HERNDON, Va., Aug. 11 /PRNewswire-FirstCall/ -- Arbinet
Corporation (Nasdaq: ARBX), a leading provider of
telecommunications services to fixed and mobile operators, today
reported financial results for the second quarter ended
June 30, 2010.
Quarter Ended June 30,
2010
Total revenues for the second quarter 2010 were $81.2 million, which included $73.4 million trading revenues and $7.8 million fee revenues. This represents a 5.6%
decrease from total revenues of $86.0
million for the second quarter 2009 and a 7.3% decrease from
total revenues of $87.6 million for
the first quarter 2010. The decrease in total revenues was
due, in part, to lower trading revenues caused by lower average
trade rate for minutes bought and sold on Arbinet's exchange, which
was partially offset by higher traffic volumes. In addition,
average fee revenue per minute decreased as a result of changes in
the mix of both geographic markets and the trading activity of
members on the exchange, resulting in decreased sales of certain
premium service offerings and decreases in usage minimums.
A total of 3.12 billion minutes were bought and sold on
Arbinet's exchange in the second quarter 2010, up 20.3% and 4.9%,
compared with 2.59 billion minutes in the second quarter 2009 and
2.97 billion minutes in the first quarter 2010, respectively.
Arbinet completed 325.9 million calls during the second
quarter 2010, up 12.2% and 11.1%, compared with 290.5 million calls
in the second quarter 2009 and 293.3 million calls in the first
quarter 2010, respectively.
Second quarter 2010 gross profit was $4.2
million, up 2.9% compared with $4.1
million in the second quarter 2009, and down 11.4% compared
with $4.8 million in the first
quarter 2010. The modest improvement in gross profit
compared with second quarter 2009 was due, in part, to the
Company's reclassification of $0.6
million of rent expense and bonus expense from indirect cost
of revenues to general and administrative expenses for 2010.
This favorable impact was largely offset by the lower fee
revenues.
Second quarter 2010 loss from operations was ($4.0) million, compared with a loss from
operations of ($2.0) million in the
second quarter 2009 and ($3.3)
million in the first quarter 2010. The increased loss
from second quarter 2009 is due primarily to lower fee revenues,
increased bad debt reserves and severance charges. Compared
with first quarter 2010, those same factors were partially offset
by savings related to cost reduction initiatives.
Net cash provided by operating activities from continuing
operations in the second quarter 2010 was $4.0 million compared with net cash used in
operating activities from continuing operations in the second
quarter 2009 of $36,000. At
June 30, 2010, Arbinet had cash and
cash equivalents of $14.0 million and
marketable securities of $7.4
million, totaling approximately $21.5
million.
The Company's net loss in the second quarter 2010 was
($4.0) million, or ($0.73) per diluted share, compared with net
income of $1.0 million, or
$0.17 per diluted share, in the
second quarter 2009.
Commenting on the Company's second quarter 2010 results and cost
reduction initiatives, Shawn O'Donnell, President and Chief
Executive Officer of Arbinet, stated, "During the second quarter,
our year-over-year growth in traffic was offset by lower average
trade rates and declining average fees per minute. To
mitigate pricing challenges, we have enhanced our networks and
broadened our sales offerings to increase traffic. We have
also incurred severance and restructuring costs over the past
several quarters as part of our cost reduction initiatives, and we
expect to recognize the benefits of these initiatives during the
third and fourth quarters of 2010. As a result of these cost
reduction initiatives, including headcount reductions, today
Arbinet is a leaner company, poised for growth and improved
results. We remain focused on leveraging our core
capabilities and prudently investing in areas that we believe
represent the highest growth opportunity, while effectively
managing costs."
Six Months Ended June 30,
2010
First half 2010 total revenues were $168.8 million, which included $152.3 million trading revenues and $16.4 million fee revenues. This represents a
2.5% decrease from total revenues of $173.1
million for the first half 2009, due, in part, to lower
trading revenues, which declined 1.9% year over year, caused by
lower average trade rates for minutes bought and sold on Arbinet's
exchange, partially offset by higher traffic volumes.
A total of 6.09 billion minutes were bought and sold on the
exchange for the six months ended June 30,
2010, an increase of 16.0% from the 5.26 billion minutes
that were bought and sold on the exchange for the six months ended
June 30, 2009. There were 619.3
million completed calls in the six months ended June 30, 2010, representing a 6.9%
increase from the 579.4 million completed calls for the
six months ended June 30,
2009.
Fee revenues decreased 8.4% to $16.4
million for the six months ended June
30, 2010 from $17.9 million
for the six months ended June 30,
2009. Average fee revenues decreased to $0.0027 per minute for the six months ended
June 30, 2010 from $0.0034 per minute for the six months ended
June 30, 2009, primarily due to
changes in the mix of both geographic markets and the trading
activity of members on the exchange, resulting in decreased sales
of certain premium service offerings and decreases in usage
minimums.
First half 2010 gross profit was $9.0
million, up 9.3%, compared with $8.2
million gross profit for the first half 2009. $1.5
million of the improvement in gross profit was due to the Company's
reclassification of rent expense and bonus expense from indirect
cost of revenues to general and administrative expenses for 2010.
First half 2010 loss from operations was ($7.4) million, compared with loss from
operations of ($4.1) million in the
first half 2009.
Net cash provided by operating activities from continuing
operations in the first half 2010 was $2.8
million compared with net cash provided by operating
activities from continuing operations in the first half 2009 of
$0.8 million.
The Company's net loss in the first half 2010 was ($8.9) million, or ($1.63) per diluted share, compared with net loss
of ($1.5) million, or ($0.28) per diluted share, in the first half
2009.
In the six months ended June 30,
2010, Arbinet recorded $1.2
million of severance charges primarily related to separation
and transition services agreements entered into with its former
general counsel and three division chiefs who departed from the
Company during the six months ended June 30,
2010. In addition, Arbinet recorded $1.13 million in bad debt expense, more than half
of which relates to a single account.
Conference Call
As previously announced on August 9,
2010, Arbinet will host a conference call to discuss its
second quarter 2010 results at 10:00 a.m.
Eastern Time today.
The dial-in number for the live audio call beginning at
10:00 a.m. Eastern Time is (888)
562-3654, or (973) 582-2703 for international callers; the passcode
is 92197722. A live web cast of the conference call will be
available on Arbinet's web site at http://www.arbinet.com.
A replay of the conference call will be available from
1:00 p.m. Eastern Time on
August 11, 2010 through midnight Eastern Time on August 18, 2010 at http://www.arbinet.com and by
telephone at (800) 642-1687, or (706) 645-9291 for international
callers; the passcode is 92197722.
About Arbinet Corporation
Arbinet is a leading provider of international voice and IP
solutions to carriers and service providers globally. With more
than 1,100 carriers across the world utilizing the Arbinet network,
Arbinet combines global scale with sophisticated platform
intelligence, call routing and industry leading credit management
and settlement capabilities. Customers and suppliers include many
leading fixed line, mobile, wholesale and VoIP carriers, as well as
calling card, ISPs and content providers around the world who buy
and sell voice and IP telecommunications capacity and content. The
Company can be reached at its corporate headquarters in
Herndon, VA at (703) 456-4100 or
by email at sales@arbinet.com.
Forward-Looking Statements
This press release contains forward-looking statements,
including forward-looking statements regarding our ability to
leverage our core capabilities and prudently invest in areas that
we believe represent the highest growth opportunities, while
effectively managing costs; and our expectations regarding the
timing and amount of the cost savings as a result of our cost
reduction and restructuring initiatives. Various important
risks and uncertainties may cause our actual results to differ
materially from the results indicated by these forward-looking
statements, including, without limitation: Members (in particular,
significant trading Members) not trading on the Exchange or not
utilizing our new and additional services; continued volatility in
the volume and mix of trading activity; our uncertain and long
Member enrollment cycle; failure to manage our credit risk; failure
to manage and adequately estimate costs of our Carrier Services
business; pricing pressure; investment in our management team and
investments in our personnel; disruption or uncertainty resulting
from recent changes in senior management; regulatory uncertainty;
system failures, human error and security breaches that could cause
us to lose Members and expose us to liability; our ability to
obtain and enforce patent protection for our methods and
technologies; losses in efficiency due to cost cutting and
restructuring initiatives; failure to extend the term of our credit
facility; economic conditions and volatility of financial markets;
and decreased availability of credit to us or buyers on the
Exchange, and the impact they may have on us and the
Members. For a further discussion of the risks and
uncertainties we face, please refer to Part I, Item 1A of our
Annual Report on Form 10-K, for the year ended December 31, 2009, filed with the Securities and
Exchange Commission (SEC) on March 17,
2010 and other periodic and current filings that have been
filed with the SEC and are available at www.sec.gov. We assume no
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise, and such
statements are current only as of the date they are made.
Contacts:
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Gary Brandt, Chief
Financial Officer
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Arbinet
Corporation
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(703)
456-4140
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Andi Salas / Jed
Repko
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Joele Frank,
Wilkinson Brimmer Katcher
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(212)
355-4449
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ARBINET
CORPORATION
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CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
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(in thousands, except per share
amounts)
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(unaudited)
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Three Months Ended June
30,
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Six Months Ended June
30,
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2010
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2009
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2010
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2009
|
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Trading revenues
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$ 73,408
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$ 77,304
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$ 152,333
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$ 155,157
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Fee revenues
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7,772
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8,674
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16,417
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17,921
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Total
revenues
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81,180
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85,978
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168,750
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173,078
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Cost of trading
revenues
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73,418
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77,272
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152,351
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155,360
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Indirect cost of trading and fee
revenues
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3,534
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4,598
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7,401
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9,488
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Total cost of
trading and fee revenues
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76,952
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81,870
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159,752
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164,848
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Gross
profit
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4,228
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4,108
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8,998
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8,230
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Other operating
expenses:
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|
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Sales and
marketing
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1,952
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1,848
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3,873
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3,665
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General and
administrative
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3,957
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2,438
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7,906
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5,036
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Depreciation and
amortization
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1,675
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1,821
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3,372
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3,612
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Severance
charges
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686
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-
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1,232
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-
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Total other operating
expenses
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8,270
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6,107
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16,383
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12,313
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Loss from operations
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(4,042)
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(1,999)
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(7,385)
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(4,083)
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Interest income
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26
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27
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|
44
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87
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Interest expense
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(160)
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(172)
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(345)
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(323)
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Foreign currency transaction
loss
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193
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3,149
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(1,298)
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2,766
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Other income, net
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63
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61
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132
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171
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Loss before income
taxes
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(3,920)
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1,066
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(8,852)
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(1,382)
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Provision for income
taxes
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65
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99
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73
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138
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Net loss
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(3,985)
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967
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(8,925)
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(1,520)
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Basic net income (loss) per
common share
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$
(0.73)
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$
0.18
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$
(1.63)
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$
(0.28)
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Diluted net income (loss) per
common share
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$
(0.73)
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$
0.17
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$
(1.63)
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$
(0.28)
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Weighted average shares used in
computing
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basic net income (loss) per
share
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5,482
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5,524
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5,474
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5,460
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Weighted average shares used in
computing
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diluted net income (loss) per
share
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5,482
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5,555
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5,474
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5,460
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ARBINET
CORPORATION
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CONDENSED CONSOLIDATED BALANCE
SHEETS
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(in thousands)
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As of
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June 30, 2010
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As of
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(Unaudited)
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December 31, 2009
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Assets
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Current Assets:
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Cash and cash
equivalents
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$
14,019
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$
15,492
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Marketable securities
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7,445
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6,407
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Trade accounts receivable, net
of allowances
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19,021
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24,513
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Prepaids and other current
assets
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932
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1,284
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Total current
assets
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41,417
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47,696
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Property and equipment,
net
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16,745
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17,821
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Security deposits
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1,665
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1,676
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Intangible assets,
net
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123
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149
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Other assets
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347
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395
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Total Assets
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$
60,297
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$
67,737
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Liabilities and Stockholders'
Equity
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Current Liabilities:
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Accounts payable
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$
12,053
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$
11,676
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Deferred revenue
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966
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1,434
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Accrued expenses and other
current liabilities
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6,885
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6,172
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Due to Silicon Valley
Bank
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-
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2,014
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Current portion of long-term
debt
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4,963
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3,600
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Current liabilities for
discontinued operations
|
100
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|
100
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Total current
liabilities
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24,967
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24,996
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Deferred rent
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2,257
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2,343
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Long-term debt and other
liabilities
|
234
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|
66
|
|
Total Liabilities
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27,458
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27,405
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Stockholders' Equity
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Common stock
|
7
|
|
7
|
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Additional paid-in
capital
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176,774
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175,926
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Treasury stock
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(17,264)
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(17,122)
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Accumulated other comprehensive
income
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2,782
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2,056
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Accumulated deficit
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(129,460)
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(120,535)
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Total Stockholders'
Equity
|
32,839
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|
40,332
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|
Total Liabilities and
Stockholders' Equity
|
$
60,297
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$
67,737
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SOURCE Arbinet Corporation
Copyright . 11 PR Newswire