EarthLink's Q1 revenue dips 2% to $344M, but up year-over-year

EarthLink (Nasdaq:ELNK) reported its revenue declined sequentially 2 percent--to $34 million--but was up 42 percent year-over-year from the same period in 2011, a factor it attributed to the closing of its acquisitions of One Communications and five IT service companies last year.

Business services continue to be the dominant revenue driver in the CLEC's revenue mix, a segment that makes up 76 percent of its total revenue mix, rising 59 percent from Q1 2011.

While overall business service revenues declined $2.3 million sequentially, the loss was narrower than the USD3.2 million losses it reported in Q4 2011.

Providing a broader mix of IT and business services are key to what Rolla Huff, EarthLink's Chairman and CEO is its growth pattern. To make its IT vision a reality, EarthLink purchased five IT-focused service companies in 2011, including Business Vitals and Synergy Global Solutions' IT Solution Center and hosted application provider assets.

"We continue our strategic transformation to an IT services company, and we are gaining significant traction in the marketplace with our differentiated assets and capabilities," he said in the earnings release. "As demand for IT services is growing, we consistently deliver tailored solutions to meet customers' evolving needs, as evidenced by our recent launch of additional IT services. With the positive trajectory in our business services segment, we remain committed to showing sequential organic revenue growth in this segment by the end of this year."

In the consumer segment, broadband services continue to be the star performer. Broadband services made up 67 percent of consumer access revenue in Q1 2012, up from 64 percent in Q1 2011. It also reduced subscriber churn to 2.5 percent, from 2.6 percent in Q4 2011 and 2.7 percent in Q1 2011.

Looking forward to the full year 2012, EarthLink's management is maintaining its guidance of Adjusted EBITDA of $285 million to $295 million and capital expenditures of $115 million to $135 million. In addition, company management increased its net income guidance to a range of $7 million to $11 million for the full year 2012.

EarthLink's stock was $8.15 on the NASDAQ at the end of Friday.

For more:
- see the release

Special report: Wireline in the first quarter of 2012

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