Cbeyond Inc. (CBEY, Financial) filed Quarterly Report for the period ended 2012-06-30.
Cbeyond, Inc. has a market cap of $221.3 million; its shares were traded at around $7.9 with and P/S ratio of 0.5. Cbeyond, Inc. had an annual average earning growth of 9.7% over the past 5 years.
Total Adjusted EBITDA was $50.2 million during the six months ended June 30, 2012, a 30.0% increase over the comparable period in 2011. Total Free Cash Flow was $20.6 million during the six months ended June 30, 2012 compared to $(1.2) million during the comparable period in 2011. The growth in Adjusted EBITDA and Free Cash Flow is primarily attributable to customer and revenue growth, a reduction in capital expenditure subsequent to our Ethernet-over-copper conversion efforts in 2011 and lower operating costs as a result of our strategic realignment during the current six-month period.
Core Managed Services revenue increased 2.2% and 2.9%, and Core Managed Services ARPU declined 2.9% and 3.3% during the three and six months ended June 30, 2012, respectively. The decline in ARPU is primarily due to existing customers converting to lower priced packages, decreased charges for usage above levels of voice minutes included in our packages, customers reducing the number of additional lines and services with incremental charges, and decreased adoption of our mobile services. We believe the decline is related to the effects of the ongoing current economic conditions on customers and the continued increased competitive pressures from alternate providers who compete primarily with our Cbeyond 1.0 services, such as cable companies. This downward pressure has been partially offset by the value delivered through selling additional service offerings including our cloud-based offerings.
Revenue from access charges paid to us by other communications companies to terminate calls to our customers increased for the three and six-month comparison periods by approximately $0.7 million and $1.1 million primarily due to a billing dispute filed by a major carrier which had an overall negative impact on terminating access revenue of approximately $0.4 million and $0.7 million in the three and six months ended June 30, 2011, respectively. Terminating access charges have historically grown at a slower rate than our customer base due to reductions in access rates on interstate calls as mandated by the FCC. These rate reductions are expected to continue in the future, so we expect terminating access revenue will be declining in the near term.
Bad debt expense was $1.6 million, or 1.3% of total revenue, compared to $1.7 million, or 1.5% of total revenue, for the three months ended June 30, 2012 and 2011, respectively. During the six months ended June 30, 2012 and 2011 bad debt expense was $3.2 million or 1.3% of revenue, and $3.2 million or 1.3% of revenues, respectively. This level of bad debt expense is consistent with stronger cash collections and more stringent credit policies maintained in recent periods.
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Cbeyond, Inc. has a market cap of $221.3 million; its shares were traded at around $7.9 with and P/S ratio of 0.5. Cbeyond, Inc. had an annual average earning growth of 9.7% over the past 5 years.
Highlight of Business Operations:
The final acquisition-date fair value of the consideration transferred to the sellers of Aretta totaled $4,027, which consisted of cash consideration of $2,465 (exclusive of $177 of cash acquired) and estimated contingent consideration of $1,562. During the second and fourth quarters of 2011, we made cash payments of $400 and $400, respectively, to the former shareholders of Aretta upon achievement of product development milestones. Based on the revenue level that was actually achieved in 2011, we paid the former shareholders of Aretta $800 in March 2012.Total Adjusted EBITDA was $50.2 million during the six months ended June 30, 2012, a 30.0% increase over the comparable period in 2011. Total Free Cash Flow was $20.6 million during the six months ended June 30, 2012 compared to $(1.2) million during the comparable period in 2011. The growth in Adjusted EBITDA and Free Cash Flow is primarily attributable to customer and revenue growth, a reduction in capital expenditure subsequent to our Ethernet-over-copper conversion efforts in 2011 and lower operating costs as a result of our strategic realignment during the current six-month period.
Core Managed Services revenue increased 2.2% and 2.9%, and Core Managed Services ARPU declined 2.9% and 3.3% during the three and six months ended June 30, 2012, respectively. The decline in ARPU is primarily due to existing customers converting to lower priced packages, decreased charges for usage above levels of voice minutes included in our packages, customers reducing the number of additional lines and services with incremental charges, and decreased adoption of our mobile services. We believe the decline is related to the effects of the ongoing current economic conditions on customers and the continued increased competitive pressures from alternate providers who compete primarily with our Cbeyond 1.0 services, such as cable companies. This downward pressure has been partially offset by the value delivered through selling additional service offerings including our cloud-based offerings.
Revenue from access charges paid to us by other communications companies to terminate calls to our customers increased for the three and six-month comparison periods by approximately $0.7 million and $1.1 million primarily due to a billing dispute filed by a major carrier which had an overall negative impact on terminating access revenue of approximately $0.4 million and $0.7 million in the three and six months ended June 30, 2011, respectively. Terminating access charges have historically grown at a slower rate than our customer base due to reductions in access rates on interstate calls as mandated by the FCC. These rate reductions are expected to continue in the future, so we expect terminating access revenue will be declining in the near term.
Bad debt expense was $1.6 million, or 1.3% of total revenue, compared to $1.7 million, or 1.5% of total revenue, for the three months ended June 30, 2012 and 2011, respectively. During the six months ended June 30, 2012 and 2011 bad debt expense was $3.2 million or 1.3% of revenue, and $3.2 million or 1.3% of revenues, respectively. This level of bad debt expense is consistent with stronger cash collections and more stringent credit policies maintained in recent periods.
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