Investor presentation January 2019 Safe harbor statement This - - PowerPoint PPT Presentation

Investor presentation

January 2019

Safe harbor statement

This presentation includes forward-looking statements within the meaning of the federal securities laws. These statements relate to, among other things, our business strategy, goals and expectations concerning our market position, the growth of the markets in which we compete and the benefits that our customers will realize from our services. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which,

• r a combination of which, could materially affect our results of operations.

Actual results and trends in the future may differ materially from those suggested or implied by the forward- looking statements depending on a variety of factors including those that are described in greater detail under the heading “Risk Factors” in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. All future written and oral forward- looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these risk

• factors. We undertake no obligation to update any forward-looking statements that may be made to reflect events or

circumstances that occur, or that we become aware of, after the date of this presentation. This presentation contains certain non-GAAP financial measures which are reconciled to the most directly comparable information derived in accordance with GAAP. These reconciliations are presented in the Appendix at the end of this

• presentation. This information should not be considered a substitute for any measures derived in accordance with GAAP.

2

The single source for the cloud(SM)

3

Single S Source f for E Everything B Businesses N Need t to M Move t to t the C Cloud Aw Award-Winning S Suite o

• f C

Cloud-Ready S Software a and S Solutions Network A Advantage t to M Manage t the E End-to to-End C Customer E Experience Broad a and D Diversified N North A American Business C Customer B Base Experienced M Management T Team D Driving G Growth a and A Accretive M M&A

ü ü ü ü ü

$5 $574M 4M

Q3 2018 Annualized Revenue

>90% >90%

Recurring Revenue(2)

21 21.3%

Q3 2018 Adjusted EBITDA Margin

>150K >150K

Customers(1)

~1 ~1,100 00

Highly Skilled Professionals

Financial H Highlights (1

(1)

(1) As of September 30, 2018

Fusion p provides a a s single s source f for a advanced c cloud s services, w with a an i integrated platform f for c cloud c communications, c cloud c computing a and c connectivity

>$200 b billion a aggregate m market o

• pportunity a

as e enterprises a adopt m multiple c cloud services f for b business-critical c communications, c computing a and c connectivity

The cloud market opportunity

4

Cloud computing Cloud connectivity

§ Enterprise networking connectivity § Software-defined WAN (“SD-WAN”) § Traditional WAN, Internet and more

$1 $18B 8B

(3 (3)

SD-WAN Services

$29B $29B

(2 (2)

Private and Hybrid Cloud Computing Services

$2 $27B 7B

(1 (1)

Cloud Communication Services § Unified communications as a service § Contact center as a service § Cloud and hosted voice services

(1) IDC, May 2018. Represents worldwide revenue for (i) hosted/cloud voice and UC (which includes IP centrex, hosted voice and UCaaS) plus (ii) Contact Center as a Service (CCaaS). (2) Technavio, May 2018. Represents market size of global cloud infrastructure services from private cloud and hybrid cloud deployments. (3) Gartner “Forecast: Enterprise Networking Connectivity Growth Trends, Worldwide, 2017-2022,” September 20, 2018. The Gartner Report(s) described herein, (the "Gartner Report(s)") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Each Gartner Report speaks as of its original publication date (and not as of the date of this document) and the opinions expressed in the Gartner Report(s) are subject to change without notice.

§ Cloud infrastructure services § Private and hybrid cloud deployments

$1 $167B 67B

(3 (3)

Total Connectivity & Services By 2 2020 By 2 2020 By 2 2020

Cloud Communications

Fusion solves cloud complexity

5

Well p positioned a as t the s single s source f for e enterprises s seeking t to m move t to t the cloud f for c communications, c computing a and c connectivity

En Enterprise ise Re Requirements

Cl Cloud Services + Co Connectivity Mi Mission Critical Re Reliability and Se Security

Ben Benef efit its

Lower T Total C Cost of f Ow Ownership, Im Improve ved Q Quality o

• f

f Servi vice Lower C CapEx Re Requirements

Single S Source, , En End to to End M Managed C Cloud S Solution Fu Fully-In Integrated Solution D Del eliv iver ered ed Over A A S Single Pla latform

La Large and Complex Re Requirements

The m more s services a a b business r requires a and t the m more c complex i its n needs, , the g greater F Fusion’s ’s c competitive a advantage b becomes

§ Delivers end-to-end quality of service § Eliminates “finger pointing” among multiple providers when issues arise § Provides efficient installation and integration § Lowers total cost of ownership (vs. point solutions) § Simplifies management § Reliable, secure and high performance

Fl Flexibility and nd Sc Scalability Tr Trus usted Provider

Integrated suite of advanced cloud services

6

Cl Cloud Co Communications Cl Cloud Co Computing Cloud C Connectivity

Services § Unified Communications-as-a-Service § SIP Trunking § Enterprise-class cloud contact center § Mobility, collaboration, secure messaging Services § Private and hybrid cloud computing § Disaster recovery-as-a-service § Cloud storage § Cloud security § Dedicated Internet Access § MPLS § Unified Threat Management § Fusion SD-WAN § Automatic Failover § Private Networks Fu FusionWorks Mo MobileConnect ct FusionSIP IP Fusion Software and Other IP Services Co Conta tact3 t360 Single source, managed cloud solution § Seamless service management § Rapid onboarding and provisioning § Unified billing and dedicated support

Unified p portfolio o

• f s

services a and o

• wnership o
• f k

key s software I IP P de deliver si significant advantages f for c customers

Network M Map L Legend NNI Platform On-Network Fiber Ethernet Canada Network Location U.S. Network Location Data Center Data Center & Class 5 Switch Site Network Connection Seattle San Francisco Los Angeles San Diego Las Vegas Denver Colorado Springs Topeka Kansas City St. Louis Memphis Birmingham Chicago Detroit Minneapolis New Y York Boston Philadelphia Charlotte Greenville At Atlanta Macon Savannah Albany Tampa Sarasota

• Ft. Myers
• W. Palm Beach

Boca Raton

• Ft. Lauderdale

Miami El Paso Midland Da Dallas Waco Longview Austin Houston San Antonio Corpus Christi Winchester Pikeville Greensboro Knoxville Lo Louisville Chattanooga Nashville

• St. John

Halifax Québec City Montréal Ottawa Barrie Toronto Windsor Sudbury Thunder Bay Winnipeg Saskatoon Regina Sherwood Park Calgary Edmonton Kamloops Vancouver New Westminster Victoria San Jose Jacksonville Newark Little Ferry Columbus Cleveland Washington, DC

Fusion’s network advantage

7

Fusion i is a a s software a and s services p provider t that b believes o

• wnership o
• f t

the underlying s service d delivery t technology i is a a s significant c competitive a advantage

Software and services provisioned and delivered by Fusion’s own cloud Leading all-IP based North American network covers all major metro areas Asset-light and capex-light architecture based on network-to-network interfaces Redundancy, low latency, and high availability to control service quality and improve customer loyalty North American-based NOCs for live 24x7x365 monitoring and technical support

Case study: a prominent teaching hospital

8

Over $ $2 M Million i in C Contract V Value a and G Growing

Challenge 1 1: C : Cloud C Connectivity f for D Disaster R Recovery

• Customer n

need: disaster recovery for secondary data center more than 90 miles outside facility

• Fusion s

solution: deliver secure, diverse connectivity to secure data center

Challenge 2 2: C : Cloud C Connectivity A Among L Locations

• Customer n

need: drive cost efficiencies; optimize network and meet expanding data requirements; reduce IT expenses

• Fusion s

solution: build robust, diverse cloud network to connect multiple sites; Fusion’s managed network services provide single point of contact for trouble resolution and expansion requirements

Challenge 3 3: C : Consolidate M Multiple P Phone S Systems

• Customer n

need: single communications platform; converge voice and data to improve efficiency and accommodate rapid expansion

• Fusion s

solution: Link over 60 offices through Cloud Voice connections: 4-digit dialing and UC features/functionality; centralized management and reporting for improved control

Challenge 4 4: S : Secure M Mobility S Solution f for H Healthcare

• Customer n

need: a compliant, secure messaging application for clinical providers to transport/receive mobile protected health information (PHI)

• Fusion s

solution ( (proposed a and u under P POC r review): secure, mobile clinical alert notification and task management solution, integrated with existing Fusion cloud voice platform linking physicians’ practices and other remote locations

Fusion’s advantage recognized

9

Legal, B Business and F Financial Ser Services es Te Technology, Tr Transportation and I Industrial Re Retail an and Co Consum sumer er Hea Healthcare

Competitive advantage

10

Fusion p provides a a h highly d differentiated v value p proposition a as s single s source f for c cloud solutions a and c connectivity

Why W We W Win Representative V Vendor L Landscape § Single source for cloud software and services § Award-winning suite of cloud- ready software and solutions § Robust, reliable and secure network and connectivity § Scalable and flexible cloud services platform § Trusted vendor with exceptional support § Point solutions = more complexity § Lack network for strong SLAs § Less emphasis on private clouds § Less flexible terms and support § Typically lead with connectivity § Fewer integrated applications § Siloed products and support § Regional vendors lack nationwide reach Co Connectivi vity-Fo Focused Ap Application-Fo Focused

La Large Pr Providers Cl Cloud Co Connecti tivity ty Re Regional Pr Providers Po Point So Solutions Unified C Cloud Co Communicati tions Cl Cloud Co Computi ting

Experienced leadership

11

Deep i industry r relationships, e exceptional o

• perational e

expertise a and p proven t track record o

• f d

driving g growth a and h highly a accretive M M&A

Prior E Experience

Mat Matthew w Ro Rosen

Chairman and Chief Executive Officer

20+ Years of Experience

Ke Keith So Soldan

Chief Financial Officer

20+ Years of Experience

Br Bria ian Ge George ge

Chief Technology Officer

15+ Years of Experience

Dan F Foster

Chief Revenue Officer

25+ Years of Experience

Kevin B Brand

SVP of Customer Experience

30+ Years of Experience

Ru Russell Mar Markman an

President and Chief Operating Officer

35+ Years of Experience

§ Deep technology industry experience and relationships § Early-stage growth company experience § Large company management experience § Distressed / turnaround business experience § Strong M&A and corporate development capabilities

Key A Attributes Senior M Management T Team

Joseph H Haines

SVP of Operations

30+ Years of Experience

Building the leading cloud services provider

12

• Proprietary U

UCaaS pl platform

• Expanded c

customer and g geographic r reach

• Cloud c

computing, s storage, a and security s services

• Intellectual p

property f for contact c center and s secure me messagin ing/colla llaboratio ion

• Meaningful c

customer, o

• perational, n

network and f financial s scale

• Strong, s

sustainable a and growing c cash f flows w with c capex- light m model

• Unmatched b

breadth o

• f i

integrated cloud s services

• Pr

Proprietary intellectual p property

• Highly d

differentiated sol solutions

• ns-
• r
• rient

nted sales s strategy

Successful M M&A s strategy to c create a an i industry leader w with s scale:

Rapid growth in operating scale

13 $573.7

Q3'18 $6.8 $30.4 $62.9 $66.2 $86.6 $117.4 2012 2013 2014 2015 2016 2017

Fusion C Connect R Revenue

Annualized Revenue ($ in millions)

Fusion C Cloud S Services R Revenue ( (Prior t to B Birch a and Meg MegaPath)(1

(1)

Annual Revenue ($ in millions)

Network and infrastructure Product and technology expertise Customer and partner relationships Skilled management and employees

(1) Represents reported revenue of the business services segment of Fusion

M& M&A-led G Growth H Has D Delivered K Key A Assets a and O Other B Benefits t to F Fusion

Fusion h has s successfully e executed o

• n i

its s strategy t to e expand t through s step-fun function M&A t transactions, c complemented b by m modest o

• rganic g

growth

Q3 2018 summary financial results

14

$ i in m millions e except p per-sh share

Q3 2 2018

Revenue $143.4 Gross profit 70.4 Gross margin 49.1% Selling, general and administrative expense 40.0 Acquisition-related non-cash expense 6.8 Depreciation and amortization 19.9 Foreign currency impact (0.2) Total operating expenses 66.5 Operating income 4.0 Interest expense (21.6) Loss on debt extinguishment and other (17.6) Income tax benefit (0.1) Net loss attributable to common stockholders $(18.1) Net loss per share (basic and diluted) $(0.23) Adjusted EBITDA $30.6 Adjusted EBITDA margin 21.3%

Adjusted EBITDA reconciliation

15

$ i in m millions

Q3 2 2018

Net loss from continuing operations $(17.6) Interest expense and other financing costs 21.6 Income tax 0.1 Depreciation and amortization 19.9 EBIT ITDA 24 24.1 Acquisition-related and restructuring expense 1.6 Nonrecurring and transition expense 5.1 Stock-based compensation expense 0.2 Foreign currency and other expense (0.5) GAAP adjustment to revenue 0.1 Adjusted E EBIT ITDA $30.6 .6 Adjusted EBITDA margin 21.3%

Capitalization

16

Capitalization a at S September 3 30, 2 2018 ($ i

in m millions)

Cash $15.4 Available and undrawn revolver (LIBOR + 500 bp) 20.5 Total liquidity $35.9 Senior secured credit facilities (wt. avg. LIBOR + 772 bp) $652.6 Subordinated note (LIBOR + 1050 bp) 10.0 Other notes payable 3.3 Total debt $665.8 Series D non-convertible redeemable preferred stock $15.0 Common s shares o

• utstanding a

at S September 3 30, 20 2018 78.4 .4 m million

Investment highlights

17

Experienced M Management T Team Deep industry expertise and proven history of delivering accretive M&A Massive M Market O Opportunity Enterprises embracing multiple cloud services for business critical communications, computing and connectivity Compelling F Financial P Profile Strong, sustainable and growing cash flows with capex-light model >150K C Customers Diversified North American customer base with blue chip enterprises in major market verticals Reliable, S , Secure a and H High P Performance N Network Fusion’s network delivers robust connections to the cloud from all major hubs in North America Single S Source f for t the C Cloud Broad suite of fully integrated software and services delivered by Fusion’s single cloud platform

NASDAQ: F FSNN

Fusion C Contact

Brian C Coyne

VP – Corporate Development & Investor Relations (212) 201-2404 bcoyne@fusionconnect.com

MZ G Group f for F Fusion

Chris T Tyson

Managing Director (949) 491-8235 FSNN@mzgroup.us