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Exhibit 99.2
FOR IMMEDIATE RELEASE
Contacts: Media: Investors:
Chris Ward Richard Tennant
iBasis, Inc. iBasis, Inc.
781-505-7557 781-505-7409
cward@ibasis.net ir@ibasis.net
iBASIS REPORTS RECORD REVENUE, MARGIN AND TRAFFIC VOLUME FOR
FIRST QUARTER 2004
COMPANY ANNOUNCES DEBT REFINANCING INITIATIVE;
QUARTERLY TRAFFIC EXCEEDS ONE BILLION MINUTES
BURLINGTON, MASS. - APRIL 28, 2004 - iBasis, Inc. (OTCBB: IBAS), the leader
in Internet-based voice communications, today announced results for the first
quarter ended March 31, 2004. The Company also announced its intention to
make a public exchange offer for its 5 3/4% Convertible Subordinated Notes
due in March 2005 and that it intends to refinance its existing $25.2 million
of 11 1/2% Senior Secured Notes due in January 2005 contemporaneously with
the closing of the intended exchange offer for its convertible notes.
First quarter results were revenue of $57.0 million, compared to revenue of
$41.8 million in the first quarter of 2003. Net loss for the first quarter 2004
was $9.3 million, or $(0.21) per share. This net loss includes a $5 million
impairment charge related to a minority equity investment in a non-public entity
made in 2000. The loss compares to first quarter 2003 net income of $4.0
million, or $0.09 per share. Net income for the first quarter 2003 included a
gain of $12.9 million on bond exchanges.
Highlights of the first quarter include:
- Increased revenue 36% over Q1 2003 revenue and 7% over Q4 2003;
- Increased Prepaid and Enhanced Services (PES) revenue 63% over Q4 2003;
- Carried more than one billion minutes for the quarter;
- Average revenue per minute (ARPM) remained consistent compared to Q4 2003
at 5.6 cents, up from 5.3 cents in Q1 2003; and
- Continued to increase traffic terminating to mobile phones.
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"During Q1, we continued to achieve top-line growth in both our core
Wholesale VoIP business, and our newer Prepaid and Enhanced Services (PES)
business," said Ofer Gneezy, president and CEO of iBasis. "With more than one
third of all international traffic being carried by wholesale carriers, the
wholesale market continues to offer significant growth opportunities for
those who can manage the complexity of routing, rating, and billing. We
continue to refine and strengthen the back-office systems we have developed
to our benefit. Today, they provide us with flexibility and precision that
constitute a significant advantage in both the wholesale VoIP business and
the PES business.
"The sequential growth in the PES business is consistent with our strategy to
increase the proportion of our revenue from higher margin services. The PES
business successfully leverages The iBasis Network(TM) and systems to take
advantage of the strongest wholesale destinations more efficiently than our
competitors in the retail space. We have begun a transformation towards a
balance between PES and our wholesale business in margin contribution.
<Table>
<Caption>
WHOLESALE
($ IN MILLIONS) VoIP PES TOTAL
-----------------------------------------------------------------
REVENUE $ 53.2 $ 3.8 $ 57.0
GROSS MARGIN* $ 7.5 $ 0.9 $ 8.4
GROSS MARGIN % 14.1% 24.1% 14.8%
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* Net revenue less Data Communications and Telecommunications costs.
"In addition to the tremendous progress in both the wholesale VoIP and PES
businesses, we continue to explore opportunities to strengthen our balance
sheet. Since Q4 2001, we have reduced our debt by almost $147 million through
bond exchanges and repurchases. Now, we intend to embark on a program to
refinance our remaining debt. We believe that the successful conclusion of this
effort will significantly reinforce our ability to build on our leadership in
international telecommunications."
KEY INDICATORS
Minutes of use on The iBasis Network(TM) in the first quarter rose to one
billion minutes, a 26% increase over the 792 million minutes carried in the
first quarter 2003, and a 7% sequential increase over the 955 million minutes in
the fourth quarter of 2003. Average revenue per minute was 5.6 cents per minute
in the first quarter of 2004, unchanged from Q4 2003. Average revenue per minute
is based on our reported net revenue divided by the minutes of traffic for the
applicable period.
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OPERATIONAL MILESTONES
In the first quarter 2004, Tier One carrier customers generated approximately
52% of Wholesale VoIP revenue, compared to 59% of Wholesale VoIP revenue in Q4
2003. Five of the top ten iBasis customers during the quarter were Tier One
carriers. Overseas-originated calls accounted for 45% of revenue in the first
quarter of 2004, compared to 41% of revenue in the fourth quarter 2003.
During the quarter, iBasis announced its DirectVoIP(TM) service, which enables
carriers to achieve the cost efficiencies of direct IP interconnection to The
iBasis Network simply and quickly by taking advantage of iBasis interoperability
with VoIP equipment from a wide range of vendors. We ended the quarter with 263
customers, up from 236 at the end of Q4 2003. iBasis announced DirectVoIP
interconnections with Comindico, the leading IP carrier in Australia, and A-Z
Communications, an emerging IP-based service provider in Cambodia.
DEBT REFINANCING
iBasis has filed a Registration Statement on Form S-4 with the Securities and
Exchange Commission relating to a proposed offer to exchange approximately $38.2
million principal amount of its existing 5 3/4% Convertible Subordinated Notes
due 2005 for the principal amount of new 6 3/4% Convertible Subordinated Notes
due 2009. The new notes will be issued in principal amounts equal to the
principal amounts of notes tendered. The 6 3/4% Convertible Subordinated Notes
will be convertible into iBasis common stock at a fixed price of $1.85 per
share. The old notes were convertible into iBasis common stock at a fixed price
of $86.14 per share. The new notes, like the existing notes, will be general
unsecured obligations of iBasis. The terms of the new notes will be
substantially similar to those of the existing notes. The purpose of the
exchange offer will be to offer holders of the existing notes an increase in
yield and a significant decrease in the conversion price in return for an
extension of the maturity of the notes.
The intended exchange offer will be subject to the satisfaction or waiver of
several conditions, including that a minimum number of the principal amount of
the existing notes has been validly tendered and not withdrawn. iBasis expects
that the exchange offer will be completed by the end of Q3 2004, assuming the
conditions to the offer have been met.
Contemporaneously with the closing of the exchange offer, iBasis intends to
refinance its 11 1/2% Senior Secured Notes due in January 2005 by repurchasing
these notes pursuant to a note repurchase, exchange and termination agreement
with the majority holders thereof. In connection with the prepayment of the 11
1/2% Senior Secured Notes, we intend to terminate the various securities
exchange agreements between iBasis and the holders of these notes. In
consideration of such prepayment and termination, we will issue to the holders
of these notes warrants to purchase 5,176,065 shares of our common stock. These
warrants will have an exercise price of $1.85 per share and shall be exercisable
for
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a period of three years from the date of issuance. We intend to register the
shares of common stock underlying these warrants for resale by the holders of
the existing senior notes, pursuant to the terms a registration rights agreement
to be entered into by and among iBasis and the warrant holders.
iBasis has secured a commitment of approximately $25.2 million from a third
party funding source to prepay these notes. iBasis will issue new secured
convertible notes to the third party financing source or sources in the
aggregate principal amount of $25.2 million. We expect that the new secured
convertible notes will have an interest rate of 8% per annum, will be
convertible into iBasis common stock at a fixed price of $1.85 per share, and
will mature three years from the date of issuance. Notwithstanding the existing
financing commitment, the prepayment may be financed by any number of other
financing sources available or that become available to iBasis on terms as
favorable, or more favorable, than those in the commitment from our third party
funding source.
This news release does not constitute an offer to exchange or sell, or the
solicitation of an offer to exchange or buy, nor shall there be any exchange or
sale of these securities in any state in which such offer, exchange,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such state.
Noteholders are strongly advised to read the registration statement, tender
offer statement and other related documents when they are filed with the
Securities and Exchange Commission because these documents will contain
important information. Stockholders and noteholders may obtain a free copy of
these documents when available from iBasis or at the SEC's website, www.sec.gov.
Noteholders may obtain copies of the exchange offer materials when available
from D.F. King, the information agent for the exchange offer, by calling toll
free: (800) 859-8508.
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 April 28, 2004, and supersedes all previous
guidance.
The Company believes it will achieve positive cash flow and net income in
mid-2004, and that it will achieve positive cash flow for the year 2004. The
Company expects to refinance its outstanding debt through a public exchange
offer for its 5 3/4% Convertible Subordinated Notes due in March 2005 and
intends to refinance its existing $25.2 million of 11 1/2% Senior Secured Notes
due in January 2005 contemporaneously with the closing of the intended exchange
offer as described in this press release.
ABOUT iBASIS
Founded in 1996, iBasis (OTCBB: IBAS) is a leading carrier of wholesale
international telecommunications services and a provider of retail international
prepaid calling cards sold through major distributors. iBasis customers include
many of the largest carriers in the world, including AT&T, Cable & Wireless,
China Mobile, China Unicom, MCI,
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Sprint, Telefonica, Telenor, and Telstra. iBasis has carried more than nine
billion minutes of international voice traffic over its global Cisco Powered
Network(TM), and is one of the ten largest carriers of international voice
traffic in the world(1). For two consecutive years service providers have named
the company as the best international wholesale carrier in Atlantic-ACM's annual
International Wholesale Carrier Report Card(2). iBasis was ranked the #1
fastest-growing technology company in New England in the 2002 and 2003
Technology Fast 50 programs 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.
###
Assured Quality Routing, ConnectPoint, and iBasis are registered marks, The
iBasis Network, Internet Central Office, Internet Branch Office, and IP CallCard
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 THE PROPOSED DEBT REFINANCING,
REVENUE GROWTH, SOURCES OF REVENUE, MARGIN IMPROVEMENT AND FUTURE CAPITAL
EXPENDITURES 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 ACTUAL
COMPLETION OF THE PROPOSED DEBT REFINANCING, AS DESCRIBED IN iBASIS' RECENTLY
FILED REGISTRATION STATEMENT ON FORM S-4, (ii) THE EXTENT OF ADOPTION OF THE
COMPANY'S SERVICES AND THE TIMING AND AMOUNT OF REVENUE GENERATED BY THESE
SERVICES; (iii) FLUCTUATIONS IN THE MARKET FOR AND PRICING OF THESE SERVICES;
AND (iv) THE OTHER CONSIDERATIONS DESCRIBED AS "RISK FACTORS" IN iBASIS' 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.
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(1) Telegeography 2003 data compared with iBasis annualized 1H 2003 traffic
volume.
(2) Atlantic-ACM INTERNATIONAL WHOLESALE CARRIER REPORT CARD -- 2002 & 2003
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iBasis, Inc.
Consolidated Balance Sheets
(In thousands)
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<Caption>
MARCH 31, DECEMBER 31,
2004 2003
---------------- -------------------
(UNAUDITED)
ASSETS
Cash and cash equivalents $ 15,892 $ 17,270
Accounts receivable, net 21,449 21,767
Prepaid expenses and other current assets 3,159 5,295
Property and equipment, net 13,768 17,175
Deferred debt financing costs, net 259 326
Long term investment in non-marketable security -- 5,000
Other assets 354 705
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Total assets $ 54,881 $ 67,538
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable $ 17,947 $ 19,902
Accrued expenses 18,479 18,652
Deferred revenue 1,544 417
Current portion of long term debt 66,939 2,097
Long term debt, net of current portion -- 65,829
Other long term liabilities 1,353 2,749
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Total liabilities 106,262 109,646
Stockholders' deficit:
Common stock 46 46
Treasury stock, at cost (341) (341)
Additional paid-in capital 370,462 370,393
Accumulated deficit (421,548) (412,206)
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Total stockholders' deficit (51,381) (42,108)
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Total liabilities and stockholders' deficit $ 54,881 $ 67,538
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iBasis, Inc.
Consolidated Statements of Operations
(In thousands)
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------
2004 2003
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(Unaudited)
Net revenue $ 57,008 $ 41,841
Cost and operating expenses:
Data communications and telecommunications
(excluding depreciation and amortization) 48,590 34,927
Research and development 3,538 3,682
Selling and marketing 2,001 1,994
General and administrative 2,953 2,509
Depreciation and amortization 3,524 6,113
Non-cash stock-based compensation -- 29
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Total costs and operating expenses 60,606 49,254
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Loss from operations (3,598) (7,413)
Interest expense, net (725) (1,357)
Gain on bond repurchases and exchanges -- 12,900
Other expenses, net (19) (98)
Loss on long-term non-marketable security (5,000) --
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Net income (loss) $ (9,342) $ 4,032
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Basic and diluted income (loss) per share:
Basic $ (0.21) $ 0.09
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Diluted $ (0.21) $ 0.09
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Weighted average common shares outstanding:
Basic 45,061 44,650
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Diluted 45,061 44,738
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