Exhibit 99.1
iBasis Reports Record Revenue, Margin and Traffic Volume
for Fourth Quarter 2004; Strong Growth in 2004 Over 2003 Led by
Increases in Retail, Mobile, and Latin America Business
BURLINGTON, Mass.--(BUSINESS WIRE)--Feb. 2, 2005--iBasis, Inc.
(OTCBB: IBAS), a leader in international long distance, VoIP, and
prepaid calling cards, today announced results for the fourth quarter
and full year ended December 31, 2004.
Revenue for the fourth quarter 2004 was $75.1 million, compared to
$53.2 million for the fourth quarter 2003. For the full year 2004,
revenue was $263.7 million, an increase of 48% over 2003 revenue of
$178.2 million.
Net loss for the fourth quarter 2004 was $1.2 million or $(0.02)
per share compared to a net loss for the fourth quarter 2003 of $2.6
million or $(0.06) per share. Net loss for the full year 2004 was
$17.5 million or $(0.35) per share, compared to a net loss for full
year 2003 of $9.7 million or $(0.21) per share. Net loss comparisons
for these periods are significantly impacted by gains on bond
repurchases and exchanges, a loss on a non-marketable security, debt
refinancing charges, and income from discontinued operations.
Loss from operations for the fourth quarter 2004 was $0.09
million, compared to a loss from operations in the fourth quarter 2003
of $3.0 million. Loss from operations for the full year 2004 was $7.5
million, compared to loss from operations for the full year 2003 of
$23.4 million.
Highlights of the fourth quarter and full year 2004 include:
-- Achieved sixth consecutive quarter of revenue growth in Q4;
-- Increased Q4 2004 revenue 41% over Q4 2003;
-- Greatly strengthened balance sheet by refinancing debt; and
-- Raised $31 million in new equity.
"The fourth quarter was another record quarter with increased
minutes, revenue, and margin, and lower expenses," said Ofer Gneezy,
president and CEO of iBasis. "During the year we achieved many very
important goals, including continued significant growth in our
wholesale business and remarkable growth in our retail prepaid
business, which we took from a start-up to an annual run rate of $60
million in just six quarters. In 2005 our strategy for the retail
business is to expand gross margin, strengthen our brands, and broaden
distribution.
"We are encouraged by how we are positioned to benefit from the
major trends that are driving growth in wholesale traffic, including
the consumer adoption of Voice over IP services and the growth in
mobile phone usage. Carrying traffic for some of the leading
providers, we already have captured significant market share of the
international traffic generated by consumers using the new voice
services over their broadband Internet connections. With the recent
launch of our DirectVoIP Broadband product, we are very well
positioned to grow that traffic and remain a major player in this
explosive segment.
"In the mobile market, we doubled the volume of traffic we carry
to mobile phones in 2004 and are now capable of reaching the majority
mobile phone subscribers worldwide with high quality international
service. In addition, our sales and business development efforts in
Latin America have been very successful, as we have grown our revenue
in that region 75% year over year.
"We also dramatically improved our balance sheet during 2004. We
refinanced our debt, all of which is convertible at $1.85 per share,
greatly enhancing our prospects for becoming debt free, and we raised
$31 million in new equity, which provides greater working capital to
pursue revenue opportunities we previously would have had to decline.
During the quarter we utilized some of this working capital to expand our
footprint in attractive destinations that required shorter payment
terms. We also chose to utilize cash rather than finance some capital
investments.
"Looking forward, we expect to continue to grow our wholesale and
retail businesses to achieve profitability."
Quarterly Results for Wholesale and Retail
($ in millions) Wholesale Retail Total
- ------------------- --------------- ------------- -----------------
Revenue $60.0 $15.1 $75.1
- ------------------- --------------- ------------- -----------------
Gross Margin(a) $9.0 $1.7 $10.7
- ------------------- --------------- ------------- -----------------
Gross Margin % 15.0% 11.0% 14.2%
(a) Net Revenue less Data Communications and Telecommunications costs
Key Indicators
Minutes of use on The iBasis Network(TM) in the fourth quarter
2004 rose to 1.5 billion, a 57% increase over the 955 million minutes
carried in the fourth quarter 2003, and a 16% increase over the 1.3
billion minutes in the third quarter 2004. For the full year 2004,
iBasis completed 4.9 billion minutes of international VoIP calls,
which is more than 16% of all international VoIP minutes, according to
forecasts from Telegeography 2005.
Average revenue per minute declined to 5.0 cents per minute in the
fourth quarter 2004, down from 5.5 cents per minute in the third
quarter 2004. This decline is predominantly due to a shift in traffic
mix, which also resulted in reducing our cost per minute to 4.3 cents,
down from 4.7 cents per minute in Q3 2004. Average revenue per minute
is based on our reported net revenue divided by minutes of traffic.
iBasis ended the fourth quarter of 2004 with $38.8 million in cash
and short-term investments compared to $17.3 million at the end of the
fourth quarter 2003 and $46.6 million at the end of the third quarter
2004. The total decrease in cash during the quarter was $7.8 million.
This included capital expenditures of $2.2 million, cash used in
financing of $0.2 million, and cash used for operations of $5.4
million, which included a semi-annual interest payment of $2.4
million. Some of our year-end collections slipped into January,
resulting in a higher than expected cash utilization in Q4.
Operational Milestones
Overseas-originated calls accounted for 43% of revenue in the
fourth quarter of 2004, the same as in the third quarter 2004.
iBasis ended the fourth quarter with 290 wholesale customers, up
from 236 at the end of 2003 and up from 287 at the end of the third
quarter 2004. New customers announced during the year included Skype,
a leading global voice over IP provider, AZ Telecommunications of
Cambodia, Golden Telecom, Telekom Malaysia, Cyprus Telecom, the
national carrier of Cyprus, Hanaro, Korea's second-largest fixed-line
and Internet broadband operator.
Also during 2004 iBasis expanded its ability to capture
higher-margin retail traffic with the launch of Pingo(TM), the prepaid
long distance service, which leverages the Company's existing network
and back office infrastructure. Pingo is sold directly to consumers
through an eCommerce interface at www.pingo.com.
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 February 2,
2005, and supersedes all previous guidance.
The Company believes that in 2005 it will:
-- achieve 40 to 50% year-over-year revenue growth;
-- achieve positive net income for the year; and
-- be cash flow positive for 2005.
Planned cash expenditures for 2005 include $7 to $8 million in
capital investment; $0.9 million in redemption of the company's
remaining 5 3/4 percent convertible notes, which are due in March
2005; and $4.8 million in bond interest payments, which would be
reduced if the bonds are converted to equity.
About iBasis
Founded in 1996, iBasis (OTCBB: IBAS) is a leading wholesale
carrier of international long distance telephone calls and a provider
of retail prepaid calling services, including the Pingo(TM) web-based
offering and disposable calling cards, which are sold through major
distributors and available at retail stores throughout the U.S. iBasis
customers include many of the largest telecommunications carriers in
the world, including AT&T, Cable & Wireless, China Mobile, China
Unicom, MCI, Sprint, Skype, Telefonica, Telenor, and Telstra. iBasis
has carried more than 13 billion minutes of international voice over
IP (VoIP) traffic over its global Cisco Powered(TM) network, and is
one of the ten largest carriers of international voice traffic in the
world(1). For three consecutive years service providers named iBasis
the best international wholesale carrier in ATLANTIC-ACM's annual
International Wholesale Carrier Report Card(2). iBasis was also ranked
among the fastest-growing technology companies in New England in the
2002, 2003, and 2004 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 and iBasis are registered marks,
DirectVoIP, Pingo, The iBasis Network, Internet Central Office, and
Internet Branch Office 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.
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 2005 data compared with iBasis annualized Q4 2004
traffic volume.
(2)ATLANTIC-ACM International Wholesale Carrier Report Card -
2002, 2003, & 2004.
iBasis, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2004 2003
------------- --------------
(Unaudited)
Assets
Cash, cash equivalents and short-term
investments $ 38,825 $ 17,270
Accounts receivable, net 34,133 21,767
Prepaid expenses and other current
assets 2,420 5,295
Property and equipment, net 11,861 17,175
Deferred debt financing costs, net 177 326
Long term investment in non-marketable
security --- 5,000
Other assets 360 705
------------- --------------
Total assets $ 87,776 $ 67,538
============= ==============
Liabilities and Stockholders' Deficit
Accounts payable $ 24,340 $ 19,902
Accrued expenses 12,186 18,652
Deferred revenue 6,303 417
Current portion of long term debt 1,775 2,097
Long term debt, net of current portion 65,933 65,829
Other long term liabilities 1,132 2,749
------------- --------------
Total liabilities 111,669 109,646
Stockholders' deficit (23,893) (42,108)
------------- --------------
Total liabilities and
stockholders' deficit $ 87,776 $ 67,538
============= ==============
iBasis, Inc.
Consolidated Statements of Operations
(In thousands)
Three Months Ended December 31,
-----------------------------
2004 2003
------------- --------------
(Unaudited)
Net revenue $ 75,136 $ 53,167
Cost and operating expenses:
Data communications and
telecommunications (excluding
depreciation and amortization) 64,476 46,054
Research and development 3,138 3,370
Selling and marketing 2,765 1,739
General and administrative 2,949 1,108
Depreciation and amortization 1,893 3,936
------------- --------------
Total costs and operating
expenses 75,221 56,207
------------- --------------
Loss from operations (85) (3,040)
Interest expense, net (1,083) (748)
Other expenses, net (78) (44)
------------- --------------
Loss from continuing operations (1,246) (3,832)
Income from discontinued operations --- 1,251
------------- --------------
Net loss $ (1,246) $ (2,581)
=============================
Basic and diluted net loss (income) per
share:
Loss from continuing operations $ (0.02) $ (0.09)
Income from discontinued operations --- 0.03
------------- --------------
Net loss per share $ (0.02) $ (0.06)
============= ==============
Weighted average common shares
outstanding:
Basic 62,823 44,769
============= ==============
Diluted 62,823 44,769
============= ==============
iBasis, Inc.
Consolidated Statements of Operations
(In thousands)
Year Ended December 31,
----------------------------
2004 2003
------------ --------------
(Unaudited)
Net revenue $ 263,678 $ 178,159
Cost and operating expenses:
Data communications and
telecommunications (excluding
depreciation and amortization) 225,169 152,853
Research and development 13,803 13,387
Selling and marketing 9,205 7,513
General and administrative 12,648 7,665
Depreciation and amortization 10,345 20,065
Non-cash stock-based compensation --- 86
------------ --------------
Total costs and operating expenses 271,170 201,569
------------ --------------
Loss from operations (7,492) (23,410)
Interest expense, net (4,031) (3,806)
Gain on bond repurchases and
exchanges --- 16,615
Other expenses, net (234) (337)
Loss on long-term non-marketable
security (5,000) ---
Debt refinancing charges:
Transaction costs (2,159) ---
Additional interest expense, net (481) ---
------------ --------------
Loss from continuing operations (19,397) (10,938)
Income from discontinued operations 1,861 1,251
------------ --------------
Net loss $ (17,536) $ (9,687)
============================
Basic and diluted net loss (income) per
share:
Loss from continuing operations $ (0.38) $ (0.24)
Income from discontinued operations 0.03 0.03
------------ ------------
$ (0.35) $ (0.21)
============ ============
Weighted average common shares
outstanding:
Basic 50,514 44,696
============ ==============
Diluted 50,514 44,696
============ ==============
CONTACT: iBasis, Inc.
Media:
Chris Ward, 781-505-7557
cward@ibasis.net
or
iBasis, Inc.
Investors:
Richard Tennant, 781-505-7409
ir@ibasis.net