Products

Ikanos Communications
•
(NASDAQ: IKAN)
•
Dec 3rd, 2013
Ikanos Communications, Inc. – All Rights Reserved
Safe Harbor Statement
This presentation contains, in addition to historical information, forward-looking statements. Such forward-looking
statements are based on management’s current expectations, estimates and projections about our industry and
business, including but not limited to the financial guidance, long term financial goals, expected growth of and
opportunities in the broadband market, the company’s position in the market, 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 or products, any statements of expectation or belief regarding the performance of our technology or
products, customer demand and future technology developments, any statements of assumptions underlying any of
the foregoing, management's beliefs, and certain assumptions, all of which are subject to change. Forward-looking
statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes,"
"seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions,
and variations or negatives of these words. These forward-looking statements are not guarantees of future results
and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and
adversely from those expressed in any forward-looking statement. For a further discussion of the risks and
uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see
the Company’s periodic filings on Forms 10-K and 10-Q, as well as other reports the Company files from time-to-time
with the Securities and Exchange Commission (“SEC”). For the most current detailed risk factors, please review our
Registration Statement on Form S-1 filed with the SEC on August 23, 2013, and subsequently amended. The
Company cannot assure that the events and circumstances reflected in any forward-looking statements will be
achieved or occur, nor does the Company undertake any obligation to update any forward-looking or other
statements for any reason after the date of this presentation.
© Ikanos Communications, Inc. All rights reserved. Ikanos, NodeScale, Velocity, Fusiv, inSIGHT, and Neos are
among the trademarks owned by Ikanos Communications, Inc. Any other trademarks or trade names mentioned are
the property of the respective owners.
2
Ikanos Communications, Inc. – All Rights Reserved
Investment Highlights
Addressing
Disruptive
Market
Opportunity
Using copper infrastructure to deliver fiber-like data rates
Significant managed gateway growth opportunity
Highly
Differentiated
Solution
Highest rate-reach performance with Ikanos NodeScale™
vectoring and Fusiv® gateway architecture
inSIGHT, the only in-home DSL diagnostics software
Product
Momentum
New products to drive growth
New product revenue > 50% and growing
New product design win momentum – 19 since launch
Technology
Leadership
World leader in VDSL port shipments
Over 400 issued and pending patents
Business
Management
3
Right sized business - margins, Opex, inventory
Completed $26.4M Capital Fund Raising
Compelling new product roadmap to drive growth
Ikanos Communications, Inc. – All Rights Reserved
Corporate Overview
• Company
Founded in 1999, IPO in 2005, NASDAQ: IKAN
265 employees: HQ – Silicon Valley; R&D – NJ, Bangalore
• Market
Serving the large and growing broadband access and home gateway markets
($1.5B TAM) by 2017
Nearly 75% of the global broadband market is currently based on xDSL
• Products
14 year history, with over 400M xDSL ports shipped worldwide
Large foot-print with gateway products reaching over 100M homes
$200M R&D spend over last 4 years, resulting in 10 new
access, gateway & software products
4
Ikanos Communications, Inc. – All Rights Reserved
Telco Demand for Bandwidth Erupting
smart + multiscreen + ultra HD TV
streaming video/audio
video conferencing
iptv
online
gaming
social & sharing
music
TR-069
cloud services
WWW
e-mail
web
voice
managed services & smart home
ADSL
DOCSIS 2.0
5
VDSL
DOCSIS 3.0
PON
Vectoring
Bonding
DOCSIS 3.1
GPON
Ikanos Communications, Inc. – All Rights Reserved
G.fast
xPON
Powering the Hybrid-Fiber-Copper (HFC) Ecosystem
Music
and
Media
Library
Online
Games
Services
Storage
& Backup
Software
(inSIGHT)
Video
Streams
Photos
and
Docs
HFC
Copper
Fiber
FTTx
Copper
Access
(NodeScale)
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Ikanos Communications, Inc. – All Rights Reserved
Gateway
(Fusiv)
Multi-Mode Gateway Supporting Any Access
LTE Tower
HFC
Copper
Fiber
FTTx
Ethernet
Copper
Multi-Mode Gateway
Ethernet
Switch in MDU
7
for HFC, Fiber, LTE, and Ethernet
Ikanos Communications, Inc. – All Rights Reserved
Large and Growing Market Opportunity
$1.5B market opportunity
FTTx is the fastest growing subscriber base
1600
1400
Source: Point Topic, Q1 2013
Millions ($)
1200
1000
800
600
400
200
0
2013
2014
HFC Access
2015
HFC Gateway
2016
2017
Multi-Mode Gateway
Source: Linley Group, Sept 2013, Ikanos’ internal
analysis based on Carrier and OEM engagements
Source: Point Topic / Broadband Forum
8
Ikanos addressing 75% of
global broadband network
Ikanos Communications, Inc. – All Rights Reserved
Positioned for Growth with
New Products and Customers
Access
Products
(3 New Products)
Gateway
Gateway
Products
Products
(6 New Products)
Software Products &
Target Customers
9
Ikanos Communications, Inc. – All Rights Reserved
Momentum
• Winner of “Best Broadband Enabler” Award for
Velocity™-3 with NodeScale™ vectoring
• Demonstrated 300Mbps on Velocity™-Uni, new singleport FTTx chip
• Announced new 1Gbps G.fast platform with Neos™
architecture
• Announced 2M-unit gateway vectoring deployment in
Europe
10
Ikanos Communications, Inc. – All Rights Reserved
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Access
Solutions
Ikanos Communications, Inc. – All Rights Reserved
Access Market Drivers
As fiber gets deeper into the
network, demand for hybrid-fibercopper (HFC) increases
1600
1400
Vectoring has accelerated transition
from CO (ADSL) to FTTN (VDSL2)
1200
Millions ($)
Carriers looking for scalable
platforms that can cover a range of
distances and port counts
1000
Multi-Mode Gateway
800
HFC Gateway
600
HFC Access
400
200
0
2013
2014
OpEx reduction a huge priority for
carriers
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Ikanos Communications, Inc. – All Rights Reserved
2015
2016
2017
Source: Linley Group, Sept 2013, Ikanos’ internal
analysis based on Carrier and OEM engagements
Access Solutions for All Configurations
Ikanos Velocity™ Solutions
Next Generation Velocity™
•
FTTdp
1 Gbps G.fast with Neos™
Velocity™-Uni 30 MHz
fiber
•
•
FTTC
Single port
300Mbps @ 200m
Velocity™-3 30 MHz Vectoring
•
•
FTTN
8 – 192 ports
300Mbps @ 200m
Velocity™-3 17MHz Vectoring
copper
•
•
16 – 384 ports
150Mbps @ 500m
CO
13
Ikanos Communications, Inc. – All Rights Reserved
Ikanos Access Chipsets
Chassis/ Backplane
Line Card
Vectoring Processor Card
To Backplane
16 port
slice
96 port
VCE
16 port
DSP
16 port
slice
8Port
AFE
8Port
AFE
96 port
VCE
16 port
slice
Line Drivers
Ikanos provides > 75% of
silicon content
Note: 192-line FTTx system shown above
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Ikanos Communications, Inc. – All Rights Reserved
Ikanos provides > 95% of
silicon content
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Gateway
Ikanos Communications, Inc. – All Rights Reserved
Carrier & Multi-Mode
Gateway Market Drivers
1600
1400
Millions ($)
1200
1000
Multi-Mode Gateway
800
HFC Gateway
600
HFC Access
400
200
0
2013
2014
2015
2016
2017
Source: Linley Group, Sept 2013, Ikanos’ internal
analysis based on Carrier and OEM engagements
Carrier Gateways
Multi-Mode Gateways
Carriers looking for smarter gateways
to support new managed services
Quality of experience and smart LAN
management are key carrier concerns
16
OEMs looking to leverage one highperformance architecture for multi-mode
gateway (fiber, LTE, Ethernet)
Common software platform with strong
ecosystem support a key requirement
Ikanos Communications, Inc. – All Rights Reserved
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Software
Ikanos Communications, Inc. – All Rights Reserved
inSIGHT To Enable Carrier OpEx Savings
Wiring Issues
x
Line Breaks/Shorts, Missing splitters
Bridge tap impairments, Missing micro-filters
Noise Impairments
Temporary noise due to home appliances
Permanent noise due to quality of line
inSIGHT BXM (Broadband eXperience Manager) benefits:
Reduced OpEx reduced carrier service costs
Enable Higher ARPU new services
Reduced Churn improved customer experience
18
Ikanos Communications, Inc. – All Rights Reserved
inSIGHT – Ikanos New Line of Business
Diversification
• Expand product portfolio with a new product category with
higher margins
Increased Carrier Visibility
• Additional revenue through direct carrier engagement
• Creates additional demand for gateway chips
Differentiation
• Ikanos is the only silicon vendor with this capability
19
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Revenue
Ikanos Communications, Inc. – All Rights Reserved
New Product Portfolio Ramping
Revenue Going
Through Transition
Revenue Mix ($)
NEW
(35%)
Mature
Products
2012
Includes estimates for Q4 2013
21
Ikanos Communications, Inc. – All Rights Reserved
NEW
(52%)
Mature
Products
2013
Design Win Growth
Design Wins
Gateway &
Access
Focus on top OEMs in Access
8 new gateway design wins thru Q3 2013
Converting over 50% of new
opportunities
2010
2011
2012
2013
Carrier
Revenue Mix
Gateway
(78%)
Access
(22%)
Current
22
Ikanos Communications, Inc. – All Rights Reserved
Gateway
(65%)
Access
(35%)
Estimated Long-Term
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Ikanos
Financial
Highlights
Ikanos Communications, Inc. – All Rights Reserved
Financial Summary
$M Income Statement
FY2012
Q1 FY2013
Q2 FY2013
Q3 FY2013
Revenue
125.9
26.2
19.1
16.9
Gross Margin %
48.6%
53.4%
48.7%
51.1%
77.7
18.3
17.5
17.0
(16.5)
(4.3)
(8.2)
(8.4)
FY2012
Q1 FY2013
Q2 FY2013
Q3 FY2013
Cash
31.2
31.6
27.3
25.6
Inventory
8.1
7.4
4.0
1.6
Short-term Debt
5.0
5.0
7.5
10.8
Working Capital
36.6
33.7
26.4
18.9
GAAP Operating Expenses
GAAP Operating Income (Loss)
$M Balance Sheet
24
Ikanos Communications, Inc. – All Rights Reserved
Continued Expense and Inventory Management
Operating Expenses
$M
• Opex reduced by 39% since 2010
120
Operating Expenses
80
40
0
2010
Inventory
2011
2012
2013
2012
2013
Turns
• Improved inventory
management, eSilicon
partnership
• Inventory turns increased by
nearly 3X
12
Inventory Turns
8
4
Inventory Levels
0
2010
25
2011
Ikanos Communications, Inc. – All Rights Reserved
Financial Outlook
26
Q4 FY2013
GAAP Guidance
•
•
•
•
Long Term
Financial Model
As a % of revenue
• GM
• R&D
• SG&A
• Opex
• Operating Margin
Revenue
GM
Opex
NI/(Loss)
Ikanos Communications, Inc. – All Rights Reserved
$17-19M
49-51%
$17-18M
($7.5)-($9.9)M
55-60%
20-25
12
32-37
18-28%
Investment Highlights
Addressing
Disruptive
Market
Opportunity
Using copper infrastructure to deliver fiber-like data rates
Significant managed gateway growth opportunity
Highly
Differentiated
Solution
Highest rate-reach performance with Ikanos NodeScale™
vectoring and Fusiv® gateway architecture
inSIGHT, the only in-home DSL diagnostics software
Product
Momentum
New products to drive growth
New product revenue > 50% and growing
New product design win momentum – 19 since launch
Technology
Leadership
World leader in VDSL port shipments
Over 400 issued and pending patents
Business
Management
27
Right sized business - margins, Opex, inventory
Completed $26.4M Capital Fund Raising
Compelling new product roadmap to drive growth
Ikanos Communications, Inc. – All Rights Reserved
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Ikanos Communications, Inc. – All Rights Reserved