iBasis Announces Record Q3 2000 Revenue and Traffic Volume; Company Achieves 40%
Sequential Quarterly Traffic Growth; Q3 Voice and Fax Traffic Exceeds Volume For All of
1999
Tuesday, October 17, 2000 06:30 PM
Mail this article to a friend
BURLINGTON, Mass.--(BUSINESS WIRE)--Oct. 17, 2000--iBasis, Inc. (Nasdaq:IBAS, news, msgs)
today announced results for the third quarter ended September 30, 2000. Third quarter revenue was
$17.21 million, a sequential quarterly increase of 26.5% compared with second quarter 2000 revenue of
$13.61 million and a 197.8% increase over third quarter 1999 revenue of $5.78 million.
Net loss for the third quarter 2000 was $17.49 million, or a net loss of $0.51 per basic and diluted share
based on 34.10 million weighted average shares outstanding. On a sequential quarterly basis, net loss
for the quarter compares to a second quarter 2000 net loss of $13.32 million, or a loss of $0.39 per
basic and diluted share based on 33.96 million weighted average shares outstanding. This net loss
also compares to a third quarter 1999 net loss of $7.63 million, or a pro forma net loss per basic and
diluted share of $0.27 based on 22.92 million pro forma weighted average shares outstanding. Pro
forma basic and diluted net loss per share and weighted average shares outstanding were calculated
assuming all preferred stock had converted into common stock as of the date of original issuance.
"We achieved another excellent quarter with continued strong execution and growth at a time when
legacy telecommunications carriers are facing significant pressures. The continued success of iBasis
and of the Internet Telephony sector as a whole is further proof of the inherent superiority of voice over
the Internet. We believe that the efforts by legacy carriers to reduce operational costs and deliver new,
value-added services directly benefits the Internet Telephony sector and will continue to fuel its rapid
growth," said Ofer Gneezy, president and chief executive officer of iBasis. "We grew our volume of
voice and fax traffic by more than 40 percent sequentially in the quarter, expanded our network
footprint, established relationships with new large carrier customers, extended the eco-system of our
VoCore unified communications solution, and strengthened our executive team with proven leaders.
We believe this revenue momentum in our business will continue."
Key Indicators
Minutes of use rose to 168.0 million minutes in the third quarter, an increase of 40.7% over second
quarter 2000 volume of 119.4 million minutes and a 275% increase compared to 44.8 million minutes in
the third quarter of 1999.
During the quarter, the company continued to expand The iBasis Network(TM) footprint at a rapid rate.
At the end of the third quarter, the iBasis Network comprised 7,800 overseas lines, a 41.8% increase
over the 5,500 lines at the end of the second quarter 2000 and a 225% increase over the 2,400 lines in
service at the end of the third quarter of 1999. Overseas lines are the phone lines that connect iBasis
Internet Branch Offices overseas to the Public Switched Telephone Network (PSTN), and are one
measure of the total capacity of the iBasis Network.
The company continued to execute on its previously announced plan to expand the number of high
capacity, carrier-class Internet Central Office (ICO) facilities on The iBasis Network to a total of 20 by
year-end. This deployment supports the company's strategic objective, to be a preferred global provider
of wholesale VoIP, Internet Telephony Hosting and enhanced voice-based services. In addition, as
content distribution and e-commerce services are increasingly voice-enabled, this ICO footprint will
support the company's quest to become a leading voice-access network for the Internet. During the
quarter, the company installed three new ICOs, in Miami, Sydney, and Tokyo, raising the total number
of ICO facilities to 11. iBasis currently has ICOs in New York, Los Angeles, Cambridge (Mass.), Hong
Kong, London, Frankfurt, Amsterdam, Vancouver, Miami, Sydney, and Tokyo. Subsequent to the
quarter end, the company provided an update on the progress of its European deployment, announcing
the seven locations in that region where the company plans to have ICOs by year's end.
During the third quarter, the company expanded the number of countries in which its network has traffic
termination and/or origination capability from 33 to 41 countries, a 24% sequential quarterly increase.
iBasis also increased the percentage of revenue received from voice and fax traffic that originated in
countries other than the U.S. during the quarter from 11% in Q2 to 15.1% in Q3 of total revenue, with
non-U.S. originated traffic volume increasing in that same period from 8.2% to 11.9% of total minutes.
Also during the quarter, the company expanded its wholesale customer base, adding more than 10
new carrier customers, including a tier one carrier and several major European providers.
Also during the quarter, the company enhanced its VoCore(SM) hosted Unified Communications
offering, announcing a strategic relationship with Convergys (NYSE:CVG, news, msgs), a leading
provider of customer care solutions. The relationship with Convergys enables iBasis to provide VoCore
customers with comprehensive end-user customer care and support options that are tightly integrated
with its VoCore solution.
The company also made several executive appointments during the quarter including naming D.J. Long
as vice president for Corporate Development, Sean O'Leary as vice president of Internet Telephony,
Alan Bugos as vice president of Engineering, Jackie VanderBrug as vice president of Unified
Communications, Roger Matus as vice president of New Products and Technologies, and Tim Walsh
as vice president of Sales for Europe, the Middle East and Africa.
Outlook
iBasis continues to benefit from increasing demand for its core international voice and fax services,
creating strong overall momentum in its business. The company is on track to deploy a total of 20
Internet Central Offices by year-end 2000. Moving forward, the company expects to expand its network
capacity sufficiently to continue to achieve top-line quarterly revenue growth in the 25% range for the
next several quarters.
Further, the company believes it can achieve sustainable positive gross margin beginning in the first
quarter 2001 and expects to show sequential quarterly improvement thereafter by increasing network
utilization, growing the percentage of voice and fax traffic that originates overseas, continuing to drive
adoption of Internet Telephony Hosting and developing revenue from enhanced, voice-based Internet
services. The company's long-term target gross margin is in the range of 20-25% and 10-15% for
EBITDA margin; and the company also expects that as its new, enhanced voice-based services are
broadly adopted both gross and EBITDA margins will improve further.
The company's total capital expenditure for 2000 is expected to be approximately $80 million, of which
expenditures for the company's wholesale VoIP business are expected to be approximately $40-45
million with another $35-40 million expended on the company's VoCore Unified Communications
solution. Capital expenditure for the company's wholesale VoIP business in 2001 is expected to be in
the range of $30-40 million. iBasis presently finances approximately 80% of its capital expenditure
through capitalized lease obligations that incur interest expense monthly and are depreciated straight
line over three years. The company's goal is to continue to finance a significant proportion of future
capital expenditures in this manner.
The company has not yet attained revenue from its VoCore Unified Communications business. While
the company is presently in contractual negotiations with service providers interested in iBasis' hosted
VoCore solution, the initiation of revenue to the company for this UC service entails timing risk.
iBasis believes that it is fully-funded through to profitability. The company expects to achieve positive
EBITDA in the third quarter of 2002 and to become profitable in the fourth quarter of 2002. |
