Investor FAQ

Investor FAQ

What is your business model?

Plover Bay Technologies develops software-defined wide area network (SD-WAN) routers for businesses. Our products are marketed under the brand names of Peplink (Wired SD-WAN routers) and Pepwave (Wireless SD-WAN routers) to value-added distributors, resellers, system integrators and network service providers, who in turn provide turnkey solutions and support to end customers. Production of our network equipment is fully outsourced to third party manufacturers based in Taiwan.

Our SD-WAN routers are fully integrated with our self-developed cloud management tool allowing end users to easily manage network policies for multiple network branches. These functionalities are available to end users for free upon purchase of our SD-WAN routers and continue to be available. 

How are you different from other SD-WAN companies?

Plover Bay’s competitors are often established enterprise networking players specialized in other areas of networking, such as cybersecurity, firewall, and they offer SD-WAN as an additional product or secondary feature to their customers.

Our mission is to deliver unbreakable connectivity, no matter where the customer is. Our unique technology, SpeedFusion, combines multiple fixed lines and 4G LTE/5G to form a highly reliable and fast VPN connectivity anywhere. Our technology enables quick and reliable branch networks to be deployed in mobile settings, such as transportation, maritime, public safety, mobile clinic, broadcasting, robotic systems among others. Even for users in a wired network settings, adding wireless bandwidth to the mix can lower bandwidth cost immensely and greatly increase reliability.

Our wireless SD-WAN solutions are certified with all major telecom operators and are purpose-designed to last in adverse conditions, such as extreme temperature ranges and high humidity conditions. Moreover, our company’s solid financials and stable operations guarantee that customers will receive our support for many years. Altogether with SpeedFusion, we have a unique formula that other existing competitors and startups cannot easily replicate.

Who are your competitors?

Plover Bay focuses on wireless SD-WAN, but wired SD-WAN is also an important segment for us.

In the wireless SD-WAN segment, competitors include:

  • Cradlepoint (Acquired by Ericsson for $1.1 billion in 2020)
  • Sierra Wireless (Public company)
  • Teldat (Private)

In the enterprise wired SD-WAN segment, some of the competitors include:

  • Viptela (Acquired by Cisco for $610 billion in 2017)
  • VeloCloud (Acquired by VMWare in 2017, amount undisclosed)
  • Silver Peak (Acquired by Hewlett-Packard Enterprise for $925 million in 2020)
  • Aryaka (Private)
  • Talari Network (Acquired by Oracle in 2018, amount undisclosed)
  • CloudGenix (Acquired by Palo Alto Networks for $420 million in 2020)
  • Mushroom Networks (Private)
  • Fatpipe (Private)
  • Riverbed (Private)
  • Forcepoint
  • Juniper Networks
  • Nokia Nuage

What will drive your company’s performance over the next five years?

Our society is increasingly data-driven, and the need for reliable connectivity is universal and oftentimes critical. In the coming years, there are a few forces that will drive the growth of the connectivity market:

  1. The arrival of the 5G network will drive a new cycle of equipment upgrades. In addition, 5G’s much lower latency will enable novel applications
  2. Secure remote working and video conferencing will be an indispensable part of any enterprise network, and corporate network infrastructure must be able strong enough to support these applications
  3. Increasing adoption of Internet of Things and the use of more devices and instruments deployed outdoors where fixed lines cannot reach

Plover Bay’s SpeedFusion capability to build secure, fast and unbreakable connections from any type of WAN and our diverse range of SD-WAN solutions enable customers to build these types of networks anywhere.

We are also building new services such as SpeedFusion Cloud, where a single subscriber button would include everything from router, cloud management, to server infrastructure and data connectivity. We believe this will make our SpeedFusion technology much more scalable, thereby increasing our addressable market.

Besides new products, we are also expanding our marketing and business development capabilities, specifically in the domain of digital marketing. We believe these can help us better capture the vast and growing connectivity market efficiently in the coming years.

As routers are one-time equipment purchases with a long refresh cycle, how will you sustain your growth?

Communication technologies are constantly evolving. Just like from 2G to 3G, or from 3G to 4G, each major mobile network upgrade brings a new product upgrade cycle. Moreover, the need for bandwidth continues to grow as internet users increasingly rely on cloud for productivity and the standard of video and pictures move up to higher resolutions and this in turn drive upgrades for better, more advanced routers.

While the sales of SD-WAN routers will always be an important sales pillar, warranty and support services are quickly becoming another important part of our business. Currently, our recurring revenue consists of warranty and cloud management subscriptions, and SpeedFusion Cloud will enhance this recurring revenue stream.

How well protected is the Company’s technology?

Over the years, Plover Bay Technologies sought to increase its patent portfolio to protect its core technologies. As of June 2021, we hold over 230 patents with over 210 patent applications being under review.

What are the key threats to your business?

Key risks to our company include:

  1. Inability to attract and retain talented employees – Our business is R&D focused and in order to attract and retain talents we have implemented a share option program.
  2. Failing in catching up the product upgrade cycle. If we are slow in developing next generation products, we might not be leading the market and become a “me too” commodity player. We run our own SD-WAN products entirely in our headquarters as well as our global VPN networks. Our VADs and global technology partners also provide valuable product feedback and feature requests. Through these, we learn where we are leading and what we are lagging
  3. Patent Trolls. We understand in the technology business, patent trolls would be difficult to avoid. However, being a non-US entity should allow us to be less risky as our US peers.
  4. Severe natural disaster in Taiwan. Three out of four of our key contract manufacturers are based in Taiwan. Only one contract manufacturer is manufactured in mainland China.
  5. Shortage of key components. Our platforms are mainly based on Intel, Qualcomm and Broadcom. If there is a shortage of key components, we might not be able to meet the market demand and lose business to competitors.

Is the Company affected by the increasing tension among major countries in the world?

Plover Bay Technologies has become more international over the years. Besides our main office in Hong Kong, we have gradually built up significant R&D and operations in Taiwan and Lithuania. We also continue to work with renowned Taiwan manufacturing companies for the production of our products, while adding regional warehouses in the Americas and Europe. With these arrangements, we can tap into diverse pools of talents worldwide, improve our flexibility in adjusting business strategies according to actual needs and diversity the risk of doing business in one single location.

While we do not see major impacts at the moment, we believe our asset light structure, diversified locations and agile mindset will help us navigate through any future challenges.

How will you weigh the tradeoff between returning capital to shareholders and reinvestment in your business?

We are committed to a return capital to shareholders after setting aside sufficient cash resources and buffers to sustain our daily operation needs. Our daily operations needs include ongoing R&D spending, engineering resources, employee salaries, inventories, and small amounts of capital expenditures. From time to time, we may identify suitable investment or acquisition opportunities that require us to set aside additional resources, which may cause our dividend payout to differ from our historic levels.11

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