[Thehostingnews] Web Hosting, VoIP Firm, Covad Financials, Reveal Growth and Profitability Surge
San Jose, California - (The Hosting News) - August 22, 2007 - Web host and national provider of integrated voice and data communications firm, Covad Communications Group, Inc., has reported its second quarter 2007 financial results, including a subscription growth product revenue increase, of 31%.
In addition, Covad reported $120.6 million in net revenues, $4.3 million in A-EBITDA and a net loss of $11.6 million, or a $0.04 loss per share.
Financial and Business Highlights include:
$120.6 million in net revenues
31 percent increase in subscription revenue from Growth products from the second quarter of 2006
$4.3 million in A-EBITDA
$11.6 million ($0.04 per share) net loss
$6.5 million usage of cash, cash equivalents and short-term investments, and restricted cash and cash equivalents
8 percent reduction in workforce resulting in expected savings of approximately $5.5 million in the second half of 2007
Launched Bonded T1 and the nation's first standalone ADSL 2+ service for businesses
Over 12,000 line-powered voice access subscribers added, an increase of approximately 51 percent from the first quarter of 2007
19 percent increase in wireless subscribers, to 3,600, from the second quarter of 2006; expanded wireless network footprint in Los Angeles
Charles Hoffman, President and Chief Executive Officer of Covad explained, ''In the second quarter, we continued to focus on the transformation of our business towards higher-margin growth services, such as our recently-launched Bonded T1 and ADSL 2+ services. The result of this transformation will be a leaner, more nimble enterprise that is intensely focused on doing a few things exceedingly well. Among these are providing business-class next generation broadband services, a superior customer experience, and an innovative choice for partners. In order to increase shareholder value, we will continue to optimize our business in the face of changing dynamics in our competitive industry.''
The Summary of Financial Results indicated:
Net revenues for the second quarter of 2007 totaled $120.6 million, an increase of $0.4 million from the $120.2 million reported for the first quarter of 2007, and an increase of $2.1 million from the $118.5 million reported for the second quarter of 2006.
Direct subscribers for the second quarter of 2007 contributed $44.0 million of net revenues, or 36.5 percent, as compared to $43.4 million, or 36.1 percent, for the first quarter of 2007, and $39.6 million, or 33.4 percent, for the second quarter of 2006. Wholesale subscribers for the second quarter of 2007 contributed $76.6 million of net revenues, or 63.5 percent, as compared to $76.8 million, or 63.9 percent, for the first quarter of 2007, and $78.9 million, or 66.6 percent, for the second quarter of 2006.
Subscription revenue from Growth products for the second quarter of 2007 totaled $53.8 million, an increase of $3.6 million, or 7.2 percent, from the first quarter of 2007, and an increase of $12.8 million, or 31.2 percent from the second quarter of 2006. Covad's growth products are T-1, business ADSL, Line-Powered Voice Access LPVA, Voice over Internet Protocol VoIP and wireless. The increase from the first quarter of 2007 was attributable to increases in broadband subscription revenue from T-1, business ADSL and LPVA of $2.6 million, VoIP subscription revenue of $0.8 million and Wireless subscription revenue of $0.2 million. The increase from the second quarter of 2006 was attributable to increases in broadband subscription revenue from T-1, business ADSL and LPVA of $8.5 million, VoIP subscription revenue of $3.6 million and wireless subscription revenue of $0.7 million. Subscription revenue from Growth products for the second quarter of 2007 contributed 48.6 percent of total subscription revenues, an increase of 2.8 percent from the first quarter of 2007 and an increase of 10.4 percent from the second quarter of 2006. Refer to the Selected Financial Data below, including Note 3, for additional information, including a summary of subscription revenue from Growth and Legacy products and a reconciliation of subscription revenue to the most directly comparable GAAP measure.
Subscription revenue from Legacy products for the second quarter of 2007 totaled $57.0 million, a decrease of $2.5 million, or 4.2 percent, from the first quarter of 2007, and a decrease of $9.6 million, or 14.4 percent from the second quarter of 2006. Covad's legacy products, primarily sold through wholesale channels, are consumer ADSL, business SDSL, frame relay and high-capacity transport circuits. The decreases from the first quarter of 2007 and second quarter of 2006 were primarily attributable to decreases in broadband subscription revenue from consumer ADSL and business SDSL and frame relay products. Subscription revenue from Legacy products for the second quarter of 2007 contributed 51.4 percent of total subscription revenues, a decrease of 2.8 percent from the first quarter of 2007 and a decrease of 10.5 percent from the second quarter of 2006. Refer to the Selected Financial Data below, including Note 3, for additional information, including a summary of subscription revenue from Growth and Legacy products and a reconciliation of subscription revenue to the most directly comparable GAAP measure.
Revenue from business subscribers for the second quarter of 2007 contributed $95.7 million of net revenues, a 0.9 percent increase from the first quarter of 2007 and a 5.7 percent increase from the second quarter of 2006. Revenue from business subscribers comprised 79.4 percent of net revenues, up from 78.9 percent in the first quarter of 2007 and 76.4 percent in the second quarter of 2006. Revenue from consumer subscribers for the second quarter of 2007 contributed $24.9 million of net revenues compared to $25.4 million in the first quarter of 2007 and $28.0 million in the second quarter of 2006. Revenue from consumer subscribers for the second quarter of 2007 comprised 20.6 percent of net revenues, down from 21.1 percent in the first quarter of 2007 and 23.6 percent in the second quarter of 2006.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter of 2007 totaled $4.3 million, up from the $1.2 million A-EBITDA reported for the first quarter of 2007, and down from the $25.6 million A-EBITDA reported for the second quarter of 2006. A-EBITDA in the second quarter of 2007 includes a benefit of $2.7 million as a result of a settlement with one of its vendors, and a $1.4 million charge for employee post-employment benefits, primarily severance costs, as a result of reductions in Covad's workforce during the second quarter of 2007. These cost reduction actions taken in the second quarter of 2007 are expected to result in approximately $5.5 million in savings in the second half of 2007. Included in A-EBITDA for the second quarter of 2006 are the benefits of a one-time federal excise tax adjustment that contributed approximately $19.5 million to Covad's A-EBITDA and a $2.1 million benefit from an employment related tax adjustment. Refer to the Selected Financial Data below, including Note 2, for additional information, including a reconciliation of this non-GAAP financial performance measure to the most directly comparable GAAP measure.
Net loss for the second quarter of 2007 totaled $11.6 million, or $0.04 loss per share, as compared to the $14.5 million net loss, or $0.05 loss per share, reported for the first quarter of 2007 and the $12.5 million net income, or $0.04 per share, reported for the second quarter of 2006. As stated above, the second quarter of 2007 includes a benefit of $2.7 million as a result of a settlement with one of its vendors, and a $1.4 million charge for employee post-employment benefits, primarily severance costs, as a result of reductions in Covad's workforce during the second quarter of 2007. Included in net income for the second quarter of 2006 are the benefits of a one-time federal excise tax adjustment that contributed approximately $19.5 million to Covad's A-EBITDA and a $2.1 million benefit from an employment related tax adjustment.
Cash, cash equivalents and short-term investments, and restricted cash and cash equivalents at the end of the second quarter of 2007 totaled $65.6 million, a decrease of $6.5 million when compared to the balance of $72.1 million at the end of the first quarter of 2007. This change in cash, cash equivalents and short-term investments, and restricted cash and cash equivalents for the second quarter of 2007 included $4.9 million of on-going expenditures related to Covad LPVA services, which is being funded with the proceeds from the strategic agreement with EarthLink, and $0.8 million of post-employment benefit payments related to the reduction in our workforce.
Justin Spencer, Chief Financial Officer at Covad added, '''In the second quarter of 2007, we took several actions to improve our future financial performance, including improving the efficiency of our growth business and reducing the size of our workforce by approximately 8 percent. These actions along with the momentum in orders of key growth products such as T1/Bonded T1 and Line Powered Voice will enable us to improve our financial results and build a platform for sustainable success going forward.''
Covad's full year guidance is unchanged. For the fiscal year 2007, Covad expects:
Net revenues in the range of $485 - $505 million
A-EBITDA in the range of $25 - $35 million
Net loss in the range of $27 - $41 million
A nationwide provider of integrated voice and data communications, Covad offers DSL, Voice Over IP, T1, web hosting, managed security, IP and dial-up, wireless broadband, and bundled voice and data services directly through Covad's network and through Internet Service Providers, value-added resellers, telecommunications carriers and affinity groups to small and medium-sized businesses and home users. According to the company, as the first company to commercially deploy DSL in the United States, Covad has spent hundreds of millions of dollars building a network that passes more than 57 million homes and businesses in 44 states - the largest nationwide footprint of any DSL company. Covad broadband services are currently available across the nation in 235 Metropolitan Statistical Areas (MSAs) which represent over 50 percent of all US homes and businesses. Corporate headquarters is located at 110 Rio Robles, San Jose, California 95134. Telephone: 1-888-GO-COVAD.
To learn more Covad, please visit: www.covad.com.
http://www.thehostingnews.com/news-web-hosting-voip-firm-covad-financials-reveal-growth-and-profitability-surge-3574.html
San Jose, California - (The Hosting News) - August 22, 2007 - Web host and national provider of integrated voice and data communications firm, Covad Communications Group, Inc., has reported its second quarter 2007 financial results, including a subscription growth product revenue increase, of 31%.
In addition, Covad reported $120.6 million in net revenues, $4.3 million in A-EBITDA and a net loss of $11.6 million, or a $0.04 loss per share.
Financial and Business Highlights include:
$120.6 million in net revenues
31 percent increase in subscription revenue from Growth products from the second quarter of 2006
$4.3 million in A-EBITDA
$11.6 million ($0.04 per share) net loss
$6.5 million usage of cash, cash equivalents and short-term investments, and restricted cash and cash equivalents
8 percent reduction in workforce resulting in expected savings of approximately $5.5 million in the second half of 2007
Launched Bonded T1 and the nation's first standalone ADSL 2+ service for businesses
Over 12,000 line-powered voice access subscribers added, an increase of approximately 51 percent from the first quarter of 2007
19 percent increase in wireless subscribers, to 3,600, from the second quarter of 2006; expanded wireless network footprint in Los Angeles
Charles Hoffman, President and Chief Executive Officer of Covad explained, ''In the second quarter, we continued to focus on the transformation of our business towards higher-margin growth services, such as our recently-launched Bonded T1 and ADSL 2+ services. The result of this transformation will be a leaner, more nimble enterprise that is intensely focused on doing a few things exceedingly well. Among these are providing business-class next generation broadband services, a superior customer experience, and an innovative choice for partners. In order to increase shareholder value, we will continue to optimize our business in the face of changing dynamics in our competitive industry.''
The Summary of Financial Results indicated:
Net revenues for the second quarter of 2007 totaled $120.6 million, an increase of $0.4 million from the $120.2 million reported for the first quarter of 2007, and an increase of $2.1 million from the $118.5 million reported for the second quarter of 2006.
Direct subscribers for the second quarter of 2007 contributed $44.0 million of net revenues, or 36.5 percent, as compared to $43.4 million, or 36.1 percent, for the first quarter of 2007, and $39.6 million, or 33.4 percent, for the second quarter of 2006. Wholesale subscribers for the second quarter of 2007 contributed $76.6 million of net revenues, or 63.5 percent, as compared to $76.8 million, or 63.9 percent, for the first quarter of 2007, and $78.9 million, or 66.6 percent, for the second quarter of 2006.
Subscription revenue from Growth products for the second quarter of 2007 totaled $53.8 million, an increase of $3.6 million, or 7.2 percent, from the first quarter of 2007, and an increase of $12.8 million, or 31.2 percent from the second quarter of 2006. Covad's growth products are T-1, business ADSL, Line-Powered Voice Access LPVA, Voice over Internet Protocol VoIP and wireless. The increase from the first quarter of 2007 was attributable to increases in broadband subscription revenue from T-1, business ADSL and LPVA of $2.6 million, VoIP subscription revenue of $0.8 million and Wireless subscription revenue of $0.2 million. The increase from the second quarter of 2006 was attributable to increases in broadband subscription revenue from T-1, business ADSL and LPVA of $8.5 million, VoIP subscription revenue of $3.6 million and wireless subscription revenue of $0.7 million. Subscription revenue from Growth products for the second quarter of 2007 contributed 48.6 percent of total subscription revenues, an increase of 2.8 percent from the first quarter of 2007 and an increase of 10.4 percent from the second quarter of 2006. Refer to the Selected Financial Data below, including Note 3, for additional information, including a summary of subscription revenue from Growth and Legacy products and a reconciliation of subscription revenue to the most directly comparable GAAP measure.
Subscription revenue from Legacy products for the second quarter of 2007 totaled $57.0 million, a decrease of $2.5 million, or 4.2 percent, from the first quarter of 2007, and a decrease of $9.6 million, or 14.4 percent from the second quarter of 2006. Covad's legacy products, primarily sold through wholesale channels, are consumer ADSL, business SDSL, frame relay and high-capacity transport circuits. The decreases from the first quarter of 2007 and second quarter of 2006 were primarily attributable to decreases in broadband subscription revenue from consumer ADSL and business SDSL and frame relay products. Subscription revenue from Legacy products for the second quarter of 2007 contributed 51.4 percent of total subscription revenues, a decrease of 2.8 percent from the first quarter of 2007 and a decrease of 10.5 percent from the second quarter of 2006. Refer to the Selected Financial Data below, including Note 3, for additional information, including a summary of subscription revenue from Growth and Legacy products and a reconciliation of subscription revenue to the most directly comparable GAAP measure.
Revenue from business subscribers for the second quarter of 2007 contributed $95.7 million of net revenues, a 0.9 percent increase from the first quarter of 2007 and a 5.7 percent increase from the second quarter of 2006. Revenue from business subscribers comprised 79.4 percent of net revenues, up from 78.9 percent in the first quarter of 2007 and 76.4 percent in the second quarter of 2006. Revenue from consumer subscribers for the second quarter of 2007 contributed $24.9 million of net revenues compared to $25.4 million in the first quarter of 2007 and $28.0 million in the second quarter of 2006. Revenue from consumer subscribers for the second quarter of 2007 comprised 20.6 percent of net revenues, down from 21.1 percent in the first quarter of 2007 and 23.6 percent in the second quarter of 2006.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the second quarter of 2007 totaled $4.3 million, up from the $1.2 million A-EBITDA reported for the first quarter of 2007, and down from the $25.6 million A-EBITDA reported for the second quarter of 2006. A-EBITDA in the second quarter of 2007 includes a benefit of $2.7 million as a result of a settlement with one of its vendors, and a $1.4 million charge for employee post-employment benefits, primarily severance costs, as a result of reductions in Covad's workforce during the second quarter of 2007. These cost reduction actions taken in the second quarter of 2007 are expected to result in approximately $5.5 million in savings in the second half of 2007. Included in A-EBITDA for the second quarter of 2006 are the benefits of a one-time federal excise tax adjustment that contributed approximately $19.5 million to Covad's A-EBITDA and a $2.1 million benefit from an employment related tax adjustment. Refer to the Selected Financial Data below, including Note 2, for additional information, including a reconciliation of this non-GAAP financial performance measure to the most directly comparable GAAP measure.
Net loss for the second quarter of 2007 totaled $11.6 million, or $0.04 loss per share, as compared to the $14.5 million net loss, or $0.05 loss per share, reported for the first quarter of 2007 and the $12.5 million net income, or $0.04 per share, reported for the second quarter of 2006. As stated above, the second quarter of 2007 includes a benefit of $2.7 million as a result of a settlement with one of its vendors, and a $1.4 million charge for employee post-employment benefits, primarily severance costs, as a result of reductions in Covad's workforce during the second quarter of 2007. Included in net income for the second quarter of 2006 are the benefits of a one-time federal excise tax adjustment that contributed approximately $19.5 million to Covad's A-EBITDA and a $2.1 million benefit from an employment related tax adjustment.
Cash, cash equivalents and short-term investments, and restricted cash and cash equivalents at the end of the second quarter of 2007 totaled $65.6 million, a decrease of $6.5 million when compared to the balance of $72.1 million at the end of the first quarter of 2007. This change in cash, cash equivalents and short-term investments, and restricted cash and cash equivalents for the second quarter of 2007 included $4.9 million of on-going expenditures related to Covad LPVA services, which is being funded with the proceeds from the strategic agreement with EarthLink, and $0.8 million of post-employment benefit payments related to the reduction in our workforce.
Justin Spencer, Chief Financial Officer at Covad added, '''In the second quarter of 2007, we took several actions to improve our future financial performance, including improving the efficiency of our growth business and reducing the size of our workforce by approximately 8 percent. These actions along with the momentum in orders of key growth products such as T1/Bonded T1 and Line Powered Voice will enable us to improve our financial results and build a platform for sustainable success going forward.''
Covad's full year guidance is unchanged. For the fiscal year 2007, Covad expects:
Net revenues in the range of $485 - $505 million
A-EBITDA in the range of $25 - $35 million
Net loss in the range of $27 - $41 million
A nationwide provider of integrated voice and data communications, Covad offers DSL, Voice Over IP, T1, web hosting, managed security, IP and dial-up, wireless broadband, and bundled voice and data services directly through Covad's network and through Internet Service Providers, value-added resellers, telecommunications carriers and affinity groups to small and medium-sized businesses and home users. According to the company, as the first company to commercially deploy DSL in the United States, Covad has spent hundreds of millions of dollars building a network that passes more than 57 million homes and businesses in 44 states - the largest nationwide footprint of any DSL company. Covad broadband services are currently available across the nation in 235 Metropolitan Statistical Areas (MSAs) which represent over 50 percent of all US homes and businesses. Corporate headquarters is located at 110 Rio Robles, San Jose, California 95134. Telephone: 1-888-GO-COVAD.
To learn more Covad, please visit: www.covad.com.
http://www.thehostingnews.com/news-web-hosting-voip-firm-covad-financials-reveal-growth-and-profitability-surge-3574.html
