nms communications investor summary

NMS Communications Investor Summary

November 2007

www.nmscommunications.com Slide 2

Safe Harbor Statement

This presentation may contain projections or other forward-looking statements regarding future events or the future financial performance of the company. While these statements represent management’s current judgment on the future direction of the business, actual results may differ materially from any future performance suggested in the company’s forward-looking statements. We refer you to the documents that the company files from time to time with the Securities and Exchange Commission. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections or forward-looking statements.


NMS Communications at a Glance

Value Added Services Focus – Developers and Operators Technologies, Platforms and Applications Components Leader in Ringback Tone deployments Global presence with product s deployed in 100+ countries 25 year history of successes and industry “firsts”

Slide 3


Investment Summary

Communications Platforms $70M Business w/ Gross Margins > 65% & Contribution Margins > 20% Global Customer Base Technology Leadership & VAS Market Growth Drive Demand

Mobile Applications Early Stage…$11M business - TTM Revenue Growing 50% Y-o-Y Beginning Shift to Managed Services Model

Corporate Total Market capitalization $75M as of October 31st, 2007 Strong Balance Sheet - $28M cash as of September 30th, 2007 Improved financial performance – top line growth - and return to

operating profitability (non-GAAP) in Q3 ‘07

www.nmscommunications.com

Communications Platforms

Slide 5


NMS Market Focus

VAS - Enhanced Services/Applications Technology leader New application areas emerging

Mobile Highest growth area for VAS (>ARPU)

Video/Multi-media Central to next wave of applications +

investmentAsia – Global Innovation Leader Approach: Fast TTM w/New Apps “Applications Driven” Offerings

Landline

WirelessTriple-play

Broadband

VoiceSMS

Mobile Video Services


Business Model

Application Components

Servers, App Platforms

Core Technologies

Ser

vice

s

• Mobile Video technology• Media Processors: boards + HMP• Signaling, protocols, global approvals

• VXML servers• Application-specific Gateway Server• Signaling Server• ATCA MRFP platform

• MobileTV• VideoSMS• VideoPortal

SI’sNEPs

Service Providers / Enterprises

Enabling NEPS and Systems Integrators to deliver Value Added Services quickly and efficiently –

3 ways to win emerging apps


Real-World Deployments:Mobile TV: Hong Kong CSL

Hong Kong CSL launch Mobile Video TV

Built on NMS Vision VxML servers and Golden Dynamic’s VOIR Mobile TV Application

Slide 8


Real-World Deployments: VISION VXML Ontario Systems’ Verified Contacts

Industry-leading debt collection solution using Vision VoiceXML Server to enhance functionality and performanceRapidly develop and deploy speech-enabled predicative dialer applications for increased right party contacts

Slide 9


CP Performance

Slide 10

Market Challenges Industry Consolidation China 3G Delays Low end erosion

Growth Drivers New Design Wins Mobile Subscriber & VAS

Demand New Technologies

Continued Strength in Margins

CP Q3'07(non-GAAP) YTD

Revenues 100%

Gross Margin 69%

OPEXSG&A 23%R&D 18%

Total Opex 41%Cont Margin 28%


Mobile Applications

Slide 11


Ringback Tones Market

Revenue from Subscribers

Western Europe: $846M

Asia-Pacific: $776M

China/India: $512M

North America: $230M

Latin America: $93M

Middle East/Africa: $63M

(Source: OVUM)


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180,000,000

MyCaller Subscribers Total Subs Passed: 161M

Active Sub Growth:

• since Jan 2007: +97%

• Year-over-year: +196%


RBT Revenue Drivers

BrandB-C Advertising $$

EnterpriseB-B Advertising $$

ConsumerSubscription + Content

ConsumerContent


Service (2009)

Capex (2007)

Product MyCaller MyCaller+

$/subscriber over 3 years $N 3 – 5x$N

# Operators 30 10 Target wins

Move to Managed Service Offering

Business Driver technology service success

Go-to-market indirect direct

Revenue One-Time/Unpredictable Repeatable/Predictable

www.nmscommunications.com 16

Our Differentiation: Why We’ll Win

RBT market leader 30+ operators; 200M+ subs passed; 10M+ subs personalizing

Mobile Place personalization platform Built to drive usage & adoption Network through handset

Domain expertise Communications network integration SUCCESS Marketing

• Managed Services capability– Storefront & content management– Experienced operations team

• Customer proof points– Need to expand at current customers


Financial Overview


Balance Sheet(In $Millions except DSO and Inventory Turns)

Dec '06 Sept '07

Cash & Securities $32.3 $28.3

Inventory $3.6 $3.6

Accounts Receivable $13.3 $13.7

Other Assets $20.2 $19.7

Total Assets $69.3 $65.3

Liabilities $14.3 $14.4

Deferred Revenue $4.4 $4.3

Stockholders' Equity $50.6 $45.3

Total Liab. & S.E. $69.3 $65.3

DSO with Deferred Revenue 55 Days 53 Days

Inventory Turns with Deferred Inventory 8.5X 9.1X


$s MillionsQ3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07

Revenues $20.8 $21.7 $19.0 $21.4 $23.2

Gross Margin $12.8 $13.5 $11.6 $13.3 $15.3

Operating ExpensesSG&A $9.8 $10.7 $9.9 $9.7 $10.1R&D $6.2 $5.9 $5.4 $5.3 $5.0Restructuring $1.3 $4.2 $0.0 $0.0 $0.0

Total Opex $17.3 $20.8 $15.2 $14.9 $15.1

Operating Income ($4.6) ($7.2) ($3.7) ($1.6) $0.3

Slide 19

NMS P&L (Non-GAAP*)

*Not including impact of stock-based compensation and amortization of acquired intangible assets

**Guidance as of October 31st, 2007

Q4 ’07 Guidance**•Modest revenue increase in Q4; Mobile Apps revenue remain lumpy•Q4 operating profit about break-even (Non-GAAP); Gross margins likely to be below Q4 levels


NMS Target Business Model (Non-GAAP*)

*Not including impact of stock-based compensation and amortization of acquired intangible assets

$s Millions TargetQ4 '06 Q1 '07 Q2 '07 Q3 '07 Model

Revenues 100% 100% 100% 100% 100%

Gross Margin 62% 61% 62% 66% 63-65%

Operating ExpensesSG&A 49% 52% 45% 44% 26-29%R&D 27% 28% 25% 21% 16-18%Restructuring 19% 0% 0% 0% -

Total Opex 96% 80% 70% 65% 42-46%

Operating Income -33% -19% -8% 1% 17-21%


Investment Summary

Communications Platforms

Highly Profitable… modest growth outlook

Mobile Applications

Rapid growth… business model shift

Corporate

Strong Balance Sheet… improving P&L

nms communications investor summary

Documents

future performance

future financial performance

line growth

nms vision vxml servers

future direction

future events

mobile video tvbuilt

vision vxml ontario