The company has been bank-rolled by Cisco Systems and one of the reasons for the IPO is to repay the outstanding loan of $64.1m in vendor finance used to buy Cisco equipment.
Apart from supplying most of its equipment, Cbeyond says it relies on Cisco for technical support and assistance.
In return, Cisco will be able to cash in on Cbeyond’s status as a public company. It was been granted options to buy up to 2.7 million shares at $0.01 per share and 24,969 shares at $1.00 per share.
Targeting the small business market, Cbeyond uses its IP-based network, linked to customer premises with T-1 lines, to offer a raft of services include local and long distance VoIP, broadband internet access, email, voicemail, web hosting, secure backup and file sharing and VPNs.
The Atlanta, Georgia company claims to achieve network and call reliability comparable to that of traditional phone networks.
Cbeyond aims its services at companies with between 4 to 200 employees in large metropolitan cities, using five or more phone lines. It quotes business information provider Dun & Bradstreet as estimating there are approximately 1.4 million businesses with 5 to 249 employees in the 25 largest markets in the US. It currently operates in five of these markets and plans to launch into six additional markets by the end of 2008.
Growth has been rapid. Revenue, which stood at $20.9m in 2003, increased by 72.9% in 2004 to $113.3m while it trimmed its net loss to $11.4m, down from $29.5m.
It sees its major competitors as BellSouth, Qwest Communications International and SBC Communications. It is also up against competitive carriers.
But it does not view other providers of VoIP technology, such as Vonage Holdings, deltathree and 8×8 as direct competitors because they primarily serve the consumer market and businesses with fewer than four lines.
It anticipates other competitors in the future and says utility companies have begun experimenting with and high-speed data services over power lines.
