EarthLink's Q1 results get boost from ITC^DeltaCom, STS Telecom acquisitions

EarthLink's (Nasdaq: ELNK) revenues rose 55 percent over Q1 2010 to $243 million, a result driven by its recently completed purchases of ITC^DeltaCom and STS Telecom.

In Q1, Earthlink's story was all about how it is looking to gain larger piece of the business communications market through its EarthLink Business unit.

During the quarter, Earthlink reported that as a result of these acquisitions and organic growth at its legacy New Edge business services unit, business services made up 59 percent of their total revenue in Q1 2011, a 21 percent increase in Q1 2010.

The consumer segment also fared well in Q1. With 64 percent of its consumer access revenue generated from broadband services, EarthLink's consumer access revenue rose 61 percent from Q1 2010.

However, EarthLink did lose 79,000 subscribers, slightly lower than the 114,000 subscribers it lost in Q1 2010. EarthLink attributes the lower subscriber losses to a reduction in customer churn. Consumer subscriber churn for the first quarter of 2011 was 2.7 percent, down from 2.8 percent in the fourth quarter of 2010 and 3.1 percent in the first quarter of 2010.

"Our results reflect the evolution of EarthLink to a leading IP solutions provider with well over half of our revenue in the quarter generated from our EarthLink Business segment. That proportion will increase next quarter as we layer in the One Communications revenue stream," stated EarthLink Chairman and Chief Executive Officer Rolla P. Huff in the earnings release. "At the same time, our EarthLink Consumer business remains strong and continues to generate significant cash flow."

Looking forward to the rest of 2011, EarthLink said the inclusion of its recent acquisition of One Communications, expects Adjusted EBITDA of $305 million to $315 million; free cash flow of $175 million to $200 million; capital expenditures of $115 million to $130 million; and net income of $13 million to $20 million for the full year 2011.

For more:
- see the earnings release

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