Arbinet Corporation Announces Fourth Quarter and Full Year 2009 Financial Results

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March 16, 2010
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Arbinet Corporation Announces Fourth Quarter and Full Year 2009 Financial Results

HERNDON, Va., March 16 -- Arbinet Corporation (NASDAQ:ARBX), a leading provider of telecommunications services to fixed and mobile operators, today reported financial results for the fourth quarter and full year ended December 31, 2009.

Total revenues for fourth quarter 2009 of $82.5 million, included $74.8 million trading revenues and $7.7 million fee revenues, representing a 15.1% and 25.8%, respectively, decrease from fourth quarter 2008.  Direct contribution from trading revenues (trading revenues minus cost of trading revenues) for the fourth quarter 2009 was $0.2 million compared with ($0.1) million in fourth quarter 2008 and $0.1 million in third quarter 2009.  This improved contribution is primarily attributable to the introduction of carrier services in late third quarter 2009.  A total of 2.5 billion minutes were bought and sold on Arbinet's platform in the fourth quarter 2009, compared with 3.0 billion minutes in the fourth quarter 2008 and 2.5 billion minutes in the third quarter 2009.  Arbinet completed 271.0 million calls during the fourth quarter 2009, compared with 342.6 million calls in the fourth quarter 2008 and 280.1 million calls in the third quarter 2009.

Fourth quarter 2009 gross profit was $3.6 million compared with $5.8 million and $3.8 million for the fourth quarter 2008 and third quarter 2009, respectively.

Fourth quarter 2009 loss from operations was ($3.9) million, compared with a loss from operations of ($4.6) million in the fourth quarter 2008.  Fourth quarter 2009 results included severance charges of $0.1 million and a restructuring charge of $0.6 million related to the closing of the New Jersey office and relocation of corporate headquarters to Virginia.  Comparatively, fourth quarter 2008 included a non-cash charge of $3.0 million to record the impairment of goodwill and other intangible assets.

The Company's loss from continuing operations in the fourth quarter was ($3.7) million or ($0.16) per diluted share, compared with a loss from continuing operations of ($9.1) million or ($0.39) per diluted share in the fourth quarter 2008.  Fourth quarter 2009 results included a non-cash foreign currency transaction gain of $0.2 million or $0.01 per diluted share, compared with the fourth quarter 2008 non-cash foreign currency exchange loss of ($4.6) million or ($0.20) per diluted share, representing the impact of currency fluctuations on U.S. denominated obligations of the Company's United Kingdom subsidiary.

Total revenues for full year 2009 of $339.5 million, included $305.8 million trading revenues and $33.7 million fee revenues, representing decreases of 26.9% and 30.3%, respectively, from full year 2008.  Direct contribution from trading revenues (trading revenues minus cost of trading revenues) for full year 2009 was $0.1 million compared with ($0.4) million for full year 2008.  This improved contribution is primarily attributable to the introduction of carrier services in late third quarter 2009.  A total of 10.3 billion minutes were bought and sold on Arbinet's platform in 2009, compared with 13.2 billion minutes in 2008.  Arbinet completed 1,130.5 million calls during 2009, compared with 1,699.3 million calls in 2008.  Average call duration was 4.5 minutes in 2009 compared with 3.9 minutes in 2008.

For the full year 2009, gross profit was $15.6 million, down 44.6% compared with $28.3 million in 2008.  The Company reported a loss from continuing operations of ($8.7) million or ($0.40) per diluted share for 2009, compared with a loss from continuing operations of ($12.7) million or ($0.53) per diluted share in 2008.

In commenting on the Company's fourth quarter and full year 2009 results, Shawn O'Donnell, President and Chief Executive Officer of Arbinet, stated, "We are encouraged by the fact that fourth quarter revenues, gross profit and traffic volumes have stabilized and are essentially flat with third quarter 2009.  We believe the actions we took over the past year to right size our cost structure have positioned us well to weather the global economic downturn.  At the same time, we have made strategic investments in growth that leverage our core capabilities. We are focused on increasing the flexibility with which we work with the marketplace and on training the sales force as we roll out new services.  In 2009 in order to expand our addressable market, we designed, developed and launched carrier services, a standard wholesale trading product, which is already gaining market traction and continuing to contribute favorably to our performance in the first quarter 2010.  We believe that by continuing to expand our product offerings to meet the increasingly complex demands of our customers while closely managing our costs, we are well positioned for long-term growth and profitability."

Conference Call

Arbinet will host a conference call to discuss its fourth quarter and full year 2009 results at 10:00 a.m. Eastern Time today.

The dial-in number for the live audio call beginning at 10:00 a.m. Eastern Time (888) 562-3654, or (973) 582-2703 for international callers; the passcode is 57749229.  A live web cast of the conference call will be available on Arbinet's web site at http://www.arbinet.com/.

A replay of the conference call will be available from 1:00 p.m. Eastern Time on March 16, 2010 through midnight Eastern Time on March 23, 2010 at http://www.arbinet.com/ and by telephone at (800) 642-1687, or (706) 645-9291 for international callers; the passcode is 57749229.

About Arbinet Corporation

Arbinet is a leading provider of international voice and IP solutions to carriers and service providers globally. With more than 1,100 carriers across the world utilizing the Arbinet network, Arbinet combines global scale with sophisticated platform intelligence, call routing and industry leading credit management and settlement capabilities. Customers and suppliers include many leading fixed line, mobile, wholesale and VoIP carriers as well as calling card, ISPs and content providers around the world who buy and sell voice and IP telecommunications capacity and content. The Company can be reached at its corporate headquarters in Herndon, VA at (703) 456-4100 or by email at sales@arbinet.com.

Forward-Looking Statements

This press release contains forward-looking statements, including forward-looking statements regarding anticipated future revenues, growth, capital expenditures, management's future expansion plans, expected product and service developments or enhancements, and future operating results.  Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as: "believes," "expects," "intends," "may," "will," "should," "confident," "work to," "seeks," or "anticipates," or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties.  Various important risks and uncertainties may cause our actual results to differ materially from the results indicated by these forward-looking statements, including, without limitation: members (in particular, significant trading members) not trading on the Exchange or utilizing our new and additional services, including our carrier services; continued volatility in the volume and mix of trading activity; our uncertain and long member enrollment cycle; failure to manage our credit risk; failure to manage our growth and implement our business plan; pricing pressure; currency fluctuations; investments in our management team and personnel; disruption or uncertainty resulting from recent changes in senior management; regulatory uncertainty; system failures, human error and security breaches that could cause us to lose members and customers and expose us to liability; our ability to obtain and enforce patent protection for our methods and technologies; losses in efficiency due to cost cutting and restructuring initiatives; decreased trading volumes due to our efforts to increase call quality on the Exchange; and economic conditions and volatility of financial markets, decreased availability of credit to us or buyers on the Exchange, and the impact they may have on us, our members and customers, and demand for our services. For a further list and description of the risks and uncertainties the Company faces, please refer to our most recent Annual Report on Form 10-K and other periodic and current filings that have been filed with the Securities and Exchange Commission and are available at http://www.sec.gov.  Such forward-looking statements are current only as of the date they are made, and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

  Contacts:

  Gary Brandt, CFO
  Arbinet Corporation
  703-456-4140

  Andrea Priest / Andi Salas
  Joele Frank, Wilkinson Brimmer Katcher
  212-355-4449

                                     ARBINET CORPORATION
                            CONSOLIDATED STATEMENTS OF OPERATIONS
                           (in thousands, except per share amounts)
                                         (unaudited)

                                     Three Months Ended     Year Ended
                                        December 31,       December 31,
                                     ------------------    ------------
                                       2009     2008      2009      2008
                                       ----     ----      ----      ----
  Trading revenues                  $74,773  $88,092  $305,792  $418,492
  Fee revenues                        7,683   10,353    33,684    48,356
       Total revenues                82,456   98,445   339,476   466,848
  Cost of trading revenues           74,526   88,194   305,696   418,890
  Indirect cost of trading and
   fee revenues                       4,289    4,439    18,132    19,698
       Total cost of trading and
        fee revenues                 78,815   92,633   323,828   438,588
                                     ------   ------   -------   -------
       Gross profit                   3,641    5,812    15,648    28,260

  Other operating expenses:
       Sales and marketing            1,904    2,011     7,566    10,211
       General and administrative     3,173    3,384    10,685    11,677
       Depreciation and amortization  1,747    1,864     7,147     7,501
       Severance charges                109      145       470     1,422
       Restructuring and other exit
        costs                           629                629
       Impairment charge                  -    2,966         -     3,442
            Total other operating
             expenses                 7,562   10,370    26,497    34,253
                                      -----   ------    ------    ------

  Loss from operations               (3,921)  (4,558)  (10,849)   (5,993)

  Interest income                        15      124       122       948
  Interest expense                     (106)    (135)     (626)     (577)
  Foreign currency transaction
   gain (loss)                          250   (4,583)    2,331    (6,978)
  Other income, net                      84       75       321       287

  Loss from continuing
   operations before income taxes    (3,678)  (9,077)   (8,701)  (12,313)
  (Benefit) provision for
   income taxes                        (236)    (119)      (39)      392
                                       ----     ----       ---       ---

  Net loss from continuing
   operations                        (3,442)  (8,958)   (8,662)  (12,705)
  Loss from discontinued
   operations, net of income tax          -      (99)        -    (2,228)
  Net loss                          $(3,442) $(9,057)  $(8,662) $(14,933)
                                    =======  =======   =======  ========

  Basic and diluted net loss
   per common share:
       Continuing operations         $(0.16)  $(0.39)   $(0.40)   $(0.53)
       Discontinued operations                 (0.01)              (0.09)
       Net loss                      $(0.16)  $(0.40)   $(0.40)   $(0.62)
                                     ======   ======    ======    ======

  Weighted average shares used
   in computing basic and diluted
   net loss per share                21,771   22,758    21,840    23,922

                                ARBINET CORPORATION
                            CONSOLIDATED BALANCE SHEETS
                       (in thousands, except share amounts)
                                    (unaudited)

                                               As of           As of
                                            December 31,    December 31,
                                                2009            2008
                                           -------------   -------------
                     Assets
       Current Assets:
  Cash and cash equivalents                    $15,492         $16,224
  Marketable securities                          6,407           7,926
  Trade accounts receivable, net of allowance   24,513          28,176
  Prepaids and other current assets              1,284           3,476
                                                 -----           -----
       Total current assets                     47,696          55,802

  Property and equipment, net                   17,821          20,868
  Security deposits                              1,676           2,130
  Intangible assets, net                           149             163
  Other assets                                     395             395
            Total Assets                       $67,737         $79,358
                                               =======         =======

     Liabilities and Stockholders' Equity
       Current Liabilities:
  Due to Silicon Valley Bank                    $2,014            $371
  Accounts payable                              11,676          12,924
  Deferred revenue                               1,434           2,770
  Accrued expenses and other current
   liabilities                                   6,172           7,552
  Current portion of long-term debt              3,600               -
  Current liabilities for
   discontinued operations                         100             473
                                                   ---             ---
       Total current liabilities                24,996          24,090

  Long-term debt                                     -           3,600
  Deferred rent                                  2,343           1,862
  Other long-term liabilities                       66              61
                                                   ---             ---
            Total Liabilities                   27,405          29,613
                                                ------          ------

  Stockholders' Equity
       Common stock                                 27              27
       Additional paid-In Capital              175,906         173,867
       Treasury stock                          (17,122)        (15,852)
       Accumulated other comprehensive gain      2,056           3,576
       Accumulated deficit                    (120,535)       (111,873)
                                              --------        --------
            Total Stockholders' Equity          40,332          49,745
            Total Liabilities and
             Stockholders' Equity              $67,737         $79,358
                                               =======         =======

Source: Arbinet Corporation
   

CONTACT:  Gary Brandt, CFO of Arbinet Corporation, +1-703-456-4140; or
Andrea Priest or  Andi Salas, both of Joele Frank, Wilkinson Brimmer Katcher,
+1-212-355-4449

Web Site:  http://www.arbinet.com/

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