Exhibit 99.1
Arbinet Announces First Quarter Financial Results
NEW BRUNSWICK, N.J., May 8, 2008—Arbinet-thexchange, Inc. (NasdaqGM: ARBX) today reported financial results for the first quarter ended March 31, 2008.
First quarter 2008 fee revenues were $13.0 million, a 4.3% increase over fourth quarter 2007 and 2.5% better than the first quarter of 2007. A total of 3.49 billion minutes were bought and sold on Arbinet’s exchange in the first quarter 2008, compared to 3.62 billion minutes in the first quarter 2007. Arbinet completed 452.8 million calls during the first quarter 2008, compared to 441.7 million calls in the first quarter 2007. First quarter 2008 trading revenue and related costs each declined approximately $17.0 million or 13.2% compared to the same quarter in 2007, reflecting a reduction in the number of minutes and a lower average trade rate of minutes transacted through the platform.
First quarter 2008 net loss from continuing operations was ($38) thousand or ($0.00) per diluted share, compared to a net loss from continuing operations of ($1.4) million or ($0.06) per diluted share in the first quarter 2007. As stated in the fourth quarter announcement, the Company is in the process of divesting Broad Street Digital Limited, a license management platform for intellectual property rights and digital content distribution, and, accordingly, Broad Street’s results of operations and financial position were classified as discontinued operations.
William M. Freeman, President and Chief Executive Officer of Arbinet, said, “We made great strides in what was expected to be a transitional quarter for us as we laid the groundwork for many of the new initiatives we will be launching in the coming quarters. We gained new members each month and ended the quarter with 1,045 members. In March, we also experienced the highest revenue month since the Company’s inception. We are pleased with our performance to date and look forward to rolling out our new products and services.”
Quarterly Conference Call
Arbinet will host a conference call to discuss its first quarter 2008 results at 5:00 p.m. Eastern Time today. The dial-in number for the live audio call beginning at 5:00 p.m. Eastern Time is 888-562-3654, or 973-582-2703 for international callers; the passcode is 45725033. A live web cast of the conference call will be available on Arbinet’s web site at http://www.arbinet.com.
A replay of the call will be available from 8:00 p.m. Eastern Time on Thursday, May 8, 2008 through midnight on May 22, 2008 at http://www.arbinet.com and by telephone at 800-642-1687, or 706-645-9291 for international callers; the passcode is 45725033.
About Arbinet
Arbinet is a leading provider of solutions to simplify the exchange of digital communications in a converging world. The Company operates the world’s largest electronic market for trading, routing and settling communications capacity. Through its managed service offerings, Arbinet provides solutions to simplify the increased complexity of routing calls across traditional and VoIP networks.
Arbinet’s 1,045 voice and data Members, including the world’s 10 largest international carriers, use Arbinet’s Internet based electronic platforms to buy, sell, deliver and settle transactions valued at about $500 million in 2008. These Members include fixed, mobile and VoIP carriers, ISPs and content providers from more than 60 countries who exchange voice, data, content and value added services.
For more information about Arbinet’s solutions visit http://www.arbinet.com.
Forward-Looking Statements
This press release contains forward-looking statements regarding anticipated future revenues, growth, capital expenditures, management’s future expansion plans, expected product and service developments or enhancements, and future operating results. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as: “believes,” “expects,” “may,” “will,” “should” or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Various important risks and uncertainties may cause Arbinet’s actual results to differ materially from the results indicated by these forward-looking statements, including, without limitation: the ability of Arbinet to effectively divest Broad Street Digital Limited; members (in particular, significant trading members) not trading on our exchange or utilizing our new and additional services (including DirectAxcessSM, PrivateExchangeSM, AssuredAxcessSM and PeeringSolutionsSM); continued volatility in the volume and mix of trading activity; our uncertain and long member enrollment cycle; the failure to manage our credit risk; failure to manage our growth; pricing pressure; investment in our management team and investments in our personnel; regulatory uncertainty; system failures, human error and security breaches that could cause Arbinet to lose members and expose it to liability; and Arbinet’s ability to obtain and enforce patent protection for our methods and technologies. For a further list and description of the risks and uncertainties the Company faces, please refer to Part I, Item 1A of the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 17, 2008, and other filings that have been filed with the Securities and Exchange Commission. Arbinet assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise and such statements are current only as of the date they are made.
Contacts:
Jack Wynne, CFO
Arbinet-thexchange, Inc.
732-509-9230
Andrea Priest / Andi Salas
Joele Frank, Wilkinson Brimmer Katcher
212-355-4449
ARBINET—THEXCHANGE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, | ||||||||
2007 | 2008 | |||||||
($ in thousands, except per share data) | ||||||||
Trading revenues | $ | 129,520 | $ | 112,442 | ||||
Fee revenues | 12,643 | 12,959 | ||||||
Total revenues | 142,163 | 125,401 | ||||||
Cost of trading revenues | 129,561 | 112,470 | ||||||
12,602 | 12,931 | |||||||
Costs and expenses: | ||||||||
Operations and development | 5,003 | 5,742 | ||||||
Sales and marketing | 2,000 | 2,211 | ||||||
General and administrative | 4,462 | 3,386 | ||||||
Depreciation and amortization | 2,053 | 1,830 | ||||||
Reserve for litigation | 1,150 | — | ||||||
Total costs and expenses | 14,668 | 13,169 | ||||||
(Loss) from operations | (2,066 | ) | (238 | ) | ||||
Interest income | 792 | 418 | ||||||
Interest expense | (331 | ) | (166 | ) | ||||
Other income (expense), net | 264 | 29 | ||||||
Income (loss) before income taxes | (1,341 | ) | 43 | |||||
Provision for income taxes | 86 | 81 | ||||||
(Loss) from continuing operations | $ | (1,427 | ) | $ | (38 | ) | ||
Discontinued operations: | ||||||||
(Loss) from discontinued operations, net of income tax of $0 in 2007 and $11 in 2008 | (449 | ) | (412 | ) | ||||
Net (loss) | $ | (1,876 | ) | $ | (450 | ) | ||
Net (loss) attributable to common stockholders | $ | (1,876 | ) | $ | (450 | ) | ||
Basic net (loss) per share: | ||||||||
Continuing operations | $ | (0.06 | ) | $ | — | |||
Discontinued operations | $ | (0.02 | ) | $ | (0.02 | ) | ||
Net (loss) | $ | (0.08 | ) | $ | (0.02 | ) | ||
Diluted net (loss) per share: | ||||||||
Continuing operations | — | — | ||||||
Discontinued operations | — | — | ||||||
Net (loss) | — | — | ||||||
Dividends declared per common stock share | — | $ | (0.40 | ) | ||||
Shares used in computing basic net (loss) per share | 25,430,319 | 24,918,630 | ||||||
Shares used in computing diluted net (loss) per share | 25,430,319 | 24,918,630 | ||||||
Other comprehensive income: | ||||||||
Cumulative unrealized loss in available-for-sale securities | (1 | ) | 13 | |||||
Foreign currency translation adjustment | 6 | 11 | ||||||
Comprehensive (loss) | $ | (1,871 | ) | $ | (426 | ) | ||
ARBINET—THEXCHANGE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 2007 | As of March 31, 2008 | |||||||
($ in thousands, except per share data) | ||||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 28,383 | $ | 18,256 | ||||
Marketable securities | 20,344 | 12,574 | ||||||
Trade accounts receivable, (net of allowance of $1,481 and $1,614 at December 31, 2007 and March 31, 2008, respectively) | 28,416 | 31,042 | ||||||
Prepaids and other current assets | 2,362 | 4,022 | ||||||
Current assets of discontinued operations | 269 | 183 | ||||||
Total current assets | 79,773 | 66,077 | ||||||
Property and equipment, net | 23,002 | 22,457 | ||||||
Security deposits | 2,430 | 2,430 | ||||||
Intangible assets, net | 2,018 | 1,946 | ||||||
Goodwill | 2,196 | 2,193 | ||||||
Other assets | 75 | 55 | ||||||
Long term assets of discontinued operations | 439 | 656 | ||||||
Total assets | $ | 109,934 | $ | 95,814 | ||||
Liabilities & Stockholders' Equity | ||||||||
Current Liabilities: | ||||||||
Capital lease obligations-current portion | $ | 7 | $ | 2 | ||||
Notes payable | 493 | 75 | ||||||
Due to Silicon Valley Bank | 285 | 653 | ||||||
Accounts payable | 16,123 | 15,316 | ||||||
Deferred revenue | 2,499 | 2,214 | ||||||
Accrued expenses and other current liabilities | 8,250 | 7,400 | ||||||
Current liabilities of discontinued operations | 334 | 155 | ||||||
Total current liabilities | 27,991 | 25,815 | ||||||
Other long-term liabilities | 2,282 | 1,892 | ||||||
Total liabilities | 30,273 | 27,707 | ||||||
Stockholders' Equity | ||||||||
Preferred Stock, 5,000,000 shares authorized | — | — | ||||||
Common Stock, $0.001 par value, 60,000,000 shares authorized, 26,355,641 and 26,570,562 shares issued and outstanding, respectively | 26 | 27 | ||||||
Additional paid-in-capital | 181,644 | 172,286 | ||||||
Treasury Stock, 674,233 and 836,997 shares, respectively | (4,613 | ) | (6,394 | ) | ||||
Accumulated other comprehensive loss | (455 | ) | (431 | ) | ||||
Accumulated deficit | (96,941 | ) | (97,381 | ) | ||||
Total Stockholders' Equity | 79,661 | 68,107 | ||||||
Total Liabilities & Stockholders' Equity | $ | 109,934 | $ | 95,814 | ||||