For the quarter ended 30 September 2014:
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strong recurring revenue and adjusted ebitda growth following good sales and installation performance over the last three quarters
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continued improvement in gross profit, with increased capital expenditure for growth and network development
London, UNITED KINGDOM – 7 November 2014 – euNetworks Group Limited, a unique Western European provider of bandwidth infrastructure services, announced results for the three months ended 30 September 2014. The Group delivered strong recurring revenue and adjusted EBITDA growth in Q3 2014 following consistently strong sales and installation performance over the last three quarters. Service installations grew 4% from Q2 2014, delivering the highest quarter for installs in the company’s history. Sales performance in Q3 2014 was lower than in Q2 2014, however new sales increased 18% from Q3 2013.
Recurring revenue was €25.7m in Q3 2014, improving 8% from Q3 2013 and 2% from Q2 2014. €21.7m of total revenue was from network services, growing 8% from Q3 2013. euNetworks continues to grow network revenues at the upper end of the forecast market growth rate of 3-5%. These results reflect euNetworks’ continued successful sales and marketing focus on Dark Fibre, Wavelengths, Ethernet and its euTrade service portfolio.
Gross profit was €19.6m, up 11% from Q3 2013 and increasing 4% from Q2 2014. Core network gross profit was €16.6m, up from €15.9m in Q2 2014. Gross margin grew to 76.1% in the quarter, up from 72.9% in Q3 2013 and 75.3% in Q2 2014. euNetworks’ focus on selling on-net bandwidth services continues to drive an improved product mix, delivering higher gross margins.
Adjusted EBITDA grew 19% from Q3 2013 and 7% from Q2 2014, reaching €7.5m. This growth reflects the continued scaling of the business and successful focus on achieving operational efficiencies while increasing sales performance.
Capital expenditure reached €8.8m in the quarter, 1% higher than Q3 2013 and up 28% from Q2 2014. Capital expenditure was again largely success based in support of key customer projects.
Proxy cash flow was €(1.3)m, improving from €(2.4)m in Q3 2013 but down from €0.1m in Q2 2014. The cash flow position in Q3 2014 was largely driven by the increase in capital expenditure.
“The results reported today reflect the positive momentum we see in the business as we continue to deliver to the bandwidth demands of our customers,” said Brady Rafuse, Chief Executive Officer of euNetworks. “Improving gross profit and significant growth in adjusted EBITDA indicates we continue to deliver operational efficiencies as we grow.”
“We are investing in growth and network development projects at the same time to create value for the business. The debt funding commitment secured in October provides us with further opportunity to invest and also add growth inorganically. We are delighted to have closed the Fibrelac acquisition in October, with this fibre based business offering a natural extension to our network footprint and a great Swiss and European bandwidth proposition to the combined customer base. We are excited by the opportunities all these activities bring and as ever thank our stakeholders for their ongoing support.”
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