EXFO Acquires NetHawk

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1 EXFO Acquires NetHawk A New Global Force in Wireless Testing and Service Assurance. Date: March 12, 2010

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 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. In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this presentation may contain non-gaap financial measures. A reconciliation of such measures to the most directly comparable GAAP measures is included in the Investors section of EXFO s website, under the heading EBITDA/GAAP Net Earnings Reconciliation EXFO Inc. All rights reserved. reserved.. 2

Table of Contents 5 Market Evolution 6 NetHawk Overview 10 Acquisition

Germain Lamonde, Founder, Chairman, President and CEO of EXFO Hannu Huttunen, NetHawk CEO The acquisition of NetHawk, provider of the most advanced 2G, 3G and 4G/LTE protocol test solutions, moves

4 Germain Lamonde, Founder, Chairman, President and CEO of EXFO Hannu Huttunen, NetHawk CEO The acquisition of NetHawk, provider of the most advanced 2G, 3G and 4G/LTE protocol test solutions, moves EXFO among the top five suppliers in telecom test and service assurance and transforms us into a global force in the wireless segment. Thanks to our synergistic bestin-class technologies and deep relationships, we are focused on assessing converged, fixed and mobile IP networks for NSPs and NEMs. I m honored to welcome the highly respected NetHawk team to the EXFO family. We re genuinely pleased to become a part of EXFO, a world-class organization that, like NetHawk, has a proven history of innovation and all-around execution. EXFO s global brand reputation and market presence, combined with our deep wireless knowledge and customer relationships, are sure to jointly carry us to new heights as the industry undergoes accelerated 3G deployment and LTE adoption to cope with explosive bandwidth demand largely created by smartphones. *Network service providers (NSPs) *Network equipment manufacturers (NEMs) 2010 EXFO Inc. All rights reserved. 4

Market Evolution to 4G/LTE A New Testing Paradigm Mobile data traffic 1 expected to increase 66X from 2008 to 2013 LTE is the natural evolution of GSM/EDGE and UMTS/HSPA networks, which account for

networks CAGR of LTE Test Equipment Market expected to be 56% between 2008 and 2013 2 Total wireless protocol analyzer and network monitoring market expected to increase from $595 million in 2008 to

5 Market Evolution to 4G/LTE A New Testing Paradigm Mobile data traffic 1 expected to increase 66X from 2008 to 2013 LTE is the natural evolution of GSM/EDGE and UMTS/HSPA networks, which account for 80% of mobile subscribers globally LTE networks: completely new test and service assurance tools required Explosive demand for bandwidth in mobile networks accelerates evolution towards 4G/LTE networks CAGR of LTE Test Equipment Market expected to be 56% between 2008 and Total wireless protocol analyzer and network monitoring market expected to increase from $595 million in 2008 to $814 million in Cisco, June Frost & Sullivan, July 2009 More than 74 mobile operators worldwide have committed to LTE trials or deployments with many more commitments expected to be announced over the coming year (GSMA, Feb. 2010) World s first commercial LTE network launched at end of 2009 by TeliaSonera in Sweden; NTT DoCoMo in Japan, China Telecom and Verizon Wireless expected to deploy LTE services by end of EXFO Inc. All rights reserved. reserved.. 5

6 NetHawk Corporate Highlights Founded in 1991 in Oulu, Finland Key products: wireless protocol analyzers, network simulators (No. 2 in market share in both cases) and monitoring solutions Revenue of 28.5 million and EBITDA of 4.2 million in 2009 Near 20-year relationships with leading wireless NEMs and operators 370 employees, mainly based in Finland, India and the United States 2010 EXFO Inc. All rights reserved. reserved.. 6

NetHawk Product Portfolio Comprehensive 2G, 3G, and 4G/LTE protocol testing coverage Wireless protocol analyzers Network simulators and load testers Network monitoring system

Fully automated test system Scalable and powerful Radio optimization measurements Multitechnology network monitoring Unique performance in mobile data testing Complete

from one to multi-user, and from functional to network system testing Complete technology support for 2G, 3G and 4G networks in a single platform Complements EXFO s IMS/load

7 NetHawk Product Portfolio Comprehensive 2G, 3G, and 4G/LTE protocol testing coverage Wireless protocol analyzers Network simulators and load testers Network monitoring system Scalable and powerful test, troubleshooting and optimization tools for NEM and NSP labs, as well as network deployment. Fully automated test system Scalable and powerful Radio optimization measurements Multitechnology network monitoring Unique performance in mobile data testing Complete technology support for 2G, 3G and 4G networks in a single platform Expands our reach within wireless protocol testing Used by NEM and NSP labs for load, regression and functional testing. Performance in subscriber simulation Time saving in testing Utilization of open technology Multitechnology support Unique performance in mobile data testing Scalable platform from one to multi-user, and from functional to network system testing Complete technology support for 2G, 3G and 4G networks in a single platform Complements EXFO s IMS/load testing offering Supports small core to large multitechnology systems covering the entire network. 24/7 multitechnology monitoring system for mobile networks Easy-to-find failed calls and bottlenecks True multitechnology in one platform NetHawk EYE Support Service for full system maintenance and care Strengthens EXFO s service assurance solutions portfolio 2010 EXFO Inc. All rights reserved. reserved.. 7

8 NetHawk Global Customer Base Customers include nearly all wireless NEMs and over 100 telecom operators The above-posted logos are registered or unregistered trademarks of their respective owners; no rights to such logos are claimed by EXFO EXFO Inc. All rights reserved. 8

Network Equipment Manufacturers A New Global Force in Wireless Testing and Service Assurance Wireless Operators #2 Worldwide in Load Testing and Simulators and Wireless Protocol Analyzers #2

9 Network Equipment Manufacturers A New Global Force in Wireless Testing and Service Assurance Wireless Operators #2 Worldwide in Load Testing and Simulators and Wireless Protocol Analyzers #2 Worldwide in Wireless Protocol Analyzers and Protocol Capturing Solutions NetHawk Wireless protocol analyzers (2G, 3G, 4G/LTE Networks) Network simulators and load testers Wireless protocol analyzers ipro fully scalable 2G, 3G, 4G/ LTE, radio access network (RAN) and IP service assurance #1 Worldwide in Optical Testing #1 Worldwide in Optical Testing EXFO VoIP and IMS testing SONET/SDH/OTN up to 40G Ethernet up to 100G Optical testing Automated mobile backhaul deployment solution Ethernet, SONET/SDH/OTN for access and core network Optical testing 2010 EXFO Inc. All rights reserved. 9

Acquisition Rationale Fit with EXFO s Long-Term Strategy Synergistically expanding reach in high-growth 3G and 4G/LTE wireless market is an excellent fit with our long-term strategy.

high-growth markets 4G/LTE is IP-based; adding NetHawk to EXFO s IP expertise strengthens our wireless backhaul and service assurance position EXFO: clear leader in fiber testing: #1 worldwide, with

10 Acquisition Rationale Fit with EXFO s Long-Term Strategy Synergistically expanding reach in high-growth 3G and 4G/LTE wireless market is an excellent fit with our long-term strategy. Focus on converged, IP fixed-mobile networks Expand share in portable Optical business Grow Protocol segment faster Leverage technologies across businesses Acquire complementary technologies in high-growth markets 4G/LTE is IP-based; adding NetHawk to EXFO s IP expertise strengthens our wireless backhaul and service assurance position EXFO: clear leader in fiber testing: #1 worldwide, with ~33% of portable market ; core part of wireless networks is fiber to the tower. Sales CAGR of 51.9% in last five years; expecting CAGR of wireless LTE segment to reach 56% over five years Strong synergies between NetHawk s wireless protocol analyzers and EXFO s existing offering Robust organic growth supported by strategic acquisitions; wireless 3G and 4G are key complementary high-growth markets 2010 EXFO Inc. All rights reserved. 10

11 Acquisition Rationale Why NetHawk? Enables EXFO to offer core-to-edge testing and service assurance of converged IP fixed and mobile networks Key Drivers Facts Strong Synergies 1 2 Adds strong 2G, 3G, 4G/LTE expertise Increases EXFO s penetration with NEMs NetHawk is a leader in 4G/LTE testing Key high-growth market for years to come; expected CAGR: 56% over 5 years (Frost & Sullivan, 2009) NetHawk has a large footprint with wireless network equipment manufacturers (> 70% of revenues) Strengthens EXFO s Brix Service Assurance solutions portfolio with 2G, 3G and 4G/LTE Complements EXFO s existing offering and deepens customer relationships with NEMs (IMS, OTN, 40G/100G optical, etc.) Broadens EXFO s offering to operators (optical, Ethernet, wireless backhaul, etc.) with portable 2G, 3G and 4G/LTE analyzers 3 Brings 20 years of wireless experience NetHawk offers in-depth knowledge of the wireless industry Team of 370 people Increases total addressable market by ~$610 million, or 37.9%, to $2.2 billion Transforms the new EXFO into a strategic supplier for wireless NEMs and NSPs 2010 EXFO Inc. All rights reserved. reserved.. 11

12 Transaction Highlights EXFO announces acquisition of NetHawk in an all-cash transaction estimated at 37.3 million for all outstanding shares on a fully diluted basis, or 27.6 million excluding NetHawk s net cash EXFO entered into a purchase agreement to acquire 91% of NetHawk s outstanding shares and will purchase remaining shares pursuant to a statutory procedure under Finnish Companies Act An additional earn-out, based on sales over the next three years, could raise the total value of the transaction by 8.7 million Acquisition expected to be neutral for remainder of FY 2010 and accretive in FY 2011, excluding after-tax amortization of intangible assets and stock-based compensation costs Cash transaction avoids dilution to shareholders and maximizes long-term value creation EXFO s cash position will be approximately US$35 million post-acquisition (excluding earn-out) Acquisition is about building strong synergies to accelerate growth, not about cost reduction 2010 EXFO Inc. All rights reserved. reserved.. 12

The world is going IP. Wireless is going LTE. EXFO can now provide end-to-end assessment of IP performance for both wireline and wireless networks.

13 The world is going IP. Wireless is going LTE. EXFO can now provide end-to-end assessment of IP performance for both wireline and wireless networks. This is a major milestone for us because it affirms EXFO as a world-leading test and service assurance solution provider. Germain Lamonde, Founder, Chairman, President and CEO of EXFO 2010 EXFO Inc. All rights reserved.. 13

Marketing with National Bank Financial

Marketing with National Bank Financial At EXFO, we make networks smarter Philippe Morin Chief Executive Officer November 1, 2017 Forwardlooking statements Certain statements in this presentation, or given