QSC grows revenues and reduces cash burn again in third quarter of 2002; EBITDA exceeds preliminary numbersCologne, November 26, 2002. QSC AG, a professional DSL service provider in Germany, grew its revenues by 66 percent to EUR 33.6 million for the first nine months of the current fiscal year, compared to EUR 20.2 million for the comparable period in 2001. During the third quarter of 2002, the company generated revenues of EUR 12.1 million (Q3 2001: EUR 7.8 million). While business with resellers, essentially consisting of Internet service providers, declined moderately, revenues from business customers and project business continued to rise. "The decision we made in early 2001 to bring our own Q-DSL products and solutions to market is now paying off", explains CEO Bernd Schlobohm.
The growing share of higher-margin revenues from business customers and project business is having a positive impact on profitability. In the third quarter of 2002, the company's EBITDA loss was EUR -14.2 million (Q3 2001: EUR -18.9 million). This means that the EBITDA loss was EUR 0.5 million lower than the preliminary numbers announced in early November 2002. During the first nine months of the current fiscal year, QSC recorded an EBITDA loss of EUR -45.4 million, compared to EUR -64.6 million in 2001, equating to a reduction of 30 percent.
For the sixth time in a row, QSC reduced its quarter-to-quarter cash burn. At EUR -15.1 million, net cash outflow for the third quarter of 2002 was more than ten percent lower than for the second quarter of 2002 (Q2 2002: EUR -17.1 million). For the coming quarters QSC also anticipates that its net cash outflow will decline by an average of at least EUR 1.5 million per quarter. Liquid assets on September 30, 2002, totaled EUR 102.6 million, after EUR 153.8 million on December 31, 2001.
Successes in project business / Earnings forecast confirmed
In the autumn of 2002, QSC succeeded in winning mobile telephony provider O2 as a new prominent customer in its project business. "The ease and speed with which 103 O2 shops were able to be networked underscores QSC's competence as a provider of integrated data/voice solutions for broadband communication", stresses CEO Schlobohm.
The company is rigorously expanding its directly addressable business customer segment, and is systematically complementing its portfolio of products and services. The nationwide rollout of Q-VPN, which enables virtual private networks (VPN) to be created, is thus making QSC an interesting partner for enterprises with multiple branch operations throughout Germany. With the successful introduction of its digital voice product QSC-Voice in six major German cities thus far, QSC is also able to offer voice and data products over a single DSL line.
The positive response to these innovations on the part of QSC's customers, as well as the company's business customer revenue growth, are strengthening QSC's conviction in its ambitious February 2002 forecast, in spite of the extremely difficult economy. Its EBITDA loss is expected to total EUR -60 to -70 million, compared to EUR -85.4 million in 2001. As of today, QSC anticipates to generate annual revenues around the lower end of its projected revenue range of EUR 46 to 54 million. The company continues to plan on reaching the EBITDA breakeven point during the course of next year and the cash flow breakeven point during the course of the year 2004.
QSC AG Investor Relations partner
This Ad-hoc announcement contains forward-looking statements pursuant to the US "Private Securities Litigation Act" of 1995). These forward-looking statements are based on current expectations and forecasts of future events by the management of QSC AG. Due to risks or mistaken assumptions, actual results may deviate substantially from those made in such forward-looking statements. The assumptions that may involve material deviations due to unforeseeable developments include, but are not limited to, the demand for our products and services, the competitive situation, the development, dissemination and technical performance of DSL technology and its prices, the development and dissemination of alternative broadband technologies and their respective prices, changes in respect of telecommunications regulation, legislation and adjudication, prices and timely availability of essential third-party services and products, the timely development of additional marketable value-added services, the ability to maintain and enlarge upon marketing and distribution agreements and to conclude new marketing and distribution agreements, the ability to obtain additional financing in the event that management's planning targets are not attained, the punctual and full payment of outstanding debts by sales partners and resellers of QSC AG, and the availability of sufficient skilled personnel.