sierra wireless corporate overview - november 2014

1 © Sierra Wireless 2014

Sierra Wireless Corporate Overview November 2014


Safe harbor statement Certain statements and information in this presentation are not based on historical facts and constitute forward-looking statements within the meaning of applicable securities laws (“forward-looking statements”) including statements and information relating to our financial guidance summary for Q1 2014, our guidance drivers for 2014 and our business outlook for 2014 and beyond. Forward-looking statements are provided to help you understand our views of our short and longer term prospects. We caution you that forward-looking statements may not be appropriate for other purposes. We will not update or revise our forward-looking statements unless we are required to do so by securities laws.

Forward-looking statements: • typically include words and phrases about the future, such as: “outlook”, “may”, “estimates”, “intends”, “believes”, “plans”, “anticipates” and “expects”; • are not promises or guarantees of future performance. They represent our current views and may change significantly; • are based on a number of material assumptions, including those listed below, which could prove to be significantly incorrect:

• Our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial acceptance; • Our ability to continue to sell our products and services in the expected quantities at the expected prices and expected times; • Expected cost of goods sold; • Expected component supply constraints; • Our ability to “win” new business; • Expected deployment of next generation networks by wireless network operators; • Our operations are not adversely disrupted by component shortages or other development, operating or regulatory risks; and • Expected tax rates and foreign exchange rates.

• are subject to substantial known and unknown material risks and uncertainties. Many factors could cause our actual results, achievements and developments in our business to differ significantly from those expressed or implied by our forward-looking statements, including, without limitation, the following factors, which are discussed in greater detail. These risk factors and others are discussed in our Annual Information Form and Management’s Discussion and Analysis of Financial Condition and Results of Operations, which may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov and in our other regulatory filings with the Securities and Exchange Commission in the United States and the Provincial Securities Commissions in Canada. • Actual sales volumes or prices for our products and services may be lower than we expect for any reason including, without limitation, the continuing uncertain

economic conditions, price and product competition, different product mix, the loss of any of our significant customers, competition from new or established wireless communication companies;

• The cost of products sold may be higher than planned or necessary component supplies may not be available, are delayed or are not available on commercially reasonable terms;

• We may be unable to enforce our intellectual property rights or may be subject to litigation that has an adverse outcome; • The development and timing of the introduction of our new products may be later than we expect or may be indefinitely delayed; • Transition periods associated with the migration to new technologies may be longer than we expect; and • We may experience higher than anticipated costs; disruption of, and demands on, our ongoing business; diversion of management’s time and attention; adverse

effects on existing business relationships with suppliers and customers and employee issues in connection with the divestiture of the AirCard assets and operations.

Investors are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future results. USE OF NON-GAAP FINANCIAL MEASURES • This presentation contains references to certain non-GAAP financial measures and should be viewed in conjunction with our press release and supplementary

information on our website (www.sierrawireless.com), which present a complete reconciliation of GAAP and Non-GAAP results.


• Global leader in devices and cloud services for the Internet of Things • Industry’s most comprehensive offering • Proven technology innovators and trusted partner

Sierra Wireless Corporate Profile

R&D R&D

R&D

Head office: Vancouver, BC

Founded in 1993

LTM revenue: $518 million

Publicly listed: NASDAQ (SWIR) TSX (SW)

Approx. 925 employees worldwide

Customers in 130+ countries


By providing intelligent wireless solutions

Enabling the Internet of Things


2020

1.4B

Long-term growth opportunity Billions of connected devices

2012

12B Connected

devices (ABI)

50B Connected devices

(Ericsson)

Connected devices (ABI)

2022

$14.4T Value from M2M

2013-2022 (Cisco)

7B*

Human population growth: *(US Census Bureau) ** (UN)

7.7B**


#1 in machine-to-machine market globally

Blue-chip customers and partners

Sierra Wireless is the market leader

(1) Source: ABI Research - 2014

34%

22%

19%

25%

Cellular M2M Embedded Module Revenue Market Share in 2013(1)

Sierra Wireless


Innovative device-to-cloud offering

Leading-edge intelligent devices

Secure cloud services platform

Faster time to market and lower costs + =


Machine-to-machine vertical markets

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Sierra’s Business Segments

Gateways and Cloud Services - AirLink: intelligent gateways and program-

mable modems for Enterprise, Mobility and Industrial applications providing mission-critical connectivity

- AirVantage M2M Cloud Services: provides seamless connectivity and end-to-end data security so customers can collect and deliver valuable field data

• AirVantage Enterprise Platform

• AirVantage Management Services

OEM Solutions

Embedded Wireless Modules - AirPrime: the industry’s broadest portfolio

of 2G, 3G, and 4G LTE wireless modules

- Smart Modules: entire M2M ecosystem on a module, including processing capabilities, integrated software (Legato and OpenAT) and cloud-based services

- Essential Modules: easy integration, upgradeable, and reliable connectivity

- Industry leaders at 4G LTE

Enterprise Solutions


Wireless modules, software and services for OEMs

AirPrime® Embedded Wireless Modules

• 4G LTE • 3G HSPA/HSPA+ • 3G EVDO • 2G 1xRTT • 2G GPRS/EDGE • GPS

Embedded SIM

AirVantage Management

Services

Embedded Applications

Embedded Modules Software Solutions and Services

Development Tools


Legato: Open source platform built on Linux

Ready-to-run Integrated, tested, validated

Ready-to-build Open source, flexible foundation

Ready-to-connect Any cloud, network, peripheral

Designed to simplify and accelerate embedded M2M development


Communications system that extends the enterprise network to the vehicle

Out-of-the-box connectivity linking remote assets to the

enterprise Platform for creating cellular wireless enabled products

and services

AirLink Product Portfolio

Programmable Modems

Intelligent Gateways

InMotion Solutions

Application Framework


AirVantage® M2M Cloud


Customer case study: Nespresso

M2M Cloud Programmable Modem

Custom Web Application

Web APIs • Asset Data Management • Device Management • Subscription Management

Hardware Integration

ERP

Network Operator

Accelerating M2M Application Development & Deployment


Vancouver, Canada Corporate Headquarters

San Diego

Melbourne

Tokyo

London

Munich

= R&D, Marketing, Sales, Operations

= Manufacturing

= Sales and Support

Beijing

Shenzhen & Hong Kong

Flextronics & USI (Shanghai)

Toulouse Paris

Johannesburg

Bangalore

Taipei

Jabil (Brazil)

Sierra Wireless operates worldwide serving global network operators, OEMs, enterprises

Strong presence around the world

Seoul


• Hundreds of platforms certified and launched, worldwide • Deep knowledge about individual carriers’ unique requirements • Services offering and relationships to get OEM products certified • AirVantage M2M Cloud connected to operator infrastructure

Partnered with network operators globally

http://www.tim.it/

http://www.hkcsl.com/en/index/index.jsp

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Global leader in M2M devices and cloud services

Well positioned to capture the M2M growth opportunity

The clear market share and innovation leader

Driving revenue growth and expanding earnings

Financial strength: $196 million cash, no debt

Track record of accelerating growth and value through M&A


Q3 2014 Financial Results


Q3 2014 Highlights

• Record quarterly revenue

• Revenue increased 27.6% year-over-year to $143.3 million

– Organic revenue growth of 18.8%

• Adjusted EBITDA doubled year-over-year to $11.8 million

• Non-GAAP earnings from operations increased 249% year-over-year to $8.4 million

• Strong cash generation

Global Leader in M2M

100 Million Devices Shipped


Q3 Revenue of $124.3M ↑29.7% YoY (Non-GAAP GM: 29.8%)

OEM Solutions

• Strong year-over-year revenue growth

• Continued robust design win activity – Automotive, Energy, Insurance

telematics, Mobile computing

• Continued strong growth in 3G/4G LTE – Well positioned as market transitions

• New products gaining market traction – Flexible, scalable HL series – Smart modules with Legato

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Enterprise Solutions

Intelligent Gateways

In Motion Solutions

Programmable Modems

Q3 Revenue of $19.0M ↑ 15.4% YoY (Non-GAAP GM: 53.8%)

• Solid year-over-year revenue growth – Strong contribution from In Motion – Strength in the Public Safety, Utility and

Regional Transit markets

• In Motion integration materially complete

– Product roadmap and sales integrated – R&D and Marketing teams co-located

• Growth in AirVantage customer base

– Launch of AirLink Enterprise Connect


Q3 2014 – Non GAAP Operating Results(1)

Q3 2013 Q3 2014

$112.3

$143.3

Quarterly Revenue ($USD millions)

$16.4

$95.9

$124.3

$19.0

$5.9

$11.8

Adjusted EBITDA(2) ($USD millions)

Q3 2013 Q3 2014

$2.4

$8.4

Earnings from Operations ($USD millions)

Q3 2013 Q3 2014

Enterprise Solutions OEM Solutions

(1) Non-GAAP financial measures exclude the impact of: stock-based compensation expense and related social taxes, acquisition and disposition costs, acquisition amortization, impairment, integration costs, restructuring costs, foreign exchange gains or losses on translation of balance sheet accounts, and certain tax adjustments. (2) Adjusted EBITDA as defined equates to earnings (loss) from operations plus stock-based compensation expense and related social taxes, acquisition costs, restructuring costs, integration costs, impairment and amortization.

28%

101%

249%


Cash, Cash Equivalents & Short-Term Investments ($USD millions)

Q3 '13 Q2 '14 Q3 '14

$168.4

$196.1

Strong Cash Position and Debt Free

Cash provided by operations $ 28.7 *

Capital expenditures $ (2.3)

Free cash flow $ 26.4

Cash provided by other activities $ 1.3

Q3 2014 increase in cash balance: $ 27.7

$188.4 ($US mill)

(* includes a $13.9 million reduction in prepaid inventory advances in Q3’14)

sierra wireless corporate overview - november 2014

Business

forwardlooking statements

expected prices

expected quantities

new products

expected tax rates

cost of products

new business

business outlook