ACCTON — Call Transcript 2022

Jan 4, 2022

ACCTON INVESTOR CONFERENCE

December 15, 2021

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Safe Harbor Statement

• The information contained in this confidential document (“Presentation”) has been prepared by Accton Technology Corporation (“ACCTON”) and may not be disclosed without the prior permission of ACCTON. This Presentation on ACCTON's strategy and possible future developments, products and or solutions are all subject to change and may be changed by ACCTON at any time without notice. The information is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. ACCTON assumes no responsibility for errors or omissions, except if such damages were caused by ACCTON intentionally or grossly negligent.

• This Presentation should not be considered as the giving of investment advice by Accton or any of its shareholders, directors, officers, agents, employees or advisers. This Presentation includes certain statements that may be deemed “forward-looking statements”. All forwardlooking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Prospective Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements.

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AGENDA

CORPORATE 01 UPDATES Spokesman, Edward Lin

FINANCIAL 02 BRIEF CFO, Fanny Chen

COMPANY 03 HIGHLIGHTS CEO, Edgar Masri

Q&A 04 CLOSING CEO, Edgar Masri

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PRESENTERS

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Edward Spokesman

Edgar Fanny CEO CFO

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CORPORATE UPDATES Spokesman, Edward Lin

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People who are really serious about software should make their own hardware.

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• Alan Kay

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Making Partnership Work

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About Accton

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Established In 1988

Leader in Infrastructure Solutions

IPO Taiwan 1995 (TSE: 2345)

Revenue 2021: 1.89 B 2020: 1.85 B ( Year-to-Nov)

Global Presence

5,630 Staff Worldwide

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VMC

Vision Mission Core Values Inspire and build Leader in Open Communication Networking Long-term Community Partnerships to Meet Emerging Demands provide advanced Connectivity networking Care for all infrastructure Stakeholders

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Growth & Profitability

(Currency: USD)

					$1.79B	$1.85B	$1.89B (+16.1% YoY)	$1.89B (+16.1% YoY)
		$912M	$1.20B	$1.43B			EPS 5.70 (Q1~Q3)
	Employees	3,300	4,300	4,470	5,200	5,220	5,630
		2016	2017	2018	2019	2020	2021
							(Year-to-Nov)

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Carrier Access

XGS-PON/GPON OLTs xPON Access

Residential SOHO

5G Network

Cell-Site Gateway Router Core Router Open RAN

Mobile Backhaul Fronthaul

Metro Ethernet

Data Center

DCI / Switch SmartNIC Accelerator Server-Switch EBOF

Multi-Gigabit Switch

Large Enterprise ETTB

Cloud Server Storage Machine Learning Data Center

Edge Computing

Campus Network

Wi-Fi 6/6E AP 4G/5G CPE

SD-WAN Network Appliances Edge Server AI Inferencing

IoT Sensor Network

Small Business Campus / Enterprise Smart Transportation / Factory / City

R&D Competencies

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• R&D Engineers : 1,100+

• • Patents Granted : 885

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MANUFACTURING CAPACITY

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• TAIWAN FACTORY CHINA JOYTECH

• • • Capacity: Capacity: ⚬ 13 High speed SMT ⚬ 16 High speed SMT ⚬ 18 Assembly lines ⚬ 24 Assembly lines

• • Location: • Location: ⚬Zhunan (20 mins from ⚬Shenzhen, China HQ)

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02

FINANCIAL BRIEF CFO, Fanny Chen

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CONSOLIDATED COMPREHENSIVE INCOME STATEMENT

		2021 Q3	2021 Q2	QoQ	2021 Q1-Q3	2020 Q1-Q3	YoY
	Operating Revenue	15,204	14,053	8%	42,455	38,749	10%
	Margin Rate	18.7%	17.5%	7%	18.5%	21.4%	-14%
	Operating Expenses	1,497	1,340	12%	4,168	3,751	11%
	Operating Income Rate	8.9%	7.9%	13%	8.6%	11.7%	-26%
	Non-Operating Income and Expenses	28	24	17%	223	3	7333%
	Net Income	1,096	960	14%	3,178	3,687	-14%
	Net Income Rate	7.2%	6.8%	6%	7.5%	9.5%	-21%
	EPS (NTD)	1.96	1.72	14%	5.70	6.62	-14%
		in millions	of New Taiwan Dollars

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CONSOLIDATED BALANCE SHEET

	2021.09.30 2021.06.30 QoQ 2020.09.30 YoY Amount % Amount % Amount %
	Cash and cash equivalents 5,375 17% 7,635 22% -30% 6,265 22% -14%
	Notes and trade receivables, net 8,874 27% 8,018 23% 11% 7,785 27% 14%
	Inventories 12,387 38% 12,108 34% 2% 8,680 30% 43%
	Property, plant and equipment 1,462 5% 1,410 4% 4% 1,473 5% -1%
	Total Assets 32,272 100% 35,173 100% -8% 28,695 100% 12%
	Current Liabilities 16,355 51% 20,289 58% -19% 13,791 48% 19%
	Total Liabilities 18,300 57% 22,277 63% -18% 15,680 55% 17%
	Capital 5,598 17% 5,598 16% 0% 5,594 19% 0%
	Total Equity 13,972 43% 12,896 37% 8% 13,015 45% 7%
	Total Liabilities and Equity 32,272 100% 35,173 100% -8% 28,695 100% 12%
	Debt Ratio(%) 56.71% 63.34% -10% 54.64% 4%
	Current Ratio (%) 178.58% 158.82% 12% 188.00% -5%
	Cash Turnover (days) 65.99 60.08 10% 52.90 25%
	in millions of New Taiwan Dollars 16

REVENUE BY SEGMENT

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2021 2020
% % YoY
Q1-Q3 Q1-Q3
Switch 26,862 63% 28,140 73% -5%
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Switch	26,862	63%	28,140	73%	-5%
Network Application	7,988	19%	4,853	13%	65%
Metro Access Switch	5,695	13%	3,634	9%	57%
Wireless	698	2%	932	2%	-25%
Broadband Access and Other	1,212	3%	1,190	3%	2%
Subtotal	42,455	100%	38,749	100%	10%
	in millions of	New Taiwan	Dollars

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REVENUE BY REGION

	America	2021 Q1-Q3 25,202	% 59%	2020 Q1-Q3 26,542	% 68%	YoY -5%
	Europe	9,690	23%	7,634	20%	27%
	Asia	7,002	17%	3,400	9%	106%
	Taiwan	535	1%	1,069	3%	-50%
	Other	26	0%	104	0%	-75%
	Subtotal	42,455	100%	38,749	100%	10%

in millions of New Taiwan Dollars

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COMPANY 03 HIGHLIGHTS CEO, Edgar Masri

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2021 Highlights

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Stabilizing yet Challenging Financial Outlook Managing Supply Chain costs and Component shortage Strategic focus on High Growth Regions and Next Generation Ethernet (400G) Investments in Expanded Production Initiatives in Business Strategy and Next Generation Technologies Establishment of ESG Office

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Stabilizing yet Challenging Financial Outlook

	Area	2021 (Q1~Q3)		Percentage of Revenues (2021 Q3)
	Revenue	- Growth with 17% YTD YoY and 9% QoQ (USD) - Geographical Expansion - Increased Demand 100G/400G
	Gross Margin	- Early challenges from Pandemic Effects & Component Shortages - High Inventory - Dollar Appreciation - Recovery from Q2 - Continued Pressures		18.7%
	Operating Expenses	- Investments in High Growth Areas and New Technologies - Stabilizing with Cost Control		9.8%
	OperatingIncome			8.9%
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Strategic Focus on High Growth Regions and Next Generation Ethernet

Complements 100G (not supplements) 400G

Hyperscalers continue investing in 100G

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Strategic Focus on High Growth Regions and Next Generation Ethernet

Asia revenue up 106% YoY

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Investment in Expanded Production

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 Capacity
Increase to fulfill growing demand
 Streamline Shenzhen Zhunan
Processes and Automation
 Strategic
Geographic Positioning
Zhubei SE Asia
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Initiatives in Business Strategy

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ODM2.0

 New Geographies

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 New Channels

 New Models

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Initiatives in Next Generation Technology

 New Technology  New Customers

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 New Talent

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Environment Management Committee Innovation and Technology Green Manufacturing Social Employee Relationship and Occupational Health and Safety, Supply Chain Governance Enterprise Sustainability, Stakeholder communication and Information Transparency

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ESG Office Establishment Buying Power Award Ministry of Economic Affairs, R.O.C.

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Q&A 04 www.accton.com.tw IR@accton.com

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