The sputtering economy in Europe isn't hurting the fiber business too much, if euNetworks' first quarter is anything to judge by. After buying both LamdaNet and TeraGate last summer, the company has been busy integrating the assets while ramping its on-net footprint.
|in millions of €||Q1/11||Q2/11||Q3/11||Q4/11||Q1/12|
|Adj EBITDA margin||4%||7.5%||17.8%||0.4%||9.1%|
Recurring revenues were up 3% sequentially, while total new sales under contract surged 55%. That seems to suggest a nice revenue ramp as 2012 unfolds, which will start to show the benefits of 80%+ incremental margins on gross profit and EBITDA. Churn was a bit higher than expected, but at least some of that is simply the combined company's revenue base settling down after the acquisition.
The EBITDA number grew sequentially, but included one time expenses related to the integration in both quarters. As integration spending tails off, EBITDA margins should start moving up steadily from here. Gross margins look ready to start pushing back toward the 70% levels from before the purchase of LambdaNet on the strength of both integration savings and high margin new revenue.
On-net buildings rose by 68 during the quarter, while the number in process increased again to 181. There was a fair amount of integration capex during the quarter, but they'll probably remain at around this level from here due to an aggressive overall expansionary footing.
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