Exhibit 99.1
iBasis Reports Record Revenue, Margin and Traffic Volume for
Second Quarter 2005;
Company Achieves Positive Cash Flow and Strengthens Balance Sheet
BURLINGTON, Mass.--(BUSINESS WIRE)--July 27, 2005--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, 2005.
Revenue for the second quarter of 2005 was $94.6 million, compared
to $61.2 million for the second quarter of 2004. Net loss for the
second quarter of 2005 was $0.8 million, or $(0.01) per share,
compared to net loss for the second quarter of 2004 of $5.9 million,
or $(0.13) per share. The net loss for the second quarter 2005
included debt conversion premiums and foreign exchange losses totaling
$1.0 million. The net loss for the second quarter 2004 included $2.5
million in refinancing-related charges and foreign exchange losses.
Highlights of the second quarter include:
-- Achieved positive cash flow of $1 million;
-- Converted $12.3 million of bond debt to equity in June, and
subsequently converted an additional $19.9 million of bond
debt to equity in July;
-- Achieved eighth consecutive quarter of revenue growth;
-- Increased overall revenue 55% over Q2 2004 and 7% over Q1
2005; and
-- Increased gross margin in Retail business to 20% of Retail
revenue.
"In large part we maintained the gains from our tremendous first
quarter and posted another quarter with positive cash flow," said Ofer
Gneezy, president and CEO of iBasis. "Revenue and gross margin dollars
advanced from the first quarter, offset by higher operating expenses.
"In our Trading business, we achieved good revenue growth but
experienced margin pressure from a decline in traffic originating in
China. We continued to build on our leadership position in the market,
adding 39 new customers during the quarter. We also continued to
expand our presence in the fast-growing consumer VoIP segment where we
now have 16 voice-over-broadband providers as wholesale trading
customers, including market leaders Skype and Yahoo BB.
"In our Retail business, we improved gross margin by 28% over Q1
in dollar terms, reaching 20% of retail revenue, up from 15% in Q1.
Towards the end of Q2 and into Q3 we introduced a number of new cards
with more aggressive pricing. We expect that as these newer cards gain
traction in the market we will resume revenue growth while possibly
giving back some percentage points of margin.
"We are particularly excited that through our efforts during and
subsequent to the quarter we have achieved a monumental milestone in
eliminating our secured bond debt entirely and reducing our overall
long-term debt to approximately $34 million, which is less than our
cash and short-term investments at the end of Q2. We will also save
$2.5 million in future annual interest payments. Primarily as a result
of the bond conversions during the second quarter, we reduced the
deficit in stockholder's equity to $11 million. The subsequent debt
conversions in Q3 added approximately $19 million to stockholder's
equity."
Quarterly Results of Trading and Retail Businesses
($ in millions) Trading Retail Total
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Revenue $77.7 $16.9 $94.6
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Gross Margin (A) $ 9.3 $ 3.4 $12.7
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Gross Margin % 11.9% 20.4% 13.4%
(A) Net revenue less Data Communications and Telecommunications costs.
Key Indicators
Minutes of use on The iBasis Network(TM) in the second quarter
2005 were 1.79 billion minutes, a 61% increase over the 1.11 billion
minutes carried in the second quarter 2004, and a 2% increase over the
1.76 billion minutes in the first quarter 2005. Average revenue per
minute increased to 5.3 cents per minute in the second quarter 2005,
up from 5.0 cents per minutes in the first quarter 2005. Average
revenue per minute is based on our reported net revenue divided by the
minutes of traffic for the applicable period.
iBasis ended the second quarter of 2005 with $42.6 million in cash
and short-term investments compared to $41.6 million at the end of the
first quarter 2005. The total increase in cash and short-term
investments during the quarter of $1.0 million included cash provided
by operations of $2.7 million, less cash for capital expenditures of
$1.1 million and less cash used for financing activities of $0.6
million. Cash used in financing activities primarily consisted of $0.5
million for debt conversion premium payments.
Operational Milestones
Overseas-originated calls accounted for 48% of revenue in the
second quarter of 2005, compared to 47% in the first quarter 2005.
iBasis ended the second quarter with 348 wholesale trading customers,
up from 309 at the end of Q1 2005. New customers announced during the
quarter included African carriers Globacom and Econet, Pakistani
carrier Callmate Telips, and Australian carrier Telecorp.
During the quarter the Company announced the expansion of its
DirectVoIP(TM) Broadband regionalized global architecture, adding to
its facility in London to meet growing demand for VoIP services in
Europe. This expansion offers VoIP service providers in Europe fast
and secure IP interconnections to the iBasis global VoIP network
through the London facility to enable high quality international voice
services for consumer and corporate customers.
Also, during the quarter iBasis announced that for the fourth year
in a row it has been ranked by carriers as the world's best
international wholesale carrier in the 2005 Global Wholesale Carrier
Report Card, the industry reference survey published annually by
independent telecommunications research and advisory firm
ATLANTIC-ACM.
Debt Refinancing
During the second quarter the Company reduced its long term debt
by converting $12.3 million in bond debt to approximately 6.6 million
shares of iBasis common stock, at the $1.85 per share conversion
price, through negotiated agreements with noteholders and through
voluntary conversions. The negotiated conversions consisted of $9.1
million of the Company's 8% Secured Convertible Notes due 2007 and $2
million of its 6 3/4% Convertible Subordinated Notes due 2009. In
addition, approximately $1.2 million of 6 3/4% Convertible
Subordinated Notes were converted to equity at the $1.85 per share
conversion price, in separate voluntary transactions. The Company paid
premiums to encourage early conversion in the amount of $661,000 in
stock and cash, which were charged to results of operations in Q2
2005.
In July, the Company announced the conversion of the remaining
$19.9 million of its 8% Secured Convertible Notes due 2007 to
approximately 10.8 million shares of iBasis common stock, at the $1.85
per share conversion price, through negotiated agreements with
noteholders. To encourage early conversion the Company paid
approximately $1.2 million in cash premiums, which will be charged to
operations in Q3 2005.
Year to date, iBasis has converted $32.4 million of bond debt,
reducing its long-term bond debt to approximately $33 million. The
overall reduction in the Company's debt adds approximately $30 million
to stockholder's equity and results in total annual savings of
approximately $2.5 million on future interest payments. Future annual
interest payments now stand at approximately $2.2 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 July 27, 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 asset investments.
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 5 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 four 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.
iBasis is a registered mark, The iBasis Network and Pingo are
trademarks of iBasis, 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 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 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.
(1)Telegeography 2005 data compared with iBasis 2004 traffic
volume.
(2)ATLANTIC-ACM International Wholesale Carrier Report Card -
2002, 2003, 2004, & 2005.
iBasis, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, Dec. 31,
2005 2004
--------- ---------
(Unaudited)
Assets
Cash, cash equivalents and short-term
investments $ 42,617 $ 38,825
Accounts receivable, net 39,673 34,133
Prepaid expenses and other current assets 2,825 2,420
Property and equipment, net 11,852 11,861
Deferred debt financing costs, net 155 177
Other assets 374 360
--------- ---------
Total assets $ 97,496 $ 87,776
========= =========
Liabilities and Stockholders' Deficit
Accounts payable $ 26,399 $ 24,340
Accrued expenses 18,419 12,186
Deferred revenue 7,441 6,303
Current portion of long term debt 20,873 1,775
Long term debt, net of current portion 34,163 65,933
Other long term liabilities 1,079 1,132
--------- ---------
Total liabilities 108,374 111,669
Stockholders' deficit (10,878) (23,893)
--------- ---------
Total liabilities and stockholders' deficit $ 97,496 $ 87,776
========= =========
iBasis, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended
June 30,
--------------------
2005 2004
--------- ---------
(Unaudited)
Net revenue $ 94,581 $ 61,175
Cost and operating expenses:
Data communications and telecommunications
(excluding depreciation and amortization) 81,874 52,066
Research and development 3,126 3,542
Selling and marketing 2,866 2,131
General and administrative 3,746 3,161
Depreciation and amortization 1,726 2,787
--------- ---------
Total costs and operating expenses 93,338 63,687
--------- ---------
Income (loss) from operations 1,243 (2,512)
Interest expense, net (862) (795)
Other expenses, net (140) (66)
Foreign exchange loss (347) (105)
Debt conversion premium (661) ---
Refinancing-related charges:
Transaction costs --- (1,954)
Additional interest expense, net --- (481)
--------- ---------
Net loss $ (767) $ (5,913)
========= =========
Net loss per share:
Basic $ (0.01) $ (0.13)
Diluted $ (0.01) $ (0.13)
Weighted average common shares outstanding:
Basic 65,994 46,287
Diluted 65,994 46,287
iBasis, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Six Months Ended
June 30,
--------------------
2005 2004
--------- ---------
(Unaudited)
Net revenue $183,253 $118,183
Cost and operating expenses:
Data communications and telecommunications
(excluding depreciation and amortization) 158,175 100,656
Research and development 6,258 7,080
Selling and marketing 5,593 4,132
General and administrative 7,059 6,299
Depreciation and amortization 3,446 6,311
--------- ---------
Total costs and operating expenses 180,531 124,478
--------- ---------
Income (loss) from operations 2,722 (6,295)
Interest expense, net (1,898) (1,520)
Other expenses, net (160) (85)
Foreign exchange gain (loss) (580) 80
Loss on non-marketable long-term security --- (5,000)
Debt conversion premium (661) ---
Refinancing-related charges:
Transaction costs --- (1,954)
Additional interest, net --- (481)
--------- ---------
Net loss $ (577) $(15,255)
========= =========
Net loss per share:
Basic $ (0.01) $ (0.33)
Diluted $ (0.01) $ (0.33)
Weighted average common shares outstanding:
Basic 65,488 45,674
Diluted 65,488 45,674
CONTACT: iBasis, Inc.
Media:
Chris Ward, 781-505-7557
cward@ibasis.net
or
Investors:
Richard Tennant, 781-505-7409
ir@ibasis.net