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EasyLink Services International Corporation Announces Fiscal Third Quarter 2010 Financial Results

EasyLink Services International Corporation ("EasyLink" or "Company") (NasdaqCM: ESIC, www.easylink.com), a global provider of comprehensive messaging services and e-commerce solutions, reported fiscal third quarter 2010 revenue of approximately $20.6 million, operating income of approximately $3.3 million, net income of approximately $2 million, earnings per share of $.06 per share, and adjusted earnings before income taxes, depreciation and amortization (“Adjusted EBITDA”) of approximately $5.9 million.

“I am extremely proud of the results turned in by the EasyLink team this quarter,” said Tom Stallings, CEO of EasyLink. “We continue to operate in a turbulent worldwide business environment and yet our team held our revenues steady while reducing our costs and expenses resulting in 28.5% Adjusted EBITDA margins.”

Financial Review

Revenue for the third quarter of fiscal 2010 was approximately $20.6 million compared to $21 million in the third quarter of fiscal 2009. We experienced another quarter of growth in our enterprise fax business, but overall revenue slightly declined due to lower volumes in our telex and other messaging services businesses. Gross margin was 73.2% in the third quarter of 2010 which is compared to 69.1% in the third quarter of fiscal 2009. Gross margins are expected to remain in the 70% to 72% range for the rest of the fiscal year.

Total revenue for the nine-month period ended April 30, 2010 was approximately $61.5 million compared to approximately $64.7 million for the first nine months of fiscal 2009. The absence of recessionary affect on revenue in the first quarter of fiscal 2009 combined with the continuing reduction in telex volumes contributed to the year-over-year decline in revenue. Gross margin for the nine months was 71.9% compared to 70.6% for the first nine months of fiscal 2009.

On Demand Messaging revenue for the third quarter of fiscal 2010, which includes fax, production messaging, document capture and management and e-mail services, was approximately $10.4 million compared to approximately $10.7 million in the third quarter of fiscal 2009. On Demand Messaging gross margin was 71.8% in the third quarter and represented 50.7% of total revenue. Supply Chain Messaging revenue for the third quarter of fiscal 2010, which includes electronic data interchange (“EDI”) products and services and telex was approximately $10.2 million compared to approximately $10.3 million in the third quarter of fiscal 2009. Supply Chain messaging gross margin was 74.7% in the third quarter and represented 49.3% of total revenue.

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