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.
3 Sigma Designs Inc.
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
4 Sigma Designs Inc.
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
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World Class Customers
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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
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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
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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
9 Sigma Designs Inc.
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
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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
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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
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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
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Design concepts
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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
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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
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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
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$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)
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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%
20 Sigma Designs Inc.
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
21 Sigma Designs Inc.
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
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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
23 Sigma Designs Inc.
Enabling Smart Home and IoT Convergence
Thank You
24 Sigma Designs Inc.
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
25 Sigma Designs Inc.
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