clwr today reported its usual subscriber positive and earnings negative quarterly results, and finally made a commitment toward building out LTE. That is, when they get the financing for it of course. The WiMAX provider demonstrated both solid revenue growth and cost savings, though how much is enough remains open to question.
Clearwire added 1.54M subscribers, 1.50M of whom were wholesale as the company's retail efforts continue to subside. That's down somewhat from the first quarter but remained well above projections, and they raised guidance to reach over 10M subscribers by the end of the year. They added coverage for 7M US households during the quarter, giving them 135M total and 132M in the US.
Clearwire's LTE Advanced effort will focus on the most densely populated urban areas of their existing footprint, where current 4G usage demands are high. They will therefore be able to re-use their backhaul networks and a fair amount of their gear and keep costs reasonable in comparison to starting from scratch or from older infrastructure. In a not-so-subtle dig at rival upstart LightSquared's proposed LTE buildout, they reminded everyone that their 2.5Ghz spectrum holdings carry no risk to GPS networks - but of course we knew that. But Clearwire's LTE buildout plans hinge on raising money for it, and they won't be able to do that until they get their current house in sufficient order.
To that effect, let's look at the financials for Q2. Pro forma revenues of $293.7M were up 13.8% sequentially from the same measure last quarter. The company's cost savings efforts bore measurable fruit. COGS, after taking out non-cash writedowns, fell 6% to $218.8M, while SG&A decreased 17% to 178.2M. Solid revenue growth coupled with falling costs can't be a bad thing, but in Clearwire's case they still have a long road to climb. Pro forma adjusted EBITDA improved dramatically from last quarter's loss of $194.2M, but remained far in the red at $85.7M. On the other hand, the company's cost cutting measures, including the Ericsson outsourcing, are still kicking in - so we can expect further improvements. Guidance on that front is for passing EBITDA breakeven sometime next year.
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