Exhibit 99.1
iBasis Reports Record Revenue, Margin and
Traffic Volume for Second Quarter 2004
BURLINGTON, Mass.--(BUSINESS WIRE)--July 21, 2004--
Company Achieves Goal of Positive Cash Flow; Continues Rapid
Growth in Retail Prepaid Business; Completes Debt Refinancing
iBasis, Inc. (OTCBB: IBAS), a leader in international long
distance, VoIP, and prepaid calling cards, today announced results for
the second quarter ended June 30, 2004.
Revenue for the second quarter of 2004 was $61.2 million, compared
to $39.1 million for the second quarter of 2003. Net loss for the
second quarter of 2004 was $5.9 million, or $(0.13) per share,
compared to net loss for the second quarter of 2003 of $5.5 million,
or $(0.12) per share.
Excluding debt refinancing charges and gains on debt exchanges,
net loss for the second quarter of 2004 was $3.5 million, or $(0.08)
per share, compared to net loss for the second quarter of 2003 of $9.2
million, or $(0.21) per share.
Highlights of the second quarter include:
-- Completed refinancing of $62.5 million in debt;
-- Increased cash and achieved positive cash flow from
operations;
-- Achieved fourth consecutive quarter of revenue growth;
-- Increased revenue 56% over Q2 2003 revenue and 7% over Q1
2004; and
-- Increased Prepaid and Enhanced Services (PES) revenue 100%
over Q1 2004.
"We achieved two of our three all-important goals: positive cash
flow by mid-2004, and debt refinancing. We expect to achieve the third
goal, profitability, by year-end.
"The debt refinancing is the culmination of a three-year effort to
strengthen our balance sheet, during which we have reduced our debt by
almost $147 million through bond exchanges and repurchases," said Ofer
Gneezy, president and CEO of iBasis. "We extended the maturity dates
significantly and created the very real potential to convert all of
our debt to equity, which would eliminate the debt and interest
payments entirely."
"Once again, we achieved tremendous sequential growth in the PES
business, more than doubling the Q1 revenue. We continue to have a
substantial competitive advantage as a result of our international
network and our superior quality of service. By leveraging The iBasis
Network(TM) and our sophisticated back office systems, the PES
business is driving a transformation towards a balance between PES and
our wholesale business in margin contribution.
($ in millions) Wholesale VoIP PES Total
- -------------------------------------------------------------------
Revenue $53.5 $7.7 $61.2
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Gross Margin(a) $7.7 $1.4 $9.1
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Gross Margin % 14.5% 17.8% 14.9%
(a) Net Revenue less Data Communications and Telecommunications costs.
Key Indicators
Minutes of use on The iBasis Network(TM) in the second quarter
2004 rose to 1.1 billion minutes, a 30% increase over the 854 million
minutes carried in the second quarter 2003, and an 8% increase over
the 1 billion minutes in the first quarter 2004. Average revenue per
minute continued to be relatively stable at 5.5 cents per minute in
the second quarter 2004, down from 5.6 cents per minutes in the first
quarter 2004. Average revenue per minute is based on our reported net
revenue divided by the minutes of traffic for the applicable period.
Operational Milestones
In the second quarter 2004, Tier One carrier customers generated
approximately 44% of iBasis Wholesale VoIP revenue, compared to 52% of
Wholesale VoIP revenue in Q1 2004. Five of the top ten iBasis
customers during the quarter were Tier One carriers.
Overseas-originated calls accounted for 42% of revenue in the second
quarter of 2004, compared to 45% of revenue in the first quarter 2004.
iBasis ended the second quarter with 277 customers, up from 263 at
the end of the first quarter. New customers announced during the
quarter included Golden Telecom, a leading alternative provider of
integrated telecommunications and Internet services in major cities of
Russia and other countries of the Commonwealth of Independent States
(CIS), and Telekom Malaysia, the national carrier of Malaysia. Both of
these customers benefited from the iBasis DirectVoIP(TM) service,
which enables cost-efficient direct VoIP interconnections with The
iBasis Network for the exchange of international phone calls using
VoIP equipment from a large selection of vendors.
Also, during the quarter iBasis announced that for the third year
in a row it has been ranked by carriers as the world's best
international wholesale carrier in the 2004 International Wholesale
Report Card, the industry reference survey published annually by
independent telecommunications research and advisory firm
ATLANTIC-ACM.
Debt Refinancing
In June, iBasis completed a refinancing of $62.5 million in debt.
As a result of an exchange offer, $37.3 million of the Company's 5
3/4% Convertible Subordinated Notes due in March 2005, representing
approximately 98% of the total amount outstanding, were tendered for
the same principal amount of new 6 3/4% Convertible Subordinated Notes
due in June 2009. The new notes are convertible into the Company's
Common Stock at $1.85 per share. Approximately $0.9 million of the
original notes was not tendered for exchange and remains outstanding.
Simultaneous with the exchange offer, the Company prepaid all
$25.2 million of its 11 1/2% Senior Secured Notes due in January 2005
for cash equal to the principal amount plus accrued but unpaid
interest and warrants exercisable for 5,176,065 shares of the
Company's Common Stock at $1.85 per share. The Company issued $29.0
million of new 8% Secured Convertible Notes due in June 2007, of which
$25.2 million was used to finance the prepayment of the 11 1/2% Senior
Secured Notes. The new notes are convertible into shares of the
Company's Common Stock at $1.85 per share.
As a result of a debt exchange in 2003, all of the interest on the
$25.2 million of 11 1/2% Senior Secured Notes due in January 2005 was
accounted for as a reduction of the gain on the debt exchange and not
charged to the statement of operations as interest expense over the
term of the debt. The interest on the $29.0 million of new 8% Secured
Convertible Notes due in June 2007 will be recorded as a charge to the
statement of operations. Although the refinancing resulted in a
reduction in the Company's annual cash interest payments, it will
result in an increase in interest expense on the statement of
operations in the future.
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 July 21, 2004,
and supersedes all previous guidance.
The Company believes it will continue to be cash flow positive for
the balance of 2004, it will achieve positive cash flow for the year,
and, partially as a result of the increased interest expense resulting
from the debt refinancing, it will now achieve positive net income in
Q4 2004.
About iBasis
Founded in 1996, iBasis (OTCBB: IBAS) is a leading wholesale
carrier of international long distance telephone calls and a provider
of retail international prepaid calling cards sold through major
distributors. iBasis customers include many of the largest
telecommunications carriers in the world, including ATT, Cable &
Wireless, China Mobile, China Unicom, MCI, Sprint, Telefonica,
Telenor, and Telstra. The Company's prepaid calling cards are sold
through retail stores in major metropolitan markets throughout the
U.S. iBasis has carried more than nine billion minutes of
international voice over IP (VoIP) 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 three 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 also 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, DirectVoIP, 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,
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.
(1)Telegeography 2004 data compared with iBasis annualized Q1 2004
traffic volume.
(2)ATLANTIC-ACM International Wholesale Carrier Report Card -
2002, 2003, & 2004.
iBasis, Inc.
Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2004 2003
---------- ------------
(Unaudited)
Assets
Cash and cash equivalents $18,217 $17,270
Accounts receivable, net 25,692 21,767
Prepaid expenses and other current assets 2,875 5,295
Property and equipment, net 11,817 17,175
Deferred debt financing costs, net 191 326
Long term investment in non-marketable
security --- 5,000
Other assets 358 705
------------ ----------
Total assets $59,150 $67,538
============ ==========
Liabilities and Stockholders' Deficit
Accounts payable $24,510 $19,902
Accrued expenses 13,875 18,652
Deferred revenue 3,421 417
Current portion of long term debt 4,023 2,097
Long term debt, net of current portion 66,285 65,829
Other long term liabilities 1,200 2,749
------------ ----------
Total liabilities 113,314 109,646
Stockholders' deficit:
Common stock 48 46
Treasury stock, at cost (341) (341)
Additional paid-in capital 373,590 370,393
Accumulated deficit (427,461) (412,206)
------------ ----------
Total stockholders' deficit (54,164) (42,108)
------------ ----------
Total liabilities and stockholders'
deficit $59,150 $67,538
============ ==========
iBasis, Inc.
Consolidated Statements of Operations
(In thousands)
Three Months Ended
June 30,
----------------------
2004 2003
------------ ---------
(Unaudited)
Net revenue $ 61,175 $ 39,119
Cost and operating expenses:
Data communications and
telecommunications (excluding
depreciation and amortization) 52,066 33,370
Research and development 3,542 3,442
Selling and marketing 2,131 1,903
General and administrative 3,266 2,820
Depreciation and amortization 2,787 5,749
Non-cash stock-based compensation --- 28
------------ ---------
Total costs and operating expenses 63,792 47,312
------------ ---------
Loss from operations (2,617) (8,193)
Interest expense, net (795) (930)
Gain on bond repurchases and exchanges --- 3,716
Other expenses, net (66) (98)
Loss on long-term non-marketable
security --- ---
Debt refinancing charges:
Transaction costs (1,954) ---
Additional interest expense, net (481) ---
------------ ---------
Net loss $(5,913) $(5,505)
======================
Basic and diluted net loss per share:
Basic $(0.13) $(0.12)
============ ========
Diluted $(0.13) $(0.12)
============ ========
Weighted average common shares outstanding:
Basic 46,287 44,652
============ =========
Diluted 46,287 44,652
============ =========
iBasis, Inc.
Consolidated Statements of Operations
(In thousands)
Six Months Ended
June 30,
--------------------
2004 2003
---------- ---------
(Unaudited)
Net revenue $ 118,183 $ 80,960
Cost and operating expenses:
Data communications and telecommunications
(excluding depreciation and amortization) 100,656 68,297
Research and development 7,080 7,125
Selling and marketing 4,132 3,896
General and administrative 6,219 5,329
Depreciation and amortization 6,311 11,862
Non-cash stock-based compensation --- 57
---------- ---------
Total costs and operating expenses 124,398 96,566
---------- ---------
Loss from operations (6,215) (15,606)
Interest expense, net (1,520) (2,287)
Gain on bond repurchases and exchanges --- 16,615
Other expenses, net (85) (195)
Loss on long-term non-marketable security (5,000) ---
Debt refinancing charges:
Transaction costs (1,954) ---
Additional interest expense, net (481) ---
---------- ---------
Net loss $(15,255) $(1,473)
====================
Basic and diluted net loss per share:
Basic $ (0.33) $ (0.03)
========== ========
Diluted $ (0.33) $ (0.03)
========== ========
Weighted average common shares outstanding:
Basic 45,674 44,651
========== =========
Diluted 45,674 44,651
========== =========
CONTACT: iBasis, Inc.
Media:
Chris Ward, 781-505-7557
cward@ibasis.net
or
iBasis, Inc.
Investors:
Richard Tennant, 781-505-7409
ir@ibasis.net