Winning Through Disruption in the Transport Markets21.q4cdn.com/892601718/files/doc_presentations/2016/INFN-Investor... · Winning Through Disruption in the Transport Market ... 100G

1 | © 2016 Infinera

Winning Through Disruption in the Transport Market

Investor Overview February 2016


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 risk that Transmode’s and Infinera’s businesses will not be integrated successfully; the risk that synergies will not be realized or realized to the extent anticipated; the risk that the combined company will not realize on its financing or operating strategies; 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 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 supply, delivery or demand of 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 its Quarterly Report on Form 10-Q for the quarter ended on September 26, 2015 as filed with the SEC on November 5, 2015, 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 www.infinera.com and the SEC’s website at www.sec.gov. 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.

Safe Harbor

http://www.infinera.com/

http://www.sec.gov/


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: A Differentiated Technology Company

Enabling An Infinite Pool of Intelligent Bandwidth

DTN-X XT

DTN Cloud Xpress

DTN-X XTC

TM-Series

Photonic Integrated Circuit (PIC)


Leader in Intelligent Transport Network™ solutions Growth over last 3 years: Revenue up 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 – A Global Business

*IHS overall DWDM growth: 2013 = 11%; 2014 = 6%; 2015 = 7%


Infinera Differentiators

PIC-enabled Technology • PIC enables scalable, intelligent

functions: SDN, integrated switching, sliceable bandwidth

• High capacity applications: Long-Haul, Metro Cloud, Metro Core

Infinera differentiates due to its technology, market expansion opportunities and vertically

integrated business model

Infinera PIC Fab

Vertical Integration • Lower cost structure

than competition • Supply chain control

New Purpose-Built Products • Cloud Xpress for DC Interconnect • Transmode Metro portfolio • Infinera Metro Aggregation • ~3x TAM expansion to >$15B in 2019*

Cloud Xpress TM-Series XTC-2 XT-500

* Based on average of latest forecasts from Ovum, IHS, Dell’Oro and ACG


-20%

0%

20%

40%

60%

80%

100%

120%

140%

Jun '12 Dec '12 Jun '13 Dec '13 Jun '14 Dec '14 Jun '15 Dec '15

INFN

CIEN

JNPR

CSCO

ADV

ALU

Revenue Growth: Trailing 12-month revenue

114%

DTN-X for 100G Long-Haul

Cloud Xpress for 100G DCI

37%

3x Revenue Growth

Outpacing Other SP Networking Players

* Based on latest financials available; Adva and ALU assumed flat for Dec 15 as results not yet available


Disruptive Technology Innovation: The Infinera Way


Uniquely Delivers Massive Optical Bandwidth with PICs

3rd Party Discrete Optics Industry’s only 500G large scale Photonic Integrated Circuit

500G PIC

• 500G “WDM on a chip” • Integrates over 600 optical functions

Competition

Moore’s Law-like for Optical


PIC Leveraged for Disruptive Systems Intelligent Transport Network

Scalability, Convergence, Automation Own Key Technologies & Processes

500+ patents filed/granted

Purpose-Built Systems

Switching ASICs

Intelligent Software

Photonic Integrated Circuits 500G Super-Channels

Vertically Integrated

Cloud Xpress XTC-2/2E XTC-10/4 XT DTN DTN-X


Market Expansion Strategy


Market Inflections

Transport becoming is Strategic

• Networks Simplifying to New Model of Cloud Services and Intelligent Transport

Vision: Enable An Infinite Pool of Intelligent Bandwidth

100G Long Haul

2012

100G Metro Cloud

2014

100G Metro Aggregation

2016

Poised to take off

• Scalable Optics and Integrated Packet-Optical Key for Simplification

Accelerated 100G uptake & 40G decline

1st to market with purpose-built solution

Infinera Core + Transmode

portfolio


Data Center Interconnect Capturing emerging cloud infrastructures


Cloud Architecture Drives New Traffic Patterns

Source: Facebook

1KB HTTP

Network

930x

Distributed Compute Model

Server-to-Server traffic growing faster than Server-to-User traffic

DCI

Home User


• 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™

Cloud Xpress Platform

Hyper-Scale Density • 2RU, smaller than most servers • 3X to 10X density improvement

Simple Operation • Simple 1-2-3 step provisioning

• Server-like operational experience

Minimal Power • ~100W per 100G: ALL INCLUSIVE • 50% better than industry leaders

Cloud Xpress – Optimized for DCI


The Metro Market A new market for Infinera as technology upgrades


CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19

400

350

300

350

200

150

100

50

0

Port

s (Th

ousa

nds)

TM Portfolio Ready for 100G Coherent Metro Ramp

Source: 2015 IHS 100G Coherent Optical Equip Ports Mkt Fcst

100G starting to ramp, rapid acceleration

68% CAGR


Transmode’s Leadership in Metro

Lowest Power

& Space

50000+ Systems

650+ Customers

#1 Packet Optical EMEA

TM-Series 10G/100G Packet-Optical Ethernet, Wireless back-

haul / fronthaul

TG-Series Biz. Service Wireless backhaul

CPE / PON Biz. Service Wireless backhaul

WDM access

Metro Edge &

Core Network

Metro Access

Metro Access

Rich Eth. Biz Service

Storage Networks

FTTx/PON Triple Play

xDSL Triple Play

CATV/MSO Triple Play

Mobile Back/ Fronthaul


Metro Networks Are Application-Oriented

100G and Packet-Optical in Metro

Cable MSO Evolution

Business Ethernet

Mobile Evolution

Metro Access/ Aggregation

Metro/Micro DC

Metro Core/ Regional

Long-Haul

IP IP

TM-Series

DTN-X Family


XTC-2 Extends DTN-X to Lower Capacity Sites

Spokane Boise Salt Lake City

XTC-10

Seattle Las Vegas

E.g. Right-sized DTN-X XTC for Smaller Cities

500G Super-channels

XTC-4 100G

100G 100G

100G

XTC-2 100G

Common Hardware, E2E Network Management & Automation


Long Haul Adding new tools to solve customer needs


Introducing the DTN-X XT Series

Long-Haul Interconnect Optically Switched (ROADM)

DTN-X XT-500

Super-channel; ILS integration Scalable

~1W/Gig, 1Tb/s IO 2RU Efficient

Instant Bandwidth, SDN enabled Programmable


End-to-End Solutions


FlexILS

MTC-9

DTN-X Family

TM- Series

Cloud Xpress

XTC-10 XTC-4 XTC-2E XTC-2 TM-3000 TM-301 TM-102

TM-Series NID

EDU

LONG HAUL / SUBSEA METRO DC INTERCONNECT

TG-Series

XT-500

AGGREGATION ACCESS CORE

Mobile Front/ Backhaul

Business Ethernet

Cable Broadband

Triple Play Broadband

SDN and INFINERA NMS

The Infinera Unified End-to-End Portfolio

$15B* (2019) – Transport Market * Based on average of latest forecasts from Ovum, IHS, Dell’Oro and ACG


XTC-4

XTC-10

Pan-European Network 500G

Super-channels

Large LH Core

Converged Packet Aggregation & OTN Switched Metro Core

Frankfurt Metro Area, Germany

XTC-2 100G

XTC-10

XT-500

Point-to-Point Interconnect

Value of End-to-End

Mobile Front/ Backhaul

Business Ethernet

Triple Play Broadband

Cable Broadband

Packet-Optical Switching Access & Aggregation

Infinera DNA

TM-Series DTN-X Family

XTC-4

XTC-10

Pan-European Network 500G

Super-channels

Large LH Core

XT-500

Point-to-Point Interconnect

Frankfurt Metro Area, Germany

XTC-2 100G

Converged Packet Aggregation & OTN Switched Metro Core

XTC-10


Optical Market exceeds $15 billion by 2019

$4,855 $5,195 $5,513 $5,814 $6,020

$5,858 $6,583 $7,192 $7,885 $8,253

$552 $828

$1,209 $1,705

$2,353

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

CY15 CY16 CY17 CY18 CY19

Long Haul* Metro* Incremental DCI**

CAGR 7.5%

CAGR 5.4%

CAGR 43.7%

* 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 ACG WW Optical Forecast, December 2015


Infinera’s Ascending Global Market Position

Source: Dell’Oro Optical Report Jan 2015

$0.0

$500.0

$1,000.0

$1,500.0

$2,000.0

$2,500.0

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($M

)

Global Metro + LH WDM (2014)

INFN

+ T

RMO

Cross-selling and revenue synergies create opportunity to go higher


Differentiated Financial Results


Infinera – A Growth Story

$668

FY14

$544

FY13

$438

FY12

$888

FY15

44.0%

8.3% 41.6%

1.4%

47.8%

13.1%

-9.4%

37.9%

Revenue (in $m)

GM%:

OM%:

3 years of >20% revenue growth

All figures are Non-GAAP (reconciliation to GAAP numbers may be found at www.Infinera.com)

Q4 ‘15 Performance $261 million revenue 48.3% gross margin $112 million net income

Q1 ’16 Guidance $240 - $250 million revenue 47.5% - 49.5% gross margin 10% - 12% operating margin $0.15 - $0.19 EPS

Industry leading revenue growth and profitability Solid Balance Sheet $207M net cash (end FY15) FY15: Positive Cash Flow from Ops every quarter

Cash Flow from Ops = $133 million Free Cash Flow/Revenue = 10.3%


Purpose-Built Products: Good for Customers & Infinera

Innovating to address entire $15B* opportunity

New XTC-2/2E: Packet-OTN Switching

for Regional / Metro Core

New XT-Series: High Capacity LH Data Center Interconnect

TM-Series: Packet-Optical for Metro

Core, Aggregation, Access



Margin Growth Opportunity

$ $ $

Margin Drivers

Expanding Markets Drive Margin Growth

Vertical integration Footprint vs fill Instant bandwidth Purpose-Built Products

Long-Haul

$ $ Cloud Xpress $ Metro $ $ $

$ $ $

Infinera PIC Fab


Great Time To Be In Optical For Infinera

End-to-end packet-optical

portfolio

Vertical IP ownership

Consolidating market TAM > $15B*



Thank You www.infinera.com

http://www.infinera.com/

Documents

Winning Through Disruption in the Transport Markets21.q4cdn.com/892601718/files/doc_presentations/2016/INFN-Investor... · Winning Through Disruption in the Transport Market ... 100G