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The world’s largest electronic marketplace for communications trading.


Chris Reid
Vice President Marketing
1.732. 509.9160
[email protected]

Arbinet Announces First Quarter 2005 Financial Results

Company Reports Q1 Fee Revenues of $12.3 Million
Achieves Q1 Net Income of $1.3 Million

New Brunswick, NJ, May 4, 2005 – Arbinet-thexchange, Inc. (NASDAQ: ARBX), the world’s leading electronic market for trading, routing, and settling communications capacity, reported financial results for its first quarter ended March 31, 2005.

First quarter 2005 fee revenues were $12.3 million, an increase of 22% over the $10.1 million in the first quarter 2004. First quarter 2005 net income was $1.3 million, an increase of 55% over the $0.8 million in the first quarter 2004. Arbinet Members bought and sold 3.0 billion minutes on Arbinet’s marketplace in the first quarter of 2005, up 28% from 2.4 billion minutes in the first quarter 2004.

"Arbinet’s growth has historically occurred in step functions as market supply and demand adjust," said Curt Hockemeier, Arbinet president and chief executive officer. "Our first quarter results were flat compared to the fourth quarter, but our fourth quarter results were at the high end of our historical quarterly growth rates. Over the past three years our quarter-over-quarter minutes growth has varied based on the liquidity in thexchange and our long-term growth has remained strong."

The Company enjoyed record trading volume in March when Members bought and sold 1.106 billion minutes and April volume was 34% ahead of April, 2004 volume. Arbinet reaffirms its 2005 outlook of fee revenues within a range of $58 million to $64 million and net income within a range of $19 million to $23 million.

Quarterly Conference Call

Arbinet will host a conference call to discuss first quarter 2005 results at 5:00 p.m. Eastern Daylight Time today. A live webcast of the conference call can be accessed through the company’s Investor Relations website at In addition, an archive of the webcast will be accessible through the same link.

About Arbinet

Arbinet is the leading electronic market for trading, routing and settling communications capacity. Members of the exchange, consisting primarily of communications service providers, anonymously buy and sell voice calls and Internet capacity based on route quality and price through its centralized, efficient and liquid marketplace. Members place orders through a web-based interface. Its fully automated, highly scalable trading platform matches these orders using proprietary software and delivers them through state-of-the-art facilities.

Forward-Looking Statements

This press release contains "forward-looking statements" (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended), including statements about the Company’s growth and future operating results. Various important risks and uncertainties may cause the Company’s actual results to differ materially from the results indicated by these forward-looking statements, including: members (in particular, significant trading members) not trading on our exchange or utilizing our new and additional services (including data on thexchange and mobile on thexchange services); our uncertain and long member enrollment cycle; the failure to manage our credit risk; failure to manage our growth; competitive factors; system failures, human error and security breaches could cause the Company to lose members and expose it to liability; future government regulation; and the Company’s ability to obtain and enforce patent protection for our methods and technologies. For a further list and description of the risks and uncertainties the Company faces, please refer to the Company’s 10-K and other filings which have been filed with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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120 Albany St. Tower II, Suite 450, New Brunswick, NJ 08901
phone: 732-509-9100, fax: 732-509-9101, website:


    Three Months Ended March 31,
    2004   2005
Trading revenues   $107,776,141   $124,432,314
Fee revenues   10,120,929   12,310,432
        Total revenues   117,897,070   136,742,746
    Cost of trading revenues   107,743,571   124,232,807
    10,153,499   12,509,939
Costs and expenses        
    Operations and development   3,033,633   3,627,991
    Sales and marketing   1,274,686   1,757,643
    General and administrative   2,162,012   2,816,483
    Depreciation and amortization   2,049,680   2,532,126
        Total costs and expenses   8,520,011   10,734,243
Income from operations   1,633,488   1,775,696
Interest income (expense), net   (726,226)   159,034
Other income (expense), net   (71,487)   (548,636)
Income before income taxes   835,775   1,386,094
Provision for income taxes     91,482
Net income   $835,775   $1,294,612
Preferred stock dividends and accretion   (1,690,542)  
Net (loss) income attributable to common stockholders   $ (854,767)   $1,294,612
Earnings per share        
    Basic   $ (0.41)   $ 0.05
    Diluted   $ (0.41)   $ 0.05
    Pro forma diluted   $ 0.04   NA
Weighted average number of common shares        
    Basic   2,092,061   24,429,386
    Diluted   2,092,061   26,111,278
    Pro forma diluted   19,083,195   NA


    As of
December 31, 2004
  As of
March 31, 2005
    Current Assets:        
Cash and cash equivalents   $ 53,532,660   $ 40,307,528
Marketable securities     14,198,000
Trade accounts receivable, net   27,351,810   27,804,182
Other current assets   2,369,746   1,873,032
    Total current assets   83,254,216   84,182,742
Property and equipment, net   24,689,053   24,417,272
Other long-term assets   6,923,671   6,700,238
    Total Assets   $ 114,866,940   $ 115,300,252
Liabilities & Stockholders’ Equity    
    Current Liabilities:    
Accounts payable   $ 15,645,826   $ 15,927,364
Deferred revenue   4,314,006   5,070,151
Accrued expenses and other current liabilities   9,445,247   8,223,225
Short-term debt obligations   1,924,023   1,886,705
    Total current liabilities   31,329,102   31,107,445
Other long-term liabilities   8,299,972   7,571,083
        Total Liabilities   39,629,074   38,678,528
Stockholders’ Equity   75,237,866   76,621,724
        Total Liabilities & Stockholders’ Equity   $ 114,866,940   $ 115,300,252


    Three Months Ended March 31,
    2004   2005
Net income   $ 835,775   $ 1,294,612
Adjustments to reconcile net income to net cash provided by    
    operating activities:    
    Depreciation and amortization   2,049,680   2,532,126
    Amortization of deferred compensation   20,950   31,054
    Non-cash interest on redeemable preferred stock   417,510  
Changes in operating assets and liabilities:    
    Trade accounts receivable, net   321,450   (652,103)
    Other assets   422,980   896,413
    Accounts payable   2,673,360   305,112
    Deferred revenue, accrued expenses and other current liabilities   (665,766)   (394,660)
    Other long-term liabilities   (255,063)   (267,193)
Net cash provided by operating activities   5,820,876   3,745,361
    Purchases of property and equipment   (794,558)   (2,227,737)
    Purchases of marketable securities     (14,198,000)
Net cash used in investing activities   (794,558)   (16,425,737)
    Repayment of indebtedness, net   (4,799,126)   (186,825)
    Issuance of common stock   7,989   3,959
    Loans made to stockholders, net of repayments   119,976  
    Net payments on obligations under capital leases   (761,793)   (312,189)
Net cash used in financing activities   (5,432,954)   (495,055)
Effect of foreign exchange rate changes on cash   27,451   (49,701)
Net decrease in cash and cash equivalents   (379,185)   (13,225,132)
Cash and cash equivalents, beginning of period   17,147,245   53,532,660
Cash and cash equivalents, end of period   $ 16,768,060   $ 40,307,528

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