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Marketing with BMO Capital Markets Jan 2017

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Marketing with BMO Capital Markets
Germain Lamonde
Chairman, President and CEO
EXFO

Published in: Investor Relations
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Marketing with BMO Capital Markets Jan 2017

  1. 1. January 11, 2017 Germain Lamonde Chairman, CEO and Founder Marketing with BMO Capital Markets
  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 Q1 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. EXFO at a glance © 2017 EXFO Inc. All rights reserved. 3 $ Revenue increase of 5% in FY 2016 $232.6M Adj. EBITDA* growth of 60% in FY 2016 $22.0M (above $20M target) Cash flows from operations in FY 2016 $24.4M * Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs and foreign exchange gain.
  4. 4. EXFO at a glance © 2017 EXFO Inc. All rights reserved. 4 No.1 in portable optical test equipment market >90 of top-100 service providers worldwide use EXFO solutions 30+ years of leadership in the telecom industry
  5. 5. © 2017 EXFO Inc. All rights reserved. 5 Clear No. 1 in portable optical testing, ex æquo leader in high-speed transport Market leader in optical and 100G Ethernet testing
  6. 6. Largest active service assurance deployment worldwide © 2017 EXFO Inc. All rights reserved. 6 Technology leader in active service assurance
  7. 7. © 2017 EXFO Inc. All rights reserved. 7 100G optical investment cycle (underway) 1 Network virtualization (about to begin)2 5G and IoT (upcoming) 3 Unprecedented transformations Dawn of a new era
  8. 8. © 2017 EXFO Inc. All rights reserved. 8 EXFO makes networks smarter! Network services simulation Field test automation Active traffic injection & monitoring Live traffic passive analysis Real-time analytics
  9. 9. © 2017 EXFO Inc. All rights reserved. 9 Real-time 3D analytics: network, services, subscriber dimensions End-to-end visibility Big data analytics across all elements, all domains, and all layers to make smarter decisions. Prioritize issues Root-cause analysis Predictive analytics
  10. 10. © 2017 EXFO Inc. All rights reserved. 10 Test automation 3D analytics
  11. 11. © 2017 EXFO Inc. All rights reserved. 11 Our test automation and systems strategy is raising EXFO’s profile to trusted advisor, helping CSPs worldwide design a smarter deployment and operations plan to drive QoE and profitability. ‟
  12. 12. © 2017 EXFO Inc. All rights reserved. 12 Executive alignment 1 Expand relationships with CSP executives 2 Evangelize SA and analytics solution 3 Improve sales efficiency
  13. 13. © 2017 EXFO Inc. All rights reserved. 13 EXFO markets * Excludes losses on FX contracts. TAM $845M $4.2B $5.0B SAM $545M $2.2B $2.7B EXFO sales ― FY 2016 $151.9M $83.3M $235.2M* Growth rate ― FY 2016 5.4% 3.4% 4.7% Gross margin profile 55-60% 70-75% 63-65% Major competitors Viavi, Anritsu Viavi, IXIA, Netscout PROTOCOL (T&D, SA, analytics, wireless) PHYSICAL (Optical and access) TOTAL
  14. 14. © 2017 EXFO Inc. All rights reserved. 14 Financial metric * Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs and foreign exchange gain or loss. FY 2017 $26M in adjusted EBITDA* +18% YoY FY 2016 $20M +40% YoY $22M +60% YoY Target Result
  15. 15. Revenue $61.8M +11.9% YoY © 2017 EXFO Inc. All rights reserved. 15 Bookings $65.9M +12.6% IRFS net earnings $3.3M +87.0% Adjusted EBITDA* $6.3M +19.6% * Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs and foreign exchange gain. Double-digit growth across the board Q1 2017 Financial results
  16. 16. © 2017 EXFO Inc. All rights reserved. 16 Absolute Analysis asset acquisition – Technology leader in optical RF testing of fiber-based radio access networks (RANs) – Acquired technology, expertise and solutions – Software integrated into EXFO’s hardware/software solution – Cash-and-stock deal: $5M in cash and $3.5M in stock FTB-1 Pro: Only all-in-one Optical, Ethernet and RF test solution on the market
  17. 17. Why invest? © 2017 EXFO Inc. All rights reserved. 17 2.Growing earnings faster than sales – Targeting at least 18% adjusted EBITDA* growth in FY 2017 – Delivered $20M in adjusted EBITDA in FY 2016 (up 60% YoY) 3.Healthy balance sheet – Cash position of $39.3M – No debt 4.Strong leadership team – Stable and experienced – Deep telecom knowledge – COO Philippe Morin (formerly at Ciena) 1.Well positioned for growth drivers – 100G optical cycle – Network virtualization – 5G and IoT * Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs and foreign exchange gain or loss.
  18. 18. Questions?

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