360networks and MarquisNet Boost Zayo’s Fiscal Q3

May 9th, 2012 by · Leave a Comment

With the AboveNet deal still in the wings, Zayo Group (news, filings) passed the $100M quarterly revenue threshold in its third fiscal quarter while continuing its margin growth.  Here's a quick tabular summary:

$ in millions Fiscal
Q3/11
Fiscal
Q4/11
Fiscal
Q1/12
Fiscal
Q2/12
Fiscal
Q3/12
 - Zayo Bandwidth  54.7 55.9 56.5 64.5 74.8
 - Zayo Fiber Solutions  11.9 13.5 13.2 15.3 19.6
 - zColo 9.1  9.5  9.7 10.2 11.8
Total Revenue 74.2 77.8 78.4  89.0 105.0
Adjusted EBITDA 32.7 37.2 38.0 45.1 53.9
Adj. EBITDA Margin 44.1% 47.8%  48.4% 50.6% 51.3%
Capex 29.1 24.9 28.6 31.4 42.7
Buildings on-net 4228 4393 4542 5193 5431

This is the first full quarter that includes the results of 360networks and MarquisNet,  so the company's results are harder than usual to gauge at first sight.  Actually, given the frequency of M&A by Zayo perhaps it's just as hard as usual.  In the second quarter there will be two months or so from AriaLink and of course AboveNet is in the wings for Q3.

Revenue grew organically as well as inorganically, but seems to have been offset by relatively higher levels of churn - to be expected in the aftermath of a merger.  I look forward to more detail on the conference call.  Margins continued to rise steadily, now solidly in the low 50s.

Zayo's network expansion accelerated during the quarter, as they added 232 buildings to their network, up from 196 in the prior quarter.  The prior quarter's on-net building jump included 455 additional on-net buildings from 360networks of course.  Of those 232, almost three quarters were to towers, with most of the rest being enterprise locations.  And there are more where that came from, as Zayo now has fiber to another 944 sites under construction, up 247 from the prior quarter.

Zayo also said it would have to restate some of its past financials slightly after discovering a mathematical error in the calculation of the deferred tax assets acquired from Fibernet Telecom Group two years ago.  That takes a small chunk off the balance sheet, but is unrelated to the company's operational growth profile.

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Categories: Financials · Metro fiber

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