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.
Internet software and services are being consumed in radically different ways, on new and increasingly mobile devices. Is EarthLink on the right side of the revolution? Check out the changing landscape and meet the company that Motley Fool analysts expect to lead "The Next Trillion-dollar Revolution." Click here for instant access to this free report.
- Add EarthLink to My Watchlist.
Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.