euNetworks Reports Third Quarter 2013 Results


London, UNITED KINGDOM – 7 November 2013 euNetworks Group Limited, a unique Western European provider of bandwidth infrastructure services, announced results for the three months ended 30 September 2013 and for the nine months of 2013. For 3Q 2013 compared to 3Q 2012, the Group delivered materially improved gross profit and adjusted EBITDA1 on flat revenue performance, with churn offsetting new sales. Proxy cash flow also reflected improvement, with capital spending increasing, but at a lower rate than the improving operating performance. Year to date the Group reported similarly better results, with significantly more efficient operating performance and capital spending.

Gross margin for the quarter was 72.9%, increasing from 67.1% in 3Q 2012. Adjusted EBITDA was €6.3m in the quarter, improving 91% from 3Q 2012 and 5% from 2Q 2013. The Group’s continued focus on high gross margin sales and cost management will result in further performance improvement.

“Following higher churn in 2Q 2013 of 2.8%, as we anticipated, churn declined but still remained high in 3Q 2013, reaching 2.2%, “ said Brady Rafuse, Chief Executive Officer of euNetworks. “We are focused on improving churn, with a targeted customer account strategy in place to do so.”

“Discretionary capital expenditure increased to €8.7m in the quarter, up from €6.5m in 3Q 2012 and €4.9m in 2Q 2013,” said Rafuse. “This investment enables additional connections to high bandwidth consuming data centres and a number of strategic network development projects have been launched. These include the new fibre based London to Stockholm ultra low latency route for euTrade, the addition of a London to Moscow route, and the London metropolitan network fibre expansion. These and other projects will deliver more bandwidth infrastructure services to grow in-place and new customers in the future.”

“Overall our proxy cash flow position has significantly improved over the last year, reflecting the benefits of continued scaling. The increase in capital expenditure in the quarter did however reduce proxy cash flow to €(2.4)m from €1.1m in 2Q 2013 and we anticipate network investment projects to continue through to 1Q 2014. This investment will deliver incremental organic growth for the business,” said Brady Rafuse.

About euNetworks

euNetworks is a bandwidth infrastructure company, owning and operating 17 fibre based metropolitan networks connected with a high capacity intercity backbone covering 53 cities in 17 countries. The company leads the market in data centre connectivity, directly connecting over 480 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.

Hannah Britt
Senior Director Marketing
Hannah Britt, Senior Director, Marketing & IR