Corporate Overview Tim Montgomery Chairman of the Board, President & CEO

Transcription

1 Corporate Overview Tim Montgomery Chairman of the Board, President & CEO This document contains proprietary information. Use of this information or reproduction of this document, in whole or part, is not allowed without the written consent of Ditech Communications Corporation.

2 Forward Looking Statements We must point out that as with similar presentations, the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed here. We will attempt to identify such forward-looking statements with qualifying words such as "we intend, plan, believe, estimate, predict or, we may, could or will," or other comparable language. Factors that could cause results to be different include factors discussed today in this presentation, as well as those detailed in the section entitled Future Growth and Operating Results Subject to Risk in the Ditech Communications Annual Report on Form 10-Q for the quarter ended January 31, 2005 (filed March 8, 2005 with the Securities and Exchange Commission). 2

3 About Ditech Ditech Communications designs and develops voice processing systems and solutions for communications networks Founded in 1983; Voice Processing Products since Employees Headquartered in Mountain View, CA Listed on NASDAQ exchange since 1999 $134 Million in Cash and Investments. $35M used in stock repurchase No debt 3

4 Complete System Level Solutions Scalable Hardware Platforms Density Power Software Algorithms Echo Cancellation VQA Voice Processing Systems Element Management Systems Customizable 4

5 We Reduce CAPEX & Improve Quality for Mobile, Wireline and VoIP Carriers PSTN GSM- HR GSM CDMA VoIP 3G Echo & Voice Quality Solutions Capacity Enhancement Solutions VoIP Solutions GSM-AMR CDMA 5

6 Global, Industry Leading Customers 6

7 53% Y/Y Revenue Growth for First 9 months $25.5 $21.3 $23.1 $24.3 $21.3 $14.5 $7.6 $8.3 $9.1$10.0$10.7 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY03 FY04 FY05 As reported in our quarterly filings on Form 10-Q or Form 10-K annual filing (previously reported as Echo Cancellation Revenue). All amounts on a GAAP basis. 7

8 Strong Gross Margins 75% 78% 78% 65% 64% 65% 66% 66% 68% 57% 59% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 FY03 FY04 FY05 As reported in our quarterly filings on Form 10-Q or Form 10-K annual filing (previously reported as Echo Cancellation Gross Margins). All amounts on a GAAP basis. 8

9 Balance Sheet Summary As of 1/31/05 Cash and Investments $134 Million $35M used in stock repurchase Accounts Receivable $17 Million Holiday Shutdown Non Linearity DSO 72 Days Inventory Turns 4 Debt ZERO 9

10 Product Strategy VoIP Packet Echo VQA Mobile/Circuit Future 10

11 Flexible Scalable Platforms Packet Voice Processor BVP Flex OC3/STM1 to DS3/STS1 Quad Voice Processor (QVP) QUAD T1/E1 SX-24/30 VoIP Echo Cancellation VQA 11

12 Echo & VQA in Mobile E V Noise O M Acoustic RE echo Level D D E V O M Hybrid echo RE Class 4 Cell Phone BSC PSTN MSC Class 4 Phone Class 4 Class 5 Switch Echo is caused by the return of a signal from a far-end device. We hear more echo as far-end delay increases Background Noise forces cell phones to use higher rate transmission. 12

13 Echo Cancellation Market Today-Snapshot Nortel Lucent Ericsson Nokia Siemens Alcatel Internal EC 70% DITC TLAB NMSS Note: External EC Data based on July 31, June 30 and July 2, Q results respectively 13

14 VQA & Mobile Capacity Enhancement 14

15 VQA expands Mobile Opportunity Echo Market ~$700M /year Internal Echo Internal EC 70% Ext Echo DITC NMSS VQA TLAB $1.2B/year Market Note: 2005 and beyond, annual market estimate- Ditech Analysis 15

16 VQA Customer Engagement Cycle 700+ GSM & CDMA Operators months 16 Network Deployment First Deployment Trial Trial Agreement Customer Engagement Total Elapsed Time

17 World wide VQA Engagement Funnel Customer Engagements Trials Agreement 30+ Trial First Deploy 2 Asian Customers Deployment Tele.Ring, AirTel 17

18 Voice-over-IP presents growth opportunities Growth Driven by end-to-end VoIP based services $6 Revenue $B $4 $2 $ WW Carrier Equipment Revenue for VoIP Infonetics Carrier Equipment Revenue Forecast- February 05 18

19 Approaching the mainstream, VoIP requires new capabilities Interconnect VoIP networks with each other while ensuring format compatibility Overcome voice quality impairments due to large variety of VoIP devices in enterprise and residence, as well as networks Measure voice quality to adhere to Service Level Agreements 19

20 Packet Voice Processor supports these new carrier requirements The Packet Voice Processor leverages our TDM experience with new features targeted for improving VoIP networks Works in conjunction with Media Gateways and SBCs for processing voice calls Class 4 Large Scale 5-9 s reliability Convert Formats Cancel Echo Measure Quality Packet Voice Processor Media GW Border Controller 20

21 Packet Voice Processor Next Generation VoIP system supporting: VoIP Codec Transcoding Voice and Packet Quality Assurance Voice Quality Measurement and Monitoring System and Performance Hardware & software system Transcode, enhance and measure at full scale and full rate Up to 18,000 simultaneous VoIP sessions per system 21

22 Ditech addresses fundamental new problems in End-to-End VoIP calling Decrease CAPEX for carrier VoIP interconnects with cost-effective codec format conversion Reduce tech support costs with voice quality processing Measure and report for SLA enforcement 22

23 Market for VoIP end-to-end Services equipment is $1.5B in 2007 Millions $1,500 $1,200 $900 $600 SBC MG $300 $0 CY2005 CY2006 CY

24 The Packet Voice Processor represents a $500M TAM in 2007 Millions $1,500 $1,200 $900 $600 SBC PVP MG $300 $0 CY2005 CY2006 CY

25 The Ditech Communications Advantage Targeted Solutions by Market Focus on Customers/Strong Relationships Investing in Next Generation Solutions 25

26 Summary Strong Financials Revenue Growth Strong Balance Sheet Generating Cash Commitment to Profitability Strong Market Presence Focusing on Growth Segments Providing System Level Solutions Proven Technology - Momentum Growing Future Markets Benefiting from Past Investments 26

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