euNetworks Reports Third Quarter 2015 Results

euNetworks Reports Third Quarter 2015 Results For the quarter ended 30 September 2015:

• double digit sales growth underpinning continued performance in monthly incremental service revenue
• strong growth in recurring revenue, gross profit and adjusted ebitda 

London, UNITED KINGDOM – 18 November 2015 – euNetworks Group Limited, a provider of bandwidth infrastructure services in Western Europe, announced results for the three months ended 30 September 2015. New sales achieved were €898k in Q3 2015, up 13% from Q2 2015 and 42% from Q3 2014. This was a new record for the company. Service installation units grew 15% from Q3 2014. Disconnections remained in line with expectations, with 45% of these due to service replacements rather than customers leaving. Average churn was 1.3%, slightly up versus 1.1% in Q2 2015 as was anticipated and driven by planned euTrade disconnections. Total monthly incremental service revenue (MISR) was €166k in Q3 2015, down from €240k in Q2 2015. euNetworks continued the momentum of previous quarters, with strong sales and revenue growth and a solid outlook for further growth ahead.

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 €29.6m in Q3 2015, growing 16% from Q3 2014 and 2% from Q2 2015. Gross profit was €23.0m, up 18% from Q3 2014 and 2% from Q2 2015. Gross margin improved to 77.6% in Q3 2015, up from 76.1% in Q3 2014 and 77.2% in Q2 2015. Adjusted EBITDA was €8.2m in Q3 2015, improving by 10% from Q3 2014 and in line with Q2 2015. This was despite the adverse foreign exchange headwinds in the quarter amounting to €281k. Capital expenditure supporting revenue growth was higher in the quarter at €11.3m as euNetworks continues to invest for growth. This contributed to lower proxy cash flow of €(3.1)m in Q3 2015.

“Our sales performance in the quarter was excellent and the 180 day sales pipeline continues to increase,” said Brady Rafuse, Chief Executive Officer of euNetworks. “Year to date, strong sales and a high volume of installations have ensured solid growth in our incremental service revenue.” “We delivered strong financial performance in Q3 2015, with growth in recurring revenue, gross profit and adjusted EBITDA versus Q3 2014. Our outlook for Q4 2015 and the full year remains in line with expectations,” said Rafuse. “Our strategy for growth continues to be through organic and inorganic investments.

We recently announced our acquisition of Inland Fibre Telecom in Dublin which brings 130km of unique network to the business and further strengthens our offering in that region at a time when demand for bandwidth solutions continues to grow. Our capital expenditure was higher this quarter in line with our continued strategy of investing in our network in support of customers and our organic growth.

dc connect Paris went live in October and we are excited for the opportunity we see for our business in the French market. We have invested further in our long haul Wavelengths network in Germany, with more route options and diversity available for customers. In addition, there are a number of other strategic network investments projects which we will announce in due course. We remain confident about the opportunities ahead and the close relationships we have with our customers drive our development moving into 2016.”

Further review and discussion of the performance of the Group for Q3 2015 can be found in the accompanying results supplement to download.
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