Xpedior Reports Q1 Revenue Doubling
Xpedior (XPDR) reported nearly doubling its revenues to $51 million and posting sequential growth of 25.7 percent over fourth quarter 1999 results. The figure reflects a $23.2 million increase over its $27.8 million revenue achievement during the first quarter of last year.
In addition to its healthy revenue report, Xpedior also increased its gross margins from 46.6 percent in the fourth quarter to nearly 48 percent in the period ending March 31. Strong performance in revenue-per-consultant figures and hourly bill rates helped increase margins and reduce the firm's EBITDA loss before compensation charges.
Excluding stock compensation charges, Expedior's EBITDA loss was $2.5 million, or $0.05 per basic share, versus an EBITDA gain of $4.4 million, or $0.11 per share, in the 1999 first quarter.
The company also benefited from a one-time $2.8 million gain realized on the sale of equity received from a client as partial payment for a successful project engagement. As a result, the net loss for the first quarter of 2000 was $3.0 million, or $0.06 per share. Supplemental income from continuing operations reflected a $2.4 million loss.
David Campbell, Xpedior president and chief executive officer, said its performance was indicative of increased business demand outsourcing its application services.
"The solid business momentum which characterized our 1999 fourth-quarter performance accelerated rapidly into the new millennium as the demand from both new and old economy companies for end-to-end Internet strategies and solutions intensified," Campbell said.
Campbell added that Expedior's recognition as a top tier ASP from Gartner Group, Inc. further fueled its first quarter growth.
"Our recognition as one of only six External Service Providers (ESP) to make the Gartner Group's Leaders Quadrant is further testimony of our growing recognition as the industrial strength e-business solutions pure play to the Global 2000," Campbell said.
Campbell concluded that Experdior's first quarter performance is just the beginning for the firm's targeted 50 percent growth goals for the year.
"We said earlier in the year, that higher SG&A spending as a percentage of revenue in the 1999 fourth quarter and the first quarter of 2000 would generate greater future growth and profitability," Campbell said. "We believe the growth in first-quarter revenues and projects represents the tip of the iceberg in terms of meeting and exceeding our 50 percent-plus target of year-over-year revenue growth for 2000."
Brian Farrar, Xpedior chief operating officer cited the firm's significant improvement in key performance metrics over its 1999 fourth-quarter results.
Farrar noted that Xpedior's first quarter new project statistics rose 93 percent from 89 assignments in the last quarter to 172 in the first. With that, average revenues per consultant increased almost 14 percent from $162,537 to $185,192 during the same period. As a result, average hourly rate metrics increased from $110 to $127 for the outsourcing company.
Farrar said the first quarter of 2000 saw Xpedior add clients and substantially broaden the bandwidth of projects for new and existing clients.
"Average annualized revenue from our top ten customers rose 72.5 percent to $7.5 million. We've also seen significant increases among the rest of our top 50 clients," Farrar said. "Our net billable hires at quarter's end rose by 94 over the 1999 fourth quarter. Today, our total consultant headcount is 1,139 of our 1,492 employees domestically and abroad."
Farrar added that the firm's recruitment across its domestic and international operations continues at an aggressive pace.
"The increase in branding and marketing activities is delivering desired results in terms of new hires, new clients and overall contract wins," Farrar said. "While SG&A expense is up, these expenditures are driving the dramatic improvement in revenues, gross profit, gross margin and EBITDA in 2000 and beyond."
While Xpedior concluded its acquisition of Enterprise eQ in January, the firm also plans to benefit from a $1.9 billion transaction whereby PSiNet, Inc. bought out its parent company, Metamor Worldwide, Inc. As a result of PSiNet's (PSIX) controlling interest in Metamor (MMWW) , the global carrier took two board member seats through its 80 percent stock ownership of Xpedior for $50 million in March.
Xpedior remains an independent business entity and PSiNet is sharing its 90,000 worldwide clients with Xpedior so it can aggressively grow its legacy integration and Web development services.
Campbell said the eQ acqusition and PSiNet investment marked two milestones in the firms path to success on a global scale.
"We acquired Enterprise eQ in January, a software product employing a 139-point bench-marking process that differentiates Xpedior from its competitors by helping clients prioritize the way to define their e-business strategy," Campbell said. "We believe our opportunities for international expansion are exceptional, and will be enhanced by the PSINet investment in our company, announced March 22nd, which would certainly provide even greater global opportunities," Campbell concluded.
Xpedior intends to continue expanding its services across the U.S. through solution centers based in Chicago, San Francisco, New York, Washington, D.C. and Dallas, while it also expands its presence in Europe with a focus on its London-based solution center.
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