Ditech Corporate Overview 030705 PDFlibrary.corporate-ir.net/library/11/113/113330/items/141915/ir... · Hardware Platforms Density Power Element Management ... BSC MSC Cell Phone

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Corporate OverviewTim Montgomery

Chairman of the Board, President & CEO

Corporate OverviewTim Montgomery

Chairman of the Board, President & CEO

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Forward Looking StatementsForward Looking StatementsWe must point out that as with similar presentations, the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed here. We will attempt to identify such forward-looking statements with qualifying words such as… "we intend, plan, believe, estimate, predict…or, “we may,” “could” or “will," or other comparable language. Factors that could cause results to be different include factors discussed today in this presentation, as well as those detailed in the section entitled “Future Growth and Operating Results Subject to Risk” in the Ditech Communications’ Annual Report on Form 10-Q for the quarter ended January 31, 2005 (filed March 8, 2005 with the Securities and Exchange Commission).

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About DitechAbout DitechDitech Communications designs and developsvoice processing systems and solutions forcommunications networks

Founded in 1983; Voice Processing Products since 1987

180 Employees

Headquartered in Mountain View, CA

Listed on NASDAQ exchange since 1999

$134 Million in Cash and Investments. $35M used in stock repurchase

No debt

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Complete System Level SolutionsComplete System Level Solutions

VoiceProcessing

Systems

Scalable Hardware Platforms

DensityPower

ElementManagement

Systems

Customizable

Software Algorithms

Echo CancellationVQA

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We Reduce CAPEX & Improve Quality for Mobile, Wireline and VoIP CarriersWe Reduce CAPEX & Improve Quality for Mobile, Wireline and VoIP Carriers

PSTN GSM- HR

Echo &Voice Quality

Solutions

GSM

VoIP

CapacityEnhancement

Solutions

VoIPSolutions

CDMA GSM-AMR

3G CDMA

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Global, Industry Leading CustomersGlobal, Industry Leading Customers

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53% Y/Y Revenue Growth for First 9 months53% Y/Y Revenue Growth for First 9 months

As reported in our quarterly filings on Form 10-Q or Form 10-K annual filing (previously reported as EchoCancellation Revenue). All amounts on a GAAP basis.

FY04

$7.6 $8.3 $9.1$10.0$10.7

$14.5

$21.3$23.1

$25.5$24.3

$21.3

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY03 FY05

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Strong Gross MarginsStrong Gross Margins

As reported in our quarterly filings on Form 10-Q or Form 10-K annual filing (previously reported as EchoCancellation Gross Margins). All amounts on a GAAP basis.

57%59%

65% 64% 65% 66% 66%68%

75%78% 78%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

FY04FY03 FY05

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Balance Sheet Summary – As of 1/31/05Balance Sheet Summary – As of 1/31/05

Cash and Investments $134 Million

$35M used in stock repurchase

Accounts Receivable $17 Million

DSO 72 Days

Inventory Turns 4

Debt ZERO

Holiday Shutdown –Non Linearity

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Product StrategyProduct Strategy

2003 Future2004 2005

VQA

Pack

et

Echo Mob

ile/C

ircui

t

VoIP

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Flexible Scalable PlatformsFlexible Scalable Platforms

SX-24/30

QUAD T1/E1

BVP FlexOC3/STM1 to DS3/STS1

Quad Voice Processor(QVP)

Echo Cancellation

VQA

VoIP

Packet Voice Processor

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Echo & VQA in Mobile Echo & VQA in Mobile

Phone

Hybrid echo

Class 5SwitchClass 4

BSCMSC

Cell Phone

Class 4

Class 4

PSTN

Acoustic echo

Noise

Level

REMOVED

REMOVED

Echo is caused by the return of a signal from a far-end device.

We hear more echo as far-end delay increases

Background Noise forces cell phones to use higher rate

transmission.

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Echo Cancellation Market Today-SnapshotEcho Cancellation Market Today-Snapshot

� Nortel� Lucent� Ericsson� Nokia� Siemens� Alcatel

NMSS

TLAB

DITCInternal EC

70%

Note: External EC Data based on July 31, June 30 and July 2, 2004 10Q results respectively

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VQA & Mobile Capacity EnhancementVQA & Mobile Capacity Enhancement

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NMSS

TLAB

DITC

Internal EC 70%

Internal Echo

VQA

Ext Echo

VQA expands Mobile OpportunityVQA expands Mobile Opportunity

Echo Market~$700M /year

$1.2B/year Market

Note: 2005 and beyond, annual market estimate- Ditech Analysis

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VQA Customer Engagement CycleVQA Customer Engagement Cycle

3-5 6-81-2 12-18 months

Customer

Engagem

ent

Trial

Agreemen

t

Trial

First

Deploym

ent

Network

Deployment

700+ GSM & CDMAOperators

Total Elapsed Time

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World wide VQA Engagement FunnelWorld wide VQA Engagement Funnel

Deployment

Trials Agreement

Trial

First Deploy

Customer Engagements

Tele.Ring, AirTel

2 Asian Customers

30+

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Voice-over-IP presents growth opportunitiesVoice-over-IP presents growth opportunities

Growth Driven by end-to-end VoIP based services

$0

$2

$4

$6

2004 2005 2006 2007 2008

Rev

enue

$B

WW Carrier Equipment Revenue for VoIPInfonetics Carrier Equipment Revenue Forecast- February 05

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Approaching the mainstream, VoIP requires new capabilitiesApproaching the mainstream, VoIP requires new capabilities

Interconnect VoIP networks with each other while ensuring format compatibility

Overcome voice quality impairments due to large variety of VoIP devices in enterprise and residence, as well as networks

Measure voice quality to adhere to Service Level Agreements

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Packet Voice Processor supports these new carrier requirementsPacket Voice Processor supports these new carrier requirements

The Packet Voice Processor leverages our TDM experience with new features targeted for improving VoIP networks

Works in conjunction with Media Gateways and SBCs for processing voice calls

Class 4

• Large Scale• 5-9’s reliability• Convert Formats• Cancel Echo • Measure Quality

Packet Voice Processor

Media GW

Border Controller

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Packet Voice ProcessorPacket Voice Processor

Next Generation VoIP system supporting:VoIP Codec TranscodingVoice and Packet Quality AssuranceVoice Quality Measurement and Monitoring

System and PerformanceHardware & software system Transcode, enhance and measure at full scale and full rateUp to 18,000 simultaneous VoIP sessions per system

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Ditech addresses fundamental new problems in End-to-End VoIP callingDitech addresses fundamental new problems in End-to-End VoIP calling

Decrease CAPEX for carrier VoIP interconnects with cost-effective codec format conversion

Reduce tech support costs with voice quality processing

Measure and report for SLA enforcement

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Market for VoIP end-to-end Services equipment is $1.5B in 2007Market for VoIP end-to-end Services equipment is $1.5B in 2007

$0

$300

$600

$900

$1,200

$1,500

CY2005 CY2006 CY2007

Mill

ions

SBCMG

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The Packet Voice Processor represents a $500M TAM in 2007The Packet Voice Processor represents a $500M TAM in 2007

$0

$300

$600

$900

$1,200

$1,500

CY2005 CY2006 CY2007

Mill

ions

SBCPVPMG

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The Ditech Communications AdvantageThe Ditech Communications Advantage

Targeted Solutions by Market

Focus on Customers/Strong Relationships

Investing in Next Generation Solutions

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SummarySummary

Strong FinancialsRevenue GrowthStrong Balance Sheet – Generating CashCommitment to Profitability

Strong Market PresenceFocusing on Growth SegmentsProviding System Level SolutionsProven Technology - Momentum

Growing Future MarketsBenefiting from Past Investments

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