EARTHLINK ANNOUNCES FIRST QUARTER 2010 RESULTS

Raises Full Year Guidance, Increases Quarterly Dividend

ATLANTA — April 27, 2010 — EarthLink, Inc. (NASDAQ:ELNK, news, filings) today announced financial results for its first quarter ended March 31, 2010. Highlights of today’s announcement include:

• Net income of $26.7 million or $0.25 per share
• Adjusted EBITDA (a non-GAAP measure) of $57.3 million
• Free cash flow (a non-GAAP measure) of $54.2 million
• Ending cash and marketable securities balance of $707.8 million
• Raised full year 2010 Adjusted EBITDA (a non-GAAP measure) guidance to $194 million to $202 million
• Dividend payments totaling $15.4 million in the first quarter
• Increased quarterly dividend to $0.16 per share

“We are very pleased that our first quarter operating results and financial performance were ahead of expectations. The tenure of our customer base continues to increase as the vast majority of our consumer base has been an EarthLink customer for two years or more, and nearly half for five years or more. We are seeing the positive impact of this increasing tenure on substantially all of our key operating metric trend lines. The increased guidance we announced today reflects these latest trend lines,” explained EarthLink Chairman and Chief Executive Officer Rolla P. Huff. “These positive trends across the business also reinforce our belief that our core access business will continue to generate meaningful cash well in to the future. We continue to manage this business for long-term value creation. Consistent with this strategy, today we announced that our Board of Directors approved a 14 percent increase in our regular quarterly dividend.”

Financial and Operating Results
EarthLink reported revenue of $157.3 million in the first quarter of 2010, a 4 percent decline from the fourth quarter of 2009, and down 21 percent from the first quarter of 2009. Broadband services comprised 59 percent of EarthLink’s revenue in the first quarter of 2010, up from 58 percent in the prior quarter and 55 percent in the year-ago quarter.

Similar to revenue, EarthLink’s subscriber losses also continued to attenuate with net subscriber losses of 118,000 in the first quarter, an improvement from 137,000 in the fourth quarter of 2009 and 208,000 in the year-ago quarter. The increasing tenure of EarthLink’s customer base continues to result in improvements in customer churn. In the first quarter of 2010, 86 percent of EarthLink’s consumer narrowband and DSL customers had two or more years of tenure with the company and 46 percent had five or more years of tenure, up from 73 percent and 34 percent, respectively, in the year-ago quarter. As a result, monthly subscriber churn improved to 3.1 percent in the first quarter of 2010, down from 3.2 percent in the fourth quarter of 2009 and 3.9 percent in the year-ago quarter.

The company continues to aggressively manage expenses. Total sales and marketing, operations, customer support, and general and administrative expenses were $45.3 million for the first quarter of 2010, a 22 percent reduction from the fourth quarter of 2009 and a 29 percent reduction from expenses in the year-ago quarter.

Profitability and Other Financial Measures
For the first quarter of 2010, EarthLink’s net income was $26.7 million, or $0.25 per share, as compared to net income of $32.5 million, or $0.30 per share, in the first quarter of 2009. EarthLink’s strong results in customer retention, combined with its ability to aggressively manage costs, resulted in the company generating Adjusted EBITDA (a non-GAAP measure, see definition in “Non-GAAP Measures” below) of $57.3 million in the first quarter of 2010, compared to Adjusted EBITDA of $50.9 million in the fourth quarter of 2009 and $68.9 million in the first quarter of 2009.

Balance Sheet and Cash Flow
EarthLink generated free cash flow (a non-GAAP measure, see definition in “Non-GAAP Measures” below) of $54.2 million during the first quarter of 2010, compared to $48.4 million in the fourth quarter of 2009 and $65.7 million in the first quarter of 2009.

Capital expenditures for the company were $3.1 million in the first quarter. EarthLink made $15.4 million of dividend payments in the quarter. EarthLink ended the first quarter of 2010 with $707.8 million in cash and marketable securities.

Business Outlook
The following statements are forward-looking, and actual results may differ materially. See comments under “Cautionary Information Regarding Forward-Looking Statements” below. EarthLink undertakes no obligation to update these statements.

Today EarthLink increased its guidance for the full year 2010. Management now expects 2010 Adjusted EBITDA of $194 million to $202 million; free cash flow of $178 million to $192 million, based upon the aforementioned Adjusted EBITDA guidance combined with $10 million to $16 million in estimated capital expenditures; and net income of $84 million to $92 million for the full year 2010.

Increased Dividend
EarthLink today announced that its Board of Directors has increased the amount of its quarterly cash dividend on its common stock from $0.14 per share to $0.16 per share. This increase will be reflected in the next quarterly dividend to be paid on June 28, 2010 to shareholders of record on June 14, 2010.

Non-GAAP Measures
Adjusted EBITDA is defined as net income before interest expense and other, net, income taxes, depreciation and amortization, stock-based compensation expense, gain (loss) on investments, net, impairment of goodwill and intangible assets, and facility exit and restructuring costs.

Free cash flow is defined as net income before interest expense and other, net, income taxes, depreciation and amortization, stock-based compensation expense, gain (loss) on investments, net, impairment of goodwill and intangible assets, and facility exit and restructuring costs, less cash used for purchases of property and equipment and purchases of subscriber bases.

Adjusted EBITDA and free cash flow are non-GAAP financial performance measures. They should not be considered in isolation or as an alternative to measures determined in accordance with U.S. generally accepted accounting principles. Please refer to the Consolidated Financial Highlights for a reconciliation of these non-GAAP financial performance measures to the most comparable measures reported in accordance with U.S. generally accepted accounting principles and Footnote 3 of the Consolidated Financial Highlights for a discussion of the presentation, comparability and use of such financial performance measures.

Conference Call for Analysts and Investors

Conference Call Details
Tuesday, April 27, 2010, at 8:30 a.m. EDT hosted by EarthLink’s Chairman and Chief Executive Officer, Rolla P. Huff and Chief Financial Officer, Bradley A. Ferguson.
U.S. and Canada Dial-in Number 800-706-0730
International Dial-in Number 706-634-5173
Participants reference the EarthLink call and dial in 10 minutes prior to scheduled start time.

Webcast
A live Webcast of the conference call will be available at: http://ir.earthlink.net/index.cfm

Replay
Replay available from 11:30 a.m. EDT on April 27 through midnight on May 4.
Dial 800-642-1687 from US and Canada, International callers dial 706-645-9291.
The replay confirmation code is 67961666.
The Webcast will be archived on the company’s website at: http://ir.earthlink.net/events.cfm

Download the First Quarter 2010 Financial Results

Cautionary Information Regarding Forward-Looking Statements
This press release includes “forward-looking” statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described. Although we believe that the expectations expressed in these forward-looking statements are reasonable, we cannot promise that our expectations will turn out to be correct. Our actual results could be materially different from and worse than our expectations. We disclaim any obligation to update any forward-looking statements contained herein, except as may be required pursuant to applicable law. With respect to forward-looking statements in this press release, the company seeks the protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include, without limitation, (1) that the continued decline of our consumer access subscribers, combined with the change in mix of our consumer access subscriber base from narrowband to broadband, will adversely affect our results of operations; (2) that we will have less ability in the future to implement cost reduction initiatives to offset our revenue declines, which will adversely affect our results of operations; (3) that we face significant competition which could reduce our profitability; (4) that adverse economic conditions may harm our business; (5) that we may not be able to execute our business strategy for our Business Services segment, which could adversely impact our results of operations and cash flows; (6) that our commercial and alliance arrangements may not be renewed or may not generate expected benefits, which could adversely affect our results of operations; (7) that our business is dependent on the availability of third-party telecommunications service providers; (8) that we may be unable to retain sufficient qualified personnel, and the loss of any of our key executive officers could adversely affect us; (9) that we may be unsuccessful in making and integrating acquisitions into our business, which could result in operating difficulties, losses and other adverse consequences; (10) that if we do not continue to innovate and provide products and services that are useful to subscribers, we may not remain competitive, and our revenues and operating results could suffer; (11) that our business may suffer if third parties used for customer service and technical support and certain billing services are unable to provide these services or terminate their relationships with us; (12) that interruption or failure of our network and information systems and other technologies could impair our ability to provide our services, which could damage our reputation and harm our operating results; (13) that government regulations could adversely affect our business or force us to change our business practices; (14) that privacy concerns relating to our business could damage our reputation and deter current and potential users from using our services; (15) that we may not be able to protect our intellectual property; (16) that we may be accused of infringing upon the intellectual property rights of third parties, which is costly to defend and could limit our ability to use certain technologies in the future; (17) that if we are unable to successfully defend against legal actions we could face substantial liabilities; (18) that our business depends on effective business support systems, processes and personnel; (19) that as a result of our continuing review of our business, we may have to undertake further restructuring plans that would require additional charges, including incurring facility exit and restructuring charges; (20) that we may be required to recognize additional impairment charges on our goodwill and intangible assets, which would adversely affect our results of operations and financial position; (21) that we may have exposure to greater than anticipated tax liabilities and the use of our net operating losses and certain other tax attributes could be limited in the future; (22) that we may change our cash return strategy; (23) that our stock price may be volatile; (24) that our indebtedness could adversely affect our financial health and limit our ability to react to changes in our industry; and (25) that provisions of our second restated certificate of incorporation, amended and restated bylaws and other elements of our capital structure could limit our share price and delay a change of management. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management’s expectations, are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements and risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2009.

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About EarthLink
“EarthLink. We revolve around you™.” As the nation’s Internet expert, Atlanta-based EarthLink has earned an award-winning reputation for outstanding customer service and its suite of online products and services. Serving millions of subscribers, EarthLink offers what every user should expect from their ISP: high-quality connectivity, minimal online intrusions and customizable features. Whether it’s dial up, high-speed Internet services like DSL and cable Internet, home phone service, Web hosting, or “EarthLink Extras” like home networking or security, EarthLink connects people to the power and possibilities of the Internet. Learn more about EarthLink by calling (800) EARTHLINK or visiting EarthLink’s Web site at www.EarthLink.net.

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