Cbeyond Grows Customer Base

By Josh Long Comments
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Cbeyond, a provider of IT and communications services to small businesses, has beefed up its customer base over the last year.

In the first quarter, Cbeyond added 1,582 customers in its 14 Core Managed Services operating markets. The Atlanta-based company ended the quarter with 58,554 customers in those markets, reflecting 13.2 percent growth over last year.

For its Core Managed Services customers, Cbeyond reported monthly customer churn of 1.3 percent. That’s down from 1.4 percent churn in the quarter a year ago.

Revenues climbed 7.7 percent to $119 million. But Cbeyond reported a net loss of $141,000, compared to a profit of $1.039 million in the quarter a year ago.

The company also noted its board of directors recently authorized it to purchase $15 million in shares.

In its first quarter results last week, Cbeyond reiterated its 2011 guidance: revenue growth of 6 to 8 percent; adjusted EBITDA growth of 9 to 12 percent; and capital expenditures of $75 million to $80 million.

As of March 31, 2011, Cbeyond had $17.3 million in cash, cash equivalents and marketable securities. The company also said it has amended its credit facility with Bank of America to allow for borrowings of up to $50 million to fund the share repurchases.

Targeting small businesses that generally have between five and 249 employees, Cbeyond provides an integrated package of managed information technology and communications services in 14 markets, including Boston, Chicago, Denver and Los Angeles.

Through 2010 acquisitions of MaximumASP and Aretta Communications, the company also offers cloud-based services throughout the United States and internationally. Last year, less than one 1 percent of Cbeyond’s revenues derived from outside the U.S.  

In its annual report filed in March, Cbeyond revealed plans to focus this year on incorporating its cloud-based services into its integrated service offering. The company further stated in the report that the acquisitions would allow it to “serve customers outside of our traditional markets through distribution channels we did not previously possess, including an online sales channel and a private-label reseller platform."

In the most recent quarter, the company improved its revenues and adjusted EBITDA within its Core Managed Services business and “made solid progress ramping up our newly acquired Cloud Services division and expect rapid growth of this division throughout the remainder of the year," Cbeyond CEO Jim Geiger said.

Shares of Cbeyond closed Monday at $13.88 on the NASDAQ. Over the last 52 weeks, shares have ranged between a high of $18.05 (May 18, 2010) and a low of $11.31 (April 12, 2011).

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