customer relationships.

We also understand that the Microsoft Teams Phone System initiative is a pretty big deal, basically competing with an application like Slack, that just went public.

Research

Mon, 22 Apr 2019 16:59:58 GMT

Altigen Communications (OOTC:ATGN) ($1.17; $26.7M market cap), a SaaS/Cloud phone management/call center solutions company, announced Q2 2019 results:

Sales of $2.5 million vs $2.5 million in the prior year
EPS of $0.02 vs $0.02 in the prior year

Product revenues from last year’s quarter were $400,000 vs $200,000 this year. While product revenues were down, the company’s cloud revenues (main focus) were up 28% year over year. Comments from management explain why occasionally, raw year over year revenue comparisons will not represent the true story:

“For the second quarter of fiscal '18, product revenue was just over $400,000 compared to product revenue of just over $200,000 for the second quarter of fiscal '19 or $200,000 less in product revenue year-over-year, which is not unexpected given our cloud focus.

On the other hand, cloud revenue in the second quarter of fiscal '18 was approximately $1.2 million compared to more than $1.5 million in this second quarter fiscal '19.

So while we reported overall revenue growth of less than $100,000, year-over-year, we actually grew our cloud revenue by over $300,000 or 28% in a year-over-year period. We will continue to face a bit of headwind as we fully transition from an upfront product revenue model to a monthly recurring cloud revenue model, an issue which will diminish over time.

That being said, from time to time, customers do want to purchase on an upfront licensing basis versus paying on ongoing subscription model. While we're happy to recognize the upfront licensing revenue, that will likely create some lumpiness over the course of the next several quarters.”

Comments on next phase of cloud strategy:

“I also wanted to provide a brief update on our cloud strategy. As we've been discussing, phase 1 of that strategy was to launch our own PBX as a hosted solution, which we've now successfully done and have approximately 19,000 cloud subscribers on our PBX platform. Phase 2 was to launch Hosted Skype for Business. It started the larger mid-market customers. We've now surpassed 1,000 subscribers on that platform as we continue to build. And while we still have work to do for both our Hosted PBX and Hosted Skype for Business platforms, we will soon move to phase 3 of our cloud strategy, which is the launch of complete cloud based omnichannel Contact Center. This solution, which we expect to launch next quarter, will support both our Hosted PBX and Hosted Skype for Business platforms and which should drive additional subscriber and ARPU growth.”

Comments regarding expanding relationship with Fiserv:

“I'm going to have to answer it a little bit more historically because we do have some things in the works, and I'm not able to disclose on that one. But we have had a long-standing relationship with Fiserv. We are their -- well, I can't say that only, they might have some other things floating around. But we are their, let's say, the bank by phone platform of choice, which is hosted in their cloud and from which they leverage both PBX and Contact Center into their customer base. So yes, we do have some expansion plans, but we're in the process of working with Fiserv to crystallize those plans and therefore, I can't announce those. But hopefully, on the next call, I can provide some more color on that front. I'm sorry, I couldn't give you more complete answer.”

Some investors are probably going to focus on the press release and year-over-year sales numbers in the release, especially those investors that bought the stock solely on the presentation they did at the LD Micro Virtual Conference on March 12, 2019.

The company should have done a better job breaking out the numbers in the press release. The key takeaway here is that nothing has really changed for the company. The turnaround growth plan that the company put in place in 2014-15 is still in place. As indicated by the conference call transcript, cloud revenue, which is a feature of the business, increased nicely year over year. We think astute investors will eventually figure that out and take any dip in the stock price as a buying opportunity.

At some point, cloud revenue will be big enough where licensing revenue lumpiness will be a non-factor. Furthermore, we wouldn't rule out a situation where’d they’d abandon the licensing offering altogether once the cloud revenue becomes big enough for it to become profitable on its own. We think the company is one major agreement away from taking revenues to a new level.

Shortly after the call, we had a conversation with management, reminding them that they need to do a better job of breaking down the numbers in their press releases since revenue comes from a variety of places. It's very important for the company to highlight the success it’s having in its overall plan to increase cloud revenue.

Research

Fri, 05 Apr 2019 17:20:07 GMT

Altigen Communications (OOTC:ATGN) ($1.06; $24.0M market cap) - We have received a few inquiries from members regarding ATGN, a SaaS/Cloud phone management/call center solutions company. The inquiries were specifically about the $1.30 to $3.13 price target range contained in a report published by Arham Khan on February 21, 2019. We agree with Arham that his target could be conservative, especially over the medium- to long-term.

Despite being one of our best performing stocks over the past year, we feel shares still have upside in the short term and multibagger potential in the long run. While it has taken time for the story to play out since we began our coverage in early 2015 when the stock was trading at $0.17, over the past 6 months shares have risen from the $0.50 level to highs of $1.47.

We first disclosed our long position on January 22, 2015, when the stock was trading at $0.21. Despite shares eclipsing a 500% rise at one point, we could see the stock rising to $2.00 in the short term based on an average Price/Sales multiple of between 4 and 6 (translating to a target range of $1.57 to $2.35). We feel the story is still in the early innings and the stock continues to have further multibagger potential and an outside chance of trading at a P/S well above 6 if the company's revenue growth accelerates. ATGN Is one of the few stocks in its industry that is growing revenue profitably, yet in our opinion, it remains one of the cheapest.

Yesterday, shares experienced some extreme volatility, trading as low as $0.94. We would expect this, since the company's shares have risen sharply in the short-term and it trades on the OTC.

You can see our full research coverage here.

Research

Wed, 13 Mar 2019 14:49:47 GMT

Altigen Communications (OOTC:ATGN) ($1.05; $24.0M market cap), a SaaS/Cloud phone management/call center solutions company, presented at the LD Virtual Conference yesterday. Shares reacted strongly, hitting new highs and crossing the $1 mark on what we felt was a very bullish presentation. Below are some notes from the presentation, generously provided to us by GeoMember Andrew Garner:

Value added products that integrate with Office 365 and Teams ( with 150 million users ) were described as a home run opportunity.
CEO was asked if he will provide guidance on revenues growth for the cloud business. He did not provide guidance but directed investors to historical growth in this category (which has been 50%) for investors to develop their own forecasts.
CEO was asked about ATGN being one of many (20 to 50) companies partnering with MSFT to provide phone center products and services. He said most of these providers only supply a contact center solution and that ATGN is the only one offering the entire end to end piece. (SIP trunk + value added applications + a contact center solution.)
The company talked about the competitive space, as ATGN is not competing so much with the big VoIP companies like 8x8, etc. He framed it as a scenario where Microsoft competes with the bigger players, and ATGN supplies product to Microsoft users.
It also seemed like ATGN's non-Microsoft related contact center solution is a pretty big component of the companies business.
CEO was asked if he's seeing a healthy pipeline of new customers. He replied by giving details on where new customers are being pulled from. (Existing PBX phone users, Fiserve and other partners, Microsoft users) And he said something along the lines of 'continued acceleration' of new customer acquisitions.

Here is a link to a replay of the presentation.

Research

Fri, 22 Feb 2019 17:06:04 GMT

**Contributor Article on ATGN

In yesterday’s email, we mentioned that GeoInvesting contributor and premium member Arham Khan was putting the finishing touches on his Altigen Communications Inc. (OOTC:ATGN) article. That article is now published and you can see it here. Arham’s thesis revolves around how undervalued the company is in light of its current growth trajectory and comps that trade at higher multiples. The article states:

“Most of Altigen’s competitors have stretched valuations and some have no profit (or even no operating profit). Moreover, ATGN has the greatest margins in this pool and trades at the lowest EBIT multiple. On a comparable sales basis, ATGN should trade for $2.34. This still represents an upside of over 150%.”

See the full article and thesis here.

Research

Tue, 05 Feb 2019 17:18:36 GMT

GB Altigen Communications (OOTC:ATGN) ($0.86; $19.8M market cap), a SaaS/Cloud phone management/call center solutions company, announced a business partnership with Cisilion, a leading UK head quartered IT systems integrator and managed service provider.

“The focus of the partnership between the two companies will be on delivering and enhancing the value of Microsoft Teams Phone System and Skype for Business. Altigen's solutions include Teams Direct Routing, a new Intelligent Call Routing application, workgroup call routing and queuing, as well as enterprise contact center applications. The combination of the solutions developed by Altigen and Cisilion's Unified Communications expertise enable the delivery of world-class communications capabilities to mid-size and large enterprise customers globally.”

Research

Thu, 24 Jan 2019 16:41:18 GMT

GB Altigen Communications (OOTC:ATGN) ($0.67; $11.2M market cap), a SaaS/Cloud phone management/call center solutions company, announced Q1 2019 results:

Sales of $2.8 million vs $2.3 million in the prior year
Non-GAAP EPS of $0.03 vs $0.01

Recurring revenues now stand at 81% of total revenue. The company continues to leverage its Microsoft Skype for Business solutions and has recently launched a new website specifically targeting Microsoft Teams customers and partners with its new teams solutions.

Quote from conference call on growth outlook:

“...our plans are to continue to be very much focused on Microsoft technologies with our current solution as well as lend the market additional value at hosted communications applications, including such cloud services as web chat, social media integration, SMS and others. We remain committed to growing our basic customers and subscribers, adding new reseller partners and increasing our average revenue per user and customer.”

With trailing 12 month non-GAAP EPS of $0.09 and nice recurring revenue growth, we continue to believe the stock is extremely cheap based on both its of PE 7.4 and EV/sales of 1.3. A very good publicly traded competitor to ATGN would be Crexendo, Inc. (OTC:CXDO). CXDO has similar revenue levels as ATGN with roughly the same top line growth rate but is losing money. Yet the company trades at EV/S of 2.6 and the stock is trading at $2.25.

If ATGN traded at a similar EV/Sales as CXDO, the stock would be $1.20.

You can see our full coverage on ATGN here.

Research

Thu, 29 Nov 2018 18:24:57 GMT

GB Altigen Communications (OOTC:ATGN) ($0.52; $11.8M market cap), a SaaS/Cloud phone management/call center solutions company, announced Q4 2018 results:

Sales of $2.7 million vs $2.1 million in the prior year
Non-GAAP EPS of $0.02 vs $0.01

''Our results demonstrate our continued success in transitioning to a cloud communications company'', said Jeremiah Fleming, President & CEO. ''While we have a lot of work to do, we've now built the foundation upon we can deliver profitable growth.''

On the conference call, management indicated that they were discussing the possibility of a buyback program and also did a good job explaining a lingering lawsuit to hopefully put investors’ minds at ease.

“I'm going to provide a little more color lot of your first part of your question with respect to the CTI lawsuit and the potential for impacting, let's say, our market cap. So we have reserved, as you can probably tell from Carolyn's discussion, everything that we believe is the maximum potential liability for AltiGen Communications. In the meantime, we are the judgment. The initial appeal would be for the damages and interest portion, which will be filed on November 30. The courts -- the Court in Colorado also split out the attorney's fees appeal separately and that will be on December 18. Now we certainly can't predict what the courts are going to do, but AltiGen fully expects to be successful in that regard. So I just want to point that out now. With respect to your question on stock buyback, the Board of Directors has discussed that, that we'll have a continued discussion on that topic in our January meeting prior to the next earnings call. And if you have any information for you as to what the board decides to do, I'll certainly be able to report to you at that time.”

Management expressed an opinion that it could take anywhere from 3 to 18 months to put its legal issue to bed if they don't settle. Management intends to follow through and “go the distance” with the full legal process. We believe this is what has depressed the stock, preventing it from attaining a valuation that more closely matches its fundamentals.

With trailing EPS of $0.07 and nice recurring revenue growth, we continue to believe the stock is extremely cheap based on both its of PE 7.4 and EV/sales of 0.99. However, many investors may still remain on the sidelines until the issue is resolved.

You can see our past coverage on ATGN and more details regarding the lawsuit here.

Research

Thu, 26 Jul 2018 15:31:59 GMT

GB Altigen Communications (OOTC:ATGN) ($0.52; $8.7M market cap), a SaaS/Cloud phone management/call center solutions company, announced Q3 2018 results:

Sales of $2.6 million vs $2.1 million in the prior year
Non-GAAP EPS of $0.02 vs $0.01 in the prior year

During the conference call, management stated:

“Over the past several years, we were very hard to eliminate all the dependencies on proprietary computer hardware and our computer -- and our communications solutions, a process, which is now complete. And at about the same time, we began to cloud enable our all-software solutions now and deliver a hosted version of our MaxCS IP PBX and contact center solution to small and midsized businesses. Along with that, we also reported the MaxCS contact center applications, which we call MaxACD now, to the Microsoft business solution, enabling us to target enterprise solutions. Today, most of these enterprise customers had deployed Maxine the on their premises. Now in order to deliver complete host of PBX and Contact Centre solutions for the upper midmarket and enterprise organization we launched in North America, a hosted version of Microsoft's Skype for Business, which also includes our innovated Maxine application suite. earlier this month, we also to announce the availability of that sale Hosted Skype 4 Business solution for MaxACD in the United Kingdom in conjunction with our data center partner iomart and said, partner at gamma communications. Collectively, our cloud strategy now enables us to target small businesses to large enterprises. And because we focus exclusively on Microsoft technologies, and more specifically Office 365 customers, we are able to effectively differentiate our cloud solutions from the multitude of hosted PBX companies that offer proprietary solutions, which don't integrate with the Microsoft product line. So our objective is to continue to focus on Microsoft technologies, expand our solution offerings and accelerate our subscriber acquisition rate.”

The Company touched on its previously announced lawsuit, stating it will continue to appeal the court ruling which the company is currently liable for a judgement of $724,000. We feel it is important for investors to understand that even in the worst case scenario, assuming the Company does not win the appeal process, it has $4.5 million in cash on the balance sheet, more than enough to pay the damages and move forward.

If the company continues on its current growth trajectory, we can assume that this will be a minor speed bump in the long term story of ATGN.

Research

Mon, 09 Jul 2018 15:46:35 GMT

GB Altigen Communications (OOTC:ATGN) ($0.52; $8.7M market cap), a SaaS/Cloud phone management/call center solutions, announced a strategic partnership to deliver a comprehensive UK-based cloud communications service providing a one stop solution for modern business communications.

“The partnership between Altigen and iomart was established to deliver a scalable, resilient and feature rich voice and multimedia cloud communications service based on the Microsoft Skype for Business platform, Altigen's natively integrated advanced routing and queuing applications, deployed and managed in iomart's ISO 9001 PCI/DSS compliant data centres. The companies have also selected Gamma Telecom Ltd. (GAMA), the UK's leading provider of voice, data and mobile products and services, to deliver cost-effective SIP trunk services.”

Gamma's Head of the Cloud & Infrastructure Channel, Mike Mills, commented,

''We're pleased to be working with Altigen and iomart to deliver Gamma's SIP trunk services for their new cloud UC solution. Together we're able to provide Microsoft partners and customers with a truly integrated solution at highly competitive price points.''

This release was anticipated as management discussed on its last two conference calls that it was finalizing the partnership with a U.K.- based cloud company. Iomart is publicly traded company in the U.K with $100 million in revenues.

Research

Fri, 20 Apr 2018 13:42:40 GMT

GB Altigen Communications (OOTC:ATGN) ($0.54; $9.0M market cap), a SaaS/Cloud phone management/call center solutions provider, announced Q2 2018 results:

Sales of $2.5 million vs $2.0 in the prior year
Non-GAAP EPS of $0.02 vs Non-GAAP EPS of $0.00 in the prior year
16,700 cloud subscribers up sequentially from 15,300 and up from 11,300 in the prior year

ATGN has now reported 7 consecutive quarters of profitability, proving that its transformation that began in 2014 is moving along nicely, when the company decided to move from a hardware/software licensing model to a pure cloud/SaaS model.

As usual, the press release contains little to no commentary, keeping in form with ATGN’s typical format of prior releases. The conference call discussed its U.K. partnership:

“This month, we moved to the beta phase of that launch which involves brining live customers onto the platform and ensuring everything is operating as expected prior to moving to the full-scale release. We're also continuing to enhance our cloud solutions with the addition of web chat, SMS and social media services as well as integrating with Microsoft's new cloud-based cognitive services, artificial intelligence engine. These new solutions, which will become at various points throughout the year, will not only work with AltiGen's cloud solutions, but will also be available to customers on a stand-alone basis regardless of their underlying communications platform.”

The company also discussed a lawsuit involving a prior reseller:

“Over the last few months, the trial court dismissed a number of CTI's claims against the company and certain employees of the company individually named as defendants.

On April 9, however, the trial court awarded CTI damages of approximately $724,000, plus attorney fees in respect of it's remaining claims.

The defendants have filed a motion with the court to set aside the judgment and pending that ruling, we'll evaluate an appeal of the judgment.

As the defendants are jointly and (inaudible) reliable, the company believes that the amounts of finally determined damages, if any, will be allocated among defendants.

Consequently, the company has determined that it's liability with respect to the CTI lawsuit is not a assumable at this point. The company will provide additional disclosure on this matter as further developments occur.”

While we certainly are not pleased with this lawsuit issue, it seems even in the worst case scenario would be a judgement for the $700k. ATGN has more than enough cash on its balance sheet ($4.2 million) to honor a potential judgement and the max potential financial impact looks like it would only equate to one quarter’s worth of net income.

We feel if the company continues on its current growth trajectory, this will be a minor speed bump in the long term story of ATGN, and we might add to our position if investors overreact to this

Research

Fri, 16 Feb 2018 19:41:50 GMT

Altigen Communications (OOTC:ATGN) ($0.60; $10.0M market cap), a SaaS/Cloud phone management/call center solutions provider, was added to Maj’s favorite stock list in early December 2017 (Listen to 12/1/2017 podcast here)

With top line growth beginning to trend up and new partnerships to be announced, we are now coding ATGN as a GeoBargain, as our confidence in its growth trajectory has strengthened.

Research

Mon, 12 Feb 2018 16:11:34 GMT

GBR Altigen Comm (OTCQB:ATGN) ($0.43; $7.1M market cap), a SaaS/Cloud phone management/call center solutions provider, was added to Maj’s favorite stock list in early December 2017 (Listen to 12/1/2017 podcast here).

We recently updated that list and stated shares had risen 54% since that time. Even at current levels, ATGN is Maj’s favorite Run to One candidate as he feels that the stock is not fully reflecting the recent strong quarter and the information from the conference call about an upcoming announcement of a U.K. partnership. We also believe the company is getting close to being in a position to be more aggressive on the investor outreach front.

Overall, we like the company's approach to competing in a very competitive market by establishing partnerships where a partner basically sells ATGN products which means a lot less SG&A outlay for the company.

Research

Fri, 26 Jan 2018 17:28:25 GMT

GBR Altigen Comm (OTCQB:ATGN) ($0.43; $7.1M market cap), a SaaS/Cloud phone management/call center solutions companyannounced Q1 20178 results:

Sales of $2.3 million vs $2.1 million in the prior year
Non-GAAP EPS of $0.02 vs $0.00 in the prior year

As usual, the press release contains little to no commentary from management, keeping in form with ATGN’s typical format of prior releases. The conference call discussed a new host partner agreement in the U.K. Management stated that they will have a press release in the coming weeks with more details on this new partnership.

We have been covering ATGN for several years now and have discussed the company's transition from a hardware to software company many times. We now believe ATGN is entering its growth phase, marking the first quarter since our coverage began in early 2015 that the company has had top line growth of 10%.

We encourage you to read the GeoInvesting note from last quarter's conference call where Maj discussed profitability and revenue growth with CEO Jeremiah Fleming. Recall, ATGN was one of Maj’s favorite stocks for 2018. His quick elevator pitch included:

“SaaS Turnaround complete; Consistent profitability seems to be in the cards; Extremely undervalued when compared to other SaaS comps; penny stock that is profitable.”

You can see Maj’s complete list of current favorite stocks here.

Research

Thu, 30 Nov 2017 15:32:59 GMT

GBR Altigen Communications (OTCQB:ATGN) ($0.28; $4.6M market cap), a provider of Hosted Skype for Business and Contact Center solutions, announced Q4 2017 results:

Sales of $2.1 million vs $2.0 million in the prior year
Non-GAAP EPS of $0.01 vs a non-GAAP EPS of $0.00 in the prior year

Quotes from management included:

"Our fiscal 2017 financial results demonstrate the solid progress we've made in our multi-year plan to establish Altigen as a Cloud Communications company," said Jeremiah Fleming Altigen's President & CEO. "Our decision to eliminate hardware from our product mix, with a corresponding focus on our software solutions, has enabled us to increase our recurring revenues. Our objective is to continue to focus on increasing our SaaS and Cloud revenues in fiscal 2018 and beyond."

We encourage you to read or listen to the conference call as our President and c0-Founder Maj Soueidan was able to ask management a few questions. We had discussed before how we had some difficulties with our attempts to reach management. Maj was able to participate on the call to have some of our questions answered. This will also offer you a glimpse of Maj’s interview process he and the GeoTeam undertake if we were able to schedule a one on one call.

The following is a question/answer exchange from the call where Geo’s Maj asks about the ability to maintain profitability:

Maj Soueidan, GeoInvesting LLC

“Okay. I mean if I was going to -- can I use your current model now to maybe kind of forecast internally at certain revenue levels that this is a profitably level you might be attaining? Can you maintain -- are you able to maintain profitability at the current revenue model you're at right now? Revenues levels right now? Is that fair to say at this point? If you kind of reached that kind of inflection point?

--------------------------------------------------------------------------------

Jeremiah J. Fleming, AltiGen Communications, Inc. - President, CEO & Chairman [11]

If I -- yes, at this -- make sure I understand your question to maintain profitability at our current levels, I guess if we did nothing more than maintain, then the answer would be, yes. Obviously, we're looking to grow revenues from where they're at. And to keep that going. But if the question is, yes, is this real profitability for the quarter? Yes, it is.”

We feel management was almost perplexed by the notion of the revenue staying at current levels. Management goes on to discuss how the Fiserv relationship continues to ramp up and its expansion plan for the U.K will boost sales moving into 2018 and beyond.

Maj also tried to get an idea of the expense outlook moving forward. The company explained that since it is such a small player, they feel the marketing dollars are better spent on continuing to establish partnerships like Fiserv.

With the transition to a pure SaaS/Cloud phase completely behind them, the next quarter will begin to exhibit an apples to apples comparison of the financials. Q4 would have showed a 20% top line growth if not for the hardware sales of last year’s Q4.

We feel ATGN is a strong candidate from our Run to One portfolio to obtain the $1/share milestone, given its low EV/S (0.6) and improving EPS run rate.

As we have stated before, you can expect SaaS sector multiples between 2 to 4. If ATGN is able to obtain these levels, (which we believe it could), there could be tremendous upside.

Research

Thu, 27 Jul 2017 15:22:38 GMT

GBR ATGN ($0.27) announced Q3 2017 results:

Sales of $2.1 million vs $2.0 million in the prior year
Sales from continuing operations of $2.1 vs $1.9
Non-GAAP EPS of $0.01 vs $0.00 in the prior year
Cloud subscribers increased 53% versus the prior year period

As we stated in the past, ATGN was one quarter away from completing its long standing shift from hardware to software/cloud driven revenue. The company finally discontinued all of its legacy business hardware sales and will no longer be reporting it on a go forward basis.

InfoArb opportunity from ATGN conference call

ATGN rarely has any commentary in its press releases. We have always looked forward to the calls for any new insights on the Company’s progress. In this quarter's conference call, the company discussed that in Q3 the company booked cloud revenue from long time business partner $FISV ($127.01), a global leader in financial services with $5 billion in revenues. FISV now offers ATGN’s cloud PBX as a hosted service to its bank and credit customers. The Company expects FISV to be a significant contributor to ATGN cloud revenues going forward.

We will aggressively reach out to management to see if they can grow top line and maintain profitably. If the Company can achieve this, we feel it is extremely undervalued.

Research

Wed, 05 Jul 2017 04:00:00 GMT

Altigen Communicatns (OTCQB:ATGN) ($0.22 ) - Anyone that’s been following ATGN’s story knows that their ultimate goal was and is to transform the company into a cloud-based service, mostly disassociating itself from the hardware and software aspects of its expertise with Microsoft related services. The company explains itself to be “a leading Microsoft Cloud Communications Solutions provider, delivers fully managed Unified Communications services, combining Hosted Skype for Business, Advanced Cloud PBX, and Innovative Cloud Contact Center applications with seamless integration to Office 365.”

Today, ATGN announced the addition of Ken Epps and Simon Chouldjian joined AltiGen's Board of Directors, with the clear purpose to use their skills in the cloud industry to facilitate the company’s long-terms goals in the cloud communications market.

We are currently long ATGN and will keep you apprised of any other major developments coming out of the company’s camp. The next few quarters are key to see if the company’s restructuring process is taking hold.

Research

Thu, 20 Apr 2017 14:24:48 GMT

ATGN ($0.26) reported Q2 fiscal 2017 results:

Sales of $2.0 million vs $2.2 million in the prior year
Non-GAAP EPS of $0.00 vs $0.00

In our last update we stated that ATGN was one quarter away from completing its long standing shift from hardware to software. Q2 2017 was the last quarter the company expects to have any hardware based sales, and has now fully shifted to a full cloud/SaaS provider. As we have stated before, it will now be up to management to prove they can drive top line growth with its new recurring revenue model.

Per the Q2 2017 conference call, total recurring revenue for Q2 2017 was 79% vs 64% a year ago. Also for the first time in the Company’s history, total cloud revenues have surpassed upfront product purchase revenues which managment states it views as an important “inflection point” which indicates future revenue growth.

We feel there could be tremendous upside if management can execute on its growth plans. The current fully diluted EV/S is currently at 0.5 compared to common SaaS sector multiples of 2 to 4, which we think is attainable for the ATGN.

Research

Mon, 13 Mar 2017 14:35:15 GMT

ATGN ($0.24) is a leading Microsoft cloud solutions provider. Its latest product, MaxACD, “enhances Skype for Business and Office 365 with Cloud-based Automated Multimedia Routing and Queuing capabilities to address the Enterprise “Line of Business” requirements for Internal or External customer requests.” It’s worth noting that the product has received some rave reviews from ATGN’s customers. Madison Mutual, an insurance company provider recently stated:

"Knowing of our recent move to Office 365, AltiGen immediately began creating a solution that would leverage that investment and also solve most of the problems we were discussing," continued Beckley. "We will be saving money too; enough for the approval meeting to basically be statements like: Please bring us more no brainers!"

We have been discussing ATGN’s shift from hardware to software for the past 2 years. It appears that the company is one quarter away from completely exiting the hardware business and becoming an exclusively cloud/SaaS provider. Management has stated that it believes it has “paved the way to significantly drive recurring revenue going forward” upon full integration of its new suite of cloud-based products.

See our January 26, 2017 earnings summary to see why we estimate the fair value of the company to be $0.44 to $0.83 per share.

Research

Thu, 26 Jan 2017 16:26:51 GMT

ATGN ($0.21) - announced Q1 2017 results:

Sales of $2.1 million vs $2.2 million in the prior year
Non-GAAP EPS of $0.00 vs $0.01

GeoInvesting has been discussing ATGN’s shift from hardware to software for a long time. It seems now that the company is 1 quarter away from completely exiting the hardware business and becoming a full cloud/SaaS provider. In Q1 2017, hardware sales came in at $117,000 vs $258,000 in Q1 2016. Management stated during its conference call that it expects full hardware sales for 2017 to be $150,000, indicating roughly $33,000 in hardware sales for Q2 2017. Beginning in Q3 2017, the company will be a pure software-based company. Q1 2017 recurring revenues were 72% of total sales vs. 61% in the prior year period. Subscribers for Q1 2017 increased 80% over the prior year period.

Management has stated that it believes it has “paved the way to significantly drive recurring revenue going forward” upon full integration of its new suite of cloud-based products. The current fully diluted EV/S is currently at 0.3 compared to common SaaS sector multiples of 2 to 4, which we think is attainable for the ATGN.

Based on an EV/Sales multiple of 2 to 4, we estimate the fair value of the company to be $0.44 to $0.83 per share.

Caveat:

Can the company grow without having to raise money? With a cash balance of $3.8 we see this risk as remote, something we will address during an interview with the company.

Research

Thu, 01 Dec 2016 16:40:10 GMT

ATGN ($0.18) reported fourth quarter 2016 results with:

Sales of $2.0 million vs $2.4 million in the prior year
Non-GAAP EPS of $0.00 vs $0.01 in the prior year

Quotes from management:

"The decrease in total revenue in fiscal 2016 compared to fiscal 2015 was primarily the result of reduced hardware sales based on AltiGen's strategic decision to exit the hardware business. For the twelve-month period ended September 30, 2016, hardware sales decreased approximately 60% versus the same period a year ago. While this planned transition impacts top line revenues and, to a lesser extent, gross profit, it enables us to focus on far more profitable software and cloud services solutions. We expect this trend to continue into the first and second quarters of fiscal year 2017. However, as we continue to experience favorable revenue shifts in these product lines, we expect to continue to see overall improved growth and profitability."

The shift from hardware to software seems to be finally nearing completion. As the company becomes a pure software player, investors may be willing to eventually apply higher valuation multiples to the company once revenues begin to show positive comps. The company’s cloud-based revenue increased 88% vs Q4 2015. The current fully diluted EV/S is currently at 0.3 compared to common SaaS sector multiples of 2 to 4, where we think it could eventually get to.

Research

Thu, 21 Jul 2016 17:27:09 GMT

ATGN ($0.24) reported third quarter 2016 results:

Sales of $2.0 million vs $2.2 million in the prior year
Non-GAAP loss of $0.02 vs $0.00 in the prior year

Conference call highlights:

Recurring revenue continues to grow as hardware revenues (legacy business) continue to be phased out. Recurring revenues accounted for 70% of overall revenues vs 55% in the prior year period. Cloud and SaaS revenues accounted for 24% of overall revenues vs 10% in the prior year.
Cloud customer growth grew 20% sequentially and 90% year over year
Gross margins will continue to improve as the Company focuses on software and service revenue
Microsoft office 365 cloud solutions product will be released in Q4 2016. The Company believes this product could drive significant recurring revenue growth.

Research

Thu, 21 Apr 2016 14:09:12 GMT

GeoBargain On the Radar $ATGN ($0.27) - ATGN is a leading provider of premise and cloud-based IP-PBX and Contact Center solutions reported Q2 2016 results:

Sales of $2.2 million vs $2.5 in the prior year
Non-GAAP EPS of $0.00 vs $0.02

The company’s shift to a software based revenue model continues. As we stated after its last quarterly update, the company continues to add new cloud clients as the shift from hardware sales and upfront licensing fees to a SaaS model continues. While this shift takes place, the company continues to lose hardware sales, but continues to replace the lost sales with higher margin, stable SaaS revenues. Hardware sales for the quarter, which can be lumpy and have low margins, were $217,000 vs $522,000 in the prior year quarter.

The migration from an upfront one time payment to a monthly SaaS recurring payment model will negatively impact revenues initially, but are expected to generate much higher sales over the life of the customer. The lower upfront cost in a SaaS model also expands the company’s customer base. On its Q2 conference call management mentioned that it was selected as a Microsoft Cloud Solution Provider which enables it to directly sell its Microsoft cloud service offerings. This could be an interesting piece of information arbitrage, since this development was not disclosed in the Q2 press release. The CEO stated that Microsoft is seeing 1000 new cloud subscribers per month. This is all encouraging news since the company is gaining traction with its new MaxACD product line, which it claims is the industry’s first scalable, all software solution specifically designed for Microsoft Skype for Business (or Lync) and Office 365.

As recurring revenues continue to increase (now 65% of overall sales), investors may be willing to eventually apply higher valuation multiples to the company once revenues begin to show positive comps.

Currently, the company is trading at an EV/S of around 0.6, however, it is common for the companies that are in the SaaS sector trading EV/S in the range from 2 to 4, translating into target price ranging from $0.66 to $1.21 per share.

Comments & Business Outlook

Tue, 15 Mar 2016 19:12:58 GMT

SAN JOSE, CA--(Marketwired - Mar 15, 2016) - AltiGen Communications, Inc. (OTCQX: ATGN), a leading provider of Microsoft-based IP-PBX and Contact Center solutions, is pleased to announce the general availability of the company's MaxACD 7.0, multi-channel contact center for Skype for Business and Office 365.

AltiGen's MaxACD Contact Center 7.0 is based on Microsoft's recommended architecture, with native integration to Skype for Business utilizing UCMA and UCWA APIs. It adds Web Chat Queuing and Routing to powerful contact center features already present in the current version of MaxACD, which includes: skills-based routing, automatic call distribution, multi-level auto attendant, call recording, and real-time monitoring and reporting. Management and administration has also been made easier with the new web-based Admin console. The new MaxACD 7.0 enables enterprises to enhance customer interaction and improve productivity.

"The new Web Chat functionality will add another dimension to the contact center," said Aaron Ferraiuolo, President at UpTime Sciences, a leading AltiGen MaxACD partner. "The ability to provide real-time engagement with customers via the website will be very valuable for enterprises that are looking to enhance sales, customer service or support."

As a turn-key, all software solution, MaxACD runs on industry standard hardware and can be deployed on-premises or in the cloud utilizing VMware or Hyper-V virtualization. AltiGen offers simple, flexible and cost-effective licensing options which include upfront perpetual or subscription-based licenses.

"With more and more enterprises adopting Skype for Business to replace their old PBX, there is a growing demand for business-critical features like advanced auto attendant and sophisticated intelligent routing capabilities," said David Tang, Vice President of Cloud Solutions at AltiGen. "As a native trusted application, MaxACD enhances Skype for Business with the PBX and contact center features required to meet the needs of today's enterprises."

Research

Thu, 21 Jan 2016 15:36:51 GMT

ATGN ($0.30) reported Q1 2016 results:

$2.2 million vs $2.6 million in the prior year
Non-GAAP EPS of $0.01 vs non-GAAP EPS of $0.02

While the associated press release did not provide color on the quarter, the conference call did.

The company continues to add new clients as the shift from hardware to SaaS continues. While this shift takes place, the company continues to lose hardware sales, but continues to replace the lost sales with higher margin more stable SaaS revenues. Hardware sales for the quarter, which can be lumpy and have low margins, were $250,000 vs $600,000 in the prior year quarter.

The company is also migrating from an upfront one time payment to a monthly SaaS recurring payment model which impacts revenues initially, but generates much higher sales over the life of the customer. The company has had added 1000 new cloud subscribers during the first quarter. As SaaS revenues continue to increase (now 60% of overall sales), investors may be willing to apply higher valuation multiples to the company.

Caveats

We were expecting a better quarter
We need to gain a better understanding of the quarter over quarter growth of SaaS revenue and what the apples to apples profit comparison would have been for the quarter.

Research

Fri, 04 Dec 2015 14:43:04 GMT

ATGN Conference Call States Sales Growth and Continued Profitability In the Cards

Yesterday we stated that GeoBargain on the radar $ATGN ($0.32)reported its Q4 and full year 2015 results. We stated that heading into 2016 with much of the transition to a SaaS platform behind them, we will look to see if the company can begin to drive top line growth. After listening to the conference call, we learned that management believes they are now in position to grow top and bottom line in 2016. During the transition phase, the company managed to increase its gross margins significantly as indicated in the table below. Any increase in the topline should have strong reflection in the bottom line results.

AS we stated in our July 23, 2015 email, we believe savvy investors who understand the SaaS model will realize ATGN is moving in the right direction in that its recurring revenues are beginning comprise an increasing share of the company’s sales. If the trend continues, as the company believes it will, we believe investors will bid up the company’s EV/Sales multiple. The company is currently trading at an EV/Sales of 0.64. A common trading multiple for SaaS companies is between 4 to 6. Using that range, ATGN share price would equate to $0.70 to $1.44.

Comments & Business Outlook

Thu, 03 Dec 2015 16:29:58 GMT

$ATGN ($0.25)reported fourth quarter and full year 2015 results:

Q4 sales of $2.4 million vs $2.5 million in the prior year period
Q4 EPS of $0.01 vs $0.01 in the prior year
Full year sales of $9.8 million vs $9.6 million in the prior year
Full year EPS of $0.03 vs a loss of $0.04 in the prior year

Quotes from management:

"2015 reflected the results of our efforts to transition from hardware and one-time license revenues to Software as a Service and annual recurring revenues, which delivered increased profitably and capital returns to our shareholders," said Jeremiah J. Fleming, Chairman, President and Chief Executive Officer of AltiGen. "We will continue to focus on driving the business in this direction in 2016 and beyond."

As we stated in our original research, while the switch to a SasS model can lead to temporary slowing of top line growth, the model should lead to improved margins which the company showed throughout 2015. Heading into fiscal 2016, with much of the transition behind them, we will look to see if the company can begin to drive top line growth.

Comments & Business Outlook

Thu, 23 Jul 2015 15:46:50 GMT

ATGN ($0.38) reported third quarter 2015 results:

Q3 2015 sales of $2.2 million vs $2.2 million in the prior year period.
Q3 2015 non-gaap earnings of $112,000 vs a net loss of $155,000 in the prior year.

The company offered no commentary in its press release. However, during the associated conference call ATGN discussed the continued transition to a software/cloud based model. Recurring revenues now and for the first time account for over 50% of revenues for the quarter. The company stated as it ramps up its cloud offerings, top line sales will be affected a bit, but that gross margins are increasing. We believe savvy investors who understand the SaaS model will realize ATGN is moving in the right direction in that its recurring revenues are beginning comprise an increasing share of the company’s sales. If the trend continues, as the company believes it will, we believe investors will bid up the company’s EV/Sales multiple. Fully diluted EV/Sales multiple stands at 1.6. We will maintain our long position as the company continues its cloud offering expansion.

Comments & Business Outlook

Wed, 22 Apr 2015 04:00:00 GMT

Second Quarter 2015 Results

Revenue for the second quarter of fiscal year 2015 was $2.5 million, in comparison to $2.4 million for the second quarter of fiscal year 2014, an increase of 5%. Net income for the second quarter of fiscal 2015 from continuing operations was $107,000, or $0.00 per share (diluted), compared with net loss of $84,000, or $0.00 per share in the same period in fiscal 2014. Gross margin in the second quarter of fiscal 2015 was 80.1%, compared to 72.8% in the same period in 2014. Operating expenses for the second quarter of fiscal 2015 totaled $1.9 million, compared to $1.8 million during the same period a year ago.

For the six months of the year, revenue was $5.2 million, compared to $4.9 million during the same period in fiscal 2014, an increase of 7%. Net income was a record $526,000, or $0.02 per share (diluted), compared with net loss of $262,000, or $0.01 per share in the same period in fiscal 2014. Gross margin was 80.0% for the first six months of fiscal 2015, compared to 72.3% in the same period in 2014. Operating expenses for the second quarter of fiscal 2015 totaled $3.6 million, compared to $3.8 million in the comparable period last year.

The increase in gross margin for both the three and six month period was primarily due to an increase in the number of software only transactions in fiscal year 2015.

Research

Thu, 22 Jan 2015 05:00:00 GMT

Speculative play $ATGN ($0.17) - Reported record breaking Q1 2015 profits. Reasons for tracking:

We are taking a closer look at the story as it appears to fit right into other software companies we have established positions in that transition to a SaaS product offering. Quote from conference call:

“As discussed in prior calls, AltiGen has been working hard to transition to cloud business model. For our cloud business, we have two distinct delivery models. The first is based on the AltiGen Cloud in which our MaxCS IP-PBX software is deployed in our datacenter and delivers a monthly SaaS subscription service.”

After perusing the related conference call transcript it appears that more profitable revenue growth is be driven by its new SaaS product. Quote from the conference call:

“Our first quarter net income of $420,000 compares to the previous quarter net income of $146,000. The quarter-over-quarter increases in both revenue and margins, which we'll talk about, were primarily a result of increased sales of our MaxCS all software IP-PBX platform along with continued growth in the delivery of MaxCS on a software-as-a-service or SaaS model. The results also reflect a decreasing contribution from our hardware products”

Although a switch to a SaaS model can lead to a temporary slowing of top line growth, the model should lead to improved margins. From conference call:

“AltiGen has been migrating away from dependencies on proprietary hardware technologies which includes servers, telephony boards and telephone.”

“ During the transition phase from hardware to software, we will experience an impact on top line revenue as AltiGen proprietary hardware is replaced by industry standard hardware products. However, this model will also allow us to improve our margins by shifting revenue from our hardware to software licenses which are required to enable the functionality of AltiGen Solutions with third party hardware products.”

At 79.8% it carries tier one SaaS gross margins
Significant operating leverage exist as evidence by the fact that year over year quarterly operating expenses remain unchanged even though revenues increased.
Valuation seems very compelling as it appears shares are trading at only 2 times cash per share and a price to sales multiple of 0.8.

Caveats:

Appears that management is not ready to concede that the company is in position to deliver consistent profitable results. We will request an interview with management immediately.

“We’ve traditionally not provided any guidance of any kind going forward. One of the reason is we’ve got a short operating history here and the last we had profit for last two quarter. So we’re cautionary optimistic that the future is going to continue to do well but again it's kind of premature for us to get used to reporting profits back-to-back, so hopefully we’ll be able to continue with this trend.”

First Quarter 2015 Results

Revenue for the first quarter of fiscal 2015 was $2.6 million, compared to $2.5 million in the preceding quarter, and compared to $2.4 million during the same period in fiscal 2014.
Net income for the first quarter of fiscal 2015 from continuing operations was a record $420,0000, or $0.02 per share (diluted), compared with net income of $146,000, or $0.01 per share (diluted) in the preceding quarter, and compared to a net loss of $178,000, or a loss of $0.01 per share in the same period in 2014.

Jeremiah J. Fleming, Chairman, President and Chief Executive Officer of AltiGen, stated, "We are pleased to report a solid first quarter which was the most profitable quarter in the company's history. The financial results are a direct result of executing on our strategic initiatives, growing sales and managing expenses to drive improved operational performance."