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Proprietary and ConfidentialProprietary and Confidential
The #1 Wireless Backhaul Specialist
Investor Presentation
November 2017
Proprietary and Confidential
This presentation contains statements concerning Ceragon's future prospects that are "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are based on the current beliefs, expectations and assumptions of Ceragon's
management. Examples of forward-looking statements include: projections of revenues, net income, gross margin, capital expenditures and liquidity,
competitive pressures, growth prospects, product development, financial resources, cost savings and other financial matters. You may identify these
and other forward-looking statements by the use of words such as "may", "plans", "anticipates", "believes", "estimates", "targets", "expects",
"intends", "potential" or the negative of such terms, or other comparable terminology. These forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially, including risks associated with a decline in revenues; the risk of a decrease in the
amount of business coming from a certain geographic region, from which a significant portion of Ceragon’s business is generated; the risk associated
with a change in Ceragon’s gross margin as a result of changes in the geographic mix of revenues; the risk associated with the loss of a single
customer or customer group, which represents a significant portion of Ceragon’s revenues; the risk associated with Ceragon’s failure to effectively
compete with other wireless equipment providers; the risk relating to the concentration of Ceragon's business in India, Latin America, Africa, and in
developing nations and the political, economic and regulatory risks from doing business in those regions, including potential currency restrictions;
and other risks and uncertainties detailed from time to time in Ceragon's Annual Report on Form 20-F and Ceragon's other filings with the Securities
and Exchange Commission that represent our views only as of the date they are made and should not be relied upon as representing our views as of
any subsequent date. We do not assume any obligation to update any forward-looking statements.
2
Safe Harbor
Proprietary and Confidential
• Ceragon is the leading provider of wireless backhaul solutions to mobile
operators and private networks globally
• +20 years of technology R&D driving significant barriers to entry; founded in
1996 and headquartered in Tel Aviv, Israel
• Leading market position is driven by its strong technology advantage:
• Completely vertically integrated solution from chipset to system drives unmatched
performance
• Ceragon’s solutions have been adopted by Tier 1 mobile operators and leading private
networks globally
• Strong execution has driven strong profitability and significant margin
expansion:
• 3rd consecutive year of increasing profitability
• Gross margins have increased from 25.2% to 32.3% (b)
3
Ceragon Snapshot
+140countries with systems deployed
+1,000,000 systems deployed
total customers+2,000
GLOBAL SCALE
$1.82-$4.23 52 week low/high(a)
(a) Source: Nasdaq as of 11/6/2017(b) Represents non-GAAP gross margin in FY2014 and YTD2017
~900 employees globally
Proprietary and Confidential
• Wireless backhaul serves as an alternative to fiber-optic networks
• Critical since it is a faster and more cost effective deployment vs. fiber based deployment
• Connects approximately 50% of all backhaul networks
• Proportion of fiber vs. wireless backhaul is expected to remain fairly constant through the evolution to 5G networks
4
Critical Technology to Core NetworksWireless Backhaul:
Proprietary and Confidential 5
Industry Leadership
2013 2014 2015 2016 2017 2018 2019 2020
Two separate Cores solutions
X2 Capacity, no Spectrum reuse gain, no Energy savings
*
* Based on company publications
Dual-core solutions
X4 Capacity, x2 Spectrum reuse gain, ½ Energy
Industry’s only
Octuple-core solutions
X16 Capacity, x4 Spectrum reuse gain, ⅛ Energy
Ceragon’s Multicore technology resolves
the key challenges associated with wireless backhaul deployments
Capacity | Spectrum | Energy | Real-estate
Industry’s only
Proprietary and Confidential
• Chip design• Software design• Hardware design• Systems
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Key to Innovation is Vertical Integration
FIBEAIR IP-20 PLATFORM
MULTICORE EVERYWHERE - IN ALL DEPLOYMENT SCENARIOS
FullVertical Integration
Proprietary and Confidential
Avoid Bundled/Price Focused Deals
7
Best-of-Breed Strategy: Sell Customer Value
Seek Best-of-Breed Focused Deals
• Focus on service providers seeking the best
wireless backhaul solution as main factor for
vendor selection
• Focus on those customers that invest resources
to assess vendors’ ability to address their
network-specific challenges
• Most private network customers are part of this
category
• Avoid end-to-end network bundling, with no
specific vendor selection process for wireless
backhaul
• De-emphasize customers that lack the skills/
resources for thorough evaluation of wireless
backhaul vendors
• Avoid situations where price is the primary or
only factor to determine vendor selection
Proprietary and Confidential
1720
1720
0
500
1000
1500
2000
2500
3000
3500
4000
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Amongst the top 3 vendors inthe Best of Breed segment of the Market
Source: Skylight research 2017, Ceragon estimates 2017.
Global Wireless Backhaul Market (2016) Best-of-Breed Market Segment (2016)
Bundled Deals $2.05B
Best of Breed$2.05B
USD [M]
Huawei22%
NEC18%
Ceragon16%
Ericsson12%
SIAE10%
Aviat8%
Nokia8%
Intracom, 2%Dragonwave, 2%
Proprietary and Confidential 9
Global Reach and Strong Customer Base
Africa,6%
Europe,13%North America,
14%
Asia Pacific,12%
• Presence in all regions
• Purchasing decisions made both centrally and regionally
Revenue by Geography — LTM
• Over 1 million radios installed in over 140 countries
• 33% of sales with global Tier 1 operators
India39%
Africa4%
Europe13%
North America12%
Asia Pacific12%
Latin America20%
Proprietary and Confidential
• Use competitive strengths to win a large share of most profitable opportunities in best of breed market
• Expand footprint in mobile and vertical markets worldwide
• As #1 specialist, gain share as industry shake-out continues
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Strategy
Public Safety MaritimeMobile UtilitiesWireless ISPs
Proprietary and Confidential
10%
15%
20%
25%
30%
35%
40%
0
10
20
30
40
50
60
70
80
90
100
110
Q1:1
4
Q2:1
4
Q3:1
4
Q4:1
4
Q1:1
5
Q2:1
5
Q3:1
5
Q4:1
5
Q1:1
6
Q2:1
6
Q3:1
6
Q4:1
6
Q1:1
7
Q2:1
7
Q3:1
7
Controllable elements are well-controlled
• Deals accepted based on contribution to gross profit dollars
• Tendency toward trade-off between revenue and gross
margin
• Stringent operating expense control sustained for 2+ years
Quarter-to-quarter fluctuationscaused by factors difficult to control
• Changes in geographic mix of revenue – based on significant
variations in GM by region
• Timing of recognizing revenue for various elements of
project – based on large customers dictating delivery timing
of each element
• Seasonality (mainly Q1)
Characteristics of Operating Model
Gross profit Revenue Gross margin Opex
.
Note: Financial metrics are presented on a non-GAAP basis.
Quarterly Operating Model
11
Proprietary and Confidential
Achievements
• Trend toward improving gross margin despite
less favorable geographic revenue mix
• Stringent opex control without jeopardizing
further technology innovation
• Stable business model with sustainable level
of profitability
Track Record of Execution & Improving Profitability
.
Note: Financial metrics are presented on a non-GAAP basis.
(a)-$30
-$25
-$20
-$15
-$10
-$5
$0
$5
$10
$15
$0
$50
$100
$150
$200
$250
$300
$350
$400
2014 2015 2016 YTD 2017 Assumed RunRate
Revenue Non-GAAP Net Income
(371(349)
(294)
(245)
(300-320)
(-25)
(7)
(11) (11) (12-15)
(Net Income)(Revenue) (in millions)
12
Proprietary and Confidential
• Majority of bank debt is related to temporary
issue to be resolved during Q4
• Expect positive cash flow in Q4
• Substantial unused borrowing capacity under
revolving credit facility
13
Strong Balance Sheet
(U.S. dollars in millions)(Unaudited)
a/o Sept. 30, 2017
Cash & cash equivalents 36.5
Bank debt 23.8
Inventory 55.9
AR 127.1
DSOs 141
Proprietary and Confidential
THE FUTURE IS EASIERWITH MULTICORE EVERYWHERE
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Proprietary and Confidential
CAPACITYX4
SPECTRUM REUSEX2
½ENERGY
CAPACITYX16
SPECTRUM REUSEX4
Dual-core Multicore technology
⅛ ENERGY
8-core Multicore technology
The Future is Easier with Multicore Everywhere
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Today 2020s
Proprietary and Confidential
The Future is Easier with Multicore Everywhere
2017
E-BAND10-20Gbps
2019
W-BANDD-BAND
20-40Gbps
2020s
E-BANDV-BAND
2.5 Gbps
16
Proprietary and Confidential 17
Continuing to refine focus on both offensive and defensive strategiesFormulating a Strategy to Accelerate Long-term Growth
Newsmall cell backhaul approach
Scale/diversificationin core business
5G fixed wireless access
Technology Fit/Business Risk Analysis
• Relevance to core competencies
• Potential competitive advantage
• Market size and maturity
• Market growth potential
Value Creation/Financial Risk Analysis
• Time to revenue
• Magnitude of investment required
• Inherent profitability (gross margin)
• Impact on cash flow
Seeking best risk-adjusted opportunity to generate profitable growth
Proprietary and Confidential 18
Summary
Leader in premium segment of the market
Time-to-market advantage with technologically-advanced IP-20 platform
Competitive strengths provide ability to be selective, obtain major share of highest-value opportunities
Financial stability enables continuous innovation and design-to-cost investment
Targeting third consecutive year of profit improvement in 2017
Positioned to benefit from industry shake-out and network evolution to 5G
Proprietary and Confidential
THE FUTURE IS CLOSER THAN WE THINK
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