QSC AG: Communication services for SMEs – simple, meaningful, efficient.

 

QSC: Revenues +34%, renewed upward revision of 2005 revenue target

  • Revenue growth of 34 percent in the 3rd quarter of 2005
  • Quarterly EBITDA of € 1.1 million
  • 2005 revenue forecast raised to over € 193 million

Cologne, November 10, 2005. According to preliminary results, QSC AG grew its revenues by 34 percent to € 51.1 million in the third quarter of 2005, as opposed to € 38.1 million for the same quarter the year before. For the first nine months of 2005, revenues also grew by 34 percent to € 141.3 million, as opposed to € 105.8 million for the same period the year before.
These higher revenues as well as the targeted and accelerated expansion of QSC´s own infrastructure again led to higher cost of revenues in the third quarter of 2005. Nevertheless, preliminary results show that gross profit continued to rise strongly by 57 percent to € 12.4 million, as opposed to € 7.9 million for the same quarter the year before. During the first nine months of the current fiscal year, gross profit increased by 54 percent to € 35.2 million, as opposed to € 22.8 million for the comparable period the year before.
According to preliminary results, QSC grew its EBITDA to € 1.1 million in the third quarter of 2005, as opposed to € 0.4 million for the corresponding quarter the year before. During the first nine months of 2005, the company posted an EBITDA of € 2.2 million, as opposed to € 0.7 million for the first three quarters of 2004.
QSC´s targeted expansion of its infrastructure also impacted the company´s operating cash flow in the third quarter of 2005. At the same time, up-front customer acquisition and installation expenses also rose, in particular for connecting new large accounts. Consequently, QSC earned an operating cash flow of € 2.5 million in the third quarter of 2005 according to preliminary results. In order to be able to continue to take optimum advantage of growth opportunities, QSC also increased its capital investment activities. The company, for example, connected ten further cities to its own DSL infrastructure and began rolling out the new ADSL2+ technology. As of September 30, 2005, liquid assets totaled € 31.5 million.
In light of its unabatedly strong order and revenue growth, QSC is again significantly upgrading its revenue forecast for the full year, which had already been revised in May 2005. The company now anticipates revenues of over € 193 million for the full 2005 fiscal year, representing growth of over 32 percent - previous guidance assumed revenue growth of at least 25 percent to at least € 183 million. Responding in particular to the rising demand for up-front infrastructure investments from the company´s wholesale partners, who are increasingly entering the German wholesale market, QSC is continuing the targeted expansion of its infrastructure. Because this demand-driven expansion in several cities and the resulting expenses are impacting the company´s operating cash flow, QSC now anticipates an operating cash flow of at least € 7 million for the full year - up until now, an operating cash flow of at least € 10 million had been budgeted. QSC continues to anticipate a positive EBITDA of € 4 to 8 million for the year.

Information requests to:
QSC AG
Arne Thull
Investor Relations
Fon: +49(0)221-6698-112
Fax: +49(0)221-6698-109
Email: invest@qsc.de

Notes:
The 9-months report of QSC AG is available starting the 29th of November 2005 at www.qsc.de/en/investor_relations/index. This corporate news 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.


Back