Following three straight quarters of declines, XO Holdings (news, filings) turned around and posted some nice numbers in this afternoon's release, which as always came on the last possible day. The prior few quarters had featured slower growth in broadband revenues that didn't successfully balance churn in legacy services. Both sources showed measurable improvement, however questions over the company's cash levels and plans to raise money remain in place. Here is a quick table summarizing XO's performance for Q2/2010:
|$ in millions||Q1/09||Q2/09||Q3/09||Q4/09||Q1/10||Q2/10|
|Cost of Revenue||220.0||
|Adj. EBITDA margin||7.4%||9.6%||11.5%||11.5%||8.2%||10.6%|
Revenue: Broadband revenues surged 4.8% from the previous quarter, while integrated voice and legacy TDM managed to eke out gains as well. Revenues declined slightly from the same quarter last year, which remains the company's high water mark. We'll have to see if they can maintain the surge into Q3 or not of course.
EBITDA: Costs rose as well, but slower than revenue and therefore EBITDA rose to $40.5M. That was good enough to raise the company's adjusted EBITDA margin above 10% again, still lagging the sector (and especially those with lots of metro fiber) but returning to the double digits.
Cash: That brings us to the question of cash, in that the company's cash on hand fell to $66M. Capex was $57.6M, which is consistent with prior quarters, and the company reiterated its need to spend capex on network projects. They also reiterated their both their intention to raise money and their objections to it being in the form of high yield debt, though they will look at all options.
There's only so long you can run a telecom company having $1.5B in revenue with cash levels below $100M, but I've given up trying to predict when they will make their next move. The ebb and flow of working capital in the sector might help them maintain current cash levels throughout the second half while continuing to spend. But why wait for the economy to dip again?
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