The second quarter financial report of Cbeyond has been delivered. The numbers are below consensus anticipation, while its adjusted EBITDA is above the estimates.
The revenue exhibited customer defections reported against the company. Despite the improving pricing trends in the previous quarter, there is a tremendous crusade of 1,421 customers opposed to the company. As a result, there is a decline of 10% for the total sales of the company, which may continue the next quarter. The experts believe that the pressure with regards to competitive pricing will carry on as cloud revenue drops to $7 million and is expected to undergo downtrend the coming periods. The figures showed a $118.2 million return for the company, which is lower than the anticipated $119.5 million. The revenue from data, network, and voice services is recorded $110.9 million, which showed a drop by 5.8%.
This represents a consequence of the company’s focus on its 2.0 services that stress on clients’ purchasing of network access. The network access service involves managed hosting and cloud revenue. Additionally, 2.0 services take away a percentage out of data, network, and voice services.
The company beside’s reporting the second quarter financials, they have also declared the recorded growth for cloud and managed hosting services. The growth is recorded to be a yearly 20.9%. Nonetheless, the increase is lower than expected since the projected growth rate for the small base and industry cloud company is 40%. The growth of hosting services may be a possible indication for the improvement of the institution in terms of its 2.0 services, but 2014 is clearly an adjustment period for Cbeyond. Besides losing 1,421 net customers, additions to gross had a drop of 1,384 from 1,607 compared to the previous quarter. As reported, Cbeyond should have the means of reversing the fundamental trends with the application of its transition and deteriorating operating metrics.
The adjusted EBITDA for the company represented income taxes, net income loss before interest, amortization expense, and depreciation. According to Cbeyond financial report, the company had an annual decrease of 19.5% in its adjusted EBITDA, which totaled $21.9 million.
The worth is more than the projected $19.1 million and compromised $19.6 million. The margin of attuned EBITDA also showed an increase of 120 basis points. Consequently, the guidance for 2014’s revenue has been lowered based on the high-bandwidth solutions offered by Cbeyond, which are declared to be below the earlier revenue projections.