Slide 1: ADTRAN Investor Overview
ADTRAN Investor Overview Needham Virtual Security, Networking and Communications Conference November 17, 2020 2020 © ADTRAN, Inc.
Slide 2: Safe Harbor Statement
Safe Harbor Statement During the course of this meeting, ADTRAN representatives expect to make forward-looking statements, which reflect management’s best judgment, based on factors currently known. However, these statements involve risks and uncertainties, as detailed in our Annual Report on Form 1
Slide 3: ADTRAN at a Glance
ADTRAN at a Glance We are a leading global provider of networking equipment, software and services. • Founded in 1985 • Publicly traded since 1994 (NASDAQ: ADTN) • Headquartered in Huntsville, Alabama • U.S. and European engineering, manufacturing, and support • $530M Revenue (2019) • More than a mi
Slide 4: Our Vision
BRINGING THE WORLD TOGETHER OUR VISION To enable a fully connected world where the power to communicate is available to everyone, everywhere. OUR UNIQUE APPROACH, UNMATCHED DOMAIN EXPERTISE AND INNOVATIVE PLATFORMS, MAKE YOUR NETWORK THE WAY IT SHOULD BE. 4
Slide 5: Our Business Focus
OUR BUSINESS FOCUS. Your Network. The Way It Should Be. Cost-effectively and in a Access solutions with Control and insight into timely manner meet highest capacity and service delivery broadband deployment lowest latency experience guidelines Fiber Access & Connected Home & Global Services & Fiber
Slide 6: Solutions Focus
ADTRAN PORTFOLIO SOLUTIONS FOCUS Broadband Access Connected Home and Business Fiber Access Systems Fiber Extension Solutions Connected Home Connected Business Service Automation & Optimization Service Automation Cloud-based E2E Service Insight and Optimization
Slide 7: Financial Reporting
FINANCIAL REPORTING ADTRAN operates in two business segments: (1) Network Solutions includes hardware and software products. (2) Services & Support includes a portfolio of services that complement our products. Three revenue categories span across these two segments: (1) Access & Aggregation is focu
Slide 8: Demand Drivers
BRINGING THE WORLD TOGETHER DEMAND DRIVERS Cloud solution providers are driving the demand for bandwidth intensive applications with simple and easy, user-driven interfaces. Streaming Cloud Connected Video Gaming Devices 8
Slide 9: Demand Catalyst: COVID-19
BRINGING THE WORLD TOGETHER COVID-19 DEMAND CATALYST COVID-19 has created unprecedented demand to close the digital divide. Telemedicine Work From Entertainment Home On-line Connect with Learning Friends/Family 20 - 40% increase broadband traffic 9
Slide 10: Investment Drivers
BRINGING THE WORLD TOGETHER INVESTMENT DRIVERS Evolution of government funding programs, regulatory broadband policies investment community guide operators’ network investment strategies. . Gig 5G & Cable Govt Subsidies, Govt Regulations Buildout VC Investment and Policies 10
Slide 11: Investment Catalyst
BRINGING THE WORLD TOGETHER INVESTMENT CATALYST Providing a technically advanced alternative to incumbent suppliers as national operators Supply Chain look to limit capital expenditure and supply chain risk. Integrity Trade Network Security Funding TTM Barriers Concerns Obligations 11
Slide 12: Operator Imperatives
BRINGING THE WORLD TOGETHER OPERATOR IMPERATIVES Communications solution providers are investing in their networks to promote increased subscriber ARPU, retention and acquisition while streamlining their operations. Increase Retain / Expand Reduce ARPU Market Share OpEx 12
Slide 13: Market Dynamics
BRINGING THE WORLD TOGETHER MARKET DYNAMICS DEMAND INVESTMENT IMPERATIVES Streaming Cloud Connected 5G & Cable Govt Subsidies,Regulation, Increase Retain / Expand Reduce Video Gaming Devices Buildout VC Investment Policies ARPU Market Share OpEx ADTRAN OPPORTUNITY Monetizing the connected home and b
Slide 14: The Opportunity
BRINGING THE WORLD TOGETHER THE OPPORTUNITY Monetizing the connected home and business while expanding network capabilities and modernizing access architectures. $32B $18B $14B 3%CAGR 5%CAGR 1%CAGR Connected Home Broadband Network Evolution & Business Access & Service Velocity 2021 – 2025 5yr SAM 20
Slide 15: The Network
BRINGING THE WORLD TOGETHER THE NETWORK End to End Network Control, Visibility, Automation & Optimization Aggregation and Cloud Services and Transport Network Business Enterprise Management Networking N x 100GE XGS-PON GPON Fiber Connected Single Access Family XGS-PON Home GPON Aggregation and Outsi
Slide 16: Fiber Access & Fiber Extension
Broadband Access Innovation FIBER ACCESS & FIBER EXTENSION Your Network. The Way It Should Be. Retain / Expand Broadband Broadband Access Market Share Capacity & Coverage Innovation 16
Slide 17: Maximizing the Market
MAXIMIZING THE MARKET Providing distinct and differentiated value for each fiber access customer segment. Regional, Municipal High Scale, Urban Rural, Cable MSO Integrated, Open, Remote, Optimized Disaggregated Distributed 17
Slide 18: Connected Home & Subscriber Cloud
SUBSCRIBER EXPERIENCE CONNECTED HOME & SUBSCRIBER CLOUD Your Network. The Way It Should Be. Increase Connected Home Subscriber ARPU & Business Experience 18
Slide 19: Residential & Enterprise Connectivity
RESIDENTIAL & ENTERPRISE CONNECTIVITY GPON & XGS-PON ONTs Wi-Fi Gateways Indoor, outdoor, pluggable Multiple WAN options, Mesh Wi-Fi 6 Enterprise WAN Connectivity Enterprise LAN Connectivity CE NIDs, Routers, IPBGs, SD-WAN Cloud-managed switches & access points 19
Slide 20: Global Services & Support
SERVICE DELIVERY EVOLUTION GLOBAL SERVICES & SUPPORT Your Network. The Way It Should Be. Reduce Network Migration Service Delivery OpEx & Service Velocity Evolution 20
Slide 21: Service Delivery Evolution
SERVICE DELIVERY EVOLUTION Hardware-centric Software-centric One-time Projects ADTRAN Reoccurring Services Copper-based Global Fiber-based Closed, Proprietary Open, Multi-vendor Incumbent Providers Services Alternative Providers Acknowledgment: 21 The innovator's dilemma 1997
Slide 22: ADTRAN Global Services
ADTRAN GLOBAL SERVICES Implementation Maintenance Professional Managed Cloud Design, deployment Hardware and Network audit and Security, capacity Subscriber, network & integration software support, consultation, solution monitoring, & business cloud services spares and repair integration, and invent
Slide 23: Customer Diversity & Operator Scale
BRINGING THE WORLD TOGETHER CUSTOMER DIVERSITY & OPERATOR SCALE Increasing customer diversity inclusive of large operator scale to achieve more linear financial results and sustainable growth. 23
Slide 24: Regional, Municipal Providers
OUR UNIQUE APPROACH, UNMATCHED DOMAIN EXPERIENCE, INNOVATIVE PLA TFORMS REGIONAL, MUNICIPAL PROVIDERS Business Must launch new services, markets rapidly Wi-Fi Switches, • Turnkey design, integration, activation Routers • Pre-tested, pre-integrated solution SMB Have limited technical resources GPON •
Slide 25: U.S. RSP Market Momentum
U.S. RSP MARKET MOMENTUM ex CLARKSVILLE ACE | ay Der Seen ean ig ELEGY: COOPERATE AptRan 25
Slide 26: Global Network Operators
OUR UNIQUE APPROACH, UNMATCHED DOMAIN EXPERIENCE, INNOVATIVE PLA TFORMS GLOBAL NETWORK OPERATORS Plan broadband network modernization • Only deployable SD-Access reference architectures • Complete gigabit broadband portfolio (Urban, Rural, MDU) Require supply chain diversity • Tier I access experien
Slide 27: Global Tier 1 Market Momentum
GLOBAL TIER 1 MARKET MOMENTUM Market Capture and Customer Loyalty Supply Chain Operational Diversity and Simplification Security 27
Slide 28: Our Strategy
BRINGING THE WORLD TOGETHER OUR STRATEGY Our unique approach, unmatched domain expertise and innovative platforms, make your network they way they should be. Subscriber Broadband Access Network Experience Innovation Evolution 28
Slide 29: 2020 – A Pivotal Year for Broadband
I N D U S T RY L A N D S C AP E 2020 – A Pivotal Year for Broadband Technology Architectural Broadband New Market Vendor Pandemic Transition Changes Policies Entrants Disruption Low capital Leap forward Influence of European Vendor cost and in bandwidth Ramp of 10G SDN, NFV, Gigabit society, concern
Slide 30: Your Network. The Way It Should Be.
Your Network. The Way It Should Be. BRINGING THE WORLD TOGETHER 30