EarthLink revenue slips 2% sequentially to $338M in Q2 2012

Narrows business services losses and announces departure of COO Joseph Wetzel

August 7, 2012 | By Sean Buckley

EarthLink (Nasdaq: ELNK) on Thursday reported that revenue declined on both a quarterly and year-over-year basis.

The service provider's revenue declined sequentially to $338.2 million, down 2 percent from Q1 2012, and 7 percent from the same period a year ago.

Business services continued to be the main driver in EarthLink's revenue mix, accounting for 76 percent during the quarter, up from 74 percent in Q2 2011. However, business services revenue declined $2.8 million, or 1 percent, sequentially.

A key piece of EarthLink's business service growth is its movement to become more of a solutions provider that offers various traditional connectivity services and IT solutions to its clients. To bolster that solutions provider position, the service provider named former XO executive Michael Toplisek as its new executive vice president of IT services and introduced an IT help-desk service.

The service provider also saw gains in the consumer access segment with revenues rise 67 percent from Q1 2012 and 65 percent from Q2 2012. It narrowed residential subscriber churn to 2.3 percent from 2.5 in the previous quarter and 2.6 percent in the same quarter a year ago. 

Financial analysts, according to data compiled by Bloomberg, forecast net income of 3 cents a share on sales of $339 million.

EarthLink's management also adjusted their financial guidance for the full year 2012 with the expectation of adjusted EBITDA of $275 million to $285 million, capital expenditures of $115 million to $125 million, and net loss of $4 million to $1 million.

In related news, EarthLink announced that COO Joseph Wetzel would leave the service provider at the end of the year as it launches a number of key pieces of its new integrated OSS platform. The service provider did not name a successor to take Wetzel's place.

Shares of EarthLink were trading at $6.56 in late day trading on the Nasdaq stock exchange on Monday.

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