euNetworks Reports First Quarter 2015 Results

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London, UNITED KINGDOM 26 May 2015 – euNetworks Group Limited, Europe’s provider of bandwidth infrastructure services, announced results for the three months ended 31 March 2015. Sales achieved were €789k in Q1 2015, up 7% from Q1 2014. While the value of services installed in the quarter fell, the units installed from Q1 2014 grew 28%. Disconnection management remained strong, with 44% of disconnections due to service replacements.  Average churn was 1%, improving from the average 2014 level of 1.1%. Solid sales performance and low disconnections delivered €209k in monthly incremental service revenue (MISR), up 35% from Q1 2014. This positions the company well for growth in recurring revenue in quarters to come.

(€k) Q1 2015 Q1 2014 % change Q4 2014 % change
New Sales 789 737 7 784 1
Installations 585 641 (9) 735 (20)
Monthly Incremental Service Revenue 209 155 35 124 69

 

(€m) Q1 2015 Q1 2014 % change Q4 2014 % change
Total Revenue     Recurring Revenue 27.8 27.8 25.4 24.5 9 14 27.2 27.2 2 2
Gross Profit 21.5 18.7 15 20.8 3
Gross Profit Margin % 77.5% 73.5% 5 76.6% 1
Adjusted EBITDA(1) 7.6 6.5 16 7.4 3
Capital Expenditure 9.2 6.8 n/a 6.1 n/a
Proxy Cash Flow(2) (1.6) (0.3) n/a 1.3 n/a
  1. Adjusted EBITDA means EBITDA before the deduction of share option expense.
  2. Proxy cash flow is calculated as Adjusted EBITDA less capital expenditure.

Recurring revenue was €27.8m in Q1 2015, improving 14% from Q1 2014 and 2% from Q4 2014. Gross profit was €21.5m, up 15% from Q1 2014 and 3% from Q4 2014. Gross margin continued to improve, reaching 77.5% in the quarter, up from 73.5% in Q1 2014 and 76.6% in Q4 2014. Adjusted EBITDA was €7.6m in Q1 2015, up 16% from Q1 2014 and by 3% from Q4 2014. This was despite pressures from foreign exchange movements and costs incurred associated with delisting the company. Capital expenditure was higher in the quarter at €9.2m. This contributed to lower proxy cash flow of €(1.6)m in Q1 2015. “Our sales performance continues to be solid, with our ability to deliver high bandwidth  network solutions to the wholesale, content, media and finance segments driving us forward,” said Brady Rafuse, Chief Executive Officer of euNetworks. “MISR is our lead indicator for future growth in our monthly recurring revenue, with of course some lag due to installation timings. The solid Q1 growth in MISR positions us well for revenue growth in 2015.”

“The financial results reported today reflect the continued momentum we see in the business,” said Rafuse. “Our recurring revenue, gross margin and adjusted EBITDA positions continue to improve.” “On the corporate side, the company was delisted from the Singapore Stock Exchange on 20 March 2015. This followed the initiation of the mandatory general offer last year by EUN Holdings, LLP, a consortium put together by Columbia Capital, our largest shareholder. With this change we continue to develop the business, focusing on our operating region of Europe. We are excited for the opportunities ahead and thank our stakeholders for their support.”
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About euNetworks

euNetworks is a bandwidth infrastructure company, owning and operating 17 fibre based metropolitan networks connected with a high capacity intercity backbone covering 51 cities in 15 countries. The company leads the market in data centre connectivity, directly connecting over 430 today. euNetworks is also a leading cloud connectivity provider, directly connecting to all key cloud platforms with access to additional platforms. 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.