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Marketing with National Bank Financial Nov 2017

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At EXFO, we make network smarter
Philippe Morin
Chief executive officer

Published in: Technology
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Marketing with National Bank Financial Nov 2017

  1. 1. November 1, 2017 Philippe Morin Chief Executive Officer Marketing with National Bank Financial At EXFO, we make networks smarter
  2. 2. © 2017 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 Q4 2017 press release or the “Non-IFRS Measures” section on EXFO’s website. All amounts in millions of US dollars, except otherwise noted.
  3. 3. © 2017 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 © 2017 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. Revenue $63.0M © 2017 EXFO Inc. All rights reserved. 5 Bookings $66.3M IFRS net earnings $0.8M Adjusted EBITDA* $8.5M * 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. Adjusted EBITDA margin of 13.6% Q4 2017 financial results
  6. 6. © 2017 EXFO Inc. All rights reserved. 6 Test instruments Built-in intelligence, automation and ease-of-use across entire optical, transport and copper test portfolio
  7. 7. Monitoring and analytics Deep visibility of real-time services like VoLTE, VoWiFi and OTT video on hybrid and virtual networks © 2017 EXFO Inc. All rights reserved. 7
  8. 8. Growth drivers © 2017 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. Full coverage of network lifecycle © 2017 EXFO Inc. All rights reserved. 13 Operations. High-growth opportunity Labs. Early insights into CSP plans Field. Core competency
  14. 14. Game-changers © 2017 EXFO Inc. All rights reserved. 14 Real-time 3D analytics Real-time visibility of all three dimensions: network, service and subscriber. Test automation Automated test routines to improve network reliability and efficiency. Data mined in the cloud. Network Subscriber Service
  15. 15. © 2017 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. © 2017 EXFO Inc. All rights reserved. 16 Astellia transaction – Global leader in performance analysis of mobile networks and subscriber experience – EXFO acquired 33.1% stake in Astellia and intends to purchase remaining equity via public tender offer – If transaction is successful, it would provide EXFO with scale and differentiation in SA and analytics market – Astellia reported sales of 48.9 M euros and net loss of 0.7 M euros in 2016
  17. 17. © 2017 EXFO Inc. All rights reserved. 17 Yenista Optics acquisition – Supplier of high-end optical test equipment for the lab and manufacturing markets – Optical spectrum analyzers, tunable lasers and filters, passive optical component test system – Revenue of US$5.8 M in 2016 and profitable – All-cash deal for US$9.7 M, net of cash acquired, closed in early October
  18. 18. © 2017 EXFO Inc. All rights reserved. 18 Why invest? 2.Generating healthy profitability – Reported adjusted EBITDA* of $22.0 M in FY 2017 – Targeting adjusted EBITDA of $26 M in FY 2018 3.Solid balance sheet – Cash position of $39.2 M – No debt 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.

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