While still small in the grand scheme of things, European metro specialist euNetworks turned in another strong quarter of growth - further suggesting that independent metro fiber in Europe is finally coming of age. Revenues of €10.3M were up 40% from the same quarter last year, and up almost 10% sequentially as well. Adjusted EBITDA, which reached break-even just last quarter, rose to €0.8M. During the quarter, they unveiled new low latency routes between London, Slough and Frankfurt, and have apparently signed 22 contracts there already - the financial vertical continues to drive interesting growth.
Operationally, sales productivity rose by 27% and while average contract length rose from 22 months all the way to 30 months. Gross margins dipped to 77%, as they built out those networks for the financial vertical in advance of revenues. The macro economy in Europe remains tough, but they seem to have plenty of room to maneuver regardless.
Capex rose to €4.5M from €3.4M in the prior quarter, suggesting a continued acceleration. The figure of $6M reported back in August for Q2 turned out to be a transcription error. euNetworks added 25 buildings to their on-net count during the quarter, which is a solid acceleration from the pace of the first half as promised. That brings them up to 320, and I suspect they will be 340-350 by the end of the year. Additionally, they continue to build out the network in London to increase their addressable market.
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