Exhibit 99.1
iBasis Reports Selected First Quarter 2007 Results
Company Achieves Record Revenue and Traffic Volume
BURLINGTON, Mass.--(BUSINESS WIRE)--May 3, 2007--iBasis, Inc.
(NASDAQ: IBAS), the global VoIP company, today announced selected
results for the first quarter ended March 31, 2007. As announced on
October 20, 2006, the Company determined that it must restate certain
of its past financial statements as a result of conclusions reached by
a special independent committee of the iBasis Board of Directors
regarding the Company's historical stock option granting practices.
Consequently, today's announcement of the Company's first quarter 2007
results includes selected financial results only. The Company will
report its full financial results after a final determination of the
appropriate stock-based compensation expense for the periods affected.
Revenue for the first quarter of 2007 was $145.8 million, compared
to $110.8 million for the first quarter of 2006. Gross profit for the
first quarter was $15.3 million, compared to $14.3 million for the
first quarter 2006.
Highlights of the first quarter 2007 include:
-- Sequential revenue growth of 4%, and a 32% increase over Q1
2006; gross profit increased from a year ago but declined
sequentially;
-- Strong sequential improvement in the Retail business,
including revenue growth of 8%, gross profit growth of 14%,
and gross margin expansion to 13.1% compared to 12.3% in Q4
2006;
-- Trading revenue grew 3.8% sequentially and 35% over Q1 2006;
Trading gross profit increased from a year ago but declined
sequentially;
-- Cash increased slightly, achieving our ninth consecutive
quarter of positive cash flow;
-- Continued minutes growth to 3.4 billion for the quarter, a 5%
increase over Q4 2006, and 45% increase over Q1 2006; and
-- Customer base grew to 591 with addition of 37 new customers.
"We achieved record revenue and traffic in both our Trading and
Retail businesses," said Ofer Gneezy, president and CEO of iBasis.
"However, sequential margin expansion in Retail was offset by margin
compression in the Trading business, resulting in lower gross profit
in Q1 2007 compared to Q4 2006.
"In our Trading business, we achieved 4% sequential growth in
revenue, but experienced a decline in gross profit due primarily to
termination costs we absorbed due to the default of a wholesale
customer during the quarter and to discounting on the part of some
competitors in Europe whose fiscal year ended March 31. We ended the
first quarter with more than 60 consumer VoIP provider customers,
which represented 9% of our Trading business.
"Our Retail business had a strong quarter. We achieved sequential
revenue growth of 8% and expanded gross margin to 13.1%, up from 12.3%
in Q4 2006, resulting in gross profit growth of 14%. This represents a
significant recovery from the weakness we experienced in late 2006.
"On April 27 we announced an amendment to our agreement to merge
KPN Global Carrier Services into iBasis. The amendment extends the
outside date for the completion of the transaction to October 31, 2007
and demonstrates both parties' continued belief in the value of the
combination, which will establish iBasis as one of the largest
carriers of international voice traffic in the world with strengths in
VoIP and mobile, two of the fastest-growing segments of global
telecom. Both parties are looking forward to completing the
transaction as early as practicable and to bringing the benefits of an
expanded footprint and suite of services to our customers."
Results for Trading and Retail Businesses:
($ in millions) Trading Retail Total
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Revenue $120.3 $25.5 $145.8
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Gross Profit(a) $12.0 $3.3 $15.3
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Gross Margin 10.0% 13.1% 10.5%
(a) Net revenue less data communications and telecommunications costs
Key Indicators
Minutes of use on The iBasis Network(TM) in the first quarter 2007
rose to 3.4 billion, a 45% increase over the 2.3 billion minutes
carried in the first quarter 2006, and a 5.4% increase over the 3.2
billion minutes in the fourth quarter 2006. Average revenue per minute
was 4.30 cents, compared to 4.34 cents in the previous quarter.
Average cost per minute was 3.84 cents, compared to 3.81 cents in the
previous quarter. Average margin per minute was 0.46 cents, compared
to 0.53 cents for the previous quarter.
iBasis ended the first quarter with 591 Trading customers,
compared to 554 at the end of the fourth quarter 2006.
iBasis - KPN Global Carrier Services Merger
As announced on April 27, iBasis and Dutch carrier Royal KPN
amended their definitive agreement, announced June 21, 2006, to extend
the outside date for completion of the transaction from April 30, 2007
to October 31, 2007. iBasis intends to seek shareholder approval of
the transaction between KPN and iBasis, as soon as possible after
iBasis restates its prior period financial statements and updates its
SEC filings.
If the transaction is approved, iBasis will acquire KPN's
international wholesale voice business and receive $55 million in cash
from KPN in exchange for iBasis' issuance of approximately 40 million
shares of common stock, which represent approximately 51% of iBasis
fully diluted stock. Upon completion of the transaction, iBasis will
pay a dividend in the aggregate amount of $113 million to its
stockholders of record on the date immediately prior to the closing
date.
This combination will establish iBasis as one of the largest
international voice carriers in the world, with combined 2006 revenues
exceeding $1.2 billion and more than 20 billion combined minutes in
2006.
Restatement of Prior Period Financial Statements
iBasis has submitted a pre-clearance letter to the Office of the
Chief Accountant (the OCA) of the Securities and Exchange Commission
seeking guidance from the OCA on the Company's determination of
accounting measurement dates for certain stock options granted between
December 1999 and May 2006. Because of the pending OCA review, the
Company has not yet determined conclusively the amount of non-cash
charges associated with these stock option grants or the resulting tax
impact. The Company remains focused on resolving the issues related to
the restatement of its prior financial statements as quickly as
possible.
Guidance
The Company believes that in 2007, on a standalone basis, its
revenues will be in the range of $600 to $650 million. Planned
expenditures for 2007 include $15 to $20 million in capital asset
investments.
NASDAQ Notification
As previously announced, on March 12, 2007, the Company was
informed by The Nasdaq Stock Market that the Nasdaq Listing and
Hearing Review Council has stayed the April 26, 2007 deadline for the
delisting of the Company's securities, pending further review by the
Listing Council. The Listing Council further informed the Company that
it may submit in writing additional information for the Listing
Council's consideration by June 1, 2007.
There can be no assurance that the outcome of the Listing
Council's review will be favorable to the Company, that the Listing
Council will not lift the stay, or that the Company's securities will
remain listed on The Nasdaq Stock Market.
Q1 Results Conference Call
iBasis will host a conference call to discuss the Company's
selected Q1 results, led by Ofer Gneezy, iBasis president & CEO on May
3, 2007 at 11:00 a.m. EDT. The public is invited to listen to the
simultaneous webcast by logging in through the iBasis investor
relations website at http://investor.ibasis.com.
About iBasis
Founded in 1996, iBasis (NASDAQ: IBAS) is a leading wholesale
carrier of international long distance telephone calls and a provider
of retail prepaid calling services, including the Pingo(R) web-based
offering (www.pingo.com) and disposable calling cards that are sold
through major distributors and available at retail stores throughout
the U.S. iBasis customers include many of the largest
telecommunications carriers, including AT&T, Verizon, China Mobile,
China Unicom, IDT, Qwest, Skype, Telecom Italia, and Telefonica.
iBasis carried more than 11 billion minutes of international voice
over IP (VoIP) traffic in 2006, and is one of the largest carriers of
international voice traffic in the world(1). 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.
(1) Telegeography 2007 and iBasis 2006 traffic.
iBasis and Pingo are registered marks, and the global VoIP company
and The iBasis Network are trademarks of iBasis, Inc. All other
trademarks are the property of their respective owners.
This press release contains forward-looking statements including
statements regarding iBasis's anticipated revenue and capital
expenditures in 2007, as well as statements regarding (i) the demand
for iBasis' services will continue, (ii) that the significant recovery
in the trading business to date will continue for the remainder of Q2,
and (iii) the benefits of the proposed transaction between the Company
and Royal KPN, including the expected timetable for completing the
transaction, the expected dividend payment, future financial and
operating results, benefits and synergies of the transaction, and
future opportunities for the combined company. While the Company
believes the forward-looking statements contained in this press
release are accurate, there are a number of factors that could cause
actual events or results to differ materially from those indicated by
such forward-looking statements. Those risks and uncertainties
include, among other things (i) the Company's ability to execute its
business plan; (ii) the extent of adoption of the Company's services
and the timing and amount of revenue and gross profit generated by
these services; (iii) fluctuations in the market for and pricing of
these services; (iv) the success of the Company's plans to contest the
FCC ruling on prepaid calling cards; (v) the ability of the Company
and Royal KPN to consummate the proposed transaction due to regulatory
restrictions, the failure to receive shareholder approval, the ability
to successfully integrate their operations and employees, the ability
to realize anticipated synergies, the emergence of new competitive
initiatives resulting from rapid technological advances or changes in
pricing in the market, business conditions and volatility and
uncertainty in the markets that the Company and Royal KPN serve, (vi)
the outcome of the OCA review, any other SEC inquiry or any lawsuits
or other proceedings related to the Company's historical stock option
administration policies and practices and any potential resulting
impact on the Company's financial statements or results, (vii) the
Company's delay in filing its delinquent periodic reports; (viii)) the
Company's inability to meet the requirements of the NASDAQ Stock
Market for continued listing of the Company's shares; and (ix) the
other factors described in the Company's reports filed with the
Securities and Exchange Commission and Royal KPN's Annual Report on
Form 20-F for its most recently completed fiscal year all of which are
available at www.sec.gov. Such forward-looking statements are only as
of the date they are made, and we have no current intention to update
any forward-looking statements.
This communication may be deemed to be solicitation material in
respect of the proposed transaction between iBasis and Royal KPN. In
connection with the proposed transaction, iBasis intends to file
relevant materials with the SEC, including a proxy statement on
Schedule 14A. SHAREHOLDERS OF IBASIS ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SEC, INCLUDING IBASIS'S PROXY STATEMENT,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. Investors and security holders will be able to obtain the
documents free of charge at the SEC's web site, http://www.sec.gov,
and iBasis's shareholders will receive information at an appropriate
time on how to obtain transaction-related documents for free from
iBasis. Such documents are not currently available.
Participants in Solicitation
Royal KPN and its directors and executive officers, and iBasis and
its directors and executive officers, may be deemed to be participants
in the solicitation of proxies from the holders of iBasis Common Stock
in respect of the proposed transaction. Information about the
directors and executive officers of Royal KPN is set forth in the
Annual Report on Form 20-F for the year ended 2006, which was filed
with the SEC on March 1, 2007. Information about the directors and
executive officers of iBasis is set forth in iBasis's proxy statement
for its 2006 Annual Meeting of Shareholders, which was filed with the
SEC on March 23, 2006. Investors may obtain additional information
regarding the interest of such participants by reading the proxy
statement regarding the transaction when it becomes available.
CONTACT: iBasis, Inc.
Media:
Chris Ward, 781-505-7557
cward@ibasis.net
or
Investors:
Richard Tennant, 781-505-7409
ir@ibasis.net