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Off-the-Shelf Products January 30, 2025Investor Presentation
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2 Safe Harbor Guidelines & Legal Notes The information presented today contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, anticipated future financial and operating results and Silicom’s outlook and prospects. Those statements are based on management’s current beliefs, expectations and assumptions, which may be affected by subsequent business, political, environmental, regulatory, economic and other conditions, and are subject to known and unknown risks and uncertainties and other factors many of which are outside Silicom’s control, which might cause actual results to differ materially from expectations expressed or implied in the forward looking statements, and which include, but are not limited to, Silicom’s increasing dependence for substantial revenue growth on a limited number of customers, the speed and extent to which Silicom's solutions are adopted by the relevant markets, difficulty in commercializing and marketing of Silicom’s products and services, maintaining and protecting brand recognition, protection of intellectual property, competition, disruptions to its manufacturing, sales & marketing, development and customer support activities, the impact of the wars in Gaza and in the Ukraine, attacks on shipping by Huthis in the Red Sea, rising inflation, rising interest rates and volatile exchange rates, as well as any continuing or new effects resulting from the COVID-19 pandemic, and the global economic uncertainty, which may impact customer demand by encouraging them to exercise greater caution and selectivity with their short-term IT investment plans. The factors noted above are not exhaustive. Further information about the company’s businesses, including information about factors that could materially affect Silicom’s results of operations and financial condition, are discussed in our Annual Report on Form 20-F and other documents filed by the Company and that may be subsequently filed by the company from time to time with the Securities and Exchange Commission (the "SEC"). Therefore, there can be no assurance that actual future results will not differ significantly from anticipated results. Consequently, you are cautioned not to rely on these forward-looking statements. Silicom does not undertake to update any forward-looking statements as a result of new information or future events or developments except as may be required by law. Financial information as presented herein, may be considered "non-GAAP financial measures" under Regulation G and related reporting requirements promulgated by the SEC as they apply to Silicom. Please refer to Silicom’s disclosure documents filed or furnished with the SEC, including Silicom’s Annual Reports on Form 20-F and/or quarterly reports on Form 6-K, for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Silicom provides such non-GAAP data to investors as supplemental data and not in substitution of or replacement for, GAAP measures.
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3 Corporate Overview Leading provider of Data Center & Edge Computing solutions for service provider, mobile operator, telecom, cloud and on-premise infrastructures 20+ years of experience delivering high performance networking products, Edge compute systems, HW accelerators, and FPGA-based products Positioned to benefit from the growth of multiple rapidly-expanding markets: SD-WAN/SASE, Cyber Security, Cloud, Data Centers, Finance and Edge-AI Leading supplier of innovative Edge/CPE units, SD-WAN/SASE Edge systems, Encryption and other hardware acceleration Smart NICs, and FPGA-based programable NICs to leading global service providers, server manufacturers and OEMs
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4 Financial and Business Performance Working capital + marketable securities: $121 million (cash, very high quality of marketable securities, accounts receivables and inventory). Represents $21 per share. Robust fundamental demand for our SD-WAN/Smart Edge systems, Acceleration solutions, and Programable NIC products Share buyback: approximately 650,000 shares repurchased during 2024 Strong balance sheet: $129 million Shareholders’ Equity Large global, solid, loyal customer base including many Tier-1 market leaders Cash & Cash Equivalents: $79 million, no debt
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5 Large Global Customer Base 400+ active Design Wins with 200+ customers, including numerous market leaders
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6 Diverse Attractive Markets % of last twelve-month revenues Based on proprietary Company data and analysis Cyber Security 33% Network Appliances (Including content delivery, WAN optimization, etc.) 25% Platforms / Infrastructure (Including SD-WAN/SASE, routers, switches, etc.) 29% Others 7%Finance 6% North America 76% EMEA 16% APAC 8% Market Segments Global Markets
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7 Strategic Plan Tightly control expenses and align them with the plan’s objectives Maintain our strong balance sheet and continue buying back shares Build a broad pipeline of sales opportunities with a significant upside potential Focus on core product lines: • Edge Systems – SD-WAN, SASE, routers, switches, ruggedized systems • Smart NICs – hardware accelerators & Network Interface Cards • FPGA - Programmable Network Interface Cards Win more projects and Design Wins Main objective – achieve EPS of $3+ as we return to revenues of $150-160 million Achieve strong double digit annual growth rates starting from 2026 `
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Transforming Opportunities into Design Wins & Revenues: Edge Systems Cyber security White label switch ~$4M/year Service provider Managed network security & Edge computing ~$7M/year Service provider Universal CPE ~$4M/year Network optimization WAN optimization ~$4M/year Service provider Managed network security & Edge computing ~$1M / year Edge System Opportunities Design Wins & Revenues Edge System Opportunities Design Wins & Revenues Networking and Security -As-A-Service Edge compute $3M-$4M/year Cyber security SASE Edge device ~$1.5M/year Connected services solutions SD-WAN ~$3M/year Cyber security Network observability ~$2M/year
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Transforming Opportunities into Design Wins & Revenues: Smart NICs AI Data Infrastructure Storage networking ~$10M/year Test & Measurement Test equipment ~$2M/year Cyber security DDOS protection ~$3M/year Streaming services Content Delivery Networking ~$2.5M/year Smart NIC Opportunities Design Wins & Revenues Smart NIC Opportunities Design Wins & Revenues US Government Machine communication ~$1M/year Cyber security DDOS protection ~$1M/year Cyber security SASE infrastructure ~$0.5M/year
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Transforming Opportunities into Design Wins & Revenues: FPGAs Streaming services Security offload ~$4M/year Cyber security Network monitoring ~$3M/year Network equipment Optical carrier equipment ~$4M/year Application delivery Security offload ~$4M/year FPGA Opportunities Design Wins & Revenues FPGA Opportunities Design Wins & Revenues Semiconductor machines Image processing ~$1M/year Financial trading High frequency trading ~$1M/year Financial trading High frequency trading ~$2M/year
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Financials
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12 Q4/2024 Financials (Non-GAAP) (in millions, except EPS data) % of RevenuesQ4/2024 100%$14.5Revenues 29.1%$4.2Gross Profit (18.7)%$(2.7)Operating Income (loss) (23.4)%$(3.4)Net Income (loss) $(0.58)EPS (diluted) 5.77Total number of outstanding shares
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13 2024 Financials (Non-GAAP) (in millions, except EPS data) % of Revenues2024 100%$58.1Revenues 29.0%$16.9Gross Profit (17.4)%$(10.1)Operating Income (loss) (14.2)%$(8.3)Net Income (loss) $(1.37)EPS (diluted) 5.77Total number of outstanding shares
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14 Balance Sheet (in millions) December 31, 2024 $79.0Cash & Cash Equivalents $114.7Working Capital $152.1Total Assets --Total Debt $22.6Total Liabilities $129.5Stockholders’ Equity ✓Strong Balance Sheet