Calling EarthLink's (Nasdaq: ELNK) quarterly results "lumpy" due to the timing of large customer wins, CEO Rolla Huff emphasized the company's backlog of deals in an earnings call. He also said leadership is considering the formation of a holding company.
The provider reported that business services revenue was $240.6 million, down sequentially from $243.3 million in Q2 2013 as the company continues to target larger enterprise customers.
"As a result of selling more large, multi-location deals, our backlog of deals that have been sold but not yet installed has grown by over 27% this year," said Huff during the earnings call. "It grew 19 percent sequentially just this quarter and now represents approximately $100 million of total contract value."
The CLEC's retail growth business, which includes MPLS, hosted VoIP and IT services, reached a $180 million annualized revenue run rate in the quarter. Earthlink reported that 64 percent of the new customer bookings were comprised of its growth products vs. 50 percent of sales bookings from growth products during the same period a year ago.
Overall product revenues, including wholesale services, reached an approximate $324 million annualized revenue run rate.
In the consumer segment, broadband services represented 70 percent of revenue. It also reduced consumer customer churn to 2.2 percent from 2.4 percent in Q3 2012.
During the quarter, it also completed two major network and services initiatives, including its acquisition of Center Beam and over 90 percent of its fiber network expansion.
In addition to the new network and service initiatives, EarthLink announced during the earnings call that it is considering the formation of a holding company as the publicly-traded parent, with EarthLink Inc. as a wholly-owned subsidiary. The service provider said that this structure would reduce ongoing audit, tax, regulatory and corporate costs, allow more efficient use of tax assets, and enable the company to manage the business more efficiently.
"We've been working for the last 2 years, frankly, to rationalize the incredibly complex structures that we bought," Huff said. "Because you can just imagine with buying these 2 big CLECs that themselves were roll-ups that the structures were just off the charts complex. And our--the finance team and our general council have been working hard to get those rationalized and this is really sort of the final step of that."
Huff added that "I don't want anybody to connect this to something having to do with the future event or transaction that we're contemplating."
Overall company revenues were $308.6 million, down sequentially from $313.4 million in Q2 2013.
For the full year 2013, EarthLink has forecast revenue of $1.24 to $1.25 billion.
Shares of EarthLink were listed at $5.27, up 37 cents, or 7.55 percent in late Tuesday afternoon trading on the Nasdaq stock exchange.
- see the release
- and the earnings transcript
Earnings summary: Wireline telecom earnings in the third quarter of 2013
EarthLink's $243.3M in business revenue driven by IP service sales
EarthLink completes CenterBeam acquisition
EarthLink bolsters IT services play with $22 million CenterBeam purchase
EarthLink enhances cloud platform with new San Jose data center