FOR THE QUARTER ENDED 30 SEPTEMBER 2012:
- Recurring revenue of €24.1m, improving 4% from 2Q 2012 and 14% from 3Q 2011
- Gross profit of €16.2m, improving 3.8% from 2Q 2012 and 2.5% from 3Q 2011
- Gross margin of 67.1%, no change from 2Q 2012 and decreasing from 68.1% in 3Q 2011
- Adjusted EBITDA of €3.3m, improving 32% from 2Q 2012 and reducing 6%1 (excluding one-time revenue contribution) from 3Q 2011
- Proxy Cash Flow of €(3.1)m, improving 46% from 2Q 2012 and 33% from 3Q 2011
- 27 new customers gained in the quarter
- 63 new buildings brought on-net
FOr the nine month period ended 30 September 2012:
- Total revenue of €70.3m, improving 46% from 2011
- Gross profit of €47.1m, improving 37% from 2011
- Gross Margin of 67.0%, declining from 71.0% in 2011
- Adjusted EBITDA of €7.9m, improving from €5.8m in 2011
- Proxy Cash Flow of €(14.8)m, down from €(12.2)m in 2011
- 85 new customers gained in the first nine months, compared to 78 gained in the first nine months of 2011
- 220 new buildings brought on-net, compared to 165 new in first nine months of 2011
London, UNITED KINGDOM – 7 November 2012 – euNetworks Group Limited, announced results for the three months ended 30 September 2012. The Group reported a steady third quarter, with continued improvement in recurring revenue and Adjusted2 EBITDA.
For the third quarter, recurring revenue was €24.1m, up from €21.2m in 3Q 2011 and €23.2m in 2Q 2012. All revenue was recurring in the quarter. Total new sales order customer contract value was €16.8m for 3Q 2012, increasing 17% year on year.
Gross margin for the quarter was 67.1%, down from 68.1% in 3Q 2011 but in line with gross margin reported in 2Q 2012. The year on year gross margin decline reflected the impact of acquisitions completed in 2011, as previously reported. euNetworks expects gross margin to improve over time, with a strong focus on high margin new sales. In 3Q 2012 new sales had gross margins of ~87%, up from ~83% in 1Q 2012 and ~84% in 2Q 2012.
Churn for the business was higher for the year to date in 2012 than previously seen. This was in part due to some LambdaNet contracts reaching the end of their term, as euNetworks knew would be the case when the acquisition was closed. Additionally there was some churn related to contracts for SDH and IP VPN services, which are not a core focus for euNetworks going forward.
“While churn will always be a part of our business, overall we continued to see good momentum in our performance through the quarter,” said Brady Rafuse, Chief Executive Officer of euNetworks. “Our growth in Adjusted EBITDA was very encouraging, with a sequential increase of 32% reflecting continued improvement as the costs of integration and rationalisation have wound down and the resulting business is operating more efficiently.”
“Optimising our systems and processes to enable a lean production system remained a priority in the quarter and will be in the quarters to come,” said Rafuse. “We also made some great developments in our network infrastructure for the benefit of our existing customers, and to increase our opportunity with new customers and segments as has been outlined further in our announcement today. I am encouraged with our progress and as ever, remain committed to driving further long term recurring growth in our business.”
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