earnings call presentation€¦ · jun-14 sep-14dec-14 mar-15 jun-15 sep-15 dec-15 mar-16 1...

Earnings Call Presentation

Zayo Group Holdings, Inc.

Fiscal Year 2016 Q3NYSE: ZAYO@ZayoGroup

2

Safe HarborInformation 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 or Form 10-K filed with

the Securities and Exchange Commission (“SEC”) on September 18, 2015. 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 http://www.zayo.com/investors.

2

Dan Caruso Chairman & Chief Executive Officer

3

4

FY 3Q16 Highlights

closed Allstream acquisition – reported as Zayo Canada

financial and operating metrics primarily reference core Zayo

26th consecutive quarter of sequential revenue growth

6% pro forma recurring revenue growth; 8% constant currency (CC)

gross installs of $5.9M and net installs of $2.1M, driven by record low

churn of 1.0%

bookings of $7.0M

Zayo at a Glance

8,390,973 fiber miles

111,693 route miles

3,379 employees

207 QBHC

Customers *

6.7k customers

54% of rev from enterprise & content

46% carriers & wireless

Products*

38% Dark Fiber Solutions

45% Network Connectivity

16% Colo & Cloud Infrastructure

1% Other

International Network Unique Metro Fiber Datacenters

Leading Fiber &

Datacenter Consolidator

38 acquisitions to date

6 since Jan 2015

Growth

5

Ou

r assets

Wh

at

we d

oTra

ck

reco

rd

59 zColo datacenters

>620k billable sf

People

Financial1

$

1 Quarter ended Mar-16 annualized2 Every quarter since becoming a public filer inclusive of Zayo Group, LLC operating subsidiary3 Based on average closing price for month of Mar-16

23,418 buildings

146 avg metro fiber count

>$1.9B revenue

~$970M adjusted EBITDA

Value Creation

26 consecutive quarters of

sequential revenue growth2

$1.1B invested equity since

2007 inception

~$6B equity value3

>5x return

* Excludes Zayo Canada

FY2015 Q4 Earnings Presentation 61 Based on quarter ended Mar-16

1

Segments & ProductsSegment Strategic Product Group Revenue

Adjusted

EBITDA

EBITDA

Margin

Adjusted

UFCF

Adjusted

UFCF Margin

Dark Fiber $115.2 $83.5 $51.8

Mobile Infrastructure $29.1 $20.4 -$28.5

Segment Total $144.3 $103.9 72% $23.3 16%

Wavelengths $74.4 $35.1 $9.6

Ethernet $43.1 $23.8 $15.2

IP Services $33.1 $18.4 $11.5

Sonet $21.9 $11.9 $11.8

Segment Total $172.5 $89.2 52% $48.1 28%

Interconnect-Oriented Colo $50.8 $25.5 $9.0

Cloud Services $9.5 $4.7 $2.5

Segment Total $60.3 $30.2 50% $11.5 19%

Canada $96.1 $18.2 19% $7.7 8%

Professional Services $4.8 $1.3 26% $1.2 25%

Segments Total $100.9 $19.5 19% $8.9 9%

Total $478.0 $242.8 51% $91.8 19%

Dark

Fib

er

Solu

tions

Netw

ork

Connectivity

Colo

cation &

Clo

ud

Infr

astr

uctu

re

Canada a

nd

Oth

er

Segm

ents

7

Zayo Canada Update

7

published information on Zayo Canada reporting, trends and value creation

8

Major Network Expansions

8

provided disclosures on timing of capital spend and associated gross installs

9

($M)Revenue

Q3 Financial Highlights

($M)

Adjusted EBITDA

Associated with Other Revenue

Excluding Associated with Other Revenue

Adjusted EBITDA Margin

9

6% QoQ annualized pro forma recurring

revenue growth

8% in CC1

7% QoQ annualized pro forma recurring

adjusted EBITDA growth

$327 $365 $377

$14

$5 $5 $341 $370 $382

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16

Recurring Other

$189 $217 $222

$10

$2 $3 $199 $219 $225

58% 57% 59% 58% 58% 59% 59% 59%

$0

$50

$100

$150

$200

$250


1CC: constant currency

EXCLUDES ZAYO CANADA

10

($130)($172)

($174)

168 146192

$38

($26)$18

25% 1% -2% 11% 11% 10% -7% 5%

($250)

($150)

($50)

$50

$150

$250

$350


Purchases of PP&E Cash Flow From Operations LFCF1 Includes churn replacement capex plus 4.2% implied growth2 Quarter ended Sep-15 LFCF impacted by ~$8M non-cash charge offset in cash flow from financing activities3 Quarter ended Dec-15 includes $54M of semi-annual interest payments and $17M of deferred interest from Jun-15 quarter senior notes offerings

Q3 Financial Highlights Cont.Purchases of Property & Equipment($M)

Net AFFO(capturing churn replacement) % of Revenue

Levered FCF($M)

($M)

10

% of Revenue

2 3

net AFFO1 of $67M or 18% of revenue

implies 4% revenue growth

$18M of quarterly levered free cash flow

$120 $163 $166

$6

$6 $6

$4

$3 $1

$130

$172 $174

$0

$50

$100

$150

$200


Growth Maintenance Other

$108 $98

$67

24% 20% 26% 32% 32% 35% 27% 18%

$0

$50

$100

$150

$200



11

Q3 Operational Highlights

Net Installations

($M)

MR

R a

nd M

AR

MR

R a

nd M

AR

($2.8) ($3.1) ($2.6)

($1.3) ($1.0)

($1.1)

($4.2) ($4.2)($3.7)

-1.3% -1.3% -1.2% -1.3% -1.2% -1.1% -1.2% -1.0%($7.0)

($6.0)

($5.0)

($4.0)

($3.0)

($2.0)

($1.0)

$0.0


Hard Disconnects

Upgrades / Price Decrease / Replacement

Churn % = $4.6 $5.1 $4.6

$1.3

$1.3$1.2

$5.9$6.4

$5.9

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0


Upgrades / Price Increase / Replacement

Installations from New Services

Gross Installations Churn Processed($M)

$1.7$2.2 $2.1

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0


MR

R a

nd M

AR

($M)

111 Implied by the current quarter pace of Net Installs, calculated as Net Installs annualized ($2.139M * 4 = $8.556M), divided by the beginning of quarter run-rate $123.5M = 6.9%

record low 1.0% churn

net installs imply 7% annualized recurring

revenue growth rate1


12

Q3 Operational Highlights Cont.

$115.0$123.5

$125.8

$0

$50

$100

$150


($M)Last day of quarter run-rate

(MRR+MAR)

$6.3 $6.5 $6.9

$6.9 $7.9 $8.7

$13.2 $14.4

$15.6

91 93 90 95 96 100 98 109

$0

$5

$10

$15

$20


Delivery date after 6 months

Delivery date within the next 6 months

Implied Average Days to Install

Service Activation Pipeline

12

($M)

7% QoQ annualized revenue run-rate growth

10% in CC

service activation pipeline represents 12% of

revenue run-rate

46 months average remaining contract term


13

$5.1 $4.3 $4.9

$1.1

$1.6

$1.6

$0.8$0.9

$0.4

$7.0 $6.8 $7.0

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0


<12 Month Payback and Positive IRR >12 Month Payback and Positive IRR

Speculative Projects

Q3 Operational Highlights Cont.

$563 $474 $392

($322)($312)

($218)

16 35 15 38 33 12 42 31

($450)

($250)

($50)

$150

$350

$550

$750


Contract Value Capex & Upfront Expenditures Payback Months

Contract Value vs. Capex on Bookings

($M)

Net New Sales (Bookings) Stratification

MR

R a

nd M

AR

($M)

13

near-record bookings of $7.0M

~70% of bookings have <12 month payback

total bookings contract value >1.75x the

associated committed capex

average payback of 31 months


14

Zayo Canada – Financial Targetsadjusted EBITDA and UFCF are expected to grow during integration period

All US$ amounts based on 0.73 Canadian to US Dollar FX rate1 Dec-15 quarter results adjusted to exclude two non-recurring items totaling $3.0M of quarterly revenue and adjusted EBITDA 14

1 Changes represent net cost overruns/underruns and net additional revenue commitments associated with the initial anchor tenant contract2 Some projects may have been booked over multiple quarters 15

Major Network Expansionone new project committed in Mar-16: Austin / San Antonio FTT

strategic fiber projects totaling

~9,000 incremental route

miles

projects represent >30% of

capex in last 2 quarters…

but only 2% of Gross Installs

($M)

Geography SPG

Booking

Quarter2

Estimated

Capital

Expenditures

Net New 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 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

Changes1

$10 $0.0 $0

Total $813 $3.7 $128

Capital

Expenditures Gross Installs

Upfront

Received

Actual Through Mar-16 $175 $0.3 $39

Percentage of Committed 21% 7% 30%

16

Q3 Commercial Highlights

16

FTT market expansion in Austin / San Antonio and Clearview acquisition add

to Texas presence Dallas – Ft Worth

fiber network to increase

by ~3,000 route miles

adding >900 towers

~$265M of committed

capex

Austin

closed 4/1/16 for $19M

2 datacenter locations totaling 30kbillable square feet

Clearview Data Center Acquisition

12/31/15 acquisition for $17M

36k billable square feet

Stream Data Center Acquisition

San Antonio

17

Q3 Commercial Highlights Cont.

17

follow-on sales leverage organic expansions and acquired assets

FlexConnect Ethernet /

Internet Retail

FlexConnect enhances

disaster recovery strategy

10 locations with

dedicated 10G Layer 2

Ethernet

Dark Fiber /

Cloud Provider

Cross-border dark fiber

utilizes Allstream assets

100G wavelengths &

dark fiber

~$100K MRR&MAR

<12 month payback

Colo & IP /

Ad Tech

colo in Ashburn and Chicago

(former Latisys)

10G DIA including location on

west coast

~$180k MRR&MAR

>12 month payback

Note: Maps are shown for illustrative purposes

18

Q3 Commercial Highlights Cont.

18

follow-on sales leverage organic expansions and acquired assets

ELAN Network/

Global Asset Management Firm

100GB transatlantic Ethernet network

leverages legacy AboveNet and Geo

networks

8 locations – (offices data centers &

disaster recovery)

~$75K MRR & MAR

>12 month payback

Ultra-Low Latency Network/

Multinational Bank

40G+ private wavelengths network

connects trading locations & exchanges

leverages NYSE, NASDAQ and IBX routes

~$100K MRR & MAR

<12 month payback

Note: Maps are shown for illustrative purposes

Ken desGarennes Chief Financial Officer

19

FY2015 Q4 Earnings Presentation

($ in millions)

March 31, June 30, September 30, December 31, March 31,2015 2015 2015 2015 2016

Revenue

Zayo Dark Fiber Solutions 133.5 135.3 135.0 137.7 144.3

Zayo Network Connectivity 163.0 163.0 167.0 168.7 172.5

Zayo Colocation & Cloud Infrastructure 38.5 57.6 58.3 58.5 60.3

Other 5.7 6.0 6.5 4.7 4.8

Zayo Canada 0.0 0.0 0.0 0.0 96.1

Zayo Group Holdings Revenue $340.7 $361.9 $366.8 $369.6 $478.0

Annualized revenue growth 21% 25% 5% 3% 117%

Pro-forma annualized revenue growth1 6% 5% 5% 3% 2%

Operating income/(loss) 56.7 54.7 52.1 58.7 57.5

Net Earnings/(loss) (53.7) 5.1 (15.2) (10.8) (19.3)

EPS (basic and diluted) (0.22) 0.02 (0.06) (0.04) (0.08)

Adjusted EBITDA

Zayo Dark Fiber Solutions 92.6 96.8 96.6 99.1 103.9

Zayo Network Connectivity 85.7 85.0 88.7 89.9 89.2

Zayo Colocation & Cloud Infrastructure 19.5 27.8 28.4 29.0 30.2

Other 1.2 1.3 1.7 0.9 1.3

Zayo Canada 0.0 0.0 0.0 0.0 18.2

Zayo Group Holdings Adjusted EBITDA $199.0 $210.9 $215.4 $218.9 $242.8

Annualized Adjusted EBITDA growth 20% 24% 9% 7% 44%

Pro-forma annualized Adjusted EBITDA

growth1 10% 7% 9% 7% 13%

Adjusted EBITDA margin 58% 58% 59% 59% 51%

Three Months Ended

Q3 Financial Results

201 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 closed2 Mar-16 EPS is based on 243.3 million weighted average shares outstanding for the quarter; 242.2 million shares were outstanding on 3/31/2016

2


Equity

21

size authorized $500M

term6 months

(expires May 9, 2016)

shares

repurchased3.1M

associated

capital used$72M

incremental

public float

since IPO

PE &

executive

management

post-2009

investors &

executive

management

pre-2009

investors

Estimated Shareholder Base1 Share Repurchase Program

~50% public float today and continued reduction of early PE ownership

242M shares outstanding2

1 Based on December 13F filings and company estimates

2 Shares outstanding as of 5/02/2016

have not renewed repurchase authorization

float at

IPO


$326

$2,039

$350

$1,842

$1,430

$900

$0

$1,000

$2,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

as of March 31, 2016 pro forma for refinancing activity

Balance Sheet

6.375%6.000%10.125% L+290

ample liquidity including $442M of

revolver capacity

$1.1B of net operating loss carry

forwards

22

($M)

Interest Rate

Debt Schedule1

4.2x gross leverage

April refinancing extends term and

creates ~$6M annual interest savings

1 Principal value; excludes capital lease obligations

($ in millions) March 31, March 31,

2015 2016

Consolidated Balance Sheet Data

Cash and cash equivalents 274 215

Property and equipment, net 3,199 4,034

Total assets 5,992 6,833

Long-term debt and capital lease

obligations, including current portion3,699 4,096

Total Stockholders' equity 1,150 1,226


$24

$26 $14

$17 $20

$40.7 $42.9$33.5

($50)

($25)

$0

$25

$50

$75

$100

$125

$150


Pre-IPO Plan Post-IPO RSU Actual Dilution1

Stock-Based Comp

23

performance oriented stock-based compensation

post-IPO RSU plans based primarily

on measured equity IRR and share

price performance

pre-IPO plan non-dilutive to current

shares outstanding

($M)

Stock Based Compensation

2,228 157N/A N/A N/A N/A N/A

1 Dilution represents the actual dilution for shares vested and delivered during the quarter

Share Dilution (000s)

0.9% 0.1%N/A N/A N/A N/A N/ADilution %

309

0.1%

For detailed Supplemental Earnings Information presentation, please visit:

investors.zayo.com

Q&A

Segment-Level Results

26

$1,914 $1,907

$1,960 $1,816 $1,672

$1,914

$2,322

$1,666

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500


$97.5 $107.4 $109.0 $111.3 $113.4 $115.4 $117.4 $122.4

$0.4 $0.2 $0.3 $0.2 $0.3 $0.3 $0.3 $0.2

$11.6 $13.3 $13.4 $14.3 $14.9 $15.7 $16.6

$18.7

$5.0 $6.4 $7.0 $7.6 $6.7 $3.6 $3.5

$3.0

$114.4 $127.4 $129.7 $133.5 $135.3 $135.0

$137.7 $144.3

$0

$25

$50

$75

$100

$125

$150

$175

$200


MRR Usage MAR Other Revenue

millions

Revenue Stratification

$36 $134 $9 $157 $141 $10 $181 $114

$0

$25

$50

$75

$100

$125

$150

$175

$200


Estimated Capital and Upfront

Expenditures associated with Net

New Sales (Bookings) less Upfront

Chargesmillions

Zayo Dark Fiber Solutions revenue stratification & operational data

thousands

($725)($945) ($818) ($993)

($836) ($761) ($1,017) ($716)

-0.7% -0.8% -0.7% -0.8% -0.7% -0.6% -0.8% -0.5%($4,500)

($4,000)

($3,500)

($3,000)

($2,500)

($2,000)

($1,500)

($1,000)

($500)

$0


Churn ProcessedGross Installations

MR

R a

nd

MA

R

MR

R a

nd

MA

R

thousands

$1,189 $962

$1,141

$824 $837

$1,153 $1,305

$949

14% 10% 11% 8% 8% 11% 12% 8%

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500


Implied Recurring Revenue Growth1=

Net Installationsthousands

MR

R a

nd

MA

RChurn % =

$2,115 $1,956 $1,239 $2,272 $2,136 $1,668 $2,165 $1,733

$327 $531

$212

$546 $484

$330

$373

$423

$2,442 $2,488

$1,450

$2,818 $2,619

$1,998

$2,538

$2,155

$326M $439M $101M $429M $392M $256M $357M $245M

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500


Net Sales - MRR

Net Sales - MAR

Contract Value =

Net New Sales (Bookings)

thousands

MR

R a

nd

MA

R

26

Segment Information

1 Calculated as Net Installs annualized, divided by beginning quarter MRR+MAR run-rate

27

$50 $58 $70 $73 $79 $94 $109 $110

44% 46% 54% 55% 58% 69% 79% 76%

$0

$25

$50

$75

$100

$125


% of Revenue

millions

Purchases of Property and Equipment

$77 $85 $90 $93 $97 $97 $99 $104

68% 67% 69% 69% 72% 72% 72% 72%

$0

$25

$50

$75

$100

$125


% of Revenue

millions

Adjusted EBITDA

$4 $20 $35 $32 $56 $54 $76 $62

4% 16% 27% 24% 41% 40% 55% 43%

$0

$25

$50

$75

$100

$125


% of Revenue

millions

Net Capital1

$61 $52 $41 $46 $26 $26 $7 $23

54% 40% 31% 35% 19% 20% 5% 16%

$0

$25

$50

$75

$100

$125


% of Revenue

millionsAdj Unlevered Free Cash Flow3

$27 $27 $20 $20 $18 $3

($10) ($6)

24% 21% 15% 15% 13% 2% -7% -4%

($25)

$0

$25

$50

$75

$100


% of Revenue

millionsUnlevered Free Cash Flow2

1 Net Capital is equal to “Cash Outflows for Purchases of Property and Equipment” less “Additions to Deferred Revenue”2 Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Cash Outflows for Purchases of Property and Equipment”3 Adjusted Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Net Capital” less “Monthly Amortized Revenue”

27

Segment InformationZayo Dark Fiber Solutions cash flow stratification

28

$2,899 $2,942 $3,017 $2,988 $3,307 $3,381

$3,230 $3,318

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500


$146.1 $153.1 $154.0 $154.2 $156.3 $159.2 $161.6 $165.2

$1.4 $1.8 $2.4 $2.2 $1.9 $1.8 $2.5 $2.1

$2.9 $3.4 $3.4 $3.4 $3.5 $3.8 $3.9 $4.1

$3.3 $1.9 $1.9 $3.2 $1.4 $2.2 $0.7 $1.1

$153.8 $160.2 $161.7 $163.0 $163.0

$167.0 $168.7 $172.5

$0

$25

$50

$75

$100

$125

$150

$175

$200



millions


$2,968 $2,735 $3,017 $3,125 $3,148 $3,259 $2,800 $3,703

$162

$57

$177 $95 $107 $164

$147

$87

$3,130

$2,792

$3,194 $3,220 $3,255 $3,423

$2,947

$3,790 $150M $90M $106M $103M $100M $119M $86M $115M

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500


Net Sales - MRR

Net Sales - MAR

Contract Value =


thousands

MR

R a

nd

MA

R

thousands

($2,452)($2,458)($2,587)($2,595)

($2,263)($2,308)($2,435)

($2,502)

-1.6% -1.6% -1.6% -1.6% -1.4% -1.4% -1.5% -1.5%($4,500)

($4,000)

($3,500)

($3,000)

($2,500)

($2,000)

($1,500)

($1,000)

($500)

$0



MR

R a

nd

MA

R

MR

R a

nd

MA

R

thousands

$447 $484 $430 $393

$1,044 $1,073 $795 $816

4% 4% 3% 3% 8% 8% 6% 6%

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500



MR

R a

nd

MA

RChurn % =

$41 $32 $41 $35 $35 $40 $39 $46

$0

$25

$50

$75

$100

$125

$150

$175

$200





Chargesmillions

28

Segment InformationZayo Network Connectivity revenue stratification & operational data



29

$35 $46 $53 $47 $49 $47 $48 $44

23% 29% 32% 29% 30% 28% 29% 26%

$0

$25

$50

$75

$100

$125


% of Revenue

millions


$82 $83 $86 $86 $85 $89 $90 $89

53% 52% 53% 53% 52% 53% 53% 52%

$0

$25

$50

$75

$100

$125


% of Revenue

millions

Adjusted EBITDA

$32 $40 $47 $47 $48 $38 $45 $37

21% 25% 29% 29% 29% 22% 27% 21%

$0

$25

$50

$75

$100

$125


% of Revenue

millions

Net Capital1

$46 $40 $35 $35 $34 $47 $41 $48

30% 25% 22% 22% 21% 28% 24% 28%

$0

$25

$50

$75

$100

$125


% of Revenue


$47 $37 $33 $39 $36 $42 $42 $45

30% 23% 20% 24% 22% 25% 25% 26%

$0

$25

$50

$75

$100

$125


% of Revenue


1 Net Capital is equal to “Cash Outflows for Purchases of Property and Equipment” less “Additions to Deferred Revenue”2 Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Cash Outflows for Purchases of Property and Equipment”3 Adjusted Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Net Capital” less “Monthly Amortized Revenue” 29

Segment InformationZayo Network Connectivity cash flow stratification

30

$443 $517 $489

$1,069

$1,189

$680 $783

$842

$0

$250

$500

$750

$1,000

$1,250

$1,500


$20.3 $25.5 $25.8 $34.9 $54.5 $55.4 $55.2 $57.3

$0.4 $0.6 $0.8

$1.3

$2.2 $2.2 $2.3 $2.5

$0.3 $0.4 $0.4

$0.6

$0.8 $0.8 $0.9 $0.9

$0.5 $0.3 $0.0

$1.9

$0.1

($0.1)

$0.1

($0.4)

$21.5 $26.9 $27.0

$38.5

$57.6 $58.3 $58.5 $60.3

($20)

$0

$20

$40

$60

$80



millions


$7 $2 $18 $31 $13 $14 $23 $24

$0

$20

$40

$60

$80

$100





Chargesmillions

thousands

($237)($301) ($262)

($475)

($700)($613) ($629)

($442)

-1.2% -1.2% -1.0% -1.3% -1.3% -1.1% -1.1% -0.8%($1,500)

($1,250)

($1,000)

($750)

($500)

($250)

$0



MR

R a

nd

MA

R

MR

R a

nd

MA

R

thousands

$205 $216 $227

$594

$489

$67 $154

$399

12% 10% 10% 27% 11% 1% 3% 8%

$0

$250

$500

$750

$1,000

$1,250

$1,500



MR

R a

nd

MA

RChurn % =

$415 $452 $536 $852 $831 $847 $1,187 $901

$48 $37

$35

$80 $51 $72

$64

$68

$462 $489 $570

$932 $882 $918

$1,251

$970

$17M $15M $19M $31M $23M $30M $30M $31M

$0

$250

$500

$750

$1,000

$1,250

$1,500


Net Sales - MRR

Net Sales - MAR

Contract Value =


thousands

MR

R a

nd

MA

R

30

Segment InformationZayo Colo and Cloud Infrastructure revenue stratification & operational data



31

$10 $11 $7 $10 $27 $19 $15 $20

47% 40% 27% 26% 47% 33% 26% 32%

$0

$20

$40

$60

$80


% of Revenue

millions


$11 $13 $13 $20 $28 $28 $29 $30

50% 50% 50% 51% 48% 49% 50% 50%

$0

$20

$40

$60

$80


% of Revenue

millions

Adjusted EBITDA

$10 $12 $6 $12 $26 $18 $15 $18

44% 44% 24% 30% 46% 30% 25% 30%

$0

$20

$40

$60

$80


% of Revenue

millions

Net Capital1

$1 $1 $7 $7 $1 $10 $14 $12

4% 4% 24% 19% 1% 17% 23% 19%

$0

$20

$40

$60

$80


% of Revenue


$1 $2 $6 $9 $1 $9 $14 $11

3% 9% 23% 24% 1% 16% 24% 18%

$0

$20

$40

$60

$80


% of Revenue


1 Net Capital is equal to “Cash Outflows for Purchases of Property and Equipment” less “Additions to Deferred Revenue”2 Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Cash Outflows for Purchases of Property and Equipment”3 Adjusted Unlevered Free Cash Flow is equal to Adjusted EBITDA less “Net Capital” less “Monthly Amortized Revenue”

31

Segment InformationZayo Colo and Cloud Infrastructure cash flow stratification

Reconciliations

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 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 and liquidity, and we use levered free cash flow as a measure to evaluate cash

generated through normal operating activities. 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. In

addition to these measures, we use levered free cash flow as a measure to evaluate cash generated through normal operating activities. 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.

33


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.

34


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

http://www.zayo.com/investors.

35

3636

Consolidated Historical Reconciliations –

Without Zayo Canada

($ in millions)

Consolidated Zayo Canada

Consolidated

Excluding Zayo

Canada

Net (loss)/income ($19.3) ($5.6) ($13.7)

Earnings/(loss) from discontinued operations 0.0 0.0 0.0

Interest expense 57.7 0.1 57.6

Provision/(benefit) for income taxes 7.8 0.0 7.8

Depreciation and amortization 137.2 13.0 124.2

Transaction costs 14.2 10.6 3.6

Stock-based compensation 33.5 0.1 33.4

Loss on extinguishment of debt 0.0 0.0 0.0

Foreign currency loss/(gain) on intercompany loans 11.1 0.0 11.1

Non-cash loss on investments 0.6 0.0 0.6

Adjusted EBITDA, from continuing operations $242.8 $18.2 $224.6

Purchases of property and equipment 185.1 11.1 174.0

Unlevered Free Cash Flow $57.7 $7.1 $50.6

March 31,

2016


ReconciliationNet (Loss)/Income to Adjusted EBITDA

37

($ in millions)

September 30, December 31, March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31,

2013 2013 2014 2014 Total 2014 2014 2015 2015 Total 2015 2015 2016

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)

Earnings/(loss) from discontinued operations (1.7) (0.8) (1.1) 1.3 (2.3) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Interest expense 51.5 50.3 49.1 52.6 203.5 46.9 53.4 60.7 53.0 214.0 53.8 51.2 57.7

Provision/(benefit) for income taxes 9.3 8.4 9.5 10.1 37.3 9.4 (4.4) (18.4) 4.6 (8.8) 2.7 11.1 7.8

Depreciation and amortization 81.0 81.7 84.2 91.3 338.2 96.0 96.9 100.1 113.2 406.2 117.1 113.7 137.2

Transaction costs 0.6 0.2 0.0 4.5 5.3 3.4 1.3 1.5 0.0 6.2 0.0 3.3 14.2

Stock-based compensation 42.9 57.0 65.2 88.6 253.7 123.1 (6.0) 40.7 42.9 200.7 46.1 42.9 33.5

Loss on extinguishment of debt 0.0 0.0 0.0 0.0 1.9 0.0 30.9 54.9 8.5 94.3 0.0 0.0 0.0

Foreign currency loss/(gain) on intercompany loans (0.6) (0.2) (0.1) (3.8) (4.7) 14.7 13.3 13.2 (16.8) 24.4 10.7 7.1 11.1

Non-cash loss on investments 0.0 1.9 0.0 0.0 0.0 0.0 0.5 0.0 0.4 0.9 0.2 0.4 0.6

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

Purchases of property and equipment 86.7 88.3 90.9 94.9 360.8 115.3 129.5 130.1 155.5 530.4 159.2 172.4 185.1

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

Fiscal Year

2016

Fiscal Year

2014

Fiscal Year

2015


Reconciliation

38

Segment Net (Loss)/Earnings to Adjusted EBITDA

($ in millions)

Zayo Dark Fiber

Solutions

Zayo

Network

Connectivity

Zayo Cloud

and

Connectivity

Services Zayo Canada Zayo Other

Corporate /

Intercompany

Elimination

Zayo Group

Holdings

Net earnings/(loss) 2.1 20.0 (13.0) (5.6) 0.7 ($23.5) ($19.3)

Interest expense 25.2 17.1 11.0 0.1 0.0 4.3 57.7

Benefit for income taxes 0.0 0.0 0.0 0.0 0.0 7.8 7.8

Depreciation and amortization expense 61.5 35.6 26.6 13.0 0.5 0.0 137.2

Transaction costs 1.3 1.6 0.7 10.6 0.0 0.0 14.2

Stock-based compensation 13.1 15.2 5.0 0.1 0.1 0.0 33.5

Loss on extinguishment of debt 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Foreign currency gain on intercompany loans 0.0 (0.3) 0.0 0.0 0.0 11.4 11.1

Non-cash loss on investments 0.7 0.0 (0.1) 0.0 0.0 0.0 0.6

Adjusted EBITDA $103.9 $89.2 $30.2 $18.2 $1.3 $0.0 $242.8

Three Months Ended March 31, 2016


Cash from Operating Activities to UFCF, Adjusted UFCF & LFCF - without

Zayo Canada

39

Reconciliation

($ in millions)


Consolidated

Excluding Zayo

Canada

Net cash provided by continuing operating activities: $196.4 $4.1 $192.3

Cash paid for income taxes 4.7 0.0 4.7

Cash paid for interest, net of capitalized interest 32.5 0.0 32.5

Non-liquidating distribution to common unit holders 0.0 0.0 0.0

Excess tax benefit from stock-based compensation 0.0 0.0 0.0


Provision for bad debts (0.6) 0.1 (0.7)

Additions to deferred revenue (58.8) (1.5) (57.3)

Amortization of deferred revenue 24.7 0.9 23.8

Other changes in operating assets and liabilities 29.7 4.0 25.7

Adjusted EBITDA 242.8 18.2 224.6

Purchases of property and equipment (185.1) (11.1) (174.0)

Unlevered Free Cash Flow 57.7 7.1 50.6

Additions to deferred revenue 58.8 1.5 57.3

Amortization of deferred revenue (24.7) (0.9) (23.8)

Adjusted Unlevered Free Cash Flow $91.8 $7.7 $84.1

Reconciliation of levered free cash flow:

Net cash provided by continuing operating activities: $196.4 $4.1 $192.3

Purchases of property and equipment ($185.1) ($11.1) ($174.0)

Levered free cash flow: $11.3 ($7.0) $18.3

March 31,

2016


AFFO & Net AFFO – without Zayo Canada

40

Reconciliation

($ in millions)


Consolidated

Excluding Zayo

Canada

March 31, March 31,

2016 2016 Total

Earnings/(loss) from continuing operations ($19.3) ($5.6) ($13.7)

Depreciation and Amortization Expense 137.2 13.0 $124.2

Foreign currency loss/(gain) on intercompany loans 11.1 0.0 $11.1

Stock-based compensation 33.5 0.1 $33.4

Transaction costs 14.2 10.6 $3.6

Loss on extinguishment of debt 0.0 0.0 $0.0

Non-cash loss on investments 0.6 0.0 $0.6

Amortization of deferred revenue (24.7) (0.9) ($23.8)

Maintenance capital expenditures (8.2) (1.9) (6.3)

AFFO 144.4 15.3 $129.1

Upfront customer payments on <12 mo payback of new sales 10.7 0.7 $10.0

Capital expenditures for <12 mo payback net new sales (46.4) (8.8) ($37.6)

Capital expenditures for network capacity (34.5) (0.4) ($34.1)

Net AFFO $74.2 $6.8 $67.4

March 31,

2016

4141

Zayo Allstream

Pro-forma

without

Allstream

Revenue 478.0$ 96.1$ 381.9$

Operating costs and expenses

Operating costs, excluding depreciation and amortization 170.8 46.5 124.3

Selling, general and administrative expenses 112.5 42.3 70.2


Operating income 57.5 (5.7) 63.2

Other income/(expense)

Interest expense (57.7) (0.1) (57.6)

Loss on extinguishment of debt - - -

Foreign currency loss on intercompany loans (11.1) - (11.1)

Other (expense)/income, net (0.2) 0.2 (0.4)

Total other expense, net (69.0) 0.1 (69.1)

Loss from continuing operations before provision for income

taxes (11.5) (5.6) (5.9)

Provisionfor income taxes 7.8 - 7.8

Net loss $ (19.3) $ (5.6) $ (13.7)

Add back non-EBITDA items included in net loss


Interest expense 57.7 0.1 57.6

Provision for income taxes 7.8 - 7.8

Unrealized loss/(gain) on intercompany loans 11.1 - 11.1


Stock-based compensation 33.5 0.1 33.4

Non-cash loss on investments 0.6 - 0.6

Adjusted EBITDA, from continuing operations $ 242.8 $ 18.2 $ 224.6

Historical

Three Months ended March 31, 2016

Pro Forma Growth Reconciliations – March 2016 (Supporting FY16Q3 Pro

Forma Growth excluding Zayo Canada)1,2

1 A reconciliation of previous quarter pro forma growth can be found in our historical earnings supplements found on our website at http://investors.zayo.com/earnings-releases2 Includes historical financial results and related adjustments for acquisitions completed prior to March 31, 2016

Reconciliation

($ in millions)

http://investors.zayo.com/earnings-releases

4242

Pro Forma Growth Reconciliations – March 2016 (Supporting FY16Q3 Pro

Forma Growth including Zayo Canada)1,2

Zayo AllstreamAllstream

adjustments

Pro-Forma

with

Allstream

(in millions)

Revenue 478.0$ 15.7$ (0.2)$ 493.5$


Operating costs, excluding depreciation and amortization 170.8 7.6 (0.1) 178.3

Selling, general and administrative expenses 112.5 6.9 - 119.4

Depreciation and amortization 137.2 2.1 0.1 139.4

Operating income 57.5 (0.9) (0.2) 56.4


Interest expense (57.7) - (3.8) (61.5)

Loss on extinguishment of debt - - - -

Foreign currency loss on intercompany loans (11.1) 0.1 -

Other (expense)/income, net (0.2) - - (0.2)

Total other expense, net (69.0) 0.1 (3.8) (72.7)

Loss from continuing operations before provision for

income taxes (11.5) (0.8) (4.0)(16.3)

Provision/(benefit) for income taxes 7.8 (0.1) (1.8) 5.9

Net Loss $ (19.3) $ (0.7) $ (2.2) (22.2)$

Add back non-EBITDA items included in net loss

Depreciation and amortization 137.2 2.1 0.1 139.4

Interest expense 57.7 - 3.8 61.5

Provision/(benefit) for income taxes 7.8 (0.1) (1.8) 5.9

Unrealized loss/(gain) on intercompany loans 11.1 (0.1) - 11.0

Transaction costs 14.2 1.7 - 15.9

Stock-based compensation 33.5 - - 33.5

Non-cash loss on investments 0.6 - - 0.6

Adjusted EBITDA, from continuing operations $ 242.8 $ 2.9 $ (0.1) $ 245.6

Three Months ended March 31, 2016

Historical


Reconciliation


4343

Pro Forma Growth Reconciliations – December 2015 (Supporting FY16Q3

Pro Forma Growth)1,2

Zayo Viatel AllstreamStream Data

Center

Adjustments

(excluding

Allstream)

Adjustments

(Allstream)

Pro-Forma

with

Allstream

Pro-Forma

without

Allstream

(in millions)

Revenue $ 369.6 $ 5.9 $ 115.5 $ 0.5 $ 1.4 $ (1.2) $ 491.7 $ 377.4


Operating costs 112.2 3.8 56.6 0.2 1.4 (0.80) 173.4 117.6

Selling, general and administrative expenses 85.0 0.8 40.2 0.1 - - 126.1 85.9

Depreciation and amortization 113.7 1.9 15.0 0.3 - $ 0.6 131.5 115.9

Operating income $ 58.7 $ (0.6) $ 3.7 $ (0.1) $ - $ (1.0) $ 60.7 $ 58.0


Interest expense (51.2) (0.7) - - (3.9) - (55.8) (55.8)

Loss on extinguishment of debt - - - - - - - -

Foreign currency loss on intercompany loans - - - - - - - -

Other expense, net (7.2) - - - - - (7.2) (7.2)

Total other expense, net $ (58.4) $ (0.7) $ - $ - $ (3.9) $ - $ (63.0) $ (63.0)

Earnings/(loss) from continuing operations before provision

for income taxes 0.3 (1.3) 3.7 (0.1) (3.9) (1.0) (2.3) (5.0)

Provision for income taxes 11.1 - - - - - 11.1 11.1

Net (loss)/income $ (10.8) $ (1.3) $ 3.7 $ (0.1) $ (3.9) $ (1.0) $ (13.4) $ (16.1)

Add back non-EBITDA items included in net (loss)/income

Depreciation and amortization 113.7 1.9 15.0 0.3 - - 130.9 115.9

Interest expense 51.2 0.7 - - 3.9 - 55.8 55.8

Provision for income taxes 11.1 - - - - - 11.1 11.1

Unrealized loss/(gain) on intercompany loans 7.1 - (0.5) - - - 6.6 7.1

Transaction costs 3.3 (0.3) - - - - 3.0 3.0

Stock-based compensation 42.9 - 0.6 - - - 43.5 42.9

Non-cash loss on investments 0.4 - - - - - 0.4 0.4

Adjusted EBITDA, from continuing operations $ 218.9 $ 1.0 $ 18.8 $ 0.2 $ - $ (1.0) $ 237.9 $ 220.1

Three Months ended December 31, 2015

Historical


Reconciliation


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