Slide 1: Third Quarter 2017 Results
UTStarcom Holdings Corp. Third Quarter 2017 Results Mr. Tim Ti, CEO NASDAQ: UTSI Mr. Eric Lam, VP of Finance November 20, 2017
Slide 2: Disclosure & Forward Looking Statements
Disclosure & Forward Looking Statements This investor presentation contains forward-looking statements, including statements regarding the Company's expectation regarding its strategic initiatives and business outlook. Forward- looking statements are based on current expectations, estimates, forecas
Slide 3: Highlights
Highlights • Capitalizing on near-term opportunities from robust demand in Japan and India • Positioning R&D investment for long-term growth • Returning to profitability 3 © 2017 UTStarcom Holdings Corp. Copyright. All Rights Reserved.
Slide 4: Immediate Opportunities
Immediate Opportunities Revenue upside driven by: • Market conditions: – Increases in mobile device usage – Speed of data transfer requirements – Higher service quality demand • New demand sources: – Japan 10G to 100G transition building momentum – India in midst of massive telecom infrastructure bu
Slide 5: Positioning for Long Term Growth
Positioning for Long Term Growth • Focused R&D investments – Further invest in specific technical capabilities – Attract targeted engineering talents by establishing a new R&D Center in Chengdu, the technology capital of western China • Additional global opportunities in the 10G to 100G transitions
Slide 6: SkyFlux – SDN + Source Routing
SkyFlux – SDN + Source Routing Service Network Orchestrator Analytics Intelligent Networking: Source Routing + SDN + 10/100GE Integrated Control and Management Platform (SDN) Enable network programmability, SDN-based automation, and high network scalability… SkyFlux Area A …while reducing complexity
Slide 7: SyncRing – Synchronization Solution
SyncRing – Synchronization Solution 4G/5G-ready SyncRing XGM synchronization ● Grand Master 4G 5G Sync requirement: Sync requirement: ±1.5μs ±260ns SyncRing XBC510 ● Boundary Clock/ GNSS Antenna Transparent Clock GNSS Antenna Core CO T-GM ePRTC IP Network T-GM T-BC T-BC SyncE/PTP support Netman 6000
Slide 8: New Integrated Smart Retail Solution
New Integrated Smart Retail Solution 3rd EPR Big Data Analytics Operator Open API China cashier-free retail market Center analysis – transactions per year IU+ Cloud 20000 18105 Quickly growing market 15000 10971 10000 Internet 5000 4592 612 1204 389 0 2017 2018 2019 2020 2021 2022 Retail Chain Wifi/
Slide 9: Financial Highlights
Financial Highlights • Achieved revenue growth and margin improvements focusing on high value products • Continued prudent management of operating expenses • Attained positive operating cash flow – Net add from operating activities was $2 million • Maintained solid balance sheet – $91 million in cas
Slide 10: Revenue
Revenue • Non-GAAP revenues in Q3 2017 were $26.0 million, compared to $31.5 million in Q2 2017 and $16.4 million in Q3 2016 • Revenue growth driven by Japan and India US$ in millions 35 30 25 20 15 31.5 25.7 27.5 26.0 22.3 22.5 10 20.0 16.4 5 0 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q
Slide 11: Gross Profit
Gross Profit • Non-GAAP gross profit in Q3 2017 were $10.6 million, compared to $8.9 million in Q2 2017 and $4.0 million in Q3 2016 US$ in millions 12 10 8 6 10.1 10.6 9.1 8.9 4 7.9 8.3 6.1 2 4.0 0 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 UTStarcom Confidential 11 © 2017 UTSta
Slide 12: Gross Margin
Gross Margin • Non-GAAP gross margin in Q3 2017 were 40.6%, compared to 28.3% in Q2 2017 and 24.4% in Q3 2016 • Favorable product mix toward PTN 765 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 41.2% 40.4% 40.6% 36.5% 15.0% 30.6% 27.2% 28.3% 24.4% 10.0% 5.0% 0.0% 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017
Slide 13: Operating Expenses
Operating Expenses • Non-GAAP operating expenses in Q3 2017 were $7.2 million, compared to $7.1 million in Q2 2017 and $5.1 million in Q3 2016 • YoY increase due to higher sales incentives/bonus • 28% of sales, down significantly, will be similar in Q4 US$ in millions 8.0 7.0 6.0 5.0 4.0 7.1 7.2 6.6
Slide 14: Operating Income (Loss)
Operating Income (Loss) • Non-GAAP operating income in Q3 2017 were $3.3 million, compared to $1.8 million in Q2 2017 and operating loss of $1.1 million in Q3 2016 US$ in millions 5.0 4.0 3.0 2.0 3.7 3.9 3.3 2.7 1.0 1.9 1.8 0.0 -0.6 -1.1 -1.0 -2.0 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017
Slide 15: Net Income (Loss)
Net Income (Loss) • Non-GAAP net income in Q3 2017 were $2.5 million, compared to $2.5 million in Q2 2017 and net loss of $1.5 million in Q3 2016 US$ in millions 10.0 5.0 5.5 6.2 0.3 2.5 2.5 - -1.5 -1.7 -5.0 -10.0 -21.2 -15.0 -20.0 -25.0 2015 Q4 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q
Slide 16: Balance Sheet and Cash Flow
Balance Sheet and Cash Flow • $91million in cash • Cash provided by operating activities was $2 million • Cash used in investing activities was $3 million © 2017 UTStarcom Holdings Corp. Copyright. All Rights Reserved. 16
Slide 17: Q3 2017 GAAP and Non-GAAP Financials
Q3 2017 GAAP and Non-GAAP Financials GAAP and Non-GAAP Key Financial Highlights Q3 2017 Y/Y Q3 2016 Y/Y GAAP Change* Non-GAAP Change* Revenue $26.0 +58.9% $26.0 +58.9% Gross Margin 40.5% +1620 bps 40.6% +1620 bps Operating Expenses $7.5 +38.5% $7.2 +41.9% Operating $3.1 +$4.5 $3.3 +$4.4 Income/(Loss
Slide 18: Investor Relations Contacts
Investor Relations Contacts For investor and media inquiries, please contact: UTStarcom Holdings Corp. Tel: +852-3951-9757 Fei Wang, Director of Investor Relations Email: fei.wang@utstar.com Ning Jiang, Investor Relations Email: njiang@utstar.com In the United States: The Blueshirt Group Ralph Fong