Leap Wireless International, Inc. (LEAP)
Q1 2008 Earnings Call
May 8, 2008 5:00 pm ET
Amy Wakeham – Director Investor Relations
S. Doug Hutcheson – President, Chief Executive Officer & Acting Chief Financial Officer
Jim Seines – Vice President Investor Relations & Acting Director
Albin F. Moschner – Executive Vice President Sales & Marketing Operations
Glenn T. Umetsu – Executive Vice President & Chief Technical Officer
Simon Flannery – Morgan Stanley
Romeo Reyes – Jefferies & Co
Scott Malat – Goldman Sachs
Analyst for Phil Cusick – Bear Stearns
Christopher Larsen – Credit Suisse
Steve Clement – Pacific Crest Securities
Previous Statements by LEAP
» Leap Wireless International Inc. Q4 2008 Earnings Call Transcript
» Leap Wireless International, Inc. Q3 2008 Earnings Call Transcript
» Leap Wireless International, Inc. Q2 2008 Earnings Call Transcript
Good morning and welcome to Leap’s first quarter 2008 conference call. This call is being recorded and will be available for playback in the United States through the close of business on May 22nd by calling 1-866-286-8010. Callers from outside the United States will need to dial 1-617-801-6888. The passcode for both calls is 84394897. This conference call with the accompanying presentation is also being webcast live and will be available for replay on the investor relations section of our website at Investor.LeapWireless.com shortly after the completion of our live call.
Joining me on the call today to discuss our first quarter results are Doug Hutcheson, our President, Chief Executive Officer and Acting Chief Financial Officer and Jim Sienes, our Vice President Investor Relations and Acting Treasurer. Following our prepared remarks JD will come back on the line with instructions for the question and answer portion of the call. Al Moschner, our Executive Vice President and Chief Marketing Officer and Glenn Umetsu, our Executive Vice President and Chief Technology Officer will join Doug and Jim for the question and answer session.
The results that we discuss today including customer information reflect the consolidated results of Leap, its subsidiaries and its non-controlled joint venture LCW Wireless, LLC and Denali Spectrum, LLC for the periods indicated. Also, as used in today’s conference call and accompanying presentation the term new initiatives refers to the company’s new market launch activity and its mobile broadband offering. The term existing markets refers to the company’s markets in operation as of December 31, 2007.
During our call today we will discuss some non-GAAP financial measures. For a GAAP reconciliation of non-GAAP financial measures I would like to refer you to the notes to the financial statements contained in today’s earnings release and also to the financial reports page of the investor relations’ section of Leap’s website at Investor.LeapWireless.com. Turning to our forward statement slide I would like to remind you that statements made today that are not historical in nature including statements about future events and performance and statements including words like expects, plan, intend and other similar terms are forward-looking statements. Our actual results could differ materially from those stated or implied by such forward-looking statements. Factors that could cause actual results to differ from our forward-looking statements are detailed in the section entitled risk factors including in our annual report on Form 10K for the year ended December 31, 2007 and in our other publically filed reports including our Form 10Q for the quarter ended March 31, 2008 which we plan to file shortly.
For anyone listening to a taped or webcast replay or viewing a written transcript of our first quarter call, please note that all information presented is current only as of today’s date, May 9, 2008. The company disclaims any duty or obligation to update any forward-looking information whether as a result of new information, future events or otherwise.
With that, I would now like to turn the call over to Doug.
S. Doug Hutches
Thank you to all of you for joining us today. I appreciate both your flexibility and understanding on our call timing. Today we share our continuing progress in building our business with attractive, strong first quarter results. Total customers increased 21% year-over-year with the addition of 230,000 net new customers in the first quarter. Service revenues were up 24% year-over-year from the attractive customer growth and stable ARPU performance we’ve achieved. The business produced a 59% year-over-year increase in adjusted OIBDA, nearly $119 million representing both our progress on our existing business and with our new initiatives. Our existing business OBIDA grew 80% year-over-year reaching approximately $135 million as margin percentage increased to 34% up over 10 points year-over-year.
As we look at customer growth the business saw strong customer activity begin after Black Friday in the fourth quarter and as evidenced by these results it has continued. The 230,000 new customers added were across the business and delivered with both the expected ARPU and better than expected CPGA. Our first quarter results reflect typical customer buying patterns as well as the introduction of several new handsets. During the quarter we introduced the Cricket EZ handset, a new low cost handset that typically sells for less than $100 and is available to promote as low as $50. We also continue to see the progress with our footprint expansions which we’ll update you with our progress on this call.