Needham Growth Conference Jan 2017

January 12, 2017

Germain LamondeChairman, CEO and Founder

Needham Growth Conference

© 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

$232.6MAdj. 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.1in portable optical test

equipment market

>90of 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 opticalinvestmentcycle(underway)

1 Network virtualization(about to begin)2 5G and IoT

(upcoming)3

Unprecedented transformationsDawn 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

$26Min 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 netearnings

$3.3M+87.0%

AdjustedEBITDA*

$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.

Questions?

Needham Growth Conference Jan 2017

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