Marketing with Stifel Nicolaus, April 2013

Marketing with Stifel Nicolaus

Germain Lamonde Chairman, President & CEO April 4, 2013

2 © 2013 EXFO Inc. All rights reserved..

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.

Annual financial data in this presentation is prepared in accordance with international financial reporting standards (IFRS) and Canadian generally accepted accounting principles (GAAP). Quarterly financial data is prepared in accordance with IFRS. For a reconciliation of adjusted EBITDA to net earnings (loss), refer to the Q2 2013 press release or the “Non-IFRS Measures” section on EXFO’s website.

Forward-Looking Statements

3 © 2013 EXFO Inc. All rights reserved.

EXFO at a Glance

Who We Are › No.2 supplier in portable

telecom testing and innovation leader in IP service assurance

› Helping network operators and equipment manufacturers design, deploy and monitor IP fixed and mobile networks

What We’ve Done › Gained market share year-in

and year-out for past 27 years

› Ten-year sales CAGR of 20%

› Difficult market in FY 2012 › EXFO sales: -7% YoY while

double-digit market decrease › Restructuring: Annual savings

of $8.0 M and restructuring costs of $2.4 M

Where We’re Going › Increase wireless presence

› Enable network operators to reduce operating expenses

› Expand share of wallet with Tier-1 operators

› Accelerate profitability through execution

4 © 2013 EXFO Inc. All rights reserved.. 4 © 2013 EXFO Inc. All rights reserved..

Global Organization

› No.1 in portable optical testing

› No.2 in portable telecom testing

2000 CUSTOMERS IN >100 COUNTRIES 1700 EMPLOYEES IN >25 COUNTRIES

Americas

› FY 2012 Sales: $130.6 M › Growth YoY: -4.6% › Sales Split: 52%

EMEA

› FY 2012 Sales: $71.0 M › Growth YoY: -16.4% › Sales Split: 29%

Asia-Pacific

› FY 2012 Sales: $47.3 M › Growth YoY: +1.2% › Sales Split: 19%

5 © 2013 EXFO Inc. All rights reserved. 5 © 2013 EXFO Inc. All rights reserved.

Global IP traffic Up 4X from 2011-2016

Mobile IP traffic

Up 13X from 2012-2017 (Cisco)

Bandwidth Demand

STRONG FUNDAMENTAL DRIVERS, MARKED BY INCREASED MOBILE TRAFFIC AND VIDEO


Dynamic Carrier Market

AT&T Invests Extra $14B to Boost Broadband

DT Spends 30B Euros Over Three Years

SoftBank to Pay $20B for 70% Stake in Sprint

Sprint to Buy Rest of Clearwire for $2.2B

China Mobile Increases CAPEX Almost 50% to $30B


Growth Strategy

Wireless sales to continue growing (~24% of sales

in FY 2012)

Increase Wireless Presence

Expand Share of Wallet with Tier-1

Operators

Doing business with ~80% of top-100 operators worldwide

Accelerate Profitability via

Execution

Combining revenue growth with a tight

control on expenses

Enable Operators to Reduce OPEX

Key productivity differentiators,

FTB Ecosystem and EXFO Connect

EXPANDING MARKET SHARE FOR 27 CONSECUTIVE YEARS


Riding the Right Waves

Market-Driven Innovation › Wireless backhaul › 4G/LTE, 3G › DAS, RRH › 100G upgrades › FTTH, VDSL2

Focus on Execution › Unmatched customer

experience

INNOVATION AND EXECUTION ENABLE MARKET-SHARE GAINS


Revenue Mix/Gross Margin Evolution

FY 2006 | FY 2012

Protocol Other

89%

11%

Sales: $250.0 M Sales: $107.4 M

55% 45%

MOVING TOWARD HIGHER-MARGIN, PROTOCOL-LAYER SALES

Gross Margin

40%

50%

55%

60%

65%

70%

45%

In %

of s

ales

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012


Telecom Market

TAM

SAM

Major competitors

Sales growth ― FY ’12/’11

Five-year sales CAGR

Annual growth rate

Sales ― FY 2012

Gross margin profile

$700 M $550 M

JDSU, Anritsu, Sunrise

-14.5%

3.9%

~5%

$135.1 M

Low-60s (%)

$3.2 B $1.8 B

JDSU, IXIA, Tektronix

4.4%

46.1%

~15%

$113.7 M

Mid-70s (%)

PHYS

ICA

L (O

ptic

al &

Acc

ess)

PROTOCOL TO DRIVE REVENUE & EARNINGS GROWTH

PRO

TOC

OL

(Wire

less

, Ser

v. A

ssur

ance

, Tr

ansp

ort &

Dat

acom

)


Physical-Layer Business

COPPER ACCESS › Product portfolio optimized for high-

speed copper links › New MaxTester series secured

contract wins with three tier-1 North American operators › Supports pair bonding & vectoring

(100 Mb/s)

PORTABLE OPTICAL › No. 1 player with >35% market share › Market dominance in OTDR testing › Key differentiator: iOLM software › Market leader in dispersion testing › Unmatched product breadth & depth


Protocol-Layer Business

WIRELESS • Protocol analyzers: 4G/LTE and 3G

test solutions for deployment and troubleshooting applications

• Network simulators: Large-scale emulation of subscriber sessions to test routers, gateways and session border controllers

• Stratgic partnership with Artiza Networks to offer highest-capacity, end-to-end simulation solution

TRANSPORT AND DATACOM › Multi-service analyzers for

SONET/SDH, OTN and Ethernet rates from 10M to 100G

› Comprehensive portfolio for wireless backhaul

› Pioneered new standard for Ethernet testing (EtherSam)

SERVICE ASSURANCE › Probe-based systems targeted at

medium to large network operators › Primary focus on active testing to

validate service-level agreements › Monitoring multi-play services with

a single platform is key differentiator


Key Differentiator

PUTTING INTELLIGENCE INTO OUR PLATFORMS!


FTB Ecosystem + EXFO Connect + EXFO Apps Store

› Test Equipment Manager › Test Data Manager › GPS/Route Optimization › Work Ticket Management › License sharing or rental › Training Management › Etc. (from EXFO or 3rd parties)

Search and request custom configuration

Download applications and configurations onto platform

Load configuration and immediately start testing

Automatically upload test results

Pass results

› Notification › Billing › Signature › Next work

order › Etc.

Automatically close job ticket

FTB Ecosystem (20+ optical, transport, datacom and copper acces test modules)

Corporate OSS

EXFO Apps Store Contains: S/W releases & updates, new applications, training material,

productivity tools, etc

REDUCES OPEX for Operators & NEMs

› Established base of ~40,000 compliant platforms

15 © 2013 EXFO Inc. All rights reserved.. Revenue Adjusted EBITDA Margin

In US

$ Milli

ons 0.0%

20.0%

50.0%

10.0%

30.0%

40.0%

70.0%

60.0%

-10.0%

$50

$100

$150

$200

$250

$300

Gross Margin

Sales CAGR of 20% over last 10 Years

Revenue

› $250 M (-7% YoY) › Gained market share › FY’13: 6-10% growth

(estimate)

Gross Margin

› Improved to 63.3% › Up 9X out of 10 years › FY’13-15: Trending up

Adjusted EBITDA Margin

› 7.3% in FY’12 from 13.5% in FY’11 due to lower revenue level

› Mid-term goal: 15%

Financial Snapshot

36% 34% 21% 24% -5% 32% 33% -7%

2004 2005 2006 2007 2008 2009 2010 2011 2012


CEO Germain Lamonde Letter to Shareholders

We plan on increasing our sales volume to better absorb the cost of being a

global player. By leveraging economies of scale, we’re targeting a mid-term adjusted EBITDA1 margin of 15%.

1Adjusted EBITDA represents net earnings before interest, income taxes, depreciation of property plant and equipment, amortization of intangible assets, stock-based compensation costs and foreign exchange gain or loss.


Annual Financial Results1 (in US$ millions, except gross margin)

Sales

Gross Margin

Net R&D Expenses

Adjusted EBITDA3

1 All financial results from continuing operations, except net earnings/loss and adjusted EBITDA. 2 Fiscal 2011 and 2012 financial results according to IFRS; prior years according to Canadian GAAP. 3 Adjusted EBITDA represents net earnings (loss) before interest, income taxes, depreciation of property, plant and equipment, amortization of intangible assets, restructuring charges, stock-based

compensation costs, R&D tax credits recovery, changes in the fair value of the cash contingent consideration, impairment of goodwill, foreign exchange gain or loss and extraordinary gain.

Net Earnings/Loss2

SG&A Expenses


Q2 2013 Highlights

› Sales reached $62.6 M

› Gross margin1 amounted to 62.2% of sales

› Adjusted EBITDA2 totaled $4.4 M

› Cash flows from operations totaled $2.1 M

› TravelHawk Pro, a troubleshooting tool for 4G/LTE networks, selected by three of top-five LTE operators

› Launched FTB-88100NGE Power Blazer, first portable, multi-service test solution supporting rates from 10M to 100G

1Gross margin is a non-IFRS financial measure and represents sales less cost of sales, excluding depreciation and amortization. 2Adjusted EBITDA represents net earnings before interest, income taxes, depreciation of property, plant and equipment, amortization of intangible assets, restructuring charges, stock-based compensation costs and foreign exchange gain.


Strong Value Proposition 5 Good Reasons to Invest in EXFO

1. Excellent track record of sales growth Sales CAGR of 20% in last 10 years

2. Well-positioned for key growth drivers Bandwidth expansion and IP network convergence

3. Balancing sales growth and profitability Targeting adjusted EBITDA1 margin of 15% on revenue of $350 to $400 M

4. Solid balance sheet Cash position of $56.4 M and negligible debt ― as at February 28, 2013

5. Experienced and disciplined management team Deep knowledge of managing business in growth and downward markets

1Adjusted EBITDA represents net earnings before interest, income taxes, depreciation of property plant and equipment, amortization of intangible assets, stock-based compensation costs and foreign exchange gain or loss.

Marketing with Stifel Nicolaus, April 2013

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