Corporate Overview
January 2017
1
January 2017
VXS:TSX
Forward Looking Statement
Certain information in this presentation and oral statements made during this meeting are forward-looking and relate to ViXS’ anticipated financial
position, business strategy, events and courses of action. Words or phrases such as “anticipate,” “objective,” “may,” “will,” “might,” “should,”
“could,” “can,” “intend,” “expect,” “believe,” “estimate,” “predict,” “potential,” “plan,” “is designed to” or similar expressions suggest future outcomes.
Forward-looking statements include, among other things, statements about: our expectations regarding our expenses, sales and operations; our
future customer concentration; our anticipated cash needs and our estimates regarding our capital requirements and our need for additional
financing; our ability to anticipate the future needs of our customers; our ability to achieve new design wins; our plans for future products and
enhancements of existing products; our future growth strategy and growth rate; our future intellectual property; and our anticipated trends and
challenges in the markets in which we operate. Such statements reflect our current views with respect to future events and are based on
assumptions and subject to significant risks and uncertainties. Although we believe that the assumptions underlying these statements are
reasonable, they may prove to be incorrect. Given these risks, uncertainties and assumptions, you should not place undue reliance on these
forward-looking statements. Our actual results, performance or achievements could differ materially from those contemplated, expressed or implied
in our statements as a result of various risk factors, including, but not limited to, business, economic and capital market conditions; market
conditions and the demand and pricing for our products; our relationships with our customers, distributors and business partners; our ability to
successfully define, design and release new products in a timely manner that meet our customers’ needs; our ability to attract, retain and motivate
qualified personnel; competition in our industry; our ability to maintain technological leadership; our manufacturing supply chain, including pricing of
goods and availability of adequate manufacturing capacity from our manufacturing suppliers; our ability to transition to new wafer fabrication
process technologies and achieve higher levels of design integration; our ability to manage risks inherent in foreign operations; our ability to
successfully maintain and enforce our intellectual property rights and defend third-party claims of infringement of their intellectual property rights;
our ability to manage cash flow, foreign exchange risk and working capital; our ability to manage our growth; fluctuation in our quarterly operating
results; and our dependence on key personnel.
Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new
information, future event or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Neither
we nor any of our representatives make any representation or warranty, express or implied, as to the accuracy, sufficiency or completeness of the
information in this presentation. Neither we nor any of our representatives shall have any liability whatsoever, under contract, tort, trust or
otherwise, to you or any person resulting from the use of the information in this presentation by you or any of your representatives or for omissions
from the information in this presentation.
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January 2017
VXS:TSX
ViXS: Leading Pure-Play in Video Technology
• Disruptive Trends: 4K UHD, HDR, OTA, IP infrastructure
Markets
Technology
& IP
• Consumer (OTA, UHD Blu-Ray); Infrastructure (Transcoding) vs. Set Top Box Focus
• Transcoding, adaptive bit-rate streaming, content protection, video analytics
• Rich IP Portfolio: ~500 patents; Independently assessed potential value of $65M+
• Strengthened balance sheet via two rounds of financing including strategics
Financial
• 61% Y/Y revenue growth  lowering threshold for breakeven
• HQ in Toronto, R&D in Hong Kong & Austin; Sales in Asia, Europe, N. America
Company
• Experienced: > 85% of employees are engineers
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January 2017
VXS:TSX
Anywhere, Anytime, Any Device
“A new generation of media consumers has risen,
demanding content delivered when they
want it, how they want it and very
much as they want it.”
– Rupert Murdoch
Evolving Video
Ecosystem
Current infrastructure built on
20 year old technology that is not
optimized to handle today’s video traffic
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January 2017
VXS:TSX
Strategy for Growth
Consumer
• Over The Air (OTA)
• UHD BluRay Disk
• “Vidity”: Secure Content Storage
Association (SCSA)
Video Delivery
•
•
•
•
Enterprise Decoding
Integrated Receiver Decoder
Cloud Transcoding
Infrastructure Encoding
IP Video
• Connected IP Clients
• Multi media over COAX
• Ethernet over COAX
Core Competencies
Communications Complex
Development Expertise
Cutting Edge Video Algorithm,
Imaging IP & Media Processing
Architecture
5
Multi-threaded Hardware &
Security Architectures
January 2017
VXS:TSX
Global Demand for OTA Products
# non-PayTV Households:
• 2015=18M
• 2020=40M
# Non
PayTV
Household
Increasing
• 94 of Top 100 shows
available for free via
Over-the-Air for free
• Installed Antennas
increasing
~7% y-o-y
OTT
Viewership
Increasing
• Subscription VOD
48% penetration in
the US
Millennial Effect
Mobile
Device
Video
Usage
Increasing
OTA
Channel
Availability
6
• Of smartphone
owners, 40% watch
video on the device
January 2017
VXS:TSX
ViXS Enables Market Driving Innovations
High Dynamic Range (HDR) 12-Bit -- Not just more pixels, but….
Original
HDR
… Better Pixels, Smarter Lumens, for Sharper Real-life Images
Source: Google Images
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January 2017
VXS:TSX
ViXS Product Families: Enable the Delivery of Video
Consumer
Video Delivery
IP Video
XCode®
XCode®Pro
XCode® / XConnex™
XC51xx
XC64xx
XC55xx
XC68xx
XCP100
XCP200
XCP300
XCP370
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XC68xx
XConnex10xx
January 2017
VXS:TSX
Cord Cutter Solution - OTA
ViXS mobile solution will work with all streaming
solutions (e.g., Chromecast /Fire stick/ROKU)
ViXS “CordCutter TV”
reference design
ANTENNA
Tuner
+
Demod
XCode55xx
TS
IP
packets
Transcoder SOC
MPEG2AVC
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WIFI
Streaming
January 2017
VXS:TSX
Infrastructure Solutions
•
Terrace QAM
•
Hospitality Industry
Dense Transcoding
2RU platform
Hospitality Gateway
• Decoder / Transcoder
• Targeted at IPTV
Headend & Cable
Headend
•=
chips
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January 2017
VXS:TSX
Diversified Customers Base
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January 2017
VXS:TSX
Strong, Valuable Intellectual Property Position
Patents by Jurisdiction *
Patents by Segment
Patents
pending / in
preparation
60%
Patents
issued
Total Patents– >500

40%

US Granted/Allowed – 163;
Pending - 133
Rest of World Issued - 86;
Pending – 130
International
42%
US
58%
* Includes issued and
pending patents
Third-Party Valuation of VIXS Patents Likely Exceeds US$65M
* Valuation work done Black Stone IP, LLC, in 2Q/3Q 2015; 7 year DCF simulation model, based on “relief from royalty” approach
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January 2017
VXS:TSX
3QFY17 Financial Update
61% Y/Y revenue growth; growth driven by XCode 5500, XCode 6800 &
XConnex
$6.6M of new financing (equity and converts), including 3 strategic partners
Narrowing EBITDA Losses $(1.8) Million in Fiscal Q3 2017
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January 2017
VXS:TSX
Leverage Potential in Financial Performance
Revenue
Gross Profit
$10
$9
$7.9
$8
Millions
$7
$6
$6.0
$5.1
$5.2
$8.3
$5.7
$5
$4
$3
$2
2.0
2.3
1.3
1.8
2.5
2.3
$1
$0
Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17
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Target Model
CAGR
25-35%
Gross
Margin
50-55%
R&D
20-25%
SG & A
10-15%
Net
Income
10-15%
January 2017
VXS:TSX
Financial Summary
OCT
F3Q’17
JULY
F2Q’17
APR.
F1Q’17
$8.3
$7.9
$5.7
Gross Margin1
27.4%
31.5%
Product Margin2
35.5%
R&D ($ mm)
SG&A ($ mm)
All Figures USD
APR.
OCT
FYE
F3Q’16 F 1Q 2015 2016
$5.1
$26.3
31.4%
43.9%
39.0%
35.3%
33.6%
47.7%
42.0%
$2.7
$3.3
$3.0
$3.2
$13.2
$2.1
$1.9
$2.0
$2.0
$7.9
Comprehensive Net Loss ($ mm)
$(3.1)4
$(2.7)
$(3.2)
$(3.2)
$(11.6)
Non-IFRS Income ($ mm) 3
$(3.0)
$(2.9)
$(2.2)
$(2.8)
$(11.9)
EDITDA
$(1.8)
$(2.3)
$(3.0)
$(2.6)
$(9.7)
$4.3
$2.2
$2.9
Revenue ($ mm)
Cash ($ mm)
$6.6
$7.3
1
Includes mask amortization
Gross Margin less amortization of mask-sets, SDKs, etc. In Fiscal October 2017, that amount was $597K, or a 483 basis point non-cash impact to gross margin
3
Non-IFRS net income (loss) is defined in MDA, removing one-time adjustments to better reflect ongoing operational performance
4
Includes approximately $0.4 million of non-cash adjustment for financial instruments valuation
2
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January 2017
VXS:TSX
The Opportunity
“Pure play” in large and rapidly evolving UHD Video market
Focused on market discontinuities – OTA, Secure Content Delivery
Growing business, strengthened balance sheet – path to breakeven
= Significantly undervalued asset
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January 2017
VXS:TSX
Thank you!
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January 2017
VXS:TSX