ATLANTA, Aug 05, 2010 (BUSINESS WIRE) — Cbeyond, Inc. (NASDAQ:CBEY, news, filings), (“Cbeyond”), a managed services provider that delivers integrated packages of communications and IT services to small businesses, today announced its results for the second quarter ended June 30, 2010.
Recent financial and operating highlights include the following:
- Second quarter revenue of $111.8 million, up 9.7% over the second quarter of 2009;
- Total adjusted EBITDA of $18.4 million in the second quarter of 2010 compared with $13.8 million in the second quarter of 2009, and $18.6 million in the first quarter of 2010 (see page 10 for reconciliation to net income);
- Net loss of ($0.1) million in the second quarter of 2010 compared with a net loss of ($2.2) million in the second quarter of 2009;
- Total customers of 53,518 in Cbeyond’s 13 operating markets, reflecting net customer additions of 1,787 in the second quarter of 2010, an increase of 15.3% in total customers year-over-year;
- Average monthly revenue per customer location (ARPU) of $708 during the second quarter of 2010, compared with $723 in the first quarter of 2010 and $748 in the second quarter of 2009;
- Monthly customer churn of 1.4% in the second quarter of 2010 as compared with 1.4% in the first quarter of 2010; and
- Cash and cash equivalents balance of $51.8 million at June 30, 2010, an increase of $9.2 million over the balance of $42.6 million at March 31, 2010.
Financial Overview and Key Operating Metrics
Financial and operating metrics, which include non-GAAP financial measures, for the three and six months ended June 30, 2009 and 2010, include the following:
| For the Three Months Ended June 30, | |||||||||||||||
| 2009 | 2010 | Change | % Change | ||||||||||||
| Selected Financial Data (dollars in thousands) | |||||||||||||||
| Revenue | $ | 101,837 | $ | 111,753 | $ | 9,916 | 9.7 | % | |||||||
| Operating expenses | $ | 103,791 | $ | 111,605 | $ | 7,814 | 7.5 | % | |||||||
| Operating income (loss) | $ | (1,954 | ) | $ | 148 | $ | 2,102 | N/M | |||||||
| Net income (loss) | $ | (2,206 | ) | $ | (98 | ) | $ | 2,108 | N/M | ||||||
| Capital expenditures | $ | 16,886 | $ | 15,168 | $ | (1,718 | ) | (10.2 | %) | ||||||
| Key Operating Metrics and Non-GAAP Financial Measures | |||||||||||||||
| Customers at end of period | 46,405 | 53,518 | 7,113 | 15.3 | % | ||||||||||
| Net customer additions | 2,063 | 1,787 | (276 | ) | (13.4 | %) | |||||||||
| Average monthly churn rate | 1.5 | % | 1.4 | % | (0.1 | %) | (6.7 | %) | |||||||
| Average monthly revenue per customer location | $ | 748 | $ | 708 | $ | (40 | ) | (5.3 | %) | ||||||
| Adjusted EBITDA (in thousands) | $ | 13,803 | $ | 18,411 | $ | 4,608 | 33.4 | % | |||||||
| For the Six Months Ended June 30, | |||||||||||||||
| 2009 | 2010 | Change | % Change | ||||||||||||
| Selected Financial Data (dollars in thousands) | |||||||||||||||
| Revenue | $ | 200,097 | $ | 222,268 | $ | 22,171 | 11.1 | % | |||||||
| Operating expenses | $ | 202,764 | $ | 221,548 | $ | 18,784 | 9.3 | % | |||||||
| Operating income (loss) | $ | (2,667 | ) | $ | 720 | $ | 3,387 | N/M | |||||||
| Net income (loss) | $ | (2,147 | ) | $ | 941 | $ | 3,088 | N/M | |||||||
| Capital expenditures | $ | 34,202 | $ | 28,395 | $ | (5,807 | ) | (17.0 | %) | ||||||
| Key Operating Metrics and Non-GAAP Financial Measures | |||||||||||||||
| Customers at end of period | 46,405 | 53,518 | 7,113 | 15.3 | % | ||||||||||
| Net customer additions | 3,942 | 3,315 | (627 | ) | (15.9 | %) | |||||||||
| Average monthly churn rate | 1.5 | % | 1.4 | % | (0.1 | %) | (6.7 | %) | |||||||
| Average monthly revenue per customer location | $ | 751 | $ | 714 | $ | (37 | ) | (4.9 | %) | ||||||
| Adjusted EBITDA (in thousands) | $ | 28,787 | $ | 36,966 | $ | 8,179 | 28.4 | % | |||||||
Management Comments
“We are pleased to report continued strong results in adjusted EBITDA and free cash flow during the second quarter of 2010,” said Jim Geiger, chief executive officer of Cbeyond. “Our adjusted EBITDA of $18.4 million represents an increase of approximately 33% over the second quarter of 2009. We are also pleased to note that Cbeyond posted ‘free cash flow’ of $3.2 million in the second quarter, with free cash flow totaling $8.6 million in the first half of 2010. Free cash flow is a non-GAAP measure that we define as adjusted EBITDA less capital expenditures. While adjusted EBITDA and free cash flow results have developed largely as planned, revenue and ARPU have continued to be challenging in this tough economic and increasingly price-sensitive environment. Our efforts are focused on trying to optimize profitability in our target markets while continuing to grow and maintain our customer base.”
Geiger added, “Despite the still-sluggish small business sector, Cbeyond posted an increase in the level of customer additions in the second quarter, the San Francisco Bay Area market became an Established Market this quarter, and we are excited to note that we recently launched services in Boston, our 14th market.”
Second Quarter Financial and Business Summary
Revenues and ARPU
Cbeyond reported revenues of $111.8 million for the second quarter of 2010, an increase of 9.7% from the second quarter of 2009. ARPU, or average monthly revenue per customer location, was $708 in the second quarter of 2010, compared with $723 in the first quarter of 2010, and $748 in the second quarter of 2009. The decline in ARPU from the first quarter of 2010 was primarily due to the lower prices of the new packages introduced in 2010, the decline in customers’ demand for mobile hardware and services, decreased charges for usage above levels of voice minutes included in the Company’s packages, and from customers reducing the number of additional lines and services with incremental charges. Cbeyond believes these declines are related to the effects of the economic recession on customers and increased competitive pressures. This downward pressure has been partially offset by the value delivered through selling additional applications. In addition, Cbeyond experienced an increase in redemptions of previously issued promotional incentives, which resulted in a reduction to revenue of $0.6 million, or approximately $4 of ARPU, in the second quarter of 2010. Cbeyond believes this change in customer behavior is directly related to the current difficult economic environment that most small business are experiencing.
Cost of Service and Gross Margin
Cbeyond’s gross margin was 68.4% in the second quarter of 2010 as compared with 67.1% in the first quarter of 2010, and 66.2% in the second quarter of 2009. Improvements in gross margin have primarily resulted from reduced rates on services from vendors as Cbeyond’s volumes have increased, decreases in mobile hardware and services provided to customers, and investments in network architecture to drive operating expense reductions.
Operating Income (Loss), Adjusted EBITDA, Income Taxes and Net Loss
Cbeyond reported operating income of $0.1 million in the second quarter of 2010 compared with an operating loss of ($2.0) million in the second quarter of 2009. Total adjusted EBITDA for the second quarter of 2010 was $18.4 million, as compared with total adjusted EBITDA of $13.8 million in the second quarter of 2009. Total adjusted EBITDA for the second quarter of 2010 included adjusted EBITDA losses from Emerging Markets of ($3.0) million; in comparison, Emerging Markets contributed ($4.5) million of adjusted EBITDA losses for the second quarter of 2009. As of the second quarter of 2010, San Francisco has been re-categorized to the Established Market group due to its achieving four consecutive quarters of positive adjusted EBITDA. Total adjusted EBITDA included the impact of negative results from these early stage markets which were entered to drive longer term growth in the business (see Selected Quarterly Financial Data and Operating Metrics, pages 7-9). Cbeyond reported a net loss of ($0.1) million for the second quarter of 2010 as compared with a net loss of ($2.2) million for the second quarter of 2009.
Cash and Cash Equivalents
Cash and cash equivalents amounted to $51.8 million at the end of the second quarter of 2010, as compared with $42.6 million at the end of the first quarter of 2010. The cash and cash equivalents balance increased at June 30, 2010, due to the excess of cash flow from operating activities in the second quarter over capital expenditures, the timing of vendor payments, and improvements in accounts receivable.
Capital Expenditures
Capital expenditures were $15.2 million during the second quarter of 2010, compared with $13.2 million in the first quarter of 2010 and $16.9 million in the second quarter of 2009. Capital expenditures in the second quarter of 2010 increased from the first quarter of 2010 due to typical fluctuations in the timing of capital expenditures in Cbeyond’s markets and in its corporate operations.
Business Outlook for 2010
Cbeyond revises its annual guidance ranges for 2010 as follows:
| Current Guidance | Prior Guidance | |||
| Revenues | Growth of 9% to 10% | Growth of 10% to 13% | ||
| Adjusted EBITDA | Growth of 15% to 20% | Growth of 15% to 20% | ||
| Capital expenditures | Growth of -3% to 3% | Growth of 2% to 7% | ||
Guidance for revenue growth has been reduced due to lower than anticipated ARPU and customer additions, while guidance for adjusted EBITDA remains unchanged largely due to Cbeyond’s improving cost of service. Guidance for capital expenditures has been reduced due to the changes in the rate of new customer additions and purchasing economies.
Conference Call
Cbeyond will hold a conference call to discuss this press release Thursday, August 5, 2010, at 5:00 p.m. EDT. A live broadcast of the conference call will be available on-line at www.cbeyond.net. To listen to the live call, please go to the web site at least 10 minutes early to register, download, and install any necessary audio software. The conference call will also be available by dialing (877) 303-9219 (for domestic U.S. callers) and (760) 666-3559 (for international callers). For those who cannot listen to the live broadcast, an on-line replay will be available shortly after the call and continue to be available for one year.
About Cbeyond
Cbeyond, Inc. (NASDAQ: CBEY) is a leading provider of IT and communications services to more than 54,000 small businesses throughout the United States. Recently named as the sixth fastest growing technology company by Forbes magazine, and added to Standard & Poor’s Small Cap S&P 600 Index, Cbeyond offers more than 30 productivity-enhancing applications including local and long-distance voice, broadband Internet, mobile, BlackBerry(R), broadband laptop access, voicemail, email, web hosting, fax-to-email, data backup, file-sharing and virtual private networking. Cbeyond delivers these services over a 100 percent private all IP network. For more information on Cbeyond, visit www.cbeyond.net.
Forward-Looking Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.Such statements include, but are not limited to statements identified by words such as “expectations,” “guidance,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” “projects” and similar expressions.Such statements are based upon the current beliefs and expectations of Cbeyond’s management and are subject to significant risks and uncertainties.Actual results may differ from those set forth in the forward-looking statements.Factors that might cause future results to differ include, but are not limited to, the following: finalization of operating data, the significant reduction in economic activity, which particularly affects our target market of small businesses; the risk that we may be unable to continue to experience revenue growth at historical or anticipated levels; the risk of unexpected increases in customer churn levels; changes in federal or state regulation or decisions by regulatory bodies that affect Cbeyond; periods of economic downturn or unusual volatility in the capital markets or other negative macroeconomic conditions that could harm our business, including the resulting inability of certain of our customers to meet their payment obligations; the timing of the initiation, progress or cancellation of significant contracts or arrangements; the mix and timing of services sold in a particular period; our ability to recruit and maintain experienced management and personnel; rapid technological change and the timing and amount of start-up costs incurred in connection with the introduction of new services or the entrance into new markets; our ability to maintain or attract sufficient customers in existing or new markets; our ability to respond to increasing competition; our ability to manage the growth of our operations; changes in estimates of taxable income or utilization of deferred tax assets which could significantly affect the Company’s effective tax rate; pending regulatory action relating to our compliance with customer proprietary network information; external events outside of our control, including extreme weather, natural disasters, pandemics or terrorist attacks that could adversely affect our target markets; and general economic and business conditions.You are advised to consult any further disclosures we make on related subjects in the reports we file with the SEC, including the “Risk Factors” in our most recent annual report on Form 10-K, together with updates that may occur in our quarterly reports on Form 10-Q and Current Reports on Form 8-K.Such disclosure covers certain risks, uncertainties and possibly inaccurate assumptions that could cause our actual results to differ materially from expected and historical results.We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.
Key Operating Metrics and Non-GAAP Financial Measures
In this press release, the Company uses several key operating metrics and non-GAAP financial measures. The Company defines each of these metrics and provides a reconciliation of non-GAAP financial measures to the most directly comparable generally accepted accounting principles in the United States, or GAAP, financial measure. These financial measures and operating metrics are a supplement to GAAP financial information and should not be considered as an alternative to, or more meaningful than, net income, cash flow or operating income as determined in accordance with GAAP.
Adjusted EBITDA is not a substitute for operating income, net income, or cash flow from operating activities as determined in accordance with GAAP, as a measure of performance or liquidity. The Company defines adjusted EBITDA as net income before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, non-cash share-based compensation, public offering expenses, loss on disposal of property and equipment and other non-operating income or expense. Information relating to total adjusted EBITDA is provided so that investors have the same data that management employs in assessing the overall operation of the Company’s business.
Total adjusted EBITDA allows the chief operating decision maker to assess the performance of the Company’s business on a consolidated basis that corresponds to the measure used to assess the ability of its operating segments to produce operating cash flow to fund working capital needs, to service debt obligations and to fund capital expenditures. In particular, total adjusted EBITDA permits a comparative assessment of the Company’s operating performance, relative to a performance based on GAAP results, while isolating the effects of depreciation and amortization, which may vary among segments without any correlation to their underlying operating performance, and of non-cash share-based compensation, which is a non-cash expense that varies widely among similar companies.
| CBEYOND, INC. AND SUBSIDIARY | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2009 | 2010 | 2009 | 2010 | |||||||||||||
| Revenue: | ||||||||||||||||
| Customer revenue | $ | 100,041 | $ | 109,922 | $ | 196,513 | $ | 218,546 | ||||||||
| Terminating access revenue | 1,796 | 1,831 | 3,584 | 3,722 | ||||||||||||
| Total revenue | 101,837 | 111,753 | 200,097 | 222,268 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Cost of revenue | 34,465 | 35,303 | 66,344 | 71,692 | ||||||||||||
| Selling, general and administrative | 57,192 | 61,971 | 112,653 | 121,243 | ||||||||||||
| Depreciation and amortization | 12,134 | 14,331 | 23,767 | 28,613 | ||||||||||||
| Total operating expenses | 103,791 | 111,605 | 202,764 | 221,548 | ||||||||||||
| Operating income (loss) | (1,954 | ) | 148 | (2,667 | ) | 720 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 7 | 1 | 25 | 1 | ||||||||||||
| Interest expense | (21 | ) | (64 | ) | (110 | ) | (109 | ) | ||||||||
| Other income (expense), net | 136 | 117 | 238 | 1,654 | ||||||||||||
| Total other income (expense) | 122 | 54 | 153 | 1,546 | ||||||||||||
| Income (loss) before income taxes | (1,832 | ) | 202 | (2,514 | ) | 2,266 | ||||||||||
| Income tax (expense) benefit | (374 | ) | (300 | ) | 367 | (1,325 | ) | |||||||||
| Net income (loss) | $ | (2,206 | ) | $ | (98 | ) | $ | (2,147 | ) | $ | 941 | |||||
| Earnings per common share | ||||||||||||||||
| Basic | $ | (0.08 | ) | $ | – | $ | (0.08 | ) | $ | 0.03 | ||||||
| Diluted | $ | (0.08 | ) | $ | – | $ | (0.08 | ) | $ | 0.03 | ||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| Basic | 28,534 | 29,326 | 28,494 | 29,213 | ||||||||||||
| Diluted | 28,534 | 29,326 | 28,494 | 30,227 | ||||||||||||
| CBEYOND, INC. AND SUBSIDIARY | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| December 31, | June 30, | |||||||
| 2009 | 2010 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 39,267 | $ | 51,847 | ||||
| Accounts receivable, gross | 30,467 | 28,060 | ||||||
| Less: Allowance for doubtful accounts | (2,867 | ) | (2,753 | ) | ||||
| Accounts receivable, net | 27,600 | 25,307 | ||||||
| Other assets | 12,706 | 10,889 | ||||||
| Total current assets | 79,573 | 88,043 | ||||||
| Property and equipment, gross | 353,616 | 379,487 | ||||||
| Less: Accumulated depreciation and amortization | (216,722 | ) | (242,811 | ) | ||||
| Property and equipment, net | 136,894 | 136,676 | ||||||
| Other assets | 12,424 | 12,271 | ||||||
| Total assets | $ | 228,891 | $ | 236,990 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 12,121 | $ | 12,418 | ||||
| Other accrued liabilities | 47,651 | 47,356 | ||||||
| Total current liabilities | 59,772 | 59,774 | ||||||
| Non-current liabilities | 10,514 | 10,478 | ||||||
| Stockholders’ equity | ||||||||
| Common stock | 290 | 295 | ||||||
| Additional paid-in capital | 283,337 | 290,524 | ||||||
| Accumulated deficit | (125,022 | ) | (124,081 | ) | ||||
| Total stockholders’ equity | 158,605 | 166,738 | ||||||
| Total liabilities and stockholders’ equity | $ | 228,891 | $ | 236,990 | ||||
| CBEYOND, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Selected Quarterly Financial Data and Operating Metrics | ||||||||||||||||||||
| (Dollars in thousands, except for Other Operating Data) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Jun. 30 | Sept. 30 | Dec. 31 | Mar. 31 | Jun. 30 | ||||||||||||||||
| 2009 | 2009 | 2009 | 2010 | 2010 | ||||||||||||||||
| Revenues | ||||||||||||||||||||
| Established Markets | ||||||||||||||||||||
| Atlanta | $ | 21,260 | $ | 21,539 | $ | 21,421 | $ | 21,441 | $ | 21,355 | ||||||||||
| Dallas | 18,668 | 19,010 | 18,973 | 19,183 | 18,991 | |||||||||||||||
| Denver | 17,841 | 17,733 | 17,264 | 17,018 | 16,550 | |||||||||||||||
| Houston | 12,598 | 12,692 | 12,638 | 12,612 | 12,463 | |||||||||||||||
| Chicago | 9,823 | 9,943 | 9,740 | 9,632 | 9,397 | |||||||||||||||
| Los Angeles | 8,793 | 9,861 | 10,583 | 11,459 | 12,169 | |||||||||||||||
| San Diego | 4,487 | 4,805 | 4,954 | 5,058 | 5,218 | |||||||||||||||
| Newly-Established Markets | ||||||||||||||||||||
| San Francisco Bay Area | 2,994 | 3,544 | 3,982 | 4,499 | 4,863 | |||||||||||||||
| Established Markets | 96,464 | 99,127 | 99,555 | 100,902 | 101,006 | |||||||||||||||
| Emerging Markets | ||||||||||||||||||||
| Detroit | 2,280 | 2,546 | 2,766 | 3,016 | 3,198 | |||||||||||||||
| Miami | 2,008 | 2,545 | 3,042 | 3,555 | 3,970 | |||||||||||||||
| Minneapolis | 909 | 1,188 | 1,398 | 1,630 | 1,702 | |||||||||||||||
| Greater Washington, D.C. Area | 176 | 539 | 871 | 1,175 | 1,424 | |||||||||||||||
| Seattle | – | 10 | 87 | 237 | 453 | |||||||||||||||
| Emerging Markets | 5,373 | 6,828 | 8,164 | 9,613 | 10,747 | |||||||||||||||
| Total Revenues | $ | 101,837 | $ | 105,955 | $ | 107,719 | $ | 110,515 | $ | 111,753 | ||||||||||
| Adjusted EBITDA | ||||||||||||||||||||
| Established Markets | ||||||||||||||||||||
| Atlanta | $ | 11,560 | $ | 11,531 | $ | 12,116 | $ | 12,016 | $ | 12,029 | ||||||||||
| Dallas | 9,263 | 9,508 | 9,862 | 10,063 | 9,433 | |||||||||||||||
| Denver | 8,979 | 9,336 | 9,038 | 8,798 | 8,807 | |||||||||||||||
| Houston | 5,548 | 5,797 | 6,162 | 6,109 | 5,952 | |||||||||||||||
| Chicago | 3,689 | 3,706 | 3,874 | 3,964 | 3,670 | |||||||||||||||
| Los Angeles | 1,891 | 2,517 | 3,146 | 3,594 | 4,471 | |||||||||||||||
| San Diego | 740 | 1,040 | 1,328 | 1,690 | 1,929 | |||||||||||||||
| Newly-Established Markets | ||||||||||||||||||||
| San Francisco Bay Area | (452 | ) | 60 | 347 | 589 | 1,222 | ||||||||||||||
| Established Markets | 41,218 | 43,495 | 45,873 | 46,823 | 47,513 | |||||||||||||||
| Emerging Markets | ||||||||||||||||||||
| Detroit | (349 | ) | (175 | ) | 20 | 127 | 457 | |||||||||||||
| Miami | (1,303 | ) | (1,013 | ) | (666 | ) | (239 | ) | (184 | ) | ||||||||||
| Minneapolis | (1,177 | ) | (969 | ) | (727 | ) | (398 | ) | (259 | ) | ||||||||||
| Greater Washington, D.C. Area | (1,603 | ) | (1,445 | ) | (1,280 | ) | (1,157 | ) | (1,162 | ) | ||||||||||
| Seattle | (104 | ) | (694 | ) | (821 | ) | (1,101 | ) | (1,368 | ) | ||||||||||
| Boston | – | – | (1 | ) | (50 | ) | (509 | ) | ||||||||||||
| Emerging Markets | (4,536 | ) | (4,296 | ) | (3,475 | ) | (2,818 | ) | (3,025 | ) | ||||||||||
| Corporate | ||||||||||||||||||||
| Corporate | (22,879 | ) | (23,909 | ) | (23,349 | ) | (25,450 | ) | (26,077 | ) | ||||||||||
| Corporate | (22,879 | ) | (23,909 | ) | (23,349 | ) | (25,450 | ) | (26,077 | ) | ||||||||||
| Total Adjusted EBITDA | $ | 13,803 | $ | 15,290 | $ | 19,049 | $ | 18,555 | $ | 18,411 | ||||||||||
| CBEYOND, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Selected Quarterly Financial Data and Operating Metrics | ||||||||||||||||||||
| (Dollars in thousands, except for Other Operating Data) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Jun. 30 | Sept. 30 | Dec. 31 | Mar. 31 | Jun. 30 | ||||||||||||||||
| 2009 | 2009 | 2009 | 2010 | 2010 | ||||||||||||||||
| Adjusted EBITDA Margin (Market-Level) | ||||||||||||||||||||
| Established Markets | ||||||||||||||||||||
| Atlanta | 54.4 | % | 53.5 | % | 56.6 | % | 56.0 | % | 56.3 | % | ||||||||||
| Dallas | 49.6 | % | 50.0 | % | 52.0 | % | 52.5 | % | 49.7 | % | ||||||||||
| Denver | 50.3 | % | 52.6 | % | 52.4 | % | 51.7 | % | 53.2 | % | ||||||||||
| Houston | 44.0 | % | 45.7 | % | 48.8 | % | 48.4 | % | 47.8 | % | ||||||||||
| Chicago | 37.6 | % | 37.3 | % | 39.8 | % | 41.2 | % | 39.1 | % | ||||||||||
| Los Angeles | 21.5 | % | 25.5 | % | 29.7 | % | 31.4 | % | 36.7 | % | ||||||||||
| San Diego | 16.5 | % | 21.6 | % | 26.8 | % | 33.4 | % | 37.0 | % | ||||||||||
| Newly-Established Markets | ||||||||||||||||||||
| San Francisco Bay Area | (15.1 | %) | 1.7 | % | 8.7 | % | 13.1 | % | 25.1 | % | ||||||||||
| Established Markets | 42.7 | % | 43.9 | % | 46.1 | % | 46.4 | % | 47.0 | % | ||||||||||
| Emerging Markets | ||||||||||||||||||||
| Detroit | (15.3 | %) | (6.9 | %) | 0.7 | % | 4.2 | % | 14.3 | % | ||||||||||
| Miami | (64.9 | %) | (39.8 | %) | (21.9 | %) | (6.7 | %) | (4.6 | %) | ||||||||||
| Minneapolis | (129.5 | %) | (81.6 | %) | (52.0 | %) | (24.4 | %) | (15.2 | %) | ||||||||||
| Greater Washington, D.C. Area | N/M | N/M | (147.0 | %) | (98.5 | %) | (81.6 | %) | ||||||||||||
| Seattle | N/M | N/M | N/M | N/M | N/M | |||||||||||||||
| Boston | N/M | N/M | N/M | N/M | N/M | |||||||||||||||
| Emerging Markets | (84.4 | %) | (62.9 | %) | (42.6 | %) | (29.3 | %) | (28.1 | %) | ||||||||||
| Adjusted EBITDA margin (as % of total revenue) | ||||||||||||||||||||
| Corporate | (22.5 | %) | (22.6 | %) | (21.7 | %) | (23.0 | %) | (23.3 | %) | ||||||||||
| Total | 13.6 | % | 14.4 | % | 17.7 | % | 16.8 | % | 16.5 | % | ||||||||||
| Operating Income (Loss) | ||||||||||||||||||||
| Established Markets | ||||||||||||||||||||
| Atlanta | $ | 10,409 | $ | 10,375 | $ | 10,940 | $ | 11,004 | $ | 10,905 | ||||||||||
| Dallas | 8,368 | 8,607 | 8,818 | 9,179 | 8,475 | |||||||||||||||
| Denver | 8,208 | 8,553 | 8,225 | 8,102 | 8,046 | |||||||||||||||
| Houston | 4,820 | 5,074 | 5,396 | 5,553 | 5,326 | |||||||||||||||
| Chicago | 2,862 | 2,898 | 3,005 | 3,307 | 3,069 | |||||||||||||||
| Los Angeles | 1,147 | 1,650 | 2,186 | 2,756 | 3,510 | |||||||||||||||
| San Diego | 309 | 580 | 790 | 1,273 | 1,462 | |||||||||||||||
| Newly-Established Markets | ||||||||||||||||||||
| San Francisco Bay Area | (835 | ) | (379 | ) | (158 | ) | 97 | 692 | ||||||||||||
| Established Markets | 35,288 | 37,358 | 39,202 | 41,271 | 41,485 | |||||||||||||||
| Emerging Markets | ||||||||||||||||||||
| Detroit | (717 | ) | (564 | ) | (431 | ) | (243 | ) | 32 | |||||||||||
| Miami | (1,582 | ) | (1,264 | ) | (1,089 | ) | (579 | ) | (602 | ) | ||||||||||
| Minneapolis | (1,380 | ) | (1,196 | ) | (988 | ) | (632 | ) | (518 | ) | ||||||||||
| Greater Washington, D.C. Area | (2,002 | ) | (1,733 | ) | (1,613 | ) | (1,489 | ) | (1,519 | ) | ||||||||||
| Seattle | (114 | ) | (705 | ) | (971 | ) | (1,289 | ) | (1,551 | ) | ||||||||||
| Boston | – | – | (2 | ) | (51 | ) | (516 | ) | ||||||||||||
| Emerging Markets | (5,795 | ) | (5,462 | ) | (5,094 | ) | (4,283 | ) | (4,674 | ) | ||||||||||
| Corporate | ||||||||||||||||||||
| Corporate | (31,447 | ) | (34,026 | ) | (33,978 | ) | (36,416 | ) | (36,663 | ) | ||||||||||
| Corporate | (31,447 | ) | (34,026 | ) | (33,978 | ) | (36,416 | ) | (36,663 | ) | ||||||||||
| Total Operating Income (Loss) | $ | (1,954 | ) | $ | (2,130 | ) | $ | 130 | $ | 572 | $ | 148 | ||||||||
| CBEYOND, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Selected Quarterly Financial Data and Operating Metrics | ||||||||||||||||||||
| (Dollars in thousands, except for Other Operating Data) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Jun. 30 | Sept. 30 | Dec. 31 | Mar. 31 | Jun. 30 | ||||||||||||||||
| 2009 | 2009 | 2009 | 2010 | 2010 | ||||||||||||||||
| Capital Expenditures | ||||||||||||||||||||
| Established Markets | ||||||||||||||||||||
| Atlanta | $ | 1,222 | $ | 732 | $ | 695 | $ | 429 | $ | 493 | ||||||||||
| Dallas | 932 | 440 | 704 | 757 | 634 | |||||||||||||||
| Denver | 593 | 317 | 263 | 28 | 323 | |||||||||||||||
| Houston | 547 | 600 | 310 | 229 | 326 | |||||||||||||||
| Chicago | 422 | 585 | 376 | 384 | 242 | |||||||||||||||
| Los Angeles | 1,037 | 929 | 1,320 | 899 | 920 | |||||||||||||||
| San Diego | 500 | 444 | 325 | 147 | 186 | |||||||||||||||
| Newly-Established Markets | ||||||||||||||||||||
| San Francisco Bay Area | 548 | 446 | 569 | 1,112 | 320 | |||||||||||||||
| Established Markets | 5,801 | 4,493 | 4,562 | 3,985 | 3,444 | |||||||||||||||
| Emerging Markets | ||||||||||||||||||||
| Detroit | 287 | 282 | 345 | 152 | 275 | |||||||||||||||
| Miami | 722 | 534 | 462 | 383 | 306 | |||||||||||||||
| Minneapolis | 296 | 360 | 234 | 93 | 204 | |||||||||||||||
| Greater Washington, D.C. Area | 250 | 242 | 570 | 220 | 129 | |||||||||||||||
| Seattle | 1,216 | 1,306 | 317 | 584 | 199 | |||||||||||||||
| Boston | 3 | 139 | 167 | 786 | 1,038 | |||||||||||||||
| Emerging Markets | 2,774 | 2,863 | 2,095 | 2,218 | 2,151 | |||||||||||||||
| Corporate | ||||||||||||||||||||
| Corporate | 8,311 | 6,030 | 7,881 | 7,024 | 9,573 | |||||||||||||||
| Corporate | 8,311 | 6,030 | 7,881 | 7,024 | 9,573 | |||||||||||||||
| Total Capital Expenditures | $ | 16,886 | $ | 13,386 | $ | 14,538 | $ | 13,227 | $ | 15,168 | ||||||||||
| Other Operating Data | ||||||||||||||||||||
| Customers (at period end) | 46,405 | 48,580 | 50,203 | 51,731 | 53,518 | |||||||||||||||
| Net customer additions | 2,063 | 2,175 | 1,623 | 1,528 | 1,787 | |||||||||||||||
| Average monthly churn rate (1) | 1.5 | % | 1.4 | % | 1.5 | % | 1.4 | % | 1.4 | % | ||||||||||
| Average monthly revenue per customer location (2) | $ | 748 | $ | 744 | $ | 727 | $ | 723 | $ | 708 | ||||||||||
| (1) Calculated for each period as the average of monthly churn, which is defined for a given month as the number of customer locations disconnected in that month divided by the number of customer locations on our network at the beginning of that month. | ||||||||||||||||||||
| (2) Calculated as the revenue for a period divided by the average of the number of customer locations at the beginning of the period and the number of customer locations at the end of the period, divided by the number of months in the period. | ||||||||||||||||||||
| CBEYOND, INC. AND SUBSIDIARY | ||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure | ||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Jun. 30 | Sept. 30 | Dec. 31 | Mar. 31 | Jun. 30 | ||||||||||||||||
| 2009 | 2009 | 2009 | 2010 | 2010 | ||||||||||||||||
| Reconciliation of Adjusted EBITDA to Net income: | ||||||||||||||||||||
| Total Adjusted EBITDA for reportable segments | $ | 13,803 | $ | 15,290 | $ | 19,049 | $ | 18,555 | $ | 18,411 | ||||||||||
| Depreciation and amortization | (12,134 | ) | (13,258 | ) | (14,814 | ) | (14,282 | ) | (14,331 | ) | ||||||||||
| Non-cash share-based compensation | (3,623 | ) | (4,162 | ) | (4,105 | ) | (3,701 | ) | (3,932 | ) | ||||||||||
| Interest income | 7 | 2 | 1 | – | 1 | |||||||||||||||
| Interest expense | (21 | ) | (41 | ) | (1 | ) | (45 | ) | (64 | ) | ||||||||||
| Other income (expense), net | 136 | 15 | 244 | 1,537 | 117 | |||||||||||||||
| Income tax (expense) benefit | (374 | ) | 1,156 | 551 | (1,025 | ) | (300 | ) | ||||||||||||
| Net income (loss) | $ | (2,206 | ) | $ | (998 | ) | $ | 925 | $ | 1,039 | $ | (98 | ) | |||||||
| Six Months Ended | ||||||||||||||||||||
| Jun. 30, | ||||||||||||||||||||
| 2009 | 2010 | |||||||||||||||||||
| Reconciliation of Adjusted EBITDA to Net income: | ||||||||||||||||||||
| Total Adjusted EBITDA for reportable segments | $ | 28,787 | $ | 36,966 | ||||||||||||||||
| Depreciation and amortization | (23,767 | ) | (28,613 | ) | ||||||||||||||||
| Non-cash share-based compensation | (7,687 | ) | (7,633 | ) | ||||||||||||||||
| Interest income | 25 | 1 | ||||||||||||||||||
| Interest expense | (110 | ) | (109 | ) | ||||||||||||||||
| Other income (expense), net | 238 | 1,654 | ||||||||||||||||||
| Income tax (expense) benefit | 367 | (1,325 | ) | |||||||||||||||||
| Net income (loss) | $ | (2,147 | ) | $ | 941 | |||||||||||||||
CBEY-F CBEY-G
SOURCE: Cbeyond, Inc.
Cbeyond, Inc. Kurt Abkemeier, 678-370-2887 Vice President, Finance and Treasurer
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