Exhibit 99.1
iBasis Reports Results for Third Quarter 2005; Company Eliminates Bond Debt,
Achieves Third Consecutive Quarter of Positive Cash Flow, Announces Stock
Repurchase Program
BURLINGTON, Mass.--(BUSINESS WIRE)--Oct. 27, 2005--iBasis, Inc.
(OTCBB: IBAS), a leader in international long distance, VoIP, and
prepaid calling cards, today announced results for the third quarter
ended September 30, 2005.
Revenue for the third quarter of 2005 was $94.6 million, compared
to $70.4 million for the third quarter of 2004. Net loss for the third
quarter of 2005 was $1.7 million, or $(0.02) per share, compared to
net loss for the third quarter of 2004 of $1.0 million, or $(0.02) per
share. Net loss for Q3 2005 included a $1.3 million charge for debt
conversion premiums and transaction costs. Net loss for Q3 2004
included a $1.9 million gain from discontinued operations.
The Company also announced a stock buy-back program to repurchase
up to $5 million of iBasis common stock over the next year. iBasis
will fund the repurchase out of working capital.
Highlights of the third quarter include:
-- Became bond-debt free with positive stockholders' equity after
converting remaining bonds to equity;
-- Achieved third consecutive quarter of positive cash flow; and
-- Carried 2.0 billion minutes of traffic, a 10% increase over Q2
2005.
"We made important progress during the third quarter, despite flat
sequential revenue and a decline in margin. In particular, we
accomplished a major milestone in eliminating our debt and generated
significant stockholders' equity in the process," said Ofer Gneezy,
president and CEO of iBasis. "We also achieved positive cash flow for
the third consecutive quarter. In the first nine months of 2005, we
surpassed the revenue and minutes of use for the full year 2004, which
is evidence of the growing demand for our services. We also swung a
$7.7 million loss from operations in the first nine months of last
year to a $2.4 million profit in the same period this year, which is a
sign of our ongoing efficiency improvements.
"In our Trading business we experienced substantial growth in our
traffic from companies that provide retail VoIP services during the
quarter. However, this was offset by the continued decline in revenue
from China traffic, which had surged in Q1 of this year. We believe
our China traffic has stabilized as a smaller portion of our business,
and additional downside is limited.
"The growth in our traffic from retail VoIP companies is
especially encouraging as it is occurring within a rapidly-growing
market segment, and we believe it will help to drive a resumption of
margin growth. During the quarter, we added a number of new customers
from this segment, including SOFTBANK's Yahoo BB unit, the largest
retail VoIP company in Japan. We now have more than 20 retail VoIP
companies as customers, representing more than six million VoIP users
worldwide. We are in testing with additional significant companies in
this space and look forward to bringing them online soon. We believe
we have established iBasis as the leading provider of call termination
services for retail VoIP companies.
"In our Retail business, we are encouraged by the growth in both
realized and deferred revenue during the quarter. However,
aggressively-priced new cards did not gain traction early enough to
have the desired impact on the results for the quarter.
"We exited the quarter with momentum in both our Retail and
Trading businesses, and in October we achieved a single-day traffic
record of more than 30 million minutes. We have established iBasis as
the preferred provider in the explosive retail VoIP space. We are
bond-debt free, and we continue to be in the sweet spot of the global
communications industry.
"The stock repurchase program reflects our continued confidence in
our business and in our ability to capitalize on the significant
opportunities before us."
($ in millions) Trading Retail Total
- ----------------------------------------------------------------------
Revenue $77.0 $17.6 $94.6
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Gross Margin(a) $8.8 $2.7 $11.5
- ----------------------------------------------------------------------
Gross Margin % 11.4% 15.4% 12.2%
(a) Net Revenue less Data Communications and Telecommunications costs
Key Indicators
Minutes of use on The iBasis Network(TM) in the third quarter 2005
rose to 2.0 billion, a 53% increase over the 1.3 billion minutes
carried in the third quarter 2004, and a 10% increase over the 1.8
billion minutes in the second quarter 2005. Average revenue per minute
(ARPM) was 4.8 cents in the third quarter 2005 compared to 5.3 cents
in the second quarter 2005. This change was largely due to an increase
in traffic to lower ARPM countries, such as Mexico and Brazil. ARPM is
based on our reported net revenue divided by minutes of traffic.
Operational Milestones
Overseas-originated calls accounted for 45% of revenue in the
third quarter of 2005, compared to 48% of revenue in the second
quarter 2005. iBasis ended the third quarter with 371 customers,
compared to 348 at the end of the second quarter. New customers
announced during the quarter included SOFTBANK, and its Yahoo BB
retail VoIP company; Telefonica Deutschland; Voiceserve, a UK-based
VoIP provider to retail consumers and corporations; and Telemar, a
strong local carrier in Brazil that is expanding into international
services.
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 October 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, excluding debt
conversion costs; 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 and Pingo are registered marks, and The iBasis Network is a
trademark 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,
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 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)
September 30, December 31,
2005 2004
------------- -------------
(Unaudited)
Assets
Cash, cash equivalents and short-term
investments $ 43,310 $ 38,825
Accounts receivable, net 43,723 34,133
Prepaid expenses and other current assets 3,179 2,420
Property and equipment, net 12,021 11,861
Deferred debt financing costs, net --- 177
Other assets 365 360
------------- -------------
Total assets $ 102,598 $ 87,776
============= =============
Liabilities and Stockholders' Equity
Accounts payable $ 27,545 $ 24,340
Accrued expenses 20,731 12,186
Deferred revenue 8,442 6,303
Current portion of long term debt 1,370 1,775
Long term debt, net of current portion 1,997 65,933
Other long term liabilities 1,016 1,132
------------- -------------
Total liabilities 61,101 111,669
Stockholders' equity (deficit) 41,497 ( 23,893)
------------- -------------
Total liabilities and stockholders'
equity $ 102,598 $ 87,776
============= =============
iBasis, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended
September 30,
-------------------
2005 2004
--------- ---------
(Unaudited)
Net revenue $94,644 $70,359
Cost and operating expenses:
Data communications and telecommunications
(excluding depreciation and amortization) 83,143 60,037
Research and development 3,076 3,585
Selling and marketing 2,999 2,308
General and administrative 4,102 3,702
Depreciation and amortization 1,682 2,141
--------- ---------
Total costs and operating expenses 95,002 71,773
--------- ---------
Loss from operations ( 358) ( 1,414)
Interest income (expense), net 166 ( 1,428)
Other expenses, net ( 40) ( 71)
Foreign exchange (loss) gain, net ( 174) 222
Debt conversion premium and transaction costs (1,314) ---
Debt refinancing transaction costs --- ( 205)
--------- ---------
Loss from continuing operations ( 1,720) ( 2,896)
Income from discontinued operations --- 1,861
--------- ---------
Net loss $ (1,720) $ (1,035)
===================
Net income (loss) per share:
Continuing operations $( 0.02) $( 0.06)
Discontinued operations --- 0.04
--------- ---------
Total net loss per share $ ( 0.02) $ ( 0.02)
========= =========
Weighted average common shares outstanding:
Basic 88,924 47,884
Diluted 88,924 47,884
iBasis, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
Nine Months Ended
September 30,
--------------------
2005 2004
--------- ----------
(Unaudited)
Net revenue $277,897 $188,542
Cost and operating expenses:
Data communications and telecommunications
(excluding depreciation and amortization) 241,318 160,693
Research and development 9,334 10,665
Selling and marketing 8,592 6,440
General and administrative 11,161 10,001
Depreciation and amortization 5,128 8,452
--------- ----------
Total costs and operating expenses 275,533 196,251
--------- ----------
Income (loss) from operations 2,364 ( 7,709)
Interest expense, net ( 1,732) ( 2,948)
Other expenses, net ( 200) ( 156)
Foreign exchange (loss) gain, net ( 754) 302
Loss on non-marketable long-term security --- ( 5,000)
Debt conversion premium and transaction
costs ( 1,975) ---
Debt Refinancing-related charges:
Transaction costs --- ( 2,159)
Additional interest, net --- ( 481)
--------- ----------
Loss from continuing operations ( 2,297) ( 18,151)
Income from discontinued operations --- 1,861
--------- ----------
Net loss $( 2,297) $ (16,290)
====================
Net (loss) income per share:
Continuing operations $ ( 0.03) $ ( 0.39)
Discontinued operations --- 0.04
--------- ----------
Total net loss per share $ ( 0.03) $ (0.35)
========= ==========
Weighted average common shares outstanding:
Basic 73,300 46,411
Diluted 73,300 46,411
CONTACT: Media:
iBasis, Inc.
Chris Ward, 781-505-7557
cward@ibasis.net
or
Investors:
Richard Tennant, 781-505-7409
ir@ibasis.net