Earnings roundup: Cogent, GTT, EarthLink

Several competitive service providers posted their first quarter earnings this week, here’s a quick review:

As others did, Cogent saw the strong dollar take a tole on its European revenues during the first quarter.  The result was revenues of $97.2M, up just 0.5% from the prior quarter and below analyst projections due to a $2.3M sequential currency hit.  The added their usual 30 on-net buildings on the way to a loss of $0.04 per share and adjusted EBITDA of $31.0M.  And of course they boosted their quarterly dividend by another penny, a trend that perhaps can’t last forever but sure has been an interesting ride.

GTT also saw some currency effects during Q2, seeing revenue decline by 0.5% sequentially to $62.4, rather than 1.2% growth in constant currency terms.  On the other hand, adjusted EBITDA expanded to $11.1M as they further integrated their various assets.  GTT will look rather larger next quarter, as the company closed the deal for MegaPath’s Managed Services business on April 1.   They are moving quickly on the integration, and hope to “realize full synergies at a target EBITDA multiple of 5-6x or better by the end of the third quarter”, which according to my math would boost their run-rate quarterly EBITDA by $6M when the fourth quarter rolls around.

EarthLink posted revenues of $282.4M, adjusted EBITDA of $61.1M, unlevered free cash flow of  $43.6M and a loss per share of $0.10 as it continued on the latest transformation path.  That performance topped expectations on pretty much all fronts and with raised guidance from EarthLink the company’s stock jumped sharply above $5 for the first time in 20 months.  As for the monetization of the company’s dark fiber assets, the company said it is seeing broader demand beyond just the dark fiber, but wouldn’t comment further.  That suggests to me that their thoughts may have shifted to a sale of the broader carrier transport division in some form. which I think makes more sense on several levels.

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Categories: Internet Backbones