EarthLink Churns Ahead, Discontinues Systems Biz

August 1st, 2013 by · 1 Comment

In its second quarter earnings report, Earthlink (NASDAQ:ELNK, news, filings) maintained its current trajectory on most metrics as they churn off legacy revenues and build their cloud, managed IT and data revenue base. They also moved the results of their negligible systems/equipment business to discontinued operations, skewing a few of the numbers slightly including forward guidance.   No doubt there are other bits and pieces of Deltacom and One that they will be doing that with over time.

Overall revenue from continuing operations fell to $313.4M from $316.8M in the prior quarter, a slower rate of decline than they have seen lately as growth products are more fully offsetting legacy stuff. Their ‘retail growth’ business saw its annual run rate rise to $157M from $148M in the prior quarter, while their total growth product revenues annual run rate rose to $313M from $300M last quarter. Consumer revenues saw only a 2.2% subscriber churn rate, the best they’ve seen. Wholesale revenues continued to increase steadily, reaching $39.1M

On the earnings front, the company lost $0.11 per share, a nickel short of expectations, on EBITDA of $59.5M. Net cash from operating activities fell to $11.7M during the quarter, while captial expenditures pulled back to $34.4M.

Full year guidance was updated to reflect the movement of the Systems business to discontinued operations. Revenue is expected to be in the $1.245M-1.250M range, EBITDA in the $214-225M range, net loss in the $283-288M range, and capex holding steady at $140-155M.

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Categories: CLEC · Cloud Computing · Financials

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