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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