Internet Service Provider (ISP) EarthLink Inc. reported net income of US$10.7 million on revenues of $348.6 million for its fourth quarter ending December 31, 2003. That compares to a loss of $36.9 million for the same quarter a year ago, and an 0.2 percent increase in year-over-year revenue.
EarthLink President and CEO Garry Betty said that the numbers show strong growth for both his company’s broadband subscriber base and the base of subscribers to PeoplePC Online, EarthLink’s value-priced access service.
EarthLink exited the quarter with 248,000 new subscribers, ending the year with about 5.2 million paying subscribers, an increase of about 4.4 percent (219,000) from 2002. 108,000 of those new subscribers for the quarter were broadband users. EarthLink ended 2003 with about 1.1 million broadband customers, a 36.2 year-over-year increase. 143,000 total narrowband subscribers were added — about 4.0 million overall, a 1.3 percent decrease year-over-year. PeoplePC Online added about 68,000 subscribers from January through December, totalling about 424,000.
The company saw gross margin improvements, lower telecommunications costs, increased Web hosting and advertising revenues and decreased operations costs, all of which helped its bottom line — its quarter adjusted EBITDA improved to $36.5 million from $20.2 million for the same quarter a year ago. EarthLink exited the quarter with $487.9 million in cash and marketable securities — a $21.3 million increase for the quarter. It also bought back about 1.0 million shares of common stock.
EarthLink anticipates adding another 250,000 to 550,000 customers for 2004, with most of that growth happening in broadband and value-priced offerings. EarthLink expects to see less of a decline in its premium narrowband service than it did in 2003.
EarthLink is hoping for 2004 revenues to weigh in at $1.41 to $1.44 billion, with slower growth in revenue expected thanks to a continued shift from its premium narrowband to value-priced narrowband services, aggressive promotional pricing and other factors. Operational efficiency will continue to be a key mantra at EarthLink as the company seeks to continue to lower telecommunication costs and improve gross margins. It also plans to outsource its contact center service providers, and close four existing contact centers in the process.
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