EarthLink business services focus helps beat analyst expectations with $320 million in revenue

EarthLink's (Nasdaq: ELNK) movement into the business market was evident in the first quarter of 2013 as the CLEC's business services focus helped it hold revenue at $320 million.

Although down from $331.6 million Q4 2012 and $344.4 million in Q1 2012, EarthLink beat analyst revenue expectations of $317.7 million.

Business services, which make up 77 percent of its overall revenue mix, declined only 0.8 percent to $247.8 million.

During the quarter, EarthLink's retail growth business, including MPLS, hosted VoIP and IT services, reached an approximate $148 million annualized revenue run rate in the first quarter of 2013, reflecting a 21 percent year-over year organic growth rate.

Overall growth product revenues, including wholesale, reached an approximate $300 million annualized revenue run rate. The CLEC also reported that net recurring sales bookings were up 14 percent sequentially in Q1 and 5 percent from Q1 2012. Growth products made up 65 percent of new sales bookings up from 40 percent in the same period a year ago.

A key foundation for growth in Q1 came with the opening a number of new data centers and the completion of unique fiber network routes.

At the end of last month, EarthLink completed four new data centers in Chicago, Dallas, Rochester and San Jose, with one more on track for completion.

"These facilities are up and running, and our facility in Miami is in final system turn up and testing," said Rolla Huff, Chairman and CEO of EarthLink, during the Q1 earnings call. "It will be coming online in the next month or so."

On the fiber expansion side, EarthLink has lit routes from Memphis to Chicago, Ashburn to New York and express routes from Atlanta to Miami, and Ashburn to Birmingham.

Huff said that they "have a few projects remaining with completion dates expected in the second half of the year, but approximately 70 percent of the fiber expansion was complete at the end of Q1."

In tandem with the opening of its new data centers and building of new fiber routes, EarthLink also introduced a Cloud Disaster Recovery service, which stores a business customer's data assets in its data centers. As a flexible service, customers will be allowed to purchase only the amount of storage needed to replicate their primary IT environment.

Looking forward, EarthLink increased revenue and adjusted EBITDA guidance for the full year 2013. Company management has forecast revenue of $1.25 to $1.26 billion and adjusted EBITDA of $214 million to $227 million for the full year 2013.

Shares of EarthLink on Thursday closed at $5.75 on the Nasdaq stock exchange.  

For more:
- see the earnings release
- and the earnings transcript (sub req.)

Earnings roundup: Wireline telecom earnings in the first quarter of 2013

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