cowen and company 42nd annual technology, media, & telecom conference
DESCRIPTION
Pardeep Kohli, Mavenir’s President & Chief Executive Officer, discussed how Mavenir is helping mobile operators transform their networks to 4G LTE and to leverage cloud-based software solutions to meet the increasing demand for Voice over LTE (VoLTE) and Rich Communication Services (RCS) and deliver new mobile services to their subscribers.TRANSCRIPT
Transforming Mobile Networks from 2G/3G to 4G LTE
Pardeep KohliPresident and CEO
Investor Presentation – May 27th, 2014 2
Forward-Looking Statements
Statements in this presentation that are not historical fact are forward-looking statements. Some of the forward-looking statements contained in this presentation can be identified by the use of forward-looking words such as“anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others.Forward-looking statements include, but are not limited to, statements regarding our intent, belief or currentexpectations with respect to matters such as future industry trends, capital expenditures by mobile serviceproviders, the adoption of 4G LTE technology by mobile service providers and users, and our expectedfinancial performance subsequent to our most recently released financial results. Forward-looking statementsare based on our management’s beliefs and assumptions and on information currently available to ourmanagement. Such statements are subject to risks and uncertainties, and actual results may differ materiallyfrom those expressed or implied in the forward-looking statements due to various factors. Investors shouldreview factors described in our filings with the U.S. Securities and Exchange Commission, including under theheading “Risk Factors” in such filings. Forward-looking statements speak only as of the date they are made,and we do not undertake any obligation to update them in light of new information or future developments or torelease publicly any revisions to these statements in order to reflect later events or circumstances or to reflectthe occurrence of unanticipated events.
Investor Presentation – May 27th, 2014 3
Investment Highlights
Transforming mobile operator networks from 2G/3G to 4G LTE
Capitalizing on 2 key network trends: 4G All-IP and cloud-based software
Disruptive software-based mobile services platform
Pure-play vendor focused on 4G LTE infrastructure with industry spending forecast to reach > $38Bn in 2018
A leading provider of converged voice, messaging and video solutions
First Mover Advantage with large and growing roster of Tier 1 carriers
Well positioned at early stage of high growth market
Investor Presentation – May 27th, 2014 4
World’s Firsts – Commercial Deployments
Voice over Wi-Fi
Rich Communication
Services
Virtualized 4G
Services
Voice over 4G LTE
(VoLTE)
4G Overlay
5Investor Presentation – May 27th, 2014
Why 4G LTE is a Necessity
Many drivers…
Speed
up to15x faster
Spectrum
up to 10xbetter
Services
more
revenue
Savings
less
cost
Investor Presentation – May 27th, 2014 6
4G LTE Progress
Operators globally 1000+
619
<4%
Operators invested in LTE301 launched
Connections on LTE
Source: GSMA, May2014
240million connections
Investor Presentation – May 27th, 2014 7
Transforming to 4G All-IP
Launch Voice
over LTE
Launch 4G LTE
Data
Coverage Capacity
“The Two Network Problem” Re-allocate 2G/3G Spectrum
8Investor Presentation – May 27th, 2014
Voice over LTE Announcements
Launches Planned
OperatorsLaunched
OperatorsTrialing
DevicesAvailable
Source: GSMA042314
2014 June July 2nd Half 2014 2015
May 22nd
May 23rd
8 27 7 57Source: GSA 0414
9Investor Presentation – May 27th, 2014
Our Portfolio
NewServices
RCS
BetterVoice
VoLTE
MoreEfficient
Mobile Core
Complete Portfolio of Virtualized 4G LTE Products and Solutions
10Investor Presentation – May 27th, 2014
Session Control
Session Border Controller
Our Products
Voice & Video Enhanced Messaging
4G LTE Core Network
Evolved Packet Core
OSS
Access Network
Rich Message Server
Presence Server
Telephony Server
OSS/BSS
LTE WiFi Fixed
Billing
NMS
SLA
CRM
Investor Presentation – May 27th, 2014 11
New Operator Initiatives for 4G Networks
Domain 2.0…based around using (SDN) and (NFV) to cut costs and turn hardware-based network functions into software-based and facilitate the deployment of new services...such as VoLTE.
May 18, 2014
‘Network Vision’ … consolidate multiple network technologies into one new, seamless network …increasing efficiency, enhancing network coverage, call quality and data speeds.
May 5, 2014
“As the industry migrates to NFV, important network functions will stop being performed by dedicated hardware and will instead operate in software form on a commodity-priced server supplied by a 3rd party.May 27, 2014
Era of the Software Defined Operator…Simplification of IP, with NFV and SDN, ..a new model to meet the unparalleled broadband demand with agile, cost effective and fast implementation of new services.Mar 13, 2014
Investor Presentation – May 27th, 2014 12
Transforming to Cloud-Based Software Networks
Hardware Based Software Based
INTEGRATED SOFTWARE ONSPECIALIZED HARDWARE
VIRTUALIZED SOFTWARE ONGENERAL PURPOSE HARDWARE
Investor Presentation – May 27th, 2014 13
Our Platform
Extracts hardware intelligence into a common carrier grade software platform
Virtualized Solutions Deployed on Cloud-based Infrastructure
Multimedia Services Network
Network Functions Virtualization (NFV)
Open APIs
mOne® Convergence Platform
Investor Presentation – May 27th, 2014 14
Mavenir Customer Highlights
VoLTE
14RCS
14CORE 2G/3G/4G
15 120+
Growing Roster of Blue Chip 4G Customers• 3 of top 4 operators in the US; 3 of top 4 operators in Europe
Diversified 4G Customer Base• Across geographies, across product lines
Strong 2G/3G/4G Customer Base • 12 of top 20 operators globally Source: Mavenir 1Q2014 data
Investor Presentation – May 27th, 2014 15
35%CAGR
88M
400M
20131,033M Total Subscribers
Mavenir Customers’ 4G LTE Subscriber Base
4G LTE subscriber penetration in 2013 is 88M (9% of 1,033M total)
4G LTE subscriber growth through 2018 projected at 35% CAGR
Source: GSMA 0414
20181,192M Total Subscribers
Investor Presentation – May 27th, 2014 16
4G LTE Competitive Landscape
Software Expertise
Wireless Expertise
Investor Presentation – May 27th, 2014 17
4G LTE is a Significant Opportunity
10.7Bn
38.3Bn
2013 2018
29%CAGR
Source: Gartner1Q14
2013-2018 Global LTE CAPEX Spend (Radio & Core)2013 4G LTE CAPEX focused on radio build-out
4G LTE CAPEX spend on core network services >29% CAGR
Mavenir TAM of 24% of 4G LTE CAPEX
18Investor Presentation – May 27th, 2014
Growth Drivers
A “connected world” of billions of IP devices
Software networks enabling new cloud and OTT services
Modernization of mobile operator voice networksVoLTE/RCS
Cloud Networks
Internet of Things
Transforming Mobile Networks from 2G/3G to 4G LTE
Terry HungleCFO
Investor Presentation – May 27th, 2014 20
Company Highlights
Founded in 2005 with a vision to lead the transformation from 2G/3G to 4G
Deployed with 3 of top 4 US mobile operators; 12 of top 20 global operators
867 employees, 713 across engineering/ops
Revenues
$101M 2013
37% YoYgrowth
Attractive financial model with growth and significant operating leverage
Proven leadership team consisting of industry pioneers
Revenues
$28.7M 1Q2014
28% YoYgrowth
Investor Presentation – May 27th, 2014 21IncreasingMargin
Svcs
Hw
Svcs
Hw
Sw
Lab Deployment
Initial Production Deployment
Capacity Expansion
NETWORKS
RE
VE
NU
E
SvcsHw
Sw
Typical Deployment Model
Investor Presentation – May 27th, 2014 22
Q1 2014 and Q4 2013 Results1Q14 1Q14 B/(W) 1Q14 B/(W) 4Q13 4Q13 B/(W) CY2013 CY'13 B/(W)
Actual 1Q13 4Q13 Actual 4Q12 Actual CY2012
Revenue ($M) $28.7 $6.3 $1.6 $27.1 $10.4 $101.3 $27.5y/y Growth 28% 62% 37%
Gross Margin % GAAP 55.8% -8.6% -2.2% 58.0% 2.1% 55.4% -3.4%
Non-GAAP 56.9% -8.0% -2.1% 59.0% -1.7% 56.2% -4.0%
Operating Loss ($M)GAAP ($2.2) ($0.5) ($0.5) ($1.7) $3.9 ($7.7) $6.9Non-GAAP ($0.2) $0.4 ($0.1) ($0.1) $3.3 ($2.1) $8.1
Net Loss ($M)GAAP ($4.0) $0.2 ($1.2) ($2.8) $3.7 ($15.3) $0.3Non-GAAP ($1.1) $0.5 $0.5 ($1.6) $3.0 ($7.8) $4.0
EPSGAAP ($0.17) $3.04 $0.04 ($0.22) $4.65 ($3.57) $8.52Non-GAAP ($0.05) $0.04 $0.03 ($0.08) $0.18 ($0.42) $0.24
23Investor Presentation – May 27th, 2014
34%66%
Voice and VideoEnhanced Messaging
47%43%
10%
47%38%
15%
Americas EMEA Asia
78%
22%
SW ProductsMaintenance Services
80%
20%
79%
21%
Highly Diversified Revenue Profile
47%53%
48%52%
Direct Channel Partners
By ProductBy ComponentBy SourceBy Region
2013
1Q20
14
24Investor Presentation – May 27th, 2014
Revenue Growth – Next Generation Products
Q1 2014 vs Q1 2013 Revenue Growth
NEXT GENERATION + 95%LEGACY (42%)TOTAL + 28%
31%
69%
78%
22%
51%49%
69%
31%
Next Generation Legacy
2013
1Q20
13
1Q20
14
Investor Presentation – May 27th, 2014 25
Long-Term Financial Goals
Long Term
Gross Profit Margin % (Non-GAAP) 69-73%
Research & Development % (Non-GAAP) 17-19%
Sales & Marketing % (Non-GAAP) 21-23%
General & Admin % (Non-GAAP) 8-10%
Operating Income % (Non-GAAP) 21-25%
Investor Presentation – May 27th, 2014 26
Business Drivers for Mavenir‘s Growth
Pure-play vendor focused on 4G LTE infrastructure with industry spending forecast to reach > $38Bn in 2018
Leverage Virtualization Technology to Enable Cloud Computing and Service Deployment Flexibility
Expand into Emerging Markets
Selectively Pursue Strategic Relationships
Extend Technology Advantage Through Continued Innovation
Investor Presentation – May 27th, 2014 27
Thank You
Investor Presentation – May 27th, 2014 28
Long-Term Financial Goals (GAAP to Non-GAAP reconciliation)
GAAP non-GAAP
Gross Profit Margin % 68-72% 69-73%
Research & Development % 18-20% 17-19%
Sales & Marketing % 22-24% 21-23%
General & Admin % 8-10% 8-10%
Operating Income % 18-22% 21-25%
Non GAAP targets exclude stock based compensation and amortization