Zayo Group Holdings, Inc. (NYSE:ZAYO) Q1 2018 Earnings Conference Call - Final Transcript

Nov 06, 2017 • 05:00 pm ET

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Zayo Group Holdings, Inc. (NYSE:ZAYO) Q1 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Thank you for standing by, and welcome to the Zayo Group's Fiscal Year 2018 First Quarter Earnings Call. My name is Austin, and I will be your operator today. During the presentation, all participants will be in listen-only mode. Afterwards, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded Monday, November 6, 2017.

I will now turn the conference over to Brad Korch.

Executive
Brad Korch

Good afternoon, and thank you for joining. Today's call will be led by Zayo's Chairman and Chief Executive Officer, Dan Caruso; President and Chief Operating Officer, Andrew Crouch; and Chief Financial Officer, Matt Steinfort. Our outgoing CFO, Ken desGarennes, is also on the line and will be available for Q&A.

This call is being webcast with a slide presentation that reviews the key financial and operating results for the three months ended September 30, 2017. For a link to the webcast, please visit the Investor Relations section of the Zayo website at www.zayo.com. The slide presentation and earnings release are available on this site.

Please turn to page 2 of our earnings call presentation while I review our Safe Harbor statement. Statements made in this call and contained in the earnings materials available on our website that are not historical in nature may constitute forward-looking statements. Such statements are based on the current expectations and beliefs of management. Actual results may differ materially from these forward-looking statements due to risks and uncertainties that are described in more detail in our filings with the SEC. We undertake no obligation to publicly update or revise these forward-looking statements, except as required by law.

I will now turn the presentation over to Dan Caruso, our Chairman and Chief Executive Officer.

Executive
Dan P. Caruso

Thank you, Brad, and welcome to our earnings call. September 2017 quarter highlights. Recall last quarter, we mapped out a path to 6% to 8% growth and that's predicated on growing our bookings as well as modestly reducing our churn level. During this quarter, we saw signs of progress toward that goal. Our net bookings number and gross installs remained at record levels, and we are ahead of our quota-bearing head count target and seeing traction in several of our targeted verticals.

Our capital profile continues to be very favorable and that also maps to our capital program and cash flow as we will review in subsequent slides. Our churn remains elevated at 1.2% as we foreshadowed during the last earnings call, but it's within the historical range despite the large bankruptcy that affected our churn with about $480,000 of MRR. That was the bankruptcy we talked about during the last earnings call. Our net installs at $1.2 million continues to imply a 3% growth rate, which is below the 6% to 8% target, and we'll talk about what we're doing to close the gap.

The Fiber Solutions business and Colo are both strong fundamentally, and where we're seeing a little bit of lag is in our Transport and Enterprise Networks segments. We are lowering