Sierra Wireless Corporate Overview - February 2014

1 © Sierra Wireless 2014

Sierra Wireless Corporate Overview February 2014


Safe harbor statement Certain statements and information in this presentation are not based on historical facts and constitute forward-looking statements within the meaning of applicable securities laws (“forward-looking statements”) including statements and information relating to our financial guidance summary for Q1 2014, our guidance drivers for 2014 and our business outlook for 2014 and beyond. Forward-looking statements are provided to help you understand our views of our short and longer term prospects. We caution you that forward-looking statements may not be appropriate for other purposes. We will not update or revise our forward-looking statements unless we are required to do so by securities laws.

Forward-looking statements: • typically include words and phrases about the future, such as: “outlook”, “may”, “estimates”, “intends”, “believes”, “plans”, “anticipates” and “expects”; • are not promises or guarantees of future performance. They represent our current views and may change significantly; • are based on a number of material assumptions, including those listed below, which could prove to be significantly incorrect:

• Our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial acceptance; • Our ability to continue to sell our products and services in the expected quantities at the expected prices and expected times; • Expected cost of goods sold; • Expected component supply constraints; • Our ability to “win” new business; • Expected deployment of next generation networks by wireless network operators; • Our operations are not adversely disrupted by component shortages or other development, operating or regulatory risks; and • Expected tax rates and foreign exchange rates.

• are subject to substantial known and unknown material risks and uncertainties. Many factors could cause our actual results, achievements and developments in our business to differ significantly from those expressed or implied by our forward-looking statements, including, without limitation, the following factors, which are discussed in greater detail. These risk factors and others are discussed in our Annual Information Form and Management’s Discussion and Analysis of Financial Condition and Results of Operations, which may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov and in our other regulatory filings with the Securities and Exchange Commission in the United States and the Provincial Securities Commissions in Canada. • Actual sales volumes or prices for our products and services may be lower than we expect for any reason including, without limitation, the continuing uncertain

economic conditions, price and product competition, different product mix, the loss of any of our significant customers, competition from new or established wireless communication companies;

• The cost of products sold may be higher than planned or necessary component supplies may not be available, are delayed or are not available on commercially reasonable terms;

• We may be unable to enforce our intellectual property rights or may be subject to litigation that has an adverse outcome; • The development and timing of the introduction of our new products may be later than we expect or may be indefinitely delayed; • Transition periods associated with the migration to new technologies may be longer than we expect; and • We may experience higher than anticipated costs; disruption of, and demands on, our ongoing business; diversion of management’s time and attention; adverse

effects on existing business relationships with suppliers and customers and employee issues in connection with the divestiture of the AirCard assets and operations.

Investors are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future results. USE OF NON-GAAP FINANCIAL MEASURES • This presentation contains references to certain non-GAAP financial measures and should be viewed in conjunction with our press release and supplementary

information on our website (www.sierrawireless.com), which present a complete reconciliation of GAAP and Non-GAAP results.


The global leader in M2M devices and cloud services Industry’s most comprehensive offering Proven technology innovators and trusted partner

Sierra Wireless Corporate Profile

R&D R&D

R&D

Head office: Vancouver, BC

Founded in 1993

2013 revenue: $442 million

Publicly listed: NASDAQ (SWIR) TSX (SW)

Approx. 850 employees worldwide

Customers in 130+ countries


By providing intelligent wireless solutions

We are enabling a connected world


2020

1.4B connected

devices

Embedded modules market

$1.0B

Embedded modules market

$1.8B

12B+

Billions of connected devices

Long term growth opportunity

connected devices

2016 2012

Source: ABI Research, Machina


#1 in machine-to-machine market globally

Blue-chip customers and partners

Sierra Wireless is the market leader

Source: ABI Research

34%

23%

19%

24%

Cellular M2M Embedded Module Market Share in 2012(1)

Sierra Wireless


Innovative device-to-cloud offering

Leading-edge intelligent devices

Secure cloud services platform

Faster time to market + lower costs + =


Wireless modules, software and services for OEMs

AirPrime® Embedded Wireless Modules

• 4G LTE • 3G HSPA/HSPA+ • 3G EVDO • 2G 1xRTT • 2G GPRS/EDGE • GPS

Embedded SIM

Management Services

Embedded Applications

Embedded Modules Software Solutions and Services

Development Tools


Wireless terminals for M2M and mobile applications

AirLink® Intelligent Gateways

• Ruggedized and commercial grade • 2G, 3G and 4G platforms • Rapid configuration and programmability

Security

Public Safety

Utilities & Infrastructure

Sales & Payment Gateways and Routers

Software Solutions and Services

Business Continuity

Device Management and Diagnostics

Embedded Intelligence and Security

Fleet Management & Field Service

Application Framework


AirVantage® M2M Cloud


A customer success: Nespresso

M2M Cloud Programmable Modem

Custom Web Application

Web APIs • Asset Data Management • Device Management • Subscription Management

Hardware Integration

ERP

Network Operator

Accelerating M2M Application Development & Deployment


Vancouver, Canada Corporate Headquarters

San Diego

Melbourne

Tokyo

London

Munich

= R&D, Marketing, Sales, Operations

= Manufacturing

= Sales and Support

Beijing

Shenzhen & Hong Kong

Flextronics & USI (Shanghai)

Toulouse Paris

Johannesburg

Bangalore

Taipei

Jabil (Brazil)

Sierra Wireless operates worldwide serving global network operators, OEMs, enterprises

Global footprint, global R&D

Seoul


Hundreds of platforms certified and launched, worldwide Deep knowledge about individual carrier’s unique requirements Services offering and relationships to get OEM products certified AirVantage M2M Cloud connected to operator infrastructure

Partnered with network operators globally

http://www.tim.it/

http://www.hkcsl.com/en/index/index.jsp

http://www.google.com/imgres?imgurl=http://www.telephonestogo.ca/images/rogers_logo.gif&imgrefurl=http://www.telephonestogo.ca/&h=304&w=600&sz=24&tbnid=cJ0X6plUlUBqYM::&tbnh=68&tbnw=135&prev=/images?q=rogers+logo&usg=__9oBhqOFjbQF4iOLTxAkU1mn-udY=&ei=kVoLSs6nO57qsgO3n8DmAg&sa=X&oi=image_result&resnum=1&ct=image

http://www.google.com/imgres?imgurl=http://www.mobilewhack.com/swisscom.jpg&imgrefurl=http://www.mobilewhack.com/cgi-bin/MTP-4.1-en/mt-search.cgi?tag=black&IncludeBlogs=2&h=288&w=384&sz=14&tbnid=bn1EPNmuMd3DMM::&tbnh=92&tbnw=123&prev=/images?q=swisscom+logo&hl=en&usg=__TbZKirmv8G1Kzwj4eehFdWWy7kc=&ei=QFwLSoeSMpiwtAPoz7SSAw&sa=X&oi=image_result&resnum=1&ct=image


Sierra Wireless: The global leader in M2M devices and cloud services

Trusted M2M partner of OEMs, enterprises, and network operators around the world

Leading innovation, comprehensive offering

#1 market share in M2M embedded modules

Over 80 million M2M devices shipped, blue-chip customer base

$442M revenue, 850 employees, R&D on three continents

Financial strength: $180M cash, no debt


FY & Q4 2013 Financial Results


GAAP Actual

Non-GAAP(1)

Actual

Non-GAAP(1)

Excl. AnyDATA

Non-GAAP(1)

Guidance GAAP Actual

Non-GAAP(1)

Actual

Revenue $118.6 $118.6 $117.0 $112 - 116 $441.9 $441.9

Gross Margin (%) 32.4% 32.5% 32.6% 33.0% 33.1%

Operating Expenses $42.0 $36.0 $35.5 $163.3 $141.0

Adjusted EBITDA(2) N/A $6.2 $6.2 N/A $18.7

Earnings (Loss) from operations $(3.5) $2.6 $2.6 $2.4 – 3.3 $(17.7) $5.0

Net Earnings (Loss) $(1.9) $3.1 $3.1 $2.2 – 3.0 $(15.6) $6.9

Earnings (Loss) per Share $(0.06) $0.10 $0.10 $0.07 – 0.10 $(0.50) $0.23

Q4 & FY 2013 Financial Metrics for Continuing Operations ($USD millions, except EPS and Margin %)

(1) Non-GAAP results exclude the impact of: stock-based compensation expense, acquisition and disposition costs, acquisition amortization, impairment, integration costs, restructuring costs, foreign exchange gains or losses on foreign currency contracts as well as on translation of balance sheet accounts, and certain tax adjustments. (2) Adjusted EBITDA as defined equates to earnings (loss) from operations plus stock-based compensation expense, acquisition costs, restructuring costs, integration costs, impairment and amortization. .

Summary of Key Financial Metrics

Q4 2013 FY 2013


$109.4 $112.3 $118.6

$14.5 $16.4 $16.8

$94.9 $95.9 $101.8

Revenue ($USD millions)

Enterprise Solutions OEM Solutions

Q4 Highlights

$7.0

$5.9 $6.2

Adjusted EBITDA** ($USD millions)

Q4 ‘12 Q3 ‘13 Q4 ‘13

$3.7

$2.6 $2.4

Earnings from Operations ($USD millions)

Q4 ‘12 Q3 ‘13 Q4 ‘13 Q4 ‘12 Q3 ‘13 Q4 ‘13

Non-GAAP* Operating Results for Continuing Operations

* Non-GAAP results exclude the impact of: stock-based compensation expense, acquisition and disposition costs, acquisition amortization, impairment, integration costs, restructuring costs, foreign exchange gains or losses on foreign currency contracts as well as on translation of balance sheet accounts, and certain tax adjustments. ** Adjusted EBITDA as defined equates to earnings (loss) from operations plus stock-based compensation expense, acquisition costs, restructuring costs, integration costs, impairment and amortization.


Annual Highlights

FY 2012 FY 2013

$397.3

$441.9

Revenue ($USD millions)

$50.8

$346.5

$382.0

$59.9

$12.6

$18.7

Adjusted EBITDA** ($USD millions)

FY 2012 FY 2013

$0.9

$5.0

Earnings from Operations ($USD millions)

FY 2012 FY 2013 Enterprise Solutions OEM Solutions

Non-GAAP* Operating Results for Continuing Operations

* Non-GAAP results exclude the impact of: stock-based compensation expense, acquisition and disposition costs, acquisition amortization, impairment, integration costs, restructuring costs, foreign exchange gains or losses on foreign currency contracts as well as on translation of balance sheet accounts, and certain tax adjustments. ** Adjusted EBITDA as defined equates to earnings (loss) from operations plus stock-based compensation expense, acquisition costs, restructuring costs, integration costs, impairment and amortization.


Cash, Cash Equivalents & Short-Term Investments ($USD millions)

Q4 '12 Q3 '13 Q4 '13

$188.4 $179.9

Strong Cash Position and Debt Free

• Cash used in Q4: $8.5 million

– Cash used in operations: $3.7 million

– Capital expenditures: $2.2 million

– Cash generated by other activities: $2.6 million

– Cash used for purchase of AnyDATA: $5.2 million

$63.6


Q1 2014 Guidance

Revenue $117.0 to $121.0 million

Earnings from operations $0.5 to $1.5 million

Net earnings $0.4 to $1.2 million

Earnings per share $0.01 to $0.04 per share

Non-GAAP* Financial Guidance for Continuing Operations ($USD millions, except EPS)

* Non-GAAP results exclude the impact of: stock-based compensation expense, acquisition and disposition costs, acquisition amortization, impairment, integration costs, restructuring costs, foreign exchange gains or losses on foreign currency contracts as well as translation of balance sheet accounts, and certain tax adjustments

Financial Guidance Summary

Financial guidance excludes impact from the contemplated acquisition of In Motion Technology Inc.


M2M Segment Information


Automotive

Typical applications Sample Customers Market Dynamics

Market demand drivers: Regulation

Increasing post-crash survival rates Regulation & Consumer Pull

Tracking stolen vehicles Consumer Demand

In vehicle comms & entertainment Tier 1 OEM

Market moving to higher bandwidth requirements for internet, entertainment, etc…

Crash Safety (eg. eCall)

Telematics & Navigation

In Vehicle Internet

Market Size (unit shipments)

3M

18M

Source: ABI

CAGR 58%

2011 2015


Transportation

and pay-as-you-drive insurance, ITS (Intelligent Transport Systems), etc…

Stolen Vehicle Tracking

Fleet management

Market demand through efficiency Fleet & collection efficiency

Less fuel/CO2, shorter routes, faster deliveries, road toll revenue

Personal & business road assets Stolen vehicle recovery, insurance premiums tuned, on-road efficiency

eToll & eTax Collect


10M

28M

Source: ABI

CAGR 31%

2011 2015



Energy

Renewable Energy EV Charging Station

Electricity – Gas – Water

Smart Metering

Transmission & Distribution

Demand drivers: regulation, grid efficiency, social conscience Energy Efficiency - Green Energy

CO2 emissions targets, smart grid: load management/optimization, grid contribution by consumer

Consumer monitored energy Web based home monitoring


7M

15M

Source: ABI

EDMI and Sierra Wireless awarded for the best innovation for Utilities

CAGR 22%

2011 2015



Industrial & Infrastructure

Digital Signage

Industrial Automation

Infrastructure / Building Monitoring

Demand drivers: regulation, grid efficiency, social conscience Energy Efficiency - Green Energy

CO2 emissions targets, smart grid: load management/optimization, grid contribution by consumer

Consumer monitored energy Web based home monitoring


5M

12M

Source: ABI

CAGR 21%

2011 2015



Security

Market demand drivers: Consumer pull

Protecting homes and loved ones Business pull

Protecting premises and assets Anti-terrorism

Protecting citizens

and criminal trackers, high value asset tracking and much more…

Personal Security

Video Surveillance

Premise Monitoring Market Size (unit shipments)

4M

11M

Source: ABI

CAGR 32%

2011 2015



Networking

Business Continuity

SMB & Residential Market demand through Broadband proliferation

3G and LTE technology provide rich end user experience or monitoring for large media applications

Internet access 24hr/24hr Area and service provider provisioning access without adequate wireline infrastructure or landline back-up


5M

9M

Source: ABI

CAGR 12%

2011 2015



Sales & Payment

Market driven by “cashless” society Convenience & security

Pay for anything, anytime, anywhere, securely.

Government regulation Electronic VAT collection to avoid fraud.

Point of Sale

ATM & Cash Registers

Vending


2.5M

4.1M

Source: ABI

CAGR 13%

2011 2015



Field Service

Market driven by efficiency Mission critical

Prevent downtime, diagnose and fix issues. Support incident and disaster management.

Labour & Time saving Customer care, efficiency ,productivity, location to reduce cost and enhance productivity.

Public Safety

Utility

Consumer


1.6M

2.7M

Source: ABI

CAGR 15%

2011 2015



Healthcare

Medical

Well Being

Sport & Fitness

Well being monitoring sub-segments: Diabetes, Cardiac, Blood Pressure, Sleep, Home medical hub,...

Market driven by Cost models and payment structure To support the industry Wireless and Telemedicine services

Curbing health expenditure and enabling new ways to manage health, disease and life-style


0.5M

3.8M

Source: ABI

CAGR 66%

2011 2015


Investor Relations

Sierra Wireless Corporate Overview - February 2014