For the quarter ended 30 June 2014:
- Recurring revenue growth driven by consecutive quarters of strong sales and installation performance
- Continued improvement in gross profit, adjusted EBITDA and proxy cash flow as the business scales
- Reiterated guidance, anticipating recurring revenue growth at or marginally above market growth in 2014
London, UNITED KINGDOM – 7 August 2014 – euNetworks Group Limited (SGX: 5VT.SI), a unique Western European provider of bandwidth infrastructure services, announced results for the three months ended 30 June 2014. Through Q2 2014 the Group continued the momentum that was evident from Q1 2014, further contributing to euNetworks’ planned growth for 2014. Sales performance was strong, with the last three quarters delivering the strongest period of sales success in the company’s history. The installation of services were also strong, growing 3% from Q1 2014 and driving growth in recurring revenue.
Recurring revenue was €25.1m in Q2 2014, improving 2% from Q2 2013 and Q1 2014. With two consecutive quarters of 2% growth in recurring revenue, there is good momentum for year on year recurring revenue growth.
In Q2 2014, €21.1m of total revenue was from network services, growing 5% from Q2 2013. euNetworks is growing network revenue at the upper end of the forecast market growth rate of 3-5% (Analyst estimates). These results reflect euNetworks’ continued successful commercial focus on Dark Fibre, Wavelengths, Ethernet and the euTrade service portfolio.
Gross profit continued to improve, reaching €18.9m in Q2 2014, up 7% from Q2 2013 and increasing 1% from Q1 2014. Core network gross profit was €15.9m, up from €15.8m in Q1 2014. Gross margin reached 75.3% in the quarter, up from 72.0% in Q2 2013. The company expects this trend to continue given the focus on selling on-net high bandwidth services. Average gross margin on new sales was 84% in Q2 2014 and 93% in Q1 2014.
Adjusted EBITDA was €7.0m in Q2 2014, increasing 17% from Q2 2013 and 8% from Q1 2014. This growth shows the continued scaling of the business.
Capital expenditure was €6.9m in Q2 2014, 41% higher than in Q2 2013 and up 1% from Q1 2014. euNetworks continues to invest in growth and network development projects to create value for the business. Capital expenditure was largely success based in support of key customer projects in the quarter.
Proxy cash flow was €0.1m in Q2 2014, down from €1.1m in Q2 2013 but improving from €(0.3)m in Q1 2014.
“Through 2Q we continued to deliver strong sales and recurring revenue growth, further improving our trading performance that I talked to last quarter,” said Brady Rafuse, Chief Executive Officer of euNetworks. “This coupled with our gross profit and adjusted EBITDA growth is scaling the business through 2014. “Our customers value our network footprint and the developments we continue to make with them. We are confident that these trends will continue through the remainder of 2014 and are excited by the opportunities we see ahead.”