Sierra Wireless Corporate Overview
November 2013

Proprietary and Confidential

1
Safe harbor statement
Certain statements and information in this presentation are not based on historical facts and consti...
Sierra Wireless Corporate Profile
The global leader in M2M devices and cloud services
Industry’s most comprehensive offeri...
We are enabling a connected world
By providing intelligent wireless solutions

Proprietary and Confidential

4
Long term growth opportunity
Billions of connected devices

12B+
1.4B
connected
devices

Embedded
modules market

connecte...
Sierra Wireless is the market leader
#1 in machine-to-machine
market globally

Blue-chip customers and
partners

Cellular ...
Innovative device-to-cloud offering

Leading-edge
intelligent devices

+

Secure cloud
services platform

=

Faster time t...
AirPrime® Embedded Wireless Modules
Wireless modules, software and services for OEMs
Embedded Modules
•
•
•
•
•
•

4G LTE
...
AirLink® Intelligent Gateways
Wireless terminals for M2M and mobile applications
Security

Sales & Payment

Public Safety
...
AirVantage® M2M Cloud

Proprietary and Confidential

10
A customer success: Nespresso
Custom Web Application

Web APIs

Hardware
Integration

Programmable
Modem

ERP

• Asset Dat...
Global footprint, global R&D

Richmond, BC
Corporate Headquarters

London
Paris
Toulouse

Munich

Beijing
Tokyo
Flextronic...
Partnered with network operators globally
Hundreds of platforms certified and launched, worldwide
Deep knowledge about ind...
Sierra Wireless: The global leader in M2M
devices and cloud services



Trusted M2M partner of OEMs, enterprises, and net...
Q3 2013 Financial Results
Proprietary and Confidential

15
Record quarterly revenue in Q3
Revenue for Continuing Operations
($USD millions)

$109.6
$100.2

$112.3

$14.5

$16.4

12%...
Improving profitability
Non-GAAP* Operating Results for Continuing Operations
Gross Margin
(% of revenue)

Earnings from O...
Strong cash position and debt free
Cash, Cash Equivalents
& Short-Term Investments
($USD millions)

$176.6

$188.4

• Cash...
Financial guidance summary
Non-GAAP* Financial Guidance for Continuing Operations
($USD millions, except EPS)

Q4 2013
Gui...
M2M Segment Information
Proprietary and Confidential

20
Automotive
Typical applications

Sample Customers

Market Dynamics
Market Size

Crash Safety (eg. eCall)

18M

(unit shipm...
Transportation
Typical applications

Sample Customers

Stolen Vehicle Tracking

Market Dynamics
Market Size

28M

(unit sh...
Energy
Typical applications

Sample Customers

Market Dynamics
Market Size

Electricity – Gas – Water

15M

(unit shipment...
Industrial & Infrastructure
Typical applications

Sample Customers

Market Dynamics
Market Size

Industrial Automation

5M...
Security
Typical applications

Sample Customers

Premise Monitoring

Market Dynamics
Market Size

11M

(unit shipments)

C...
Networking
Typical applications
Business Continuity

Sample Customers

Market Dynamics
Market Size

9M

(unit shipments)

...
Sales & Payment
Typical applications
Point of Sale

Sample Customers

Market Dynamics
Market Size

4.1M

(unit shipments)
...
Field Service
Typical applications
Public Safety

Sample Customers

Market Dynamics
Market Size

2.7M

(unit shipments)

1...
Healthcare
Typical applications
Medical

Sample Customers

Market Dynamics
Market Size
(unit shipments)

3.8M
CAGR
66%

We...
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Sierra Wireless Corporate Overview - November 2013

  1. 1. Sierra Wireless Corporate Overview November 2013 Proprietary and Confidential 1
  2. 2. 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 Q4 2013, our guidance drivers for 2013 and our business outlook for 2013 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. • 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; • 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. 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. Proprietary and Confidential 2
  3. 3. Sierra Wireless Corporate Profile The global leader in M2M devices and cloud services Industry’s most comprehensive offering Proven technology innovators and trusted partner Founded in 1993 LTM1 revenue: $433 million Publicly listed: NASDAQ (SWIR) TSX (SW) R&D Head office: Vancouver, BC R&D R&D Approx. 850 employees worldwide Customers in 130+ countries 1. Last Twelve Months as of September 30, 2013 Proprietary and Confidential 3
  4. 4. We are enabling a connected world By providing intelligent wireless solutions Proprietary and Confidential 4
  5. 5. Long term growth opportunity Billions of connected devices 12B+ 1.4B connected devices Embedded modules market connected devices $1.8B Embedded modules market $1.0B 2012 2016 2020 Source: ABI Research, Machina Proprietary and Confidential 5
  6. 6. Sierra Wireless is the market leader #1 in machine-to-machine market globally Blue-chip customers and partners Cellular M2M Embedded Module Market Share in 2012(1) 24% Sierra Wireless 34% 19% 23% Source: ABI Research Proprietary and Confidential 6
  7. 7. Innovative device-to-cloud offering Leading-edge intelligent devices + Secure cloud services platform = Faster time to market + lower costs Proprietary and Confidential 7
  8. 8. AirPrime® Embedded Wireless Modules Wireless modules, software and services for OEMs Embedded Modules • • • • • • 4G LTE 3G HSPA/HSPA+ 3G EVDO 2G 1xRTT 2G GPRS/EDGE GPS Software Solutions and Services Development Tools Management Services Embedded SIM Embedded Applications Proprietary and Confidential 8
  9. 9. AirLink® Intelligent Gateways Wireless terminals for M2M and mobile applications Security Sales & Payment Public Safety Gateways and Routers Business Continuity Utilities & Infrastructure Fleet Management & Field Service • Ruggedized and commercial grade • 2G, 3G and 4G platforms • Rapid configuration and programmability Software Solutions and Services Device Management and Diagnostics Embedded Intelligence and Security Application Framework Proprietary and Confidential 9
  10. 10. AirVantage® M2M Cloud Proprietary and Confidential 10
  11. 11. A customer success: Nespresso Custom Web Application Web APIs Hardware Integration Programmable Modem ERP • Asset Data Management • Device Management • Subscription Management Network Operator M2M Cloud Accelerating M2M Application Development & Deployment Proprietary and Confidential 11
  12. 12. Global footprint, global R&D Richmond, BC Corporate Headquarters London Paris Toulouse Munich Beijing Tokyo Flextronics & USI (Shanghai) Taipei San Diego Bangalore Hong Kong and Shenzhen = R&D, Marketing, Sales, Operations = Manufacturing = Sales and Support Jabil (Brazil) Johannesburg Melbourne Sierra Wireless operates worldwide serving global network operators, OEMs, enterprises Proprietary and Confidential 12
  13. 13. Partnered with network operators globally 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 Proprietary and Confidential 13
  14. 14. Sierra Wireless: The global leader in M2M devices and cloud services  Trusted M2M partner of OEMs, enterprises, and network operators around the world  #1 market share in M2M embedded modules  Over 50 million M2M devices shipped, blue-chip customer  base $433M+ revenue, 850 employees, R&D on three continents  Financial strength: $188M cash, no debt  Leading innovation, comprehensive offering Proprietary and Confidential 14
  15. 15. Q3 2013 Financial Results Proprietary and Confidential 15
  16. 16. Record quarterly revenue in Q3 Revenue for Continuing Operations ($USD millions) $109.6 $100.2 $112.3 $14.5 $16.4 12% year-over-year growth Enterprise Solutions $11.9 OEM Solutions $88.3 Q3 '12 $95.1 $95.9 Q2 '13 Q3 '13 Proprietary and Confidential 16
  17. 17. Improving profitability Non-GAAP* Operating Results for Continuing Operations Gross Margin (% of revenue) Earnings from Operations Adjusted EBITDA** ($USD millions) ($USD millions) $5.9 33.4% 33.4% 31.1% $4.9 $3.2 $2.4 $1.5 $0.3 Q3 ‘12 Q2 ‘13 Q3 ‘13 Q3 ‘12 Q2 ‘13 Q3 ‘13 Q3 ‘12 Q2 ‘13 Q3 ‘13 * Non-GAAP results exclude the impact of: stock-based compensation expense, acquisition and disposition costs, acquisition amortization, impairment, integration costs, restructuring costs, foreign exchange gains or losses on foreign currency contracts as well as on translation of balance sheet accounts, and certain tax adjustments. ** Adjusted EBITDA as defined equates to earnings (loss) from operations plus stock-based compensation expense, acquisition costs, restructuring costs, integration costs, impairment and amortization. Proprietary and Confidential 17
  18. 18. Strong cash position and debt free Cash, Cash Equivalents & Short-Term Investments ($USD millions) $176.6 $188.4 • Cash generated in Q3: $11.8 million – Cash from operations: $19.1 million – Capital expenditures: $4.4 million – Cash used in financing and other activities: $2.9 million Q2 '13 Q3 '13 Proprietary and Confidential 18
  19. 19. Financial guidance summary Non-GAAP* Financial Guidance for Continuing Operations ($USD millions, except EPS) Q4 2013 Guidance Revenue $112.0 to $116.0 million Earnings from operations $2.4 to $3.3 million Net earnings from continuing operations $2.2 to $3.0 million Earnings per share $0.07 to $0.10 per share Financial guidance excludes any impact from the acquisition of the M2M module and modem assets of AnyDATA * 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 Proprietary and Confidential 19
  20. 20. M2M Segment Information Proprietary and Confidential 20
  21. 21. Automotive Typical applications Sample Customers Market Dynamics Market Size Crash Safety (eg. eCall) 18M (unit shipments) 3M Telematics & Navigation CAGR 58% Source: ABI 2011 2015 Market demand drivers: Regulation Increasing post‐crash survival rates In Vehicle Internet 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… Proprietary and Confidential 21
  22. 22. Transportation Typical applications Sample Customers Stolen Vehicle Tracking Market Dynamics Market Size 28M (unit shipments) 10M Fleet management CAGR 31% Source: ABI 2011 2015 Market demand through efficiency Fleet & collection efficiency eToll & eTax Collect Less fuel/CO2, shorter routes, faster  deliveries, road toll revenue Personal & business road assets Stolen vehicle recovery, insurance  premiums tuned, on‐road efficiency and pay‐as‐you‐drive insurance, ITS (Intelligent Transport Systems), etc… Proprietary and Confidential 22
  23. 23. Energy Typical applications Sample Customers Market Dynamics Market Size Electricity – Gas – Water 15M (unit shipments) 7M Smart Metering CAGR 22% Source: ABI 2011 2015 Demand drivers: regulation,  grid  efficiency, social conscience Energy Efficiency ‐ Green Energy Transmission &  Distribution CO2 emissions targets, smart grid: load  management/optimization, grid  contribution by consumer  Renewable Energy  EV Charging Station Consumer monitored energy Web based home monitoring EDMI and Sierra Wireless awarded for the best innovation for Utilities Proprietary and Confidential 23
  24. 24. Industrial & Infrastructure Typical applications Sample Customers Market Dynamics Market Size Industrial Automation 5M Infrastructure / Building  Monitoring Digital Signage 12M (unit shipments) CAGR 21% Source: ABI 2011 2015 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 Proprietary and Confidential 24
  25. 25. Security Typical applications Sample Customers Premise Monitoring Market Dynamics Market Size 11M (unit shipments) CAGR 32% 4M Personal Security Source: ABI 2011 2015 Market demand drivers: Consumer pull Video Surveillance 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… Proprietary and Confidential 25
  26. 26. Networking Typical applications Business Continuity Sample Customers Market Dynamics Market Size 9M (unit shipments) 5M CAGR 12% Source: ABI 2011 SMB & Residential 2015 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 Proprietary and Confidential 26
  27. 27. Sales & Payment Typical applications Point of Sale Sample Customers Market Dynamics Market Size 4.1M (unit shipments) 2.5M ATM & Cash Registers CAGR 13% Source: ABI 2011 2015 Market driven by “cashless” society Convenience & security Vending Pay for anything, anytime, anywhere,  securely. Government regulation Electronic VAT collection to avoid fraud. Proprietary and Confidential 27
  28. 28. Field Service Typical applications Public Safety Sample Customers Market Dynamics Market Size 2.7M (unit shipments) 1.6M Utility CAGR 15% Source: ABI 2011 2015 Market driven by efficiency Mission critical Consumer 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. Proprietary and Confidential 28
  29. 29. Healthcare Typical applications Medical Sample Customers Market Dynamics Market Size (unit shipments) 3.8M CAGR 66% Well Being 0.5M Source: ABI 2011 Sport & Fitness 2015 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 Well being monitoring sub‐segments:  Diabetes, Cardiac, Blood Pressure, Sleep,  Home medical hub,...    Proprietary and Confidential 29
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