EARNINGS CALL PRESENTATION Fiscal Year 2018 Q2 NYSE: ZAYO @ZayoGroup
Safe Harbor Information contained in this supplemental presentation that is not historical by nature constitutes “forward-looking statements” which can be identified by the use of forward-looking terminology such as “believes,” “expects,” “plans,” “intends,” “estimates,” “projects,” “could,” “may,” “will,” “should,” or “anticipates” or the negatives thereof, other variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that future results expressed or implied by the forward-looking statements will be achieved and actual results may differ materially from those contemplated by the forward-looking statements. Such statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, those relating to Zayo Group Holdings, Inc.’s (“the Company” or “ZGH”) financial and operating prospects, current economic trends, future opportunities, ability to retain existing customers and attract new ones, outlook of customers, and strength of competition and pricing. In addition, there is risk and uncertainty in the Company’s acquisition strategy including our ability to integrate acquired companies and assets. Specifically there is a risk associated with our recent acquisitions, and the benefits thereof, including financial and operating results and synergy benefits that may be realized from these acquisitions and the timeframe for realizing these benefits. Other factors and risks that may affect our business and future financial results are detailed in the “Risk Factors” section of our annual report on Form 10-K and most recent Form 10-Q filed with the Securities and Exchange Commission. We caution you not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after releasing this supplemental information or to reflect the occurrence of unanticipated events, except as required by law. In addition to this presentation and our filings with the SEC, the Company provides a glossary of terms used throughout and a supplemental earnings presentation, both of which are available under the investor section of the Company’s website at http://www.zayo.com/investors. The supplemental earnings presentation includes definitions and tables reconciling non-GAAP measures used in this presentation, including the quantitative reconciliation of Adjusted EBITDA to net income/(loss) and quantitative reconciliations of adjusted unlevered free cash flow and levered free cash flow, each to net cash provided by operating activities. 2
DAN CARUSO Chairman & Chief Executive Officer
EXCLUDES ALLSTREAM Dec17q Highlights Communications Infrastructure (CI): EBITDA margin of 57% , and aUFCF of 19% , driven by strong performance in Fiber Solutions and Colo record $7.9M net bookings and record $7.6M gross installs, showing progress toward >$8.5M goal churn remains elevated at $6.0M / 1.2% , expect to moderate throughout 2018 Net Installs at $1.6M imply a 4% growth rate, which remains below 6-8% target Dec17q aEBITDA in line with revised guidance from Sep17q earnings call several tuck-in acquisitions continue evaluation of potential REIT conversion; progressing Allstream separation 4
2017: good results despite challenging year weathered late 2016 industry pause rebuilt leadership team organized into 5 key business segments ramped Chief Revenue Officer organization, organized around 5 Vertical Clusters integrated ELI and Allstream acquired Spread Networks and 4 Colo facilities Continued to grow CI organically and generate equity IRR 5
EXCLUDES ALLSTREAM Vertical Sales Teams completed in January Global Vertical Clusters 1 sales executive has global responsibility Finance & for each Vertical Cluster Professional Carrier Services QBHC dedicated to each Vertical Cluster 48% 16% centralized strategic marketing has resources aligned to each Vertical Cluster Media, Content & Cloud, Software & Infrastructure Commerce 13% 13% Public, Health & Utilities 10% 1 Percentages correspond to ending MRR by vertical 6 6
Customer Strategy focused on 2,000 accounts TAP Ranking Target Account Program (“TAP”) used to categorize customers based on criticality to Zayo basis is forward-looking revenue opportunity ranking is highly correlated with existing revenue, though many low revenue accounts have high rankings 7 7
Customer Strategy 50% of existing revenue is TAP 100 TAP Ranking % of Monthly Recurring Revenue / Cumulative 8 8
Customer Strategy revenue per customer materially higher by TAP rank category Average Monthly Recurring Revenue per TAP Ranking Customer ($000s) 1 1 Only customers with revenue in current period included in average MRR per Customer 9 9
Customer Strategy Field Sales focused on TAP 2000; Inside on 2000+ TAP Ranking QBHC = 243 average 8 accounts per QBHC Field TAP 1 - 50 often will have more than one QBHC QBHC, and span U.S., Canada, and Europe resources Inside QBHC 10 10
Customer Strategy top 10 includes Webscale and Carriers TAP 1-10 1 TAP 11-25 2 Average MRR: $4,214 3 Average MRR: $756 3 MRR Range: $229 - $2,145 3 Customer Customer Webscale Global Carrier Global Carrier Global Carrier Webscale Cable Global Carrier Cable Global Carrier Global Carrier Webscale Content Webscale Global Carrier Global Carrier Content Global Carrier Cloud / Software Webscale Data Center Global Carrier Carrier Commerce Media, Content & Commerce Cloud / Software Public, Health & Utilities Cloud / Software Finance & Professional Services Cable Cloud, Software & Infrastructure 1 top 10 listed in random order 2 listed based on MRR run rate 3 Revenue in $000s 11 11
Customer Strategy 26-50 reveals importance of Finance and Media TAP 26-50 1 Average MRR: $504 2 MRR Range: $26 - $2,396 2 Customer Customer Regional Carrier Financial Regional Carrier Cloud / Software Regional Carrier Cloud / Software Regional Carrier (Europe) Regional Carrier (Europe) Financial Data Center Regional Carrier Financial Financial Content Financial Cable Financial Financial Carrier Cable Media Media, Content & Commerce Cable Media Public, Health & Utilities Financial Cloud / Software Finance & Professional Services Commerce Cloud, Software & Infrastructure 1 listed based on MRR run rate 2 Revenue in $000s 12 12
Customer Strategy TAP 101-200 TAP 51-100 101 - 200 customers have broad 51-100 has tech, datacenters, and foreign representation across all 5 mega-verticals carriers, emerging media/content Carrier Media, Content & Commerce Public, Health & Utilities Finance & Professional Services Cloud, Software & Infrastructure 13 13
ANDREW CROUCH President & Chief Operating Officer
EXCLUDES ALLSTREAM ~$3M of Net Installs required for 6-8% growth Net Installs Target requires >$8.5M Bookings 8% Growth = $3.4m which leads to >$8.5M of Gross Installs 6% Growth = $2.6m while churn at <$5.5M (1.1%) 15
EXCLUDES ALLSTREAM Ended 2017 with momentum Net New Sales (Bookings) Stratification 3rd consecutive quarter at record bookings level $8.5m $8.5M target is an 8% increase from $7.9M addressable market supports >>$8.5M 16 16
EXCLUDES ALLSTREAM Invested in QBHC & Sales Leadership QBHC 1 Chief Revenue Officer and Europe Sales SVP joined in late 2017 business development resources in Fiber and Colo gaining traction sales channel investments scaled to deliver >$8.5M bookings goal 1 " Jun16q to Dec16q Avg” as previously reported included Account Coverage; “Mar17q” as previously reported included Account Coverage and zColo & Fiber Solutions Business Development teams 17 17
EXCLUDES ALLSTREAM Bookings quality remains high Contract Value vs. CapEx on Bookings Payback total bookings contract value 2.6x the associated committed capex average payback of 15 months 18 18
EXCLUDES ALLSTREAM Gross Installs momentum as well Gross Installations Gross Installs continue steady growth $8.5m path pipeline & Bookings are sufficient to remain on upward trend attaining $8.5M threshold is a 12% increase from Dec17q $7.6M Gross Installs 19 19
EXCLUDES ALLSTREAM Churn remains elevated Churn 1,2 Churn remains elevated at 1.2% , anticipate gradual improvement in 2018 $5.5m 1 Previously reported churn for the Dec16q quarter excluded Zayo Canada 2 Mar17q includes only one month of ELI CI 20 20
EXCLUDES ALLSTREAM Net Installs remain below 6-8% target growth Net Installations 1 2 Net Installs were $1.6M -----------------------------------$3.4m required for 8% implied growth ramping Net Installs will result from bookings momentum and decline of -----------------------------------$2.6m required for 6% implied growth Churn 1 Net installs used for Mar17q calculation excludes ELI 2 Implied by the current quarter pace of net installs, calculated as Net Installs annualized ($1.55M*4 = $6.22M), divided by the beginning quarter run-rate $170.4M=4%) 21 21
Recommend
More recommend
