The rough patch at Inteliquent (NASDAQ:IQNT, news, filings) got rougher today with their Q3 report, offering a bit of insight into the recent management upheaval. Revenues and EBITDA came in light, and earnings took a $9M charge amidships from a voice termination settlement with one of their major voice customers that also shifted the overall relationship. As a result, full year 2012 guidance was reduced again. Here’s the birds eye view:
| ($ in millions) | Q3/11 | Q4/11 | Q1/12 | Q2/12 | Q3/12 | FY12 guidance |
|---|---|---|---|---|---|---|
| IP transit | 14.4 | 14.8 | 14.5 | 14.9 | 13.5 | |
| Ethernet | 2.1 | 2.8 | 2.6 | 2.6 | 3.1 | |
| Voice | 50.8 | 51.8 | 53.5 | 50.7 | 52.2 | |
| Revenue | 67.3 | 69.5 | 70.7 | 68.3 | 68.8 | 265-275 |
| Adj. EBITDA | 21.0 | 22.1 | 21.3 | 18.5 | 17.3 | 60-65 |
| Adj. EBITDA Margin | 31.2% | 31.7% | 30.2% | 27.1% | 25.1% | |
| Earnings per share | 0.18 | 0.19 | 0.21 | 0.12 | (0.09) | |
| Billed Minutes | 32.9 | 33.3 | 34.4 | 32.8 | 33.1 | |
| Capex | 6.8 | 2.4 | 9.1 | 5.7 | 6.2 | 25-30 |
Inteliquent is now putting out a bunch more operational data with its earnings report offering greater insight into the pieces of its business. This quarter, the main takeaway was that IP transit revenues took a substantial hit from pricing pressure, which took the company’s average price per Mbps down by more than 10% sequentially. A solid updraft from Ethernet was not enough to compensate. They regained a bit of the voice revenues lost last quarter, but not as much as they probably hoped for.
And Inteliquent gave up on its Cisco-based Hosted UCS product line entirely during the quarter, discontinuing the effort and recording a $1.8M charge. That effort was aimed at differentiating the company’s offerings and finding complementary lines of business, but apparently it just didn’t work out.
Which all begs the question, where to now? I speculated last month that the company might wind up as an M&A target and I’m leaning further in that direction now.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!
Categories: Financials · Internet Backbones · VoIP
Join Our LinkedIn Group
More bad news for you. Inteliquent’s Hosted Collaboration Solution (HCS) platform that was announced earlier in the year imploded due to lack of sales. This is after millions invested in the platform from Cisco. Evans pulled the plug on HCS and now owes Cisco millions in unpaid bills. Cisco is threatening to sue Inteliquent. Inteliquent is trying to find someone to buy the used equipment. Inteliquent laid off the entire HCS sales team just after Evans and Dr. Saboo came to a head during the recent AT&T partnership meltdown. The bad news continues for Inteliquent. I highly doubt that anyone would consider Inteliquent an M&A target especially since they are fighting with Cisco.