Investor Presentation Oddo BHF Forum – January 10, 2019
THE SPEAKERS Anne GABROT • CFO Loic HAMON • Vice President of Corporate Dev. and Datacenter BU 20 years of experience as group CFO in the telecommunications sector and 20 years of experience in mobile technology, in technology start-ups. security and semiconductors, of which 10 years at Inside Secure et 12 years at Texas Instruments at strategic positions. 2
KALRAY IN A NUTSHELL ~70 3 Designs processors Employees of which at the heart of new offices ~60 engineers intelligent systems Grenoble (France), Silicon Valley & PhDs (Los Altos, USA), Tokyo (Japan) Financial and industrial shareholders 23 patent families* Pengpai *Including 2 families with an exclusive global patent granted by the CEA until December 31, 2026 3
KALRAY: The processor at the heart of new intelligent systems
WE ARE ENTERING A NEW DIGITAL ERA 9 x MORE DIGITAL DATA CREATED in the last 2 years than since the beginning of humanity 1 It is critical to process this data in REAL TIME through INTELLIGENT SYSTEMS 1 Deloitte Digital, Becoming an exponential organization (Sept. 2017) 5
INTELLIGENT SYSTEMS: A TECHNOLOGICAL DISCONTINUITY 1970 1990 2020 COMPUTERS: SMARTPHONES: INTELLIGENT SYSTEMS: APPLICATION CONNECTIVITY ANALYSIS & PROCESSING & MOBILITY DECISION-MAKING 6
A NEED FOR A NEW GENERATION OF PROCESSORS AT THE HEART OF INTELLIGENT SYSTEMS 1970 1990 2020 PROCESSORS PROCESSORS PROCESSORS DESIGNED DESIGNED DESIGNED FOR LARGE FOR LOW FOR INTELLIGENT APPLICATIONS CONSUMPTION PROCESSING 7
KALRAY, PIONEER OF INTELLIGENT PROCESSORS 8
USE CASE: THE INTELLIGENT CAR RENAULT 1 GB OF DATA PROCESSED PER SECOND Credit : Yannick BROSSARD 9
KALRAY’S INTELLIGENT PROCESSOR: THE OUTCOME OF 10 YEARS OF DEVELOPMENT Academic EXCELLENCE > 60 M€ R&D investment > 350 person-years 23 patents families* *incl. 2 families as an exclusive CEA license. 10
A COMPANY FOCUSED ON TWO MARKETS WITH VERY STRONG SHORT TERM POTENTIAL DISRUPTIVE DOMAINS Intelligent (opportunities for a new entrant) data center A HIGH LEVEL OF TECHNOLOGICAL EXPECTATIONS (barrier to entry) SIMILAR TECHNOLOGY (synergies) Intelligent A LIMITED NUMBER OF car LARGE CUSTOMERS (market access) 11
A COMPANY ENGAGED IN A LARGE-SCALE COMMERCIAL DEPLOYMENT PHASE Ambition €100M of revenue in 2022 Industrial processes in place in a fabless model Certified hardware and software offering Commercial opportunity validated by well-known corporate shareholders Pengpai 12
Intelligent processors KALRAY: a disruptive technology 13
KALRAY, PIONEER OF MANYCORE PROCESSORS Few actors have harnessed this technology MANYCORE Unlimited number of cores on a single chip SINGLE CORE MULTICORE 1 core Dozens of cores on a single chip on a single chip TO CONTINUE AND IMPROVE PROCESSORS’ PERFORMANCE IN THE FUTURE, THE INDUSTRY MUST TURN TOWARD THE MANYCORE APPROACH 14
WHAT MAKES THE KALRAY ARCHITECTURE UNIQUE # 1 Computing power # 2 Data processing in real time Completion of dozens # 3 of critical tasks in parallel # 4 Low power consumption # 5 Programmable / Open system # 6 Security & Safety 15
COOLIDGE : ONGOING R&D FOR A COMMERCIAL LAUNCH IN 2019 COMMERCIAL LAUNCH 2018 2019 2020 2021 BOSTAN COOLIDGE -1 COOLIDGE -2 Dx PROCESS 28 nm 16 nm 16 nm nm12 nm or PERFORMANCE 1 TOPS 24 TOPS 48 TOPS / 96 TOPS 100 TOPS / 200 TOPS Boards and storage chip Boards SC (40G) controllers (100G) Qualification Car USE DC Prototypes Accelerator Market DC - NFV intelligent car CONSUMPTION (WATTS) 8W – 25W 5W – 15W 5W – 20W 2W – 10W UNDER DEVELOPMENT UNDER DEFINITION 16
Major progress in very promising application market segments
2018 MILESTONES INTELLIGENT INTELLIGENT IPO DATA COOLIDGE CAR CENTER KALRAY first to receive Strong interest from Ongoing research NVME-oF certification for a and developments automotive Successfull IPO, for commercial fully integrated system (2) € 47,7 M raised (1) industry launch in 2019 for Kalray’s solutions (Renault, Baidu, NXP, Fondation Autoware) (1) Including the over- allotment option exercised in July 2018 (€4.2 M) (2) KTC80 product has been certified by the NVM Express organization through the University of New Hampshire InterOperability Laboratory (UNH-IOL), an independent testing provider of standard conformance solutions and multi-vendor interoperability. 18
INTELLIGENT DATA INTELLIGENT DATA CENTER : CENTER A MARKET WITH A TECHNOLOGICAL DISCONTINUITY Explosion of data A need for speed and intelligence to analyze data “on the fly” Explosion of the number of machines A need for speed A technological breakthrough SPEED 100 X Target market KALRAY Intelligent HDD SSD ~ € 1B acceleration boards in 2022 (1) CAGR 2017-21 +60% (2) (1) Made up of: • 500 M€ SMART NIC market (“Serverless DPDK Public Report “, CAVIUM) • 500 M€ NVMe -OF Smart Adapter market (G2ME NVMe Market Report, 2017) 19 (2) Source: NVMe Market Sizing, G2ME Report, 2017
INTELLIGENT DATA INTELLIGENT DATA CENTER : CENTER KEY COMPETITIVE ADVANTAGES First “NVMe -oF all-in- one” certified solution * 8x more powerful than the latest products announced by our competitors** Power consumption below 20W*** * Kalray KTC80 has been certified in April 2018 by the independent certification Inter Operability Laboratory ((University of New Hampshire). No competitors’ products has been certified so far (www.iol.unh.edu/registry/nvmeof) ** Kalray KTC80 : 288 cores @ 550MHz = 158GHz / Mellanox Bluefield : 16 cores @ 1.2GHz = 19.2GHz / Broadcom Stingray : 8 cores @ 2GHz = 16 GHz *** Kalray measurement of KTC80 KALRAY: THE SOLUTION THAT BRINGS INTELLIGENCE “ON THE FLY” TO THE WORLD OF DATA CENTERS 20
MAJOR COMMERCIAL PROGRESS INTELLIGENT DATA CENTER EXEMPLES OF “BOARD” PROSPECTS EXAMPLES OF “CHIP” PROSPECTS H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 Softwares developments NVMe-oF Qualif Certification “BOARD CUSTOMERS” Volume sales Customer “CHIP CUSTOMERS” Selection Volume sales Evaluations qualification 21
INTELLIGENT INTELLIGENT CAR: CAR TOMORROW’S CAR RETHOUGHT Perf. increase x 100 A need to consolidate A need for performance up to x 1,000 the electronic functions of the car Target market KALRAY 50 to 100 ~€1.5B processors NEEDS ESTIMATED BY MANUFACTURERS TODAY: per car BETWEEN 150 AND 300 TOPS in 2025 (1) today CAGR 2019-2025 +75% (1) (1) Source: JP Morgan, https://www.marketwatch.com/story/want-to-invest-in-self-driving-cars-check-out-the-chips-2016-08-26 22
THE INTELLIGENT CAR: INTELLIGENT CAR PARTNERING WITH INDUSTRY LEADERS EXAMPLES OF EXAMPLES EXAMPLES OF CAR OEMs OF TIER-1 COMPANIES ACCESSORY MAKERS H2 2018 2019 2020 2021 2022 Integration process of car manufacturers Volume Sales Prototypes Selection Qualification 23
INTELLIGENT STRONG INTEREST FROM THE INDUSTRY CAR FOR KALRAY’S TECHNOLOGY DEMONSTRATIONS OF NEW STRATEGIC PARTNERSHIP TO KALRAY JOINS ARTIFICIAL INTELLIGENCE AUTOWARE FOUNDATION JOINTLY DEVELOP THE AI AS FOUNDING PREMIUM SOLUTIONS AND PLATFORM REQUIRED FOR MEMBER ACCELERATION OF AUTONOMOUS DRIVING PERCEPTION CAPABILITIES 24
H1 2018 results reflect the step-up in development programs 25
P&L AS OF JUNE 30, 2018 Consolidated (in K€) June 30, 2017 June 30, 2018 Sale of cards and development platforms to clients Net sales 475 322 in product assessment or qualification phase. R&D capitalization 1,987 2,502 30/06/17 30/06/18 Subsidies 875 853 BOSTAN : 1,159 k€ 725 k€ COOLIDGE : 828 k€ 1,777 k€ Total revenue 3,337 3,677 Cost of sales (159) (81) As of June 30, 2018 : Differed subsidies revenue € 3,072 K to be recognized in the next 24 months Operating expenses (4,674) (5,652) In 2018 : +282 k€ of « personnel costs » due to Including salaries & contributions (2,870) (3,152) recruitment Including other expenses (1,804) (2,500) Amortization (2,467) (2,107) In 2018 : + €555 K R&D subcontractors (design & development ) and + € 97 K of licences for design Operating result (3,963) (4,163) tools. Taxes (including research Tax Credit) 915 1,385 Net operating result 1 (3,048) (2,778) Financial result (63) (2,275) Of which non-conversion premium in 2018 : €2,070 K Exceptional result (529) (26) Net result (3,640) (5,079) 1 Net operating result = Operating result + Research tax credit 26
CASH FLOW STATEMENT AS OF JUNE 30, 2018 Consolidated – (In K€) Dec. 31, 2017 June 30, 2018 Operating CF before Capex & WC variation (2,339) (1,464) Including € 1,388 K prefinancing of Change in working capital (97) (1,469) CIR (research tax credit) in 2017, not in 2018 Capex (6,833) (4,355) Free cash-flow (9,269) (7,288) Before exercise of over-allotment Net cash from investors 10,828 36,946 option (€ 4.2 M) Debt reimbursement 584 (378) Exchange differences 8 2 Cash flow from financing activites 11,420 36,570 Annual cash in (cash out) 2,151 29,282 Cash beginning of period 803 2,954 Cash end of period 2,954 32,236 27 27
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