Winning Through Disruption in the Transport Market

Transcription

1 Winning Through Disruption in the Transport Market Investor Overview May 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 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 risk that Transmode s and Infinera s businesses will not be integrated successfully and/or the risk that synergies will not be realized or realized to the extent anticipated; 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 the supply, delivery or demand of Infinera s 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 Infinera s Annual Report on Form 10-K for the fiscal year ended on December 26, 2015 as filed with the SEC on February 23, 2016, 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 Forward-looking 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 Infinera TM/TG-Series Cloud Xpress Photonic Integrated Circuit (PIC) DTN-X XT Enabling An Infinite Pool of Intelligent Bandwidth DTN DTN-X XTC

4 Infinera A Global Business A leader in Intelligent Transport Network solutions Revenue growth for past 3 years of 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 * Based on average of data from Ovum, IHS, Dell Oro and ACG

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

6 Outpacing Other SP Networking Players 140% 120% Revenue Growth: Trailing 12-month revenue New Metro Portfolio introduced 128% 3x Revenue Growth 100% 80% 60% 40% DTN-X for 100G Long-Haul Cloud Xpress for 100G DCI INFN CIEN JNPR CSCO 20% ADV 0% -20% Jun '12 Dec '12 Jun '13 Dec '13 Jun '14 Dec '14 Jun '15 Dec '15 Mar Infinera Based on latest publicly-available financials

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 Photonic Integrated Circuits 500G Super-Channels Intelligent Transport Network Scalability, Convergence, Automation Purpose-Built Systems Intelligent Software Vertically Integrated Switching ASICs Cloud Xpress XTC-10/4 XTC-2/2E XT DTN DTN-X Infinera

10 Introducing: The Infinite Capacity Engine Industry s first 2.4 Tb/s transport technology The next step function in optical with Infinite Capacity Engine Advanced electronics (DSP/ASIC): Next-gen FlexCoherent processor Cutting-edge photonics: Fourth-gen Photonic Integrated Circuit (PIC) Infinera Infinite Capacity Engine DSP PIC Infinera

11 A Quantum Leap in Optical Transport to Terabits Bigger Multi-terabit super-channels, up to 12x bigger Multi-terabit wire-rate L1 encryption Smaller One of world s smallest multi-terabit subsystems Lower power: 82% vs. competition Infinera Infinite Capacity Engine Better Sliceable photonics, 53% lower TCO Advanced coherent, 40-60% improved capacity-reach performance Infinera

12 Infinera Market Expansion Strategy

13 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 Vision: Enable An Infinite Pool of Intelligent Bandwidth Infinera

14 Poised to Benefit from ICP-driven Bandwidth Demand Top 7 Cloud & Content Providers: > 67% of delivered Internet traffic Private backbones replacing Internet transit (i.e., massive server-to-server traffic growth) Cumulative % of North American Internet Traffic Trans-Atlantic Bandwidth Private Internet 0 Netflix Google Apple Facebook Microsoft Hulu Amazon Gnutella 1H11 2H Infinera Source: Sandvine Global Internet Traffic Reports Spring 2014 and 2H2014, TeleGeography

15 Data Center Interconnect Capturing emerging cloud infrastructures Infinera

16 Cloud Architecture Drives Network Demands Search Query 1500 Miles HTTP request 930x Network Traffic Cloud Data Center Network Infinera sources: google.com, facebook.com

17 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

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

19 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

20 Expanding into 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 50,000+ 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

21 Metro: Mobile Fronthaul Opportunity Mobile operators are increasingly evaluating and adopting Mobile Fronthaul Significant cost savings - Lower power and less equipment than traditional Backhaul More space efficient Fewer Central Offices, less equipment at cell site Fronthaul spending expected to exceed $1B by 2020 (~$350m today)* Infinera: Won 3 Fronthaul deals to date and in trials with multiple Tier 1s RRH RRH RRH Fiber all the way from antenna to Central Office Stacking of BBUs in Central Office RRH RRH RRH Cell site cabinet Cell site cabinet RRH RRH RRH Fronthaul Backhaul IP MPLS D-RoF Load balancing BBU Central Office CO CO CO CO Network Cell site cabinet Infinera *Source: Ovum Mobile Backhaul and Fronthaul Forecast Report: (September 2015

22 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

23 Long Haul Adding new tools to solve customer needs Infinera

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

25 End-to-End Solutions Infinera

26 The Infinera Unified End-to-End Portfolio Infinera $15B* (2019) Transport Market * Based on average of latest forecasts from Ovum, IHS, Dell Oro and ACG

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

28 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 $517 $5,858 Long Haul* Metro* Incremental DCI** $786 $6,583 $1,093 $7,192 $1,442 $1,843 $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 March 2016 ACG WW Optical Forecast CAGR 37.4% CAGR 7.5% CAGR 5.4%

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

30 Infinera Differentiated Financial Results

31 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 * All figures as of end of Q1-FY2016 Industry leading profitable revenue growth Solid Balance Sheet* $211M net cash 8 consecutive quarters of positive Cash Flow from Ops Last 4 quarters Cash Flow from Ops = $123 million Last 4 quarters Free Cash Flow/Revenue = 8.2% Q1 16 Performance $245 million revenue (31% y/y growth) 50.2% gross margin 12.3% operating margin Q2 16 Guidance $250 - $260 million revenue 47% - 49% gross margin 10% - 12% operating margin $ $0.19 EPS

32 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

33 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

34 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

35 Thank You Infinera