Corporate Business revenue up 21%, contributing 81% of total revenues
by
Pacnet
First Quarter 2007 Financial Highlights (vs. First Quarter 2006)
-Record revenues of US$32.4M, up 10%
-Higher net income of US$1.7M, up 9%
-Corporate Business customer sales up 21%; 81% of total revenues
-By product line: - Access Services revenue up 8%; Leased Line revenue up 64% - IP Services revenue up 17%, contributing to 23% of total sales; Voice service up 9% and Hosting/Hosted services up 53%
-Operational efficiency drove revenue per employee up 12%
-Cash and cash equivalents at US$39.9M at the end of 31 Mar 2007
SINGAPORE, 14 May 2007 --- Pacific Internet Limited (NASDAQ:PCNTF) (“PacNet” or the “Company”), the largest telco-independent Internet communications service provider by geographic reach in the Asia-Pacific, started fiscal year 2007 with record high revenues for the quarter ended 31 March 2007, increasing 10% to US$32.4 million. The Company alsoreported a net income of US$1.7 million during the quarter, up 9% compared to the same quarter in 2006.
The Company’s Corporate Business, which grew 21% during the quarter, is its main growth engine, contributing 81% of total sales in the same period. This revenue growth followed continuing increase in the corporate customer base. During the latest quarter, corporate customer base increased by 3% to 116,648 corporate customers.
The success in the Corporate Business drove the growth in three major product lines, Broadband, IP Services and Leased Line, which grew 3%, 17% and 64% respectively in the first quarter of 2007. Corporate Broadband, which is 76% of total Broadband revenue, grew 8%. More than 95% of IP Services revenues are from Corporate Business.
The monthly average revenue per user (ARPU) for subscribers grew 21% to US$35. This is an average ARPU made of corporate monthly ARPUs of US$76 and consumer monthly ARPUs of $10.
Operational efficiency also contributed to growth in net income. Despite an increase in staff cost, staff cost as a percentage of revenue was down 2% to 28% from the same period last year. On an annualized basis, revenue per employee improved by 6% from about US$135,000 in full-year 2006.
Mr. Phey Teck-Moh, President and CEO of the Company said, “I am pleased to report that we are executing our transformational strategy. We have announced the deployment of a wireless broadband (WiMAX) network in the Philippines; and expanded our IP services portfolio. Voc@l, our voice service, is now available in five markets. Our sales capability has stepped up with the winning of significant contracts. The evidence of this is in the subscriber base and ARPU growth. At the same time, our operational efficiency has improved.”
“Asia Pacific is experiencing tremendous growth in broadband. Pacific Internet is transforming at the right time in the right space. We will continue to invest to strengthen our position in this exciting market. Pacific Internet today is a different company from a year ago. There is renewed energy and vigor. Our execution has sharpened. Despite the shareholder changes and actions, the management and employees of Pacific Internet are committed to maximizing shareholder value and remain focused at serving our customers by increasing the value we bring to them,“ said Mr. Phey.
Notes:
-Corporate Business subscriber base continues to grow in line with the Group’s focus in this segment. In Q12007, Corporate Business subscriber base grew 3% over the same quarter in the previous year. Totalsubscriber base reduction was primarily due to decline in the Dial-Up segment, which is in line withConsumer market trend.
-Corporate customers with multi-site access deployment are counted as one single subscriber.
Revenues:
The three months ended 31 March 2007 recorded net revenues of US$32.4 million, a 10% or US$3.0 million increase compared to the same period in 2006. The higher revenues reported were primarily contributed by higher sales from Leased Line, Corporate Broadband and IP Services, and the consolidation of financial results from the Company’s Thailand operations (consolidated from the third quarter of 2006). This growth is partially offset by lower Dial-uprevenue.
The Corporate Business segment increased revenue by 21% from the same quarter last year. This contributed 81% of total revenues, compared to 74% in the first quarter of 2006.
Access Services: The Access Services business remains a dominant revenue-driving segment, contributing 71% of total revenues during the quarter. With the exception of the Dial-Up segment, which declined 32% during the quarter, Broadband and Leased Line both experienced growth (3% and 64% respectively). Broadband is the largest revenue contributor at 44% of total revenues, of which 76% are contributed by the Corporate business segment.
IP Services: The IP Services grew 17% from the same quarter in 2006. Its share of the total revenues also increased to 23%. The Corporate Business segment contributed 95% of the IP Services revenues during the quarter in line with the Company’s focus in the Corporate Business. Voice revenue contributed 42% of total IP Services revenues; Hosted Services contributed 28%; Security Services contributed 7% and Roaming contributed 5%. Other services contributed the remaining 18% of IP Services revenues.
Operating Costs and Expenses
Total operating expenses, excluding cost of sales were US$14.3 million, reflecting an increase of 7% compared to the same quarter last year. The increase was due to an increased in staff cost and general and administrative expenses.
Cost of sales for the quarter increased 18% to US$17.1 million compared to last year as the Company provides more higher-bandwidth Internet access services in line with market demand and development. Staff cost for the quarter increased 4% to US$9.0 million compared to the same period last year.
Staff cost as a percentage of revenues was 28% for this quarter compared to 30% for the same quarter last year. Revenue per employee for the quarter increased to US$35,752 from US$31,904, a 12% improvement compared to the corresponding period last year. On an annualized basis, revenue per employee improved by 6% from about US$135,000 in full-year2006.
Other General and Administrative (G&A) Expenses, consisting mainly of traveling expenses, office expenses, and professional fees increased by 27% to US$3.3 million from the same quarter last year. The increase was mainly due to increased expenses as a result of the consolidation of the Company’s operations in Thailand.
Earnings
Higher revenues and the Group's cost efficiencies contributed to the earnings growth during the quarter. Net income for the quarter was US$1.7 million, a 9% increase compared to the same period last year.
Cash Position
The Group’s cash position remained strong with cash and cash equivalents and fixed deposits of US$39.9 million. Cash generated by operating activities was US$1.6 million. This was offset by the outflow of US$0.8 million in investing activities, primarily for the acquisition of fixed assets. Cash inflow from financing activities amounted to US$0.2 million.
Business Highlights for First-Quarter 2007
-Million-dollar accounts: Won million-dollar accounts in Singapore as sales capabilities increased. This is the first wins of such scale in the Company’s history.
-Government tender: Won a tender by the Australian Victorian State Government to provide Government-wide Internet services. The win gives the Company exclusive opportunity to seek new contracts in the provision of Internet services with a number of Victorian Departments for the rest of 2007. PacNet was also named one of four Internet service providers to have Victorian Government preferred supplier status for the next three years.
-WiMAX in the Philippines: The Company announced a plan to roll out WiMAX services in Philippines. This is a US$12M investment that will provide WiMAX compliant access services initially in Metro Manila.
-Launch of Voice Service, PacNet Voc@l: Launched commercial voice service in India, Singapore, the Philippines and Thailand, and trials in Hong Kong. The Company is on track to roll out the service on a regional basis.
-Industry award: The Company’s Australian subsidiary won the 2007 Australian Telecommunications User Group (ATUG) award for 'Best Communications Solution - Small Business'. This award recognized Pacific Internet's IP private network solution incorporating the Company's flagship product, SecureSite. This is the fourth industry award the Australian operations has received during the past two years for products and services purpose-built for the Small and Medium sized Businesses market.
Cautionary Statement
PacNet notes that no offer has been made by Connect Holdings Limited. If and when an offer is made, a circular (“Circular”) containing, inter alia, the recommendation of the independent directors of the PacNet in relation to the Offer will be dispatched to Shareholders in due course. Shareholders are advised to read the Circular, PacNet’s Recommendation Statement and related materials when they become available because they will contain important information. Shareholders may download a free copy of the Circular, PacNet’s Recommendation Statement and other documents that PacNet intends to file with the U.S. Securities and Exchange Commission (“SEC”) at the SEC’s website at www.sec.gov if an offer is made.
Responsibility Statement
The Directors of PacNet have taken all reasonable care to ensure that the facts stated and opinions express in this press release are fair and accurate, and that no material facts have been omitted and they jointly and severally accept responsibility accordingly. Where any information has been extracted from published or otherwise publicly available sources, the sole responsibility of the Directors of PacNet has been to ensure through reasonably enquiries that such information is accurately and correctly extracted from such sources or, as the case may be, accurately reflected or reproduced in this press release. 29.05.2007
FCA Member
Contact Pacnet
1/1 Southbank Boulevard
Southbank
VIC 3006
Tel: 13 36 39
