Winstar Reports Strong Fourth Quarter Results
NEW YORK--(BUSINESS WIRE)--Feb. 27, 2001--
BROADBAND REVENUE: Double-digit Sequential Increase
- 15th Straight Quarter
ON-NET PERCENTAGE: Over 85% for Quarter
- Another Industry Record
GROSS MARGIN: Sharp Increase
- 8th Consecutive Quarter
EBITDA: Strong Improvement
- 6th Consecutive Quarter
Winstar Communications, Inc. (NASDAQ: WCII), a leading broadband services company, today reported total revenue of $225.1 million for the quarter ended December 31, 2000, a 59.1% increase over the year-ago quarter. Winstar's broadband services revenue for the quarter rose to $197.3 million, up 74.6% from the prior year and up 12.2% from the previous quarter. The company has now delivered double-digit percentage increases in broadband services revenue for 15 consecutive quarters.
Winstar's stronger than expected revenue performance was augmented by its eighth consecutive quarter of sharp improvement in gross margin. The company posted an all-time high gross margin of 50.3% for the quarter, as compared to 47.3% in the prior quarter, 35.4% a year ago, and 10.5% as recently as two years ago. The company expects execution of its on-net strategy to continue to drive gross margin improvement throughout 2001.
The combination of strong revenue growth and margin improvement enabled Winstar to narrow its EBITDA loss for the quarter to $19.9 million, a $41.9 million improvement from the year-ago quarter, and a $12.0 million, or 37.7%, improvement from the prior quarter. This is the company's sixth consecutive quarter of significant improvement since posting its peak EBITDA loss in the second quarter of 1999. Winstar expects its EBITDA losses to continue to decline until it reaches EBITDA breakeven, which is expected to occur during the second quarter of 2001.
The company reported a net loss for the quarter applicable to common shareholders of $255.1 million, or $2.76 per share, $0.02 better than consensus analyst earnings expectations. For the full year ended December 31, 2000 Winstar reported total revenue of $759.3 million, a 70.4% increase over 1999. Broadband services revenue increased to $659.5 million, up 85.2% from the prior year. EBITDA losses for the year were $153.4 million, down over 48% from $297.3 million in 1999.
Winstar added a record total of 120,000 customer lines during the fourth quarter, bringing cumulative installed lines to 1,040,000. Of the new lines added, over 85% were fully on-network, up from 82% in the prior quarter, and 57% a year ago. On a cumulative basis, Winstar has now more than tripled its on-net percentage to an industry-leading 52% - up from only 15% when the company launched its focused strategy of selling primarily on its own network.
"Solid and sustained execution of our business strategy has enabled us to deliver another quarter of results that exceed consensus expectations," said William J. Rouhana, Jr., Winstar chairman and chief executive officer. "Our performance in two key areas has driven much of that success. First, consistent execution of our strategy to accelerate the build-out of our broadband network, while enhancing its value with a wide range of broadband services, continues to pay dividends. Second, the unprecedented success of our disciplined on-net strategy has resulted in sharply improved financial performance for eight consecutive quarters."
Winstar added approximately 1,600 new building access rights during the fourth quarter, bringing its cumulative total to over 14,700, including approximately 400 hub sites. A total of 250 of those hub sites are now operational, up from 225 last quarter, and 142 a year ago.
The company increased its total on-net buildings (those directly connected to its broadband network) by 1,000 buildings during the quarter, bringing its cumulative total to 4,400 - an increase of more than 29% from the prior quarter. As a result, the company's "addressable businesses" (businesses located in on-net buildings, where it can provide its full suite of product offerings) increased by 32%, to 125,000, during the quarter. For the full year, Winstar more than doubled on-net buildings, growing from approximately 1,700 to 4,400. This performance more than tripled the company's On-net addressable market from 38,000 to 125,000 businesses.
"Execution is driving our results - pure and simple," said Nathan Kantor, Winstar president and chief operating officer. "With both network expansion and product development on track or ahead of schedule, we continue to broaden and enrich the market for our sales force. The resulting sales momentum has enabled us to deliver strong revenue growth across all channels. Given our goal of doubling our addressable market again in 2001, we clearly expect that momentum to continue."
Selected Metrics
- Weighted Average Revenue Per Customer rose to more than $1,850 per
month, up from approximately $1,700 in the preceding quarter.
- Percentage of New Customers Ordering Bundled Voice and Data
Services increased to over 73%, up from 62% in the previous
quarter, 40% in the first quarter of 2000 and approximately 5%
only five quarters ago.
- On-Net Customers Installed increased by over 22% to approximately
13,900, up from approximately 11,500 at September 30, 2000. This
reflects an addressable customer penetration rate of approximately
11.1%.
For a full presentation of the company's metrics and other operating data, see the attached table.
Recent Highlights
- In early November, Winstar completed a $1.02 billion financing
package, composed of $270 million in private equity from
Microsoft, Compaq, CSFB and Welsh Carson; additional vendor
financing from Compaq Computer Corporation and Cisco Systems,
Inc.; and the expansion of its Senior Credit Facility. This
financing complements the strategic financing completed earlier in
the year, which raised $1.6 billion of high-yield debt and
established a $1.15 billion Senior Credit Facility. In conjunction
with the earlier financing, the company put in place a $2 billion
vendor finance facility with Lucent Technologies, of which $1.0
billion is available at any one time.
- In October, Winstar launched its Business Essentials marketing
initiative for small and medium-sized businesses. Business
Essentials features seven different flat-rate plans, all of which
include "always-on" Internet access, unlimited local telephony
services, and competitively priced long-distance services. Upgrade
packages include other data services such as Web hosting, Web
design, higher speed Internet connectivity, frame, ATM and IP
services.
- Also in October, the Federal Communications Commission (FCC)
issued a ruling that was designed to provide greater and quicker
access to multi-tenant buildings. Winstar praised the efforts of
the FCC, and reaffirmed its commitment to work with the real
estate community to continue to refine the process that promotes
the delivery of new, high-speed broadband communications services
to all businesses that desire them.
About Winstar
Winstar is a leading broadband services company. The company is rapidly building one of the world's most widely available, end-to-end broadband networks. Winstar makes this network important and useful to businesses by providing a comprehensive set of high-quality, digital-age broadband services. These services include high-speed Internet and data, Web hosting and design, phone services, Web-based applications, e-commerce, professional services and Office.com(R), A Service From Winstar, the top-ranked online business service for small and medium-sized businesses. |
