iBasis Reports Record Traffic Volume and Margin
for First Quarter 2003;
Company Achieves Net Income of $4.0 Million,
After Gain from Debt Exchanges
BURLINGTON, Mass.--(BUSINESS WIRE)--April 23, 2003--iBasis, Inc.
(OTCBB: IBAS), the leader in Internet-based voice communications,
today announced results for the first quarter ended March 31, 2003.
Unless otherwise noted, all financial and other information in this
release excludes discontinued operations, which have been reported
separately.
First quarter results were revenue of $41.8 million, compared to
revenue of $41.7 million in the first quarter of 2002. Net income for
the first quarter 2003 was $4.0 million, or $0.09 per share, based on
44.6 million weighted average shares outstanding. This net income
compares to a first quarter 2002 net loss of $18.0 million, or $0.40
per share, based on 45.1 million weighted average shares outstanding.
Net income for the first quarter 2003 included a gain of $12.9 million
on the exchange of convertible subordinated notes.
Gross margin in the first quarter 2003 was $6.9 million, compared
to $6.1 million in the first quarter of 2002. iBasis results for Q1
2002 included revenue of $2.9 million and gross margin of $2.4 million
related to its Messaging business, which was sold during Q1 2002. In
comparing year-over-year performance of the company's core wholesale
VoIP business, revenue growth was 8% and margin growth was 84%, from
$3.8 million in Q1 2002 to $6.9 million in Q1 2003.
Highlights of the first quarter include:
-- Achieved net income of $4.0 million, after gain of $12.9
million resulting from the exchange of convertible debt.
-- Expanded gross margin to 16.5% in Q1 2003 from 15.9% in Q4
2002
-- Reduced operating expenses to $8.2 million in Q1 2003, down
11% from $9.2 million in Q4 2002 and down 44% from $14.6
million in Q1 2002;
-- Reduced convertible bond debt by $38.2 million through
exchanges for senior notes in the amount of $19.1 million
-- Continued effective working capital management, including the
improvement in accounts receivable days outstanding (DSO) from
60 to 56 days.
-- Received the highest rating among international wholesale
carriers for the second consecutive year in the Atlantic-ACM
2003 International Wholesale Carrier Report Card
"I am very pleased to have achieved net income in the first
quarter, following our achievement of positive operating cash flow in
the fourth quarter of 2002. Although we don't expect to reach these
milestones on a sustainable basis until mid-2004, they are evidence
that we are taking the right steps to achieve our goals," said Ofer
Gneezy, president and CEO of iBasis. "Our focus on operating
efficiency and effective management of working capital is enabling us
to continue to grow gross margin and make progress toward
profitability despite slower growth in the quarter."
Key Indicators
Minutes of use on The iBasis Network(TM) in the first quarter rose
to 792 million minutes, a 43% increase over the 555 million minutes
carried in the first quarter 2002, and a 6% sequential increase over
the 748 million minutes in the fourth quarter of 2002. Average revenue
per minute was 5.3 cents per minute in the first quarter of 2003,
compared to 5.7 cents per minute in Q4 2002.
Operational Milestones
In the first quarter 2003, overseas-originated calls accounted for
50% of wholesale telecommunications revenue and 43% of wholesale
traffic, compared to 49% of wholesale revenue and 41% of wholesale
traffic in the fourth quarter of 2002. Tier One carrier customers
generated approximately 62% of revenue in the first quarter 2003,
compared to 67% of revenue in Q4 2002.
During the quarter, iBasis continued to expand its customer base,
with major service providers from every region connecting to The
iBasis Network. Customers announced in the first quarter included
Telekom Austria; New Century InfoComm (DBA sparq), a competitive
carrier in Taiwan; and MeetingZone, a pan-European provider of
audioconferencing and other enhanced services. iBasis finished the
quarter with 182 customers.
In February 2003, Atlantic-ACM, an independent telecommunications
research and advisory firm, released the results of its 2003
International Wholesale Carrier Report Card in which carriers rate
their wholesale service providers in the six key criteria: billing,
customer service, network, pricing, products, and provisioning. iBasis
was ranked #1 in four of the six categories, and, for the second
consecutive year, was the highest-rated international wholesale
carrier overall.
Also during the quarter iBasis announced it had carried its five
billionth minute of voice traffic over its Cisco Powered Network.
Financial Highlights
Gross margin increased to 16.5% of revenue, or $6.9 million during
the first quarter 2003, compared with 15.9% or $6.8 million, in the
fourth quarter 2002.
The decrease in cash during the quarter was $8.2 million,
consisting of $4.2 million of cash used in operating activities
(including a $2.5 million semi-annual interest payment on our
outstanding bonds), $2.1 million in principal repayments on capital
leases, $0.5 million of capital expenditures, a $0.7 million
adjustment to the proceeds of the sale of our Speech Solutions
business, and $0.7 million in fees paid in connection with the
exchanges of our outstanding bonds. The company ended the first
quarter with $24.1 million in cash.
Debt Reduction
During the first quarter iBasis retired $38.2 million of the
company's 5.75% Convertible Subordinated Notes due 2005 in exchange
for a new debt instrument at 50% of the face value of the retired
notes and warrants to purchase shares of iBasis common stock. These
transactions resulted in a gain of $12.9 million that is included in
results from continuing operations in Q1 2003, in accordance with
recent changes in accounting rules.
Since early in Q4 2001, the company has reduced its debt by more
than $131 million through repurchases of convertible bond and vendor
lease debt and convertible bond exchanges. The outstanding face amount
on the company's 5.75% Convertible Debt is $50.4 million, down from
the original face amount of $150 million.
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 23,
2003, and supersedes all previous guidance.
With the recent issuance of Regulation G by the SEC as directed by
the Sarbanes-Oxley act of 2002 there is renewed focus on GAAP based
financial measures. Also, with the recent changes in the accounting
rules for the treatment of certain transactions, EBITDA and other
non-GAAP financial measures have become less meaningful. Accordingly
iBasis will focus the reporting of its financial measurements in
accordance with GAAP.
The company is maintaining previous guidance. The company believes
it will achieve positive cash flow and net income in mid-2004.
About iBasis
Founded in 1996, iBasis (OTCBB: IBAS) is a leader in wholesale
international telecommunications. Named by service providers for the
last two years as the best international wholesale carrier in
Atlantic-ACM's annual International Wholesale Carrier Report Card,
iBasis is a preferred provider for many of the largest carriers in the
world, including AT&T, Cable & Wireless, China Mobile, China Unicom,
Sprint, Telefonica, Telenor, Telstra, and WorldCom. The company's
global VoIP infrastructure, The iBasis Network is the world's largest
international Cisco Powered Network(TM) for Internet Telephony. Based
on its revenue growth from 1997 through 2001, iBasis was named the
eighth fastest-growing technology company in North America and the
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.
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 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 extent of adoption of the
company's services and the timing and amount of revenue 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 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.
iBasis, Inc.
Consolidated Balance Sheets
March 31, December 31,
2003 2002
Assets
Cash and cash equivalents $24,120,222 $32,316,609
Accounts receivable, net 17,796,017 20,853,573
Prepaid expenses and other current assets 5,413,128 5,374,390
Property and equipment, net 26,421,409 32,357,491
Deferred debt financing costs, net 697,389 1,381,927
Long term investment in non-marketable
security 5,000,000 5,000,000
Other assets 1,380,321 1,240,321
Total assets $80,828,486 $98,524,311
Liabilities and Stockholders' Equity (Deficit)
Accounts payable $10,456,687 $13,142,280
Accrued expenses 18,308,239 18,147,455
Current portion of long-term debt 4,736,282 5,348,852
Long term debt, net of current portion 73,039,119 93,589,694
Other long term liabilities 3,657,944 2,268,455
Total liabilities 110,198,271 132,496,736
Stockholders' equity (deficit):
Common stock 45,785 45,785
Treasury stock; 1,135,113 shares at cost (340,534) (340,534)
Additional paid-in capital 369,468,853 368,927,164
Deferred compensation (57,171) (85,756)
Accumulated deficit (398,486,718) (402,519,084)
Total stockholders' equity (deficit) (29,369,785) (33,972,425)
$80,828,486 $98,524,311
iBasis, Inc.
Consolidated Statements of Operations
Three Months Ended March 31,
2003 2002
Net revenue
Net revenue $41,841,267 $41,726,210
Cost and operating expenses:
Data communications and
telecommunications 34,926,620 35,587,961
Research and development 3,682,781 5,475,694
Selling and marketing 1,993,767 3,588,677
General and administrative 2,509,256 5,534,134
Depreciation and amortization 6,113,242 9,907,974
Non-cash stock-based compensation 28,585 334,265
Loss on sale of messaging business -- 2,180,540
Total cost and operating expenses 49,254,251 62,609,245
Income (loss) from operations (7,412,984) (20,883,035)
Interest income 70,151 360,571
Interest expense (1,427,090) (3,903,024)
Gain on exchange/repurchase of
convertible subordinated notes 12,899,789 10,394,431
Other expenses, net (97,500) (93,110)
Income (loss) from continuing operations 4,032,366 (14,124,167)
Loss from discontinued operations -- (3,838,512)
Net income (loss) $4,032,366 $(17,962,679)
Basic and diluted net income (loss) per
share:
Income (loss) from continuing
operations $0.09 $(0.31)
Loss from discontinued operations -- (0.09)
Basic and diluted net income (loss)
per share $ 0.09 $ (0.40)
Weighted average common shares
outstanding:
Basic 44,649,942 45,121,759
Diluted 44,738,329 45,121,759
CONTACT: Media:
iBasis, Inc.
Chris Ward, 781/505-7557
cward@ibasis.net
or
Investors:
iBasis, Inc.
Richard Tennant, 781/505-7409
ir@ibasis.net