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Building Carrier Scale Personalized Networks (NASDAQ: PKT)

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Presentation on theme: "Building Carrier Scale Personalized Networks (NASDAQ: PKT)"— Presentation transcript:

1 Building Carrier Scale Personalized Networks (NASDAQ: PKT)

2 Safe Harbor Statement Certain statements in this presentation relate to future events and expectations and as such constitute forward-looking statements involving known and unknown factors that may cause actual results of Procera Networks, Inc. (“we,” “our,” “Procera” or the “Company”) to be different from those expressed or implied in the forward-looking statements. In this context, words such as “will,” “would,” “expect,” “anticipate,” “should,” “projected” or other similar words and phrases often identify forward-looking statements made on behalf of Procera. It is important to note that our actual results may differ materially from those described or implied in such forward-looking statements based on a number of factors and uncertainties, including, but not limited to, (i) adverse changes in general economic conditions; (ii) adverse changes in the industries Procera serves including without limitation communications equipment and networking, telecommunications services, enterprise networking and systems integrators; (iii) our ability to manage material, including components used in our solution, and freight costs; (iv) our ability to generate cash from operations; (v) material adverse changes in customers’ access to liquidity and capital; (vi) currency exchange; (vii) market acceptance of our products; (viii) significant changes in the competitive environment; (ix) changes in law, regulations and tax rates; and (x) other general economic, business and financing conditions and factors described in more detail in “Item 1A – Risk Factors” in Part I of our Annual Report on Form 10-K filed with the SEC on March 15, 2012 and statements made in subsequent filings. These filings are available on our website at www.proceranetworks.com. We do not undertake to update our forward- looking statements. 2

3 Leading Provider Of Intelligent Policy Enforcement (IPE) Founded in 2002; shifted focus to IPE in 2008 130 employees; 25% of headcount in R&D Software Based Solution Focused On Traffic Intelligence And Management Enabling Explosive Growth In Mobile Data And Video Significant Customer Growth Over 20 Tier-1 service provider wins in 4 years IPE TAM Growing At 43% 5-year CAGR To $2.1 B Procera at a Glance CAGR: 60% Rapid Revenue Growth ($ in millions) 3

4 Investment Highlights Leading Provider In The Large, High-growth IPE Market Leveraging Significant Growth In Mobile And IP Data Consumption Software Based Solution Offers Leading Technology Performance Global Tier-1 Customer Footprint Across Mobile And Broadband Revenue Growth With Profitable Business Model Outstanding R&D Capabilities; Proven Leadership Team 4

5 Accelerating Business Momentum Tier-1 Customer Wins: 2010 – 2012New Product Releases MobileCableFixed / Mobile Strong Partnership MomentumFinancial Momentum Advanced Traffic Steering and Carrier Grade NAT PacketLogic PL8920 – 50Gbps at appliance price PL20000 – industry's highest performance IPE at 320Gbps and first to 100GE Report Studio – customizable analytics and reports based on deepest collection engine available Smart Campus 2.0 – turnkey network management solution for Higher Education adds User Awareness Integrated policy management solution Integrated policy management solution for LTE Integrated policy and charging solution Performance management and optimization Technology license and re-sale agreement Integrated policy management solution Malaysian Mobile Operator E. European Cable Company U.S. Cable Company Canadian Cable Company Scandinavian Carrier E. European Carrier Australian Carrier 2 New APAC Mobile Operators APAC Fixed Carrier Asian Fixed/Mobile 5 52% revenue growth YoY for Q2:12; Bookings up 47% Gross margin increased to 63% in Q2:12 from 62% in Q2:11 Non-GAAP net income $1.4M or $0.8 per share in Q2:12 Added 16 new service providers in Q2:12 (3 new Tier-1s) plus 27 new higher education product orders Increased guidance to 40% revenue growth YoY in 2012

6 Consumers Have Unique “App Clouds” Service Personalization Delivers Individual Value My Business Plan My Networking Plan My Apps Plan My Teen Plan 6

7 Why Are Operators Buying IPE? Network Intelligence Subscriber, Service Tier, Location, Device and Traffic Awareness Intuitively Combined to Assess Trends and User Behavior Improve Quality and Postpone CAPEX Investments by Optimizing the Use of Network Resources to Function with Today’s Plethora of Applications Intelligence Enables Early Detection and Mitigation of Anomalies that Indicate Security Issues Offer and Manage Subscriber Offerings and Service Packages Based on User Behavior Analysis, Customer Requests and Demographic Preferences Network Optimization Security / Protection Personalized Services SolutionSolutionBenefitBenefit 7

8 Networking technologies for mobile and IP service providers across the globe Software-based solution focused on traffic intelligence and management Our customers’ businesses are being driven by the continued explosion of mobile data, video and connected devices MarketMarket Intelligent Policy Enforcement sits at the core of a new ecosystem, providing the traffic intelligence that enables new applications IPE is a requirement to effectively implement new services With IPE as a foundation, new, complementary products are possible TechnologyTechnology Advanced Traffic Steering – An application delivery networking technology enabling carriers to effectively route application services traffic in real time Carrier Grade NAT – Carrier-grade network address translation that enables IPE-based subscriber aware analytics and business decisions New Products Procera’s Opportunities are Expanding 8

9 Feb 2010 July 2010 Jan 2011 Feb 2011July 2008 Jan 2012 PL8720: 1 st 10GE DPI Appliance – 1 year ahead of competition IPv6: 1 st IPE system to support IPv6 – 1 year ahead of competition PSM 5 PSM 5: 1 st 3GPP IPE system to support 50,000 TPS – no equivalent today PL10000 & PL8820: 1 st 120 Gbps and 30 Gbps shipping IPE solutions PL10000: 1 st 80 Gbps DPI solution – 3 years ahead of competition Nov 2011 PL20000: 1 st 100 GE capable IPE solution, 320 Gbps capacity Report Studio: 1 st fully customizable analytics leveraging rich IPE data June 2012 PL ATS: 1 st IPE Integrated Advanced Traffic Steering Application PL CGN: 1 st IPE-based large scale NAT solution for operators Procera: A History of Innovation for IPE Accelerating the Pace of IPE Technology 9

10 ($ in millions) 20102011E2012E2013E2014E CAGR: 43% Source: Infonetics 2011. Convergence of IPE + ADN Markets Significantly Expands TAM Growing Need for Application and Session Awareness Innovative Service Creation by Network Operators 2015E Trend Towards Personalized Services Application Delivery Networking (Layer 4-7) DPI Product Market Catalysts for Continued Growth 20102011E2012E2013E2014E Source: IDC 2012. 2015E CAGR: 9% ($ in millions) 10

11 Intelligent Policy Enforcement is a Strategic Technology 11 DPI Traffic Engineering P2P Traffic Management Congestion Management IPE Business Analytics Superior Performance Network Optimization 2005 – Reduce Expenses 2010 – Gain Business Intelligence Today – Deliver Innovative Services Service Personalization Intelligent Charging High Resilience: 99.999% IPE 2.0

12 Only IPE 2.0 Delivers Intelligence and Awareness SubscriberSubscriber Content Provider Service Plan LocationLocation DeviceDeviceApplicationApplication 12

13 PCRF “Intelligent” Architecture is Needed, But Where? GGSN PGW Internet SGSN SGW RNC OCSAAA/HLR/HSS CMTS FTTH Aggregation DSL Router BRAS FTTH CABLE 2G/3G/LTE AccessPacket Core WAN Edge HIGH-END ENTERPRISE DSLAM CLOUD SERVICES Core Layer Peering Combine IPE and ADN: Full “Awareness” Policy Enforcement Intelligent Charging Address Management Traffic Steering Detailed Analytics Combine IPE and ADN: Full “Awareness” Policy Enforcement Intelligent Charging Address Management Traffic Steering Detailed Analytics Integrated Edge: Multivendor access solutions fail Requires extremely sophisticated features Drastically raises cost of access solutions Integrated Edge: Multivendor access solutions fail Requires extremely sophisticated features Drastically raises cost of access solutions “Smart” Core:: Designed for Layer 3 “Box Only” approach Scalability limits “Smart” Core:: Designed for Layer 3 “Box Only” approach Scalability limits Access Layer Service Layer 13

14 ATS + NAT Leverages Feature-Rich IPE 2.0 Advanced Traffic Steering Network Address Translation Enables Per-subscriber, application, service plan, location, device, and content provider VAS Enables insertion of services without requiring in-line deployments Most efficient solution available today Grow subscriber base by capitalizing on device explosion Maintain detailed analytics to drive service decisions Offer Intelligent charging services Conserve address space by using private addresses in-network Conserve resources on existing platforms to preserve performance Minimize traffic analysis, eliminating latency and complexity Create new service offerings leveraging IPE technlogy Insert targeted services into existing traffic flow with minimal latency Revenue share W / CDNs & content service providers Dramatically reduce VAS hardware requirements through surgical steering Deploy VAS services anywhere CDN integration leverages content visibility to ensure high QoE Operators experiencing shortage of IPv4 addresses Subscribers and device count still growing fast Enables oversubscription of subscribers -> IP addresses Revenue Generation Network Optimization Value Proposition 14

15 New Intelligent Architecture Paradigm Access Termination IPE-Services, Analytics Load Balancers (LB for FW, Some Traffic Steering) Firewall/Security Load Balancers (LB for FW, Some Traffic Steering) CGN Devices and Applications Access Termination IPE, Analytics, Traffic Steering, Carrier Grade NAT, Network Protection Routing Devices and Applications Legacy Approaches Utilize Point Solutions Today Future 15

16 IPE & ADN Competitive Landscape Procera is the First to Market with Integrated IPE + ADN + NAT Functionality IPE 2.0 Products: Advanced Traffic Steering Carrier-Grade NAT Cloud Services Full IPE functionality Stand-Alone ADN Stand-Alone IPE 16

17 IPE Features Performance & Scalability IPE Competitive Landscape 17

18 Core Edge Access Bandwidth PL1420 PL1200PLM1200 PL7k 1RU appliance, <4 Gbps, access + enterprise PL7k 1RU appliance, <4 Gbps, access + enterprise PL8k 2RU appliance, <30 Gbps, SP/MNO edge + core PL8k 2RU appliance, <30 Gbps, SP/MNO edge + core PL10k/PL20k 13/14RU ATCA chassis, <320 Gbps, SP/MNO core PL10k/PL20k 13/14RU ATCA chassis, <320 Gbps, SP/MNO core Real-Time Enforcement Intelligence Center Subscriber Manager Procera PacketLogic Solutions 18

19 Our Technology Differentiation Highest Industry Performance Scalable, Software- Based Solution Seamless Partner Integration Shortest Product Release Cycle – Persistent Innovation Robust Reporting and Analytics Cutting Edge IPE Technology Performance Largest Signature Database – Highly Accurate Traffic ID 19

20 Illustrative Examples of Customer Oppty. Large Total Opportunity: $25 – $50 mm ClassificationClassificationSizeSize 3 Year Revenue Cycle Medium Total Opportunity: $10 – $25 mm Small Total Opportunity: $3 – $5 mm BookingsCumulative Bookings > 40 mm Subscribers 5 – 40 mm Subscribers < 5 mm Subscribers Global Opportunities ~25 Large service providers globally Country incumbents; developed markets and large emerging markets ~150 Medium service providers globally Regional operators; competitors to incumbents ~325 Small service providers globally Greenfield operators, alternative providers and emerging markets 20

21 Our Growth Strategy Increase our Tier-1 SP customer count Harvest our current customer opportunity Pursue new partnerships and tactical acquisitions Extend our technology advantage and leadership Drive margin improvement 21

22 Solid Q2:12 Results Revenue of $14.7 million, up 52% from Q2:11 Bookings of $14.2 million, up 47% from Q2:11 Added 16 new service provider customers Won 3 new Tier-1 customers in Asia Pacific and Western Europe regions Received 23 follow on orders from existing service provider customers, including 7 from existing Tier-1 customers Support revenue of $2.8 million, up 101% from Q2:11 Non-GAAP net income of $1.4 million, compared to non-GAAP net income of $595,000 in Q2:11 Generated $2.4 million of cash flow from operations Cash & investments was $131.6 million at June 30, 2012 22

23 Gross Margin57%59%63%65% – 70% Research & Development16%10%11%12% Sales & Marketing32%26%28%30% General & Administrative15%11%13%6% Total Operating Expenses64%47%53%48% Operating Income(7%)13%11%17% – 22% Attractive Long-Term Financial Model (1) Long-TermLong-Term2011201120102010 (1)Excludes stock-based compensation and business development expenses. Q2 2012 23

24 Thank You


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