Revenue, EBITDA Surge for euNetworks

The pan-European fiber builder and operator euNetworks reported its earnings today, a couple weeks ahead of their usual schedule.  And why not get the news out early, as they did have a very nice quarter, posting revenues and EBITDA up 10% and 30% over the same period last year.  Here are their numbers in some context:

in millions of €, UOS	Q2/15	Q3/15	Q4/15	Q1/16	Q2/16
– Fibre	6.1	6.5	6.6	6.7	6.8
– Wavelengths	9.0	9.2	9.7	10.1	11.2
– Ethernet	5.4	5.5	5.5	5.5	5.6
– Non-focus	6.1	6.0	6.0	5.9	5.9
– Energy, Amortised, Other	2.6	2.5	2.7	2.4	2.7
Total Revenue	29.2	29.6	30.6	30.6	32.2
Gross margin	77.2%	77.6%	77.6%	78.0%	78.4%
Adj EBITDA	8.2	8.2	9.9	9.8	10.7
Adj EBITDA margin	28.1%	27.7%	32.3%	32.0%	33.2%
Capital Expenditures	9.8	11.3	10.9	11.5	16.1
Proxy Cash Flow	(1.6)	(3.1)	(1.0)	(1.7)	(5.6)
New Sales (in thousands of €)	796	898	819	970	937
Installs (in thousands of €)	774	699	655	706	904
Monthly Incremental Service Revenue	240	166	197	381	254
Churn	1.1%	1.3%	0.9%	0.7%	1.1%

There are several interesting Q2 numbers in that table.  On the revenue side, while fiber and Ethernet were up sequentially it was in wavelengths that euNetworks had the big quarter with a jump of more than 10% sequentially.  Meanwhile, churn returned to levels seen last year at 1.1%, but 49% of those were service replacements due to a change in trading venue in their financial vertical, a factor which also probably contributed to the higher level of installs.  But the biggest individual shift was seeing capex rise to 50% of revenue during the quarter.  That clearly reflects the company’s network expansions, adding dark fiber to Marseilles and Stockholm as well as other as-yet undisclosed projects.  While EBITDA and margins also jumped, those capex levels translated to a substantial amount of proxy cash flow spent.  Now privately held, euNetworks seems more willing and able to spend on longer term growth projects.

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Categories: Fiber Networks · Financials