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July 2018
NASDAQ: MOSY
Investor Presentation
Safe Harbor Statement
This presentation may contain forward-looking statements about MoSys, Inc. (the Company) for purposes of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange act of 1934, as amended, including, without limitation, benefits and performance expected from use of its embedded memory and interface technologies and integrated circuit (IC) products, improving operational efficiencies, the timing of product development and shipments of the Company’s IC products, anticipated benefits andperformance expected from the Company’s IC products, growth in the size of the market addressed by the Company’s business, future markets and future business prospects. Forward-looking statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Actual results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors. These factors include, but are not limited to the following:
❖ our inability to raise sufficient capital through our current common stock offering;
❖ a substantial increase in the number of shares of our common stock to be outstanding through our current stock offering, which may have a dilutive impact on the price of our common stock;
❖ a lack of working capital to aggressively fund product development and growth;
❖ a lack of working capital to repay the convertible notes due in August 2019, unless we raise sufficient capital through our current common stock offering;
❖ achieving additional design wins for our IC products through the acceptance of our IC architecture and interface protocols by potential customers and their suppliers;
❖ the timing of customer orders and product shipments;
❖ customer concentration;
❖ lengthy sales cycle;
❖ our ability to enhance our existing proprietary technologies and develop new technologies;
❖ achieving necessary acceptance of our IC products by equipment suppliers to the cloud networking, data center, security and other systems markets;
❖ difficulties and delays in the development, production, testing and marketing of our IC products;
❖ reliance as a fabless semiconductor manufacturer on our manufacturing partners to assist successfully with the fabrication of our ICs;
❖ availability of quantities of ICs supplied by our manufacturing partners at a competitive cost;
❖ level of intellectual property protection provided by our patents, the expenses and other consequences of litigation, including intellectual property infringement litigation, to which we may be or may become a party from time to time;
❖ vigor and growth of markets for cloud networking, data center, security and other systems served by our licensees and customers;and
other risks identified in MoSys’ most recent reports on form 10-K and form 10-Q filed with the Securities and Exchange Commission, as well as other reports that MoSys files from time to time with the Securities and Exchange Commission. MoSys undertakes no obligation to update publicly any forward-looking statement for any reason, except as required by law, even as new information becomes available or other events occur in the future.
Copyright © 2018 MoSys, Inc. All rights reserved. 2
Fast, Intelligent & Secure Cloud Networking
Industry Leading Serial Intelligent Memory ICs
❖Bandwidth Engine® - BE-1, 2, 3
Serial memory with intelligent statistics offload
❖Programmable Search Engine™ - PSE
Serial memory with integrated search-optimized
processors
Patented Serial Memory Technology
❖ Hold fundamental patents for serial memory
❖ Low-latency interface, protocol and memory
Established Customers & Ecosystem
❖ Leading OEMS in Cloud Networking and Security
❖ Accelerate high-speed FPGA data processing
❖ New opportunities in Test/Monitor, Smart NIC, Video
NASDAQ: MOSYISO 9001:2008 CertifiedHQ: San Jose, CA~125 Patents & Pending
Fabless semiconductor company enabling fast, intelligent and secure data throughput for cloud infrastructure OEMs
Copyright © 2018 MoSys, Inc. All rights reserved. 3
Cloud Services, Mobility, IOT, VideoUsers Demand Speed, Security and Consistency
Copyright © 2018 MoSys, Inc. All rights reserved. 4
OTT Video
Services4K→8K
Mobile3G→5G
IOTNew
ConsumerSocial Media
Business ServicesCRM, ERP, Office
Gaming
Huge TrafficMassive Device CountMany traffic Types
Distributed Intelligence
Prioritized Bandwidth
Security Everywhere
Cloud Applications
Data Centers
HPC
AI
Cloud Storage
MAPS
Database
emailHadoop
Higher Speed
Optimized Compute
per Application /
Workload
Network
Appliances / ServersSingle /few cards per System
Chassis Up to 16+ Cards per System
Router
Metro Switch
Security
Video
Smart NICLine Rate
Processing
NPU, ASIC, FPGA
Legacy Memory is Bottleneck at 100G+ SpeedLimited Access Rate, Too Many Pins, Board Area
Data Processing
FPGA
ASIC / ASSP
CPU + Accelerators
Line Rate
Data
Configuration
MemoryAccelerators
MemoryLarge Packet Buffer
Ba
ck
pla
ne
(C
ha
ss
is)
MemoryFast Buffer for
Low System Latency
Dat
a In
/ o
ut
MemoryLook up, Statistics
Data Processing Card Functions:
Router, Switch, Security, Monitor/Test, Video, Server Offload
Packet / Data Processing Cards
Data Processing Cards
MoSys’ Intelligent Serial MemoryEnables Fast, Efficient, Intelligent, Secure
Bandwidth
Engine
DRAMLarge Packet
Storage
Bandwidth
Engine
Memory
Access
Programmable
Search Engine
User-
Defined
Offload
Packet/DataProcessing
Engine/Switch
FPGA
High-Speed Serial Memories
Deliver Performance
Save Pins, Space, Power and Cost
Copyright © 2018 MoSys, Inc. All rights reserved. 6
Data ≥ 100Gb/s
→Memory Access Rate
→Reduce Pins, Space
Bandwidth
Engine
Protocol /Data
ParsingFPGA
Proven Ecosystem Accelerating Design Time & Lowering Risk for New Designs
❖ Proven Platforms and Ecosystem with Xilinx and Altera/Intel FPGAs
Xilinx® Virtex® -6, Virtex-7, UltraScale™Altera® Stratix® IV, Stratix V, Arria® 10
Bandwidth Engine® IC
SerDes
Interface
Rx
1T-SRAM
ALUMacro Functions
Bit Safe
TechnologyTx
MoSys Provides Reference Designs
to Speed Customer Design Process
MemoryController &
App Functions
GCI*PCS /
Framer
4, 8
4, 8
Rx
Tx
PSE-S30
PEPEPEPEPEPEPEProcessor
Engines
(PE)
1Gb MemoryTx
Rx
GCI
Tx
RxS
ch
ed
ule
r
Copyright © 2018 MoSys, Inc. All rights reserved. 7
*MoSys interfaceSource: Company Management
Applications Need High Access RateTarget Customers Throughout Cloud, Security, Data Center, Video…
8
Access
Aggregation
DC Security
Edge
Data Centers
Core
Wireless / Ethernet
DLAM
EPON / GPON
Edge Routers
Service Routers
Metro Ethernet Switch
Optical Transport
Core Routers
Security DPI
Load Balancing
Cloud Data Center / Networks
Enterprise
Switch / Routers
NIC / Smart NIC
Servers
DC Security / Edge
Palo Alto Networks, Cisco, Fortinet
F5, A10, Radware
Core
Cisco, Nokia, Juniper
Ciena, Fujitsu, Huawei, Infinera, ADVA
Aggregation
Cisco, Nokia, Juniper, Huawei
ZTE, Fujitsu, NEC, Hitachi, H3C
Access
Cisco, H3C, Huawei, Ericsson
NEC, Fujitsu, Hitachi
Data Centers
Cisco, Arista, Juniper, Huawei, H3C
White Box / ODM for Google, Microsoft, Amazon, FaceBook
Smart NIC
Xilinx, Intel
Microsoft, Amazon, Google, FaceBook
Video – BRCST, 8K
Sony, JVC, Panasonic, NEC
Evertz, NHK, Media Links
Test / Monitor
Spirent, Ixia
Napatech, Gigamon, Netscout
Gov’t / Industrial
Raytheon, Lockheed, Boeing
Government Agencies
Note: Companies listed include both actual and prospective customers for target markets; listings are not all-inclusive.
New Markets
Copyright © 2018 MoSys, Inc. All rights reserved.
Applications in Metro Ethernet & RoutersBandwidth Engine Wins on Performance, Size, Pins, Power, Cost
ASICMACFPGA
Data
Fro
m N
etw
ork
Bandwidth Engine 2
Bandwidth Engine 2
Advantages vs. Alternatives
❖ Memory access performance
❖ RLDRAM won’t fit or route
❖ Memory access performance
❖ Impossible with traditional memory
❖ Lower - pin count, area, power, cost
FramerFPGA
Data
Fro
m N
etw
ork
Bandwidth Engine 2
ASSPSwitch
Bandwidth Engine 2
Bandwidth Engine 2
Bandwidth Engine 2
ClassifyFPGAs
Copyright © 2018 MoSys, Inc. All rights reserved. 9
Metro Ethernet (First design win - 2012)
100G Buffer, Lookup and StatisticsCarrier traffic classification features at line rate
4-9 units per card, 4-10 cards per system
Edge Router (First design win - 2013)
400G OversubscriptionTraffic smoothing prevents dropped packets
1-4 units per card, 4-10 cards per system
Data Center ApplicationsCloud 100G, Security & SDN Drives New Requirements
Data Center Security (First design win - 2014)
Security AccelerationThreat Prevention – multiple lookup and buffering functions
2-4 units per card, 1-10 cards per system
Advantages vs. Alternatives
❖ Memory access performance
❖ RLDRAM won’t fit or route
CPU
Data
Fro
m N
etw
ork
SecurityFPGA
Bandwidth Engine 2
Bandwidth Engine 2
Bandwidth Engine 2
❖ Adds 50% more memory BW
❖ Accelerated table look up
❖ Small packet performance
Netw
ork
Ba
ckp
lane
Routers/Appliances (First design win - 2017)
Added Memory BW to NPS400Accelerated Search Tables
2 units per card, 4-10 cards per system
Copyright © 2018 MoSys, Inc. All rights reserved. 10
Mellanox
NPS-400
Bandwidth Engine 3 – Z30
Mellanox
NPS-400
New ApplicationsVideo Frame Buffers & Custom Search
Key Bandwidth Engine / PSE Architecture Advantages
Data Center SDN Switch (New App Example)
Custom Search & StatisticsAccelerate Routing and Switch Functions
2-4 units per card, 1-10 cards per system
❖ Memory Bandwidth → Features
❖ Custom Search Performance
ASSPChassis SwitchN
etw
ork
ParsingFPGA
ProgrammableSearch Engine
Ba
ckp
lane
ProgrammableSearch Engine
Video (First design win - 2017)
High Speed Frame BufferEnable High-Access Buffer and Editing
1-2 units per card, 1-4 cards per system
❖ Memory Bandwidth / Access Rate
❖ Board Size
❖ BE3 option: share between FPGAs
4K/8K FPGA
Bandwidth Engine 2
Bandwidth Engine 2
4K/8K FPGA
Copyright © 2018 MoSys, Inc. All rights reserved. 11
Relieving Key System Constraints Significant Advantages over Legacy Memory Solutions
Attribute
High-Access Processing / Fast Buffers
QDR SRAM/RLDRAM Bandwidth Engine
System Speed 100-400Gbps
Number of Chips 4 - 8 1-2
Pin Count 300 - 600 64-128
Power (W) 14-28 8-16
4x
4x
2x
Source: Company Management
XilinxVirtex 6, 7, UltraScale
AlteraStratix IV, V, Arria 10
BE2
BE2
Copyright © 2018 MoSys, Inc. All rights reserved. 12
Up to 4x Improvement
Performance
# Chips
Pin Count
Board Area
Power
Differentiated Product FamilyBandwidth Engine & Programmable Search Engine
15G / 576Mb
BE2-620
Burst
BE2-820
Macro
BE3-630
Burst
BE1
MSR576
25G / 1Gb
Z30for NPS-400
BE3-830
Macro
Serial Interface, Integrated Fast Memory & Flexible Intelligence
Serial
Memory
Fixed
Macro
Functions
Programmable
Serial Interface / Capacity
Fle
xib
le In
telli
ge
nce
10G / 576Mb
PSE
MSPS30
Copyright © 2018 MoSys, Inc. All rights reserved. 13
New Markets Requiring Bandwidth & Access Performance
Existing Roadmap Addresses Growing Markets
- Leading edge performance
- Future optimizations in software
Long Product Life: 5-10 Years
Growth in
Existing Markets
Expanding Market Opportunities
Copyright © 2018 MoSys, Inc. All rights reserved. 14
2012 2018
Smart Switch & NIC
SDN, Big Data
Indust / Gov’t
Acceleration
Video
Broadcast, 8K
Monitor & Test
Security Appl.
Metro Ethernet
Router
New Emerging
Market
Opportunities
>$500M Market*
>$500M Market*
* Market definition and other information is based on management opinion.
Experienced Management Team
Len Perham
CEO
Jim Sullivan
CF0
John Monson
VP Sales & Marketing
Michael Miller
VP System Applications
Sinan Doluca
VP Engineering & Operations
Copyright © 2018 MoSys, Inc. All rights reserved. 15
Improving Financial ResultsPath to Non-GAAP Profitability
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
$5.0
3Q17 4Q17 1Q18 2Q18
Revenue
License/Royalty IC Revenue
Copyright © 2018 MoSys, Inc. All rights reserved. 16
-$1.0
-$0.5
$0.0
$0.5
$1.0
3Q17 4Q17 1Q18 2Q18
Adjusted EBITDA*
* Adjusted EBITDA defined as GAAP net income (loss) before interest expense, income tax provision, depreciation and amortization, as well as stock-based compensation, intangible asset amortization and restructuring/ impairment charges. See reconciliation of GAAP to non-GAAP financial information on slide 22.
$ in millions, except EPS
Improving Financials
Key Initiatives:
❖ Establish Sales &
Operational Scale
❖ Achieve/maintain
Profitability
❖ Reduce Cash Burn
❖ Improve Cash
Position
Copyright © 2018 MoSys, Inc. All rights reserved. 17
Non-GAAP* Q3 17 Q4 17 2017 Q1 18 Q2 18
Total Revenues $ 2.5 $ 3.8 $ 8.8 $ 4.2 $ 4.6
Product 2.2 3.5 7.8 3.7 4.1
Royalty/other 0.3 0.3 1.0 0.5 0.5
Product GM % 44% 41% 40% 57% 55%
Total GM % 49% 45% 47% 62% 60%
R&D 1.3 0.8 7.6 1.0 0.9
SG&A 1.2 0.9 4.4 0.9 1.2
Total Op Ex 2.5 1.8 12.0 1.9 2.1
Op Income (Loss) (1.3) (0.1) (7.9) 0.7 0.7
Net Inc (Loss) $ (1.5) $ (0.1) $ (8.5) $0.5 $0.5
Adjusted EBITDA** $ (1.0) $ 0.1 $ (7.1) $0.9 $0.9
EPS $(0.18) $(0.01) $(1.16) $0.06 $0.06
* Non-GAAP: Excludes stock-based compensation, amortization of intangibles and restructuring/impairment charges. See reconciliation of GAAP to non-GAAP results on slide 21.** Adjusted EBITDA defined as GAAP net income (loss) before interest expense, income tax provision, depreciation and amortization, as well as stock-based compensation, intangible asset amortization and restructuring/impairment charges. See reconciliation of GAAP to non-GAAP financial information on slide 21.
$ in millions, except EPS
Target Operating Model
Targets Near Term Long Term
Revenue Growth (YoY)• Established design win base
• Long term - leverage BE3 and PSE
75%+ YoY 25%+ YoY
Gross Margin• Improvements from volume efficiency
• Align price/capacity/cost
50%+ 60%+
Operating Margin*• Revenue growth
• Improved gross margin
• Reduced OpEx
0-5% 20%+
Cash Flow• $3.6M cash @ 6/30/18
Declining
Cash Burn
Cash-
Generating
* Non-GAAP measure that excludes restructuring and impairment charges, stock-based compensation expenses and amortization of intangibles
18Copyright © 2018 MoSys, Inc. All rights reserved.
Balance Sheet
Q2 - June 30, 2018(in millions)
Cash & Investments $3.6
Total Assets $21.9
Convertible Notes* $9.6
Deferred Revenue $1.6
Total Liabilities $13.5
Stockholders’ Equity $8.0
Copyright © 2018 MoSys, Inc. All rights reserved. 19
* Feb 2018 - amended terms: i) extended maturity to Aug 2019, ii) reduced interest rate to 8% PA (PIK) and iii) reduced
convert price to $4.25 per share
Investment Highlights
❖ IC Products Solve Key Networking & Cloud Challenges
❖ Highly Differentiated Solutions, Very Long Product Life Cycles
❖ Market Trends & Partnerships Pave Way for Future Success
❖ Growing Business, Improving Financials - Path to Profitability
❖ Dedicated Organization, Proven Veteran Leadership
Fast, Intelligent & Secure
Data Throughput
Copyright © 2018 MoSys, Inc. All rights reserved. 20
Reconciliation of GAAP and Non-GAAP
Financial Information
Copyright © 2018 MoSys, Inc. All rights reserved. 21
Q3 17 Q4 17 2017 Q1 18 Q2 18
GAAP net income (loss)$ (1,743) $ (526) $ (10,668) $ 348 $ 315
Stock-based compensation expense 196 167 719 94 159
Restructuring & impairment charges 50 269 1,321 - -
Amortization of intangibles 28 28 112 27 28
Non-GAAP net income (loss) (1,469) (62) (8,516) 469 502
EBITDA adjustments:
Depreciation 184 174 747 169 171
Interest expense 238 242 927 221 206
Prov (benefit) for income taxes 4 (249) (233) 1 1
Adjusted EBITDA $ (1,043) $ 105 $ (7,075) $ 860 $ 880
$ in 000s
Thank You
1T-SRAM, Bandwidth Engine, the GigaChip logo, and MoSys are registered trademarks of MoSys, Inc. in the US and/or other countries. Bit Safe, GigaChip, LineSpeed, and the MoSys logo are trademarks of MoSys, Inc.
All other marks mentioned herein are the property of their respective owners. Copyright © 2018 MoSys, Inc. All rights reserved.