Both CBeyond and 8x8, two rather different providers of VoIP services to small business customers, reported their quarterly earnings today, and in both cases results were steady though not spectacular. But then, expecting spectacular results in this environment would be a bit loony. What matters is the implication that while churn is surely rising somewhat, SME telecom purchases are not suffering all that much.
CBeyond (CBEY), which offers small chunks of integrated voice and data over leased lines to over 38,000 small businesses in 12 markets, had reduced 2008 guidance slightly back in Q2 in anticipation of a worsening environment. Their results of $90.2M revenue and $16.9M in EBITDA were in-line while earnings per share of $0.11 were a bit better than expected, and they narrowed guidance further to the lower half of the range. However, they also provided 2009 guidance of $420-440M revenue, which would be 20-25% growth. This implies that visibility is perhaps not so bad. Growth will come from new markets, including Washington DC early next year.
8x8 (EGHT), which offers over-the-top VoIP services primarily to the SME nowadays, saw revenue of $16.4M and just barely eked out a profit. The company continues to increase revenues from business customers and decrease emphasis on its consumer products (of whom I remain one), now with 60% of its revenues from its 13,700 business customers.
Small business sales numbers, while not spectacular, do seem to be holding up ok in this nasty financial crisis. This bodes well for the results of larger companies still to report this quarter who depend on health in this customer segment as well as larger enterprise customers. TW Telecom, XO Communications, and Paetec come to mind - all have seen their common stock annihilated by economic fears.
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