Stock code: Industrial SD-WAN: Present & Future August 2017

Transcription

1 Stock code: 1523 Industrial SD-WAN: Present & Future August 2017

2 Disclaimer The information contained in this presentation is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning Plover Bay Technologies Limited (the Company ). The Company makes no representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein. In addition, the information contains projections and forward-looking statements that may reflect the Company s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and which may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the Company s assumptions are correct. It is not the intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the Company's financial or trading position or prospects. This presentation does not constitute an offer or invitation to purchase or subscribe for any securities or financial instruments or to provide any investment service or investment advice, and no part of it shall form the basis of or be relied upon in connection with any contract, commitment or investment decision in relation thereto. 1

3 Key Facts Warranty svc Revenue (1H17) US$17.8m, +48% YoY Software license 18% 4% 23% Wired SD- WAN routers Key figures Year Founded 2006 Product mix Market share / ranking (2015) 6% / 5th 55% Wireless SD-WAN routers Other Number of patents / filed 33 / 150+ Employees in R&D ~80 Asia Pacific 7% 22% Location mix 49% North America Net profit* growth (1H17) 37% EMEA 22% Dividend Payout (1H17) 80% * Excludes listing fees and share option expenses 2

4 Investment Highlights Focused on a wide range of industrial applications where customers are sticky and barrier of entry is high to new entrants Proprietary software + hardware + cloud SpeedFusion can combine multiple connections (fixed, mobile, satellite and more) regardless of carrier, achieving high-bandwidth and unbreakable connections Strong technology and distribution channel accumulated through 11 years of operation Efficiency R&D focused, flat organization and 100% outsourced production 3

5 What SpeedFusion Can Do 4

6 Introducing Unbreakable Connectivity 5

7 SD-WAN Market Landscape Software Defined WAN Industrial Networks (our focus) Long tail, small verticals Little competition Potentially larger market than Enterprise Use cases unique to vertical Deployed in rugged environments Enterprise Networks Largest market size Highly competitive Homogenous network infrastructure Similar use cases across different users Deployed in largely similar environments Traditional players: Sierra Wireless CalAmp Digi International SD-WAN players: Plover Bay Icomera Traditional players: Cisco HP Aruba Huawei Brocade Ruckus Ubiquiti Aerohive Key SD-WAN players: Plover Bay Cisco Velocloud Viptela CradlePoint Aryaka Networks Others 6

8 Future of SD-WAN SD-WAN reaching an inflection point Technology Adoption We are here Wi-Fi (blue line) adoption close to 100% since its introduction in late-1990s. We expect SD-WAN to follow a similar adoption path Innovators Early adopters Early majority Late majority Laggards Time Industry growth accelerates Industry growth slows down What the market says: 50% of WAN edge infrastructure to be based on SD-WAN by (Nov 2016) SD-WAN market estimated to grow from US$740M in 2016 to USD9,066M by 2021, at an expected CAGR of 65% - (April 2017) SD-WAN infrastructure and services revenue will see a 70% CAGR, reaching USD8bn by (Jul 2017) 7

9 Active M&A in Startups Cisco s aggressive investment in SD-WAN startup confirms SD-WAN growth trend: Cisco acquired Viptela for US$610m (May-2017) VeloCloud raises US$35m in series D (Mar-2017), investors include Cisco Cisco acquired Meraki for an estimated US$1.2B (Dec-2012) Other Private Equity Funding: VeloCloud raises US$35m in series D (Mar-2017) Cradlepoint secures US$89m in series C (Mar-2017) Aryaka series D funding, US$45m (Jan-2017) Viptela series C funding, US$75m (May-2016) Riverbed acquired Ocedo with undisclosed amount (Jan-2016) CloudGenix series B funding, US$25m (Jan-2015) Potential IPO: Aryaka plans to IPO in 2018 with US$1bn valuation. Revenue in 2015/2016E/2017E are $25/$50/$102. Aryaka expects to turn profitable in mid

10 Business Roadmap Channel Partners: Products & Technology VAR / VADs Telco / Service Providers Vertical Market Technology Partners Products: MAX Balance APX SFN Engine MBX EBX IPX SPX Warranty & Cloud services: MAX IoT Cloud Licensing model & Onwards Market Segments Public safety Transport Maritime Unmanned systems Enterprises Broadcasting Construction Events Retail Branches IoT New verticals brought in by Channel Partners 9

11 SD-WAN Use Cases 10

12 Public Safety Government Enforcement Agencies SpeedFusion enables real time HD video surveillance and communications from mobile branches, such as police vehicles Rapid deployable with high bandwidth ideal for security set-up for public events Seamless transition between government and public cellular networks Rugged design: Electrostatic discharge, shock and vibration resistant 11

13 Transportation Passenger buses and trains Reliable free guest Wi-Fi on long-haul rides enhances customer satisfaction InControl 2 provides remote fleet tracking and management InControl 2 captive portal opens up new revenue stream such as targeted advertising Employee shuttle services for Silicon Valley giants Multiple LTE connections provides high-bandwidth and unbreakable connectivity Mobile office experience on the move through VPN with headquarter Greatly enhances productivity as staff can work on hour-long commutes 12

14 Maritime Luxury yachts Multiple-LTE connection along shorelines allows connectivity for productivity and entertainment on the yacht Vastly cheaper and much lower latency compared to satellite connection Pepwave is becoming a standard option among leading luxury yacht builders Passenger cruises and ships Reliable free guest Wi-Fi greatly enhances customer satisfaction InControl 2 captive portal opens up new revenue stream such as targeted advertising 13

15 Maritime cont d Large ocean vessels Simultaneously connect to VSAT and cellular networks for always on connectivity Cellular near shore provides significantly lower cost compared to VSAT Waterproof enclosure: IP55 and IP67 14

16 Broadcasting & Events Live HD Broadcasting Live streaming of HD quality through multiple LTE connections Cheaper and faster than satellite WAN Smoothing reduces packet loss to ensure smooth streaming Working with JVC to develop next generation smart camcorders Events Deployment in hours anywhere, including outdoor events with no fixed line access 15

17 Retail Retail branches Easy to setup and deploy, up and running within hours Secure and stable connection for POS terminals and store backend systems Predictable network cost with LTE plans, versus varying costs for fixed lines depending on availability of network infrastructure Not tied down by fixed line contracts when stores relocate InControl 2 allows central network management of all branches 16

18 Retail cont d Pop-up stores and events Store location no longer restricted by availability of WAN/LAN ports Secure and stable LTE connections for POS terminals in temporary pop-up stores Shopping malls Free Wi-Fi enhances shoppers experience InControl 2 has the ability to provide customer analytics through free Wi-Fi 17

19 Construction Construction sites Worksites require stable network for IP camera, employee attendance system and VPN link with head office SpeedFusion bonds multiple LTE connections to create unbreakable and highbandwidth network for site engineers Saves time and money: Deployment within hours, compared to months and the substantial connection fees needed to lay down a fixed line 18

20 Unmanned Systems Automatic Teller Machines Multiple cellular connections ensures 100% ATM uptime in remote locations Digital Signage Flexible sign locations with LTE connectivity Remote signage content delivery Location tracking and troubleshooting from a central location Autonomous Driving Plover Bay products unbreakable connectivity well-positioned for vehicle-to-vehicle communications, which will play a crucial role in autonomous driving 19

21 Enterprise Offices and branch networks SD-WAN opens up alternatives to expensive MPLS connections, often over 50% savings and ROI in months Seamless failover provides mission-critical reliability for crucial productivity apps Load-balancing prioritizes bandwidth to important applications first SpeedFusion VPN provides high bandwidth and reliable connections to branch networks 20

22 Appendix: Company Financials 21

23 Appendix: Income Statement Income statement Year ended Dec-31 (US$'000) H16 2H16 1H17 Revenue 17,946 21,860 28,358 12,033 16,325 17,788 Cost of sales -6,910-9,166-10,413-4,110-6,303-7,286 Gross profit 11,036 12,693 17,945 7,923 10,022 10,502 Other income Selling and distribution exp. -1,035-1,003-1, , Administrative expenses -2,049-2,710-3,412-1,344-2,068-1,974 R&D expenses -3,969-3,907-4,990-2,015-2,975-3,268 Operating profit 4,289 5,142 7,950 3,981 3,969 4,992 Listing expenses 0-1,001-1, Finance cost Profit before taxation 4,285 4,140 6,675 3,430 3,245 4,981 Income tax expenses , Profit for the period 3,743 3,357 5,240 2,801 2,439 4,135 Non-GAAP adjustments: + Listing expenses 0 1,001 1, Stock option expenses Non-GAAP Earnings 3,743 4,358 6,900 3,338 3,154 4,573 Segment breakdown Year ended Dec-31 (US$'000) H16 2H16 1H17 Segment revenue Wired SD-WAN routers 7,493 6,987 7,687 3,273 4,414 4,067 Wireless SD-WAN routers 7,635 10,685 14,291 5,685 8,606 9,832 Warranty and support services 2,580 3,905 5,189 2,536 2,653 3,114 Software licenses , Segment gross margin Wired SD-WAN routers 69.8% 67.1% 67.5% 66.1% 68.6% 66.0% Wireless SD-WAN routers 44.7% 40.7% 49.4% 53.0% 47.0% 44.1% Warranty and support services 83.7% 86.4% 86.9% 87.0% 86.8% 87.0% Software licenses 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Geographic revenue breakdown North America 41.9% 42.0% 48.8% 42.6% 49.6% 49.3% Asia Pacific 25.3% 21.4% 20.3% 23.7% 19.5% 21.9% EMEA 27.2% 33.6% 24.5% 31.1% 26.2% 21.6% Other 5.6% 3.0% 6.4% 2.7% 4.6% 7.2% Per share data (US cents): Basic EPS Non-GAAP EPS Dividend per share Basic weighted avg. shares ,000 22

24 Appendix: Balance Sheet & Cash Flow Balance Sheet Year ended Dec-31 (US$'000) H17 Property, plant & equipment ,941 Deposits for acquiring property Intangible assets Total non-current assets ,183 2,372 Inventories 3,651 4,138 6,678 8,970 Trade and other receivables 3,328 3,857 5,315 6,331 Pledged bank deposit Bank balances and cash 3,696 6,062 19,193 17,296 Others Total current assets 11,491 14,516 31,315 32,597 Trade and other payables 1,983 1,045 1,884 1,100 Deferred revenue 1,768 2,852 3,551 3,921 Tax liabilities ,589 1,595 Bank borrowings 60 1, Others 154 1, Total current liabilities 4,464 7,460 7,342 7,306 Deferred tax liabilities Deferred revenue ,008 Bank borrowings Total non-current liabilities 1, ,467 Statement of Cash Flows Year ended Dec-31 (US$'000) Cash generated from operations 3,451 3,797 4,766 Income tax paid Net cash from operating activities 3,093 3,019 4,420 Additions to intangible assets Purchase of property, plant and equipment Deposits paid for acquisition of property Change in pledged bank deposit Interest received Others Net cash used in investing activities Dividends paid -3,701-2,800-3,228 Interest paid New bank loan raised 0 1, Repayment of bank borrowings 0 0-1,238 Proceeds from issue of new shares ,701 Others 66 1, Net cash from financing activities -3, ,654 Net increase in cash & cash equivalents ,306 13,137 Cash at the beginning of the year 4,133 3,696 6,062 Effect of foreign exchange rate changes Cash at the end of the year 3,696 6,062 19,193 Share capital 0 0 1,288 1,288 Reserves 6,596 7,113 22,958 24,908 Equity to owners of the Company 6,596 7,113 24,246 26,196 23

25 Investor Relations Contact Phone: Q&A