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Cbeyond Reports Third Quarter 2012 Results



Cbeyond Reports Third Quarter 2012 Results

                       Solid EBITDA and Free Cash Flow;
                  Market Launch of New Cbeyond 2.0 Products

ATLANTA, Nov. 5, 2012 (GLOBE NEWSWIRE) -- Cbeyond, Inc. (Nasdaq:CBEY),
("Cbeyond"), the technology ally for small and mid-sized businesses, today
announced its results for the third quarter ended September 30, 2012.

Recent financial and operating highlights include:

  * Third quarter 2012 total revenue of $121.5 million compared with $122.5
    million in the third quarter of 2011 and $123.8 million in the second
    quarter of 2012;
     
  * Adjusted EBITDA of $25.2 million in the third quarter of 2012 compared
    with $18.9 million in the third quarter of 2011, and $27.2 million in the
    second quarter of 2012 (see reconciliation tables for reconciliation to
    net income);
     
  * Free cash flow (defined as adjusted EBITDA less cash capital expenditures)
    of $7.7 million in the third quarter of 2012, compared with ($0.4) million
    in the third quarter of 2011, and $12.5 million in the second quarter of
    2012;
     
  * Net income of $2.0 million in the third quarter of 2012, compared with a
    net loss of $1.1 million in the third quarter of 2011, and net income of
    $2.7 million in the second quarter of 2012;
     
  * Cbeyond 2.0 revenue was 7.8% of total revenue in the third quarter, an
    increase from 6.5% last quarter;
     
  * Average monthly revenue per customer (ARPU) of $640 during the third
    quarter of 2012 compared with $645 in the second quarter of 2012 and $658
    in the third quarter of 2011; and,
     
  * Updated annual guidance for 2012 to $487 million to $488 million of
    revenue, $92 million to $93 million of adjusted EBITDA, cash capital
    expenditures to be slightly above $60 million, and $30 million to $32
    million of free cash flow.

Financial Overview and Key Operating Metrics

Financial and operating metrics, which include non-GAAP financial measures,
for the three and nine months ended September 30, 2012, include:

                                     For the Three Months Ended September 30,
                                     2011       2012       Change     % Change
Selected Financial Data (dollars in                                    
thousands)
Revenue (total)                       $ 122,529  $ 121,491  $ (1,038) (0.8%)
Operating expenses                    $ 123,043  $ 117,431  $ (5,612) (4.6%)
Operating income (loss)               $ (514)    $ 4,060    $ 4,574   N/M
Net income (loss)                     $ (1,141)  $ 1,953    $ 3,094   N/M
Capital expenditures (total)          $ 19,273   $ 17,516   $ (1,757) (9.1%)
                                                                       
Key Operating Metrics and Non-GAAP                                     
Financial Measures
(dollars in thousands, except Average Monthly Revenue Per Network      
Access Customer)
Network Access Customers (At Period   61,125     60,876     (249)     (0.4%)
End)
Net Network Access Customer           1,460      (1,139)    (2,599)   (178.0%)
Additions
Average Monthly Churn Rate           1.4%       1.6%       0.2%       14.3%
Average Monthly Revenue Per Network   $ 658      $ 640      $ (18)    (2.7%)
Access Customer
Adjusted EBITDA                       $ 18,877   $ 25,207   $ 6,330   33.5%
Cash capital expenditures             $ 19,273   $ 17,516   $ (1,757) (9.1%)

                                  
                                 For the Nine Months Ended September 30,
                                 2011          2012       Change      % Change
Selected Financial Data (dollars                                       
in thousands)
Revenue (total)                   $ 362,101     $ 369,096  $ 6,995    1.9%
Operating expenses                $ 365,648     $ 360,718  $ (4,930)  (1.3%)
Operating income (loss)           $ (3,547)     $ 8,378    $ 11,925   N/M
Net income (loss)                 $ (2,958)     $ 3,453    $ 6,411    N/M
Capital expenditures (total)      $ 59,322      $ 50,474   $ (8,848)  (14.9%)
                                                                       
Key Operating Metrics and Non-GAAP Financial                           
Measures
(dollars in thousands, except Average Monthly                          
Revenue Per Network Access Customer)
Network Access Customers (At      61,125        60,876     (249)      (0.4%)
Period End)
Net Network Access Customer       4,153         (1,293)    (5,446)    (131.1%)
Additions
Average Monthly Churn Rate       1.3%          1.5%       0.2%        15.4%
Average Monthly Revenue Per       $ 663         $ 648      $ (15)     (2.3%)
Network Access Customer
Adjusted EBITDA                   $ 57,604      $ 75,417   $ 17,813   30.9%
Cash capital expenditures         $ 59,235      $ 47,117   $ (12,118) (20.5%)

Management Comments

"I'm pleased with Cbeyond's progress in its strategic evolution and believe
that the third quarter marks an important point in our path for several
reasons," said Jim Geiger, chief executive officer of Cbeyond, Inc. "First, we
launched two key cloud services products that address the 2.0 business
opportunity: Total Cloud Data Center, a secure, enterprise class, customizable
set of managed services, and Total Cloud Phone System, an advanced version of
our hosted PBX offering. Second, we lit dark fiber in our first batch of 35
buildings, with many more on the way, and third, most of our new 2.0 sales
force is now in place and beginning to be productive. The combination of these
three events represents a powerful platform for our future growth, and we look
forward to developing the opportunities they afford us."

Geiger added, "Meeting our financial commitments is highly important to us, so
I'm very pleased to report that we are adjusting our 2012 guidance to note our
confidence in achieving revenue and free cash flow toward the high end of
prior guidance, while we expect to exceed our prior guidance on adjusted
EBITDA, even during a significant business transformation."

Third Quarter Financial and Business Summary

Revenues and ARPU

As of the third quarter of 2012, the Company now reports its operations under
a single segment because the Company has fully integrated its cloud
acquisitions into the rest of its operations and now manages its business as a
unified whole. The Company is required to report segment data consistent with
the way it manages its business. However, it will continue to provide detailed
revenue data and, as a result of this change, the Company now categorizes its
revenue into two product groups. The first category is Network, Voice and
Data, which includes its traditional BeyondVoice packages and related
services, terminating access and mobile and office applications. The second
category is Managed Hosting and Cloud, which includes virtual and physical
servers, cloud PBX and other cloud services. Please refer to the last table at
the end of this release for a breakdown of revenue under these categories for
all historical periods going back through 2011. [NOTE: See our 10-Q for
additional comments regarding the segment change].

Another change to note is in the reported ARPU metric. After integrating the
billings systems inherited from acquisitions, to be consistent the Company is
now able to accurately include certain cloud revenues that should be counted
in its ARPU calculation as this revenue is associated with customers who also
purchase network access. A recalculation of total ARPU going back through 2011
is presented in the last table of the release. 

Cbeyond reported total revenues of $121.5 million for the third quarter of
2012, a decrease of 0.8% from the third quarter of 2011 and a decrease of 1.8%
from the second quarter of 2012. Managed Hosting and Cloud revenue increased
15.7% year-over-year for the third quarter of 2012. The decline in total
revenue was the result of 1,139 fewer customers due to higher churn and lower
sales of communications centric customers that was partially offset by
increases in 2.0 revenue to technology dependent customers. The revenue trends
in the quarter, which were in-line with prior expectations, reflect the
current sales force transition, the ramp of 2.0 efforts and customer churn
that was slightly higher than in prior periods.

ARPU was $640 in the third quarter of 2012, compared with $645 in the second
quarter of 2012, and $658 in the third quarter of 2011. While ARPU changes
result from a variety of factors, the most significant contributor to the
decline in ARPU during the third quarter was a reduction in terminating access
charges, as mandated by the Federal Communications Commission.

Cost of Service and Gross Margin

Cbeyond's gross margin was 68.2% in the third quarter of 2012, an increase of
120 basis points from the 67.0% level in the third quarter of 2011 and 70
basis points from the 67.5% in the second quarter of 2012. The sequential
improvement in gross margin was the result of higher cost recoveries from
network partners as well as reduced mobile costs.

Adjusted EBITDA and Net Income

Adjusted EBITDA for the third quarter of 2012 was $25.2 million, as compared
with adjusted EBITDA of $27.2 million in the second quarter of 2012, and $18.9
million in the third quarter of 2011. The quarter-to-quarter decline in
adjusted EBITDA was in-line with expectations and was the result of lower
revenue and slightly higher SG&A expense, driven by the hiring in new sales
channels.

Cbeyond reported net income of $2.0 million for the third quarter of 2012
compared with $2.7 million in the second quarter of 2012 and a net loss of
$1.1 million for the third quarter of 2011. The year-on-year improvement in
net income was driven predominantly by the increase in Adjusted EBITDA. 

Cash, Cash Equivalents, and Borrowings

Cash and cash equivalents amounted to approximately $24 million at the end of
the third quarter of 2012, as compared with $10.7 million at the end of the
second quarter of 2012. The Company currently has $2 million outstanding on
its fiber loan while it does not have any outstanding borrowings under its $75
million revolving credit facility.

Capital Expenditures

Total capital expenditures were $17.5 million during the third quarter of
2012, all of which were cash capital expenditures. The Company did not incur
any non-cash capital expenditures during the period. Non-cash capital
expenditures represent Cbeyond's capital leases of fiber network assets, which
are being paid over time. In the second quarter of 2012, capital expenditures
were $15.7 million, of which $14.8 million were cash capital expenditures and
$1.0 million were non-cash capital expenditures.

Free Cash Flow

Free cash flow, defined as adjusted EBITDA less cash capital expenditures, was
$7.7 million in the third quarter of 2012, compared with $12.5 million in the
second quarter of 2012 and ($0.4) million in the third quarter of 2011. The
year-over-year increase was due to improved adjusted EBITDA and lower capital
expenditures, which resulted from reduced levels of investment on
Ethernet-over-copper technology in 2012, as planned.

Business Outlook for 2012

Cbeyond has updated its guidance for 2012 to the following: 

                          Current Guidance       Prior Guidance
Revenue                   $487 million -- $488 million $485 million -- $490
                                                       million
Adjusted EBITDA           $92 million -- $93 million   $85 million -- $90
                                                       million
Cash Capital Expenditures Slightly above $60 million   $55 million -- $60
                                                       million
Free Cash Flow            $30 million -- $32 million   $25 million -- $35
                                                       million

Regarding capital expenditures, it should be noted that the guidance range of
"slightly above $60 million", as well as the resulting $30 million to $32
million of free cash flow (adjusted EBITDA less capital expenditures), relates
to cash capital expenditures. Cbeyond has already and may continue to enter
into agreements for fiber networks involving long-term capital leases that
will create additional non-cash capital expenditures this year not included in
the guidance range provided above. The assets acquired under these agreements
are excluded from the Company's definition of cash capital expenditures
because they do not require upfront outlays of cash. 

Preliminary Business Outlook for 2013

Based on its current assumptions for churn, sales rep productivity, the
current macro environment and other key drivers of its business and barring
any material changes to these key drivers, Cbeyond is providing the following
commentary regarding its preliminary outlook for 2013.

Management expects revenue to be close to 2012 levels with increasing growth
in the latter part of the year. Adjusted EBITDA is expected to decline in 2013
due to increased levels of SG&A expense primarily associated with the growing
sales force needed to support future levels of revenue growth. With respect to
cash capital expenditures, management expects a slightly higher level relative
to 2012. As a result, management expects a reduced level of free cash flow
when compared with 2012. However, management expects to continue its focus on
delivering significant levels of positive free cash flow in 2013 and future
years. 

Conference Call

Cbeyond will hold a conference call to discuss this press release Monday,
November 5, 2012, at 5:00 p.m. EST. A live broadcast of the conference call
will be available on-line at www.cbeyond.com. 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 the technology ally for small and mid-sized
business. Our private, proactively-managed IP network connects customers to
voice, data and enterprise applications hosted in our award-winning cloud data
centers. Since 1999, Cbeyond has served the unmet needs of businesses through
technology and service innovation. We were the first company to build an
all-IP network specifically for small businesses and among the few to offer
consultative sales and service professionals onsite. Today, our expanded
portfolio helps customers reduce the burden of outlaying capital and manpower
to manage infrastructure. Creating an exceptional customer experience is in
our DNA. It's why more than a third of our approximately 60,000 customers come
from referrals. For more information on Cbeyond, visit www.cbeyond.com and
follow Cbeyond on Twitter: www.twitter.com/Cbeyondinc.

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; changes in business climate or other factors
affecting our customer base; the risk of unexpected increases in customer
churn levels; our ability to manage competitive pricing dynamics in our
markets; 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 our access to capital markets and the impact on
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; the risk that the anticipated benefits,
growth prospects and synergies expected from our acquisitions may not be fully
realized or may take longer to realize than expected; the possibility that
economic benefits of future opportunities in an emerging industry may never
materialize, including unexpected variations in market growth and demand for
the acquired products and technologies; delays, disruptions, costs and
challenges associated with integrating acquired companies into our existing
business, including changing relationships with customers, employees or
suppliers; unfamiliarity with the economic characteristics of new geographic
markets; ongoing personnel and logistical challenges of managing a larger
organization; our ability to retain and motivate key employees from the
acquired companies; external events outside of our control, including extreme
weather, natural disasters, pandemics or terrorist attacks that could
adversely affect our target markets; our ability to implement and execute
successfully our new strategic focus; our ability to expand fiber
availability; the extent to which small and medium sized businesses continue
to spend on cloud, network and security services; our ability to recruit,
maintain and grow a sales force focused exclusively on our
technology-dependent customers; our ability to integrate new products into our
existing infrastructure; the effects of realignment activities; the extent to
which our customer mix becomes more technology-dependent; our ability to
achieve future cost savings related to our capital expenditures and investment
in Ethernet technology; 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 EBITDA as net income
(loss) before interest, income taxes, depreciation and amortization. However,
we use adjusted EBITDA, also a non-GAAP financial measure, to further exclude,
when applicable, non-cash share-based compensation, public offering or
acquisition-related transaction costs, purchase accounting adjustments, gain
or loss on asset dispositions and non-operating income or expense. On a less
frequent basis, adjusted EBITDA may exclude charges for employee severances,
asset or facility impairments, and other exit activity costs associated with a
management directed plan. Information relating to adjusted EBITDA is provided
so that investors have the same data that management employs in assessing the
overall operation of the Company's business.

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, 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.

Free cash flow represents the cash that a company is able to generate
after cash expenses and capital expenditures necessary to maintain or expand
its asset base. The Company defines free cash flow as adjusted EBITDA less
cash capital expenditures. Cbeyond believes that free cash flow is an
important metric for investors in evaluating how a company is currently using
cash generated, and may indicate its ability to generate cash that can
potentially be used by the business for capital investments, acquisitions,
reduction of debt, payment of dividends or share repurchases. Internally,
Cbeyond has also begun to focus on free cash flow as an important operating
performance metric and has designed its corporate bonus compensation plan to
utilize free cash flow as a component. However, free cash flow is not a
measure of financial performance under GAAP and may not be comparable to
similarly titled measures reported by other companies. Additionally, the
Company does not present or manage free cash flow on a segment basis.

CBEYOND, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                                                                       
                                                                       
                                        Three Months Ended  Nine Months Ended
                                       September 30,       September 30, 
                                       2011       2012     2011       2012
                                                                       
Revenue                                 122,529    121,491  362,101    369,096
                                                                       
Operating expenses:                                                    
 Cost of revenue (excluding             40,457     38,675   120,261    119,323
depreciation and amortization) 
 Selling, general and administrative
(excluding depreciation and             65,744     60,584   194,587    185,977
amortization) 
 Depreciation and amortization          16,842     18,172   50,800     55,418
 Total operating expenses               123,043    117,431  365,648    360,718
                                                                       
 Operating income (loss)                (514)      4,060    (3,547)    8,378
                                                                       
 Other income (expense):                                               
 Interest expense                       (136)      (138)    (363)      (409)
 Other income, net                      --         --       1,210      --
 Total other income (expense)           (136)      (138)    847        (409)
                                                                       
 Income (loss) before income taxes      (650)      3,922    (2,700)    7,969
                                                                       
 Income tax expense                     (491)      (1,969)  (258)      (4,516)
                                                                       
Net income (loss)                       $ (1,141)  $ 1,953  $ (2,958)  $ 3,453
                                                                       
Net Income (loss) per common share:                                    
 Basic                                  $ (0.04)   $ 0.07   $ (0.10)   $ 0.12
 Diluted                                $ (0.04)   $ 0.06   $ (0.10)   $ 0.12
                                                                       
Weighted average number of common shares                               
outstanding:
 Basic                                 29,442     29,533   29,606     29,348
 Diluted                               29,442     30,267   29,606     29,971

 
 
CBEYOND, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                               
                                                               
                                                 December 31,  September 30,
                                                2011          2012 
ASSETS                                                         
Current assets                                                 
Cash and cash equivalents                        $ 8,521       $ 23,876
                                                               
Accounts receivable, gross                      27,479        25,877
Less: Allowance for doubtful accounts           (2,608)       (2,346)
Accounts receivable, net                        24,871        23,531
                                                               
Other assets                                    11,526        14,660
Total current assets                            44,918        62,067
                                                               
Property and equipment, gross                   486,273       527,289
Less: Accumulated depreciation and amortization (325,803)     (370,789)
Property and equipment, net                     160,470       156,500
Other non-current assets                        35,684        32,533
Total assets                                     $ 241,072     $ 251,100
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY                           
Current liabilities                                            
Accounts payable                                 $ 14,467      $ 16,462
Other current liabilities                       53,760        51,344
Total current liabilities                       68,227        67,806
                                                               
Non-current liabilities                         8,858         7,351
Non-current fiber debt                           --           3,158
                                                               
Stockholders' equity                                           
Common stock                                    289           298
Additional paid-in capital                      311,370       318,709
Accumulated deficit                             (147,672)     (146,222)
Total stockholders' equity                      163,987       172,785
Total liabilities and stockholders' equity       $ 241,072     $ 251,100

 
CBEYOND, INC. AND SUBSIDIARIES
Selected Quarterly Financial Data and Operating Metrics
(Dollars in thousands, except for Network Access Customer Data)
(Unaudited)
                                                                     
                     
                    Sep. 30 2011 Dec. 31 2011 Mar. 31    Jun. 30    Sep. 30
                                              2012       2012       2012
Revenues                                                             
 Network, Voice and  $ 117,061    $ 117,702    $ 118,087  $ 117,674  $ 115,164
Data 
 Managed Hosting     5,468        5,619        5,756      6,088      6,327
and Cloud 
 Total Revenue       $ 122,529    $ 123,321    $ 123,843  $ 123,762  $ 121,491
                                                                     
                                                                     
Adjusted EBITDA      $ 18,877     $ 22,559     $ 22,974   $ 27,236   $ 25,207
Adjusted EBITDA
margin (As % of      15.4%        18.3%        18.6%      22.0%      20.7%
Total Revenue)
                                                                     
 Cash Capital        $ 19,273     $ 18,369     $ 14,836   $ 14,765   $ 17,516
Expenditures 
 Non-cash Capital                                                    
Expenditures 
 Capital Leases      $ --         $ --         $ 2,400    $ 957      $ --
 Leasehold           $ --         $ --         $ --       $ --       $ --
Improvements 
 Total Capital       $ 19,273     $ 18,369     $ 17,236   $ 15,722   $ 17,516
Expenditures 
                                                                     
Free cash flow       $ (396)      $ 4,190      $ 8,138    $ 12,471   $ 7,691
                                                                     
Network Access                                                       
Customer Data
 Network Access
Customers (At        61,125       62,169       62,465     62,015     60,876
Period End) 
 Net Network Access  1,460        1,044        296        (450)      (1,139)
Customer Additions 
 Average Monthly     1.4%         1.4%         1.5%       1.5%       1.6%
Churn Rate (1) 
 Average Monthly
Revenue Per Network  $ 658        $ 650        $ 645      $ 645      $ 640
Access Customer
(2) 
                                                                     
(1) Calculated for each period as the average of monthly churn, which is
defined for a given month as the number of network access customers
disconnected in that month divided by the number of network access customers
on the Company's network at the beginning of that month.
                                                                     
(2) Calculated as the revenue for a period divided by the average of the
number of network access customers at the beginning of the period and the
number of network access customers at the end of the period, divided by the
number of months in the period. Revenue used to calculate ARPU is defined as
the revenue associated with customers where Cbeyond provides network access
and includes all Network, Voice and Data revenue and the portion of Managed
Hosting and Cloud revenue where Cbeyond provides network access. 

 
CBEYOND, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
(In thousands)
(Unaudited)
                                                                     
                                                                     
                                                                     
                         
                        Sep. 30    Dec. 31    Mar. 31    Jun. 30    Sep. 30
                        2011       2011       2012       2012       2012
                                                                     
Reconciliation of Free
Cash Flow and Adjusted                                               
EBITDA to Net income
(loss):
                                                                     
Free Cash Flow           $ (396)    $ 4,190    $ 8,138    $ 12,471   $ 7,691
Cash capital             19,273     18,369     14,836     14,765     17,516
expenditures
Adjusted EBITDA          $ 18,877   $ 22,559   $ 22,974   $ 27,236   $ 25,207
Depreciation and         (16,842)   (19,095)   (18,876)   (18,370)   (18,172)
amortization
Non-cash share-based     (2,920)    (3,598)    (3,783)    (2,939)    (2,975)
compensation
MaximumASP purchase      418        162        --         --         --
accounting adjustments
Transaction costs        (47)       --         --         --         --
Realignment costs        --         --         (1,640)    (284)      --
Interest income          --         --         --         --         --
Interest expense         (136)      (137)      (127)      (144)      (138)
Other income, net        --         1          --         --         --
Income (loss) before     (650)      (108)      (1,452)    5,499      3,922
income taxes
                                                                     
Income tax (expense)     (491)      (4,918)    258        (2,805)    (1,969)
benefit
Net income (loss)        $ (1,141)  $ (5,026)  $ (1,194)  $ 2,694    $ 1,953
                                                                     
                                                                     
                                                                     
                                                                     
CBEYOND, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
(Dollars in thousands, except for ARPU)
(Unaudited)
                                                                     
                                                                     
                                                                     
                         
                        Sep. 30    Dec. 31    Mar. 31    Jun. 30    Sep. 30
                        2011       2011       2012       2012       2012
                                                                     
Calculation of ARPU:                                                 
Total revenue            $ 122,529  $ 123,321  $ 123,843  $ 123,762  $ 121,491
Cloud only revenue       (3,326)    (3,186)    (3,245)    (3,367)    (3,486)
(A) Network access       $ 119,203  $ 120,135  $ 120,598  $ 120,395  $ 118,005
customer revenue
                                                                     
 (B) Average network     60,395     61,647     62,317     62,240     61,446
access customers 
ARPU (A / B / 3)         $ 658      $ 650      $ 645      $ 645      $ 640

 
CBEYOND, INC. AND SUBSIDIARIES
Historical Revenue and ARPU Data
(Dollars in thousands, except for ARPU)
(Unaudited)
                                                                   
                            
                           Mar. 31 2011 Jun. 30 2011 Sep. 30 2011 Dec. 31 2011
Revenues                                                           
 Network, Voice and Data    $ 114,386    $ 115,510    $ 117,061    $ 117,702
 Managed Hosting and        4,592        5,084        5,468        5,619
Cloud 
 Total Revenue              $ 118,978    $ 120,594    $ 122,529    $ 123,321
                                                                   
                                                                   
 ARPU                                                              
 Previous                   $ 668        $ 660        $ 656        $ 646
 Updated                    $ 669        $ 662        $ 658        $ 650
                                                                   
                                                                   
                                                                   
                                                                   
                                                                   
                                                                   
                                                                   
                           Mar. 31 2012 Jun. 30 2012 Sep. 30 2012  
Revenues                                                           
 Network, Voice and Data    $ 118,087    $ 117,674    $ 115,164    
 Managed Hosting and        5,756        6,088        6,327        
Cloud 
 Total Revenue              $ 123,843    $ 123,762    $ 121,491    
                                                                   
                                                                   
 ARPU                                                              
 Previous                   $ 642        $ 641        N/A          
 Updated                    $ 645        $ 645        $ 640        

CONTACT: Investor Contact:
         Cbeyond, Inc.
         T.C. Robillard
         Investor Relations
         (678) 486-8023
         tc.robillard@cbeyond.com
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