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EXFO Needham Growth Conference Jan 18

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EXFO Needham Growth Conference
Philippe Morin
Chief Executive Officer

Published in: Technology
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EXFO Needham Growth Conference Jan 18

  1. 1. January 17, 2018 Philippe Morin Chief Executive Officer Needham Growth Conference At EXFO, we make networks smarter
  2. 2. © 2018 EXFO Inc. All rights reserved. 2 Forward- looking statements Certain statements in this presentation, or given in response to your questions, may constitute forward-looking statements within the meaning of the Securities Act of 1934. The Private Securities Litigation Reform Act of 1995 provides “safe- harbors” for such forward-looking statements and we intend that any forward- looking statements made today be subject to the safe harbors. We caution you that any forward-looking statements are just predictions. They are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those projected in forward-looking statements and we invite you to review the company’s most recent filings with the Securities and Exchange Commission or Canadian securities commissions for a discussion of the factors at risk. These forward-looking statements speak only as of the date of this presentation and, unless required by law or applicable regulations, we will not be reviewing or updating the material that is contained herein. For a reconciliation of adjusted EBITDA to net earnings, refer to the Q1 2018 press release on EXFO’s website. All amounts in millions of US dollars, except otherwise noted.
  3. 3. © 2018 EXFO Inc. All rights reserved. 3 No.1 in optical test equipment market Largest active service assurance deployment worldwide 1600+ employees in 25 countries The network test, monitoring and analytics experts.
  4. 4. EXFO by numbers © 2018 EXFO Inc. All rights reserved. 4 * Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs, restructuring charges, change in fair value of cash contingent consideration and foreign exchange loss. $22.0M Adjusted EBITDA* margin of 9.1% $12.9M Cash flows from operations $243.3M Revenue increase of 4.6% in FY 2017
  5. 5. Major customer groups © 2018 EXFO Inc. All rights reserved. 5 Webscale companies Communications service providers Equipment manufacturers
  6. 6. Revenue $63.4M © 2018 EXFO Inc. All rights reserved. 6 Bookings $65.9M IFRS net earnings $2.7M Adjusted EBITDA* $6.1M * Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs, change in the fair value of cash contingent consideration and foreign exchange gain. Adjusted EBITDA margin of 9.6% Q1 2018 results
  7. 7. Bandwidth: Growing almost 3X in 5 years © 2018 EXFO Inc. All rights reserved. 7 Source: Cisco VNI, June 2017 Annual IP traffic: 1.2 ZB in 2016 to 3.3 ZB in 2021 Video 82% of IP traffic (from 73% in 2016) Broadband networks 53 Mbps (ave. speed to nearly double by 2021) Connected devices 27.1 Billion (>3X world pop. by 2021)
  8. 8. Growth drivers © 2018 EXFO Inc. All rights reserved. 8 Fiber 5G Network virtualization Cloud
  9. 9. © 2017 EXFO Inc. All rights reserved. 9 Customer investments Communications service providers (CSPs) deploying fiber everywhere and upgrading transmission rates to 100G to handle ongoing bandwidth explosion EXFO positioning Market leadership in optical testing and shared lead in high-speed Ethernet testing Fiber
  10. 10. © 2017 EXFO Inc. All rights reserved. 10 Customer investments Web-scale operators building data centers in large cities and interconnecting them with fiber to improve service quality Web-scale operators also deploying fiber inside data centers to add capacity and reliability EXFO positioning Market leadership in optical testing and shared lead in high-speed Ethernet testing Real-time performance assurance of Ethernet services Cloud
  11. 11. © 2017 EXFO Inc. All rights reserved. 11 Network virtualization Customer investments CSPs virtualizing network functions to accelerate introduction of new services and reduce operating costs EXFO positioning Technology leadership in active monitoring and real-time analytics, combined with automated network topology discovery, for virtual and hybrid networks
  12. 12. © 2017 EXFO Inc. All rights reserved. 12 5G Customer investments CSPs rolling out fiber and small cells to prepare for stringent capacity, latency and reliability requirements of next-generation mobility networks EXFO positioning Lab-to-field testing and real-time monitoring/analytics supported by 30+ years of telecom expertise
  13. 13. © 2018 EXFO Inc. All rights reserved. 13 Test instruments Built-in intelligence, automation and ease-of-use across entire optical, transport and copper test portfolio
  14. 14. Monitoring and analytics Deep visibility of real-time services like VoLTE, VoWiFi and OTT video on hybrid and virtual networks © 2018 EXFO Inc. All rights reserved. 14
  15. 15. © 2018 EXFO Inc. All rights reserved. 15 EXFO markets * Excludes losses on FX contracts Market size $600M $2.0B $2.6B EXFO sales―FY 2017 $161.9M $81.9M $243.8M* Growth rate―FY 2017 6.6% -1.7% 4.6% Gross margin profile 55-60% 70-75% 60-65% Major competitors Viavi, Anritsu Viavi, NetScout PROTOCOL (T&D, SA, analytics, wireless) PHYSICAL (Optical and copper) TOTAL
  16. 16. © 2018 EXFO Inc. All rights reserved. 16 1Deal Transformative 3Deals Technology +
  17. 17. Astellia update AMF approved EXFO’s public tender offer (Dec. 12, 2017) - Final hurdle passed before launch of public tender offer EXFO announced opening of public tender offer (Dec. 15, 2017) - Offer extends 25 trading days until January 23, 2018 AMF will disclose results of public tender offer (Jan. 29, 2018) - EXFO seeking to acquire remaining equity of Astellia © 2018 EXFO Inc. All rights reserved. 17 EXFO increased its credit facilities to $63.3 M
  18. 18. © 2018 EXFO Inc. All rights reserved. 18 Financial milestones Short-term1 (FY 2018) Medium-term (Three years) Adj. EBITDA2 of $26 M (18% growth YoY) Adj. EBITDA margin of 15% 1Short-term financial milestone excludes financial results from pending Astellia acquisition. 2Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs, and foreign exchange gain or loss.
  19. 19. Why invest? 2. Healthy profitability – Reported adjusted EBITDA* of $22.0 M in FY 2017 – Targeting adjusted EBITDA of $26 M in FY 2018 3. Robust cash flows – Generated $12.9 M in cash flows from operations in FY 2017 – Delivered $24.4 M in cash flows from operations in FY 2016 4. Strong leadership team – One-two tandem of Executive Chairman Germain Lamonde and CEO Philippe Morin – Stable and experienced – Deep telecom knowledge 1. Well positioned for growth drivers – Fiber – Cloud – Network virtualization – 5G * Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs, restructuring charges, change in cash contingent consideration and foreign exchange loss. © 2018 EXFO Inc. All rights reserved. 19
  20. 20. Questions?

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