Sigma Designs Q3 FY 17 Corporate Summary€¦ · · 2017-07-11Sigma Designs Q3 FY 17 Corporate Summary December 6, 2016. ... 90% US Market Share in traditional security monitoring

1 Sigma Designs Inc. confidential | Sigma Designs Inc.

Sigma Designs

Q3 FY 17 Corporate Summary

December 6, 2016

2 Sigma Designs Inc.

Safe Harbor Statement

During the course of this presentation, we will provide projections and other forward

looking statements regarding future events or the future financial performance of

Sigma Designs, Inc., including expectations concerning our business strategy and

our Q4 FY17 financial outlook. Such statements are only current expectations and

actual events or results may differ materially. We refer you to Sigma’s filings with the

SEC, particularly our most recent Reports on Forms 10-K, 10-Q and 8-K. These

documents identify important risk factors that could cause actual results to differ

materially from our projections or other forward looking statements.


Sigma Designs

• Founded in 1982

• 34 Years of Innovation

• HQ in Fremont, CA

• ~700 Employees

• Fabless Manufacturing

• NASDAQ: SIGM

A Leading Supplier Of

Technologies Enabling

Smart Home IoT Convergence


Mobile IoT

New Business Focus

Smart Home IoT

Smart Streaming Boxes

Video Connectivity

Connected Smart TV Platforms IoT Devices

Two Broad Businesses With Application Synergies

Smart TV


World Class Customers

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwipzfrN7qLKAhVT32MKHQlHBv0QjRwIBw&url=http://thenextweb.com/dd/2015/09/02/verizon-what-are-u-doing/&psig=AFQjCNHQktb7RhTEcFGwuF7TVKwT1rDPSg&ust=1452639669233876

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwipzfrN7qLKAhVT32MKHQlHBv0QjRwIBw&url=http://thenextweb.com/dd/2015/09/02/verizon-what-are-u-doing/&psig=AFQjCNHQktb7RhTEcFGwuF7TVKwT1rDPSg&ust=1452639669233876

https://www.google.com/imgres?imgurl=http://c.fixya.net/fixya20/products/logos/177x150/roku.jpg&imgrefurl=http://www.fixya.com/troubleshoot/roku/media_streamers&docid=S9XnglU8lYNt6M&tbnid=7mPgN-sQVymzbM:&w=177&h=150&ved=0ahUKEwiMuYzEkqPKAhVQymMKHZMjDr0QxiAIBzAF&iact=c&ictx=1

https://www.google.com/imgres?imgurl=http://c.fixya.net/fixya20/products/logos/177x150/roku.jpg&imgrefurl=http://www.fixya.com/troubleshoot/roku/media_streamers&docid=S9XnglU8lYNt6M&tbnid=7mPgN-sQVymzbM:&w=177&h=150&ved=0ahUKEwiMuYzEkqPKAhVQymMKHZMjDr0QxiAIBzAF&iact=c&ictx=1

http://www.uplus.co.kr/com/main/pemain/PeMain.hpi





Consumer interest creates demands

Connected Smart TV Platforms

Smart City

LTE & Z-Wave

Smart Televisions

- SoC

- FRC

- OTT Software

4K Smart Streaming Boxes

- SoC

- OTT Software

- IPTV Solutions

G.hn Video Connectivity

- Powerline

- Coax

Cloud Platforms

- Roku

- Google CAST TV

- Android


6.0

11.8

17.620.1

21.3

0.0

5.0

10.0

15.0

20.0

25.0

2015 2016E 2017E 2018E 2019E

North America UHD 4K Units (M)

4K SmartTV Innovator

Source: IHS

Industry First Innovations:

• OS integration for Roku and Google Cast TVs

• HDR including Dolby Vision

• Single Chip 4K TV SoCs

SmartTV Platforms Leading Revenue Growth

~20% percent share of North American SmartTV

in CY 2016

Number of SKU design wins doubled from 16 to

32 models shipping in CY 2016

• Supporting all VIZIO 4K TVs

• >5 million TVs shipped

• VIZIO introducing new models with volume

expected to grow

• Leading supplier of SoCs for Roku TVs

• >4 million units shipped


Next Generation IP Streaming Chips

• Joint collaboration agreement with Korea-based Telechips

• Will develop and market advanced SoC solutions for the new generation

of ultra-high-definition 4KTV IP streaming boxes

• Provide the lowest power consumption for a SoC with 4KTV video

plus universal HDR support

• Sharing common development expenses

• Collaboration will bring more products to market faster

• Currently engaged with multiple customers

• Expect first volume shipments in the first quarter of CY 2017

• Capturing additional customers using individual territorial strengths


Consumer interest creates demands

Global IoT Coverage

Smart City

Mobile Devices

LTE

Mobile IoT

Tracking- Keys

- Pets

- Luggage

- Packages

- Fleet

Sensors- Door/motion

- Smoke/water

- Metering

- Parking

- Retail

LTE–Z-Wave

M-M IoT

Smart City

Smart Home

Z-Wave IoT for the

Smart Home

Controls- Thermostats

- Appliances

- Door locks

- Lighting

- Cameras


Smart Home Applications

Entertainment

Controller

Siren

Motion

Sensors

Door Window

Sensors

Light Switches

Fan Control

Moisture

Sensor

Temperature

Sensor

Security

Panel

Flood

Sensor

Water Leak

Sensor

Smart

Appliance

Smart

Power Strip

Cabinet

SensorGateway

Curtain

Motors

Smart

Outlet

Smoke

Sensors

Thermostat

Window Break Sensors

Door Lock

Garage Door

Opener

CO2 Sensor


Z-Wave: The Industry Leader

#1 Position With More Than 50 Million Z-Wave Chipsets Deployed

70% market share in smart home

>1500 home devices

>375 Z-Wave device manufacturers and service providers

90% US Market Share in traditional security monitoring providers

10% of US homes have Z-Wave powered products

Large and Growing Addressable Market

$1B in product sales in 2015

(20M units x $50 ASP)

$1B services market in 2015

(4M panels x 12 months x $20/month)

New growth ramping in AsiaMarketshare and Addressable Market Data is Approximate


Expanding Into Mobile IoT

Using standard LTE networks – available worldwide

• Most competitors rely on dedicated networks to achieve performance

• LTE provides vastly superior coverage, scalability, and mobility support

Sigma’s unique patented architecture is designed for:

• An order of magnitude lower power for very long battery life

• Ultra-sensitive geo-location ability – for short range uses

• Smaller size and lower cost – to suit any tracking application

Product launch

• Full technology demonstrations at CES 2017

• First product shipments in Q2 CY 2017


Design concepts


Mobile IoT Applications

Tracking

Vehicles, Bikes, People, Pets,

Parking, Luggage, Packages

IoT Backhaul

Security Panels, Utilities

Resource, Traffic

Sensor-Actuators

Temperature, Pressure,

Moisture, Chemical

WearablesFitness, Watches, PERS

Medical, Diagnostics

Telematics to reach over US

$80 billion by 2020

Initial Focus

Future Opportunities

15 Sigma Designs Inc. confidential | Sigma Designs Inc.

Sigma Designs Inc.Financial Summary


Q3 FY17 Results Summary (Non-GAAP)

Revenue

• $62.7M compared with $61.3M in Q2 FY17

• Connected SmartTV $50.0M or 80.0%

• IoT Devices $12.7M or 20.0%

• License & Other $0.0M or 0.0%

Non-GAAP Gross Margin

• 51.0% vs. 49.9% in Q2 FY17

Non-GAAP Operating Income

• $5.3M vs. $3.4M in Q2 FY17

Non-GAAP EPS

• $0.09 vs. $0.07 in Q2 FY17

Outlook

• Q4 revenue to follow normal seasonal trends

Reported September 6, 2016


Trended Revenue By Market(GAAP)

$44.9

$39.5$43.7

$51.7 $50.0

$10.2

$11.3$9.9

$9.5 $12.7

$0.4

$0.6$0.2

$0.2$0.0

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

Connected Smart TV Platforms IoT Devices License & Other

$53.8M

$61.6M

$51.5M

$61.3M

$62.7M


$5.8

($1.9)($2.5)

$3.4

$5.3

-$4

-$2

$0

$2

$4

$6

Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

Operating Income ($M)

Trended Financial Performance(Non-GAAP)

51.7%

49.6%

46.6%

49.9%

51.0%

44.0%

48.0%

52.0%

Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

Gross Margin %

$0.13

$0.02

($0.12)

$0.07 $0.09

($0.15)

$0.00

$0.15

Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

EPS$9.7

$3.1

$1.5

$8.1$9.0

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

Q3'16 Q4'16 Q1'17 Q2'17 Q3'17

EBITDA ($M)


Trended Non-GAAP P&L

FY 2015 FY 2016 Q1 2017 Q2 2017 Q3 2017Long-Term

Model

Revenue 100% 100% 100% 100% 100% 100%

Gross Profit 53% 51% 47% 50% 51% 47%-50%

Research & Development 34% 29% 33% 29% 28% 23%-25%

Selling, General & Admin. 20% 16% 18% 16% 15% 12%-16%

Total Operating Expense 54% 45% 51% 45% 43% 35%-41%

Operating Income (1%) 6% (5%) 6% 8% ~7%-13%


Balance Sheet Summary

Q3 FY16

$ MillionsMetrics

Q3 FY17

$ MillionsMetrics

Cash and Marketable Securities $95.6 $69.9*

Accounts Receivable $31.0 46 days $49.6 72 days

Inventory $28.0 4.1 turns $20.2 6.0 turns

Accounts Payable $26.7 $20.6

* The change was primarily due to the purchase of Bretelon, Inc. on November 4, 2015


Q4 FY17 Financial Guidance

* Guidance ranges provided on December 6, 2016 for the period ending January 28, 2016

$ Millions Guidance Ranges*

Revenues $42 million - $45 million

Non-GAAP Gross Margin % 47% – 50%

Non-GAAP Operating Expenses Under $28 million


Long-Term Growth Drivers

Connected Smart TV Platform

• Will focus on healthy margin businesses, ensuring the consistent margin profile

and bottom line performance while positioning for future revenue growth

• Capitalizing on rapid 4K UHDTV adoption, a market growing at 30% CAGR

• Main supplier of 4K UHDTV SoCs supporting VIZIOs product lines

• Engaged with multiple customers and delivering first volume shipments

addressing the IP Streaming Device market

IoT Devices

• Z-Wave is THE undisputed standard in Smart Home applications

• The markets we serve are returning to growth patterns after a pull-back

earlier in CY 2016,

• Revenue increased 34% sequentially in Q3’17

• Focused on worldwide market for Telco-based IoT services


Enabling Smart Home and IoT Convergence

Thank You


Reconciliation of GAAP Net Income/(Loss) to Non-GAAP Net Income/(Loss) 1 of 2

October 29, July 30, October 31,

2016 2016 2015

GAAP Net Revenue $ 62,729 $ 61,316 $ 61,581

Items reconciling GAAP Net Revenue to Non-GAAP:

Reversal of rebate - - -

GAAP to Non-GAAP adjustments - - -

Non-GAAP Net Revenue $ 62,729 $ 61,316 $ 61,581

GAAP Cost of Revenue $ 31,734 $ 31,734 $ 30,794

Items reconciling GAAP Cost of Revenue to Non-GAAP:

Stock based compensation expense (61) (74) (78)

Amortization of acquired intangibles (938) (940) (965)

GAAP to Non-GAAP adjustments (999) (1,014) (1,043)

Non-GAAP Cost of Revenue $ 30,735 $ 30,720 $ 29,751

GAAP Gross Profit $ 30,995 $ 29,582 $ 30,787

GAAP Gross Margin % 49.4% 48.2% 50.0%

Non-GAAP Gross Profit $ 31,994 $ 30,596 $ 31,830

Non-GAAP Gross Margin % 51.0% 49.9% 51.7%

(Unaudited)

(In thousands, except per share data)

Three months ended


Reconciliation of GAAP Net Income/(Loss) to Non-GAAP Net Income/(Loss) 2 of 2

GAAP Operating Expenses $ 28,826 $ 29,895 $ 29,323

Items reconciling GAAP Operating Expenses to Non-GAAP:

Stock based compensation expense (1,432) (1,677) (1,814)

Amortization of acquired intangibles (692) (696) (318)

Impairment of IP, mask sets and design tools - (300) (795)

One time legal fee expenses - - (357)

GAAP to Non-GAAP adjustments (2,124) (2,673) (3,284)

Non-GAAP Operating Expenses $ 26,702 $ 27,222 $ 26,039

GAAP Other Income (Expense) and Tax $ (1,948) $ (1,409) $ 4,971

Items reconciling GAAP Other Income (Expense) and Tax to Non-GAAP:

Impairment (gain on sale) of privately held instruments, net 1 584 -

Gain on sale of development project - - (7,551)

Income tax adjustments - - 1,494

GAAP to Non-GAAP adjustments 1 584 (6,057)

Non-GAAP Other Income (Expense) and Tax $ (1,947) $ (825) $ (1,086)

Non-GAAP Net Income $ 3,345 $ 2,549 $ 4,705

Non-GAAP Net Income (Loss) per share:

Basic 0.09$ 0.07$ 0.13$

Diluted 0.09$ 0.07$ 0.13$

Shares used in computing Non-GAAP net income (loss) per share:

Basic 37,666 37,182 36,046

Diluted 38,001 37,527 36,785

Documents

Sigma Designs Q3 FY 17 Corporate Summary€¦ · · 2017-07-11Sigma Designs Q3 FY 17 Corporate Summary December 6, 2016. ... 90% US Market Share in traditional security monitoring