EX-99.(C)(2) 3 d549590dex99c2.htm EX-99.(C)(2)

Exhibit (c)(2) Project Sequoia – Materials for Discussion DRAFT, PRELIMINARY, AND SUBJECT TO CONFIRMATION & MATERIAL REVISION April 23, 2023 STRICTLY PRIVATE & CONFIDENTIAL

- DRAFT AND SUBJECT TO CHANGE - Presentation Basis ▪ This presentation was prepared on a confidential basis exclusively for the benefit and use of the Board of Directors of Sting (the “Company”). This presentation is subject to the assumptions, qualifications and limitations set forth herein. This presentation is for discussion purposes only. It is not a recommendation as to how any Board member should vote, and does not carry any right of publication or disclosure. Neither this presentation nor any of its contents may be used for any other purpose without the prior written consent of Needham & Company, LLC. ▪ The information contained in this material is based on information obtained from the Company and other sources. Needham & Company, LLC has relied upon the accuracy and completeness of the foregoing information and has neither attempted to verify independently nor assumed responsibility for verifying any of such information. Any financial estimates and projections contained herein have been prepared by management or are based upon such estimates and projections, and involve numerous and significant subjective determinations, which may or may not be correct, and we have assumed that such estimates and projections have been reasonably prepared on bases reflecting the best currently available estimates and judgments of management or represent reasonable estimates. No representation or warranty, expressed or implied, is made as to the accuracy or completeness of such information and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. This material was not prepared for use by readers not as familiar with the business and affairs of the Company as the Board of Directors of the Company and, accordingly, Needham & Company, LLC takes no responsibility for the accompanying material when used by persons other than the Board of Directors. ▪ Nothing contained herein should be construed as tax, accounting, or legal advice. NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 1

- DRAFT AND SUBJECT TO CHANGE - Table of Contents Section 1 Valuation Analysis and Considerations Appendix A WACC Analysis NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 2

- DRAFT AND SUBJECT TO CHANGE - Valuation Analysis and Considerations NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 3

- DRAFT AND SUBJECT TO CHANGE - Sequoia Whole Company Forecast (Chip Only) Sequoia Pro-Forma Annual Income Statement Sequoia Pro-Forma Quarterly Income Statement (in $000) 2022A 2023E 2024E 2025E Revenue Massive IoT $ 21,986.0 $ 19,204.1 $ 62,012.6 $ 110,519.8 Broadband IoT 987.9 3,091.7 8,824.9 29,483.4 IP & Services 37,577.1 28,943.4 26,010.7 17,535.0 Total Revenue 60,551.0 51,239.2 9 6,848.2 157,538.3 Note: Pre-Chip Conversion Product Revenue Est. 30,674.8 107,247.4 210,185.4 Cost of Revenue Variable Product Cost (13,999.7) (11,574.7) (34,542.1) (63,329.8) Fixed Cost (1,269.6) (1,144.8) (1,180.4) (1,184.0) Cost of Services (2,222.0) (2,376.0) (2,376.0) (756.0) Total Cost of Revenue (17,491.3) (15,095.5) (38,098.4) (65,269.8) Gross Profit 4 3,059.8 36,143.7 5 8,749.8 92,268.5 Variable Product Gross Profit Margin 39.1% 48.1% 51.2% 54.8% Product Gross Profit Margin 33.5% 43.0% 49.6% 53.9% Total Gross Profit Margin 71.1% 70.5% 60.7% 58.6% Operating Expenses General & Administrative (6,791.8) (6,415.9) (6,615.9) (6,633.7) Sales & Marketing (8,406.7) (9,996.1) (10,292.8) (10,347.2) Research & Development (21,286.1) (26,325.7) (30,109.6) (31,078.7) OverHead (5,748.0) (5,786.9) (5,928.5) (5,935.6) Total Operating Expenses (42,232.7) (48,524.6) (52,946.9) (53,995.2) 0 0 0 0 Operating Profit $ 827.1 $ (12,380.9) $ 5,802.9 $ 38,273.3 Operating Profit Margin 1.4% (24.2%) 6.0% 24.3% Notes: Source: Information provided by management NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 4

- DRAFT AND SUBJECT TO CHANGE - Summary of Valuation Methodologies ▪ In preparing the following preliminary valuation, Needham considered the following ➢ Selected Public Companies: Wireless / Connectivity / IoT-Centric Peers ➢ Selected M&A Transactions: Valuation is capped by applying transaction multiple to historical financial results; doesn’t represent full value and future potential upside post acquisition (included for illustrative purposes) ➢ Discounted Cash Flow Analysis: intrinsic valuation analysis performed based on Company’s financial statement estimates; reflects opportunity to unlock long term value NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 5

- DRAFT AND SUBJECT TO CHANGE - Selected Public Companies Enterprise Value / % of $ in millions Revenue Gross Profit Revenue Growth Gross Margin 4/21/2023 52-week Equity Enterprise Company Price High Value Value CY'23E CY'24E CY'25E CY'23E CY'24E CY'25E 23E/22A 24E/23E 2023E 2024E Wireless / Connectivity / IoT-Centric Companies Analog Devices, Inc. $ 186.34 94% $ 94,260.6 $ 99,133.3 7.8x 7.5x NA 10.6x 10.3x NA 5.3% 2.8% 73.5% 73.4% Infineon Technologies 38.01 92% 49,640.9 51,518.2 2.9x 2.7x 2.5x 6.4x 6.1x 5.5x 15.1% 7.4% 45.3% 44.6% Microchip Technology Inc. 76.80 89% 42,070.7 48,370.5 5.6x 5.5x 5.0x 8.3x 8.0x NA 7.4% 1.7% 67.7% 68.9% Nordic Semiconductor 10.89 53% 2,099.0 1,719.9 2.5x 2.0x 1.7x 4.7x 3.9x 3.2x (9.7)% 21.3% 51.7% 51.6% NXP Semiconductors 169.82 87% 44,071.6 51,682.6 4.2x 3.8x 3.6x 7.2x 6.6x 6.1x (6.1)% 8.3% 57.8% 58.0% Qorvo Inc. 92.95 77% 9,284.7 10,389.5 3.1x 2.8x 2.4x 6.9x 5.8x 4.8x (12.6)% 12.1% 45.2% 47.5% Semtech Corporation 20.70 32% 1,322.1 2,426.9 2.4x 2.0x NA 4.9x 4.0x NA 33.2% 20.0% 49.3% 50.2% Silicon Laboratories Inc. 166.50 86% 5,311.2 4,648.8 4.4x 3.8x 3.1x 7.1x 6.5x 5.4x 4.1% 15.4% 61.3% 58.4% Skyworks Solutions Inc. 106.72 87% 16,965.7 18,162.9 3.6x 3.3x NA 7.0x 6.4x NA (4.9)% 9.1% 51.2% 50.7% STMicroelectronics 47.42 89% 43,175.6 41,428.6 2.4x 2.3x 2.1x 5.1x 4.9x 4.5x 7.0% 4.8% 46.7% 47.1% Synaptics Inc. 95.13 55% 3,747.7 3,868.7 2.6x 2.3x NA 4.4x 4.1x NA (5.7)% 10.5% 58.9% 57.1% Mean 3.8x 3.5x 2.9x 6.6x 6.1x 4.9x 3.0% 10.3% 55.3% 55.2% Median 3.1x 2.8x 2.5x 6.9x 6.1x 5.1x 4.1% 9.1% 51.7% 51.6% Sequoia $ 2.47 60% $ 118.4 $ 154.4 2.8x 1.8x 1.9x 4.2x 2.8x 3.6x (10.0)% 61.4% 67.4% 61.8% Aggregate Mean 3.7x 3.3x 2.8x 6.4x 5.8x 4.7x 1.9% 14.6% 56.3% 55.8% Aggregate Median 3.0x 2.7x 2.4x 6.6x 5.9x 4.8x (0.4)% 9.8% 54.7% 54.3% Notes: Source: FactSet Research Systems, SEC Filings Market statistics reflect closing stock price on April 21, 2023 ‘NM’ for multiples that exceed 75x, ‘NEG’ for multiples that are below zero and ‘NA’ for unavailable or insufficient information NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 6

- DRAFT AND SUBJECT TO CHANGE - Selected M&A Transactions ($ in Millions) Announce Enterprise Enterprise Value / Date Target Acquirer Value LTM Revenue 8/2/2022 Sierra Wireless, Inc. Semtech Corporation $ 1,263 2.3x 11/4/2021 Neophotonics Corporation Lumentum Holdings Inc. 858 3.1x 10/28/2021 Celeno Communications Renesas Electronics Corp. 315 8.5x 8/30/2021 DSP Group, Inc. Synaptics, Inc. 480 3.8x 7/14/2021 Coretex Eroad 133 4.0x 5/25/2021 Telit Communications Limited DBAY Advisors Limited 418 NA 4/22/2021 Silicon Laboratories Inc. (Infrastructure & Automotive Business) Skyworks Solutions Inc. 2,750 7.1x 4/8/2021 ORBCOMM Inc. GI Partners, L.L.C. 1,089 4.4x 2/7/2021 Dialog Semiconductor Plc Renesas Electronics Corp. 5,461 4.1x 1/14/2021 Acacia Communications, Inc. Cisco Systems, Inc. 4,190 11.3x 7/17/2020 DisplayLink Corp. Synaptics, Inc. 305 3.2x 7/7/2020 Broadcom, Inc. (Wireless Internet of Things Business) Synaptics, Inc. 250 3.8x 4/1/2020 Thingstream Ltd. u-blox AG 10 NA 2/20/2020 Adesto Technologies Dialog Semiconductor 433 3.7x 5/29/2019 Marvell Technology Group Ltd. (Wireless Connectivity Business) NXP Semiconductors NV 1,760 5.9x 5/6/2019 Aquantia Corp. Marvell Technology Inc. 450 4.1x 3/27/2019 Quantenna Communications Inc. ON Semiconductor Corporation 934 4.2x 11/9/2018 Finisar Corporation II-VI Incorporated 4,806 3.7x 10/30/2018 Electro Scientific Industries, Inc. MKS Instruments, Inc. 987 2.4x 9/10/2018 Integrated Device Technology, Inc. Renesas Electronics Corp. 6,686 7.6x 3/12/2018 Oclaro, Inc. Lumentum Holdings Inc. 1,510 2.5x 1/23/2018 Sigma Designs, Inc. (Z-Wave Business) Silicon Laboratories, Inc. 243 NA 12/17/2017 Gemalto N.V. Thales S.A. 6,614 1.9x 9/22/2017 Imagination Technologies Canyon Bridge Capital Partners 749 4.0x 8/28/2017 IXYS Littelfuse 726 2.2x 3/19/2017 Exar MaxLinear 464 4.2x 2/13/2017 GigPeak Integrated Device Technology 227 3.9x 11/21/2016 Applied Micro Circuits MACOM Technology Solutions 683 4.1x Notes: Source: FactSet Research Systems, 451 Research, SEC Filings, Company Press Releases ‘NM’ for multiples that exceed 75x, ‘NEG’ for multiples that are below zero and ‘NA’ for unavailable or insufficient information NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 7

- DRAFT AND SUBJECT TO CHANGE - Selected M&A Transactions (Cont.) ($ in Millions) Announce Enterprise Enterprise Value / Date Target Acquirer Value LTM Revenue 3/16/2016 ROFIN-SINAR Technologies, Inc. Coherent, Inc. $ 816 1.6x 2/23/2016 Newport Corporation MKS Instruments, Inc. 980 1.6x 9/30/2015 Ezchip Semiconductor Mellanox Technologies 607 5.8x 9/3/2015 Pericom Semiconductor Diodes 291 2.3x 5/7/2015 Micrel Microchip Technology 743 3.1x 3/18/2015 Vitesse Semiconductor Microsemi 356 3.3x 3/12/2015 Integrated Silicon Solutions Investor Consortium 677 2.1x 2/25/2015 Emulex Avago 577 1.4x 2/3/2015 Entropic Communications MaxLinear 183 1.0x 1/27/2015 Silicon Image Lattice Semiconductor 444 1.7x 11/19/2014 Oplink Communications, Inc. Koch Industries, Inc. 322 1.6x 4/29/2013 Telular Corporation Avista Capital Partners 253 2.8x 6/5/2012 Miranda Technologies Inc. Belden Inc. 331 1.8x 75th Percentile 4.2x Mean 3.7x Median 3.5x 25th Percentile 2.2x Notes: Source: FactSet Research Systems, 451 Research, SEC Filings, Company Press Releases ‘NM’ for multiples that exceed 75x, ‘NEG’ for multiples that are below zero and ‘NA’ for unavailable or insufficient information NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 8

- DRAFT AND SUBJECT TO CHANGE - Discounted Cash Flow – Revenue Multiple Discounted Cash Flow Analysis ($ in millions) Fiscal Year Ending December 31, 2022E 2023E 2024E 2025E Operating Profit $ (12.4) $ 5.8 $ 38.3 PRESENT VALUE CALCULATION ($ in millions) Revenue Discount Rate Multiple 15.5% 17.0% 18.5% 20.0% (1)(2) Present Value of Free Cash Flows $ 19.3 $ 18.4 $ 17.6 $ 16.8 Plus: Present Value of Terminal Value 1.0x $ 106.8 $ 103.1 $ 99.6 $ 96.3 Based on multiple of FY2025 Revenue of $157.5M 1.5x 160.1 154.7 149.5 144.5 2.0x 213.5 206.2 199.3 192.6 2.5x 266.9 257.8 249.1 240.8 3.0x 320.3 309.3 298.9 288.9 Equals: Implied Enterprise Value 1.0x $ 126.0 $ 121.5 $ 117.2 $ 113.1 Based on multiple of FY2025 Revenue of $157.5M 1.5x 179.4 173.1 167.0 161.2 2.0x 232.8 224.6 216.8 209.4 2.5x 286.2 276.2 266.6 257.5 3.0x 339.6 327.7 316.5 305.7 Implied Equity Value 1.0x $ 90.1 $ 85.5 $ 81.2 $ 77.1 Based on $10.7M of Cash & $46.7M of Debt 1.5x 143.4 137.1 131.0 125.2 2.0x 196.8 188.6 180.8 173.4 2.5x 250.2 240.2 230.7 221.5 3.0x 303.6 291.8 280.5 269.7 Notes: Source: Financials provided by management Present value as of April 21, 2023 Based on 2023E – 2025E operating profit NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 9

- DRAFT AND SUBJECT TO CHANGE - Implied Valuation of Sequoia Whole Company (Chip Only Scenario) 2023E Revenue $ 159 $ 192 (3.1x - 3.8x) LTM Revenue ('24 Multiples) $ 197 $ 246 (2.8x - 3.5x) 2023E Revenue $ 178 $ 189 (3.5x - 3.7x) 2025E Revenue $ 167 $ 276 (1.1x - 1.8x) $50 $100 $150 $200 $250 $300 Notes: Source: FactSet Research Systems, SEC Filings, Financials Provided by Management Market statistics reflect closing stock price on April 21, 2023 LTM Revenue as of June 30, 2024 NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 10 Discounted Cash Selected Precedent Selected Wireless / Connectivity / IoT- Flow Analysis Transactions Centric Companies

- DRAFT AND SUBJECT TO CHANGE - Premia Paid Analysis – Technology Transaction Between $100M and $1B ($ in millions) Selected Technology M&A Transactions Between $100M and $1B, Last Two Years Announce Equity Enterprise Offer Price % Premium Date Acquirer Company Target Company Value Value 1-Day 5-Days 30-Days 60-Days 90-Days a 2/8/23 Wavenet Ltd. AdEPT Technology Group Plc $ 60.4 $ 103.0 74.8% 74.8% 96.1% 78.7% 82.7% 1/3/23 First Brands Group LLC Horizon Global Corp. 48.5 402.5 350.1% 207.0% 236.5% 165.2% (8.9%) Alpha Private Equity; Peninsula Capital 12/7/22 Prima Industrie SpA 108.1 360.8 1.0% 1.0% 1.8% 2.5% 5.0% Advisors; Private Groups 11/9/22 Carlyle Japan Asset Management Uzabase, Inc. 382.2 358.3 74.6% 101.3% 129.7% 110.7% 78.6% 11/8/22 Carlyle Japan Asset Management Totoku Electric Co. Ltd. 260.6 198.8 157.0% 157.2% 156.5% 152.1% 146.1% 11/1/22 Voya Financial, Inc. Benefitfocus, Inc. 362.0 582.7 48.9% 66.9% 56.3% 54.4% 25.9% Thoma Bravo; Sunstone Partners; Private 10/27/22 UserTesting, Inc. 1,101.4 951.4 94.3% 111.9% 90.8% 68.9% 49.4% Groups 10/26/22 K1 Investment Management LLC ELMO Software Ltd. 309.1 323.5 47.0% 55.9% 61.7% 64.4% 98.8% 9/29/22 Accenture Japan Ltd. Albert, Inc. 283.8 259.8 126.4% 120.9% 108.2% 103.8% 68.7% Insight Venture Management; GTCR; 9/6/22 ChannelAdvisor Corp. 668.0 588.8 57.1% 52.8% 55.6% 60.4% 66.8% Sycamore Partners; CommerceHub, Inc. 8/16/22 Danawa Co., Ltd. KoreaCenter Co., Ltd. 500.8 503.3 (2.0%) 5.0% 18.1% 10.7% (21.5%) 8/15/22 Thoma Bravo LP Nearmap Ltd. 746.2 685.9 39.1% 41.9% 89.2% 101.9% 43.8% 8/8/22 Nordson Corp. CyberOptics Corp. 401.0 383.1 31.4% 34.7% 53.8% 24.9% 24.8% Convey Health Solutions Holdings, 6/21/22 TPG Capital LLC 194.5 1,038.4 143.1% 161.2% 88.5% 75.6% 46.4% Inc. 6/20/22 Aareon AG Momentum Software Group AB 163.7 154.1 71.4% 61.5% 54.0% 40.9% 25.6% 6/2/22 Apax Partners LLP EcoOnline Holding AS 399.2 404.3 68.5% 64.9% 58.5% 61.3% 23.0% 5/25/22 Thoma Bravo LP Mercell Holding AS 330.2 491.8 109.7% 111.8% 110.0% 104.2% 4.0% Notes: Source: FactSet Research Systems NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 11

- DRAFT AND SUBJECT TO CHANGE - Premia Paid Analysis – Technology Transaction Between $100M and $1B (Cont.) ($ in millions) Selected Technology M&A Transactions Between $100M and $1B, Last Two Years Announce Equity Enterprise Offer Price % Premium Date Acquirer Company Target Company Value Value 1-Day 5-Days 30-Days 60-Days 90-Days a 5/9/22 Concentrix Corp. ServiceSource International, Inc. $ 150.4 $ 159.1 47.1% 37.6% 14.5% 19.0% 52.5% 5/5/22 Latécoère SA Avcorp Industries, Inc. 31.8 109.3 22.2% 22.2% 29.4% 46.7% 69.2% 4/29/22 GI Manager LP GTY Technology Holdings, Inc. 376.7 395.1 122.6% 138.6% 72.1% 41.9% 8.2% Accel-KKR; Briarwood Chase Management; 4/14/22 Basware Oyj 493.5 554.5 94.7% 93.7% 80.6% 77.4% 30.0% Long Path Partners; Private Groups 4/11/22 Pfizer Australia Holdings Pty Ltd. ResApp Health Ltd. 133.3 130.9 131.1% 147.6% 210.4% 184.9% 220.0% 4/6/22 Turn/River Management LP Tufin Software Technologies Ltd. 500.4 438.2 44.0% 44.8% 56.8% 48.8% 54.7% 2/14/22 Murata Electronics North America, Inc. Resonant, Inc. 289.9 282.8 262.9% 216.9% 163.2% 144.6% 74.4% 1/31/22 Agrico Acquisition Corp. Kalera AS 191.6 191.6 0.0% 12.5% (28.1%) (36.3%) (72.6%) Alpha Luck Industrial; AKM Meadville 1/14/22 AKM Industrial Co., Ltd. 230.0 380.6 (5.9%) (7.8%) (10.0%) (6.3%) 80.4% Electronics.; Private Groups Clayton Dubilier & Rice LLC; Vera Whole 1/5/22 Castlight Health, Inc. 335.5 278.7 25.0% 36.7% 21.3% 30.6% 12.6% Health, Inc. 12/16/21 NAT GAMES Co., Ltd. Nexon GT Co., Ltd. 550.7 493.5 2.3% 17.8% 46.3% 81.2% 60.5% 11/8/21 Open Text Corp. Zix Corp. 482.7 789.9 (2.7%) 3.7% 15.2% 14.7% 19.0% 11/4/21 Lumentum Holdings, Inc. NeoPhotonics Corp. 859.0 815.3 38.9% 62.3% 77.0% 64.3% 56.4% 75th Percentile $ 495.2 $ 561.5 112.9% 114.1% 99.1% 102.4% 70.5% Mean 364.8 427.0 75.8% 75.2% 73.8% 66.4% 47.5% Median 332.8 389.1 53.0% 61.9% 60.1% 62.8% 47.9% 25th Percentile 184.6 244.6 24.3% 31.6% 27.4% 29.1% 17.4% Notes: Source: FactSet Research Systems NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 12

- DRAFT AND SUBJECT TO CHANGE - Appendix A: WACC Analysis NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 13

- DRAFT AND SUBJECT TO CHANGE - WACC Analysis Sequoia Levered Beta Unlevered Beta 0.75 Debt / Equity Ratio 30.4% (1) 21.0% Marginal Tax Rate (2) 0.93 Levered Beta Cost of Capital Calculation (3) 6.00% Equity Market Risk Premium (x) Sequoia Levered Beta 0.93 Adjusted Equity Market Risk Premium 5.58% (4) 3.57% (+) U.S. Risk Free Rate (5) 6.37% (+) Size Premium Cost of Equity 15.52% Equity % in the Capital Structure 76.7% Debt % in the Capital Structure 23.3% Weighted Average Cost of Capital 15.52% Notes: (1) Assumed capital structure based on industry average for comparable public companies (2) Assumes tax rate of 21.0% (3) Calculated as Relevered Beta = Unlevered Beta x (1 + ((1 – Tax Rate) x (Debt/Equity))) (4) Source: Kroll (fka Duff & Phelps) as of April 21, 2023 (5) US Treasury; Represents current yield on 10-year Treasury Bonds as of April 21, 2023 (6) Source: Kroll (fka Duff & Phelps); represents size-related risk premium of companies with market capitalizations between $79M and $124M NEEDHAM & COMPANY STRICTLY PRIVATE & CONFIDENTIAL 14