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iBasis Reports Record Revenue, Margin and Traffic Volume for Third Quarter 2004

Company Achieves Fifth Consecutive Quarter of Growth; Continues Growth in Wholesale and Retail Businesses; Increases Cash Through Equity Placement

BURLINGTON, MA— October 20, 2004 — iBasis, Inc. (OTCBB: IBAS), ), a leader in international long distance, VoIP, and prepaid calling cards, today announced results for the third quarter ended September 30, 2004.

Revenue for the third quarter of 2004 was $70.4 million, compared to $44.0 million for the third quarter of 2003. Net loss for the third quarter of 2004 was $1.0 million, or $(0.02) per share, compared to net loss for the third quarter of 2003 of $5.6 million, or $(0.13) per share.

Highlights of the third quarter include:

  • Raised $31.5 million through private placement of equity;
  • Achieved second consecutive quarter of positive cash flow from operations;
  • Achieved fifth consecutive quarter of revenue growth;
  • Increased revenue 60% over Q3 2003 and 15% over Q2 2004; and
  • Increased Retail revenue 54% over Q2 2004.

"We achieved very strong growth in both our wholesale and retail business segments," said Ofer Gneezy, president and CEO of iBasis. "The shakeout in international wholesale telecommunications is continuing, with large carriers deemphasizing or exiting the wholesale business. Our proven ability to deliver high quality service to both incumbent and emerging providers while maintaining very solid gross margins puts us in a strong position to increase our market share in this environment.

"We also strengthened our balance sheet dramatically this quarter with the addition of $31.5 million through a successful private placement of equity. As a result of this cash infusion, in combination with the debt refinancing completed in Q2, which enabled all of our long-term debt to become convertible into equity, we believe we are on a clear path to become completely debt-free."

($ in millions) Wholesale VoIP PES Total
Revenue $58.6 $11.8 $70.4
Gross Margin* $8.5 $1.8 $10.3
Gross Margin % 14.6% 15.1% 14.7%
* Net Revenue less Data Communications and Telecommunications costs
** Previously referred to as Prepaid and other Enhanced Services (PES)

Key Indicators

Minutes of use on The iBasis Network™ in the third quarter 2004 rose to 1.3 billion, a 49% increase over the 866 million minutes carried in the third quarter 2003, and a 16% increase over the 1.1 billion minutes in the second quarter 2004. Average revenue per minute remained stable at 5.5 cents per minute in the third quarter 2004, the same as in the second quarter 2004. Average revenue per minute is based on our reported net revenue divided by minutes of traffic.

Operational Milestones

In the third quarter 2004, Tier One carrier customers generated approximately 43% of iBasis Wholesale VoIP revenue, compared to 44% in Q2 2004. As VoIP has become the preferred wholesale transport technology, and as local and emerging alternative carriers have grown their share of retail traffic, the portion of our traffic that comes from Tier One carriers has become less meaningful as a measurement of our performance. In the future, we will not report this data. Overseas-originated calls accounted for 43% of revenue in the third quarter of 2004, compared to 42% of revenue in the second quarter 2004.

iBasis ended the third quarter with 287 customers, up from 277 at the end of the second quarter. New customers announced during the quarter included Cyprus Telecom, the national carrier of Cyprus, Hanaro, Korea's second-largest fixed-line and Internet broadband operator, and Skype, the global peer-to-peer Internet telephony company.

Also during the quarter iBasis launched Pingo, a prepaid long distance service that leverages the Company's existing network and back office infrastructure and is sold directly to consumers through an eCommerce interface at www.pingo.com.

Equity Placement

On September 24, 2004 iBasis completed a private placement of $31.5 million, providing the Company with more working capital. In the offering, iBasis sold 15.0 million shares of its common stock to new and existing accredited individual and institutional investors at $2.10 per share.

Guidance

The following statements are forward-looking and actual results may differ materially due to factors noted below, among others. The information provided in this financial outlook is as of October 20, 2004, and supersedes all previous guidance.

The Company believes it will achieve positive cash flow for the year, and will achieve net income in Q4 2004.

About iBasis

Founded in 1996, iBasis (OTCBB: IBAS) is a leading provider of wholesale international telecommunications services. For the past two years the company has been named by service providers as the best international wholesale carrier in Atlantic-ACM's annual International Wholesale Carrier Report Card1. iBasis is a preferred provider for many of the largest carriers in the world, including AT&T, Cable & Wireless, China Mobile, China Unicom, MCI, Sprint, Telefonica, Telenor, and Telstra. iBasis has carried more than six billion minutes of international voice traffic over its global Cisco Powered Network™, and is one of the ten largest carriers of international voice traffic in the world2. In addition to its wholesale international telecommunications services, iBasis provides retail prepaid calling cards to major distributors, utilizing the international iBasis Network. Based on its revenue growth from 1997 through 2001, iBasis was ranked the #8 fastest-growing technology company in North America and the #1 fastest-growing technology company in New England in the Technology Fast 500 national program sponsored by Deloitte & Touche. The company can be reached at its worldwide headquarters in Burlington, Massachusetts, USA at 781-505-7500 or on the Internet at www.ibasis.com.

The New England Technology Fast 50 program is presented by Deloitte & Touche and Hale and Dorr, in association with the sponsor, Mazonson Inc. In addition, Mass High Tech and Trinity Communications are associated with the program.

Assured Quality Routing, ConnectPoint, and iBasis are registered marks, Pingo, DirectVoIP, The iBasis Network, Internet Central Office, Internet Branch Office, and IP CallCard are trademarks of iBasis, Inc. Cisco and Cisco Powered are registered trademarks of Cisco Systems, Inc. All other trademarks are the property of their respective owners.

   
 
 
     

 

 


PDFConsolidated Balance Sheets and Consolidated Statements of Operations for Quarter 3 in PDF format

1 Telegeography 2003 data compared with iBasis annualized Q1 2004 traffic volume.

2 ATLANTIC-ACM International Wholesale Carrier Report Card—2002, 2003, & 2004.

Assured Quality Routing and iBasis are registered marks, DirectVoIP and The iBasis Network are trademarks of iBasis, Inc. Cisco and Cisco Powered Network are registered trademarks of Cisco Systems, Inc. All other trademarks are the property of their respective owners.

Except for historical information, all of the expectations, projections and assumptions contained in the foregoing press release, including those relating to the company's current expectations regarding revenue growth, sources of revenue, margin improvement, profitability, future capital expenditures, and cash flows constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. Important factors that could cause actual results to differ materially from such forward-looking statements include, but are not limited to, (i) the extent of adoption of the company's services and the timing and amount of revenue and margin generated by these services; (ii) fluctuations in the market for and pricing of these services; and (iii) the other considerations described as "Risk Factors" in the Company's most recent Forms 10-K and 10-Q, and the company's other SEC filings. We have no current intention to update any forward-looking statements.

Use of Non-GAAP Financial Data
The Company provides certain financial data in addition to providing financial results in accordance with GAAP. This data is not in accordance with, or an alternative to GAAP, and may be different from Non-GAAP financial data used by other companies. This Non-GAAP financial data includes average revenue per minute, which the Company believes provides useful information, to both its management and investors about the Company's current performance.