Transcript
TRANSFORMING NETWORKS THAT CONNECT, MOVE, AND STORE BIG DATA PMC Investor Relations July 2015
SAFE HARBOR STATEMENT This presentation contains forward looking statements which are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to risks described in PMC-Sierra’s SEC filings. PMC-Sierra undertakes no obligation to update any forward looking statements. This presentation also includes certain non-GAAP financial measures, which are reconciled to the most directly comparable GAAP financial measures in the financial news releases posted at our website, http//investor.pmcs.com.
2
MISSION STATEMENT
PMC is the Semiconductor and Software Solutions Innovator Transforming Networks that Connect, Move, and Store Big Data
3
PMC AT-A-GLANCE Founded: 1984 Public: 1991 Stock Symbol: PMCS Headquarters: Sunnyvale, CA
Montreal Allentown
Vancouver Roseville Sunnyvale Houston
Colorado Springs
Italy
Israel
Shanghai
Bangalore
Penang
WW Employees: ~1,200 2014 Annual Revenue: $526 Million Business Segments: Storage, Optical & Mobile Website: www.pmcs.com Corporate Headquarters International Headquarters
4
Design Center
KEY INVESTMENT HIGHLIGHTS • World leader in Storage Systems SAS port connectivity • World leader in high-performance SSD controllers • World leader in enabling 100G OTN switching deployment • Best-in class gross margins in the semiconductor sector at ~70% • Long-term operating model offers best-in-class operating leverage • Targeting a $2.3 billion market growing at a CAGR greater than 10% 2014 Revenue: $526 Million
70% 18% 12% Storage
Optical 5
Mobile
Revenue, in millions
TRANSFORMED REVENUE PROFILE 700
35%
600
30%
500
25%
400
20%
Mobile Optical
300
15%
Storage Legacy as % of total
200
10%
100
5%
0
0% 2007
2008
2009
2010
2011
2012
Note: Legacy includes SONET, ATM and MIPS Processors
6
2013
2014
UNPRECEDENTED TRAFFIC GROWTH
2008
2010
2012
2014
EVERYTHING AS A SERVICE
2016
MOBILE DEVICE PROLIFERATION
2018
DIGITIZATION OF EVERYTHING
BIG DATA TRENDS DRIVING GROWTH 7
“From 2013 to 2020, the digital universe will grow by a factor of 10 – from 4.4 trillion gigabytes to 44 trillion. It more than doubles every two years.”
A DECADE OF DIGITAL UNIVERSE GROWTH: STORAGE IN TRILLIONS OF GIGABYTES
50 45 40 35 30 25 20 15 10 5 0 2013
- IDC
Source: IDC’s Digital Universe Study, Sponsored by EMC, April 2014
8
2020
PMC’s GROWING MARKET SEGMENTS PMC SAM, $ in Millions
$3.1B $2.3B
$1.1B Carrier
$960 Carrier
$1.3B
$2.0B
Storage
Storage 2014
2017
PMC poised to capture significant revenue growth through market segment expansion and increased share Note – all numbers are based on data from IDC, Gartner & PMC Estimates Storage includes $80M SAM in 2014 and $90M SAM in 2017 representing printer ASICs to enterprise customers
9
GROWTH DRIVERS
OTN
CLOUD DATA CENTER
FLASH CONTROLLER 12G SAS
Full Potential Run Rate
Incremental Annual Revenue
H2’17
$100 - $150M
2017
$60 - $80M
H2’17
$100 - $150M
H2’16
$70 - $90M
Target / Opportunity OTN Switching in Metro
Highest Density Solutions
Enterprise SSDs
>10% share gain in Server & Storage; 6G to 12G transition
$330 - $470M
PMC still to realize ~75% of the Incremental Annual Revenue OTN = Optical Transport Network SAS = Serial Attached SCSI
10
STORAGE
PMC STORAGE SOLUTIONS • Premier supplier of storage solutions optimized for Data Centers • Focused and investing for the storage solutions market segment - Annual storage revenue >$370M - Leading-edge silicon and hardware expertise - Robust and industry-hardened software
• Comprehensive product portfolio • Dedicated global engineering support team • Engaged with worldwide ODMs and system builders
12
LEADING SOLUTIONS FOR SERVERS AND STORAGE SYSTEMS I/O Solutions
Highest port density & highest performance
Expander Solutions
RAID Solutions
Flash Solutions
13
Industry-leading port count & signal integrity
Flashtec™ Industry’s highest performance NVMe controller
PMC IN ENTERPRISE STORAGE A H I S T O RY O F I N D U S T RY L E A D E R S H I P
2014 2008 1st ControllerBased Encryption Solution
2013
1st 16-port SAS and SATA I/O Controllers
Industry’s Highest 1st NVMe Enterprise Performance Flash Controller 12G SAS Controllers enables highest and Highest Port performing SSDs Expanders
1st NVRAM Drive establishes ultrafast storage class memory tier
2012
2007
2014
2009
2012
1st 6Gb/s SAS RoC and SAS/SATA Protocol Controllers
1st PCIe Gen3 RAID Controller
2013 1st Single Chip 24-port SAS HBA & 1st 24-port, Low Profile SAS/SATA RAID Adapter enable densification of the Data Center
14
PMC SAS: MARKET LEADER CONTINUING TO GAIN SHARE % Of Total SAS Ports Shipped 100%
Other
90%
•
PMC is the market segment share leader in 6G SAS
•
PMC to gain >10% share in the 12G SAS transition in server and storage systems, based on current design wins
80% 70%
Competitor
60% 50% 40% 30% 20% 10% 0% 2007
2008
2009
2010
2011
2012
2013
2014
7 OF THE TOP 7 STORAGE OEMS AND 3 OF TOP 3 SERVER OEMS SHIPPING WITH PMC SAS PRODUCTS
SAS market segment share data as of year-end 2014
15
THE STORAGE OPPORTUNITY D ATA C E N T E R & F L A S H S O L U T I O N S A C C E L E R AT I N G G R O W T H PMC SAM, $ in Millions
$2.0B
$85 Enterprise SSD Controller
$380
$1.3B
Enterprise SSD Controller
$980
$1.3B
Data Center
Data Center
$275
$325
Storage System
Storage System 2014
2017
PMC poised to capture significant revenue growth from 2014 to 2017
Note – all numbers are based on data from IDC, Gartner & PMC estimates Data Center includes $80M SAM in 2014 and $90M SAM in 2017 representing printer ASICs to enterprise customers
16
CLOUD DATA CENTERS DEMAND THE HIGHEST-DENSITY SOLUTIONS INITIAL DEPLOYMENTS
2014 DEPLOYMENTS
• Initial deployments were based on standard motherboard/form factors - Challenge: Inefficient, not optimized for Power/Density
• Trend towards customization for hyperscale deployments with demanding density/power/cost requirements - OpenCompute, Windows Cloud Servers, OpenStack, Project Scorpio
17
PMC OFFERS HIGHEST DENSITY SOLUTIONS HBA: INDUSTRY-LEADING PERFORMANCE
SERIES 8: CORNERSTONE OF 12GB/S PRODUCT LINE-UP
• Industry’s only PCIe Gen3 low-profile/MD2 formfactor with 16 native ports
• Industry’s only 16-port native 12Gb/s SAS Adapter with embedded flash backup – all within an LP/MD2 form-factor
• Industry’s first solution to take full advantage of PCIe Gen3 bandwidth • Industry’s first SAS/SATA HBA solution capable of over 1M IOPS
• Advanced SSD caching software, maxCache™, helps IT managers get the most value and performance out of their storage assets
• Industry’s only encrypted HBAs with maxCrypto™ hardware encryption
• Industry leading 700,000+ IOPS; 60% faster than its predecessor
18
SERIES 8 INDUSTRY REVIEW: AMAZING THROUGHPUT “The [Adaptec] ASR-8885 is a great RAID adapter. It offers 16
ports of 12Gbps SAS with amazing throughput. We had no issues hitting 700K IOPS and 6GB/s. Those are amazing maximums, but we were more impressed with the incredible consistency that we observed. With sub-microsecond variance,
the Series 8 destroyed our latency tests. Although prices may be high for the consumer market, the pricing for enterprise customers is very competitive, especially on a per port basis.” - SSD Review –Sept 30, 2013
Note: Review based on Adaptec (by PMC) ASR-8885 12Gb/s PCI Express RAID Adapter Review – RAID Testing With 8 HGST 12Gbps SSDs
19
FLASHTEC™ INDUSTRY-LEADING NVMe FLASH SOLUTIONS • Performance Dominance - Industry’s highest performance NVMe controller for PCIe SSD and NV-DRAM applications
• Flexible Architecture - Customers can easily optimize and deliver their IP providing cost/performance (cost per I/O) tuning
• Broad Market Support - Driver development across all major Operating Systems and NAND suppliers
20
PMC LEADERSHIP IN FLASH • Uniquely positioned in the Enterprise - Focused on enterprise PCI Express (PCIe) SSD controllers - Leadership products, including: • World’s first enterprise NVMe flash controllers for PCIe solutions • World’s first enterprise NVMe NV-DRAM controllers for PCIe solutions
• Fast growing market – transitioning from SAS/SATA to PCIe SSDs - Much lower latency and 10X the IOPs
• Marquee customers - Design wins across a broad customer base: • Tier 1 SSD vendors • NAND suppliers • Tier 1 OEM and hyperscale customers • All-Flash array vendors
• Flashtec™ NVMe Controllers in volume production 21
PMC EXPANDING WITH FAST-GROWING ENTERPRISE SSD CONTROLLERS ENTERPRISE SSD PCIe CONTROLLER SAM ($M USD)
WW ENTERPRISE SSD REVENUE SHARE BY INTERFACE $12,000
$380
$10,000
Millions
$8,000
$6,000
$4,000
$85
$2,000
$2014
2015
PCIe
2016
SATA
2017
2018
SAS
Source: Worldwide Solid State Drive 2014–2018 Forecast and Analysis, Doc # 248727, June 2014
22
2014
2017
FLASHTEC™ NVRAM DRIVE N E W M E M O RY T I E R F O R H Y P E R S C AL E D ATA C E N T E R S T O R AG E
• New ultra-fast storage class memory tier - 10X higher performance than the fastest SSD - More than 10 million IOPS in Memory Mapped Access - 1 million IOPS (4KB) as a block device - Industry-standard NVMe interface - Use cases include metadata store in a scale-out file system or as a caching tier in an all-flash array
23
STORAGE SYSTEM SAM OPPORTUNITY PMC SAM, $ in Millions
$325
• Switching SAM Growth Drivers
$275 $180
- PCIe switching will accelerate SAM Expansion - PCIe SSD growth driving switch demand
$245
$95
$80
2014
2017
SAS Controller & Storage Switching
PMC is #1 in SAS Switching
FC Network & Interconnect
* Note – all numbers are based on data from IDC, Gartner & PMC estimates
24
PMC WELL POSITIONED IN ENTERPRISE AND DATA CENTER MARKETS #1 in SAS ports shipped #1 in Storage Systems #1 in Performance #1 in Density / Port Count #1 in Enterprise NVMe Flash Controllers # 2 in WW Server OEM / Channel
25
CARRIER
PMC IN METRO OPTICAL TRANSPORT A H I S T O RY O F N E T W O R K L E A D E R S H I P
PMC’s SONET/SDH, ATM and T1/E1 solutions form the backbone of global voice and data convergence 1990 PMC establishes early leadership in networking with the 1st SONET device and the 1st Asynchronous Transfer Mode (ATM) solutions
2000
HyPHY and META solutions lead transition to converged OTN infrastructure across IP and optical
2010
PMC enables new generation of metro transport equipment with both Ethernet and T1/E1 services over SONET/SDH
2015
DIGI-120G 1st OTN processor for 10G, 40G and 100G accelerates deployment of OTN Switching
27
META-120G 1st tri-speed converged Carrier Ethernet/OTN framer
DIGI-G4 1st OTN processor for dense 4x100G enables transition to 400G OTN switching in metro networks
OTN - NEW OPTICAL TRANSPORT LAYER
28
THE CARRIER OPPORTUNITY PMC SAM, $ in Millions
$1.1B
$290
$960
$475
OTN
OTN
$120
$90
SONET / SDH
SONET / SDH
$550
$560
OPTICAL
PON & MOBILE BACKHAUL
2014
2017
PMC poised to significantly increase share in the OTN segment
* Note – all numbers are based on data from IDC, Gartner & PMC estimates
29
PMC LEADING IN OTN SWITCHING • PMC has been a leader in optical transport for over a decade • Carriers and Data Centers deploying 100G OTN - Backbone deployment underway - Metro deployment is still ahead – bandwidth doubling every two years - Data Center
Data Center traffic has exceeded Data Center
User traffic
• Leading global optical network transition to 100G OTN Switching - Enabling 400G OTN switching in metro networks - Enabling security cloud networking with low latency OTN encryption - Reducing power by 50% per 100G port at each product generation - Carrier hardened OTN Switching SDK accelerating OEM time-to-market
• Four generations of OTN processors with wins at 8 of the 9 top OEMs
30
NETWORK ARCHITECTURE OF CHOICE: 100G + OTN SWITCHING + SECURITY • Increases fiber capacity by 10X • 40%+ more efficient use of optical resource • Makes 100G deployments economical • Virtualizes network architecture • Security for new cloud services
31
INNOVATIVE SOLUTIONS: OTN PROCESSOR PORTFOLIO Gen 1:
Gen 2:
Gen 3:
Gen 4:
Transition from SDH to OTN in Access and Metro
Optimization of Transport Network for Packet
Enabling 10G and 100G Port Cards
Enabling Highest Density 400G Cards
10G-40G Line Card Multi-service SFP/10G
10G-40G Line Card Multi-service SFP/10G with ODU0/flex
100/200G Line Card Multi-service 10/40/100G with ODU0/flex
400G Line Card Multi-service 10/40/100G with OTN Encryption
IN PRODUCTION
IN PRODUCTION
IN PRODUCTION
SAMPLING
32
WINPATH TM : LEADERSHIP IN ACCESS AGGREGATION • Segment leader in hybrid packet/TDM backhaul with WinPath NPU
WinPath NPU 4 Generations of Innovation
- WinPath4 purpose-built processor for 40G Carrier Ethernet Routeron-Chip - WinPath3 for 10G access backhaul - WinPath3-SuperLite for enterprise backhaul and 3G base stations
• OpenFlow-ready Silicon and Software Architecture - Programmable data plane to enable OpenFlow support for SDN
100+ design wins to date 33
CONTINUING TO LEAD JAPAN PON DEPLOYMENTS • First to 20M+ ONUs • First to cut PON power by 50%
20M ONUs EPON
• Wide Carrier footprint in PON access Japan, Korea, Europe
15M ONUs
• Enabled “ONU in SFP” form factor to reduce cost & application use cases
10M ONUs
GPON
EPON GPON
5M ONUs
EPON
2006
2009
Today
PMC provides mature and field proven end-to-end solutions for EPON and GPON
34
PMC KEY TAKEAWAYS • Semiconductor and software solutions innovator transforming storage, optical, and mobile networks - Expertise to Connect, Move, and Store Big Data
• Franchise player in key infrastructure segments - Growth trends: Cloud services, Internet of Things, digitization of content, mobile proliferation and distribution services - Leadership in SAS, Flash and OTN technology
• New product cycles in expanding addressable markets: - Flash, 12G SAS, Hyperscale Data Center, OTN - New product cycles began in late 2013 & 2014 after years of investment - SAM to increase from ~$2.3 Billion to ~$3.1 Billion between 2014 and 2017
• Strong financial performance
35
OPERATING RESULTS N O N - G A A P Q 3 ’ 1 3 – Q 2 ’ 1 5 ( $ U S I N M I L L I O N S E X C E P T % AN D E P S )
Q3’13
Q4’13
Q1’14
Q2’14
Q3’14
Q4’14
Q1'15
Q2’15
$128.4
$126.9
$126.5
$126.8
$135.5
$136.9
$133.1
$124.8
90.2
90.0
89.1
90.2
95.4
96.4
93.4
87.8
Gross Profit Margin
70.3%
70.9%
70.5%
71.1%
70.4%
70.5%
70.2%
70.4%
Operating Expenses
(70.0)
(70.3)
(72.1)
(71.2)
(71.9)
(72.8)
(71.8)
(68.7)
Operating Income
20.2
19.7
17.1
19.0
23.5
23.6
21.6
19.1
Operating Margin
15.8%
15.5%
13.5%
15.0%
17.3%
17.2%
16.2%
15.3%
19.9
19.0
16.0
18.3
22.5
22.7
20.9
18.0
Revenue Gross Profit
Net Income EPS
$
0.10 $
0.09 $
0.08 $
0.09 $
0.11 $
0.11 $
0.10 $
0.09
Financial measures shown for periods prior to the fourth quarter of fiscal 2013 (“Q4’13”) may differ from those previously published as a result of changes made in connection with the restatement of certain GAAP financials as presented in our Annual Report on Form 10-K for fiscal year ended December 28, 2013 filed on February 26, 2014. Also, for reconciliation between GAAP and non-GAAP financials, please refer to the quarterly summary published under the Financial Reports tab of the Investor Relations page of the PMCS website.
36
STRONG BALANCE SHEET ( $ U S M E X C E P T D S O S AN D I N V E N T O RY T U R N S ) Sept 2013
Dec 2013
Mar 2014
June 2014
Sep 2014
Dec 2014
Mar 2015
Jun 2015
Total Cash & Investments*
$210
$214
$193
$214
$228
$266
$230
$242
Accounts Receivable
$61
$56
$57
$58
$57
$55
$62
$58
Inventory
$35
$31
$30
$31
$35
$38
$36
$36
-
$30
$5
-
-
-
$10
$37
$210
$184
$188
$214
$228
$266
$220
$205
Key Balance Sheet Items
Revolving Debt Net Cash Quarterly Metrics DSOs
43 days 40 days 41 days 42 days 38 days 37 days 43 days 42 days
Inventory Turns
4.3x
4.8x
5.0x
4.7x
4.7x
4.3x
4.5x
4.1x
Capex & IP Additions**
$3.8
$7.5
$4.2
$4.6
$3.6
$3.0
$4.9
$7.8
Depreciation & Amortization
$3.9
$4.5
$5.8
$5.4
$5.5
$5.8
$5.7
$6.1
Financial measures shown for periods prior to the fourth quarter of fiscal 2013 (“Q4’13”) may differ from those previously published as a result of changes made in connection with the restatement of certain GAAP financials as presented in our Annual Report on Form 10-K for fiscal year ended December 28, 2013 filed on February 26, 2014. Also, for reconciliation between GAAP and non-GAAP financials, please refer to the quarterly summary published under the Financial Reports tab of the Investor Relations page of the PMCS website. *Cash + Cash Equivalents + Short-term Investments + Long-term Investment Securities **Capex is cash purchase of property and equipment from cash flow statement 37
LONG-TERM FINANCIAL MODEL (NON-GAAP)
LongQ1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Term Model
2010
2011
2012
2013
2014
Gross Margin %
68.2%
69.3%
70.3%
70.5%
70.6%
70.5%
71.1%
70.4%
70.5%
70.2%
70.4% 67-69%
R&D %
27.3%
32.4%
38.3%
38.5%
35.6%
37.0%
36.5%
34.0%
35.1%
34.5%
36.1% 27-30%
SG&A %
13.4%
15.0%
17.6%
18.6%
19.2%
20.0%
19.6%
19.1%
18.1%
19.4%
18.9% 12-13%
Operating Income % 27.5%
21.9%
14.4%
13.5%
15.8%
13.5%
15.0%
17.3%
17.2%
16.2%
15.3% 25-30%
Financial measures shown for periods prior to the fourth quarter of fiscal 2013 (“Q4’13”) may differ from those previously published as a result of changes made in connection with the restatement of certain GAAP financials as presented in our Annual Report on Form 10-K for fiscal year ended December 28, 2013 filed on February 26, 2014. Also, for reconciliation between GAAP and non-GAAP financials, please refer to the quarterly summary published under the Financial Reports tab of the Investor Relations page of the PMCS website.
38
NASDAQ: PMCS www.pmcs.com
