The 10-second takeaway
For the quarter ended March 31 (Q1), EarthLink met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank. Non-GAAP earnings per share dropped to zero. GAAP earnings per share shrank to a loss.
Margins dropped across the board.
EarthLink tallied revenue of $320.0 million. The five analysts polled by S&P Capital IQ predicted sales of $317.2 million on the same basis. GAAP reported sales were 7.1% lower than the prior-year quarter's $344.4 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.00. The five earnings estimates compiled by S&P Capital IQ forecast -$0.07 per share. Non-GAAP EPS shrank to zero from the prior-year quarter's $0.00. GAAP EPS were -$2.30 for Q1 against $0.07 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 51.7%, 200 basis points worse than the prior-year quarter. Operating margin was 4.4%, 420 basis points worse than the prior-year quarter. Net margin was -73.9%, much worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $311.7 million. On the bottom line, the average EPS estimate is -$0.03.
Next year's average estimate for revenue is $1.24 billion. The average EPS estimate is -$0.12.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 276 members out of 360 rating the stock outperform, and 84 members rating it underperform. Among 96 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 72 give EarthLink a green thumbs-up, and 24 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on EarthLink is outperform, with an average price target of $8.75.
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