Cbeyond Reports Fourth Quarter 2012 Results

Cbeyond Reports Fourth Quarter 2012 Results

Introduction of 2.0 Cloud and Network Bundled Offering; Stabilizing ARPU
Trends

ATLANTA, Feb. 27, 2013 (GLOBE NEWSWIRE) -- Cbeyond, Inc. (Nasdaq:CBEY),
("Cbeyond"), the technology ally for small and mid-sized businesses, today
announced its results for the fourth quarter ended December 31, 2012.

Recent financial and operating highlights include:

  *Fourth quarter 2012 total revenue of $118.9 million compared with $123.3
    million in the fourth quarter of 2011 and $121.5 million in the third
    quarter of 2012;
  *Adjusted EBITDA of $18.8 million in the fourth quarter of 2012 compared
    with $22.6 million in the fourth quarter of 2011, and $25.2 million in the
    third quarter of 2012 (see reconciliation tables for reconciliation to net
    income);
  *Free cash flow (defined as adjusted EBITDA less cash capital expenditures)
    of $4.3 million in the fourth quarter of 2012, compared with $4.2 million
    in the fourth quarter of 2011, and $7.7 million in the third quarter of
    2012;
  *Net loss of $5.8 million in the fourth quarter of 2012, compared with a
    net loss of $5.0 million in the fourth quarter of 2011, and net income of
    $2.0 million in the third quarter of 2012;
  *Cbeyond 2.0 revenue was 9.5% of total revenue in the fourth quarter, an
    increase from 7.8% last quarter;
  *Average monthly revenue per customer (ARPU) of $638 during the fourth
    quarter of 2012 compared with $640 in the third quarter of 2012 and $650
    in the fourth quarter of 2011 (see selected quarterly operating metrics
    table for an ARPU definition); and,
  *Annual guidance for 2013 of $475 million to $485 million of revenue, $75
    million to $82 million of adjusted EBITDA, $60 million to $65 million of
    cash capital expenditures, and $15 million to $20 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 twelve months ended December 31, 2012, include:

                            For the Three Months Ended December 31,
                            2011       2012       Change     % Change
Selected Financial Data                                    
(dollars in thousands)
Revenue (total)              $123,321 $118,870 $(4,451) (3.6%)
Operating expenses           $123,293 $122,402 $(891)   (0.7%)
Operating income (loss)      $28      $(3,532) $(3,560) N/M
Net income (loss)            $(5,026) $(5,775) $(749)   (14.9%)
Capital expenditures (total) $18,369  $19,464  $1,095   6.0%
                                                          
Key Operating Metrics and                                  
Non-GAAP Financial Measures
(dollars in thousands, except Average Monthly Revenue Per Network         
Access Customer)
Network Access Customers (At 62,169    59,692    (2,477)   (4.0%)
Period End)
Net Network Access Customer  1,044     (1,184)   (2,228)   (213.4%)
Additions
Average Monthly Churn Rate   1.4%       1.6%       0.2%       14.3%
Average Monthly Revenue Per  $650     $638     $(12)    (1.8%)
Network Access Customer
Adjusted EBITDA              $22,559  $18,828  $(3,731) (16.5%)
Cash capital expenditures    $18,369  $14,488  $(3,881) (21.1%)

                                   
                                   For the Twelve Months Ended December 31,
                                   2011       2012       Change      % Change
Selected Financial Data (dollars in                                
thousands)
Revenue (total)                     $485,422 $487,966 $2,544    0.5%
Operating expenses                  $488,941 $483,120 $(5,821)  (1.2%)
Operating income (loss)             $(3,519) $4,846   $8,365    N/M
Net income (loss)                   $(7,984) $(2,322) $5,662    70.9%
Capital expenditures (total)        $77,691  $69,938  $(7,753)  (10.0%)
                                                                  
Key Operating Metrics and Non-GAAP                                 
Financial Measures
(dollars in thousands, except Average Monthly Revenue Per Network Access
Customer)
Network Access Customers (At Period 62,169    59,692    (2,477)    (4.0%)
End)
Net Network Access Customer         5,197     (2,477)   (7,674)    (147.7%)
Additions
Average Monthly Churn Rate          1.4%       1.6%       0.2%        14.3%
Average Monthly Revenue Per Network $661     $649     $(12)     (1.8%)
Access Customer
Adjusted EBITDA                     $80,163  $94,245  $14,082   17.6%
Cash capital expenditures           $77,604  $61,605  $(15,999) (20.6%)

Management Comments

"Over the past twelve months we made significant progress in evolving our
business model to provide services at the intersection of cloud, network and
security," said Jim Geiger, chief executive officer of Cbeyond, Inc."In
addition, I'm proud to note that we met or exceeded our public guidance while
pursuing these important changes in our business. Going forward, we intend to
build on last year's progress with a focus on improving sales productivity and
driving further refinement to our service delivery processes to address the
emerging needs of our technology dependent customers."

Geiger added, "With the recent launch of our new offering that bundles cloud
services with broadband, called Cloud Advantage, Cbeyond can now provide a
full suite of cloud and communications services delivered over our privately
managed network to small and mid-sized businesses, taking care of their IT
infrastructure needs from their desktop and phone all the way to our cloud
data center.We believe this provides us with a unique competitive advantage
as compared to cloud providers operating without the benefit of a reliable and
secure managed private network when hosting mission-critical applications."

Geiger continued, "We are very excited about our new bundles and go-to market
approach.We believe this will assist in accelerating cloud adoption in the
small and mid-sized business market, enabling us to improve ARPU and return to
growth in revenue in the coming periods."

Fourth Quarter Financial and Business Summary

Revenue and ARPU

Cbeyond reported total revenue of $118.9 million for the fourth quarter of
2012, a decrease of 3.6% from the fourth quarter of 2011 and a decrease of
2.2% from the third quarter of 2012.Managed Hosting and Cloud revenue was
$6.5 million during the quarter, an increase of 15.8% year-over-year.The
revenue trends in the quarter, which were in-line with Company guidance,
reflect the current sales force transition, the ramp of 2.0 efforts and
customer churn that was slightly higher than last year's period.

ARPU was $638 in the fourth quarter of 2012, compared with $640 in the third
quarter of 2012, and $650 in the fourth quarter of 2011.While ARPU appears to
be stabilizing on a sequential basis, the most significant contributor to the
year-over-year decline in ARPU during the fourth quarter was pricing pressure
in our traditional base.

Cost of Service and Gross Margin

Cbeyond's gross margin was 67.0% in the fourth quarter of 2012, an increase of
30 basis points from the 66.7% level in the fourth quarter of 2011 and 120
basis point decrease from the 68.2% in the third quarter of 2012.The
sequential change in gross margin was the result of lower cost recoveries from
network partners and higher mobile costs, which were the result of a greater
mix of smart phones.

Adjusted EBITDA and Net Income

Adjusted EBITDA for the fourth quarter of 2012 was $18.8 million, as compared
with adjusted EBITDA of $25.2 million in the third quarter of 2012, and $22.6
million in the fourth quarter of 2011.The quarter-to-quarter and
year-over-year declines in adjusted EBITDA were in-line with Company guidance
and were the result of lower revenue and a higher SG&A expense, driven by
hiring in new sales channels.

Cbeyond reported a net loss of $5.8 million for the fourth quarter of 2012
compared with a net loss of $5.0 million in the fourth quarter of 2011 and net
income of $2.0 million in the third quarter of 2012.The quarter-to-quarter
change in net income was driven predominantly by the decrease in Adjusted
EBITDA as well as a $3.3 million impact to income tax expense resulting from a
write-down of deferred tax assets.

Cash, Cash Equivalents, and Borrowings

Cash and cash equivalents amounted to $30.6 million at the end of the fourth
quarter of 2012, as compared with $23.9 million at the end of the third
quarter of 2012.The Company currently has $2.0 million outstanding on its
fiber loan while it does not have any outstanding borrowings under its $75.0
million revolving credit facility.The Company also had $6.3 million in
outstanding capital lease obligations on its balance sheet as of the end of
2012.

Capital Expenditures

Total capital expenditures were $19.5 million during the fourth quarter of
2012, of which $14.5 million were cash capital expenditures.The Company
incurred $5.0 million in non-cash capital expenditures during the fourth
quarter, consisting of $1.6 million from a lease of servers and computers at
its data center and $3.4 million in capital lease obligations related to its
fiber assets.The majority of the Company's non-cash capital expenditures
represent Cbeyond's capital leases of fiber network assets. In the third
quarter of 2012, capital expenditures were $17.5 million, all of which were
cash capital expenditures.

Free Cash Flow

Free cash flow, defined as adjusted EBITDA less cash capital expenditures, was
$4.3 million in the fourth quarter of 2012, compared with $7.7 million in the
third quarter of 2012 and $4.2 million in the fourth quarter of 2011. The
sequential change was in-line with expectations and was due to lower
sequential revenue and higher SG&A, which were partially offset by lower
capital expenditures.

Business Outlook for 2013

Cbeyond provides the following guidance for 2013:

  *Revenue of $475 million to $485 million
  *Adjusted EBITDA of $75 million to $82 million
  *Cash capital expenditures of $60 million to $65 million; and
  *Free cash flow of $15 million to $20 million

Regarding capital expenditures, it should be noted that the guidance range of
$60 million to $65 million, as well as the resulting $15 million to $20
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 network assets and computer equipment 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.

Conference Call

Cbeyond will hold a conference call to discuss this press release Wednesday,
February 27, 2013, at 5:00p.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 (fordomestic 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), a cloud and communications services provider, 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.

The Cbeyond logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=16243

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
aftercash 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.

Historically, we have defined free cash flow as adjusted EBITDA less total
capital expenditures. During the first quarter of 2012, we refined our
definition of capital expenditures for purposes of calculating free cash flow
to distinguish capital expenditures that require the up-front outlay of cash
from those where payment is deferred on a longer-term basis. This distinction
is primarily driven by the significant investments we are making to lease
fiber network assets that have an expected useful life of 20 years, which is
substantially longer than our typical asset lives. We believe this distinction
is warranted and appropriate since these investments are expected to yield
meaningful positive cash flows in future periods when the debt and lease
payments occur. These favorable future cash flows will result from fiber
infrastructure replacing a significant portion of the access and transport
circuits we currently lease from incumbent local exchange carriers (or
"ILECs"). We have recast all historical disclosures of capital expenditures as
well as free cash flow for all periods presented in this Form 10-K to be
consistent with this delineation between cash and non-cash capital
expenditures.

CBEYOND, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                                                                
                                                                
                                  Three Months Ended  Twelve Months Ended
                                   December 31,         December 31,
                                  2011       2012       2011       2012
                                                                
Revenue                          $123,321 $118,870 $485,422 $487,966
                                                                
Operating expenses:                                              
Cost of revenue (excluding        41,045    39,259    161,306   158,582
depreciation and amortization)
Selling, general and
administrative (excluding          63,153    64,538    257,740   250,515
depreciation and amortization)
Depreciation and amortization    19,095    18,605    69,895    74,023
Total operating expenses         123,293   122,402   488,941   483,120
                                                                
Operating income (loss)          28        (3,532)   (3,519)   4,846
                                                                
Other income (expense):                                        
Interest expense, net            (137)     (168)     (500)     (577)
Other income, net                1         -         1,211     -
Total other income (expense)     (136)     (168)     711       (577)
                                                                
Income (loss) before income       (108)     (3,700)   (2,808)   4,269
taxes
                                                                
Income tax expense               (4,918)   (2,075)   (5,176)   (6,591)
                                                                
Net income (loss)                  $(5,026) $(5,775) $(7,984) $(2,322)
                                                                
Net Income (loss) per common                                     
share:
Basic                             $(0.17)  $(0.19)  $(0.27)  $(0.08)
Diluted                           $(0.17)  $(0.19)  $(0.27)  $(0.08)
                                                                
Weighted average number of common                                
shares outstanding:
Basic                             28,925     29,877     29,224     29,482
Diluted                           28,925     29,877     29,224     29,482


CBEYOND, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                               
                                                               
                                                  December 31, December 31,
                                                   2011          2012
ASSETS                                                          
Current assets                                                  
Cash and cash equivalents                          $8,521      $30,620
Accounts receivable, net of allowance for doubtful 24,871        23,328
accounts
Other assets                                       11,526        12,423
Total current assets                               44,918        66,371
                                                               
Property and equipment, net                        160,470       157,624
Other non-current assets, net                      35,684        31,053
Total assets                                       $241,072    $255,048
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY                            
Current liabilities                                             
Accounts payable                                   $14,467     $15,870
Other current liabilities                          53,760        52,623
Total current liabilities                          68,227        68,493
                                                               
Non-current liabilities                            8,858         7,722
Non-current portion of long-term debt              -            6,947
                                                               
Stockholders' equity                                            
Common stock                                       289           299
Additional paid-in capital                         311,370       323,584
Accumulated deficit                                (147,672)     (151,997)
Total stockholders' equity                         163,987       171,886
Total liabilities and stockholders' equity         $241,072    $255,048


CBEYOND, INC. AND SUBSIDIARIES
Selected Quarterly Financial Data and Operating Metrics
(Dollars in thousands, except for Network Access Customer Data)
(Unaudited)
                                                               
                                                               
                       Dec. 31    Mar. 31    Jun. 30    Sep. 30    Dec. 31
                        2011       2012       2012       2012       2012
Revenues                                                        
Network, Voice and     $117,702 $118,087 $117,674 $115,164 $112,364
Data
Managed Hosting and    5,619     5,756     6,088     6,327     6,506
Cloud
Total Revenue         $123,321 $123,843 $123,762 $121,491 $118,870
                                                               
                                                               
Adjusted EBITDA         $22,559  $22,974  $27,236  $25,207  $18,828
Adjusted EBITDA margin  18.3%     18.6%     22.0%     20.7%     15.8%
(As % of Total Revenue)
                                                               
Cash Capital           $18,369  $14,836  $14,765  $17,516  $14,488
Expenditures
Non-cash Capital                                               
Expenditures
Capital Leases        $-       $2,400   $957     $-       $4,976
Leasehold              $-       $-       $-       $-       $-
Improvements
Total Capital          $18,369  $17,236  $15,722  $17,516  $19,464
Expenditures
                                                               
Free cash flow          $4,190   $8,138   $12,471  $7,691   $4,340
                                                               
Network Access Customer                                         
Data
Network Access
Customers (At Period    62,169    62,465    62,015    60,876    59,692
End)
Net Network Access     1,044     296       (450)     (1,139)   (1,184)
Customer Additions
Average Monthly Churn  1.4%      1.5%      1.5%      1.6%      1.6%
Rate (1)
Average Monthly
Revenue Per Network     $650     $645     $645     $640     $638
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)
                                                               
                                                               
                         Three Months Ended,
                         Dec. 31    Mar. 31    Jun. 30   Sep. 30   Dec. 31
                          2011       2012       2012      2012      2012
                                                               
Reconciliation of Free
Cash Flow and Adjusted                                          
EBITDA to Net income
(loss):
                                                               
Free Cash Flow            $4,190   $8,138   $12,471 $7,691  $4,340
Cash capital expenditures 18,369    14,836    14,765   17,516   14,488
Adjusted EBITDA           $22,559  $22,974  $27,236 $25,207 $18,828
Depreciation and          (19,095)  (18,876)  (18,370) (18,172) (18,605)
amortization
Non-cash share-based      (3,598)   (3,783)   (2,939)  (2,975)  (3,443)
compensation
MaximumASP purchase       162       -         -        -        -
accounting adjustments
Transaction costs         -         -         -        -        -
Realignment costs         -         (1,640)   (284)    -        (312)
Interest expense, net     (137)     (127)     (144)    (138)    (168)
Other income, net         1         -         -         -        -
Income (loss) before      (108)     (1,452)   5,499    3,922    (3,700)
income taxes
                                                               
Income tax (expense)      (4,918)   258       (2,805)  (1,969)  (2,075)
benefit
Net income (loss)         $(5,026) $(1,194) $2,694  $1,953  $(5,775)
                                                               
                                                               
                                                               
                         Twelve Months Ended                   
                         Dec. 31,                              
                         2011       2012                         
                                                               
Reconciliation of Free
Cash Flow and Adjusted                                          
EBITDA to Net income
(loss):
                                                               
Free Cash Flow            $2,559   $32,640                    
Cash capital expenditures 77,604    61,605                      
Adjusted EBITDA           $80,163  $94,245                    
Depreciation and          (69,895)  (74,023)                    
amortization
Non-cash share-based      (14,149)  (13,140)                    
compensation
MaximumASP purchase       516       -                           
accounting adjustments
Transaction costs         (154)     -                           
Realignment costs         -         (2,236)                     
Interest expense, net     (500)     (577)                       
Other income, net         1,211     -                           
Income (loss) before      (2,808)   4,269                       
income taxes
                                                               
Income tax (expense)      (5,176)   (6,591)                     
benefit
Net income (loss)         $(7,984) $(2,322)                   


CBEYOND, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Financial Measure to GAAP Financial Measure
(Dollars in thousands, except for ARPU)
(Unaudited)
                                                               
                                                               
                       Three Months Ended,
                       Dec. 31    Mar. 31    Jun. 30    Sep. 30    Dec. 31
                        2011       2012       2012       2012       2012
                                                               
Calculation of ARPU:                                            
Total revenue           $123,321 $123,843 $123,762 $121,491 $118,870
Cloud only revenue      (3,186)   (3,245)   (3,367)   (3,486)   (3,483)
(A) Network access      $120,135 $120,598 $120,395 $118,005 $115,387
customer revenue
                                                               
(B) Average Network    61,647    62,317    62,240    61,446    60,284
access customers
ARPU (A / B / number of $650     $645     $645     $640     $638
months in period)
                                                               
                                                               
                                                               
                                                               
                       Twelve Months Ended                     
                       Dec. 31,                                
                       2011       2012                           
                                                               
Calculation of ARPU:                                            
Total revenue           $485,422 $487,966                     
Cloud only revenue      (12,793)  (13,581)                      
(A) Network access      $472,629 $474,385                     
customer revenue
                                                               
(B) Average Network    59,571    60,931                        
access customers
ARPU (A / B / number of $661     $649                         
months in period)

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

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