|By Business Wire||
|February 27, 2013 10:38 AM EST||
euNetworks Group Limited (SGX: H23.SI), a unique Western European provider of bandwidth infrastructure services, announced results for the three months ended, and full year ending 31 December 2012. The Group reported strong financial performance for the year with continued improvement in recurring revenue, Adjusted EBITDA1 and proxy cash flow.
Recurring revenue improved 10% year over year, to €24.5m in 4Q 2012. Adjusted EBITDA was €5.0m in 4Q 2012, improving materially from 4Q 2011 and 52% from 3Q 2012. Absolute capital spending was reduced and allocated increasingly toward customer sales throughout the year.
Gross margin for the full year was 68.0%, down from 69.0% in 2011, reflecting the impact of acquisitions completed in 2Q and 3Q 2011. Gross margin for the quarter was 71.2%, improving from 64.7% in 4Q 2011 and from 67.1% in 3Q 2012. Year on year and sequential gross margin improvement in 4Q 2012 reflected the Company’s continued focus on high margin new sales. New sales delivered gross margins of greater than 80% throughout 2012.
“The Group maintained its growth and scaling momentum reported quarter over quarter throughout 2012,” said Brady Rafuse, Chief Executive Officer of euNetworks. “As integration and rationalisation wound down in 1H 2012, customer bandwidth demand steadily increased. This enabled our discretionary capital investment to be shifted even more towards extending network reach for our customers. We saw growing opportunity with both our existing customer base and new customers and segments.”
“Whilst our financial metrics continued to improve, churn remained higher than previously seen through 2012. We acknowledge churn is a component of our business which needs to be managed aggressively. Adjusted EBITDA growth, utilising discretionary capital efficiently, is the primary measure for value creation in our business. Steadily improving operating efficiency and leveraging increasing customer demand will enable euNetworks to deliver real value creation over time.”
Performance Highlights for the Full Year 2012
- Sales performance and customer contract value improved in 2012 relative to 2011. Whilst more than 90% of new sales were derived from the Company’s existing customer base, new customer relationships were consistently established. In addition, more than 95% of sales were within the Company’s core product portfolio including Fibre, Wavelengths, Ethernet, Colocation and Internet, with sales of non-core products of IP VPN and SDH declining materially as expected. Average contract term for new customer contracts was 41 months in the year, increasing from 39 months in 2011.
The Company noted increased awareness by customers, varying by size and industry across all operating markets, of the benefits of fibre connections between buildings and data centres.
Accordingly, the Company made material lit services network investments in 2012 including deployment of an 8.8 Terabit per second Wavelength network from London through Manchester to Dublin and an upgrade to the Company’s long haul transport platform across its entire footprint.
The low latency euTrade service portfolio continued to see strong sales and was a revenue generator in 2012. The December launch of a new euTrade route, delivering high-capacity low latency fibre based connectivity between Basildon, UK (NYSE Euronext) and Frankfurt, Germany contributed to sales in 4Q 2012. However, increased competition through microwave technologies mean that euTrade is expected to be a smaller contributor to the Company’s sales mix going forward.
Sales efforts to pursue new segments in 2012 included the media industry, where both Ethernet and Fibre services proved popular to several large new media customers.
At the same time, the wholesale segment remained an important part of the Company’s business. Whilst supporting existing wholesale customers for their traditional internal needs, euNetworks has developed bundling techniques, thereby enabling such customers to serve their enterprise customers with higher capacity services.
Ultimately, the ability to deliver services directly to enterprise customers or bundled together with partners’ and wholesale providers’ offerings, has remained our core sales methodology. As additional buildings are connected to the network, customers enjoy the benefits of having access to essentially unlimited bandwidth capacity via euNetworks’ infrastructure and the Company enjoys the scaling benefits of high gross margins delivered over an easy to maintain product set.
- Churn was 1.7% in 4Q 2012 and averaged 1.5% of monthly recurring revenue for the full year 2012. This was higher than previously seen in the business and is expected to continue for the foreseeable future. The primary sources of churn included end of term customer contracts for non-core SDH and IP VPN services in Germany as well as expired euTrade customer contracts which generally related to strategy changes by some Financial Services customers. That is, they discontinued providing services to their customers thereby terminating their need for use of low latency bandwidth services altogether.
Gross margin for churn averaged 72% for 2012. This was consistently lower than the gross margins achieved on new sales in each quarter of 2012.
- Network investment included the addition of 59 new buildings to the Company’s networks in 4Q 2012, exiting 2012 with 912 on-net buildings and an additional 79 buildings in the process of being connected. Through 2012 euNetworks connected 279 new buildings, up from 268 in 2011.
As mentioned above, euNetworks’ long haul transport platform was upgraded in the year. New Dense Wave Division Multiplexing (DWDM) technology was rolled out across the Company’s European long haul network. This enabled euNetworks to offer customers an end-to-end connectivity solution, from 1G to 100G to over 100 key data centres in Western Europe.
Integration of the LambdaNet Ethernet and Internet platforms ran through 2012. LambdaNet owned and operated one of the most highly ranked Internet Autonomous Systems (AS13237) in Europe. euNetworks customers were migrated to AS13237, enhancing their Internet experience and offering one of the shortest and fastest pathways to a wider range of exchanges and destinations.
Ethernet integration resulted in a solution for customers that offers end-to-end connectivity across 41 cities and 10 countries in Europe, with expansion into Stockholm and Manchester in 4Q 2012.
- Capital expenditure was €5.0m in the quarter, down from €13.8m in 4Q 2011, and down from €6.5m in 3Q 2012. Capital expenditure was significantly higher in 4Q 2011, due to FTTx build out and wavelength overbuilds underway at the time. Total capital expenditure for the full year 2012 was €27.8m, down from €31.8m in 2011. 66% of capital expenditure in 2012 was allocated to success based (customer sales) investment, compared to 44% in 2011. On average, incremental committed sales enjoyed 4 month payback periods in 2012.
- Proxy cash flow reflected the benefits of business scaling throughout 2012, improving to €(14.9)m from €(25.9)m in 2011. Proxy cash flow improved each quarter through 2012 to €(0.0)m in 4Q 2012, compared with €(13.7)m in 4Q 2011.
euNetworks Group Limited (SGX: H23:SI) is a bandwidth infrastructure provider, owning and operating 13 fibre based metropolitan networks across Europe connected with a high capacity intercity backbone covering 38 cities in 9 countries. The Company offers a portfolio of metropolitan and long haul services including Colocation, Dark Fibre, Metro Wavelengths, Wavelengths, Ethernet, and Internet. Enterprise and carrier customers benefit from euNetworks’ unique inventory of fibre and duct based assets that are tailored to fulfil their high bandwidth needs.
euNetworks Group Limited is headquartered in London and publicly listed on the Singapore Stock Exchange. For further information please visit www.eunetworks.com.
(1) Adjusted EBITDA means EBITDA before the deduction of share option expense.
From wearable activity trackers to fantasy e-sports, data and technology are transforming the way athletes train for the game and fans engage with their teams. In his session at @ThingsExpo, will present key data findings from leading sports organizations San Francisco 49ers, Orlando Magic NBA team. By utilizing data analytics these sports orgs have recognized new revenue streams, doubled its fan base and streamlined costs at its stadiums. John Paul is the CEO and Founder of VenueNext. Prior ...
Sep. 28, 2016 06:30 PM EDT Reads: 3,064
One of biggest questions about Big Data is “How do we harness all that information for business use quickly and effectively?” Geographic Information Systems (GIS) or spatial technology is about more than making maps, but adding critical context and meaning to data of all types, coming from all different channels – even sensors. In his session at @ThingsExpo, William (Bill) Meehan, director of utility solutions for Esri, will take a closer look at the current state of spatial technology and ar...
Sep. 28, 2016 06:15 PM EDT Reads: 254
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, will discuss the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports. The session will include a working demo and a technical d...
Sep. 28, 2016 06:00 PM EDT Reads: 1,765
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
Sep. 28, 2016 05:15 PM EDT Reads: 221
Businesses are struggling to manage the information flow and interactions between all of these new devices and things jumping on their network, and the apps and IT systems they control. The data businesses gather is only helpful if they can do something with it. In his session at @ThingsExpo, Chris Witeck, Principal Technology Strategist at Citrix, will discuss how different the impact of IoT will be for large businesses, expanding how IoT will allow large organizations to make their legacy ap...
Sep. 28, 2016 05:15 PM EDT Reads: 223
The many IoT deployments around the world are busy integrating smart devices and sensors into their enterprise IT infrastructures. Yet all of this technology – and there are an amazing number of choices – is of no use without the software to gather, communicate, and analyze the new data flows. Without software, there is no IT. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the protocols that communicate data and the emerging data analy...
Sep. 28, 2016 05:00 PM EDT Reads: 1,717
As ridesharing competitors and enhanced services increase, notable changes are occurring in the transportation model. Despite the cost-effective means and flexibility of ridesharing, both drivers and users will need to be aware of the connected environment and how it will impact the ridesharing experience. In his session at @ThingsExpo, Timothy Evavold, Executive Director Automotive at Covisint, will discuss key challenges and solutions to powering a ride sharing and/or multimodal model in the a...
Sep. 28, 2016 04:45 PM EDT Reads: 361
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management solutions, helping companies worldwide activate their data to drive more value and business insight and to transform moder...
Sep. 28, 2016 04:30 PM EDT Reads: 2,805
Creating replica copies to tolerate a certain number of failures is easy, but very expensive at cloud-scale. Conventional RAID has lower overhead, but it is limited in the number of failures it can tolerate. And the management is like herding cats (overseeing capacity, rebuilds, migrations, and degraded performance). Download Slide Deck: ▸ Here In his general session at 18th Cloud Expo, Scott Cleland, Senior Director of Product Marketing for the HGST Cloud Infrastructure Business Unit, discusse...
Sep. 28, 2016 04:15 PM EDT Reads: 2,428
Whether they’re located in a public, private, or hybrid cloud environment, cloud technologies are constantly evolving. While the innovation is exciting, the end mission of delivering business value and rapidly producing incremental product features is paramount. In his session at @DevOpsSummit at 19th Cloud Expo, Kiran Chitturi, CTO Architect at Sungard AS, will discuss DevOps culture, its evolution of frameworks and technologies, and how it is achieving maturity. He will also cover various st...
Sep. 28, 2016 04:15 PM EDT Reads: 1,864
SYS-CON Events announced today that eCube Systems, a leading provider of middleware modernization, integration, and management solutions, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. eCube Systems offers a family of middleware evolution products and services that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...
Sep. 28, 2016 04:15 PM EDT Reads: 1,487
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of So...
Sep. 28, 2016 04:00 PM EDT Reads: 1,481
What are the new priorities for the connected business? First: businesses need to think differently about the types of connections they will need to make – these span well beyond the traditional app to app into more modern forms of integration including SaaS integrations, mobile integrations, APIs, device integration and Big Data integration. It’s important these are unified together vs. doing them all piecemeal. Second, these types of connections need to be simple to design, adapt and configure...
Sep. 28, 2016 03:15 PM EDT Reads: 356
Digital innovation is the next big wave of business transformation based on digital technologies of which IoT and Big Data are key components, For example: Business boundary innovation is a challenge to excavate third-party business value using IoT and BigData, like Nest Business structure innovation may propose re-building business structure from scratch, as Uber does in the taxicab industry The social model innovation is also a big challenge to the new social architecture with the design fr...
Sep. 28, 2016 03:15 PM EDT Reads: 1,309
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Sep. 28, 2016 03:15 PM EDT Reads: 4,144