Canada Slowed Zayo’s Revenue, But EBITDA Rose Anyway

Zayo reported its fiscal Q1/2017 earnings this afternoon.  Revenues checked in light at $504.9M, slowed down by lower numbers from the Allstream assets in Canada they are currently integration.  But Zayo found cost savings to more than compensate, turning in higher EBITDA and earnings per share a penny above expectations.  Here are their numbers in some context:

$ in millions	Fiscal Q1/16	Fiscal Q2/16	Fiscal Q3/16	Fiscal Q4/16	Fiscal Q1/17
– Dark Fiber	135.0	137.7	144.3	146.9	148.4
– Network Connectivity	167.0	168.7	172.5	175.3	175.6
– Colo & Cloud	58.3	58.5	60.3	63.6	64.1
– Other+Canada	6.5	4.7	100.9	121.5	116.8
Total Revenue	366.8	369.6	478.0	507.3	504.9
Adjusted EBITDA	215.4	218.9	242.8	257.8	260.6
Adj. EBITDA Margin	58.7%	59.2%	50.8%	50.8%	51.6%
Capex	159.2	172.4	185.1	187.4	208.3
Buildings on-net	18,528	19,341	23,418	24,282	25,263

Zayo saw revenue growth in each of Dark Fiber, Network Connectivity, and Colo/Cloud, steady forward progress albeit nothing huge.  But in other/Canada it was another story.  This is probably something that should be expected, as Zayo has different priorities for the acquired Allstream assets and could even prune off parts of that business that don’t fit over time.   That being said, analysts weren’t quite expecting it to hit this quarter perhaps.  Overall, net bookings hit a new high at $7.2M.

But EBITDA continued to rise nonetheless, as Zayo did bring in cost savings up in Canada as it continues to integrate that business.  Capex ticked up past the $200M mark for the first time as Zayo continues to spend on infrastructure projects for future growth.  During the quarter they won a big wireless backhaul contract covering 1,800+ sites across 26 markets nationwide that leverages what they call ‘second tenant’ economics.

 

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Categories: Financials · Metro fiber