DSLN - First Quarter Revenue Increases 47%, Gross Margin Increases 70% and Adjusted EBITDA Improves 10% from Year Earlier
NEW HAVEN, Conn.--(BUSINESS WIRE)--May 13, 2003--DSL.net, Inc. (NASDAQ:DSLN - News), a leading nationwide provider of broadband communications services to businesses, today reported first quarter 2003 financial results.
Revenue for the first quarter of 2003 was $16.8 million, representing a 47% increase from first quarter of 2002 revenue of $11.4 million. The Company ended the first quarter with approximately 33,800 installed broadband subscriber lines, a 57% increase compared to a year earlier.
The Company generated gross margin, or revenue less network expense, of $4.5 million for the first quarter of 2003, representing a 70% improvement over gross margin of $2.7 million for the first quarter of 2002.
Earnings before interest, taxes, depreciation, amortization and non-cash stock compensation ("Adjusted EBITDA") for the first quarter of 2003 was negative $3.5 million, a 10% improvement compared to negative $3.9 million in the first quarter of 2002.
Free cash flow (defined as Adjusted EBITDA minus capital expenditures) for the first quarter of 2003 was negative $3.9 million, a 14% improvement over first quarter of 2002 free cash flow of negative $4.5 million.
Adjusted EBITDA and free cash flow in the first quarter of 2003 were affected by expenses related to integration of network assets and related subscriber lines acquired from Network Access Solutions Corporation (NAS).
"Consistent with our previous quarters, we continued to generate improved cash flows in the first quarter of 2003. In addition, we made significant progress integrating network assets and related subscriber lines acquired from NAS at the beginning of the quarter," said David F. Struwas, chairman and chief executive officer of DSL.net. "We also continued to pursue external growth opportunities and, shortly after the first quarter closed, we announced plans for a strategic acquisition of substantially all of the assets and operations of TalkingNets, Inc. We believe this transaction can provide us with tremendous value by allowing us to incorporate a voice platform into our existing data network - and positioning us to realize new revenue streams and margins."
Net loss for the quarter ended March 31, 2003, was $9.2 million, representing a 3% improvement over net loss of $9.5 million for the first quarter of 2002. Further improvements in net loss on a year-over-year basis were offset by the expenses associated with the NAS integration.
On a per share basis, the Company reported a net loss applicable to common stockholders of $0.20 per share for the first quarter of 2003, compared to $0.18 per share for the same period a year earlier. The 2003 period included charges for dividends and accretions on a larger amount of outstanding preferred stock than the 2002 period. These preferred stock-related charges translated into $0.06 per share for the first quarter of 2003, compared to $0.03 per share for the first quarter of 2002.
At the end of the first quarter of 2003, the Company had $4.5 million in cash. The Company has a $15 million revolving credit facility for general corporate purposes, with availability based on third-party guarantees. As part of its ongoing financing activities, the Company has secured $9.1 million of such guarantees and has drawn approximately $6.1 million under the facility. Total assets at the end of the first quarter were $66.7 million.
"We are aggressively pursuing multiple avenues of financing to fund our existing business plan," said Robert J. DeSantis, chief financial officer of DSL.net. "We believe our first quarter 2003 financial results and recent strategic acquisitions improve DSL.net's value proposition for investors."
DSL.net will host a conference call to discuss results for the quarter, as well as future plans and expectations, today at 11 a.m., Eastern Time. Interested parties may listen to the live audio webcast of the call by visiting the investor relations section of DSL.net's Web site, www.dsl.net. The call also may be accessed live via telephone by dialing 800-589-4298, confirmation code 466554. For those unable to access the live conference call, an audio replay will be available until 11 p.m., Eastern Time, on May 27, 2003, by dialing 888-203-1112 and entering code 466554. Investors may also access the call replay by visiting the investor relations section of the Company's Web site.
