Earnings Call Presentation Zayo Group Holdings, Inc. Fiscal Year 2017 Q3 NYSE: ZAYO @ZayoGroup
Safe Harbor Information contained in this 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 filed with the Securities and Exchange Commission (“SEC”) and updates to risk factors as included in our Quarterly Report 10-Q filed with the SEC on February 9, 2017. 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 supplemental earnings presentation and a glossary of terms used throughout. All of which can be found under the investor section of the Company’s website at http://www.zayo.com/investors. 2
Dan Caruso Chairman & Chief Executive Officer
Zayo at a Glance International Network Unique Metro Fiber Datacenters People 10,057,299 fiber miles 29,402 buildings 44 zColo data centers 3,899 employees 121,923 route miles 150 avg metro fiber count >867k billable sf 227 QBHC 1 Products 1 Customers 1 Leading Fiber & 38% Fiber Solutions 7.5k customers Data Center Consolidator 11% Colocation 55% of rev from enterprise & content 40 acquisitions to date 23% Transport 45% of rev from carriers & wireless 8 since Jan 2015 26% Enterprise Networks Growth Value Creation Financial 2 $1.1B invested equity since ~$2.2B revenue 30 consecutive quarters of 2007 inception ~$1.1B adjusted EBITDA sequential revenue growth 3 $8.0B equity value 4 >7x return 1 excludes Allstream 2 Mar17q annualized 3 every quarter since becoming a public filer inclusive of Zayo Group, LLC operating subsidiary. Excludes Allstream 4 4 based on average closing price for month of Mar-17
Context Electric Lightwave (ELI) acquisition closed on March 1, 2017 aggressive integration of ELI; in parallel, Canada and Europe snapping into a unified global structure the transition to a post-IPO executive team is largely complete March investor call established targets for Dec17q; update provided in this deck as previously indicated, the ELI close and integration create a challenge to produce a detailed earnings supplement for Mar17q; nonetheless, most info is provided the headwinds associated with these transformations are expected to ease going forward 5
FY 3Q17 Highlights continued consecutive quarter revenue & aEBITDA growth 3% 1 pro forma annualized recurring revenue growth; 3% 1 constant currency (CC) net bookings of $6.9M 1 representing recovery from $5.2M Dec16q bookings the payback period of 18 1 months, contract value of $320M 1 , and net capital of $113M 1 associated with net bookings were strong relative to prior quarters gross installs of $7.1M 1 churn of 1.2% 1 , resulting in net installs of $1.5M 1 and implied organic growth rate of 4% 1 record Adj UFCF of $116M , representing 21% of revenue unlike Dec16q, Mar17q metrics include Communications Infrastructure portion of Canada and ELI (for month of March) 1 includes Electric Lightwave CI but excludes Allstream 6
Zayo Group Segments global Business Segment structure established in Mar17q Communications Infrastructure Shared Allstream Fiber Enterprise Sales & Colo Transport Solutions Networks Customer Voice & Service SMB Zayo Group is a holding company of multiple portfolio businesses, with a Communications Infrastructure theme majority of alignment into new Segments completed in Mar17q management’s focus is on sum-of-the-parts value creation orange means Segment 7
Executive Team transition to post IPO team is largely complete substantially more experience across Dan Caruso, Chairman & CEO multiple dimensions: Ken desGarennes Matt Steinfort global CFO Corporate Strategy, management of large organizations Development, & Administration product portfolio general management Andrew Crouch , President & COO Communications Infrastructure 1 Jack Waters TJ Karklins Max Clauson Mike Strople Ed Morche Sandi Mays Fiber Colo Transport Enterprise Sales CIO & Service Solutions & Networks CTO blue means new to Zayo 1 outside of Communications Infrastructure, Zayo also added Ray Lahoud to lead the Allstream segment 8
EXCLUDES ALLSTREAM Bookings bookings rebounded nicely from Dec16q quarter Net New Sales (Bookings) Stratification Mar17q includes Canadian CI business + 1 ELI month Fiber Solutions remains lower than earlier performance levels Colo on par with prior quarters combination of Enterprise Networks and Transport is higher than in past, due in part to inclusion of Canadian CI business Prior Segmentation New Segmentation 9 9 9
Major Network Expansion no new >$20M projects signed in Mar17q 47% of capital commitments spent through Mar17q… 33% of installs realized 1 changes represent net cost overruns/underruns associated with the initial anchor tenant contract 2 some projects may have been booked over multiple quarters 3 MRR+MAR per site varies due to factors such as distance between site and existing network 10
EXCLUDES ALLSTREAM Customer Size bookings diversified across a broader set of customers Net New Sales (Bookings) to Very Large Customers 1 Mar17q includes Canadian CI business + 1 ELI month Zayo has ~50 customers that are defined as Very Large Customers 1 that make up 46% of our recurring revenue, many of which are carriers bookings from Very Large Customers were stronger Net New Sales (Bookings) than Dec16q, but still lag historical performance to All Other Customers bookings from All Other Customers rebounded beyond historical performance, accounting for greater portion of total 1 Very Large Customers defined as >$300K Monthly Recurring Revenue 11
EXCLUDES ALLSTREAM Deal Size bookings improvement driven by smaller deals Net New Sales (Bookings) Large Deals >10k MRR Mar17q includes Canadian CI business + 1 ELI month bookings from large deals remain below the pre-Dec16q average Net New Sales (Bookings) bookings from smaller deals are above the Deals < 10k MRR pre-Dec16q average 12
EXCLUDES ALLSTREAM Bookings Profile high quality bookings Contract Value vs. Capex on Bookings 1 Capex & Upfront Expenditures are low relative to recent quarters total bookings contract value >2x the associated committed capex average payback of 18 months 1 Mar17q includes CI from Canada & 1 month of CI from ELI 13
EXCLUDES ALLSTREAM 2017 Sales Execution Plan establish sales and marketing as a core competency Bookings Target 1 Increase QBHC bolster leadership with strong sales 3 and marketing backgrounds 2 Andrew Crouch Ed Morche Assumes 1.1% Churn Intensify Vertical Coverage Leverage Tranzact 3.0 Webscale Wireless Cable TV PTTs Finance Healthcare Media, Gaming & Adtech Datacenters, Cloud & Software Manufacturing / Transportation Federal / Public Sector 1 includes ELI CI but excludes Allstream Segment 2 excludes Canada, ELI, and Business Development employees in Fiber Solutions and Colocation 14 3 includes Canada, ELI, and Business Development employees in Fiber Solutions and Colocation
6 Geographic Fiber Regions each run by a seasoned executive maximize value creation of local fiber assets end-to-end ownership of product, service and customer lifecycle Jack business development QBHC staffed in region Waters North America Western Europe Fiber Solutions East West Randy Dunbar Dan Stoll Central Randy Brogle Mountain Europe Kay Henze Annette Murphy South Brady Adams 15
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