Download - Gigamon 1Q15 Investor Relations Presentation
Gigamon (GIMO) Investor OverviewAs of January 29, 2015
2©2015 Gigamon Inc. All rights reserved.
Safe Harbor StatementAny forward-looking indication of plans for products is preliminary and all future release dates are tentative and subject to change.
Any future release of products or planned modifications to product capability, functionality, or features are subject to ongoing evaluation by Gigamon, and may or may not
be implemented and should not be considered firm commitments by Gigamon and should not be relied upon in making purchasing decisions.
This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking
statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes,"
"estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or
intentions. Forward-looking statements in this presentation include, but are not limited to, our expectations that the market for our products will continue to grow and
develop; and our expectations regarding product developments and enhancements and adoption of those products by our customers. Our expectations and beliefs
regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from
those projected. These risks include our ability to continue to deliver and improve our products and successfully develop new products; customer acceptance and purchase
of our existing products and new products; our ability to retain existing customers and generate new customers; the market for network traffic visibility solutions not
continuing to develop; competition from other products and services; and general market, political, economic and business conditions.
The forward-looking statements contained in this presentation are also subject to other risks and uncertainties, including those more fully described in our filings with the
Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 28, 2013 and our Quarterly Report on Form 10-Q for the
most recent quarterly period. The forward-looking statements in this presentation are based on information available to Gigamon as of the date hereof, and Gigamon
disclaims any obligation to update any forward-looking statements, except as required by law.
This presentation includes certain non-GAAP financial measures as defined by the SEC. As required by Regulation G, we have provided a reconciliation of those measures
to the most directly comparable GAAP measures, which is available in the appendix.
3©2015 Gigamon Inc. All rights reserved.
• Enabling disruptive network change
• Broad software-centric solution
• Industry leading capabilities
• Large underpenetrated market
• Compelling business model
Investment Highlights
$46
$68
$97
$140
$157
2010 2011 2012 2013 20142010 2011 2012 2013 2014
Revenue($ Millions)
4©2015 Gigamon Inc. All rights reserved.
Powerful Market Drivers in IT
Visible traffic
Agile networks
Improved ROI
Centralized management
Reduced complexity
5©2015 Gigamon Inc. All rights reserved.
Third Party Applications,
SDN Controller Integration, etc…
Applications & Tools Infrastructure,
User Community
* APIs, GigaVUE-OS on white box subject to future availability
Unified Visibility Fabric™
Traffic
Intelligence
Visibility
Fabric Nodes(Pervasive visibility across
physical, virtual, remote
sites, and future SDN
production networks)
Fabric
Services Flow Mapping®
Fabric Control
(Management)
Applications
Inline Bypass
GigaVUE-HD8 GigaVUE-HD4 GigaVUE-HB1
GigaVUE-HC2H S
eri
es
TA
Se
rie
s
GigaVUE-TA1
GigaVUE-OS
on white box* Vir
tua
l V
isib
ilit
y
GigaVUE-VM
TA
Ps
G-TAP
G-TAP A Series
G-TAP BiDi
Embedded TAPs
G S
eri
es GigaVUE-2404
GigaVUE-420
G-SECURE-0216
De-duplication
Packet Slicing
FlowVUE™
Masking
GTP Correlation
Header Stripping
NetFlow Generation
Tunneling
SSL Decryption
Adaptive Packet Filtering
GigaVUE-FM
Clustering
AP
I
AP
I
AP
I
AP
I
AP
I
6©2015 Gigamon Inc. All rights reserved.
AS OF Q4 2014
Enterprise
A broad spectrum of brand-name customers
Gigamon Customers Today
TECHNOLOGY INDUSTRIAL RETAIL
FINANCE HEALTHCARE & INSURANCE GOVERNMENT
50 of the Top 100 Global SPs
Service Providers
1600+ End Customers 65+ of the Fortune-100
7©2015 Gigamon Inc. All rights reserved.
58X as of Q4 2014 - Top 25 Gigamon customers at the time of IPO (June 2013)
Seed and Grow2006 2007 2008 2009 2010 2011 2012 2013 2014
Top 25 Customers Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
1 Service Provider
2 Enterprise
3 Service Provider
4 Enterprise
5 Enterprise
6 Service Provider
7 Service Provider
8 Service Provider
9 Enterprise
10 Service Provider
11 Service Provider
12 Enterprise
13 Enterprise
14 Enterprise
15 Enterprise
16 Service Provider
17 Service Provider
18 Service Provider
19 Enterprise
20 Enterprise
21 Enterprise
22 Enterprise
23 Service Provider
24 Enterprise
25 Service Provider
= Initial purchase
8©2015 Gigamon Inc. All rights reserved.
Our Market and TAM: Into the Future
Visibility Fabric™
$2-3bn
The Network
Upgrade Cycle
3G 4G
LTE / VoLTE
Applications Designed
for the Cloud
Internet
of Things
9©2015 Gigamon Inc. All rights reserved.
Growth Enablers
The power of our
SOLUTIONThe strength of our
POSITION
Our unrealized
POTENTIAL
The market
DEMAND
The VALUEwe deliver$
Financial Overview
11©2015 Gigamon Inc. All rights reserved.
Compelling Financial Performance
$16 $19
$24
$18
$23
$29 $32
$20 $23
$26
$37
$6
$7
$8
$8
$9
$10
$11
$12 $12
$13
$14
2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
= Product = Service
Quarterly Revenue($ Millions)
Geography (% revenue)
End-Customer Vertical (% bookings)
APAC…
EMEA
17%
AMERICAS
78%
SERVICE …
GOVERNME…
ENTERPRISE
73%
12©2015 Gigamon Inc. All rights reserved.
14% 15% 16%
2%
15%
23%
20%
-10%
-5%
5%
17%
2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
Note: See appendix for reconciliation of non-GAAP operating expenses and non-GAAP operating margin.
Investing for Profitable Growth
Non-GAAP Operating Expenses($ Millions)
$4 $4 $5 $5 $6 $6 $8 $8 $9 $9 $9
$9$9
$12 $12$13 $13
$15 $15$17 $17 $18
$2$3
$3 $3$3 $3
$3 $4
$3 $3$3
2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
R&D S&M G&A
Non-GAAP Operating Margin
13©2015 Gigamon Inc. All rights reserved.
Long-Term Target Model (Non-GAAP)
2013 2014 Q4’14 Target Model
Gross Margin 81% 77% 77% 75 – 77%
R&D 18% 22% 17% 15 – 16%
S&M 38% 43% 36% 29 – 31%
G&A 9% 9% 7% 5%
Operating Margin 16% 4% 17% 23 – 28%
Thank You
15©2015 Gigamon Inc. All rights reserved.
Non-GAAP Reconciliation Q212 - 2013 ($ Millions)Q2’12 Q3’12 Q4’12 Q1’13 Q2’13 Q3’13 Q4’13 2013
Revenue $22.5 $25.7 $31.9 $25.8 $ 32.4 $39.0 $43.1 $140.3
GAAP gross profit $17.9 $20.6 $25.0 $20.4 $ 23.6 $31.2 $34.3 $109.5
Share-based compensation expense and related taxes 0.0 0.1 0.0 0.0 3.0 0.3 0.4 3.8
Non-GAAP gross profit $17.9 $20.7 $25.1 $20.5 $ 26.6 $31.5 $34.7 $113.3
% non-GAAP gross margin 80% 81% 79% 79% 82% 81% 81% 81%
GAAP research and development $ 3.6 $ 4.8 $ 5.4 $ 5.7 $ 17.1 $ 9.0 $10.3 $ 42.1
Share-based compensation expense and related taxes (0.0) (0.3) (0.2) (0.3) (11.3) (2.5) (2.6) (16.7)
Non-GAAP research and development $ 3.5 $ 4.5 $ 5.2 $ 5.4 $ 5.8 $ 6.5 $ 7.7 $ 25.4
GAAP sales and marketing $ 9.1 $10.0 $12.1 $12.4 $ 26.1 $15.5 $18.0 $ 72.0
Share-based compensation expense and related taxes (0.1) (0.5) (0.3) (0.4) (13.3) (2.7) (2.6) (19.0)
Non-GAAP sales and marketing $ 9.0 $ 9.5 $11.7 $12.0 $ 12.9 $12.7 $15.4 $ 53.0
GAAP general and administrative $ 2.7 $ 3.7 $ 3.9 $ 3.5 $ 12.7 $ 4.7 $ 4.7 $ 25.6
Share-based compensation expense and related taxes (0.5) (0.8) (0.7) (0.8) (9.5) (1.5) (1.5) (13.4)
Non-GAAP general and administrative $ 2.2 $ 3.0 $ 3.2 $ 2.7 $ 3.2 $ 3.2 $ 3.2 $ 12.2
GAAP operating income (loss) $ 2.5 $ 2.1 $ 3.7 $ (1.2) $(32.3) $ 2.1 $ 1.2 $ (30.2)
Share-based compensation expense and related taxes (0.6) (1.7) (1.3) (1.6) (37.1) (7.1) (7.2) (52.9)
Non-GAAP operating income (loss) $ 3.1 $ 3.8 $ 4.9 $ 0.4 $ 4.7 $ 9.1 $ 8.4 $ 22.7
% non-GAAP operating margin 14% 15% 16% 2% 15% 23% 20% 16%
16©2015 Gigamon Inc. All rights reserved.
Non-GAAP Reconciliation 2014 ($ Millions)Q1’14 Q2’14 Q3’14 Q4’14 2014
Revenue $ 31.8 $34.9 $39.3 $51.3 $157.1
GAAP gross profit $ 23.2 $27.0 $30.3 $39.2 $119.7
Share-based compensation expense and related taxes 0.5 0.5 0.4 0.3 1.7
Non-GAAP gross profit $ 23.7 $27.5 $30.7 $39.5 $121.4
% non-GAAP gross margin 75% 79% 78% 77% 77%
GAAP research and development $ 10.9 $10.9 $10.1 $10.9 $ 42.8
Share-based compensation expense and related taxes (3.0) (2.1) (1.3) (2.2) (8.5)
Non-GAAP research and development $ 7.9 $ 8.8 $ 8.8 $ 8.7 $ 34.3
GAAP sales and marketing $ 18.2 $19.6 $17.9 $20.4 $ 76.1
Share-based compensation expense and related taxes (3.0) (2.4) (1.1) (1.9) (8.4)
Non-GAAP sales and marketing $ 15.2 $17.2 $16.9 $18.5 $ 67.6
GAAP general and administrative $ 6.0 $ 4.4 $ 5.2 $ 5.0 $ 20.7
Share-based compensation expense and related taxes (2.1) (1.1) (2.0) (1.6) (6.8)
Non-GAAP general and administrative $ 3.9 $ 3.4 $ 3.3 $ 3.4 $ 13.9
GAAP operating income (loss) $(11.9) $ (7.8) $ (3.0) $ 2.9 $ (19.9)
Share-based compensation expense and related taxes (8.6) (6.0) (4.8) (6.0) (25.5)
Non-GAAP operating income (loss) $ (3.3) $ (1.8) $ 1.8 $ 8.9 $ 5.6
% non-GAAP operating margin -10% -5% 5% 17% 4%
17©2015 Gigamon Inc. All rights reserved.
Gap in Data Volume and Relevancy
Big Data
% of Data
Consumable
by Tools
Broad & General Focused & SpecificTools
Infrastructure
1Gb 10Gb 40Gb 100GbNetwork & Applications Infrastructure
$
$
$
18©2015 Gigamon Inc. All rights reserved.
Why Our Customers Buy a Visibility Fabric™
Global Petrochemical Company
Without
GIMO
With
GIMO Saving
Management probes 25 8
Total cost $6.2M $3.0M 52%
GIMO percentage of deal 33%
One of the Nation’s Largest Electric Utility Providers
Without
GIMO
With
GIMO Saving
Management probes 39 21
Total cost $7.1M $5.1M 29%
GIMO percentage of deal 24%
19©2015 Gigamon Inc. All rights reserved.
Production Network
Network
Management
Application
Performance
Security
ToolsGigamon Visibility Fabric™ Solution
Private Cloud
SDN
Sources: 1 IDC 2015 market projections. 2 IDC 2015 market projections (Firewall; IPS; IDS; UTM)
The Agnostic Solution
$3.3bn(*1)
$3.1bn(*1)
$1.8bn(*2)
$8.1B tool market
adjacency
Conservative 25%
capture of wallet
Incremental to TAM
calculation:
• Recording
• Analytics
• Inline Security
Incremental to TAM
calculation:
• Network TAPs
• Virtual TAPs
• Software licenses
Deployed 10Gb &
40Gb ports
Number of SPAN &
Mirror ports
Ingress ports into
Visibility Fabric
Visibility Fabric
port premium
20©2015 Gigamon Inc. All rights reserved.
The Competitive Landscape
Intelligence
Control
Scale
So
lutio
n V
alu
e
Traditional TAP &
Aggregation
Approach
Traditional
Switch
Approach
Visibility
Fabric™
Approach
Nexus Data
Broker (NDB)