When the summer started, abvt was apparently for sale and the bidding was fierce. But as I suspected, nothing came of it (or has come of it yet) and the speculation has died down and the surge in stock price has ebbed. So now we get back to business, which in AboveNet's case is the business of rock-solid, high margin organic growth - as demonstrated by the company's Q2 report this morning. Here's a quick summary of the relevant metrics alongside the prior four quarters:
|$ in millions||Q2/10||Q3/10||Q4/10||Q1/11||Q2/11||FY2011(Guidance)|
|Revenue||$100.7||$103.7||$108.1||$114.4||$118.3||$460-470 (high end)|
|EBITDA Margin||45.4%||45.5%||43.8%||45.0%||45.6%||~2010 (i.e. 44-45%)|
Revenue: The market was expecting relatively flat sequential revenue growth, as the prior quarter had extra equipment sales and termination revenue in it that boosted numbers. That didn't happen, largely because of even higher equipment sales of $4.2M and plus a bit more termination revenue of $1.0M. As usual, it was revenue from domestic WAN services that drove most of the growth. AboveNet said it expected to achieve the high end of guidance, which remains in place.
EBITDA & Margins: Adjusted EBITDA checked in at $54M, for a 45.6% adjusted EBITDA margin. That's about as high as the company usually gets, and was inline with last year's numbers and of course guidance - which was that it be similar to last year's numbers.
Capex & Expansion: AboveNet spent $37.3M during the quarter, keeping them on track for guidance of $140-150M. The company's expansion into several new US and European markets last year has kept them busy of course. But there was no new news on the expansion front, as the company seems to be focusing on increasing their depth in current markets by adding additional data centers to their network.
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