Zayo Still Seeking Better Growth after Fiscal Q3

May 4th, 2018 by · 6 Comments

Zayo posted its Fiscal Q3 2018 numbers yesterday, coming up short of analyst projections.  Revenues fell sequentially to $649.4M, and Adjusted EBITDA dropped as well to $319.6M.  Churn from the company's Allstream business dragged things down relative to the prior quarter.  Earnings per share of $0.09 was a couple of pennies shy of the street's composite estimate.

$ in millions Fiscal
Q3/17
Fiscal
Q4/17
Fiscal
Q1/18
Fiscal
Q2/18
Fiscal
Q3/18
Total Revenue 550.2 638.0 643.5 653.5 649.4
 - Fiber 179.6 190.9 195.5 200.5 210.3
 - Transport 110.5 117.4 119.1 117.3 117.2
 - Enterprise 121.7 136.6 137.7 145.9 138.8
 - Colo 53.6 56.7 58.4 59.9 59.6
 - Allstream 79.3 128.9 127.7 123.5 117.7
Adjusted EBITDA 282.0 310.8 316.6 329.9 319.6
Adj. EBITDA Margin 51.2% 48.7% 49.2% 50.5% 49.2%
Capex 208.3 205.3 193.4 193.4 195.1
Buildings on-net 29,402 30,555 ~31,600 32,793 33,954

Zayo did see solid revenue growth in its fiber business, but the colo, enterprise, and transport segments were less happy.  In terms of bookings, they rose to a promising $9.5M, and within that fiber and transport saw some decent strength.  Operationally, Zayo's trajectory remained on track, adding 1,161 on-net buildings and spending capex at a steady rate.

Since the beginning of the year, Zayo has acquired a data center in McLean and Neutral Path, and has agreed to sell Scott-Rice Telephone Co.  The details of those deals will make next quarter's numbers a bit harder to follow - but that's par for the course with Zayo.  We are still waiting to see what they have planned for the rest of the Allstream business, and there is still a likely REIT transition in the works.

 

Categories: Fiber Networks · Financials

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