© 2019 Mellanox Technologies 2
Safe Harbor Statement
These slides and the accompanying oral presentation contain forward-looking statementsand information. The use of words such as “may”, “might”, “will”, “should”, “expect”,“plan”, “anticipate”, “believe”, “estimate”, “project”, “intend”, “future”, “potential” or“continued”, and other similar expressions are intended to identify forward-lookingstatements. All of these forward-looking statements are based on estimates andassumptions by our management that, although we believe to be reasonable, areinherently uncertain. Forward-looking statements involve risks and uncertainties,including, but not limited to, economic, competitive, governmental and technologicalfactors outside of our control, that may cause our business, industry, strategy or actualresults to differ materially from the forward-looking statement. These risks anduncertainties may include those discussed under the heading “Risk Factors” in theCompany’s most recent 10K and 10Qs on file with the Securities and ExchangeCommission, and other factors which may not be known to us. Any forward-lookingstatement speaks only as of its date. We undertake no obligation to publicly update orrevise any forward-looking statement, whether as a result of new information, futureevents or otherwise, except as required by law.
© 2019 Mellanox Technologies 4
Cloud &Web 2.0
Big Data
Enterprise
Business Intelligence
HPC
Storage
Security
AI & Machine Learning
Internet of Things
Exponential Data Growth Everywhere
Source: IDCHPC: High-Performance ComputeAI: Artificial Intelligence
© 2019 Mellanox Technologies 5
Higher Data SpeedsFaster Data Processing
Better Data Security
Exponential Data Growth Everywhere
source: IDC
© 2019 Mellanox Technologies 6
Exponential Growth of Data & Real Time AnalyticsRequires Mellanox High Throughput, Low Latency, Smart Interconnect Solutions
Data Growth is Driving Mellanox Growth
Higher Data SpeedsFaster Data Processing
Better Data Security
SmartNIC: Smart Network Interface Card
Adapters SwitchesCables &
Transceivers
SmartNIC System on a Chip
© 2019 Mellanox Technologies 7
Industry Leaders Choose Mellanox Solutions
10 of Top 10 Automotive Manufacturers
3 of Top 5 Pharmaceutical Companies
9 of the Top 10 Oil and Gas Companies
9 of Top 10 Hyperscale Companies
5 of Top 6 Global Banks
© 2019 Mellanox Technologies 8
Yosemite Platform with Multi-Host Technology Lowers Total Cost of Ownership
Higher Performance While Reducing System Footprint by 50%
Concurrent Streams From a Single Server For the Highest Quality Viewing Experience
Business Success Depends on MellanoxDeliver the Highest Data Center Return on Investment
Reduction in Database Recovery Time97%
ReductionOf Latency
Military Systems
Tier-1 Fortune100 Web 2.0 Company
Tier-1 Trading Institution 10X
4X
100K
© 2019 Mellanox Technologies 9
Enabling Most Efficient Machine Learning PlatformsAllowing AI to Perform Critical & Real Time Decisions
Real Time Fraud Detection
18X Speedup For Image Recognition
4X Speedup For Image Recognition
Data Analytics Image Recognition
OCP Big Sur Artificial Intelligence Platform
Machine Learning System with 400Gb/s
World Record For Data Sort, 3X FasterOCP: Open Compute Project
© 2019 Mellanox Technologies 10
Mellanox connects 53% of TOP500 platforms (265 systems), InfiniBand and Ethernet, 38% increase in 12 months (Nov’17-Nov’18)
Mellanox Connects 51% (130 systems) of TOP500 Ethernet Systems Representing Cloud and Hyperscale Infrastructures
InfiniBand Connects nearly 55% of the TOP500 HPC Platforms
InfiniBand Accelerates the Top Three, and Four of the Top Ten Supercomputers in the World (TOP500)
The Smart Choice for HPC and AI Platforms
InfiniBand Leadership
EthernetLeadership
InfiniBand Accelerates the Fastest HPC and AI Supercomputer in the World (TOP500)
Delivering the Highest Data Center Return on Investment
Source: Top500.org
© 2019 Mellanox Technologies 11
Mellanox Empowers Leading Storage PlatformsDelivering the Highest Data Center ROI
SMB Direct
© 2019 Mellanox Technologies 12
Software-Defined Network Intelligence
Mellanox is Enabling Data Centers of the Future - Today
Security Data Insights Real-Time
Highest Performance 100Gb/s, 200Gb/s and 400Gb/s Interconnect Solutions
Performance Efficiency Scalability
© 2019 Mellanox Technologies 13
Comprehensive End-to-End PortfolioInfiniBand and Ethernet
Metro / WAN
Cables/Modules
Adapter Cards
ICs
Software
NPU & Multicore
Switches/Gateways
© 2019 Mellanox Technologies 14
Leading Supplier of InfiniBand and EthernetEnd-to-End Interconnect SolutionsThe Smart Choice for Intelligent Compute and Storage Platforms
StorageFront /
Back-End
Server /Compute
Switch /Gateway
56/100/200G InfiniBand
10/25/40/50/100/200/400GbE
Virtual Protocol Interconnect
56/100/200G InfiniBand
10/25/40/50/100/200/400GbE
Virtual Protocol Interconnect
© 2019 Mellanox Technologies 15
Highest Performance 100, 200 and 400Gb/s Interconnect Solutions
TransceiversActive Optical and Copper Cables (10 / 25 / 40 / 50 / 56 / 100 / 200Gb/s)
40 HDR (200Gb/s) Ports 80 HDR100 (100Gb/s) Ports 16Tb/s Throughput, 15.6 Billion msg/sec
Interconnect
Switch
Adapters200Gb/s, 0.6us Latency 200 Million Messages per Second(10 / 25 / 40 / 50 / 56 / 100 / 200Gb/s)
Switch16 400GbE Ports, 32 200GbE Ports64 100GbE Ports, 128 25/50GbE PortsThroughput of 6.4Tb/s
SoC
System on Chip and SmartNICProgrammable adapterSmart Offloads
SoC: System on Chip
© 2019 Mellanox Technologies 16
Enabling the Future of Machine Learning
HPC and Machine Learning Share Same Interconnect Needs
Storage
High PerformanceComputing
Financial
EmbeddedAppliances
Database
Hyperscale
Machine Learning
IoT
Healthcare
Manufacturing
Retail
Self-Driving Vehicles
© 2019 Mellanox Technologies 17
High-Speed Ethernet Adapter Market is Significantly Growing
10GbE 25GbE 40GbE 50GbE 100GbE
63% of total market22% →200GbE
10G
25G21%
40G1%
50G15%
100G20%
200G4%
37%63%Of TotalMarket
Source: Crehan Research Long Range Forecast Server-Class Adapter/Lom Controller (10G and greater), Jan ‘18TAM: Total Available Market
201825G+ Ethernet Adapter TAM
202225G+ Ethernet Adapter TAM
$1.5B10G
69%
11%
16%
40G
25G31%Of TotalMarket
$0.6B
© 2019 Mellanox Technologies 18
Spectrum Delivers Highest Data Center ROI
Flexibility
Scalability
Programmability
TCO
Performance
10, 25, 40, 50, 100, 200 and 400 Gigabit Speeds, Variety of Port Configurations
10X Better Scalability, Optimized Data Center Utilization and End-User Experience
Programmable Flexible Parser and Packet Modifier, Support User-Defined Protocols
1.3X Lower Power Consumption Versus Competition
1.4X Lower Latency Versus Competition, Enable Real-Time Data Analysis and Insights
Open Ethernet
© 2019 Mellanox Technologies 19
BlueField SmartNIC & Storage Controller Driving Future Growth
The New Generation of Intelligent Interconnect for Compute and Storage Platforms Broad Base of Customers Using ConnectX Can Seamlessly Transition to BlueField
On a Single Chip, BlueField combines: Market Leading ConnectX Adapter Technology ARM v8 Multicore Processors Two DDR4 DRAM Controllers PCIe Gen-4 Switch
NFV: Network Function Virtualization
Security Data Center Infrastructure Protection
Storage Enabling NVMe-over-Fabric Storage Platforms
Machine Learning The Most Efficient Machine Learning Systems
NFV Higher Performance & Flexibility at Lower Cost
BlueFieldARM Cores
Accelerators
PCIe Gen4
VPI(Ethernet/ InfiniBand)
DDR4 RAM
© 2019 Mellanox Technologies 20
End-to-End Solutions for All Platforms
Highest Performance and Scalability for Intel, AMD, IBM Power,NVIDIA, Arm and FPGA-based Compute and Storage Platforms at10, 20, 25, 40, 50, 100, 200 and 400Gb/s Speeds
Unleashing the Power of all Compute Architectures
X86Open
POWERGPU ARM FPGA
© 2019 Mellanox Technologies 21
Company Headquarters:
Mellanox Overview
Yokneam, IsraelSunnyvale, CaliforniaWorldwide Offices
~2,500Employees worldwide
$1.09B2018 Revenue
$5.012018 Non-GAAP EPS
$265M2018 Cash From Operations
$439M2018 Ending Cash & Investments
Ticker: MLNX
© 2019 Mellanox Technologies 22
Boards Silicon
Systems Boards Silicon
Cables Systems Boards Silicon
Software Cables Systems Boards Silicon
Optics Software Cables Systems Boards Silicon
Processing Optics Software Cables Systems Boards Silicon
2001 20132004 2008 2011 2018
Mellanox Has A Long Track Record Of Delivering Breakthrough Technology
Source: Crehan Research, Mellanox internal estimates
As Bandwidth Goes Up, Mellanox’s Competitive Advantage From its Leading Offload Engine Capability Increases
10Gb/s 20Gb/s40Gb/s
56Gb/s
100Gb/s
200/400Gbps
■ #1 in InfiniBand Since 2004■ #1 in Ethernet NIC in 2016 / 2017■ #2 in Ethernet Switch Silicon in 2017
Leading Edge Products Across Technology Generations
Silicon photonics
Optical Interconnect Technology
© 2019 Mellanox Technologies 23
Delivering Strong Financial Performance2018 Financial Results
Non-GAAP Operating Margin
Cash Flow from Operations
Cash and Investments
Revenue
Non-GAAP Gross Margin
Non-GAAP EPS
$1,088 million
$5.01
$264.9 million
$438.5 million
24.8%
69.2%
+26% YoY
70.4% in 2017
+120% YoY
+64% YoY
+60% YoY
13.7% in 2017
Reference reconciliation tables in back-up
© 2019 Mellanox Technologies 24
Source: Crehan Research, Linley Group, LightCountingNote: Market segments may not sum to total due to rounding
Mellanox's Opportunity Is Significant with Multiple Growth Vectors
$1.6$2.5
$6.8
$9.0
$2.3
$2.8$2.6
$4.7
2017 2021
$13.2
$19.0
Segment ’17 – ’21 CAGR
Cables (10G+) 16%
Multicore Processors 6%
Switch (10G+) 7%
Adapter (10G+) 12%
Total 9%
($ in billions)
Mellanox’s strong product cycles and share gain momentum should allow the Company to grow substantially above the market at rates of mid-double digits or higher.
© 2019 Mellanox Technologies 25
Market Waves: 25 Gb/s and Above Ethernet Adapter
$0M
$200M
$400M
$600M
$800M
$1,000M
$1,200M
$1,400M
$1,600M
2017 2018 2019 2020 2021 2022
200G
100G
50G
40G
25G
Source: Crehan Long-range Forecast – Ethernet Adapter forecast, July 2018
25G+ Ethernet Adapter Market Waves
Each Transition to Faster Ethernet Adapter Speeds Represent aMulti-Year Growth Wave for Mellanox(10G25G50G100G…)
© 2019 Mellanox Technologies 26
Positioned For Significant Growth In High-Speed Ethernet Adapters
Mellanox 69%
Broadcom 6%
Intel 14%
Others 11%
■ First to Market with 25/40/50/100 Gb/s Ethernet Adapters
■ Broad and expanding portfolio of offload engines creates a competitive advantage - lowers TCO, improves operational efficiency
Mellanox is the Market Leader in25G+ Ethernet Adapters1
25G+ Ethernet Adapter Market is Growing Rapidly
$636M
2018 2022
$1,450M
Source: Crehan Quarterly Market Share Server-Class Adapter-LOM-Controller 3Q 2018125, 40, 50, and 100 Gb/s Adapter2Crehan Long-range Forecast - Server-Class Adapter-LOM-Controller, January 2019
2
© 2019 Mellanox Technologies 27
Mellanox Revenue Breakdown
($ in millions)
25G+ Ethernet Switch and Adapter Market
($ in billions)
25G+ Adapter…
25G+ Switch…
25G+ Adapter…
25G+ Switch $6.1
$3.1BN $7.3BNSource: Crehan Long-range Forecast – Data Center Switch, January 2018
Crehan Long-range Forecast – Server-Class Adapter-LOM-Controller, January 2019
Mellanox has Expanded into High-Growth Ethernet Market
Ethernet$83
Other$43
InfiniBand$338
20182014
InfiniBand $438
Ethernet$618
Other$32
$1,088M$464M
2021E2017
© 2019 Mellanox Technologies 28
InfiniBandHigh End
Ethernet NICHigh End
Ethernet SwitchSmart NIC
Cables andTransceivers
Broad Data Center Portfolio
Source: Crehan Research, Mellanox internal estimates
Mellanox Now Has a Leading InfiniBand and Ethernet Product Portfolio Targeting the Data Center
#1Since 2004
#1Since 2016
#2Since 2017
NewLeading Technology
Rapid Share Gains
© 2019 Mellanox Technologies 29
Delivering Record Financial Performance in 2018
$52.0
$80.1
$150.5
$196.1
$161.3
$264.9
2013 2014 2015 2016 2017 2018
5-Year CAGR 38%
$390$464
$658
$858 $864
$1,088
2013 2014 2015 2016 2017 2018
($ in Millions) ($ in Millions)
Achieved $1.1 Billion in Annual Revenue
Generated $264.9 Million in Operational Cash Flow
5-Year CAGR 23%
© 2019 Mellanox Technologies 30
($ in Millions)
Quarterly Revenue Growth Trend
$99.0 $102.6
$120.7
$141.1 $146.7
$163.1$171.4 $176.9
$196.8
$214.8$224.2 $221.7
$188.7
$212.0$225.7
$237.6$251.0
$268.5$279.2
$290.1$300.0
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19
1 Based on mid-point of 1Q 2019 revenue guidance range of $295M - $305M, provided on January 30, 2019
E1
E1
© 2019 Mellanox Technologies 31
$10.5$7.3
$17.2
$45.0 $45.8$41.3
$28.7
$34.7
$48.6$44.8
$48.7$54.0
$35.0
$6.4
$53.0
$66.9
$55.4
$46.7
$66.4
$96.4
Record
($ in Millions)
Consistently Generating Operational Cash Flow
© 2019 Mellanox Technologies 32
Strong Balance Sheet
$328
$274
$439
2016 2017 2018
$243
$73
$0
2016 2017 2018
Maintained Stable Cash and Investments
Successfully Retired Debt1
1 Reflects Term Debt
($ in Millions)
© 2019 Mellanox Technologies 33
Delivering Strong Operating Leverage
Focused on Profitable Growth
$251
$268$279
$290
$52
$66$73
$79
20.8%
24.7%
26.2%27.1%
1Q18 2Q18 3Q18 4Q18
Revenue
Non-GAAP Operating Profit
Non-GAAP Operating Margin
($ in Millions)
Reference reconciliation tables in back-up
© 2019 Mellanox Technologies 34
Maintain the best ISS overall “QualityScore” of 1 since May 2017, indicating lowest risk
ISS measures up to 80 factors to identify potential risks and concerns for investors in 4 categories: Board Structure
Compensation
Shareholder Rights
Audit & Risk Oversight
Scoring is entirely data-driven based on SEC filings by the Company and peers in the Russell 3000 Index
Rated Highest ISS Corporate Governance Score
© 2019 Mellanox Technologies 35
■ Exponential growth of data creating significant opportunities
for Mellanox ($19B TAM)
■ Leading interconnect solutions supplier, offering technology
that is critical to data center performance at the highest ROI
■ Diversified business with comprehensive end-to-end Ethernet,
InfiniBand and multi-core processor product portfolio
■ Leading the transition to Exascale computing; first to market
with 200G HDR InfiniBand with 400G NDR under development
■ Benefiting from multi-year growth opportunities driven by the
transition to 25G+ Ethernet technology
■ Demonstrating revenue growth, strong cash flow generation
and increasing profitability
Summary
© 2019 Mellanox Technologies 37
Back-up Reconciliation Tables
GAAP gross profit to non-GAAP FY2017 FY2018 Q1'18 Q2'18 Q3'18 Q4'18 GAAP operating expenses to non-GAAP FY2017 FY2018 Q1'18 Q2'18 Q3'18 Q4'18
GAAP gross profit $563 $700 $162 $164 $184 $190 GAAP operating expenses $581 $588 $150 $148 $144 $146
Share-based compensation expense 2 2 1 1 - - Share-based compensation expense (67) (70) (15) (15) (19) (22)
Amortization of acquired intangibles 43 42 11 11 10 10 Amortization of acquired intangibles (10) (9) (2) (2) (3) (2)
Settlement costs - 9 - 9 - - Acquisition and other charges (3) (16) (4) (11) (1) -
Non-GAAP gross profit $608 $753 $174 $185 $194 $200 Restructuring and related charges (12) (10) (8) (2) - -
Non-GAAP gross profit % 70% 69% 69% 69% 70% 69% Non-GAAP operating expenses $489 $483 $122 $119 $121 $122
GAAP SG&A to non-GAAP FY2017 FY2018 Q1'18 Q2'18 Q3'18 Q4'18 GAAP income (loss) from operations to non-GAAP FY2017 FY2018 Q1'18 Q2'18 Q3'18 Q4'18
GAAP SG&A $203 $217 $56 $59 $50 $52 GAAP income (loss) from operations ($17) $112 $12 $17 $40 $44
Share-based compensation expense (27) (31) (7) (6) (8) (10) Share-based compensation expense 69 71 15 15 19 22
Amortization of acquired intangibles (9) (8) (2) (2) (2) (2) Amortization of acquired intangibles 52 51 13 13 12 12
Acquisition and other charges (2) (15) (4) (10) (1) - Acquisition and other charges 3 16 4 10 1 1
Non-GAAP SG&A $165 $163 $43 $41 $39 $40 Settlement costs - 9 - 9 - -
Restructuring and related charges 12 11 8 2 1 -
Non-GAAP income (loss) from operations $119 $270 $52 $66 $73 $79
GAAP R&D to non-GAAP FY2017 FY2018 Q1'18 Q2'18 Q3'18 Q4'18 Non-GAAP income from operations % 14% 25% 21% 25% 26% 27%
GAAP R&D $366 $360 $86 $87 $93 $94
Share-based compensation expense (40) (39) (8) (8) (11) (12)
Amortization of acquired intangibles (1) (1) (1) - - -
Acquisition and other charges (1) - - - - -
Non-GAAP R&D $324 $320 $77 $79 $82 $82