Zayo Group, a global provider of network-neutral colocation and connectivity services, has announced financial results for the three months ended on March 31, 2014. Third fiscal quarter revenue of $278.0 million grew 6% over the previous quarter on an annualized basis, while net loss increased by $25.2 to $43.7 million from the third quarter of fiscal year 2013.
Net loss increased by $7.4 million in the quarter ended March 31, 2014 as compared to the previous quarter’s net loss of $36.3 million. This was due to an $8.3 million increase in stock-based compensation expense and an increase in expense associated with Zayo Group’s tax provision.
Revenue increased $24.9 million over the third quarter of fiscal year 2013, principally as a result of organic growth related to sales efforts and expansion of the network and acquisition-related activities during fiscal years 2013 and 2014.
The increase in revenue related to organic growth was partially offset by total customer churn of $3.5 million in monthly revenue during the quarter. Approximately 88% of churn processed was related to hard disconnects; 10% was related to negative price changes; and 2% was associated with upgrades. Acquisition-related growth represented approximately $0.7 million of the sequential quarterly revenue increase.
Acquisition Neo Telecoms
On April 27, 2014, the colocation and connectivity provider entered into a purchase agreement with Neo Telecoms, a Paris-based bandwidth infrastructure company. Upon the closing of the transaction, Zayo Group will acquire a 96% equity interest in Neo Telecoms and its subsidiaries.
The agreement also includes a contractual mechanism to acquire the remaining approximate 4% equity interest on or after December 31, 2015. The purchase price of 58.0 million Euros (or $80.2 million based on the exchange rate as of April 27, 2014) is in consideration of acquiring full equity ownership in Neo Telecoms. Zayo Group expects the purchase price will be paid with cash on hand. The transaction is subject to customary closing conditions and approvals.