Adtran Networks Se · XETR:ADV
Adtran Networks — ADVA Optical Networking — Investor Presentation (February 2023)
38 slides from Adtran Networks's investor presentation, February 2023
Slide 1: ADVA open edge networking
ADVA open edge networking Solutions for a digital future Investor presentation, February 2023
Slide 2: Disclaimer
Disclaimer FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements with words such as “believes”, “anticipates” and “expects” to describe expected revenues and earnings, anticipated demand for optical networking solutions, internal estimates and liquidity. These forward-look
Slide 3: Company overview
Company overview Mission, vision, customers and products © 2023 ADVA. All rights reserved.
Slide 4: Transforming our business
Transforming our business Statement from the CEO “With our investments in recent years, we have created the foundation for transforming our business model. This transformation includes growing revenue contributions from software and services, expansion into new industries and further verticalization
Slide 5: ADVA fundamentals
ADVA fundamentals Background • Atlanta Richardson Neuchâtel York Meiningen Munich Gdynia • Headquartered in Munich, Germany • Approximately 1,900 employees • EUR 0.6 billion annual turnover Our vision We love to work with highly innovative people to connect the world and drive change, success and va
Slide 6: The executive team
The executive team Christoph Glingener Ulrich Dopfer CEO CFO PLM, Finance, IR Development Legal, HR Sales and marketing IT 6 © 2023 ADVA. All rights reserved.
Slide 7: The ADVA brand promise
The ADVA brand promise Speed for customers Innovation leadership Trusted partner Open networking solutions Operational excellence Ease of doing business • Differentiated technology • High quality • Technology and VAR ecosystems • Network-level applications • Short lead times • Broad and deep applica
Slide 8: Serving network operators around the world
Serving network operators around the world Private enterprises Communication service providers Internet content provider • 30 of top 50 banks (revenue) • 17 of top 25 global CSPs • 4 of top 5 global ICPs • 5 of top 6 global Ethernet service leaders 30%* 65%* 5%* + Premium quality + Longevity (sticki
Slide 9: Our partners
Our partners Technology partners Partner ecosphere members Ensemble harmony ecosystem … and many more driven by real-world customer deployments … and many more Connect+ and Connect partners 9 © 2023 ADVA. All rights reserved.
Slide 10: ADVA's technology tripod
ADVA’s technology tripod Cloud interconnect Cloud access Network synchronization 70% of revenues 25% of revenues 5% of revenues Private enterprises: Private enterprises: Private enterprises: Business continuity Secure cloud access Timing for critical infrastructure and disaster recovery and SD-WAN M
Slide 11: ESG approach and ratings
ESG approach and ratings Holistic approach External ratings • Science-based emissions targets (SBTi) Gold rating Gold rating from TIA / QuEST Forum • Approved 1.5°C targets in place from EcoVadis Gold Silver Bronze ADVA 07/22 TIA AVG Q1/22 • Net Zero committed (top-3%) Eco Design Organizational 100
Slide 12: Why ADVA?
Why ADVA? Growth and profitability First-class Strong products Excellent team Positive macro Accelerating customers and and technology and patent dynamics cash generation partners alignment portfolio Innovative solutions for a digital future 12 © 2023 ADVA. All rights reserved.
Slide 13: Market dynamics
Market dynamics Growth drivers, competitive landscape © 2023 ADVA. All rights reserved.
Slide 14: Market growth drivers
Market growth drivers Network transformation Moving to the cloud 5G and IoT • Investment in broadband • Video, video, video! • New fronthaul, backhaul and networks • Terascale DCI* timing investments • Stimulus funding to advance • Secure cloud access • Edge compute resources digitization of society
Slide 15: Networking industry – a consolidating ecosystem
Networking industry – a consolidating ecosystem Components Systems Networks Production floor ADVA, Meiningen, Germany 15 © 2023 ADVA. All rights reserved.
Slide 16: Systems suppliers in times of deglobalization
Systems suppliers in times of deglobalization Acquired 2014 2015 2015 2016 2017 2018 2019 16 © 2023 ADVA. All rights reserved.
Slide 17: Technology convergence at the network edge
Technology convergence at the network edge Layer 3 routing Carrier Ethernet (CE) is the ideal foundation for cloud access NFV* Converged cloud access Carrier Ethernet 2016 Layer 2 2017 NFV* is disrupting the market: functions of higher network layers run as software installations on generic servers.
Slide 18: New market dynamics and opportunity expansion
New market dynamics and opportunity expansion … have shifted the baseline Macro dynamics … • Network infrastructure transitions • Pandemic accelerates from cheap commodity to strategic asset digitalization • Government stimulus favors trusted suppliers • Deglobalization impacts vendor selection • Fe
Slide 19: Market share data – ADVA highlights
Market share data – ADVA highlights Optical networking1 SP access switching and Data center interconnect2 Carrier Ethernet demarcation3 Access WDM, Enterprise, global (37%) EMEA (45%) EMEA (12%) Enterprise, EMEA (58%) Metro WDM, Global (21%) EMEA (16%) Enterprise, NA (25%) Purpose built DCI, Governm
Slide 20: Technology
Technology Products and solutions © 2023 ADVA. All rights reserved.
Slide 21: ADVA solutions overview
ADVA solutions overview Ensemble network management and control Synchronization Internet content provider and timing Communication service provider Cloud and OTT services Metro / Core Distribution and hosting Service delivery and assurance Enterprise Business continuity Cloud access Disaster recover
Slide 22: Cloud interconnect overview
Cloud interconnect overview Objective Industry focus ADVA innovation Open terminal with TeraFlex™ highest data rates (1200G) Terminal OpenFabric ™ Efficient Terabit traffic Lowering cost Higher bitrate grooming per Gbit/s mile adoption (400G+) Metro DCI* Industry-leading open line OLS system, empowe
Slide 23: Cloud interconnect dynamics
Cloud interconnect dynamics Open optical networking solutions Foundation Transformation Upside • Market leadership • Higher bitrate adoption • Share gain through 400G+ in enterprise DCI1 (400Gbit/s+) optimized product portfolio • Large installed base of OLS2 • TAM and margin expansion • Disaggregati
Slide 24: Cloud access overview
Cloud access overview Objective Industry focus ADVA innovation Ensemble software Increasing White box Orchestrator Scalable management and service agility adoption MANO orchestration Connector Transforming enterprise IT NOS2 5G goes open Activator Scaling 5G mobile networks 2) network operating syst
Slide 25: Cloud access dynamics
Cloud access dynamics Empowering the network edge Foundation Transformation Upside • Market leadership in • Transition to 10/100G in access • Share gain in consolidated Carrier Ethernet (CE) access1 and backhaul CE vendor landscape • Differentiated portfolio • Collapsing multiple hardware • Growing
Slide 26: Network synchronization
Network synchronization Objective Industry focus ADVA innovation Cesium atomic clocks Industry expansion Better timing Nanosecond accuracy precision PTP1 • Mobile network operators Grandmasters • Power utilities • Internet content providers Synchronization Pluggable • Professional broadcasting every
Slide 27: Network synchronization dynamics
Network synchronization dynamics Foundation Transformation Upside • Technology leadership in • Ever more stringent timing • Accelerating 5G rollouts network-based timing requirements with sub- microsecond accuracy • New market verticals • Consistently high win rates including energy, finance, leadin
Slide 28: Product portfolio overview
Product portfolio overview Cloud access Cloud interconnect Solutions that enable communication service providers Solutions that deliver scalable bandwidth for access, to deliver software-defined, differentiated and metro and long-haul networks; high levels of open performance-assured wholesale, mobi
Slide 29: Transformation
Transformation … to higher margin business © 2023 ADVA. All rights reserved.
Slide 30: Business transformation
Business transformation Value Verticalization Optical sub-modules → 15% SW & Services → 30% Acquisitions and New applications high R&D invest Non-telco → 40% Innovation Cost control Transformation 2014 – 2018 2019 – 2020 2021 - 2023 Leveraging our investments of the last years to a higher margin mod
Slide 31: Transformation has started
Transformation has started to support our financials Verticalization MicroMux™ family expansion SW & Services Accelerating growth 23% → 25% (2021) New applications Oscilloquartz CAGR >25% Government wins Enterprise IT Driving operating results to new levels 31 © 2023 ADVA. All rights reserved.
Slide 32: Financials
Financials Overview © 2023 ADVA. All rights reserved.
Slide 33: Q4 2022 key financials
Q4 2022 key financials Revenues (m€) Pro forma gross profit (m€) Pro forma EBIT (%) +24.1% 195.7 +27.4% +3.4pp 157.7 71.4 12.5% 56.1 9.1% Q4 21 Q4 22 Q4 21 Q4 22 Q4 21 Q4 22 Net income (m€) Diluted EPS (€) Net cash (+) / debt (-) (m€)* 36.2 -78.4% -78.4% 17.5 0.34 3.8 0.07 -19.2 Q4 21 Q4 22 Q4 21 Q4
Slide 34: Regional revenue development Q4 2022
Regional revenue development Q4 2022 Revenue split Q4 2022 (%) Revenue development per region Q4 21 – Q4 22 (m€) 101 96 98 116 93 EMEA Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 28.9% 59 59 59 57 39 59.5% Americas 11.6% Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 23 23 18 15 14 EMEA Americas Asia-Pacific Asia-Pacific Q4 21 Q1
Slide 35: Cash flow and balance sheet
Cash flow and balance sheet Cash flow breakdown (m€)* Working capital development (m€; %) Q4 20.6% 23.8% 27.4% 27.2% 26.4% 2021 2022 193.8 205.2 183.0 129.0 164.4 Earnings before taxes 12.3 9.2 Depreciation & Amortization 18.3 20.3 Increase (-) / decrease (+) in working capital 1.8 -12.7 Increase (-
Slide 36: Annual revenue and pro forma profitability
Annual revenue and pro forma profitability Revenue & pro forma gross margin (m€; %) Pro forma EBIT & margin (m€; %) 712.1 603.3 556.8 565.0 502.0 54.6 50.4 37.0% 35.1% 35.2% 36.6% 33.7% 33.8 9.1% 23.3 24.8 7.1% 6.0% 4.6% 4.5% 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Revenue Gross margin Pro
Slide 37: Financial policy – investment grade rating
Financial policy – investment grade rating Leverage (Debt / EBITDA) Equity ratio Available liquidity 2.5x 81.0 56.5% 57.0% 119.0 52.6% 10.0 1.2x 47.7% 62.6 56.4 30% 47.8 74.9 64.3 68.4 10.0 10.0 10.0 0.7x 0.7x 109.0 0.4x 54.3 64.9 58.4 2019 2020 2021 2022 2019 2020 2021 2022 2019 2020 2021 2022 Debt
Slide 38: Thank you
Thank you ir@adva.com IMPORTANT NOTICE The content of this presentation is strictly confidential. ADVA is the exclusive owner or licensee of the content, material, and information in this presentation. Any reproduction, publication or reprint, in whole or in part, is strictly prohibited. The informa
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