Sales Power Strong Q2 for euNetworks

August 5th, 2015 by · Leave a Comment

Earnings season continues, and this morning we got a Q2 report from euNetworks, which has long been our unencumbered window into the fiber infrastructure business over in western Europe.  euNetworks posted a quarter of solid organic growth powered by another quarter of strong sales. Here is a quick table of their numbers in some context:

 in millions of €, UOS  Q2/14 Q3/14 Q4/14 Q1/15 Q2/15
 - Fibre 4.6 5.1 5.8 6.1
 - Wavelengths 7.1 7.8 8.2 9.0
 - Ethernet 5.1 5.3 5.3 5.4
 - Non-focus 6.2 6.2 6.2 6.1
 - Energy, Amortised, Other 2.1 2.8 2.2 2.6
Total Revenue 25.1 25.7 27.2 27.8 29.2
Gross margin 75.3% 76.1% 76.6% 77.5% 77.2%
Adj EBITDA 7.0 7.5 7.5 7.6 8.2
Adj EBITDA margin 27.8% 29.1% 27.5% 27.3% 28.1%
Capital Expenditures 6.9 8.8 6.1 9.2 9.8
Proxy Cash Flow 0.1 (1.3) 1.3 (1.6) (1.6)
New Sales (in thousands of €) 788.1 630.8 783.7 789 796
Installs (in thousands of €) 661.6 688.9 734.8 585 774
Monthly Incremental Service Revenue 225.9 254.2 123.9 209 240
Churn 0.8% 1.1% 1.6% 1.0% 1.1%

New Sales, Installs, and MISR each hit new highs during the quarter, promising a strong pipeline into Q3.  Revenue growth from the company's wavelength products was the big winner, trading places with fiber which took those honors in Q1.  Overall, recurring revenue was up 4.9% sequentially and 16.2% over the same period last year.   Capex was up again, as the company continues to pour its cash flow back into new opportunities.

euNetworks is no longer trading in Singapore, although the process to go fully private is still ongoing.  But when they do finish with that, it should be interesting to see whether the company then moves to IPO in a market closer to home or whether its private equity backers at Columbia Capital use the freedom of being private to get more aggressive on the M&A trail.

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Categories: Financials · Metro fiber

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