Finishing off the week of fiber earnings reports, abvt turned in yet another outsized performance today for its fourth quarter following their expected completion of the expansion to Amsterdam, Paris, and Frankfurt yesterday. Revenues of $108.1M were at the top of guidance and above expectations, whether or not one includes the reported $0.4M in termination revenue. Earnings per share of $0.85 easily outdistanced analyst projections, which Yahoo Finance had averaging $0.61, for a full year of $2.64 per share. Here's a quick table of Abovenet's results in context of the past four quarters plus 2011 guidance:
|$ in millions||Q4/09||Q1/10||Q2/10||Q3/10||
|EBITDA Margin||41.6%||43.8%||45.4%||45.5%||43.8%||44.6%||~2010 (i.e. 44-45%)|
Revenue: Revenue grew 14.6% over the same quarter last year, or 15.3% if one ignores termination revenue in both quarters. The fastest growing segment was domestic WAN services, followed by domestic metro services, then UK revenues, and finally fiber infrastructure. Having domestic WAN lead the way shows that AboveNet is evolving beyond a pure metro provider into something a bit more complicated. Revenue for 2011 is projected to grow to $460-470M, just above the range expected by analysts and at about the same rate the company saw in 2010 or a tad slower - but they've been known to be cautious.
EBITDA & Margins: EBITDA of $47.3 was up sequentially, but just barely and hence EBITDA margins fell back slightly to 43.8%. The Q3 number had been higher than in the past plus they have been opening for business in a half dozen new cities in the past couple of quarters in advance of revenue, so that's to be expected. EBITDA margins are forecast to be similar in 2011, which suggests EBITDA for the full year will be in the $200-210 range.
Capex: We saw some of that slightly delayed capex surge kick in during the quarter, with spending reaching $47.7M. Spending is also expected to grow in 2011 overall, but to remain at just over 30% of revenue.
Conclusions: No surprises here for me, just strong steady growth with obvious plans to continue. It just takes so long to get big this way, I always wonder if they might find an inorganic way to take their business model into the $B revenue range.
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