EarthLink narrows Q3 net loss to $2M, but business, residential declines continued

EarthLink may have reduced its net loss to $2 million year-over-year from $11.3 million, but the service provider reported that revenues dropped in both its consumer and business segments.

The service provider's consumer segment was the hardest hit, where revenues declined 10.7 percent to $60.7 million, while business revenue dropped 1.5 percent to $237 million. EarthLink said in the earnings presentation that it does not expect the consumer revenues to improve anytime soon with the expectation that 2014 revenues will decline between 10-11 percent.

Targeted price actions completed during the quarter helped to aid the consumer services revenue profile. EarthLink said that churn in the consumer services segment was "commensurate with an increase in average revenue per user (ARPU)," adding that it expects consumer churn to "continue to moderate in future periods."

In the business services unit, EarthLink reported that retail services were $189 million, down from $199 million in the third quarter of 2013.

The CLEC portion of the business services segment reported revenue of $144 million, down 10 percent year-over-year. Churn in the CLEC segment remained higher "than historical levels" and the company expects a 2014 decline of 11 percent. Managed network and cloud and IT services remained a hot button for EarthLink, with revenues rising to $51 million, up from $45 million, in the third quarter of 2013.

EarthLink also saw a gain in wholesale services, which were $43 million, up from $36.3 million from the same period a year ago.

From an overall financial perspective, EarthLink's adjusted EBITDA improved 5.2 percent to $59.0 million, while revenues declined 3.5 percent to $297.7 million. For the year 2014, EarthLink revised its guidance, forecasting revenue of $1.16 billion to $1.17 billion.

Shares of EarthLink were listed at $3.90, up 39 cents or 10.97 percent, in Tuesday morning trading on the Nasdaq stock exchange.  

For more:
- see the earnings release

Special report:  Wireline telecom earnings in the third quarter of 2014

Related articles:
EarthLink outsources 9-1-1 capabilities to Bandwidth, enhances focus on customer acquisition
EarthLink's Q2 business revenue declines to $234M, but revenue trajectory improving
EarthLink grows Q1 existing business customer sales, narrows losses to 4.3 percent
EarthLink serves up Wi-Fi for multi-site businesses

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