1
Safe Harbor Statement
This presentation contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by their use of terms and phrases such as “believe,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “could,” “potentially” or the negative of these terms or other similar expressions and include statements concerning future financial and operating performance. The outcome of the events described in these forward-looking
statements is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: the Company’s dependence on the success of
BroadWorks and on its service provider customers to sell services using its applications; claims that the Company infringes the intellectual property rights of others; the Company’s dependence in large part on service providers’ continued deployment of, and investment in, their IP-based networks; and the Company’s ability to expand its product offerings, as well as those factors contained in the “Risk Factors” section of the Company’s Form 10-K for the year ended December 31, 2011 filed with the SEC on February 29, 2012 and in the Company’s other filings with the SEC. All information in this presentation is as of June 7, 2012. Except as required by law, the Company undertakes no obligation to update publicly any forward-looking statement made herein to conform the statement to actual results or changes in the
BroadSoft, Inc.
BroadSoft ®, Inc. 2012 3
Service providers are transforming their business models through the delivery of IP-based applications
Providing innovative business and consumer
communications applications that enable
telecommunications service providers to monetize their
fixed and mobile broadband networks
Seasoned Team with Telecommunications
Expertise
David Bukovsky VP, Products Robert Weidenfeller VP, Operations Ken Rokoff VP, BroadCloud Leslie Ferry VP, Marketing Michael TesslerPresident and CEO
Scott Hoffpauir
Chief Technology Officer
James Tholen
Chief Financial Officer
Craig Decker
VP, Sales EMEA
Jonathan Reid
VP, Sales APAC
Mary Ellen Seravalli
VP, General Counsel
Greg Callanan
VP, Sales Americas VP, Cloud R&DGreg Pounds
Sam Hoffpauir
Market Trends Accelerating Opportunities
Growing awareness,
acceptance and
adoption of cloud-based
services by enterprises
BroadSoft ®, Inc. 2010. 5Evolution of
communications
networks to IP and
broadband rollout
Explosion of smart
communication
devices
Opportunity to Win the End-User
Exceed expectations by providing a seamless
user experience for all communication
Service Provider Challenges & Advantages
Challenges
Declining average revenue
per user
Growing mobile network
build out costs
Scale Advantages
Customer – low cost of sale
Support – efficient & cost
effective
Network – quality of service for
differentiated services
BroadSoft ®, Inc. 2012 7
High-demand consumer and
business services
Unique branding opportunities on
desktops, smartphones and
tablets
Cost-effective delivery model
BroadSoft Value Proposition
Drives higher average revenue per
user
Increases customer retention
Strong financial return, which can
be reinvested in the business
Service Provider Market Offers
The breadth of our communications
applications enable service
providers to design offers that meet
the needs of each target market
9 Large Ent 1000+ Mid-market 100-1000 seats Small Business <100 seats Micro Business <10 seats Consumers BroadSoft ®, Inc. 2012
BroadSoft Solution SIP Trunking and Hosted Unified Communications
Target Market Small, Medium & Large Enterprise
Customer Large North American Competitive Carrier
Service Status Deployed
Value to Service Provider
Opportunity to extend product portfolio Address a new market segment
Why we Won Trusted partner relationship thanks to longevity
Product breadth
Fixed/Mobile convergence capability
BroadSoft ®, Inc. 2012
11
Carrier Case Study #2
BroadSoft ®, Inc. 2012
BroadSoft Solution Hosted Unified Communications
Target Market Small & Medium Enterprise
Customer Multi-country European carrier with fixed & mobile assets
Service Status In development; Q4 12 market introduction
Value to Service Provider
Comprehensive Unified Communications services to meet the wide-range of enterprise user needs
Why we Won Comprehensive Unified Communications services
User-interface integration
Carrier Case Study #3
BroadSoft Solution Full Hosted Unified Communications, including Call Center
Target Market Small, Medium & Large Enterprise & Call Center Vertical
Customer Asia Pacific incumbent carrier
Service Status Deployed
Value to Service Provider
Target market expansion
Why we Won Network cost savings
Extensive call routing capabilities
BroadSoft ®, Inc. 2010. 13
Consumer Fixed VoLTE Consumer VoLTE Enterprise Hosted UC SIP Trunking
$10B + Total Addressable Market
(5 Year Cumulative Outlook)
$8B per year PBX business1 migrating to
hosted/cloud solutions
Over 600m PBX/key system
connected phones
Assume 25% penetration for hosted
voice
Believe majority of remaining PBX
trunks move to IP/SIP by 2016
600M LTE subscribers by 20162
LTE drives both consumer and
enterprise opportunity
1 Infonetics
2Strategy Analytics
Unified Communications Services 2014 Forecast
Reaches $8.6B
$0 $3,000 $6,000 $9,000 $12,000 2009 2010 2011 2012 2013 2014 Contact Center Mobility (FMC/mobile PBX)Enterprise Social Networking
Integrated/Team Collaboration Video Conferencing Web Conferencing Messaging (e-mail/IM/UM) IP Telephony Source: IDC
Large Opportunity for Further Customer Penetration
Remains
BroadSoft ®, Inc. 2010. 15 0 5 10 15 20 25 2005 2006 2007 2008 2009 2010 2011Customers in the Top 30
Significant Competitive Advantages
Alcatel
BroadSoft Lucent Ericsson NSN Huawei Metaswitch Genband Cisco Microsoft Carrier class scale/reliability
Full IMS Compliance
Interoperability across IMS cores
IMS/NGN seamlessness
PBX feature set
UC feature set
Interoperability/Openness
complementary client SW
Single platform for enterprise/consumer
Telecom regulatory compliance
BroadSoft Unique Advantages
Large addressable market in
early stage
Customers that have great
scale advantages
Outpacing competition
through product innovation
Our Technology
Our Vision
19
To provide innovative communications
applications that enable global
telecommunications service providers to offer
differentiated, competitive business and
consumer services
BroadSoft Core Communications Platform
Suite of complementary network software, cloud services &
user-experience applications
Focusing on the telecommunications service provider
market
Enabling innovative and incremental revenue-generating
communications services
BroadWorks is Central to the Breadth of our
Services
Carrier-grade infrastructure software hosted by the service
provider
Proven scalability
Five-nines reliability
Broadest feature set
Standards Compliant/Future Proof – seamless integration with
next-generation networks
IMS
VoLTE
SIP Connect
BroadWorks Solutions
Hosted PBX
PBX functionality delivered from within the carrier network
Includes features expected by businesses
– Calling, IVR, call centers, conferencing and unified messaging
Solutions range from small-to-medium business to enterprise apps
SIP Trunking
VoIP connection between a service provider and enterprise
Next-generation connectivity for IP PBXs using SIP-based call control
Extends cloud-based services to existing PBX customers; mobile extensions,
disaster recovery, bursting, etc.
Consumer
Mobile VoLTE
BroadCloud Simplifies Service Delivery
Complementary Unified Communications applications hosted by
BroadSoft
Services branded and taken to market by our service provider
customers
Extends benefit of cloud/SaaS to carriers, in addition to end-users
Rapid time-to-market
Lower initial and operating costs for carriers
BroadCloud Services
Instant Messaging and
Presence
Web collaboration
Video conferencing
Text messaging
PacketSmart Quality of
Service Monitoring
BroadTouch Focuses on the User Experience
User experience for BroadWorks & BroadCloud
services
Consistent interface across smartphones, tablets,
laptops and desktops
Empower users to communicate using preferred service
anywhere at anytime
White-label strategy enables carrier to brand the user
experience
BroadSoft ®, Inc. 2012 25
BroadTouch Applications
Standalone and integrated services
applications
Enables fixed/mobile convergence
Calling, collaboration and messaging
services seamlessly moved between
devices
–
Smartphone to PC to tablet
Enables business identity on a user’s
Product and Technology Direction
Innovate in new growth areas
IMS/VoLTE; IMS Express
Expand Unified Communication services
Leverage cloud delivery model benefits for new,
innovative services
Extend to include BroadWorks functionality
Deliver an intuitive, seamless user experience for
all services, across all communication devices
Delivery Platforms
End-Customer Carrier Network BroadSoft Cloud Web Collaboration IM & Presence Video Conferencing Texting Messaging Carrier-Branded BroadWorks R 18 BroadTouch ApplicationsExpansion of Cloud Services
29 29 Carrier Network End-Customer Carrier-Branded New Apps BroadSoft ®, Inc. 2012 Web Collaboration IM & Presence Video Conferencing Texting Messaging BroadSoft Cloud BroadWorks BroadWorks R 19, 20… BroadTouch ApplicationsKey Industry Trends
Availability of abundant broadband
Acceptance of cloud services
Explosion of smart devices
Seamless user experience across devices
Our Strategic Elements
31Xcelerate
Xtended
Devices
BroadSoft
Service Provider
BroadCloud
BroadWorks
BroadTouch
33
Financial Performance
Revenue ($mm)
Non-GAAP diluted EPS
$1.23 $1.22 -$1.321
$(0.43) $(0.18) $0.48
$133 -135
Non-GAAP diluted EPS $0.29 $0.18 $0.38 $0.17-$0.231 BroadSoft ®, Inc. 2012. $0.38 $0.29 1Guidance as of 5/7/2012 1 1 $30 $32 $36 $41 $38 $36-$38 Q1: 11 Q2: 11 Q3: 11 Q4: 11 Q1: 12 Q2: 12E $62 $69 $96 $138 $158-$162 2008 2009 2010 2011 2012E
2007 2011
Hosted UC SIP Trunking Consumer
24% 35% 31% 37% 0% 10% 20% 30% 40% 50% 60% 70% 80% 2007 2011 Tier 1 Tier 2/Cable
2011 Geography*
2011 Customer Diversity
BroadSoft Revenue/Billings Dynamics
Applications Mix*
** Hosted UC includes applications and other products
Customer Tiers* APAC 14% EMEA 24% Top 10 Customers 40% Other Customers 60% Americas 62%
* Based on Total Billings
Business Model Review
Primary Model: SW perpetual license fee + maintenance
BroadWorks traditional license model – majority of revs today
Per-seat perpetual license
ASPs vary greatly by end-market application
Success-based capital – can differ from traditional enterprise SW model
Most orders are shipped for revenue within the same quarter as
received
Maintenance & Services can fluctuate qtr-to-qtr from both revenue
recognition and professional services impacts
Small but growing SaaS component
Monthly recurring revenues
35
Common Investor Questions Following Q1
Does a decline in deferred revenue signal a lower quality
pipeline?
What are your expectations for deferred revenue going
forward?
What is your visibility today and how has it changed from
last year?
Why is Q2 opex going up and why is that not the correct
run-rate to use going forward?
Do you expect to see margin leverage in the near-term on a
y-y basis?
Vectors of Growth: 2011 View
BroadSoft ®, Inc. 2010. 37 SIP Trunking Hosted PBX Consumer Fixed-Line UC add-ons TimeVectors of Growth: 2012 and Beyond
BroadSoft ®, Inc. 2010. SIP Trunking Hosted PBX Consumer Fixed-Line UC add-ons BroadCloud PBX Mobility/VoLTE TimeBroadCloud PBX Drives Additional Customer
Delivery Option
BroadSoft ®, Inc. 2010. 39 Traditional SW Model Well understood implementation model Leverage own capital base at scale
High and leverage-able margin model
BroadCloud PBX Model
Limited capex investment Pay-as-you-grow
Faster go-to-market Option to transition to
traditional model at scale
Strong LT margins with limited initial margin impact
Increases speed of time-to-market
Expands universe of customers and projects Provides revenue balance to traditional
BroadWorks model
Preferred delivery model for new entrants
Carriers Choose:
OR
High margin SW license revs plus recurring maintenance
Embedded deeply into customer’s
backoffice BSS/OSS
Business Model Comparison:
Current Model vs Cloud Delivery
BroadSoft ®, Inc. 2010.
Current Model Cloud Delivery
Prototypical Mid-Size Carrier 3
Year Aggregate Revs $2.5m $3.0m+
Gross Margin Target 84-85% 70-80%
Long Term Profit Model
41
* 2011 excludes stock compensation of $7.2M and amortization expense of $1.3M. ** Q1:12 excludes stock compensation of $3.2M, amortization expense of $0.6M. Note: Figures may not sum due to rounding
BroadSoft ®, Inc. 2012. 2011 GAAP 2011 Q1:12 GAAP Q1:12 Long Term Non-GAAP* Non-GAAP** Model
Gross Margin 82% 84% 79% 81% 82 - 85%
Operating
Expenses 62% 57% 66% 59% ~54 - 55%
Operating
GAAP / Non-GAAP Reconciliation
March 31, 2011 June 30, 2011 September 30, 2011 December 31, 2011 March 31, 2012GAAP net income per diluted common share $ 0.13 $ 0.57 $ 0.26 $ 0.19 $ 0.06
Plus:
Adjustment for preferred stock conversion - - - - -Stock-based compensation expense 0.04 0.06 0.07 0.08 0.11 Amortization of acquired intangible assets 0.01 0.01 0.01 0.02 0.02 Non-cash interest expense on convertible notes - 0.01 0.04 0.05 0.05 Tax provision (benefit) related to valuation allowance
release/Non-cash tax provision 0.01 (0.36) - 0.04 0.05
Non-GAAP net income per diluted common share $ 0.19 $ 0.29 $ 0.38 $ 0.38 $ 0.29 For the three months ended
December 31, 2008 December 31, 2009 December 31, 2010 December 31, 2011
GAAP net (loss) income per diluted common share $ (1.81) $ (1.25) $ 0.32 $ 1.15
Plus:
Adjustment for preferred stock conversion 1.20 0.84 - -Stock-based compensation expense 0.16 0.19 0.12 0.26 Amortization of acquired intangible assets 0.02 0.04 0.04 0.05 Non-cash interest expense on convertible notes - - - 0.09 Tax provision (benefit) related to valuation allowance
release/Non-cash tax provision - - - (0.32)
Non-GAAP net (loss) income per diluted common share $ (0.43) $ (0.18) $ 0.48 $ 1.23 For the twelve months ended
NOTE: With respect to non-GAAP diluted EPS for the second quarter and full year 2012 appearing on slide 33, a reconciliation of estimated non-GAAP diluted EPS to GAAP diluted is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges that are excluded from these non-GAAP measures. In particular, the measures and effects of non-cash income taxes, which are extremely difficult to project as a result of our tax status in a number of foreign jurisdictions and stock-based compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially