Zayo Still Seeking Better Growth after Fiscal Q3

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.

 

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Categories: Fiber Networks · Financials