February 16, 2023 - 11:38pm EST by
2023 2024
Price: 0.66 EPS 0 0
Shares Out. (in M): 24 P/E 0 0
Market Cap (in $M): 16 P/FCF 0 0
Net Debt (in $M): -3 EBIT 0 0
TEV (in $M): 13 TEV/EBIT 0 0

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Altigen Communications (Ticker ATGN): Worth 2-5x the current share price when it re-rates

In May of 2021, Grizzlybear posted to VIC on a microcap company called Altigen Communications (ticker: ATGN). The market cap at the time was $52m and the EV was $46m.

In the two years since that post, the business is improved and now primed for growth. Like all small companies, things sometimes take longer to materialize than investors and management might like.

Today, the same company, with better prospects of earnings and growth has a value of $16m, with an EV of only $13m. This post focuses on why the growth is coming soon and what has led to the longer than expected timelines.

Additionally, recent trading activity is noteworthy. Altigen has averaged ~30k shares/day over the past year, but in the past few trading sessions, it has averaged over 400k shares/day, more than 13x normal volume. This trading action suggests investor capitulation and the subsequent bounce back observed suggests the likelihood that an overhang has been removed.

To recap, ATGN is a provider of cloud-based IP-PBX, Call Center and Contact Center solutions. It primarily focuses its sales efforts on SMB businesses, and its UCaaS solutions are primarily delivered as a cloud service, hosted and managed by Altigen. Its customers are in virtually every industry, but have larger concentrations of customers in the financial services and healthcare industries.

The vast majority of communication platforms in existence today are legacy, on-premise seats such as Avaya, Mitel and Cisco, amongst others. ATGN primarily competes with the cloud-based UCaaS and Contact Center service providers such as RingCentral (RNG) and 8x8 (EGHT), who are taking share from the legacy, on-premise vendors.

But enough about that, let’s discuss the growth initiatives for this Company.

There are 3 different ways for Altigen to accelerate their growth. Each opportunity will be touched on below. Bullets follow the growth section which are quotes copied from past conference call transcripts as supporting evidence from management that can be used to further connect the dots on their multiple opportunities.



Fiserv ($73B market cap) has been Altigen’s largest customer for several years, ~35% of revenue. Importantly, Fiserv does not allow other UC providers to tie into their data today. Altigen effectively is the only Unified Communications company they are reselling. The legacy relationship began when Altigen was selected to provide an IVR (interactive voice response) product to their banks after their previous provider was acquired years ago. Since then, they have grown their relationship and have been working on new advanced technology products for several years. Deployment of the new products has taken longer than expected due in part to Fiserv merging with FirstData ($22B merger). Data center migrations, in addition to Fiserv asking Altigen to build their technology stack inside their data center was an additional part of the delay. All the work has been completed and deployments finally began in 2022. When Altigen products are sold by Fiserv, the sales are included in their sales team quotas, ie. Altigen is already embedded in the Fiserv sales force. While Fiserv is one of the three main opportunities for growth, there are actually three ways as well that Altigen can grow within Fiserv.


  1. Full solution suite: Fiserv is now selling their full Unified Communications solution suite, within their Sentry division, which includes MaxCloud (more info below), contact center, fraud prevention tools, and more. Fiserv has 5000 bank customers, 2000 of which already use Altigen’s IVR product and are the foundation to which Altigen is building from. A net new $4B bank was the first deployment in 2022. They’ve slowly been adding 1-2 net new banks per quarter. While new customer deployments can take a long time with Fiserv, sometimes 12 months or longer from contract, this pipeline of new contracts has already been building for 12-18 months. The bigger question and larger opportunity exists through the conversion of current Fiserv customers. Revenue per customer can range from $2500k to $20k/month. Any traction thus can move the needle rather quickly given the size of the company today. Net new deployments are expected throughout the year at the current pace. We will be watching for any uptick of additional net new as well as the conversion of existing customers. 

How big could Fiserv be for Altigen? 10% penetration of their full customer base = 500 customers. Conservative average revenue per customer of $3500 monthly recurring revenue would equate to $1.75M/month or $21M in annual recurring revenue, much more than double their current revenue base.


  1. SecureSIP/TrustID: Fiserv is also selling their fraud prevention tool for banks as a standalone product. This service authenticates people calling into bank IVR’s before the call is answered. Altigen is paid per call, likely around $0.05. Price will increase as biometrics and additional features such as a more AI conversational experience (customer asks any question and receives a response) are added over time. This is a switch flip for Fiserv. It doesn’t require their customer banks to use Altigen in any other way. They can keep their current contact center/UC provider, as such it could be a relatively short sales cycle. The value proposition to their bank customers is significant as a typical call to a human service representative costs $2.50/call. Pre-authenticating can significantly reduce time per call, in addition to preventing the fraudulent activity.
  2. Conversion of legacy on premise to MaxCloud. Altigen CEO recently said Fiserv has 100 customers who will move to the cloud this year as Fiserv no longer wants to offer on premise. Each conversion presents upselling opportunities for Altigen to layer on their new products which could be worth $1.0M+ annual contract value by the end of 2023 (for context, 2022 revenue was $11.9M total).


The Fiserv unit they work with is called Sentry, which is a portfolio of managed services around IT infrastructure (cybersecurity, lifecycle management, network services, unified communications):

ConvergeIT is the interactive voice response (IVR) system at Fiserv:

Joe Selveraj from Fiserv/Director of ConvergeIT spoke on Altigen’s Investor Day in March of 2022. He’s publicly on record stating their excitement for the new features/functionality.


Acquired in September of 2020. Commercial launch was at the end of 1Q22. CoreInteract is an Azure based Microsoft Teams application that enables call routing, queuing, analysis, and reporting of every customer interaction in the Teams environment. The platform began demos and proof of concepts approximately one year ago. The feedback was very positive, but customers requested additional features which were further developed during 2022. Multiple significant upgrades have since taken place with the latest in January of 2023. Product sales should accelerate now. CEO said the base is small currently but there are bookings and revenue. Many comments from previous calls noting substantial reseller and customer opportunities with potential seats per customer ranging as large as 5-10k. The business model is land and expand so it’s unlikely any customer would start with thousands, but traction should pick up as the year progresses. 2023 should be what 2022 was supposed to be. $30/seat in revenue. 1000 seats by end of the year would be a conservative goal. If the latest upgrade signals the start (conservatively), pickup begins in calendar 2Q with momentum building through the rest of the year. The sales cycle is likely 90 days.

CoreInteract will also be added as an additional product to the Fiserv relationship in the future which could be an additional revenue stream.

How big could CoreInteract be to Altigen: There are 280M monthly active users on Microsoft Teams. A significant percentage use calling through Teams today, and many more are likely to in the future. Any penetration into this market at all will move the needle for Altigen. At $30/seat, an immaterial 50,000 subs would equate to $1.5M/month in revenue – more than doubling the revenue base of the company.

MaxCloud: Transition On Premise Customers to the Cloud 

MaxCloud is a complete private branch exchange (PBX) and Unified Communications solution deployed in the cloud and delivered as a fully managed service. The PBX term is used for a business telephone system that includes inbound/outbound lines, call routing, voicemail, and call management features. MaxCloud also introduces additional features such as real time presence, instant messaging, desktop sharing, HD video conferencing, and mobile apps. MaxCloud was launched in calendar 4Q22.

MaxCloud is a key product in terms of the Altigen growth story. It is the foundation of the Fiserv offering for one. Secondly, the company can simply sell it to net new customers. And third, Altigen has a legacy revenue product line for their On-Premise customers that has been in decline as the company transitions those customers to the cloud. MaxCloud is the product that will act as a catalyst for their remaining ~500 on premise legacy customers to convert. At the end of December ‘22, MaxCloud had 10 active customers post launch, 5 of which converted, 5 of which were net new customers. This is a new product that is just beginning to be sold. And importantly, MaxCloud revenue to Altigen is 8x the old MaxCX on premise revenue, therefore this opportunity just on conversion alone suggests significant growth could be coming in the future.

What follows are quoted commentary from previous conference calls where the progression of information shared by management provides additional color on the three opportunities noted above.

Management Quotes from Recent Conference Calls

4Q21 CC December 2021

I want to reiterate our commitment and expectation that we will double our revenues in the next three years.

3 phases to rollout of new products. 

Phase 1 is best-in-class baseline functionality. Our objective here is to introduce the first versions of our solutions at superior price and performance points that will drive new incremental streams for AltiGen. Products we are releasing or have released are currently in Phase 1. This phase establishes a presence in the market and engages our partners and customers in the process. 

Phase 2 is extended functionality. This includes both enhanced functionality as well as add-on, fee-based applications. Examples of this include integrations with all-popular CRM platforms, real-time performance dashboards, and new desktop and mobile apps. 

Phase 3 is conversational AI, analytics and machine learning. After that, we will be -- so after -- all of those we'll be introducing new AI capabilities such as chat and tech spots, conversation, keyword detection, and sentiment analysis.

On the CoreInteract side, most of the resellers I'd mentioned, they're coming on with us because of CoreInteract. And so those 80-plus resellers and 100-plus opportunities are generally CoreInteract -oriented.

1Q22 January 2022

Now as I mentioned, our relationship with Fiserv is becoming increasingly more strategic. We're enhancing our IVR, our Bank by Phone application by adding both caller validation and voice biometrics to verify the identity of callers as a fraud prevention mechanism for both banks and credit unions. I've mentioned this before that the Trust ID caller validation has now been rolled out and is currently being used by a handful of Fiserv bank and credit union customers.

A more exciting piece is the voice biometrics, which adds a voiceprint technology to caller validation for maximum secure access. The first customer for the voice biometric solution will be deployed next month. Now this happens to be -- this customer happens to be the credit union arm of one of the largest -- the world's largest consumer appliance companies, very visible. And this is just the beginning. Today, Fiserv has 13 different core processing platforms, these are the platforms that run the business of the bank or credit union, as a result of their historical acquisition strategy. Our solution will be integrated with all 13 platforms during the course of the year. We're starting with the largest platforms and working our way down to the smallest. Now the full solution, in addition to what I just described, consists of Altigen's SIP Trunk service, our IVR application, our UC or UCaaS platform and the contact center solution all integrated with Fiserv's bank and credit union core processing platforms.

A bit closer to home is a recent CoreInteract customer who has deployed about 10 CoreInteract users today with plans to grow that number to hundreds of users. They also had a requirement to integrate with their CRM system, which resulted in a services engagement of $50,000.

We have customers in our pipeline, through resellers or direct, as small as 20, 30 users. I have them as large as 90,000 users, right? So if I just sort of give the customer, it doesn't really tell a good picture. But yes, we are continuing to grow our partner channel. Partners are signing -- continuing to sign on. They're piloting our software. We have customer pilots going on across the board, right? It's not just one product. So those things are moving forward.

2Q22 May 2022

30 customer opportunities that are when I say opportunities, these are the customers evaluating our product, moving to a pilot phase, moving to some sort of a proof of concept, but in some sort of evaluation process. The total seats represented by those customers is in excess of 4500. 

Some of these companies are let's say, small to midsize companies 200, 300 employees, something like that, and some are over 5 thousand, 10 thousand 20 thousand employees.

3Q22 August 2022

Fiserv currently has about 100 legacy on-premise and hosted MaxCS customers with the latter accounting for about one-third of these customers. In total, there are about 3,500 seats that Fiserv plans to migrate to the new MaxCloud platform, initially targeting the migration of existing hosted MaxCS cloud customers.

Now to quantify this opportunity today, because many Fiserv customers deploy our full solution suite, the average revenue from those customers as they migrate to the cloud, is roughly 10 times what we see from an on-premise customers.

Fiserv is also targeting its broader base of approximately 5,000 banks and credit unions that are Fiserv customers that do not currently use the MaxCS system, and of course, pitching the entire MaxCloud and Altigen solution suite to those customers.

Fiserv rolled out their first customer on the combined MaxCloud and FrontStage platforms. This particular customer is a regional bank with $4 billion in assets and is a net new customer for Altigen.

Fiserv has either secured or submitted quotes for another dozen contracts with their customers. So, there is truly movement from Fiserv with a new fintech solutions as we're seeing good progress here.

The next sales channel that I'd like to address is our legacy MaxCS customer base, many of which have been sold to and are supported by our long-time channel partners, which we tend to call legacy channel partners. Today, we have roughly 500 on-premises customers that have not yet migrated to a cloud solution, which are our initial targets to upgrade to MaxCloud since they represent the greatest risk. We also have another 350 or so MaxCS cloud customers, which we plan to migrate to the new cloud MaxCloud platform.

In total, these two customer bases, one on-premise, one in the cloud, have about 32,000 potential subscribers and certainly weighted a little bit more heavily on the on-premise customers, but we're targeting all of them to convert to MaxCloud. I should also point out that converting our on-premises customers brings the biggest bang for our buck as we estimate the incremental revenue per customer on on-premises customer -- I'm talking about to be about $400 per month from what they're currently spending. 

To date, we have signed seven contracts for MaxCloud with early adopters including five existing customers that will transition from MaxCS on-premise to the cloud and two net new customers.

Overall, we do expect it will take somewhere around 18 months, perhaps 24 months to migrate all of our current MaxCS customers onto the new MaxCloud platform. 

Regarding our progress with the CoreInteract solutions suite, to date, we have about a dozen paying customers. We've also provided approximately 50 new quotations to prospective customers, which generally range in side -- in size from 10 users to 250 users. 

The positive news is that our new products are gaining traction in the market and our business momentum is building as evidenced by our growing list of new and prospective customers. One final comment, I would ask everybody to please keep in mind that this is just the tip of the iceberg as we're truly just getting started.

4Q22 December 2022

FY '22 has been a year of monumental change for Altigen.

In the fourth quarter of fiscal 2022, we introduced the first version of our new UCaaS solution, MaxCloud. The benefits are twofold. For customers, MaxCloud adds much needed unified communications capabilities on a scalable, high availability and redundant platform. The benefit to Altigen is that we receive approximately 8x the revenue from a MaxCS cloud customer versus a MaxCS on-premises customer.

MaxCloud now has also now been fully deployed in Fiserv's data centers. Fiserv will be targeting their base of approximately 100 legacy MaxCS customers, of which, about 1/3 are using the cloud version of MaxCS and they remain 2/3 using the on-premises version of MaxCS, in total, representing approximately 3,500 subscribers that Fiserv will migrate to the new MaxCloud platform.

In FY '22, Fiserv deployed 3 MaxCloud customers, representing about 200 subscribers. All of these customers were net new to Altigen.

In FY '22, we deployed FrontStage for the first 2 Fiserv customers, representing an average revenue per customer of approximately $10,000 per month.

TrustID/SecureSIP. This service became available right at the end of fiscal 2022 and is now being piloted by the first few customers. Just to give you an idea of the revenue to Altigen for the Secure Access SIP service we expect to range from approximately $2,500 to $7,500 per month per customer to take that platform. I should also point out that while Fiserv is targeting their base of 100-or-so MaxCS customers to upgrade them to both MaxCloud and FrontStage, they are also going after the more than 2,000 customers that use Altigen's IVR or Interactive Voice Response Platform.

Regarding our progress with the CoreInteract solution suite, in FY '22, we licensed 18 new customers having a total of approximately 200 users, many of which will go into larger deployments as more departments are brought on. Our pipeline continues to grow and includes quite a few opportunities with customers, a single customer having more than 200 users for CoreInteract

We also signed approximately 15 new partners during FY '22, who came on board to be selling the CoreInteract solution. I think it's safe to say that we are beginning to see real traction with CoreInteract.

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. A

1Q23 January 2023

MaxCloud does represent a significant upgrade to our legacy MaxCS hosted PBX solution. MaxCloud introduces a complete new suite of unified communications features, including real time presence, instant messaging, desktop sharing, HD video conferencing, and new mobile apps, none of which were available on our legacy MaxCS hosted PBX and all of which are required by today's [modern businesses] [ph] and which we do now have in the MaxCloud platform. we are first targeting for conversion of our approximately 500 on-premises legacy MaxCS PBX customers since they represent the highest incremental revenue potential.

As of the end of December, we had approximately 10 customers on our new MaxCloud UC platform, which was roughly split evenly between current and new customers. The MaxCloud UC platform has also now been fully deployed for three Fiserv customers, two of which who have also deployed our front stage contact center.

Fiserv is also charging their base of approximately 100 legacy MaxCS cloud and on-premise customers for migration to both MaxCloud and the Fiserv UCaaS platform. All of these customers represent incremental revenue to Altigen in terms of both additional UCaaS revenue, CCaaS revenue, or in most cases both CCaaS and UCaaS.

Now, during the fiscal first quarter, we also rolled-out our first Fiserv secure SIP customer. This new service authenticates callers by verifying the caller's ID and telephone device, which reduces the possibility of fraudulent colors and [personating] [ph] a legitimate customer in order to gain access to their account.

Now because the secure SIP service requires integration to multiple Fiserv core processing systems, we will be doing a phased rollout as each core system is supported, but ultimately, this plan is – the plan for this service is to be available for all 6,000 Fiserv customers.

Regarding CoreInteract, we do have well over 20 customers using the product in production, many of which are now starting small, but they have plans to extend the use of CoreInteract throughout the enterprise. In other words, this is a true land and expand opportunity with CoreInteract. Our fiscal first quarter revenue for CoreInteract was small as a result, but that does provide us with a foundation that we can continue to build on as our enterprise customers continue to expand CoreInteract throughout their businesses.

In addition, as a result of the completion of our business integration with ZAACT, we do expect to see reduced expenses and growing profitability going forward.

Partner Spotlights – Altigen does not disclose many of their resellers. However, they offer Partner Spotlights from time to time. A few examples.

American Technology Services

Gracon Services



Valuation: What is the stock worth?

With multiple shots on goal to accelerate growth, ATGN could command a valuation of 3-5x sales. Most of the revenue is recurring, and the margin profile of the business will move towards 75-80% as they begin to scale. The company has historically earned $0.00 -$0.02/quarter in EPS and is expected to be within that range without any of the growth topics discussed contributing. We can value it on a multiple of revenue, such as that below. We can also value it on an earnings basis, where a $0.10+ annual run rate in EPS should be achievable over the next twelve months.

At the following 12 month sales run rates, the stock is worth:








Sales run rate







 $           15.00


 $     1.67

 $     1.98

 $     2.29

 $     2.60

 $     2.91

 $           20.00


 $     1.51

 $     1.76

 $     2.02

 $     2.28

 $     2.53

 $           25.00


 $     1.68

 $     1.95

 $     2.21

 $     2.47

 $     2.74

 $           30.00


 $     2.21

 $     2.54

 $     2.86

 $     3.19

 $     3.52


At the current price, the market is ignoring the potential for a massive re-rating of ATGN shares. Fatigue amongst the microcap minions has presented those that are first getting involed with a great opportunity.


I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise hold a material investment in the issuer's securities.


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