The world’s largest electronic marketplace for
communications trading.
Chris Reid
Vice President Marketing
Arbinet
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 http://investor.arbinet.com. 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: www.arbinet.com.
CONSOLIDATED STATEMENTS OF OPERATIONS
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
CONSOLIDATED BALANCE SHEETS
As of December 31, 2004
As of March 31, 2005
Assets
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
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
2004
2005
CASH FLOWS FROM OPERATING ACTIVITIES:
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
