London, UNITED KINGDOM – 3 August 2017 euNetworks is a European facilities based horizontally integrated bandwidth infrastructure provider that sells focus products to target customers. Our key drivers of bandwidth growth are data centre and cloud connectivity.
In the second quarter euNetworks continued its strong growth trajectory. Total revenue grew 5% from Q2 2016 reaching €33.8m, with recurring revenue from the focus products of Fibre, Wavelengths and Ethernet up 11% from Q2 2016, despite adverse currency impact. Adjusted EBITDA grew 17% from Q2 2016.
Capital investment in Q2 2017 was €16.9m, up 5% from Q2 2016. The majority of capital invested in the quarter was allocated to specific customer projects. We commenced a number of new investment initiatives to expand our addressable market, with these metro and long haul projects due to be available for service in Q3 and Q4 2017. We also completed some key investment projects:
euNetworks delivered solid sales performance in 1H 2017 and Q2 2017. The new network service capabilities along with the additional sales resource added in Q1 2017, offers further sales growth opportunity in 2H 2017. Following high service installations in Q1 2017, service installations increased 9% quarter on quarter and 7% from Q2 2016. Disconnections were higher in the quarter due to a known and long time planned move by a customer, transitioning services out of our Amsterdam data centre and into their own. Average churn was subsequently 1.4% in Q2 2017, higher than 1.1% in Q2 2016 and up from last quarter.
Normalised adjusted EBITDA was up 9% from Q2 2016 and up 7% from Q1 2017, reaching €12.1m. Normalised adjusted EBITDA in the quarter was €0.4m lower than adjusted EBITDA due to some debt recovery activity in the business.
“The performance of the business remained strong through Q2 2017, with the completion of important network development projects and solid growth in revenue and adjusted EBITDA,” said Brady Rafuse, Chief Executive Officer of euNetworks. “Our core business focus is on three products for our customers – Fibre, Wavelengths and Ethernet – and we combine these into bandwidth solutions to meet specific customer needs. These focus products account for a high proportion of our new sales each month and recurring revenue growth across these products was 11% from Q2 2016.”
“We continue to focus on making sure we have the leanest production system possible, driving for zero defects. That enables us to offer fast and flexible service delivery and provisioning, being agile for our customers. We’re delivering on-net services to our customers in less than 30 days, unless they prefer to have a longer set delivery date. We’re focused on consistently over-delivering for our customers as we strive to be the category owner for bandwidth infrastructure services in Western Europe.”
“Customers are looking for bandwidth providers who can offer high capacity routes, delivering them the resiliency that they need. This may require as many as 5 fully diverse routes between two points in order to achieve that,” said Rafuse. “The network development projects we have undertaken to date are delivering that level of diversity, right across our European footprint. euNetworks has demonstrated an ability to respond quickly and creatively, both commercially and technically, to meet customers’ needs. With additional network development projects underway for specific customers, that will continue in 2H 2017. We also have some opportunistic network developments where we have a high degree of confidence we will gain good return from the investment. We remain focused on our product set, maintaining our lean production system, developing our network in ways that create value for our business and our customers, and continuing to grow the business.”
|€m||Q1 2016||Q2 2016||Q3 2016||Q4 2016||Q1 2017||Q2 2017||12 mths – 30/6/2016||12 mths – 30/6/2017||%|
|Normalised Adjusted EBITDA||9.9||11.1||11.0||11.7||11.3||12.1||39.7||46.1||16.3|
|LQA Normalised Adjusted EBITDA exit||39.5||44.2||44.2||46.7||45.2||48.4||44.2||48.4||9.5|
|Proxy Cash flow||(1.7)||(5.6)||(1.1)||(5.9)||(3.5)||(4.4)||(11.2)||(14.9)||n/a|
euNetworks is a bandwidth infrastructure company, owning and operating 14 fibre based metropolitan networks connected with a high capacity intercity backbone covering 49 cities in 15 countries. The company leads the market in data centre connectivity, directly connecting over 360 today. euNetworks is also a leading cloud connectivity provider, directly connecting 14 cloud platforms with access to a further 7. The company offers a targeted portfolio of metropolitan and long haul services including Dark Fibre, Wavelengths, and Ethernet. Wholesale, finance, content, media, data centre and enterprise customers benefit from euNetworks’ unique inventory of fibre and duct based assets that are tailored to fulfil their high bandwidth needs.