ARBX Arbinet Corp. (MM)

Arbinet Announces First Quarter 2005 Financial Results Company Reports Q1 Fee Revenues of $12.3 Million NEW BRUNSWICK, N.J., May 4 /PRNewswire-FirstCall/ -- Arbinet-thexchange, Inc. (NASDAQ:ARBX), the world's leading electronic market for trading, routing, and settling communications capacity, reported financial results for its first quarter ended March 31, 2005. First quarter 2005 fee revenues were $12.3 million, an increase of 22% over the $10.1 million in the first quarter 2004. First quarter 2005 net income was $1.3 million, an increase of 55% over the $0.8 million in the first quarter 2004. Arbinet Members bought and sold 3.0 billion minutes on Arbinet's marketplace in the first quarter of 2005, up 28% from 2.4 billion minutes in the first quarter 2004. "Arbinet's growth has historically occurred in step functions as market supply and demand adjust," said Curt Hockemeier, Arbinet president and chief executive officer. "Our first quarter results were flat compared to the fourth quarter, but our fourth quarter results were at the high end of our historical quarterly growth rates. Over the past three years our quarter-over-quarter minutes growth has varied based on the liquidity in thexchange and our long-term growth has remained strong." The Company enjoyed record trading volume in March when Members bought and sold 1.106 billion minutes and April volume was 34% ahead of April, 2004 volume. Arbinet reaffirms its 2005 outlook of fee revenues within a range of $58 million to $64 million and net income within a range of $19 million to $23 million. Quarterly Conference Call Arbinet will host a conference call to discuss first quarter 2005 results at 5:00 p.m. Eastern Daylight Time today. A live webcast of the conference call can be accessed through the company's Investor Relations website at http://investor.arbinet.com/. In addition, an archive of the webcast will be accessible through the same link. About Arbinet Arbinet is the leading electronic market for trading, routing and settling communications capacity. Members of the exchange, consisting primarily of communications service providers, anonymously buy and sell voice calls and Internet capacity based on route quality and price through its centralized, efficient and liquid marketplace. Members place orders through a web-based interface. Its fully automated, highly scalable trading platform matches these orders using proprietary software and delivers them through state-of-the-art facilities. Forward-Looking Statements This press release contains "forward-looking statements" (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended), including statements about the Company's growth and future operating results. Various important risks and uncertainties may cause the Company's actual results to differ materially from the results indicated by these forward- looking statements, including: members (in particular, significant trading members) not trading on our exchange or utilizing our new and additional services (including data on thexchange and mobile on thexchange services); our uncertain and long member enrollment cycle; the failure to manage our credit risk; failure to manage our growth; competitive factors; system failures, human error and security breaches could cause the Company to lose members and expose it to liability; future government regulation; and the Company's ability to obtain and enforce patent protection for our methods and technologies. For a further list and description of the risks and uncertainties the Company faces, please refer to the Company's 10-K and other filings which have been filed with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 120 Albany St. Tower II, Suite 450, New Brunswick, NJ 08901 phone: 732-509-9100, fax: 732-509-9101 ARBINET - THEXCHANGE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended March 31, 2004 2005 Trading revenues $107,776,141 $124,432,314 Fee revenues 10,120,929 12,310,432 Total revenues 117,897,070 136,742,746 Cost of trading revenues 107,743,571 124,232,807 10,153,499 12,509,939 Costs and expenses Operations and development 3,033,633 3,627,991 Sales and marketing 1,274,686 1,757,643 General and administrative 2,162,012 2,816,483 Depreciation and amortization 2,049,680 2,532,126 Total costs and expenses 8,520,011 10,734,243 Income from operations 1,633,488 1,775,696 Interest income (expense), net (726,226) 159,034 Other income (expense), net (71,487) (548,636) Income before income taxes 835,775 1,386,094 Provision for income taxes - 91,482 Net income $835,775 $1,294,612 Preferred stock dividends and accretion (1,690,542) - Net (loss) income attributable to common stockholders $(854,767) $1,294,612 Earnings per share Basic $(0.41) $0.05 Diluted $(0.41) $0.05 Pro Forma Diluted $0.04 N/A Weighted average number of common shares Basic 2,092,061 24,429,386 Diluted 2,092,061 26,111,278 Pro Forma Diluted 19,083,195 N/A ARBINET - THEXCHANGE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of As of December 31, 2004 March 31, 2005 Assets Current Assets: Cash and cash equivalents $53,532,660 $40,307,528 Marketable securities - 14,198,000 Trade accounts receivable, net 27,351,810 27,804,182 Other current assets 2,369,746 1,873,032 Total current assets 83,254,216 84,182,742 Property and equipment, net 24,689,053 24,417,272 Other long-term assets 6,923,671 6,700,238 Total Assets $114,866,940 $115,300,252 Liabilities & Stockholders' Equity Current Liabilities: Accounts payable $15,645,826 $15,927,364 Deferred revenue 4,314,006 5,070,151 Accrued expenses and other current liabilities 9,445,247 8,223,225 Short-term debt obligations 1,924,023 1,886,705 Total current liabilities 31,329,102 31,107,445 Other long-term liabilities 8,299,972 7,571,083 Total Liabilities 39,629,074 38,678,528 Stockholders' Equity 75,237,866 76,621,724 Total Liabilities & Stockholders' Equity $114,866,940 $115,300,252 ARBINET - THEXCHANGE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, 2004 2005 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $835,775 $1,294,612 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,049,680 2,532,126 Amortization of deferred compensation 20,950 31,054 Non-cash interest on redeemable preferred stock 417,510 - Changes in operating assets and liabilities: Trade accounts receivable, net 321,450 (652,103) Other assets 422,980 896,413 Accounts payable 2,673,360 305,112 Deferred revenue, accrued expenses and other current liabilities (665,766) (394,660) Other long-term liabilities (255,063) (267,193) Net cash provided by operating activities 5,820,876 3,745,361 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (794,558) (2,227,737) Purchases of marketable securities - (14,198,000) Net cash used in investing activities (794,558) (16,425,737) CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of indebtedness, net (4,799,126) (186,825) Issuance of common stock 7,989 3,959 Loans made to stockholders, net of repayments 119,976 - Net payments on obligations under capital leases (761,793) (312,189) Net cash used in financing activities (5,432,954) (495,055) Effect of foreign exchange rate changes on cash 27,451 (49,701) Net decrease in cash and cash equivalents (379,185) (13,225,132) Cash and cash equivalents, beginning of period 17,147,245 53,532,660 Cash and cash equivalents, end of period $16,768,060 $40,307,528 Contact: Chris Reid 732.509.9160 DATASOURCE: Arbinet-thexchange, Inc. CONTACT: Chris Reid of Arbinet-thexchange, Inc., +1-732-509-9160, Web site: http://www.arbinet.com/ http://investor.arbinet.com/

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