tw telecom (Nasdaq: TWTC) saw the benefits of its business-centric services focus in Q2 2011 take shape as the service provider reported that revenue grew 1.8 percent to $338.4 million.
On a year-over-year basis, revenue was up 6.8 percent, up from the $316.8 million reported in Q2 2010, representing a year-over-year increase of $21.6 million.
As has been the case in previous quarters, the growth drivers in tw telecom's earnings mix continue to be derived from enterprise, data and Ethernet and VPN-based products. Data and Internet services represent 47 percent of revenue for the quarter versus 42 percent in the same quarter last year.
During the Q2 2011, tw telecom's enterprise revenue grew 2.2 sequentially and 8.3 percent year-over-year. Likewise, data and Internet revenue grew 3.9 percent sequentially and 17.9 percent year-over-year, a factor that was driven by a 29 percent year-over-year increase in Ethernet and VPN-based products.
Larissa Herda, tw telecom's Chairman, CEO and President, said that "Our success was driven by our strategic data and Internet portfolio, including the new product initiatives we launched last year."
Ongoing demand for enterprise services drove tw telecom to increase its fiber-connected building additions nearly 60 percent.
Outside of enterprise sales, tw telecom reported a $2.6 million increase in wholesale services, which it attributes to more wireless backhaul services to wireless operators and more Ethernet services to other service providers to serve their end-customer base.
Of course, there were some obvious losses.
tw telecom's net income was $14.3 million for the quarter, down from the $242.3 million in Q2 2010. The service provider's net income was impacted by a $227.3 million non-cash income tax benefit in 2010.
Network services, for one, declined 1.2 percent, a factor that tw telecom says reflects growth in other services, including colocation. Voice services remained nearly flat with 0.7 percent growth, reflecting churn and a reduction in usage-based services.
Ongoing demand for its enterprise and wholesale network services, tw telecom decided to raise its 2011 annual capital investment guidance to $340 to $350 million. The increase in capital spending will be used to drive more success-based investments to connect new customer locations, expand colocation facilities and extend the reach of its fiber network.
- see the earnings release (PDF)
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