1 Welcome to EarthLink Business November 29, 2011
Why EarthLink Business? 2 Vision Network Financial Stability Brand Recognition Flexibility New Revenue Opportunities
EarthLink Business is Born 3 Seven companies with matching core values and focus combine to be a market leader in nationwide IP Networking and Managed Services.
EarthLink Managed Services Acquisitions Expanding IT support capabilities on an extensive IP network 4 STS: Hosted VoIP platform Voice over IP services Small and mid-size business customers Logical Solutions: Virtual Computing Platform Enterprise class data center Web and application hosting On demand server virtualization Business Vitals: Managed IT Security Tier IV data center Security Operations Center IT security and Risk Management xdefenders: Managed IT and Cloud Security Security Operations Center
About EarthLink 5 Mission Statement Anytime, anywhere, EarthLink connects businesses to the power and possibilities of the cloud. We deliver a reliable and customized experience our customers trust. The Company Over 3,000 employees Over 1.6 million customer relationships Over $1.3 billion in annualized revenue
Nationwide Footprint 6
Fiber, Data Centers and Collocations 7 Extensive network with dense metro fiber, plus: Over 28,000 Miles of Total Fiber 90 Metro Fiber Markets in 25 States 500+ NNIs With Other Carriers Across the Country 5 Secure Data Centers on EarthLink MPLS Fiber network Access Agnostic Connectivity: T-1, DS3, DSL, Ethernet, Wireless Metro fiber route miles: 30,000 15,500 10,609 7,916 NA 7,500 9,000 NA Note: Fiber route miles include those in the U.S. only. Source: Company filings, websites and press releases
EarthLink Financial Strength Millions Revenue 400 $357 350 300 $243 250 8 200 150 $145 100 50 Millions 0 70 60 50 Q3 2010 Q1 2011 Q3 2011 Operating Cash Flow $60 $52 $48 40 30 20 10 0 Q3 2010 Q1 2011 Q3 2011 Revenue and Operating Cash Flow numbers as reported Operating Cash Flow is a non-gaap measure and is not determined in accordance with U.S. generally accepted accounting principles Operating Cash Flow defined as Adjusted EBITDA less CAPEX
Our Financial Position is a Differentiator 9 ~$1.3B+ of Revenue $300M+ of EBITDA $200M+ of Free Cash Flow
Strong and Well Recognized Brand Name 10 Recent brand name study of IT professionals shows EarthLink has the highest brand recognition amongst SMB focused communication providers AT&T 86% Verizon 76% Sprint 68% Qwest 57% EarthLink 43% Windstream 29% Level3 28% XO 24% PAETEC 23% twtelecom 22% Cbeyond 19% MegaPath 19% Source: 2010 B2B Telecommunications Study
Growing Market Opportunity 11 (Petabytes per month) 10,051 7,091 5,115 12,988 16,136 19,019 Revenue ($ Billions) 21.0 18.0 15.0 12.0 9.0 6.0 3.0 2009 2010 2011 2012 2013 2014 North American IP Traffic - MPLS/DIA/IP Hosted Voice VoIP (inc. SIP) Growth Industry Rates Growth 2010 -Rates 2014 2010-2014 Source: Cisco Visual Networking Index Forecast and Methodology 2009 2014, Gartner 2011, Wall Street research Converging Opportunities to Expand Share of Wallet Potential for EarthLink IT Budget Operating: 1.5% to 2.0% of company revenue Capital:.25% to.5% of company revenue Telecom Budget.10% to.20% of company revenue Source: Frost & Sullivan IT Spend Dwarfs Telecom Spend Sample $250M Company Budget Category Spend $ % of Revenue IT Budget $3.8M 1.5% IT Capital Budget $770k 0.31% Telecom Spend (Annual) $400k 0.16% Telecom Spend (Monthly) $34k Sources: D&B, Computer Economics, EarthLink internal analysis
Core Business Products 12 Portals / Tools Core Business Products Data Center & Virtual Services IT Support Services Value Added Services Hosted Voice Voice w/system Conferencing Video, Audio, Web Cloud Computing & Storage Services Data Center / Colo Services Applications Services Technical Care Services IT Governance Services Security Network Security CPE or Hosted Professional & Managed Security Services Core IP Services Local National Local Voice Lines Trunks Long Distance 1+ Toll Free Business Internet Integrated Voice/Internet MPLS
13 EarthLink Business Access Guide - Partners Presented by Mike Frane
EarthLink Business Network 14
Ubiquitous IP Coverage 15 IP Coverage by the Numbers 25,000 Total universe of End Offices in U.S. 23,362 End Offices where EarthLink has voice and/or data coverage (93%) 19,942 End Offices where EarthLink has access capabilities (80%) 13,051 End Offices with local voice coverage (52% 9,631 End Offices where EarthLink has local coverage and access (38%) 3,420 End Offices where EarthLink has local availability but no access BYOB (14%) MPLS & Internet Access 19,942 End Offices (80%) Voice Services with Access 9,631 End Offices (38%) IP SEC Coverage 25,000 (100%) Voice Services BYOB 3,420 End Offices (14%)
Performance 16 Wireless ADSL Cable T1 NxT1 DS3 Ethernet
ADSL 17 Product Family MPLS, Internet and Voice Customer Segment All Opportunities Broad metro availability Ability to provide CoS over ADSL Great option for low volume/remote locations High download speeds
Wireless Data 18 Product Family MPLS Customer Segment Large (20+ site) Opportunities Private Wireless Connections Strong nationwide coverage Truly diverse from the wireline network Great backup access Fast service delivery intervals
19 Resold ADSL Product Family MPLS (IPsec) and Internet Customer Segment Large (20+ site) Opportunities Increased service footprint Support for Canadian locations Resold Cable Product Family MPLS (IPsec) and Internet Customer Segment Large (20+ site) Opportunities Increases the service footprint High speeds available Good for fill-in where CoS and latency aren t an issue
IPsec 20 Product Family MPLS Customer Segment Large (20+ site) Opportunities Provides secure access over the Internet Used with resold services Can allow the customer to provide their own access (BYOA)
Layer 2 Low Cap Access Matrix 21 ADSL (SL) ADSL (NSL) Wireless Data Availability ~10,000 COs ~3,300 COs Nationwide Throughput Variable Variable Variable POTS Line Classes of Service (MPLS) Product Family REQUIRED Customer Provided N/A N/A 2 CoS if < 512k 2 CoS if < 512k N/A MPLS, Internet & Voice MPLS, Internet & Voice MPLS
Layer 3 Low Cap Access Matrix 22 Availability ADSL (SL) ADSL (NSL) Cable ~70 US COs ~95% of Canada ~0 US COs ~95% of Canada Regionally Canada Throughput Variable Variable Variable POTS Line REQUIRED Customer Provided Classes of Service N/A N/A N/A Product Family MPLS (IPsec) & Internet N/A MPLS (IPsec) & Internet N/A MPLS (IPsec) & Internet
T1/NxT1 23 Product Family MPLS, Internet and Voice Customer Segment All Opportunities Tried and true access technology Reliable business class service performance and SLAs Nearly universally available Competitive pricing on inter-regional networks and in major metro areas
DS3 24 Product Family MPLS, Internet and Voice Customer Segment All Opportunities High bandwidth Nearly ubiquitous coverage Ethernet Product Family MPLS, Internet and Voice Customer Segment All Opportunities High speeds available Cost effective bandwidth options
High Capacity Access Matrix 25 DS1 OC n Ethernet DS3 Availability 19,000+ COs Nationally Regionally Nationally Throughput Up to 12MB With bonding Up to OC 12 Up to 1GB Up to 45MB CoS 6 CoS 6 CoS 6 CoS 6 CoS Pricing Availability Standard ICB Standard (for NNI) ICB for Others ICB Product Family MPLS, Internet & Voice MPLS, Internet & Voice MPLS, Internet & Voice MPLS, Internet & Voice
What s Next? 26
Think of EarthLink Business when.. 27 Nationwide customers with multiple locations MPLS over ADSL with analog IP voice Ethernet with Hosted Voice or SIP Trunking Customers with back-up, disaster recovery/ supplemental network needs MPLS with class of service over ADSL MPLS Wireless Internet Service Access to a private cloud and all the applications that drive their bottom line! You are looking for ways to generate NEW revenue for your business Customer s looking for financially stable company with trusted brand recognition
How do we help you win? 28 Local channel manager support Sales SME Overlay Dedicated Sales Support Access to Executive Team Dedicated Sales Engineering Support Dedicated Account Management for your customers Commitment to Partner Channel
Partner Wins 29 Scott Equipment Solution: Multi-site MPLS Monthly Recurring Revenue: $42,000 Eye Care Centers of America Solution: MPLS and Cloud Solution Monthly Recurring Revenue: $105,000 Pet Food Express Solution: Multi-site MPLS Monthly Recurring Revenue: $17,000