25
September 2020
September 2020
/ 2
Disclaimer
Certain statements in this presentation, including responses to questions, contain or may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this presentation are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,”’ “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words. Forward-looking statements and related risks include, but are not limited to, statements concerning: market size and growth strategy; our estimated and projected costs and capital expenditure requirements; margins, revenue, expenditures and growth rates; the scalability of our business; our future results of operations or financial condition; our plans and objectives for future operations, growth, initiatives, or strategies; the total addressable market for our products; timing of new product launches; expectations for smart cities and technology procurement, including adoption of new technologies by municipalities and government entities; research and development costs; commercial success and market acceptance of our products; ability to retain customers; competitive companies and technologies in our industry; ability to enhance our products; our business model and strategic plans for our products, technologies and business, including our implementation thereof; ability to accurately forecast customer demand for our products and manage our inventory; our ability to expand, manage and maintain our direct sales and marketing organization; our expectations about market trends; and the other risks described in the “Risk Factors” section of our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) for the year ended December 31, 2019 and of our Quarterly Report on Form 10-Q for the three months ended March 31, 2020, and in our other filings with the SEC.
The forward-looking statements in this presentation are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this presentation and are subject to a number of known and unknown risks, uncertainties and assumptions. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this presentation, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements as predictions of future results.
This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions, and estimates of our future performance and the future performance of the markets in which we compete are necessarily subject to a high degree of uncertainty and risk.
/ 3
Sonim: What We Do
Ultra-rugged mobility solutions including handsets,
accessories and software
Serving ~47 million blue- and grey-collar task workers in
North America(2)
Purpose-built for the enterprise and agency
Selling through leading mobile carriers
Established brand and market leader
Thriving ecosystem of application partners
Ultra-Rugged Handset Portfolio
Source: Bureau of Labor Statistics, Defense Manpower Data Center (DoD), IBISWorld statistics, Government of Canada statistics, Canadian Association of Fire Chiefs, Public Safety Canada.
(1) Now part of T-Mobile. Sonim anticipates that future sales to Sprint will cease at the end of Q4 2020 as a result of the restructuring of Sprint following its acquisition by T-Mobile.
(2) U.S. and Canada Industrial Enterprise and Federal Government data are as of 2018; U.S. and Canada Public Safety data are as of 2017, with the exception of Canada Security Guard data which is as of 2016.
Selling through Leading Mobile Carriers
(1)
/ 4/ 4
A Leader in Handheld Ultra-Rugged Mobility Solutions with >10 Years' Experience
Reliability Functionality Solution Focus Service-Oriented Mission Critical
On-SiteService
XP8 XP5s XP3
Why Sonim
/ 5
Proven Management TeamTom Wilkinson, Chief Executive Officer
• Experienced executive with various leadership positions, most recently as Chairman and Interim CEO of Cipherloc Corporation and formerly as CEO of Xplore
Technologies which was sold to Zebra Technologies in August 2018
• Master and Bachelor degrees from the University of Texas and is a Certified Public Accountant in Texas and Colorado
Bob Tirva, Chief Financial Officer
• Proven financial executive with various executive roles, most recently as CFO of Intermedia and formerly as Corporate Controller at Dropbox, Inc.
• M.B.A. from the Yale School of Management and a Bachelor of Business Administration in Accounting from the University of Notre Dame
Randy Denny, Executive Vice President of Sales
• Proven sales leader and rugged electronics industry expert most recently with RealWear, and additional success at Xplore Technologies and General Dynamics
Itronix
• Bachelor of Science in Business from the University of Idaho
John Graff, Chief Marketing Officer
• Experienced marketing leader with prior experience at Zebra Technologies, Xplore Technologies and National Instruments.
• Bachelor of Science in Electrical Engineering from the University of Texas
Peter Liu, Senior Vice President of Operations
• Former Global Quality Director at LOM/Perlos and Head of Quality for Motorola Solutions’ Strategic Growth Engine business unit
• Bachelor degree in Engineering from Tianjin University and an M.B.A. from Lawrence Technological University
Bengt Jonassen, Senior Vice President of Engineering
• Served as R&D Manager and Concepting Product Program Manager at Nokia, in Germany and China, respectively
• Bachelor degree in Electrical Engineering from Frankfurt University of Applied Sciences
/ 6
Turnaround in Progress
TTM Revenue $79.8m at 22% Gross Margin
• Proven ability to win designs and ship production volume to top US and Canadian carriers
• Excellent carrier relationships and growing distribution capabilities
• Margin expansion expected with next generation products
Strengthened balance sheet to fund product development and future growth
• Raised $27.6 million from public offering
• Generated $5.7 million in positive cash through first 6 months 2020 through improved capital efficiency
• Eliminated $10.2 million of debt through cash and stock, leaving company effectively debt-free
• Ended the second quarter with $38.1 million in cash and equivalents
Lean operating cost structure implemented
• Reduced operating expenses 39% year-over-year
• Positioned to maintain low-opex model going forward, including forward R&D activities
/ 7
Sonim Organization
Austin, TX
Headquarters
Beijing, China
Hardware R&D
Shenzhen, China
Final Assembly
Bangalore, India
Software R&D
San Diego, CA
Sales & Marketing
San Francisco, CA
Finance
/ 8
Confidential
/ 8
/ 9
Source: Bureau of Labor Statistics, Defense Manpower Data Center (DoD), IBISWorld statistics, Government of Canada statistics, Canadian Association of Fire Chiefs, Public Safety Canada.
(1) U.S. and Canada Industrial Enterprise and Federal Government data are as of 2018; U.S. and Canada Public Safety data are as of 2017, with the exception of Canada Security Guard data which is as of 2016.
~47 Million Task and Public Sector Workers Strong in the U.S. and Canada
Facilities
Management
Transportation &
Logistics
ManufacturingConstruction Energy and
Utility
Industrial Enterprise: ~38 million(1)
Public Safety Federal
Government
Public Sector: ~9 million(1)
/ 10
First Responder Network Authority established by Congress
AT&T wins contract to deploy dedicated public safety broadband network in the US
AT&T launches FirstNet and aggressively markets to public safety
Verizon and other wireless carriers battle to maintain market share
Nationwide competition among other U.S. wireless carriers for first responders and
critical infrastructure ensues
Implications for Legacy LMR Providers
Dedicated Public Safety Broadband Networks are Leading the Transition to a Next Generation Solution
2012
2017
2018
2019
• PTToC cannibalizes LMR
• LTE-based devices and solutions disrupt
Implications for Smart Cities
• Cities expected to become increasingly connected and “smart” in the long term
• City communications and technology procurement often follow public safety’s lead
/ 11
Transition from Legacy Tools to Next-Generation Broadband
Proprietary Networks and Technologies
Multiple Single-Purpose Devices
Pen and Paper
CCTV
Device Agnostic Communications
Voice, Text, Data and Multimedia
Communications
Global Broadband Coverage
Realtime Data from Non-Traditional Sources
CBRS Small Cell Networks
/ 12
Sonim’s Portfolio of Rugged Mobile Handsets
Extra-LoudAudio
Dual-ShiftBattery Life
Operationalin Extreme
Temperatures
Glove Friendly
Water-proofIPX8
Dust-proofIP6X
PressureResistant
PunctureResistant
ShockResistant
ChemicalResistant
Drop/ImpactResistant
Sonim XP8 Sonim XP5s Sonim XP3Ultra-Ruggedness Backed by Industry Leading
/ 13
Industrial Accessories
Multi-bay Handset &
Battery Charging
In-vehicle Pro-install
& Passive Kits
Wired & Wireless PTT
Headsets & RSMs
Dispatch Carrying Solutions
Bluetooth RSM
& Smart Button
Chargers,
Cables & Adapters
Wide Assortment of Sonim and 3rd Party Rugged Accessories to Meet User Needs in Various Industries and Environments
Secure Audio
Connector
/ 14
Sonim’s Development Plan – Next Generation SolutionsA broader offering of rugged solutions for the toughest environments
• New products to help us reach broader market
• Latest technologies
• 5G
• Updated and faster chipsets
• Platform-based approach
• Improves ROI
• Faster time to market for derivative products
• Application-specific functionality
• Barcode scanners
• Public safety
/ 15
Market Opportunity
/ 16
LMR (Land Mobile Radio)
• First technology for PTT and still in use today both commercial and public safety
• Public safety relies on LMR for mission-critical voice communications
iDEN
• Launched by Nextel in 1996
• At its peak had 15+ million subscribers
• Decommissioned in 2013
PoC (PTT over Cellular)
• First introductions in early 2000’s but poor QoS impacted it’s adoption
• LTE has fostered growth due to enhanced performance and added capabilities
• PoC has traction in commercial, while MCPTT is key to public safety adoption
Push-to-Talk (PTT) History/BackgroundFavorable Trend Toward Broadband Cellular-Based PTT is Exemplified by Large and Growing PoC End-User Markets
/ 17
U.S. Total PTT Users by NetworkPoC User Base is Growing 2x Faster than LMR
© Copyright 2020 VDC Research Group, Inc. Source: 2019 PTT-over-Cellular and its Impact on LMRData presented relate to estimates of broader market trends and projections and are solely presented to indicated potential market opportunity. There are no assurances that the Company’s growth rates, rates of product adoption, revenues or other results of operations will follow similar trajectories or trends or will correlate to such trajectories or trends.
4.0 4.5 5.1 5.8 6.6 7.5
9.0 9.39.9
10.411.1
12.0
2018 2019 2020 2021 2022 2023
PoC (M) LMR (M)
2018-2023 CAGR
PoC 13.6%
LMR 5.9%
/ 18
Worldwide Shipment Forecasts for Rugged Handhelds/Scanners and Rugged Smartphones
$1,853
$1,931
$2,004
$2,071
$2,137
$2,202 4,129 4,333
4,536 4,714 4,901 5,076
2018 2019 2020 2021 2022 2023
Revenues (USD, Millions) Units (Thousands)
$2,632 $2,724 $2,888
$3,055 $3,198 $3,332 4,125 4,310 4,622
4,946 5,208
5,492
2018 2019 2020 2021 2022 2023
Revenues (USD, Millions) Units (Thousands)
© Copyright 2020 VDC Research Group, Inc. Source: 2019 Rugged Handheld Computers & SmartphonesData presented relate to estimates of broader market trends and projections and are solely presented to indicated potential market opportunity. There are no assurances that the Company’s growth rates, rates of product adoption, revenues or other results of operations will follow similar trajectories or trends or will correlate to such trajectories or trends.
Sonim’s Product Roadmap into Rugged Handhelds and Scanners Opens Up Broader Market Opportunity
Rugged Handhelds/Scanners Rugged Smartphones
/ 19
Rugged Smartphones vs. Rugged Handhelds
Rugged Smartphones
• Leading vendors including SONIM, Kyocera, Samsung and CAT
• Sold via carrier channels or carrier enabled sales
• Often accessorized with payment/scanner sleds (or Bluetooth scanners) from vendors like Infinite Peripherals, Koamtac or Cognex or
leverage SDK-based scanning solutions from vendors like Scandit to support line of business applications
• Average upgrade cycle: 30 months
Rugged Handheld Computers
• Purpose-built rugged mobile computers designed for data capture applications serving various industries and workflows
• IP rating of 5X or 6X and minimum drop specification of 4ft
• Majority (90%+) have integrated/dedicated barcode scanning or RFID reading capabilities
• Migrating from legacy Windows (CE/Mobile) to Android
• Leading vendors/brands include Zebra Technologies, Honeywell, Datalogic and Panasonic
• Various form factors from "brick"-styled devices with gun-grips and full alpha-numeric keyboards to smartphone-style all-touch devices
• Sold through IT distribution and specialty data capture/AIDC solution providers
• Average upgrade cycle: 54 months
© Copyright 2020 VDC Research Group, Inc. Source: 2019 Rugged Handheld Computers & SmartphonesData presented relate to estimates of broader market trends and projections and are solely presented to indicated potential market opportunity. There are no assurances that the Company’s growth rates, rates of product adoption, revenues or other results of operations will follow similar trajectories or trends or will correlate to such trajectories or trends.
/ 20
Sonim’s Marketing and Distribution Partnership Plan Adds EMEA to Overall Market Opportunity
Rugged Handheld and Smartphone Forecast
USD (millions)
$739.0 $766.9 $793.6 $817.3 $840.1 $862.2
$1,063.2$1,133.4
$1,199.1$1,255.5
$1,305.1$1,354.8
2018 2019 2020 2021 2022 2023
Hand Held/PDA
CAGR 2018-20235.0%
Rugged
Smartphones
CAGR 2018-2023
3.1%
$682.6$712.0
$739.3 $763.2 $785.8 $809.5
$914.9 $915.0$975.9
$1,041.6$1,095.3
$1,139.8
2018 2019 2020 2021 2022 2023
Hand Held/PDA
CAGR 2018-20234.5%
Rugged
Smartphones
CAGR 2018-2023
3.5%
Americas EMEA
© Copyright 2020 VDC Research Group, Inc. Source: 2019 Rugged Handheld Computers & SmartphonesData presented relate to estimates of broader market trends and projections and are solely presented to indicated potential market opportunity. There are no assurances that the Company’s growth rates, rates of product adoption, revenues or other results of operations will follow similar trajectories or trends or will correlate to such trajectories or trends.
USD (millions)
/ 21
Business Model and Strategy
/ 22
Compelling and Scalable Business Model
Blended ODM and Outsourced manufacturing combined with in-house engineering expertise
Supply and value chain optimization to support either vertical integration or contract manufacturing to maximize control, cost and flexibility
Lean operations approach with outsourcing of non-value added tasks to scalable partners
Carrier sales model is capital efficient while building brand recognition and enterprise/agency relationships. Non-carrier sales model to support non-cellular focused use of data gathering tools
/ 23
Multiple Growth Drivers
Accelerate Public
Safety Network
Developments
Leverage expertise to
expand product
offerings
International
Expansion
Expand go to market
strategy
• Become the go-to solution for public safety during
anticipated shift to dedicated LTE networks and smart
cities.
• Leverage existing expertise in rugged mobility to design and offer
additional form factors, expand into data collection devices (bar
code scanners), tablets and integrated LTE/LMR/Satellite Phone
devices.
• Increase market presence by bringing products to
market through distribution and value-added resellers.
• Roll out Sonim’s solutions to international
markets as the replacement of LMR devices
continues and demand for PTT over LTE
increases.
/ 24
Multi-Faceted Demand Channel for our Solutions
Wireless Carriers Target Distribution Partners
Sonim is Broadening its Market Reach Beyond its Wireless Carrier Relationships by Adding Distribution Partners
(1)
(1) Now part of T-Mobile. Sonim anticipates that future sales to Sprint will cease at the end of Q4 2020 as a result of the restructuring of Sprint following its acquisition by T-Mobile.
/ 25
Confidential
Contact:
Sonim IR
Matt Kreps
Darrow Associates
M: 214-597-8200
