EarthLink's Q2 business revenue declines to $234M, but revenue trajectory improving

EarthLink reported that its business service revenues once again declined sequentially 3.7 percent to $234 million, down from the 4.3 percent decline that took place in the previous quarter.

The service provider re-emphasized that the revenue trajectory continued to show improvement versus the 6.1 percent year-over-year decline the company reported in the first quarter of 2014.

"We are intensely focused on improving our operations and cash flow generation," said Joseph F. Eazor, EarthLink's CEO and president, in the earnings release. "Our results this quarter reflect the team's good progress so far."

During the quarter, EarthLink said that its sales teams continued to make progress extending the terms of contracts with existing customers.

Similar to the first quarter, each segment of the business services unit had varying results.

In the CLEC segment, which serves mainly small businesses, revenues declined 11 percent to $148 million. EarthLink said it expects a decline rate of ~11 percent in 2014 as a result of the full-year impact of the elevated churn in mid-2013. Looking forward, it has forecast improvement over subsequent periods as it ramps up its customer retention efforts. 

One bright spot of growth in the business arena was managed network and cloud and IT services, which rose 26 percent sequentially to $49 million. EarthLink anticipates that year-over-year growth will be lower in the third quarter due to the inclusion of CenterBeam revenue. However, it has forecast long-term annual growth of 20 percent for this segment.

In the wholesale segment, EarthLink reported that revenues declined 3 percent to $38 million. It expects overall wholesale revenue to decline 3 percent in 2014 as a result of the impact of the Sprint/Nextel disconnect, but grow in the low single digits in the long-term.

EarthLink said that quarterly wholesale results "will continue to be lumpy as we complete settlements as in this period."

Shares of EarthLink were trading at $4.24, up 35 cents or 8.99 percent, in Tuesday morning trading on the Nasdaq stock exchange.

For more:
- see the earnings release

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

Related articles:
EarthLink grows Q1 existing business customer sales, narrows losses to 4.3 percent
EarthLink serves up Wi-Fi for multi-site businesses
EarthLink's Q4 2013 emerging product revenues grow but overall business services down 7%
EarthLink officially launches holding company

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