Winning Through Disruption in the Transport Market

Transcription

1 Winning Through Disruption in the Transport Market Investor Overview February Infinera

2 Safe Harbor This presentation contains "forward-looking" statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact could be deemed forward-looking, including, but not limited to, any statements about future market performance and similar statements; any statements about historical results that may suggest trends for our business; any statements of the plans, strategies, and objectives of management for future operations; any statements of expectation or belief regarding future events, potential markets or market size, technology and product developments, or enforceability of our intellectual property rights; and any statements of assumptions underlying any of the items mentioned. These statements are based on estimates and information available to us at the time of this presentation and are not guarantees of future performance. These risks and uncertainties include, but are not limited to, the risk that Transmode s and Infinera s businesses will not be integrated successfully; the risk that synergies will not be realized or realized to the extent anticipated; the risk that the combined company will not realize on its financing or operating strategies; the risks of competitive responses and shifts in the market; delays in the release of new products or updates to existing products; fluctuations in customer demand, changes in industry trends, and changes in the macro economic market; the effect that changes in product pricing or mix, and/or increases in component costs could have on our gross margin; our ability to respond to rapid technological changes; our reliance on single-source suppliers; aggressive business tactics by our competitors; our ability to protect our intellectual property; claims by others that we infringe their intellectual property; war, terrorism, public health issues, natural disasters and other circumstances that could disrupt supply, delivery or demand of products; and other risks and uncertainties detailed in our SEC filings from time to time. More information on potential factors that may impact our business are set forth in its Quarterly Report on Form 10-Q for the quarter ended on September 26, 2015 as filed with the SEC on November 5, 2015, as well as subsequent reports filed with or furnished to the SEC from time to time. Our SEC filings are available on our website at and the SEC s website at Forwardlooking statements are subject to change, and we may not inform you when changes occur. We assume no obligation to, and do not currently intend to, update any such forward-looking statements Infinera

3 Infinera: A Differentiated Technology Company Redefining what the network will be Unique technology innovation with PIC Best-in class systems with Automation, Convergence and Scalability Industry leading global service & support Unmatched reliability Right tools for right job Focused on customer success TM-Series Photonic Integrated Circuit (PIC) Cloud Xpress DTN-X XT Enabling An Infinite Pool of Intelligent Bandwidth DTN DTN-X XTC Infinera

4 Infinera A Global Business Leader in Intelligent Transport Network solutions Growth over last 3 years: Revenue up greater than 20% YoY, more than double DWDM market growth* Diversified customer base across multiple verticals - Several Tier 1s globally - 3 of top 4 Internet Content Providers - Several major global Cable/MSOs - Multiple top Wholesale and Enterprise Carriers Infinera *IHS overall DWDM growth: 2013 = 11%; 2014 = 6%; 2015 = 7%

5 Infinera Differentiators Infinera differentiates due to its technology, market expansion opportunities and vertically integrated business model PIC-enabled Technology PIC enables scalable, intelligent functions: SDN, integrated switching, sliceable bandwidth High capacity applications: Long- Haul, Metro Cloud, Metro Core Cloud Xpress XT-500 XTC-2 TM-Series New Purpose-Built Products Cloud Xpress for DC Interconnect Transmode Metro portfolio Infinera Metro Aggregation ~3x TAM expansion to >$15B in 2019* Infinera PIC Fab Vertical Integration Lower cost structure than competition Supply chain control Infinera * Based on average of latest forecasts from Ovum, IHS, Dell Oro and ACG

6 Outpacing Other SP Networking Players 140% 120% 100% 80% 60% 40% 20% Revenue Growth: Trailing 12-month revenue DTN-X for 100G Long-Haul Cloud Xpress for 100G DCI 114% 37% 3x Revenue Growth INFN CIEN JNPR CSCO ADV ALU 0% -20% Jun '12 Dec '12 Jun '13 Dec '13 Jun '14 Dec '14 Jun '15 Dec ' Infinera * Based on latest financials available; Adva and ALU assumed flat for Dec 15 as results not yet available

7 Disruptive Technology Innovation: The Infinera Way Infinera

8 Uniquely Delivers Massive Optical Bandwidth with PICs Competition Moore s Law-like for Optical 500G PIC 500G WDM on a chip Integrates over 600 optical functions 3 rd Party Discrete Optics Industry s only 500G large scale Photonic Integrated Circuit Infinera

9 PIC Leveraged for Disruptive Systems Own Key Technologies & Processes 500+ patents filed/granted Intelligent Transport Network Scalability, Convergence, Automation Photonic Integrated Circuits 500G Super-Channels Purpose-Built Systems Intelligent Software Vertically Integrated Switching ASICs Cloud Xpress XTC-2/2E XTC-10/4 XT DTN DTN-X Infinera

10 Infinera Market Expansion Strategy

11 Transport becoming is Strategic Networks Simplifying to New Model of Cloud Services and Intelligent Transport Market Inflections 100G Long Haul 100G Metro Cloud 100G Metro Aggregation Scalable Optics and Integrated Packet-Optical Key for Simplification Accelerated 100G uptake & 40G decline st to market with purposebuilt solution 2014 Infinera Core + Transmode portfolio 2016 Poised to take off Vision: Enable An Infinite Pool of Intelligent Bandwidth Infinera

12 Data Center Interconnect Capturing emerging cloud infrastructures Infinera

13 Cloud Architecture Drives New Traffic Patterns 1KB HTTP 930x Network DCI Home User Distributed Compute Model Server-to-Server traffic growing faster than Server-to-User traffic Source: Facebook Infinera

14 Cloud Xpress Optimized for DCI Cloud Xpress Platform 500Gb/s input and output in 2 RU 500G PIC based super-channel line side 500G client w/mix of 10/40/100 GbE Instant Bandwidth Hyper-Scale Density 2RU, smaller than most servers 3X to 10X density improvement Minimal Power ~100W per 100G: ALL INCLUSIVE 50% better than industry leaders Simple Operation Simple step provisioning Server-like operational experience Infinera

15 The Metro Market A new market for Infinera as technology upgrades Infinera

16 TM Portfolio Ready for 100G Coherent Metro Ramp Ports (Thousands) % CAGR 100G starting to ramp, rapid acceleration CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY Infinera Source: 2015 IHS 100G Coherent Optical Equip Ports Mkt Fcst

17 Transmode s Leadership in Metro CATV/MSO Triple Play FTTx/PON Triple Play Storage Networks xdsl Triple Play Metro Access Metro Access Metro Edge & Core Network Lowest Power & Space Systems TM-Series TG-Series 650+ Customers 10G/100G Packet-Optical Ethernet, Wireless backhaul / fronthaul Biz. Service Wireless backhaul #1 Packet Optical EMEA Rich Eth. Biz Service Mobile Back/ Fronthaul CPE / PON Biz. Service Wireless backhaul WDM access Infinera

18 Metro Networks Are Application-Oriented Cable MSO Evolution Long-Haul DTN-X Family Business Ethernet IP Metro Core/ Regional IP Mobile Evolution Metro Access/ Aggregation Metro/Micro DC TM-Series 100G and Packet-Optical in Metro Infinera

19 XTC-2 Extends DTN-X to Lower Capacity Sites E.g. Right-sized DTN-X XTC for Smaller Cities Seattle Spokane Boise Salt Lake City Las Vegas 100G 100G 100G XTC-2 100G 100G XTC-4 XTC G Super-channels Common Hardware, E2E Network Management & Automation Infinera

20 Long Haul Adding new tools to solve customer needs Infinera

21 Introducing the DTN-X XT Series Scalable Super-channel; ILS integration DTN-X XT-500 Efficient ~1W/Gig, 1Tb/s IO 2RU Programmable Instant Bandwidth, SDN enabled Long-Haul Interconnect Optically Switched (ROADM) Infinera

22 End-to-End Solutions Infinera

23 The Infinera Unified End-to-End Portfolio SDN and INFINERA NMS Triple Play Broadband Cable Broadband Business Ethernet NID EDU METRO ACCESS AGGREGATION CORE TM-Series TM-102 TM-301 TM-3000 XTC-2 LONG HAUL / SUBSEA DTN-X Family XTC-2E XTC-4 XTC-10 FlexILS DC INTERCONNECT XT-500 Cloud Xpress TM- Series Mobile Front/ Backhaul TG-Series MTC Infinera $15B* (2019) Transport Market * Based on average of latest forecasts from Ovum, IHS, Dell Oro and ACG

24 Value of End-to-End Converged Packet Aggregation & OTN Switched Metro Core Triple Play Broadband Cable Broadband XTC-2 Business Ethernet 100G Frankfurt Metro Area, Germany Mobile Front/ Backhaul Packet-Optical Switching Access & Aggregation TM-Series XTC-2 Converged Packet Aggregation & OTN Switched Metro Core XTC G Super-channels 100G Frankfurt Metro Area, Germany Infinera DNA XTC-10 XTC-4 Pan-European 500G Network Super-channels Large LH Core XTC-4 DTN-X Family Pan-European Network XTC-10 Large LH Core XT-500 XTC-10 XT-500 Point-to-Point Interconnect Point-to-Point Interconnect Infinera

25 Optical Market exceeds $15 billion by 2019 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $ Infinera $552 $5,858 Long Haul* Metro* Incremental DCI** $828 $6,583 $1,209 $7,192 $1,705 $2,353 $7,885 $8,253 $4,855 $5,195 $5,513 $5,814 $6,020 CY15 CY16 CY17 CY18 CY19 * Long Haul and Metro forecasts based on average of latest forecasts from Ovum, IHS, Dell Oro and ACG ** We estimate 50% of DCI market to be incremental to Long Haul and Metro DWDM; underlying market estimate from ACG WW Optical Forecast, December 2015 CAGR 43.7% CAGR 7.5% CAGR 5.4%

26 Infinera s Ascending Global Market Position Global Metro + LH WDM (2014) Revenues ($M) $2,500.0 $2,000.0 $1,500.0 $1,000.0 $500.0 $0.0 HUAWEI CIENA ZTE ALCATEL-LUCENT Cross-selling and revenue synergies create opportunity to go higher INFN + TRMO FUJITSU CORIANT INFINERA CISCO ADVA NEC TRANSMODE ERICSSON ECI TELECOM BTI MRV OTHERS Infinera Source: Dell Oro Optical Report Jan 2015

27 Infinera Differentiated Financial Results

28 Infinera A Growth Story 3 years of >20% revenue growth GM%: OM%: Infinera $ % -9.4% FY12 Revenue (in $m) $ % 1.4% FY13 $ % 8.3% FY14 $ % 13.1% FY15 All figures are Non-GAAP (reconciliation to GAAP numbers may be found at Industry leading revenue growth and profitability Solid Balance Sheet $207M net cash (end FY15) FY15: Positive Cash Flow from Ops every quarter Cash Flow from Ops = $133 million Free Cash Flow/Revenue = 10.3% Q4 15 Performance $261 million revenue 48.3% gross margin $112 million net income Q1 16 Guidance $240 - $250 million revenue 47.5% % gross margin 10% - 12% operating margin $ $0.19 EPS

29 Purpose-Built Products: Good for Customers & Infinera Innovating to address entire $15B* opportunity New XT-Series: High Capacity LH Data Center Interconnect New XTC-2/2E: Packet-OTN Switching for Regional / Metro Core TM-Series: Packet-Optical for Metro Core, Aggregation, Access Infinera * Based on average of latest forecasts from Ovum, IHS, Dell Oro and ACG

30 Margin Growth Opportunity Margin Drivers Vertical integration Footprint vs fill Instant bandwidth Purpose-Built Products $ Long-Haul $ $ $ $ Cloud $ Xpress $ $ $ $ $ Metro Infinera PIC Fab $ Expanding Markets Drive Margin Growth Infinera

31 Great Time To Be In Optical For Infinera End-to-end packet-optical portfolio Consolidating market TAM > $15B* Vertical IP ownership Infinera * Based on average of latest forecasts from Ovum, IHS, Dell Oro and ACG

32 Thank You Infinera