Exhibit 99.1
iBasis Reports Net Income and Positive Cash Flow for First Quarter 2005;
Record Revenue, Margin, and Traffic Volume in both Trading and Retail
Businesses Drive Company's Crossover to Profitability
BURLINGTON, Mass.--(BUSINESS WIRE)--May 4, 2005--iBasis, Inc.
(OTCBB:IBAS), a leader in international long distance, VoIP, and
prepaid calling cards, today announced results for the first quarter
ended March 31, 2005.
First quarter revenue was $88.7 million, compared to revenue of
$57.0 million in the first quarter of 2004. Net income for the first
quarter 2005 was $0.2 million, or $0.00 per share compared to first
quarter 2004 net loss of $9.3 million, or $(0.21) per share. The Q1
2004 net loss included a $5.0 million impairment charge related to a
minority equity investment in a non-public entity made in 2000.
Highlights of the first quarter include:
-- Achieved net income for the quarter;
-- Generated positive cash flow of $2.8 million;
-- Achieved seventh consecutive quarter of revenue growth;
-- Increased revenue 56% over Q1 2004 and 18% over Q4 2004; and
-- Carried approximately 1.8 billion minutes for the quarter, a
72% increase over Q1 2004 and 17% over Q4 2004.
"We reached a tremendous milestone in becoming profitable and
generating positive cash flow in Q1," said Ofer Gneezy, president and
CEO of iBasis. "We are leveraging our global VoIP network and back
office systems to generate growth in both our wholesale trading
business and in our retail prepaid calling business. Today, both of
these growth engines are firing on all cylinders.
"The response from customers and prospects to our recently
launched DirectVoIP(TM) Broadband and PremiumCertified(TM) products
has been very strong in the most vibrant growth areas of the
international wholesale trading business today. Leading voice over
broadband and mobile providers like Skype and China Mobile are taking
advantage of these capabilities respectively to reinforce their
businesses. In combination, our new products enable us to provide a
compelling and comprehensive solution for consumer VoIP providers. In
addition, the superior quality of the PremiumCertified international
routing product is a powerful asset in growing our retail traffic from
new and existing trading customers and from our own retail prepaid
services, including our web-based Pingo(TM) offering.
"We are also very pleased with the strong improvement in gross
margin percent in our retail business, which we expanded to 15%, up
from 11% in Q4 2004. Enhancements we made to our systems, processes
and organization to strengthen our calling card lifecycle management
are producing the desired results.
"We exited the first quarter with confidence in our ability to
execute our business plan, to sustain our growth, and to meet our
financial goals. We have the network infrastructure, the customer
base, the products, and more than $41 million in cash, and the
industry trends favor our continued growth."
Quarterly Results of Trading and Retail Businesses
($ in millions) Trading Retail Total
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Revenue $70.8 $17.9 $88.7
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Gross Margin(a) $9.7 $2.7 $12.4
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Gross Margin % 13.7% 15.0% 14.0%
(a) Net revenue less Data Communications and Telecommunications costs.
Key Indicators
Minutes of use on The iBasis Network(TM) in the first quarter rose
to 1.8 billion minutes, a 72% increase over the 1.0 billion minutes
carried in the first quarter 2004, and a 17% sequential increase over
the 1.5 billion minutes in the fourth quarter of 2004. Average revenue
per minute was 5.0 cents per minute in the first quarter of 2005,
unchanged from Q4 2004. Average revenue per minute is based on our
reported net revenue divided by the minutes of traffic for the
applicable period.
iBasis ended the first quarter of 2005 with $41.6 million in cash
and short-term investments compared to $38.8 million at the end of the
fourth quarter 2004. The total increase in cash and short-term
investments during the quarter was $2.8 million. This included cash
provided by operations of $4.2 million, less cash for capital
expenditures of $1.0 million and less cash from financing of $0.4
million. Cash used in financing consisted of $0.9 million for the
redemption of the remaining 5.75% Convertible Subordinated Notes and
$0.4 million in capital lease payments offset by proceeds of $0.9
million from warrant exercises.
Operational Milestones
Overseas-originated calls accounted for 47% of revenue in the
first quarter of 2005, compared to 43% in the fourth quarter 2004.
iBasis ended the first quarter with 309 wholesale trading customers,
up from 263 at the end of Q1 2004 and up from 290 at the end of the
fourth quarter 2004.
During the quarter the company announced two new products:
PremiumCertified international routing and DirectVoIP Broadband.
PremiumCertified is designed for retail traffic and features more than
700 routes that have been certified by iBasis as meeting or exceeding
the company's Retail Quality Index for stable call completion and
quality. DirectVoIP Broadband provides fast and secure IP
interconnections to The iBasis Network and meets the specific
technical requirements of providers of consumer VoIP or voice over
broadband services.
Debt Redemption
During the quarter the company redeemed the last of its original 5
3/4 percent Convertible Subordinated Notes due March 2005, which were
issued in March 2000. Consistent with guidance the company issued on
February 2, 2005, the company paid $895,000, plus accrued interest, to
redeem the remaining outstanding notes. All of iBasis' outstanding
bond debt is now convertible by holders at $1.85 per share.
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 May 4, 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 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 (www.pingo.com) 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, and
Telefonica. iBasis carried approximately five billion minutes of
international voice over IP (VoIP) traffic in 2004, 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, Pingo,
DirectVoIP, PremiumCertified, and The iBasis Network are trademarks of
iBasis, Inc. Skype is a trademark of Skype Technologies S.A. 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 2004 traffic
volume.
(2)ATLANTIC-ACM International Wholesale Carrier Report Card -
2002, 2003, & 2004.
iBasis, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2005 2004
------------ -------------
(Unaudited)
Assets
Cash, cash equivalents and short-term
investments $ 41,595 $ 38,825
Accounts receivable, net 41,761 34,133
Prepaid expenses and other current assets 2,937 2,420
Property and equipment, net 11,262 11,861
Deferred debt financing costs, net 165 177
Other assets 284 360
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Total assets $ 98,004 $ 87,776
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Liabilities and Stockholders' Deficit
Accounts payable $ 25,824 $ 24,340
Accrued expenses 20,084 12,186
Deferred revenue 7,372 6,303
Current portion of long term debt 655 1,775
Long term debt, net of current portion 65,594 65,933
Other long term liabilities 1,061 1,132
------------ -------------
Total liabilities 120,590 111,669
Stockholders' deficit (22,586) (23,893)
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Total liabilities and stockholders'
deficit $ 98,004 $ 87,776
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iBasis, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended March 31,
----------------------------
2005 2004
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(Unaudited)
Net revenue $ 88,672 $ 57,008
Cost and operating expenses:
Data communications and
telecommunications (excluding
depreciation and amortization) 76,301 48,590
Research and development 3,132 3,538
Selling and marketing 2,727 2,001
General and administrative 3,546 2,953
Depreciation and amortization 1,720 3,524
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Total costs and operating expenses 87,426 60,606
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Income (loss) from operations 1,246 (3,598)
Interest expense, net (1,036) (725)
Other expenses, net (20) (19)
Loss on long-term non-marketable
security --- (5,000)
------------ -----------
------------ -----------
Net income (loss) $ 190 $ (9,342)
============ ===========
Net income (loss) per share:
Basic $ 0.00 $ (0.21)
Diluted $ 0.00 $ (0.21)
Weighted average common shares outstanding:
Basic 64,982 45,061
Diluted 69,446 45,061
CONTACT: Media:
iBasis, Inc.
Chris Ward, 781-505-7557
cward@ibasis.net
or
Investors:
iBasis, Inc.
Richard Tennant, 781-505-7409
ir@ibasis.net