WinningThroughDisrup8oninthe TransportMarkets21.q4cdn.com/892601718/files/doc_presentations/2016/... · 2016. 5. 20. · 20"|"©"2016"Inﬁnera Keys"to"WinningIn"Metro"! Follow"the"ﬁber"

1 | © 2016 Infinera

Winning Through Disrup8on in the Transport Market

Investor Overview May 2016


This presenta8on contains "forward-‐looking" statements that involve risks, uncertain8es and assump8ons. If the risks or uncertain8es ever materialize or the assump8ons 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 objec8ves of management for future opera8ons; any statements of expecta8on or belief regarding future events, poten8al markets or market size, technology and product developments, or enforceability of our intellectual property rights; and any statements of assump8ons underlying any of the items men8oned.

These statements are based on es8mates and informa8on available to us at the 8me of this presenta8on and are not guarantees of future performance. These risks and uncertain8es include, but are not limited to, the risks of compe88ve responses and shiPs in the market; delays in the release of new products or updates to exis8ng products; fluctua8ons in customer demand, changes in industry trends, and changes in the macro economic market; the risk that Transmode’s and Infinera’s businesses will not be integrated successfully and/or the risk that synergies will not be realized or realized to the extent an8cipated; 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 tac8cs by our compe8tors; 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 the supply, delivery or demand of Infinera’s products; and other risks and uncertain8es detailed in our SEC filings from 8me to 8me. More informa8on on poten8al factors that may impact our business are set forth in Infinera’s Annual Report on Form 10-‐K for the fiscal year ended on December 26, 2015 as filed with the SEC on February 23, 2016, as well as subsequent reports filed with or furnished to the SEC from 8me to 8me. 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 obliga8on to, and do not currently intend to, update any such forward-‐looking statements.

Safe Harbor


ê  Redefining what the network will be •  Unique technology innova8on with PIC •  Best-‐in class systems with Automa8on,

Convergence and Scalability

ê  Industry leading global service & support ê  Unmatched reliability ê  Right tools for right job ê  Focused on customer success

Infinera: A Differen8ated Technology Company

Enabling An Infinite Pool of Intelligent Bandwidth

DTN-‐X XT

DTN Cloud Xpress

DTN-‐X XTC

TM/TG-‐Series

Photonic Integrated Circuit (PIC)


ê  A leader in Intelligent Transport Network™ solu8ons ê  Revenue growth for past 3 years of greater than 20% YoY, more than double DWDM market growth* ê  Diversified customer base across mul8ple ver8cals

-‐  Several Tier 1s globally -‐ 3 of top 4 Internet Content Providers -‐  Several major global Cable/MSOs -‐ Mul8ple top Wholesale and Enterprise Carriers

Infinera – A Global Business

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


Infinera Differen8ators

PIC-‐enabled Technology •  PIC enables scalable, intelligent

func8ons: SDN, integrated switching, sliceable bandwidth

•  High capacity applica8ons: Long-‐Haul, Metro Cloud, Metro Core

Infinera differen:ates due to its technology, market expansion opportuni:es and ver:cally

integrated business model

Infinera PIC Fab

Ver:cal Integra:on •  Lower cost structure

than compe88on •  Supply chain control

New Purpose-‐Built Products •  Cloud Xpress for DC Interconnect •  TM-‐Series & XTC-‐2 for Metro •  XT-‐500 for Long Haul •  ~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


Outpacing Other SP Networking Players

Based on latest publicly-‐available financials

-‐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

Revenue Growth: Trailing 12-‐month revenue

128%

DTN-‐X for 100G Long-‐Haul

Cloud Xpress for 100G DCI

3x Revenue Growth

Mar ‘16

New Metro PorXolio introduced


Disrup8ve Technology Innova8on: The Infinera Way


Uniquely Delivers Massive Op8cal Bandwidth with PICs

3rd Party Discrete Op:cs Industry’s only 500G large scale Photonic Integrated Circuit

500G PIC

•  500G “WDM on a chip” •  Integrates over 600 op8cal func8ons

Compe::on

Moore’s Law-like for Optical


PIC Leveraged for Disrup8ve Systems Intelligent Transport Network

Scalability, Convergence, Automa8on Own Key Technologies & Processes

500+ patents filed/granted

Purpose-‐Built Systems

Switching ASICs

Intelligent So`ware

Photonic Integrated Circuits 500G Super-‐Channels

Ver:cally Integrated

XTC-‐2/2E XTC-‐10/4 XT DTN-‐X

Cloud Xpress DTN


Industry’s first 2.4 Tb/s transport technology

Introducing: The Infinite Capacity Engine

ê  Advanced electronics (DSP/ASIC): Next-‐gen FlexCoherent™ processor

ê  Cuyng-‐edge photonics: Fourth-‐gen Photonic Integrated Circuit (PIC)

The next step func:on in op:cal with Infinite Capacity Engine

DSP PIC

Infinera Infinite Capacity Engine


A Quantum Leap in Op8cal Transport to Terabits

Infinera Infinite Capacity

Engine

Bigger ê Mul8-‐terabit super-‐channels, up to 12x bigger

ê Mul8-‐terabit wire-‐rate L1 encryp8on

Smaller ê One of world’s smallest mul8-‐terabit subsystems

ê  Lower power: 82%↓ vs. compe88on

Beeer ê  Sliceable photonics, 53% lower TCO ê Advanced coherent, 40-‐60% improved capacity-‐reach performance


Market Expansion Strategy


Market Inflec:ons

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 Aggrega:on

2016

•  Scalable Op:cs and Integrated Packet-‐Op:cal Key for Simplifica8on

Accelerated 100G uptake & 40G decline

1st to market with purpose-‐built solu8on

Infinera Core + Transmode por|olio


Poised to Benefit from ICP-‐driven Bandwidth Demand

0

10

20

30

40

50

60

70

Netflix Google Apple Facebook Microsoft Hulu Amazon Gnutella

Cumulative % of North American Internet Traffic

1H11 2H14

Source: Sandvine Global Internet Traffic Reports Spring 2014 and 2H2014, TeleGeography

Top 7 Cloud & Content Providers: > 67% of delivered Internet traffic

Private backbones replacing Internet transit (i.e., massive server-‐to-‐server traffic growth)

Private

Internet

Trans-‐Atlan8c Bandwidth


Data Center Interconnect Capturing emerging cloud infrastructures


Cloud Architecture Drives Network Demands

sources: google.com, facebook.com

Search Query

930x Network Traffic

Cloud Data Center Network

1500 Miles

HTTP request


•  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 PlaXorm

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

Simple Opera:on •  Simple 1-‐2-‐3 step provisioning

•  Server-‐like opera:onal experience

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

Cloud Xpress – Op8mized for DCI


The Metro Market A new market for Infinera as 100G Metro begins to ramp


0

50

100

150

200

250

300

350

400

CY12 CY13 CY14 CY15 CY16 CY17 CY18 CY19

400

350

300

350

200

150

100

50

0

Ports (Th

ousand

s)

Infinera Ready for 100G Coherent Metro Ramp

Source: 2015 IHS 100G Coherent Op8cal Equip Ports Mkt Fcst

100G star:ng to ramp, rapid accelera:on

68% CAGR


Keys to Winning In Metro

ê  Follow the fiber •  Strong shiP from copper to fiber •  Fiber is founda8onal for mobile fronthaul, backhaul and 5G

ê  Hiyng the right power and cost points •  Metro environments are fiber-‐constrained; Modular and efficient

footprints are vital to ensure network and cost efficiencies •  Low power is impera8ve to minimize customers’ opex

ê  Mee8ng service providers’ needs •  Solu8on Range: Passive & semi-‐passive, ac8ve transparent transport

of range of L1 services (OTN, FC, Eth) •  Packet Op8cal integra8on; increasing network efficiency •  TDM as overlay; smart management of cost of legacy •  Opera8ng efficiency, ease of use, quick response 8mes on supply and

new features


ê  1G to 100G Packet-‐Op8cal ê  All metro/regional Layer T

applica8ons in a single pla|orm ê  Applica8on specific characteris8cs

•  Low Power •  High Density •  Superior Sync •  Low latency

Metro Solu8ons from Core to Access

30000+

Systems

650+

Customers

TM-‐Series

Metro Aggregation

& Core Network

Metro Access

Metro Access

Triple Play Broadband

Cable Broadband

Mobile Front/Backhaul

Business Ethernet

TG-‐Series Passive CWDM, DWDM and WDM-‐PON access infrastructure

20000+

Systems


XTC-‐2 Extends DTN-‐X to Lower Capacity Sites

Spokane Boise Salt Lake City

XTC-‐10

Sea~le Las Vegas

E.g. Right-‐sized DTN-‐X XTC for Smaller Ci8es

500G Super-‐channels

XTC-‐4 100G

100G 100G 100G XTC-‐2

100G

Common Hardware, E2E Network Management & Automa8on


XTC-‐4

XTC-‐10

Pan-‐European Network 500G

Super-‐channels

Large LH Core

Converged Packet Aggrega:on & 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-‐Op:cal Switching Access & Aggrega:on

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 Aggrega:on & OTN Switched Metro Core

XTC-‐10


Infinera Packet-‐Op8cal = Transport Op8mized Ethernet

Carrier Ethernet Switch

Infinera Packet-‐Op:cal

Line System

ROADM, Add-‐Drop, Amplifier

Layer 2 services

Transponders

EMXP

Advantages with WDM & Ethernet (L2) integra8on §  Op8miza8on of wavelength u8liza8on with L2 aggrega8on

§  Minimiza8on of router/switch hops with DWDM §  Flexible op8cal layer to handle capacity needs

§  Single management system WDM + Ethernet §  Space, Power, Spares, Training, …

Single, integrated system


ê  Mobile operators are increasingly evalua8ng and adop8ng Mobile Fronthaul •  Significant cost savings -‐ Lower power and less equipment than tradi8onal Backhaul •  More space efficient – Fewer Central Offices, less equipment at cell site

ê  Fronthaul spending expected to exceed $1B by 2020 (~$350m today)* ê  Infinera: Won 3 Fronthaul deals to date and in trials with mul8ple Tier 1s

Metro: Mobile Fronthaul Opportunity

Cell sitecabinet

RRH

RRH

RRH

RRH

RRH

RRH

D-‐RoFFronthaul Backhaul IP MPLS Network

Stacking of BBUsin Central Office

CO

CO

CO

COBBU

Central Office

Load balancing

RRH

RRH

RRH

Fiber all the way from antenna to Central Office

Cell sitecabinet

Cell sitecabinet

*Source: Ovum “Mobile Backhaul and Fronthaul Forecast Report: 2015-‐20 (September 2015


Reasons Infinera Wins in the Metro Market

4. Innova:ve Solu:ons in the Op:cal Access Market

2. End-‐to-‐end Packet-‐op:cal Integra:on from Access to Metro core

5. Significant opportunity to expand rela:onships with exis:ng Customer Base

3. Compe::ve solu:ons for the Mobile Front/Backhaul and 5G Transport

1. Cost and Power Efficiency Leadership


Long Haul Adding new tools to solve customer needs


Introducing the DTN-‐X XT Series

Long-‐Haul Interconnect Op:cally Switched (ROADM)

DTN-‐X XT-‐500

Super-‐channel; ILS integra8on Scalable

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

Instant Bandwidth, SDN enabled Programmable


End-‐to-‐End Solu8ons


The Infinera Unified End-‐to-‐End Por|olio


$15B* (2019) – Transport Market


Op8cal Market exceeds $15 billion by 2019

$4,764 $5,083 $5,398 $5,688 $5,934

$5,660 $6,220 $6,839 $7,529

$7,995 $517

$786 $1,093

$1,442 $1,843

$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 9.0%

CAGR 5.6%

CAGR 37.4%

* Long Haul and Metro forecasts based on average of latest forecasts from Ovum, IHS, Dell’Oro and ACG ** We es8mate 50% of DCI market to be incremental to Long Haul and Metro DWDM; underlying market es8mate from ACG WW Op8cal Forecast, December 2015


Infinera’s Ascending Global Market Posi8on

Source: Dell’Oro 4Q 15 Market Share report (Q1-‐15 to Q4-‐15).

Revenu

es ($

M)

Global Long Haul + Metro WDM – 2015

$2,000

$1,500

$1,000

$500

$0

$2,500

Cross-‐selling and revenue synergies create opportunity to con:nue to ascend


Differen8ated 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 (reconcilia8on to GAAP numbers may be found at www.Infinera.com) * All figures as of end of Q1-‐FY2016

Q1 ‘16 Performance ê  $245 million revenue (31% y/y growth) ê  50.2% gross margin ê  12.3% opera8ng margin Q2 ’16 Guidance ê  $250 -‐ $260 million revenue ê  47% -‐ 49% gross margin ê  10% -‐ 12% opera8ng margin ê  $0.15 -‐ $0.19 EPS

Industry leading profitable revenue growth Solid Balance Sheet* ê  $211M net cash ê  8 consecu8ve quarters of posi8ve Cash Flow from Ops ê  Last 4 quarters Cash Flow from Ops = $123 million ê  Last 4 quarters Free Cash Flow/Revenue = 8.2%


Purpose-‐Built Products: Good for Customers & Infinera

Innova8ng to address en8re $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-‐Op8cal for Metro Core, Aggrega8on, Access



Margin Growth Opportunity

$$$

Margin Drivers

Expanding Markets Drive Margin Growth

ê  Ver8cal Integra8on ê  Footprint vs Fill ê  Instant Bandwidth ê  Purpose-‐Built Products

Long-‐Haul

$ $Cloud Xpress $Metro $$$

$$$

Infinera PIC Fab


Great Time To Be In Op8cal For Infinera

End-‐to-‐end packet-‐op:cal

porXolio

Ver:cal IP ownership

Consolida:ng market TAM > $15B*



Thank You www.infinera.com

Documents

WinningThroughDisrup8oninthe TransportMarkets21.q4cdn.com/892601718/files/doc_presentations/2016/... · 2016. 5. 20. · 20"|"©"2016"Inﬁnera Keys"to"WinningIn"Metro"! Follow"the"ﬁber"