Along with its first quarter earnings report, tw telecom also threw in some additional fiber expansion news, added more intelligence to its network services, and hooked up another cloud. The short version: revenue growth was a bit better than expected, but on the flip side EBITDA and earnings per share took a slightly bigger hit than they usually do in Q1.
| ($ in millions) | Q1/13 | Q2/13 | Q3/13 | Q4/13 | Q1/14 (actual) |
|---|---|---|---|---|---|
| – Data & Internet Services | 211.7 | 220.1 | 226.5 | 235.2 | 243.7 |
| – Network Services | 65.0 | 64.1 | 61.6 | 60.0 | 58.4 |
| – Voice Services | 76.0 | 76.4 | 77.3 | 76.8 | 77.4 |
| – Intercarrier Compensation | 7.9 | 8.3 | 7.3 | 6.6 | 6.1 |
| – Taxes & Fees | 20.6 | 20.6 | 20.5 | 21.4 | 22.8 |
| Total Revenue | 381.2 | 389.5 | 393.2 | 400.0 | 408.3 |
| M-EBITDA | 136.0 | 137.3 | 138.5 | 140.7 | 136.8 |
| M-EBITDA Margin | 35.7% | 35.3% | 35.2% | 35.2% | 33.5% |
| Adj. Earnings per share | 0.09 | 0.12 | 0.12 | 0.11 | 0.08 |
| Revenue Churn | 0.8% | 0.9% | 1.0% | 0.8% | 0.8% |
| Capital Expenditures | 90.9 | 101.0 | 102.0 | 208.0 | 102.2 |
| On-net buildings added | 498 | 616 | 566 | 607 | 523 |
| Free Cash Flow | 23.9 | 16.1 | 16.3 | (34.1) | 10.8 |
Higher costs are to be expected though given the other costs involved in the various big projects they’ve got going on. They’ve moved some revenues around, shifting some network and voice revenues into data & internet, and broke out a new category for taxes & fees collected for regulators and such, but other than that there wasn’t anything terribly surprising in the numbers. Operationally, tw telecom added another 523 on-net buildings to their network, keeping up the torrid pace they’ve been on for a few years now. They also bought back $113M worth of stock during the quarter.
On the intelligent networking front, tw telecom is now offering dynamic control over another key piece of its portfolio: class of service. Customers will be able to control class of service on demand in real time across their IP VPN and managed services. I’m curious just how often an actual enterprise ought to be touching this on their network, but the point is that they don’t have to ask & wait should they need to.
The cloud news a new relationship with GoGrid, whereby tw telecom will be integrating its eLynk private data services directly with GoGrid’s platform. The result will be a scalable, elastic environment for open source big data solutions for enterprises.
And as for the fiber expansion news, following the SF Bay area to start the week it was Los Angeles’s turn on Tuesday. tw telecom is adding fiber out into the West LA neighborhoods of Century City, El Segundo, Santa Monica, Beverly Hills, and Westwood and down into the southern part of LA County.
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Categories: Cloud Computing · Ethernet
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Free cash flow, adj earnings per share and MEBITDA margins are all going the wrong way. It looks to me like the inroads that the Cable MSO’s are making into the Enterprise market is having an adverse effect on TWT’s normally consistent growth. But hey Larissa’s no dummy, she’ll get this turned around quickly I’m sure.