Investor Presentation

Transcription

1 Investor Presentation Zayo Group Holdings, Inc. Results through Fiscal Year 2016 Q4 NYSE:

2 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 to be filed with the Securities and Exchange Commission ( SEC ). 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, pricing supplement and a glossary of terms used throughout. All of which can be found under the investor section of the Company s website at 2 2

3 Track record What we do Our assets Zayo at a Glance International Network Unique Metro Fiber Datacenters People 8,778,822 fiber miles 112,660 route miles 24,282 buildings 152 avg metro fiber count 61 zcolo data centers >668k billable sf 3,224 employees 175 QBHC Products * 38% Dark Fiber Solutions 45% Network Connectivity 16% Colo & Cloud Infrastructure 1% Other Customers * 6.8k customers 54% of rev from enterprise & content 46% carriers & wireless Leading Fiber & Data Center Consolidator 38 acquisitions to date 6 since Jan 2015 * Excludes Zayo Canada Financial 1 $ ~$2.0B revenue ~$1.0B adjusted EBITDA Growth 27 consecutive quarters of sequential revenue growth 2 Value Creation $1.1B invested equity since 2007 inception >$6.7B equity value 3 >6x return 1 Quarter ended Jun-16 annualized 2 Every quarter since becoming a public filer inclusive of Zayo Group, LLC operating subsidiary 3 Based on average closing price for month of Jun-16 3

4 Zayo Vision & Mission Vision: Amass fiber, data center, and structure assets and unleash their value by providing exceptional communications infrastructure services Mission: Accelerate our customers capabilities to bring freedom and prosperity to the world by providing enormous high-quality bandwidth 4

5 Expansive US & Int l Fiber Footprint 5

6 with Dense Regional & Metro Networks Napa Sacramento Yonkers Columbia Baltimore Morristown Newark Leesburg Bloomfield Santa Cruz Fresno Silver Spring 6

7 across the U.S. Ft. Collins Lafayette Jasper Mount Prospect Evanston Boulder Cedartown Athens Rosemont Addison Georgetown Parker 7

8 also Europe & Canada United Kingdom - London France - Paris Canada - Toronto Notingham Birmingham Lowesoft Bristol Strasbourg Lyon London Buffalo Bordeaux Marseille 8

9 FY 4Q16 Highlights 1 material progress on Allstream integration - continue to report as Zayo Canada closed Clearview data center acquisition full quarter included here continued consecutive quarter revenue & aebitda growth 7% pro forma recurring revenue growth; 7% constant currency (CC) record net installs of $2.4M, driven by growing gross installs and consistent churn of 1.1% net bookings of $6.4M; below expectations improved pricing and extended term of debt 1 Financial and operating metrics exclude Zayo Canada 9

10 Segments & Products 1 Segment Strategic Product Group Revenue Adjusted EBITDA EBITDA Margin Adjusted UFCF Adjusted UFCF Margin Dark Fiber Solutions Network Connectivity Colocation & Cloud Infrastructure Canada and Other Segments Dark Fiber $117.9 $86.7 $40.6 Mobile Infrastructure $29.0 $20.2 -$29.4 Segment Total $146.9 $ % $11.2 8% Wavelengths $76.0 $37.2 $10.2 Ethernet $44.1 $24.1 $13.8 IP Services $34.4 $19.2 $9.8 Sonet $20.8 $11.0 $11.0 Segment Total $175.3 $ % $ % Interconnect-Oriented Colo $53.1 $27.4 $6.8 Cloud Services $10.5 $4.4 $1.6 Segment Total $63.6 $ % $8.4 13% Canada $117.2 $ % -$0.9-1% Professional Services $4.3 $0.6 15% $0.6 15% Segments Total $121.5 $ % -$0.3 0% Total $507.3 $ % $ % 1 Based on quarter ended Jun-16 FY2015 Q4 Earnings Presentation 10

11 Q4 Financial Highlights EXCLUDES ZAYO CANADA $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Revenue $362 $9 $382 $390 $5 $4 $353 $377 $386 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Recurring Other 12% QoQ annualized pro forma recurring adjusted EBITDA growth 7% QoQ annualized pro forma recurring revenue growth 7% in CC 1 $300 $250 $200 $150 $100 Adjusted EBITDA 57% 59% 58% 58% 59% 59% 59% 59% $211 $7 $225 $231 $3 $2 $50 $0 $204 $222 $229 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Associated with Other Revenue Excluding Associated with Other Revenue Adjusted EBITDA Margin 1 CC: constant currency 11

12 EXCLUDES ZAYO CANADA Q4 Financial Highlights Cont. $200 $150 $100 Purchases of Property & Equipment $156 $5 $8 $174 $177 $1 $6 $6 $5 net AFFO 1 of $112M or 29% of revenue approximately LFCF breakeven $50 $0 $143 $166 $167 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Growth Maintenance Other $200 $150 $100 $50 $0 Net AFFO (capturing churn replacement) % of Revenue 20% 26% 32% 32% 35% 27% 18% 29% Implied revenue growth: 0.3% 0.2% 3.9% 1.6% 2.3% $ % 4.2% $350 $250 $150 $50 ($50) ($150) ($250) % of Revenue 1 Includes churn replacement capex plus 0.2% implied growth 2 Quarter ended Sep-15 LFCF impacted by ~$8M non-cash charge offset in cash flow from financing activities 3 Quarter ended Dec-15 includes $54M of semi-annual interest payments and $17M of deferred interest from Jun-15 quarter senior notes offerings 4 Quarter ended Jun-16 LFCF includes $23.2M outflow related to debt refinancing activities. Excluding this impact, LFCF would be $5.2M $67 0.2% $112 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Levered FCF 1% -2% 11% 11% 10% -7% 5% -5% $195 $192 $159 $39 $18 ($18) ($156) ($174) ($177) 2 3 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Purchases of PP&E Cash Flow From Operations LFCF 4 12

13 MRR and MAR MRR and MAR MRR and MAR Q4 Operational Highlights EXCLUDES ZAYO CANADA $7.0 $6.0 $5.0 Gross Installations $6.3 $1.3 $5.9 $1.2 $6.5 $1.1 $0.0 ($1.0) ($2.0) Churn Processed ($2.9) ($2.6) ($3.3) $4.0 $3.0 $2.0 ($3.0) ($4.0) ($5.0) ($1.1) ($4.0) ($1.1) ($0.8) ($3.7) ($4.1) $1.0 $0.0 $5.0 $4.6 $5.4 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 ($6.0) ($7.0) Churn % = -1.3% -1.2% -1.3% -1.2% -1.1% -1.2% -1.0% -1.1% Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Upgrades / Price Increase / Replacement Installations from New Services Hard Disconnects Upgrades / Price Decrease / Replacement $7.0 Net Installations $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $2.2 $2.1 $2.4 churn stabilizing in 1.0% to 1.3% range net installs imply 8% annualized recurring revenue growth rate 1 $0.0 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 1 Implied by the current quarter pace of Net Installs, calculated as Net Installs annualized ($2.387M * 4 = $9.548M), divided by the beginning of quarter run-rate $125.8 = 7.6% 13

14 EXCLUDES ZAYO CANADA Q4 Operational Highlights Cont. $150 Last day of quarter run-rate (MRR+MAR) $117.4 $125.8 $127.8 $100 $50 5% QoQ PF annualized revenue run-rate growth 7% in CC $0 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 service activation pipeline represents 12% of revenue run-rate 48 months average remaining contract term $20 $15 $10 $5 Service Activation Pipeline $15.6 $15.5 $13.7 $7.4 $8.7 $8.2 $0 $6.3 $6.9 $7.2 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Delivery date after 6 months Delivery date within the next 6 months Implied Average Days to Install 14

15 MRR and MAR EXCLUDES ZAYO CANADA Q4 Operational Highlights Cont. $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 Net New Sales (Bookings) Stratification $6.8 $7.0 $6.4 $0.3 $0.4 $0.4 $1.6 $2.0 $1.9 strong bookings despite lack of large projects and unusual cancel ~64% of bookings have <12 month payback $1.0 $0.0 $4.5 $4.9 $4.1 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 <12 Month Payback and Positive IRR >12 Month Payback and Positive IRR Speculative Projects $750 Contract Value vs. Capex on Bookings total bookings contract value 2x the associated committed capex average payback of 16 months $550 $350 $150 ($50) ($250) ($450) $515 $392 $344 ($253) ($218) ($165) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Contract Value Capex & Upfront Expenditures Payback Months 15

16 Zayo Canada Financial Targets Jun-16 performance ahead of plan $150 $100 $50 $0 Allstream Revenue $113 $117 $40 $30 $27 $20 $18 $96 $10 $18 Dec-15 Mar-16 Jun-16 Sep-16 $ $0 Adjusted EBITDA 16% 19% 23% Dec-15 Mar-16 Jun-16 Sep-16 $50 Purchases of PP&E $50 Unlevered Free Cash Flow (UFCF) $40 $40 $30 $30 $20 $15 $20 $17 $10 $0 1 $11 $10 Dec-15 Mar-16 Jun-16 Sep-16 $10 $0 Adjusted EBITDA Margin $3 $7 1 Dec-15 Mar-16 Jun-16 Sep-16 Actual Jun-16 US$ amounts based on 0.78 US Dollar FX rate 1 Dec-15 quarter results adjusted to exclude two non-recurring items totaling $0.3M of quarterly revenue and adjusted EBITDA 16

17 Major Network Expansion one new >$20M project signed in Jun-16 quarter Geography SPG Booking Qtr 2 Estimated Capital Expenditures NetNew Sales (Bookings) MRR & MAR Upfront Charges West Mobile Infrastructure Mar-14 $58 $0.4 $38 Midwest Dark Fiber Sep-14 $75 $0.1 $0 Southwest Dark Fiber Sep-14 $22 $0.1 $0 West Mobile Infrastructure Mar-15 $39 $0.4 $32 South Mobile Infrastructure Mar-15 $189 $0.6 $25 SouthWest Dark Fiber Mar-15 $24 $0.2 $0 Midwest Mobile Infrastructure Jun-15 $88 $0.4 $21 Northwest Mobile Infrastructure Jun-15 $61 $0.6 $0 Southeast Mobile Infrastructure Dec-15 $98 $0.3 $6 Midwest 3 Mobile Infrastructure Dec-15 $38 $0.2 $3 South Mobile Infrastructure Dec-15 $36 $0.2 $3 South Mobile Infrastructure Mar-16 $75 $0.2 $2 South Dark Fiber Jun-16 $34 $0.3 $30 Cumulative Changes 1 $9 $0.0 $0 Total $808 $3.7 $156 includes one unusually large cancel order in Jun-16 quarter projects represent ~30% of capex in last 3 quarters but only 2-3% of Gross Installs Capital Expenditures Gross Installs Upfront Received Actual Through Jun-16 $215 $0.5 $47 Percentage of Committed 27% 13% 30% 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 The Midwest Mobile Infrastructure project was canceled in the June-16 quarter and will be removed from this list in future periods. This cancel resulted in a $38M reduction to estimated Capital Expenditures, a $3M decrease to expected Upfront Charges and a $0.2M decrease to Net New Sales (Bookings) in the June 16 quarter. 17

18 Commercial Highlights penetration of dark fiber continues to expand Denver Public Schools deal connects 153 sites, including 2 datacenters 618 mile solution includes: 562 miles existing and planned network 56 miles new construction additionally 1,178 mile Texas school district win leverages FTT build in Dallas 122 sites dark fiber provides schools with the bandwidth, security and control necessary to meet today s and plan for tomorrow s connectivity needs 18

19 Commercial Highlights Cont. follow-on sales leverage organic expansions and acquired assets Colo & IP / Managed Networks Operator Dark Fiber / National Carrier ELAN & DIA / Media global IP backbone connectivity + colo space Dallas 7 major markets connected ~$5k MRR&MAR <12 month payback long haul dark fiber follow on sale to recent network expansions >3,000 route miles ~$197k MRR&MAR >12 month payback nationwide solution leverages Zayo s leading network 34 sites connected ~$75k MRR&MAR <12 month payback Note: Maps are shown for illustrative purposes 19

20 Commercial Highlights Cont. follow-on sales leverage organic expansions and acquired assets ELAN / CDN Infrastructure Dark Fiber & Waves / Cloud Storage 100G Wavelengths / Global Carrier complex international ELAN solution leverages Viatel assets 5 international sites 3 year contract >12 month payback metro dark fiber ring + longhaul waves utilize recent network expansions 7 locations in major metros ~$120k MRR&MAR <12 month payback new 100G coherent solution built on acquired Viatel assets 4 locations 3 year contract >12 month payback Note: Maps are shown for illustrative purposes 20

21 Q4 Financial Results ($ in millions) Revenue Three Months Ended June 30, September 30, December 31, March 31, June 30, Zayo Dark Fiber Solutions Zayo Network Connectivity Zayo Colocation & Cloud Infrastructure Zayo Canada Other Zayo Group Holdings Revenue $361.9 $366.8 $369.6 $478.0 $507.3 Annualized revenue growth 25% 5% 3% 117% 25% Pro-forma annualized revenue growth 1 5% 5% 3% 2% 9% Operating income/(loss) Net Earnings/(loss) 5.1 (15.2) (10.8) (19.3) (30.9) EPS (basic and diluted) 0.02 (0.06) (0.04) (0.08) (0.13) Adjusted EBITDA Zayo Dark Fiber Solutions Zayo Network Connectivity Zayo Colocation & Cloud Infrastructure Zayo Canada Other Zayo Group Holdings Adjusted EBITDA $210.9 $215.4 $218.9 $242.8 $257.8 Annualized Adjusted EBITDA growth 24% 9% 7% 44% 25% Pro-forma annualized Adjusted EBITDA growth 1 7% 9% 7% 13% 18% Adjusted EBITDA margin 58% 59% 59% 51% 51% 2 1 Pro forma annualized growth for revenue and Adjusted EBITDA are calculated as if the acquisitions occurred on the first day of the quarter preceding the respective quarter in which the acquisitions closed 2 Jun-16 EPS is based on million weighted average shares outstanding for the quarter; million FY2015 shares Q4 Earnings were outstanding Presentation 6/30/

22 Equity significant progress to date in reducing "PE overhang" Estimated Shareholder Base 1 pre-2009 float at IPO private equity post-2009 investors incremental public float as of Zayo F3Q Call incremental public float since Zayo F3Q Call management 243M shares outstanding 2 1 Based on latest available 13F filings and company estimates 2 Shares outstanding as of 8/19/2016 FY2015 Q4 Earnings Presentation 22

23 Balance Sheet ($ in millions) June 30, June 30, Consolidated Balance Sheet Data Cash and cash equivalents Property and equipment, net 3,299 4,080 Total assets 6,095 6,728 Long-term debt and capital lease obligations, including current portion 3,701 4,136 ample liquidity including $442M of revolver capacity $1.2B of net operating loss carry forwards Total Stockholders' equity 1,211 1, x gross leverage 2 April refinancing extends term and creates ~$6M annual interest savings July term loan repricing creates~$3m annual interest savings $2,000 $1,000 $0 Debt Schedule 1 Interest Rate L % 6.375% $1,837 $1,430 $ Principal value; excludes capital lease obligations 2 As of June 30, 2016 and based on LQA EBITDA 3 Rate post July-16 repricing FY2015 Q4 Earnings Presentation pro forma for refinancing activity 23

24 Stock-Based Comp performance oriented stock-based compensation Stock Based Compensation Share Dilution (000s) N/A N/A N/A N/A 2, Dilution % $150 $125 $100 N/A N/A N/A N/A 0.9% 0.1% 0.1% 0.2% post-ipo RSU plans based primarily on measured equity IRR and share price performance $75 $50 $25 $0 $42.9 $23 $33.5 $33.4 $20 $20 $14 $14 pre-ipo plan non-dilutive to current shares outstanding ($25) ($50) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Pre-IPO Plan Post-IPO RSU Actual Dilution 1 1 Dilution represents the actual dilution for shares vested and delivered during the quarter FY2015 Q4 Earnings Presentation 24

25 Reconciliations

26 Presentation of Certain Consolidated Pro-forma Financial Data Acquisitions have been, and are expected to continue to be, a component of the Company s strategy. In this presentation, the Company sets forth its pro-forma annualized revenue growth rate and pro-forma annualized Adjusted EBITDA growth rates for the current fiscal quarter. The adjustments reflected in our pro-forma amounts have not been prepared with a view towards complying with Article 11 of Regulation S-X. These pro-forma measures are intended to provide additional information regarding such rates of growth on a more comparable basis than would be provided without such pro-forma adjustments. Non-GAAP Financial Measures The Company provides financial measures that are not defined under generally accepted accounting principles in the United States, or GAAP, including Adjusted EBITDA, Adjusted EBITDA Margin, unlevered free cash flow, adjusted unlevered free cash flow, levered free cash flow, adjusted funds from operations, and net adjusted funds from operations. Adjusted EBITDA, as defined below and in our Segment Reporting note to our consolidated financial statements and notes thereto, is the primary measure used by our Chief Operating decision maker to evaluate segment operating performance. Adjusted EBITDA is defined as earnings/(loss) from continuing operations before interest, income taxes, depreciation, and amortization ( EBITDA ) adjusted to exclude acquisition or disposal-related transaction costs, losses on extinguishment of debt, stock-based compensation, unrealized foreign currency gains/ (losses) on intercompany loans, and non-cash income/(loss) on equity and cost method investments. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. Unlevered free cash flow is defined as Adjusted EBITDA minus purchases of property and equipment, net of stimulus grants. Adjusted unlevered free cash flow is defined as Adjusted EBITDA minus purchases of property and equipment, net of stimulus grants, plus additions to deferred revenue, less non-cash monthly amortized revenue. Levered free cash flow is defined as operating cash flow minus purchases of property and equipment, net of stimulus grants. Adjusted funds from operations ( AFFO ) is defined as earnings/(loss) from continuing operations before depreciation and amortization, unrealized foreign currency gains/(losses) on intercompany loans, stock-based compensation, acquisition or disposal-related transaction costs, losses on extinguishment of debt, non-cash income/(loss) on equity and cost investments, non-cash monthly amortized revenue, less cash payments related to maintenance capital expenditures. Net AFFO is defined as AFFO plus upfront customer payments from less than twelve month payback on net new sales less cash payments related to capital expenditures for (i) less than twelve month payback on net new sales and (ii) network capacity. These measures are not measurements of our financial performance under GAAP and should not be considered in isolation or as alternatives to net income, net cash flows provided by operating activities, total net cash flows or any other performance measures derived in accordance with GAAP or as alternatives to net cash flows from operating activities or total net cash flows as measures of our liquidity. We use Adjusted EBITDA to evaluate our operating performance. In addition to Adjusted EBITDA, management uses unlevered free cash flow, which measures the ability of Adjusted EBITDA to cover capital expenditures. Adjusted EBITDA is a performance rather than cash flow measure. Correlating our capital expenditures to our Adjusted EBITDA does not imply that we will be able to fund such capital expenditures solely with cash from operations. These metrics are among the primary measures used by management for planning and forecasting future periods. We believe the presentation of Adjusted EBITDA is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by management and make it easier to compare our results with the results of other companies that have different financing and capital structures. We believe that the presentation of levered free cash flow is relevant and useful to investors because it provides a measure of cash available to pay the principal on our debt and pursue acquisitions of businesses or other strategic investments or uses of capital. We believe the presentation of AFFO and Net AFFO is useful to investors by providing measures presented by certain datacenter and cellular tower REITs (and some non-reits) with which we are sometimes compared. 26

27 We also monitor Adjusted EBITDA because our subsidiaries have debt covenants that restrict their borrowing capacity that are based on a leverage ratio, which utilizes a modified EBITDA, as defined in our credit agreement and the indentures governing our notes. The modified EBITDA is consistent with our definition of Adjusted EBITDA; however, it includes the pro forma Adjusted EBITDA of and expected cost synergies from the companies acquired by us during the quarter for which the debt compliance certification is due. Adjusted EBITDA results, along with the quantitative and qualitative information, are also utilized by management and our Compensation Committee, as an input for determining incentive payments to employees. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of our results of operations and operating cash flows as reported under GAAP. For example, Adjusted EBITDA: -does not reflect capital expenditures, or future requirements for capital and major maintenance expenditures or contractual commitments; - does not reflect changes in, or cash requirements for, our working capital needs; - does not reflect the interest expense, or the cash requirements necessary to service the interest payments, on our debt; and - does not reflect cash required to pay income taxes. Unlevered free cash flow and adjusted unlevered free cash flow have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. For example, unlevered free cash flow: - does not reflect changes in, or cash requirements for, our working capital needs; - does not reflect the interest expense, or the cash requirements necessary to service the interest payments, on our debt; and - does not reflect cash required to pay income taxes. Levered free cash flow, AFFO, and Net AFFO have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. For example, levered free cash flow, AFFO, and Net AFFO: - does not reflect principal payments on debt; - does not reflect principal payments on capital lease obligations; - does not reflect dividend payments, if any; and - does not reflect the cost of acquisitions. Our computation of Adjusted EBITDA, unlevered free cash flow, adjusted unlevered free cash flow, levered free cash flow, AFFO, and Net AFFO may not be comparable to other similarly titled measures computed by other companies because all companies do not calculate these measures in the same fashion. Because we have acquired numerous entities since our inception and incurred transaction costs in connection with each acquisition, borrowed money in order to finance our operations and acquisitions, and used capital and intangible assets in our business, and because the payment of income taxes is necessary if we generate taxable income after the utilization of our net operating loss carryforwards, any measure that excludes these items has material limitations. As a result of these limitations, these measures should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of our liquidity. See Reconciliation of Non-GAAP Financial Measures for a quantitative reconciliation of Adjusted EBITDA, AFFO, and Net AFFO to net income/(loss) and for a quantitative reconciliation of unlevered free cash flow, adjusted unlevered free cash flow and levered free cash flow to net cash flows provided by operating activities. Annualized revenue and annualized Adjusted EBITDA are derived by multiplying the total revenue and Adjusted EBITDA, respectively, for the most recent quarterly period by four. Our computations of annualized revenue and annualized Adjusted EBITDA may not be representative of our actual annual results. Measures referred to as being calculated on a constant currency basis are intended to present the relevant information assuming a constant exchange rate between the two periods being compared. Such metrics are calculated by applying the currency exchange rates used in the preparation of the prior period financial results to the subsequent period results. Tables reconciling such non-gaap measures are included in the Historical Financial Data & Reconciliations section of this presentation. A glossary of terms used throughout is available under the investor section of the Company s website at 27

28 Consolidated Historical Reconciliations Without Zayo Canada ($ in millions) Consolidated June 30, 2016 Zayo Canada Consolidated Excluding Zayo Canada Net (loss)/income ($30.9) $4.1 ($35.0) Interest expense Provision/(benefit) for income taxes (13.1) 0.0 (13.1) Depreciation and amortization Transaction costs Stock-based compensation Loss on extinguishment of debt Foreign currency loss/(gain) on intercompany loans Non-cash loss on investments Adjusted EBITDA $257.8 $27.0 $230.8 Purchases of property and equipment Unlevered Free Cash Flow $70.4 $17.0 $

29 Reconciliation Net (Loss)/Income to Adjusted EBITDA ($ in millions) Fiscal Year 2014 Fiscal Year 2015 Fiscal Year 2016 September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, Total Total Total Net (loss)/income ($27.4) ($36.8) ($41.6) ($73.5) ($179.3) ($110.5) $3.8 ($53.7) $5.1 ($155.3) ($15.2) ($10.8) ($19.3) ($30.9) ($76.2) Earnings/(loss) from discontinued operations (1.7) (0.8) (1.1) 1.3 (2.3) Interest expense Provision/(benefit) for income taxes (4.4) (18.4) 4.6 (8.8) (13.1) 8.5 Depreciation and amortization Transaction costs Stock-based compensation (6.0) Loss on extinguishment of debt Foreign currency loss/(gain) on intercompany loans (0.6) (0.2) (0.1) (3.8) (4.7) (16.8) Non-cash loss on investments Adjusted EBITDA, from continuing operations $155.6 $161.7 $165.2 $171.1 $653.6 $183.0 $189.7 $199.0 $210.9 $782.6 $215.4 $218.9 $242.8 $257.8 $934.9 Purchases of property and equipment Unlevered Free Cash Flow $68.9 $73.4 $74.3 $76.2 $292.8 $67.7 $60.2 $68.9 $55.4 $252.2 $56.2 $46.5 $57.7 $70.4 $230.8 FY2015 Q4 Earnings Presentation 29

30 Reconciliation Segment Net (Loss)/Earnings to Adjusted EBITDA ($ in millions) Zayo Dark Fiber Solutions Zayo Network Connectivity Three months ended June 30, 2016 Zayo Cloud and Connectivity Services Zayo Canada Zayo Other Corporate/Interco mpany Elimination Net (loss)/income $3.6 $21.1 ($11.7) $4.1 ($0.2) ($47.8) ($30.9) Interest expense $57.4 Provision/(benefit) for income taxes (13.1) ($13.1) Depreciation and amortization $148.3 Transaction costs $4.0 Stock-based compensation $33.4 Loss on extinguishment of debt $33.8 Foreign currency loss/(gain) on intercompany loans (0.2) (0.4) $24.9 Non-cash loss on investments (0.1) (0.1) ($0.0) Adjusted EBITDA $106.9 $91.5 $31.8 $27.0 $0.6 $0.0 $257.8 Zayo Group Holdings FY2015 Q4 Earnings Presentation 30

31 Reconciliation Cash from Operating Activities to UFCF, Adjusted UFCF & LFCF - without Zayo Canada ($ in millions) Consolidated June 30, 2016 Zayo Canada Consolidated Excluding Zayo Canada Net cash provided by continuing operating activities: $176.2 $16.8 $159.4 Cash paid for income taxes Cash paid for interest, net of capitalized interest Non-liquidating distribution to common unit holders Excess tax benefit from stock-based compensation Transaction costs Provision for bad debts (0.8) 0.1 (0.9) Additions to deferred revenue (38.6) (2.4) (36.2) Amortization of deferred revenue Other changes in operating assets and liabilities (14.0) (10.6) (3.4) Adjusted EBITDA Purchases of property and equipment (187.4) (10.0) (177.4) Unlevered Free Cash Flow Additions to deferred revenue Amortization of deferred revenue (44.9) (20.3) (24.6) Adjusted Unlevered Free Cash Flow $64.1 ($0.9) $65.0 Reconciliation of levered free cash flow: Net cash provided by continuing operating activities: $176.2 $16.8 $159.4 Purchases of property and equipment ($187.4) ($10.0) ($177.4) Levered free cash flow: ($11.2) $6.8 ($18.0) FY2015 Q4 Earnings Presentation 31

32 Reconciliation AFFO & Net AFFO without Zayo Canada ($ in millions) Consolidated June 30, 2016 Zayo Canada Consolidated Excluding Canada Earnings/(loss) from continuing operations ($30.9) $4.1 ($35.0) Depreciation and Amortization Expense Foreign currency loss/(gain) on intercompany loans Stock-based compensation Transaction costs Loss on extinguishment of debt Non-cash loss on investments Amortization of deferred revenue (44.9) (20.3) (24.6) Maintenance capital expenditures (5.6) (0.6) (5.0) AFFO Upfront customer payments on <12 mo payback of new sales Capital expenditures for <12 mo payback net new sales (38.8) (8.8) (30.0) Capital expenditures for network capacity (46.4) (0.7) (45.7) Net AFFO $108.4 ($3.9) $112.3 FY2015 Q4 Earnings Presentation 32

33 Reconciliation Pro Forma Growth Reconciliations June 2016 (Supporting FY16Q4 Pro Forma Growth excluding Zayo Canada) 1,2 Three Months ended June 30, 2016 Historical ($ in millions) Zayo Allstream Purchase accounting and other adjustments (in millions) Revenue $ $ (0.4) Pro-forma without Allstream $ $ Operating costs and expenses Operating costs, excluding depreciation and amortization Selling, general and administrative expenses Depreciation and amortization Operating income/(loss) (0.4) 65.6 Other income/(expense) Interest expense (57.4) (2.1) - (55.3) Loss on extinguishment of debt (33.8) - - (33.8) Foreign currency loss on intercompany loans (24.9) - - (24.9) Other (expense)/income, net (0.1) Total other expense, net (116.0) (1.9) - (114.1) (Loss)/income before provision for income taxes (44.0) 4.1 (0.4) (48.5) (Benefit)/provision for income taxes (13.1) (11.7) Net (loss)/income $ (30.9) $ 4.1 $ (1.8) $ (36.8) Add back non-ebitda items included in net (loss)/income Depreciation and amortization Interest expense Provision for income taxes (13.1) (11.7) Loss on extinguishment of debt Unrealized loss/(gain) on intercompany loans Transaction costs Stock-based compensation Non-cash loss on investments Adjusted EBITDA $ $ 27.0 $ (0.4) $ A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at 2 Includes the financial results of the acquired Allstream business during the three months ended June 30, 2016 and purchase accounting adjustments for acquisitions (excluding Allstream) 33

34 Reconciliation Pro Forma Growth Reconciliations March 2016 (Supporting FY16Q4 Pro Forma Growth excluding Zayo Canada) 1,2 Historical Three Months ended March 31, 2016 Zayo Clearview Allstream Purchase accounting and other adjustments Pro-forma without Allstream (in millions) Revenue $ $ 2.3 $ 96.1 $ (0.3) $ Operating costs and expenses Operating costs, excluding depreciation and amortization Selling, general and administrative expenses Depreciation and amortization Operating income/(loss) (5.7) (0.3) 63.6 Other income/(expense) Interest expense (57.7) - (0.1) - (57.6) Foreign currency loss on intercompany loans (11.1) (11.1) Other (expense)/income, net (0.2) (0.4) Total other expense, net (69.0) (69.1) (Loss)/income before provision for income taxes (11.5) 0.7 (5.6) (0.3) (5.5) Provision for income taxes (0.1) 7.7 Net (loss)/income $ (19.3) $ 0.7 $ (5.6) $ (0.2) $ (13.2) Add back non-ebitda items included in net (loss)/income Depreciation and amortization Interest expense Provision for income taxes (0.1) 7.7 Unrealized loss on intercompany loans Transaction costs Stock-based compensation Non-cash loss on investments Adjusted EBITDA $ $ 0.7 $ 18.2 $ (0.3) $ A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at 2 Includes historical financial results and related adjustments for acquisitions completed prior to June 30,

35 Reconciliation Pro Forma Growth Reconciliations March 2016 (Supporting FY16Q4 Pro Forma Growth) 1,2 Three Months ended March 31, 2016 Historical Zayo Clearview Allstream Purchase accounting and other adjustments Pro-Forma with Allstream (in millions) Revenue $ $ 2.3 $ 15.7 $ (0.5) $ Operating costs and expenses Operating costs, excluding depreciation and amortization (0.1) Selling, general and administrative expenses Depreciation and amortization Operating income/(loss) (0.9) (0.5) 56.7 Other income/(expense) Interest expense (57.7) - - (3.8) (61.5) Loss on extinguishment of debt Foreign currency (loss)/gain on intercompany loans (11.1) (11.0) Other (expense)/income, net (0.2) (0.2) Total other expense, net (69.0) (3.8) (72.7) (Loss)/income before provision for income taxes (11.5) 0.7 (0.8) (4.3) (16.0) Provision/(benefit) for income taxes (0.1) (1.6) 6.1 Net (loss)/income $ (19.3) $ 0.7 $ (0.7) $ (2.7) $ (22.0) Add back non-ebitda items included in net (loss)/income Depreciation and amortization Interest expense Provision/(benefit) for income taxes (0.1) (1.6) 6.1 Foreign currency loss/(gain) on intercompany loans (0.1) Transaction costs Stock-based compensation Non-cash loss on investments Adjusted EBITDA $ $ 0.7 $ 2.9 $ (0.4) $ A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at 2 Includes historical financial results and related adjustments for acquisitions completed prior to June 30,

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