Fusion Scores 3-year Cloud Solutions Agreement With “Major Family Entertainment Center & Restaurant Chain”

NYC-based Fusion is a leading provider of integrated cloud solutions to small, medium and large businesses, and is a Single Source for the Cloud®. Fusion’s advanced, proprietary cloud service platform enables the integration of leading edge solutions in the cloud, including cloud communications, contact center, cloud connectivity and cloud computing. Fusion’s innovative, yet proven cloud solutions lower their customers’ cost of ownership and deliver new levels of security, flexibility, scalability, and speed of deployment.

Fusion recently announced that it has secured a $1.1 million, three-year cloud solutions agreement with a major family entertainment center and restaurant chain. The popular chain looked to Fusion to consolidate its communications services across several hundred locations in the United States. The chain is currently reviewing a multiple site deployment in Canada to further support its network optimization efforts.

Fusion’s dedicated solutions integration team facilitated the onboarding of the account for an expedited installation process, exceeding the customer’s expectations for rapid deployment and seamless integration with existing applications and workflows. Fusion’s all-in, fully integrated solution met the chain’s requirement for a single source to provide the highest quality services at competitive pricing across its rapidly expanding chain of popular establishments. The chain also looked for a solution that could support the integration of locations across the border into Canada, a growing territory for the well-known entertainment and restaurant chain.

Dan Foster, Fusion’s Chief Revenue Officers stated, “We’re proud to help the management team of this major organization focus on serving their growing base of customers, relieving them of the need to divert precious resources to manage their wide-ranging and expanding voice and connectivity network. We look forward to growing with the company and improving productivity across the enterprise with the always-on, reliable communications solutions required for businesses to compete, succeed and grow.”

To learn more about Fusion (Nasdaq: FSNN) and to track its progress please visit the Vista Partners Coverage Pages. 

Fusion Wins $1.1 Million, Multi-Year Contract to Provide Cloud Communications Solution for a Major Restaurant Brand

Fusion (FSNN), a leading provider of cloud services, announced today that it has secured a $1.1 million, three-year cloud solutions agreement with a major family entertainment center and restaurant chain. The popular chain looked to Fusion to consolidate its communications services across several hundred..

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Vista Partners Publishes August’s FREE Macroeconomic & Investment Monthly Newsletter – “Robust Economy, Resilient Market”

Vista Partners (“Vista”) has published August’s FREE Macroeconomic & Investment Monthly Newsletter, “Robust Economy, Resilient Market.”

Vista’s monthly newsletter contains investment considerations for Banks, Biotech, Cloud Services, Energy, Fintech, Healthcare, Manufacturing, Mining, Materials, Nuclear Energy, Real Estate, and Technology.

Vista Partners centers its Coverage on the Dow 30 Components, Select Emerging Growth Companies & Vista’s Featured Companies, with exclusive, broad-based commentary from Managing Director, John F. Heerdink, Jr.

In August’s edition of the Macroeconomic & Investment Newsletter, Mr. Heerdink states,

“The market seems to have had its fantods and now is back to looking bullish. To be sure, fears and worries about a trade conflict have….”Read full newsletter.

Companies Featured in August’s Newsletter: Atossa Genetics, Inc. (NASDAQ: ATOS) | DowDupont Holding Company (DWDP) |First Majestic Silver Corp. (NYSE: AG) | Fusion, Inc.(NASDAQ: FSNN) | Goldman Sachs (GS) & Health Insurance Innovations, Inc. (HIIQ).

Vista Partners publishes 100% of its content free. Vista Partners offers a wealth of mixed-media resources on the Dow 30 & Select Emerging Growth Companies. To receive FREE email updates from Vista, please sign up at VistaPGlobal.com/signup.

About Vista Partners LLC:

Founded in 2005, Vista Partners LLC (“Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, and Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

We encourage readers to view a complete list of disclaimers and disclosures on the Vista Partners website at VistaPGlobal.com/disclaimer.

Please follow Vista Partners on Twitter @VistaPResearch to receive updates, thoughts, and ideas on Dow 30 Components, Select Emerging Growth Companies, Vista’s Featured Companies, International Companies, Pre-IPO Companies & Strategic Companies.

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Leading Cloud Services Provider Fusion’s Financial Results for Three & Six Months Ended June 30, 2018

Fusion (NasdaqGM: FSNN), a leading cloud services provider, recently announced financial results for the three and six months ended June 30, 201.  Note that on May 4, 2018, Fusion completed its acquisition of the Cloud and Business Services business of Birch Communications Holdings, Inc. (“Birch”). Due to the nature and structure of that transaction, Birch is considered acquirer of Fusion under generally accepted accounting standards. Accordingly, the financial statements (other than equity) they presented are those of Birch for the current and prior periods with the current period giving effect to the acquisition of Fusion as of May 4, 2018, and MegaPath Holding Corporation, Inc. (“MegaPath”) as of June 15, 2018.

Here are the Q2 2018 Highlights presented:

  • Revenue was $120.8 million, compared to $102.9 million in Q1 2018 and $116.7 million in Q2 2017
  • Gross margin was 45.2%, compared to 46.4% in Q1 2018 and 46.0% in Q2 2017
  • Net loss attributable to common stockholders was $34.5 million, or $0.59 per share, compared to a net loss of $4.0 million, or $0.33 per share in
  • Q1 2018 and a net loss of $4.7 million, or $0.19 per share in Q2 2017
  • Excluding the retirement of debt obligations, non-GAAP net loss attributable to common stockholders was $20.1 million, or $0.34 per share
  • Adjusted EBITDA (a non-GAAP measure) was $26.6 million, or 22.0% revenue, compared to $26.7 million in Q1 2018 and $28.1 million in Q2 2017
  • Unlevered Free Cash Flow (a non-GAAP measure), defined as Adjusted EBITDA less capital expenditures, was $18.6 million, or 15.4% of revenue, compared to $19.3 million in Q1 2018 and $18.2 million in Q2 2017
  • Acquisition integration proceeding ahead of schedule in key areas including: Service Delivery; Network & Engineering; Sales, Marketing and Product; HR and Administration; and Finance and Accounting
  • Achieved integration-related cost synergies with an annualized run-rate of approximately $14 million exiting Q2 2018, representing 40% of the $35 million of targeted acquisition-related synergies within 12 months following the closings
  • Average monthly revenue per customer (ARPU) was $309, compared to $203 in Q1 2018
  • Churn was at the mid-1% level, compared to more than 2% in Q2 2017

Matthew Rosen, Fusion’s Chairman & CEO stated, “Fusion delivered solid second quarter financial results, demonstrating the progress we have made in stabilizing the Birch business, as we have indicated we would. Our integration of Birch and MegaPath is running ahead of schedule, having made significant progress toward several major milestones in terms of real estate consolidation, network interconnection, sales and marketing, and financial operations. As a result, less than 60 days after closing Birch, we had already achieved nearly 40% of our original 12-month cost synergy target of approximately $35 million for the acquisitions, which we now expect to exceed as we continue to find incremental savings opportunities since the acquisitions closed. With integration well underway, we are focusing on driving Fusion’s growth by increasing our emphasis on our Product, Sales & Marketing organization, including the addition of Dan Foster as our Chief Revenue Officer and key hires in our Partner sales channel group. We anticipate that these efforts will further strengthen our bookings and churn performance, where we have already seen good progress, and lead to top-line expansion. We are also leveraging our intellectual property to accelerate our product and solution innovation, based on our proprietary software for Unified Communications, contact center, secure team messaging, and collaboration. We believe these measures, along with Fusion’s greatly-enhanced scale, bode well for our future growth trends,” Mr. Rosen concluded.

Here are the Q2 2018 Financial Results presented:

  • Revenue in Q2 2018 was $120.8 million, compared to $116.7 million in Q2 2017. The increase was primarily due to $17.7 million of revenue from pre-merger Fusion and $1.6 million of revenue from MegaPath, partially offset by churn impact.
  • Gross margin was 45.2% for the three months ended June 30, 2018, compared to 46.0% for the same period in 2017. The decrease is primarily due to the fixed cost network becoming a higher percentage of the cost of revenue primarily due to the spinoff of the former Birch consumer business on May 4, 2018. Management expects these costs to decline as it aligns its fixed network costs with its business.
  • Selling, General, and Administrative expense were $43.0 million, compared to $29.0 million in Q2 2017. The increase was primarily due to $8.9 million of acquisition transaction costs, $0.9 million in restructuring costs, $5.7 million of expenses attributable to Fusion, and $1.6 million of expenses attributable to MegaPath, partially offset by a lower cost base of $2.7 million.
  • Net loss attributable to common stockholders was $34.5 million, or $0.59 per share on a basic and diluted basis, compared to net loss to common stockholders in Q2 2017 of $4.7 million, or $0.19 per share on a basic and diluted basis. Excluding the retirement of debt obligations, net loss attributable to common stockholders was $20.1 million, or $0.34 per share.
  • Adjusted EBITDA in Q2 2018 was $26.6 million, compared to $28.1 million in Q2 2017 (see definition and further discussion about the presentation of adjusted EBITDA, a non-GAAP term, below). Consolidated capital expenditures totaled $8.0 million in Q2 2018, or 6.6% of revenue, compared to capital expenditures for the former stand-alone Birch of $7.3 million in Q1 2018, and $9.9 million in Q2 2017.
  • Total cash and equivalents at June 30, 2018, were $13.5 million, compared to $5.8 million at December 31, 2017. During the second quarter, Fusion retired approximately $443 million in Birch debt and accrued interest, and approximately $89 million of pre-merger Fusion debt, while incurring an additional $62 million of debt related to the acquisition of MegaPath.
  • Due to the timing of scheduled principal amortization payments, Fusion made no pay downs on its new credit facilities during the second quarter. Going forward, Fusion expects its scheduled principal amortization payments to be approximately $6.9 million per quarter.
  • Further details about the Company’s financial results are available in its quarterly report on Form 10-Q at www.sec.gov.

To learn more about Fusion (Nasdaq: FSNN) and to track its progress please visit the Vista Partners Coverage Pages. 

Fusion Reports Second Quarter 2018 Financial Results

NEW YORK, Aug. 14, 2018– Fusion, a leading cloud services provider, today announced financial results for the three and six months ended June 30, 2018.. On May 4, 2018, Fusion completed its acquisition …..

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Vista Partners Publishes July’s FREE Macroeconomic & Investment Monthly Newsletter

Vista Partners (“Vista”) has published July’s FREE Macroeconomic & Investment Monthly Newsletter, “Economy & Market Maintaining Highs.”

Vista’s monthly newsletter contains investment considerations for Banks, Biotech, Cloud Services, Energy, Fintech, Healthcare, Manufacturing, Mining, Materials, Nuclear Energy, Real Estate, and Technology.

Vista Partners centers its Coverage on the Dow 30 Components, Select Emerging Growth Companies & Vista’s Featured Companies, with exclusive, broad-based commentary from Managing Director, John F. Heerdink, Jr.

In July’s edition of the Macroeconomic & Investment Newsletter, Mr. Heerdink states,

“Speaking of bonds—and not the 007 variety—, back at home, the yield curve, which measures the difference between shorter- and longer-term Treasury yields—is….”Read full newsletter.

Companies Featured in July’s Newsletter: Atossa Genetics, Inc. (NASDAQ: ATOS) | Disney (DIS) | | Fusion, Inc.(NASDAQ: FSNN) | Google (Alphabet) (GOOG) | Pfizer (PFE) & UnitedHealth Group (UNH).

Vista Partners publishes 100% of its content free. Vista Partners offers a wealth of mixed-media resources on the Dow 30 & Select Emerging Growth Companies. To receive FREE email updates from Vista, please sign up at VistaPGlobal.com/signup.

About Vista Partners LLC:

Founded in 2005, Vista Partners LLC (“Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.comwith daily stories, weekly market updates, monthly macroeconomic newsletters, and Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

We encourage readers to view a complete list of disclaimers and disclosures on the Vista Partners website at VistaPGlobal.com/disclaimer.

Please follow Vista Partners on Twitter @VistaPResearch to receive updates, thoughts, and ideas on Dow 30 Components, Select Emerging Growth Companies, Vista’s Featured Companies, International Companies, Pre-IPO Companies & Strategic Companies.

Contact:

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Cloud Services Provider Fusion Secures Automotive Industry Win

NYC based cloud services provider Fusion (FSNN) has secured a $5.4 million, five-year cloud solutions contract with a leading distributor in the automotive industry. The companies cited Fusion’s productivity-enhancing cloud communications and collaboration solutions, integrated cloud connectivity with Quality of Service guarantees, experienced, live technical support and an exemplary reputation for providing a superior customer experience. As part of the Agreement, Fusion reported that it delivered multiple offerings from its comprehensive portfolio of single source cloud solutions, including network connectivity, cloud access, and voice services. Fusion’s cloud solutions were apparently selected to ensure a seamless customer experience, through one online portal and with services delivered through a single, integrated sales, implementation and support team. Fusion further confirmed that by extending feature-rich solutions and applications across the enterprise, Fusion mobilized a rapid deployment team to deliver its cloud solutions quickly and efficiently to over 70 geographically dispersed locations. The solution has been engineered and provisioned with the potential of incorporating IoT applications in the future to increase efficiencies for the customer’s rapidly expanding network of delivery drivers.

Russell P. Markman, Fusion’s Chief Operating Officer, stated, “Fusion’s proprietary, advanced cloud services platform enabled us to rapidly develop and deliver a solution that supports the customer’s applications over a very large geographic footprint. We continue to win business by providing simple solutions to our customers’ highly complex challenges, especially where the highest level of customer service is paramount.”

Fusion Secures $5.4 Million, Five Year Contract to Provide Single Source Cloud Solutions for a Leading Automotive Industry Distributor

Fusion (FSNN), a leading provider of cloud services, has secured a $5.4 million, five-year cloud solutions contract with a leading distributor in the automotive industry. The companies cited Fusion’s productivity-enhancing cloud communications and collaboration solutions, integrated cloud connectivity..

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Vista Partners Publishes June’s FREE Macroeconomic & Investment Monthly Newsletter – “Strong Economy, Trade Wars & Market Volatility”

Vista Partners (“Vista”) has published June’s FREE Macroeconomic & Investment Monthly Newsletter, “Strong Economy, Trade Wars & Market Volatility.”

Vista’s monthly newsletter contains investment considerations for Banks, Biotech, Cloud Services, Energy, Fintech, Healthcare, Manufacturing, Mining, Materials, Nuclear Energy, Real Estate, and Technology.

Vista Partners centers its Coverage on the Dow 30 Components, Select Emerging Growth Companies & Vista’s Featured Companies, with exclusive, broad-based commentary from Managing Director, John F. Heerdink, Jr.

In June’s edition of the Macroeconomic & Investment Newsletter, Mr. Heerdink states,

“It is not performing at the amazing rate of some of the individual and team performances that many of us have seen throughout the first round of World Cup 2018 in Russia, but the US national economy appears to be ….” Read full newsletter.

Companies Featured in June’s Newsletter: Amazon (AMZN) | Apple (AAPL) | Atossa Genetics, Inc.(NASDAQ: ATOS)| Caterpillar (CAT) | Facebook (FB) | First Choice Bancorp (FCBP) | Fusion, Inc. (NASDAQ: FSNN) | Google (Alphabet) (GOOG) | & (Netflix (NFLX).

Vista Partners publishes 100% of its content free. Vista Partners offers a wealth of mixed-media resources on the Dow 30 & Select Emerging Growth Companies. To receive FREE email updates from Vista, please sign up at VistaPGlobal.com/signup.

About Vista Partners LLC:

Founded in 2005, Vista Partners LLC (“Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.comwith daily stories, weekly market updates, monthly macroeconomic newsletters, and Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

We encourage readers to view a complete list of disclaimers and disclosures on the Vista Partners website at VistaPGlobal.com/disclaimer.

Please follow Vista Partners on Twitter @VistaPResearch to receive updates, thoughts, and ideas on Dow 30 Components, Select Emerging Growth Companies, Vista’s Featured Companies, International Companies, Pre-IPO Companies & Strategic Companies.

Contact:

inquiries@VistaPGlobal.com




Russell 2000® Index & Russell 3000® Index Add Cloud Services Provider Fusion

New York City-based Fusion, a leading provider of integrated cloud solutions to small, medium and large businesses, is a single source for the cloud®. Fusion’s advanced, proprietary cloud service platform enables the integration of leading-edge solutions in the cloud, including cloud communications, contact center, cloud connectivity and cloud computing. Fusion’s innovative, yet proven cloud solutions lower their customers’ cost of ownership and deliver new levels of security, flexibility, scalability, and speed of deployment.

Fusion was recently added to the small-cap Russell 2000® Index and the broad-market Russell 3000® Index effective at the open of trading today, marking the annual Russell U.S. Indexes reconstitution. Membership in the Russell 3000® Index, which remains in place for one year, means automatic inclusion in the large-cap Russell 1000® Index or the small-cap Russell 2000® Index as well as the appropriate growth and value style indexes. FTSE Russell determines membership for its Russell U.S. Indexes primarily by objective, market-capitalization rankings, and style attributes. Russell U.S. Indexes are widely used by investment managers and institutional investors as the basis for index funds and as benchmarks for active investment strategies. Approximately $9 trillion in assets are benchmarked against Russell U.S. Indexes. Russell U.S. Indexes are part of FTSE Russell, a leading global index provider.

Matthew Rosen, Fusion’s Chairman and CEO stated, “Our inclusion into two of the most widely-followed benchmarks for small-cap and broader-market growth companies is a testament to the growth that we have achieved over the last six years. In 2012, Fusion had just 5,000 customers and reported revenue of $7 million and an adjusted EBITDA loss of $4 million. In contrast, Fusion now serves approximately 160,000 customers, and over the next 12 months, expects to generate at least $575 million in revenue and achieve an Adjusted EBITDA run-rate of more than $140 million. Our confidence is further supported by the successful progress we have made on the integration of our two recent acquisitions and the overwhelmingly positive response we have received from our channel partners across the country,” Mr. Rosen continued. “Fusion is now one of the largest cloud services providers in North America with a unique single source strategy, serving business customers throughout the U.S. and Canada. Our progress thus far, and today’s addition to the Russell 2000® and 3000® Indexes, represent important achievements for Fusion as we look to realize our intermediate-term financial objectives of $750 million in annualized revenue and $185 million in annualized Adjusted EBITDA.”

Fusion recently announced that on June 15, 2018, it closed its previously-announced acquisition of MegaPath Holding Corporation (“MegaPath”). The total purchase price was $71.5 million, consisting of $61.5 million in cash and 1.7 million shares of Fusion common stock priced at $5.78 per share. The cash portion of the purchase price was financed from Fusion’s existing cash balances held in escrow for this acquisition. The acquisition of MegaPath contributes to Fusion approximately $67 million in annualized revenue, 95% of which is contracted monthly recurring revenue, with an average monthly revenue per customer (ARPU) of $750 and 1.0% monthly churn, and brings Fusion’s customer base to approximately 160,000 businesses. MegaPath also contributes to Fusion approximately $15 million in annualized Adjusted EBITDA including anticipated cost synergies, which will be realized within 12 months of the close.

To learn more about Fusion (Nasdaq: FSNN) and to track its progress please visit the Vista Partners Fusion (FSNN) Coverage Page.

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.
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Fusion Added to the Russell 2000 and Russell 3000 Indexes

Fusion (FSNN), a leading provider of cloud services, today announced that it was added to the small-cap Russell 2000® Index and the broad-market Russell 3000® Index effective at the open of trading today, marking the annual Russell U.S. Indexes reconstitution. Membership in the Russell 3000® Index,..

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Read “Summer Moves” Vista Partners Weekly Market Update 6-2-18

Vista Partners has published “Summer Moves” Vista Partners Weekly Market Update 6-2-18 and is accessible on our Newsletters Page. Each issue is written by Managing Director, John Heerdink and speaks to the activities of the market, influencers and specific featured stories from Vista’s Coverage Universe that spans the Dow 30, International and Select Emerging Growth Companies & Now “Investor Picks”, where we have begun to selectively add those companies/ideas that we are receiving from investors around the world.

Each weekly update issue is sent out via email directly to the thousands of investors around the world that have elected to be updated each week. Please “Join us” Today!

 

Vista Partners LLC (”Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, podcasts, & Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

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Vista Partners Publishes May’s FREE Macroeconomic & Investment Monthly Newsletter – “The Balancing Act”

Vista Partners (“Vista”) has published May’s FREE Macroeconomic & Investment Monthly Newsletter titled “The Balancing Act.”

Vista’s monthly newsletter contains investment considerations for Banks, Biotech, Cloud Services, Energy, Fintech, Healthcare, Manufacturing, Materials, Mining, Real Estate, SaaS, and Technology in addition to the Macroeconomic commentary.

Vista Partners centers its Coverage on the Dow 30 Components, Select Emerging Growth Companies & Vista’s Featured Companies, with exclusive, broad-based commentary from Managing Director, John F. Heerdink, Jr.

In May’s edition of the Macroeconomic & Investment Newsletter, Mr. Heerdink states, “The Federal Open Market Committee will hold its next meeting on June 12 to 13 and is still widely expected to raise short-term interest rates by a quarter percentage point. It’s a juggling act. On the one hand, ….” Read full newsletter.

Companies Featured in March’s Newsletter:

Companies Featured in April’s Newsletter: Atossa Genetics, Inc.(NASDAQ: ATOS) | Caterpillar (CAT) | Coca-Cola (KO) |  Fusion, Inc. (NASDAQ: FSNN) | & | United Technologies (UTX).

Vista Partners publishes 100% of its content free. Vista Partners offers a wealth of mixed-media resources on the Dow 30 & Select Emerging Growth Companies. To receive FREE email updates from Vista’s select & extensive coverage universe, please sign up at VistaPGlobal.com/signup.

About Vista Partners LLC:

Founded in 2005, Vista Partners LLC (“Vista”) is a California Registered Investment Advisor based in San Francisco. Vista delivers timely and relevant insights via the website: www.vistapglobal.com with daily stories, weekly market updates, monthly macroeconomic newsletters, and Vista’s proprietary equity and market research to help you stay informed and stay competitive. Vista’s mission is to invest partner capital while arming investors with a comprehensive global financial perspective across all market sectors. Vista also seeks to provide select issuers with actionable advice regarding fundamental development, corporate governance, and capital market directives.

We encourage readers to view a complete list of disclaimers and disclosures on the Vista Partners website at VistaPGlobal.com/disclaimer.

Please follow Vista Partners on Twitter @VistaPResearch to receive updates, thoughts, and ideas on Dow 30 Components, Select Emerging Growth Companies & Vista’s Featured Companies.

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Fusion Reports Q1 2018 Results

Fusion (FSNN), a leading cloud services provider, announced their financial results for its Q1 ended March 31, 2018, earlier this month.

On May 4, 2018, Fusion completed the spin-off of its remaining interest in its Carrier Services business segment. As a result, this segment has been treated as discontinued operations in the accompanying financial statements.

Fusion reported the following business highlights for Q1 2018:

  • Total revenue grew 2% to $29.0 million, compared to $28.5 million in Q1 2017, while gross margin was 55.5%, compared to 57.4% in Q1 2017
  • Net loss attributable to Fusion common shareholders from continuing operations was $4.2 million, or $0.20 per share, compared to net loss of $4.4 million, or $0.32 cents per share in Q1 2017
  • Adjusted EBITDA (a non-GAAP measure) grew 2% to $3.7 million, compared to $3.6 million in Q1 2017
  • Signed new sales bookings with a total contract value of $7.3 million
  • Ended the quarter with 13,300 Business Services customers and approximately $472,000 of Business Services monthly recurring revenue (MRR) in backlog, representing $17.7 million in total contract value, up 58% year over year
  • Ended the quarter with an average monthly revenue per customer (ARPU) of $715 and a churn rate of 1.2%, compared to $732 and 1.0% at March 31, 2017
  • Acquired the intellectual property and substantially all of the other assets of IQMax, a provider of secure messaging, enterprise data integration, collaboration and advanced cloud communications solutions
  • Completed a public offering of 8,625,000 shares of Fusion’s common stock at a price of $4.80 per share, for net proceeds of $38.7 million after underwriting discounts and commissions, but before offering expenses payable by Fusion
    Subsequent Events
  • Completed the acquisition of Birch Communications Holdings, Inc. (“Birch”), issuing approximately 50 million shares to Birch’s selling shareholders at $5.78 per share, and retiring $444 million of Birch’s prior outstanding indebtedness, for a total Enterprise Value of approximately $600 million
  • Closed $680 million of new Senior Secured Credit Facilities (the “Facilities”), consisting of First and Second Lien Term Loans and including a $40 million Revolving Credit Facility that is currently undrawn, and retired Fusion’s prior outstanding indebtedness
  • Raised an additional $10 million of debt through the issuance of a subordinated note to Holcombe Green, Fusion’s Vice Chairman and largest shareholder, with the same terms as Fusion’s new Second Lien Term Loan
  • Closed a $15 million private placement of non-convertible preferred shares that are redeemable by Fusion at any time, in a transaction led by Holcombe Green
  • Completed an $8 million private placement of Fusion’s common stock priced at $5.25 per share, led by a fund managed by Morgan Stanley which, together with the other purchasers of the shares, also participated in the Facilities
  • Completed the spin-off of Fusion’s remaining interests in its Carrier Services business as well as Birch’s consumer and single-line business customer base, leaving Fusion’s focus on the cloud services market
  • Retired all of Fusion’s Series A-1, A-2 and A-4 and Series B-2 Preferred Stock with a total stated value, plus accrued and unpaid dividends, of $18.9 million, through the issuance of 1.3 million shares of Fusion common stock
  • Signed a definitive agreement to acquire MegaPath Holding Corporation (“MegaPath”) for total consideration of $71.5 million, subject to working capital adjustments
  • Changed the Company’s corporate name to Fusion Connect, Inc., which better reflects its focus on the cloud services market
  • Established new intermediate-term financial objectives of $750 million in annualized revenue and $185 million in annualized adjusted EBITDA
    Management Commentary

Matt Rosen, Fusion’s Chariman & CEO stated, “Our performance in the first quarter of 2018 was solid, as we delivered another quarter of year-over-year revenue and adjusted EBITDA growth, excluding the impact of acquisitions. We also achieved a number of important milestones during the first quarter, which helped set the stage for the even more transformational accomplishments that followed.Now that the Birch acquisition has closed, and with the expected close of the MegaPath acquisition on the horizon, I’m very excited by Fusion’s opportunity to be a disruptive force in the cloud services industry. We believe strongly that our unique strategy, the strength of our operating model, and the power of our platform to drive significant levels of free cash flow will greatly benefit our customers and partners, our employees, and our shareholders. As a result, today we are establishing our next set of intermediate-term financial objectives of $750 million in annualized revenue and $185 million in annualized adjusted EBITDA.”

First Quarter 2018 Financial Results

  • Total revenue in Q1 2018 was $29.0 million, compared to $28.5 million in Q1 2017. The consolidated gross margin was 55.5% in Q1 2018, as compared to 57.4% in Q1 2017, primarily due to the inclusion of revenue from customers acquired during the first half of 2017 which carried a lower gross margin.
  • Net loss attributable to common stockholders from continuing operations in Q1 2018 was $4.2 million, or $0.20 per share on a basic and diluted basis, compared to a net loss in Q1 2017 of $4.4 million, or $0.32 per share on a basic and diluted basis.
  • Adjusted EBITDA grew 2% in Q1 2018 to $3.7 million, compared to $3.6 million in Q1 2017 (see definition and further discussion about the presentation of adjusted EBITDA, a non-GAAP term, below). Capital expenditures totaled $1.0 million in Q1 2018 or 3.4% of total revenue.
  • Total cash and equivalents at March 31, 2018, was $31.0 million, compared to $2.5 million at December 31, 2017. On February 5, 2018, Fusion completed a follow-on offering of 8,625,000 shares of its common stock for net proceeds before offering expenses of $38.7 million. Additionally, during the first quarter, Fusion made $6.6 million of debt pay downs of its then-outstanding senior secured term loan.

Further details about the Company’s financial results are available in its quarterly report on Form 10-Q at www.sec.gov.

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