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Slide 1: Sierra Wireless Corporate Update Q1 2011 Sierra Wireless Proprietary and Confidential January 21, 2010 Page 1
Slide 2: Safe Harbor Statement Certain statements and information in this presentation are not based on historical facts and constitute forward-looking statements within the meaning applicable securities laws (“forward-looking statements”) including statements and information relating to our financial guidance summary for Q1, 2011 and fiscal year 2011, our guidance drivers for 2011 and our outlook for 2011. 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 about the future, such as: “look forward to”, “outlook”, “may”, “intend”, “believe”, “plan”, “anticipate”, “expect”, “goals”, “targets”, “forecasts”, “well positioned for”, “trending” and “will continue to”. ● 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. ▲ that wireless network operators will deploy next generation networks when expected. ▲ our operations are not adversely disrupted by component shortages or other development, operating or regulatory risks; ● are subject to substantial known and unknown material risks and uncertainties. As a result, our actual results, achievements and developments in our business may differ significantly from our current expectations. 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. Certain of these material risks are listed below: ▲ actual sales volumes or prices for our products and services are 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 development and timing of the introduction of our new products is later than we expect or is indefinitely delayed. ▲ transition periods associated with the migration to new technologies are longer than we expect. 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. © Sierra Wireless 2011 Page 2
Slide 3: Corporate Profile A leading provider of Mobile Computing and Machine-to-Machine cellular wireless solutions Founded in 1993 Experienced leadership Approximately 900 employees worldwide Broad range of high performance hardware & software solutions Proven innovator in new wireless technologies, embedded systems and end to end solutions 2010 Revenue $650 million Strong global presence. HQ in Vancouver, Canada R&D on three continents NASDAQ TSX © Sierra Wireless 2011 Page 3
Slide 4: Targeting Two Large, Growing Markets Mobile Computing Global Market Size ($USD billion) 18.0 Mobile Broadband 750M+ notebooks, netbooks, tablets shipped per year „10-13 CAGR 23% 15.5 2.5 3.7 12.4 Connected Homes >1 billion middle-class households Mobile Consumer 5+ connected devices per person 1.8 Year 2020 “Everything Connected” 9.6 1.3 7.7 1.2 Healthcare 13.0 10.6 8.3 6.5 14.3 Automotive & Transportation >1 billion motor vehicles >1 billion people with chronic welfare diseases Energy >3 billion utility meters 2009 2010 2011 2012 2013 Machine-to-Machine Source: ABI Research © Sierra Wireless 2011 Page 4
Slide 5: Global Leader in Wireless Solutions for M2M and Mobile Computing Machine-to-Machine • #1 global market share • Leading product portfolio • Highly differentiated • Global support • Solutions across the value chain Mobile Computing • Air interface leadership • Strong product portfolio: USB, mobile hotspots • Key channel positions with operator and OEM partners • Highest quality, lowest TCO Leverage LTE WiMAX HSPA+ EVDO Core wireless technology Global footprint Manufacturing and supply chain © Sierra Wireless 2011 Page 5
Slide 6: Broad Product Offering Targeting Key Verticals Mobile Consumer Mobile Computing Automotive Transportation Energy Industrial & Infrastructure Security Networking Sales & Payment Field Services & Logistics Healthcare Sierra Wireless Products and Solutions Mobile Broadband Devices © Sierra Wireless 2011 Intelligent Embedded Modules Intelligent Gateways & Routers Services Platform & Solutions Page 6
Slide 7: AirCard® Mobile Broadband Devices Mobile broadband devices for global operators, including: USB modems, mobile hotspots, PC cards, and express cards Leading provider of high speed 4G air interfaces: LTE, Dual-Carrier HSPA+, Dual-Mode WiMAX / CDMA Ranked top global vendor in 2009 by ABI Research © Sierra Wireless 2011 Page 7
Slide 8: AirPrime Intelligent Embedded Modules Wireless modules, software and services for OEMs embedded modules • • • • • • • • LTE HSPA/HSPA+ EVDO TD-SCMDA EDGE 1xRTT GSM/GPRS GPS e-readers, tablets notebooks, netbooks automotive sales and payment software solutions and services smart grid, smart metering networking embedded SIM embedded applications security healthcare development tools management services professional services © Sierra Wireless 2011 Page 8
Slide 9: AirLink Intelligent Gateways & Routers Wireless terminals for M2M and mobile applications gateways and routers • Ruggedized and commercial grade • 2G and 3G platforms security sales & payment in-vehicle platforms commercial grade routers M2M gateways programmable gateways tracking business continuity software solutions and services utilities & infrastructure device management and diagnostics embedded intelligence and security fleet management & field service © Sierra Wireless 2011 Page 9
Slide 10: AirVantage Services Platform and Solutions Cloud platform for accelerating development and deployment of M2M applications Ready Agent Asset Communication Device Operator Networks AirVantage Services Platform Applications Intelligent Gateways and Routers Operating Portal • Subscription Mgmt • Device Mgmt • Asset Mgmt • Web Applications • Mobile Applications • Development Tools Intelligent Embedded Modules 3rd Party Portable Agent Fully-Integrated With Operator Networks Secure Operation Hosted in the Cloud Open Standards Based Development © Sierra Wireless 2011 Page 10
Slide 11: Superior Global Footprint London Munich Silicon Valley San Diego Vancouver, Canada Corporate Headquarters Beijing Tokyo Toulouse Flextronics Suzhou Paris Sierra Wireless operates worldwide serving global network operators, OEMs, enterprises • R&D • Sales • Technical Support & Services • Manufacturing Johannesburg Hong Kong and Shenzhen Melbourne = R&D, Marketing, Sales, Operations = Manufacturing = Additional Major Offices © Sierra Wireless 2011 Page 11
Slide 12: 2010 Financial Highlights 2010 Revenue by Business Line 2010 Full Year Results ($USD) Revenue Gross Margin (% of revenue) Non-GAAP Earnings from Operations $650.3 million 29.3% $22.4 million 51% 49% Mobile Computing M2M Non-GAAP Earnings per Share Cash Balance as of Dec 31, 2010 $0.64 per share $111.8 million 2010 Revenue by Geography 40% 14% 46% Americas EMEA APAC © Sierra Wireless 2011 Page 12
Slide 13: Summary Sierra Wireless is the company that operators, OEMs and enterprises around the world count on for wireless solutions • Innovative Mobile Computing and M2M applications • Broadest product portfolio – mobile broadband devices, embedded modules, M2M gateways and routers, M2M cloud services platform • Global reach – R&D and technical services in North America, Europe and Asia, sales and distribution in more than 100 countries • Fastest time to market and lowest total cost of ownership • Financial strength and stability Global leader in wireless solutions for M2M and Mobile Computing © Sierra Wireless 2011 Page 13
Slide 14: Machine-to-Machine Segment Overview © Sierra Wireless 2011 Page 14
Slide 15: Market Focus  Automotive Typical applications Sample Customers Market Dynamics CAGR 37%/35% (Vol/Rev 2009-2014) Crash Safety (eg. eCall) $328m $74m Telematics & Navigation 1.7mu Source: ABI 2009 Market demand drivers: Regulation 2014 In Vehicle Internet Increasing post-crash survival rates Regulation & Consumer Pull Tracking stolen vehicles Consumer Demand In vehicle comms & entertainment Tier 1  OEM  Market moving to higher bandwidth requirements for internet, entertainment, etc… © Sierra Wireless 2011 Page 15 8.15mu
Slide 16: Market Focus  Transportation Typical applications Sample Customers Market Dynamics CAGR 31%/29% (Vol/Rev 2009-2014) Stolen Vehicle Tracking $831m $230m Fleet management 6.4mu Source: ABI 2009 2014 Market demand through efficiency Fleet & collection efficiency eToll & eTax Collect Less fuel/CO2, shorter routes, faster deliveries, road toll revenue Personal & business road assets Stolen vehicle recovery, insurance premiums tuned, on-road efficiency and pay-as-you-drive insurance, ITS (Intelligent Transport Systems), etc… © Sierra Wireless 2011 Page 16 24.5mu
Slide 17: Market Focus  Energy Typical applications Sample Customers Market Dynamics CAGR 18%/11% (Vol/Rev 2009-2014) Electricity – Gas – Water $270m $158m Smart Metering Transmission & Distribution Renewable Energy Management 5mu Source: ABI 2009 2014 Demand drivers: regulation, grid efficiency, social conscience Energy Efficiency - Green Energy CO2 emissions targets, smart grid: load management/optimization, grid contribution by consumer Consumer monitored energy Web based home monitoring © Sierra Wireless 2011 Page 17 11.3mu
Slide 18: Market Focus  Security Typical applications Sample Customers Market Dynamics CAGR 29%/33% (Vol/Rev 2009-2014) Premise Monitoring $232m $63m 2mu Personal Security Source: ABI 2009 Market demand drivers: Consumer pull 2014 Video Surveillance Protecting homes and loved ones Business pull Protecting premises and assets Anti-terrorism Protecting citizens and criminal trackers, high value asset tracking and much more… © Sierra Wireless 2011 Page 18 8.5mu
Slide 19: Market Focus  Sales & Payment Typical applications Sample Customers Market Dynamics CAGR 24%/16% (Vol/Rev 2009-2014) Point of Sale $113m $54m ATM & Cash Registers 1.6mu Source: ABI 2009 2014 Market driven by “cashless” society Convenience & security Vending Pay for anything, anytime, anywhere, securely. Government regulation Electronic VAT collection to avoid fraud. © Sierra Wireless 2011 Page 19 4.6mu
Slide 20: Market Focus  Networking Typical applications Sample Customers Market Dynamics CAGR 14%/12% (Vol/Rev 2009-2015) Enterprise $505m $291m Residential 7.7mu Source: ABI 2009 Market demand through Broadband proliferation 2015 Safety & Industrial 3G and LTE technology provide end user experience to wireline access Media applications possible Internet access 24hr/24hr Enables service provider to provide access (primary or backup) where wireline infrastructure is inadequate © Sierra Wireless 2011 Page 20 17mu