euNetworks Reports Second Quarter 2015 Results

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London, UNITED KINGDOM 5 August 2015 – euNetworks Group Limited, Europe’s provider of bandwidth infrastructure services, announced results for the three months ended 30 June 2015. New sales achieved were €796k in Q2 2015, up 1% from Q1 2015 and a new record for the company. Service installations also reached a record level in the quarter, increasing 32% from Q1 2015 and 17% from Q2 2014. Disconnections were slightly higher but in line with expectations. 41% of disconnections were due to service replacements, indicating customers are upgrading services with euNetworks.  Average churn was 1.1%, slightly up versus 1.0% in Q1 2015 but in line with the 2014 average. Total monthly incremental service revenue (MISR) was €240k in Q2 2015, up 15% from Q1 2015. The continued strong sales performance and focus on managing disconnections positions the company well for further growth in H2 2015.

(€k) Q2 2015 Q2 2014 % change Q1 2015 % change
New Sales 796 788 1 789 1
Installations 774 662 17 585 32
Monthly Incremental Service Revenue 240 266 (10) 209 15
(€m) Q2 2015 Q2 2014 % change Q1 2015 % change
Total Revenue      Recurring Revenue 29.2 29.2 25.1 25.1 16 16 27.8 27.8 5 5
Gross Profit 22.5 18.9 19 21.5 5
Gross Profit Margin % 77.2% 75.3% 3 77.5% 0
Adjusted EBITDA(1) 8.2 7.0 17 7.6 8
Capital Expenditure 9.8 6.9 n/a 9.2 n/a
Proxy Cash Flow(2) (1.6) 0.1 n/a (1.6) 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 €29.2m in Q2 2015, growing 16% from Q2 2014 and 5% from Q1 2015. Gross profit was €22.5m, up 19% from Q2 2014 and 5% from Q1 2015. Gross margin was in line with Q1 2015 at 77.2%, and up from 75.3% in Q2 2014. Adjusted EBITDA was €8.2m in Q2 2015, up 17% from Q2 2014 and by 8% from Q1 2015. This growth was again achieved despite the adverse headwinds of foreign exchange movements in the quarter amounting to €234k. Capital expenditure supporting revenue growth was higher in the quarter at €9.8m. This contributed to lower proxy cash flow of €(1.6)m in Q2 2015.

“We maintained the strong sales momentum we saw in Q1 2015 through the second quarter and continued to build a solid opportunity pipeline,” said Brady Rafuse, Chief Executive Officer of euNetworks. “Record level new sales and service installations in the quarter ensured MISR growth, putting us in a good position to continue to grow our recurring revenue this year.” “We delivered solid financial results, with double digit growth in recurring revenue, gross profit and adjusted EBITDA versus Q2 2014. This positions the business for further improvement and we move into Q3 with good momentum. We remain confident about the opportunities ahead,” said Rafuse.

Further review and discussion of the performance of the Group for Q2 2015 can be found in the accompanying results supplement to download.
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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.