Marketing with BMO Capital Markets Jan 2017

January 11, 2017
Germain Lamonde
Chairman, CEO and Founder
Marketing with
BMO Capital Markets

© 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.

EXFO at a glance
$
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.

EXFO at a glance
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

Clear No. 1 in portable optical testing,
ex æquo leader in high-speed transport
Market leader
in optical and 100G
Ethernet testing

Largest active service assurance
deployment worldwide
Technology leader
in active service assurance

100G optical
investment
cycle
(underway)
1 Network
virtualization
(about to begin)2 5G and IoT
(upcoming)
3
Unprecedented transformations
Dawn of a new era

EXFO makes
networks smarter!
Network services simulation
Field test automation
Active traffic injection & monitoring
Live traffic passive analysis
Real-time analytics

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

Test automation 3D analytics

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.
‟

Executive alignment
1 Expand relationships with
CSP executives
2 Evangelize SA and analytics
solution
3 Improve sales efficiency

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

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

Revenue
$61.8M
+11.9% YoY
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

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

Why invest?
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.

Marketing with BMO Capital Markets Jan 2017

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