Revenues for the first quarter totaled $142.8 million, an increase of 3% compared to the first quarter of 2000. The increase in revenues was driven by growth in consumer access revenues related to Excite@Home’s residential broadband services, which was partially offset by lower revenues from media/advertising services. In the first quarter Excite@Home’s worldwide residential broadband subscriber base grew to 3,200,000, up 126% from 1,416,000 at March 31, 2000. Net subscriber additions in the quarter totaled 449,000, an increase of 40% from the 321,000 added in the first quarter of 2000. Excite@Home’s subscriber totals exclude all subscribers of Cablevision Systems Corp., with whom the company has decided to terminate its relationship. Historical numbers also exclude Cablevision for comparison purposes.
Net operating loss, which excludes non-operating costs and other items, was $61.6 million for the quarter, or $0.15 per share, compared to a net operating loss of $4.6 million, or $0.01 per share, in the first quarter of 2000. The increase in net operating loss was driven primarily by increased investment in the build-out and upgrade of Excite@Home’s broadband network. Non-operating costs and other items include expenses for the amortization of goodwill and other intangible assets, cost and amortization of distribution agreements, equity share of losses of affiliated companies, write-down of goodwill and intangible assets, and restructuring charges associated with workforce reductions.
Net loss for the quarter, which includes all of the items specified above, was $832.6 million or $2.05 per share, compared to a loss of $676.5 million, or $1.75 per share in the first quarter of 2000. The increase in net loss compared to the year-ago period was driven primarily by a write-down of goodwill and other intangible assets and other restructuring charges related to the company’s acquired media assets. The write-down and restructuring charges totaled $630.5 million in the quarter.
Consumer access revenues are comprised primarily of Excite@Home’s share of subscription fees paid by residential broadband subscribers in North America. These revenues totaled $75.4 million in the first quarter, an increase of 80% from the first quarter of 2000. The increase was driven by growth in Excite@Home’s North American residential subscriber base. North American subscribers totaled 2,867,000 at March 31, 2001, an increase of 112% from a year ago.
Excite@Home’s addressable market for residential broadband services grew to 33 million upgraded cable homes passed in North America, an increase of 38% from a year ago. The upgraded footprint represents 61% of Excite@Home’s total homes under contract in North America.
8.7% in the first quarter, up from 5.6% a year ago. Subscriber and addressable-market figures include certain areas served by Excite@Home affiliates that Excite@Home expects to convert to the @Home service.
Commercial Services
Commercial services revenues are generated through the sale of @Work broadband services to small and medium-sized enterprises via cable, T1 connections, and the sale of very high-speed connectivity to content delivery networks and Internet content providers. Commercial services revenue totaled $15.5 million in the first quarter, an increase of 15% from the first quarter of 2000. The increase in revenues was driven by growth in bandwidth under contract, which totaled 8 gigabits at quarter-end. Net bandwidth sold in the quarter was 1.5 gigabits, an increase of 152% from a year ago. Total @Work accounts at quarter-end totaled 11,790 an increase of 90% over the year-ago figure.
Media/Advertising
Media revenues are comprised primarily of fees for advertising and sponsorships on Excite@Home’s open-web and broadband media properties as well as online marketing services revenues generated by Excite@Home’s MatchLogic subsidiary. Media revenues totaled $45.1 million in the first quarter, a decrease of 41% compared to the year-ago quarter. The decline was driven primarily by general softness in the online advertising market.
Traffic on the Excite Network, which includes Excite@Home’s broadband and narrowband media properties, averaged 146 million daily page views in March, up 1% from 144 million page views a year ago. Broadband page views averaged more than 14 million per day in March, up approximately four times from March 2000. In March, the Excite Network ranked sixth in overall digital media reach according to Nielsen Net Ratings, reaching 31 million unique visitors.
International Services
International revenues are generated through fees paid to Excite@Home for services provided to broadband subscribers outside North America, as well as advertising on Excite@Home’s consolidated international portal properties. Excite@Home also participates in non-consolidated media joint ventures in Japan, Australia, Italy and the United Kingdom.
First quarter international revenues were $6.8 million, a 6% increase over first quarter 2000. The increases was driven by growth in broadband subscribers, which numbered 333,000 at the end of March, up more than five times from 61,000 a year ago. Subscriber growth was led by @Home Japan, which is now the largest provider of broadband service in Japan after less than a year of operations. Growth in access revenues in the first quarter of 2001 was offset by revenues included in the year-ago period for services provided by Excite@Home to @Home Japan and Excite@Home Australia in conjunction with the launch of broadband services by those joint ventures. Financial Detail
Net interest expense for the quarter was $3.3 million. Net interest expense includes the impact of other income/expense from portfolio sales and other items.
EBITDA for the quarter was negative $23.0 million, compared to positive EBITDA of $11.8 million in the first quarter of 2000. Depreciation and amortization included in operating expenses was $35.4 million, up from $19.6 million in the year-ago period.
Capital expenditures totaled $68.4 million in the first quarter. Capital expenditures were directed primarily at expanding and increasing the reliability of Excite@Home’s broadband network.
Excite@Home’s cash balance was $104.5 million as of March 31, 2001, down from $200.8 million at the end of 2000. The decrease in cash was driven primarily by capital expenditures and the company’s operating losses. The company also paid approximately $6 million in cash severance costs associated with workforce reductions during the quarter.
