q3'16 investor-deck 20161111

1 | © 2016 IXIA AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.

WE MAKE APPLICATIONS STRONGER

Investor Presentation – Q3 2016


Certain statements made in this presentation may be deemed to be forward-looking statements, including, without limitation, statements

regarding the growth in cloud outsourcing, data usage, and the number of connected devices, customer base growth and diversification, the

company’s target model for the relative sizes of its customer market segments, growth drivers, and the company’s financial target model. In

some cases, such forward looking statements can be identified by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,”

“anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” and variations of these words and similar expressions. These statements

reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. These risks

and uncertainties, as well as other factors, may cause our future results, performance, or achievements to be materially different from those

expressed or implied by such forward-looking statements. Factors that could cause our actual results to differ materially from the results

predicted include, among others: the risk that cloud outsourcing, data usage, and the number of connected devices will not grow as

contemplated by the company and/or third parties; changes with respect to the sales momentum for our network visibility solutions; changes

in our business strategy and/or in our execution of or investment in such strategy; our success in developing, producing, and introducing

new products and in keeping pace with the rapid technological changes that characterize our market; our success in developing new sales

channels and customers; market acceptance of our products; competition; changes in the global economy and in market conditions;

consistency of orders from significant customers; our success in leveraging our intellectual property portfolio, expertise and market

opportunities; our expectations regarding the transition into Software Defined Networks (SDN) and Network Functions Virtualization (NFV);

a material weakness in our internal controls; and war, terrorism, political unrest, natural disasters, cybersecurity attacks, and other

circumstances that could, among other consequences, reduce the demand for our products, disrupt our supply chain, impact the delivery of

our products, and/or change our business strategy, market positioning, and business plans and focus and/or affect our ability to execute on

such strategy and plans. The factors that may cause future results to differ materially from our current expectations also include, without

limitation, the risks identified in our Annual Report on Form 10-K for the year ended December 31, 2015, and in our other filings with the

U.S. Securities and Exchange Commission. Many of these risks and uncertainties are outside of our control and are difficult for us to

forecast or mitigate. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future

events, or otherwise.

SAFE HARBOR STATEMENT


To supplement our consolidated financial results prepared in accordance with Generally Accepted Accounting

Principles ("GAAP"), we have included certain non-GAAP financial measures in this presentation. Specifically, we

have provided non-GAAP financial measures (e.g., non-GAAP operating income, non-GAAP operating expenses,

non-GAAP operating margin, and non-GAAP diluted earnings per share) that exclude certain non-cash and/or non-

recurring expense items such as expenses relating to internal investigations and any related remediation efforts, the

securities class action and shareholder derivative action that have recently been settled, as well as an ongoing SEC

investigation, the amortization of acquisition-related intangible assets, stock-based compensation expenses,

acquisition and other related costs, restructuring expenses, and the related income tax effects of these items, as well

as certain other non-cash income tax impacts such as changes in the valuation allowance recorded against certain

deferred tax assets. The aforementioned items represent expense items that may be difficult to estimate from period

to period and/or that we believe are not directly attributable to and/or reflective of the underlying performance of our

business operations. We believe that by excluding these items, our non-GAAP measures provide supplemental

information to both management and investors that is useful in assessing the operating performance of our core

business, identifying and assessing financial and business trends affecting our business that might otherwise be

obscured or distorted, and comparing our results of operations on a consistent basis from period to period by

eliminating certain items that may vary independent of business performance. These non-GAAP financial measures

are provided to enhance the user's overall understanding of our financial performance and to provide to our investors

greater transparency with respect to key metrics used by management to operate our business. These non-GAAP

financial measures are used by management, in conjunction with and in addition to our results prepared in

accordance with GAAP, to plan, budget, and forecast for future periods and in making operating and strategic

decisions. The company also uses these measures in evaluating the performance and making determinations

regarding executive compensation. The presentation of this additional information is not prepared in accordance with

GAAP. The information may not necessarily be comparable to that of other companies that may calculate their non-

GAAP financial measures differently and should be considered as a supplement to, and not a substitute for, or

superior to, the corresponding measures calculated in accordance with GAAP. A reconciliation of GAAP to non-GAAP

results is provided at the end of this investor presentation. Note that unless specifically noted otherwise, all numbers

in this presentation are on a non-GAAP basis.

NON-GAAP INFORMATION


COMPANY OVERVIEWBethany Mayer, President and CEO


IXIA HAS A STRONG HISTORY OF PERFORMANCE

0

100

200

300

400

500

600

2009 2010 2011 2012 2013 2014 2015

REVENUE

BUSINESS NOW RELATES TO SECURITY

TO MARKET WITH 10G, 40G, 100G, 400G,

25G, 50G

OF EMPLOYEES IN R&D

($MM)

U.S. AND FOREIGN PATENTS PENDING OR ISSUED

~45%

>400

1st

~35%

FOUNDED 1997

HEADQUARTERS CALABASAS, CA

EMPLOYEES ~1823

MARKET CAP* ~$1.0 BILLION

ENTERPRISE

VALUE*~$933 MILLION

*As of 11-3-16


WE ARE PROUD TO SERVE

ENTERPRISESERVICE PROVIDERSNEMs

77OF THE

FORTUNE 100

47OF THE

TOP 50 CARRIERS

15OF THE

TOP 15 NEMS


INTERNET OF THINGSCLOUD NETWORK SECURITY BIG DATA

MARKET DYNAMICS DRIVINGMore Data, More Complexity, More to Secure

MOBILE DATA TRAFFIC

MOVES TO CLOUD APPS

BY 2019

90%BILLION CONNECTED

THINGS REQUESTING

SUPPORT BY 2018

6GIGABYTES OF

NEW DATA PER

PERSON / DAY BY 2020

150GROWTH IN

GLOBAL SECURITY

INCIDENTS 2014 to 2015

38%


Jeep Hack

Forces 1.4M

Recalls; Drives

Congress

to Action

OPM Hack:

4 Million

Government

Workers Completely

Exposed

2.5 million people

have medical

device implants

with WiFi. Was

yours fully tested?

One out of three

Americans’

health records

were breached

CUSTOMER PAIN POINTSThe Cost of Inadequate Network Design, Monitoring and Security:


Network Design and Rollout

Financial Trading Exchange

• 10X DDoS response speed

• Prevented P1 service outage –

Priceless!

Payment Processing Company

• Ability to share security tools

freed $3M budget

• Delivered 10X ROI on cost of

Security Fabric

Network Operation

B I G D A T A C L O U D I o T

NetworkDesign

NetworkOperations

NetworkRollout

I X V I S I O NI X T E S T I X S E C U R E

WE MAKE APPLICATIONS STRONGERWe challenge the infrastructure, harden security and visualize the applications


CloudL

ens

MGR.

INTRODUCING CLOUDLENS

One solution for visibility across your physical network, data center

and cloud

Security

AdminApplication

Operations

Network

Operations

Forensics


END-TO-END APPLICATION STRENGTHENINGAcross the Infrastructure

Across ALL Platforms

Flex Taps, iBypass, Virtual Taps

802.11ac, MU-MIMO

PerfectStormBPS vEPCIxLoad/VE

IxNetwork/VEMultis SDN

ThreatARMOR,ATIP

Mobile Endpoint Network Data Center Cloud

Vision One, NTO, Hawkeye,

xStream40, Control Tower


Increased channel investment

Targeted markets and customers

~1000 partners worldwide and growing

CRN 5-Star Rating0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 2015 Target Model

CUSTOMER SEGMENTS*

NEM & Carrier Enterprise

CUSTOMER BASE CONTINUES

TO GROW AND DIVERSIFY

* Percentage based on estimated sales volume

CUSTOMER BASE EXPANSION


P O W E R F U L

G R O W T H

D R I V E R S

D E E P

A P P L I C AT I O N S

A N D

S E C U R I T Y I P

E X PA N D I N G

C U S TO M E R

B A S E

S T R O N G

F I N A N C I A L

M O D E L

WELL POSITIONED FOR GROWTH


FINANCIALSBrent Novak, CFO


THIRD QUARTER 2016 SUMMARY

Just above the guidance range

of $113M - $123M

Record revenue in our

Enterprise customer vertical

Deferred revenue up 10%

year-over-year

R E V E N U E : $ 1 2 3 . 9 M

Up from 16.5% in Q3’15

(YoY)

Solid gross margin of

78.2%, flat YoY

Continued focus on

financial discipline

N O N - G A A P O P E R AT I N G

M A R G I N : 1 7 . 4 %

Exceeded guidance

of $0.08 to $0.15

Up from $0.15 in Q3’15

(YoY)

Generated $22M in

cash flow from

operations

N O N - G A A P E P S : $ 0 . 1 8

Please refer to reconciliation of GAAP to Non-GAAP measures in Appendix and in the investor relations section of the company’s website.


TARGET MODEL

100%

76 – 78%

58 – 53%

18 – 25%

12 – 16%

2014 2015YTD

Q3’16

Revenue $464M $517M $357M

Gross Margin 76% 78% 79%

Operating

Expenses65% 60% 63%

Operating Margin 11% 18% 16%

Net Margin 6% 11% 11%

Please refer to reconciliation of GAAP to Non-GAAP measures in Appendix and in the investor relations section of the company’s website.

NON-GAAP FINANCIALS AND MODEL


IN MILLIONS DEC. 2014 DEC. 2015 SEPT. 2016

Cash, cash equivalents

and marketable securities$126 $67 $122

Total assets $869 $780 $770

Convertible debt $199 - -

Term loan - $38 $34

Shareholders’ equity * $481 $519 $537

Availability under Credit Facility - $75 $150

* On February 23, 2016, the company announced that its Board of Directors authorized a $25 million share repurchase program. As of September 30,

2016, the company has repurchased 707,332 shares under the share repurchase program for a total consideration of approximately $6.9 million.

BALANCE SHEET DETAILS


THANK YOU


RECONCILIATION OF GAAP TO NON-GAAP 1 OF 3

FY 2014 FY 2015 YTD Q3/16

Revenue 100% 100% 100%

GM %, GAAP 75.2% 78.0% 78.6%

Inventory adjustments (a) 0.3% 0.0% 0.0%

Stock-based compensation (b) 0.1% 0.1% 0.1%

GM %, non-GAAP 75.6% 78.1% 78.7%

Operating expense, GAAP 84.8% 73.5% 75.6%

Amortization of intangible assets (c) -10.1% -8.2% -8.3%

Acquisition and other related (d) -0.7% -0.1% 0.0%

Restructuring (e)-2.2% 0.1% 0.1%

Stock-based compensation (b) -3.5% -3.6% -3.7%

Legal, contract settlements, and other (f ) -3.3% -1.2% -0.5%

Operating expense, non-GAAP 65.0% 60.5% 63.2%

Operating Margin (loss), GAAP -9.6% 4.5% 3.0%

Effects of reconciling items (g) 20.2% 13.1% 12.5%

Operating Margin (loss), non-GAAP 10.6% 17.6% 15.5%

Net income (loss), GAAP -9.0% 1.2% 1.0%

Effects of reconciling items (h) 15.1% 9.8% 9.5%

Net income, non-GAAP 6.1% 11.0% 10.5%

Diluted earnings / (loss) per share, GAAP ($0.54) $0.07 $0.04

Effects of reconciling items (i) (j) $0.90 $0.60 $0.41

Diluted earnings per share, non-GAAP $0.36 $0.67 $0.45



(a) These adjustments represent purchase price accounting adjustments related to the fair value of inventory as a result of our acquisitions.

(b) These adjustments represent non-cash stock-based compensation expenses.

(c) This adjustment represents the amortization of intangible assets related to the acquisitions of various businesses and technologies.

(d) This adjustment represents costs associated with acquisition-related activities. Acquisition and other related costs consist primarily of transaction and

integration related costs such as success-based banking fees, professional fees for legal, accounting, tax, due diligence, valuation and other related services,

change in control payments, consulting fees, required regulatory costs, certain employee, facility and infrastructure costs, and other related expenses.

(e) This adjustment represents costs associated with our restructuring plans/reorganization plans. These costs primarily relate to one-time employee termination

benefits consisting of severance, facility-related costs, and other costs.

(f) This reconciling item represents costs incurred related to (i) internal investigations and any related remediation efforts, (ii) the restatement of our financial

statements for the first quarter of 2013 and for the three and six months ended June 30, 2013, (iii) the securities class action and shareholder derivative

action that have been settled recently, and (iv) the ongoing SEC investigation. These costs consisted primarily of legal and accounting fees, recruiting and

consulting expenses, severance and retention costs, and other related expenses. The fourth quarter of 2014 also includes $1.0 million write-off for a one-time

item related to a certain contractual matter.

(g) These adjustments represent the effects of the adjustments noted in footnotes (a), (b), (c), (d), (e) and (f).

(h) These adjustments represent the income tax effects of the adjustments noted in footnotes (a), (b), (c), (d), (e) and (f), as well as certain other non-cash

income tax impacts such as changes in the valuation allowance relating to the company’s deferred tax assets.

(i) These adjustments represent the effects of the adjustments noted in footnotes (a), (b), (c), (d), (e), (f), and (h), on a per share basis.

(j) This adjustment, if applicable, includes the impact of the convertible senior notes if these were anti-dilutive for the equivalent GAAP earnings per share

calculations.



Target Model - Low Target Model - High

GAAP

Adjustments (1)

Non-

GAAP GAAP

Adjustments(1)

Non-

GAAP

Revenue 100% 0% 100% 100% 0% 100%

GM% 76% 0% 76% 78% 0% 78%

Operating expense 70% -12% 58% 66% -13% 53%

Operating income 6% 12% 18% 12% 13% 25%

Interest income and other, net 0% 0% 0% 0% 0% 0%

Interest expense -2% 0% -2% -1% -1% -2%

Income tax expense 1% 4% 5% 3% 4% 7%

Net income 3% 8% 12% 8% 8% 16%

q3'16 investor-deck 20161111

Investor Relations