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Building Carrier-scale Personalized Networks

Building Carrier-scale Personalized Networks. (NASDAQ : PKT ). Cowan Technology, Media & Telecom Conference May 30, 2012. Disclaimer.

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Building Carrier-scale Personalized Networks

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  1. Building Carrier-scale Personalized Networks (NASDAQ : PKT) Cowan Technology, Media & Telecom Conference May 30, 2012

  2. Disclaimer 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.

  3. Procera at a Glance Rapid Revenue Growth ($ in millions) • Leading provider of Intelligent Policy Enforcement • Founded in 2002; shifted focus to IPE in 2008 • 115 employees; 30% of headcount in R&D • Software-based solution focused on traffic intelligence and management • Enabling explosive growth in mobile dataand video • Significant customer growth • 20 Tier-1 service provider wins in 4 years • TAM growing at 43% 5-year CAGR to $2.1 bn CAGR: 60% 3

  4. Procera: A History of Innovation for IPEAccelerating the Pace of IPE Technology • PSM 5 PL10000: 1st 80 Gbps DPI solution – 3 years ahead of competition PL10000 & PL8820: 1st 120 Gbps and 30 Gbps shipping IPE solutions PSM 5: 1st 3GPP IPE system to support 50,000 TPS – no equivalent today PL20000: 1st 100 GE capable IPE solution, 320 Gbps capacity Feb 2010 July 2008 July 2010 Jan 2011 Jan 2012 Feb 2011 Nov 2011 Report Studio: 1st fully customizable analytics leveraging rich IPE data PL8720: 1st 10GE DPI Appliance – 1 year ahead of competition IPv6: 1st IPE system to support IPv6 – 1 year ahead of competition 4

  5. Investment Highlights ü ü ü ü ü ü 5

  6. 78% revenue growth YoY for Q1:12; Bookings up 53% Gross margin increased to 70% in Q1:12 from 61% in Q1:11 Non-GAAP net income $1.9M or $0.13 per sharein Q1:12 Added 12 new service providers in Q1:12 (2 new Tier-1s) plus 41 new higher education product orders Expects to exceed 30% revenue growth YoY in 2012 APAC Fixed Carrier Asian Fixed/Mobile Malaysian Mobile Operator E. EuropeanCable Company U.S. Cable Company PacketLogic PL8920 – establishing new throughput density benchmark – 50Gbps at appliance price IPL20000 – industry's highest performance IPE at 320Gbps and first to 100GE Report Studio – customizable analytics and reports based on deepest collection engine available Smart Campus2.0 – turnkey network management solution for Higher Education adds User Awareness ScandinavianCarrier E. European Carrier AustralianCarrier Canadian Cable Company • Accelerating Business Momentum Tier-1 Customer Wins: 2010 – 2012 New Product Releases Mobile Cable Fixed / Mobile 2 New APAC Mobile Operators Strong Partnership Momentum Financial Momentum

  7. Growing Data Consumption Drives TAM Global IP Traffic Standalone DPI Product Market (PB per Month) ($ in millions) 64,181 CAGR: 33% 49,985 CAGR: 43% 38,246 28,498 20,405 2010 2011E 2012E 2013E 2014E 2010 2011E 2012E 2013E 2014E 2015E Internet Data Managed IP Mobile Data Source: Cisco Visual Networking Index 2011. Source: Infonetics 2011. Catalysts for Continued Growth Explosive Demand for Online Content Mobile Device Growth and Smartphone Penetration Innovative Service Creation by Network Operators 7

  8. Consumers Have Unique “App Clouds”Service Personalization Delivers Individual Value My Business Plan My Networking Plan My Apps Plan My Teen Plan 8

  9. Upsell Opportunities for Carriers Turbo Top-Up Happy Hour Video Family Plans Prioritization Parental Control 9

  10. Why Are Operators Buying IPE? Solution Benefit 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 Intelligence Network Optimization Security / Protection Personalized Services 10

  11. IPE Increasingly Driving Revenue Before Now DPI IPE Service Innovation Personalized Charging Intelligent Usage Management • Traffic Engineering • P2P Traffic Management • Congestion Management 11

  12. Procera’s Uniquely Capable IPE SolutionsAwareness, Analysis, Control PSM PIC PRE PacketLogic Real-Time Enforcement PacketLogic Subscriber Manager PacketLogic Intelligence Center • Fastest policy interaction available – approaching 100k transactions per second • Easiest service creation and integration into existing infrastructure • Highest performing (10x collection) and most detailed statistics collection available • Report Studio delivers most customizable analytics for business decisions • Highest performing and most scalable IPE solutions • Subscribers • Throughput • Services • Signatures 12

  13. Procera PacketLogic Solutions Core PL8k 2RU appliance,<30 Gbps, SP/MNO edge + core Real-Time Enforcement PL7k 1RU appliance,<4 Gbps, access + enterprise PL10k/PL20k 13/14RU ATCA chassis, <320 Gbps, SP/MNO core Edge Bandwidth Access PL1420 PL1200 PLM1200 Subscriber Manager Intelligence Center 13

  14. Illustrative Examples of Customer Oppty. Classification Size 3 Year Revenue Cycle Global Opportunities • ~25 Large service providers globally • Country incumbents; developed markets and large emerging markets LargeTotal Opportunity:$25 – $50 mm > 40 mm Subscribers • ~150 Medium service providers globally • Regional operators; competitors to incumbents Medium Total Opportunity:$10 – $25 mm 5 – 40 mm Subscribers • ~325 Small service providers globally • Greenfield operators, alternative providers and emerging markets Small Total Opportunity:$3 – $5 mm < 5 mm Subscribers Bookings Cumulative Bookings 14

  15. Our Technology Differentiation Highest Industry Performance Scalable, Software-Based Solution Robust Reporting and Analytics Largest Signature Database – Highly Accurate Traffic ID Shortest Product Release Cycle – Persistent Innovation Seamless Partner Integration Cutting Edge IPE Technology Performance 15

  16. Competitive Landscape Performance & Scalability IPE Features 16

  17. Our Growth Strategy Extend our technology advantage and leadership Increase our Tier-1 SP customer count Harvest our current customer opportunity Pursue new partnerships and tactical acquisitions Drive margin improvement 17

  18. Experienced Leadership Name Title Prior Experience Swedish Military IDA Systems Swedish Trade Council TheSchoolbook.com 18

  19. Solid Q1:12 Results • Revenue of $12.3 million, up 78% from Q1:11 • Bookings of $14.7 million, up 53% from Q1:11 • Added 12 new service provider customers • Won two new Tier-1 customers in Asia Pacific and Western Europe regions • Received 26 follow on orders from existing service provider customers • Support revenue of $2.5 million, up 92% from Q1:11 • Non-GAAP net income of $1.9 million, compared to non-GAAP net income of $136,000 in Q1:11 • Generated $3.6 million of cash flow from operations • Cash & investments was $41 million at March 31, 2012 • Raised $88 million in secondary offering of common stock in April 2012 19

  20. Attractive Long-Term Financial Model(1) 2010 2011 Q1 2012 Long-Term (1) Excludes stock-based compensation and business development expenses. 20

  21. Investment Highlights ü ü ü ü ü ü 21

  22. Thank You

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