Back to Basics, Inteliquent Boosts EBITDA Guidance

Fresh off yesterday’s announcement of the sale of its data business to GTT, Inteliquent (NASDAQ:IQNT, news, filings) posted stronger than expected Q1 earnings.  Revenues rose sequentially and were well above estimates, while earnings per share were basically inline.  EBITDA margins rose despite revising its revenue guidance downward due to the divesting of the data network, Inteliquent actually *raised* its EBITDA guidance materially.

($ in millions)	Q1/12	Q2/12	Q3/12	Q4/12	Q1/13	FY13 guidance
IP transit	14.5	14.9	13.5	14.6	15.3
Ethernet	2.6	2.6	3.1	3.6	3.9
Voice	53.5	50.7	52.2	49.5	50.6
Revenue	70.7	68.3	68.8	67.7	69.7	200-210
Adj. EBITDA	21.3	18.5	17.3	14.5	18.0	34-40
Adj. EBITDA Margin	30.2%	27.1%	25.1%	21.4%	25.8%
Earnings per share	0.21	0.12	(0.09)	(2.76)	0.21
Billed Minutes	34.4	32.8	33.1	31.9	30.6
Capex	9.1	5.7	6.2	4.7	6.2	14-18

Inteliquent had a rough second half of 2012, but it seems they have indeed found some better footing in 2013.  The data network they just sold turned in its biggest ever quarter as both IP and Ethernet revenues surged on higher traffic.  But the story now, of course, becomes all about their voice business – which is where it all started as Neutral Tandem.  They’ve gone back to basics after deliberately trying to evolve away from those basics, so the question is where to from here?

With the proceeds of the data business on the balance sheet, they now have to decide what to do with it.  Last fall they returned a bunch to shareholders via a special dividend, they might do the same.  Or they could go and try another M&A avenue I guess, either as a buyer or seller but most likely as a seller I’d think.

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Categories: Financials · Internet Backbones · VoIP