EarthLink’s Stabilization Stabilizes Further

August 4th, 2015 by · 12 Comments

EarthLink turned in its second stronger-than-expected quarter of the year yesterday, keeping its newfound momentum going. After a few lean years of churn, the company’s financials are a whole lot less painful to look at, and were enough to allow the company to boost 2015 guidance for the second quarter in a row.

Revenues of $283.7M were not only $10M above projections, but were actually up sequentially. Loss per share of $0.10 was three cents better than estimates and flat with the prior quarter, which had also been on the plus side. And EBITDA rose to $66.1M during the quarter, a level they haven’t seen in quite some time. That was enough for the company to boost revenue guidance to $1.075-1.085B and EBITDA guidance to $225-235M.

So what is working? Business services were up sequentially even when factoring out $1M in favorable one-time settlements. The actual bit of growth came from wholesale, although cloud & managed services, the CLEC business, and consumer services each held the line pretty well too.  The rest is coming from cost controls, including ongoing headcount reductions – at the end of the quarter they had 2314 employees on the rolls, down 88 from the end of Q1 and 667 from a year ago.

The relative stability takes a bit of the urgency off of the table for EarthLink in terms of strategic alternatives for its various business lines. But it also puts them in a stronger position should they choose to pursue any of them. Still no word on any moves to monetize the company’s fiber assets, although I’ll be listening to the call for more.

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Categories: CLEC · Cloud Computing · Financials · Managed Services

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12 Comments So Far

  • Anon says:

    Congratulations Mike Flannery. You, again, have turned around a company. You are the wind beneath our wings.

  • Jose says:

    This report does even reflect the recent lay offs that just occured on Monday. So, I guess their 3Q will be better.

  • Anonymous says:

    With the majority of Sales not hitting their number this is simply “cloak and dagger”. They have removed a significant amount of operational staff that will only add on to the existing tarnished service delivery reputation.

    Operationally, the numbers are looking better for Wall Street, but they are failing in functionality.

  • bebbers says:

    Are they for sale yet?

  • bebbers says:

    I thought they were going to sell off the dark fiber?

    • Anonymous says:

      likely monetizing the dark fiber buy leasing it out in IRU’s since no one could possibly be interested in acquiring it under the terms they wanted (ie. it was more balanced on the side of earthlink than the purchaser).

  • Anon says:

    Can you IRU IRUs? I thought much of ELINK’s fiber was IRU’ed from others, and/or using Southern Company’s ROW.

    • Anonymous says:

      Hmm. They own dark fiber in northeast especially in nyc but never did anything with the dark fiber in nyc b/c they weren’t good routes. I thought the southeast fiber was part of the old IFN network which was a co-build in the southeast with another company that Delta com eventually purchased. I was under the impression the dark fiber in the southeast was the one that they had leased to paetec prior to the windstream acquisition. I could be wrong but they may have some leased fiber from Alpheus or others in places like dallas or west coast but i thought the southeast fiber was owned. If i am wrong i apologize.

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