EasyLink Services International Corporation (ESIC)

F3Q10 (Qtr End 04/30/2010) Earnings Call

June 4, 2010, 8:30 a.m. EDT


Andrew Kaminsky – Investor Relations

Thomas Stallings - Chief Executive Officer

Glen Shipley - Vice President, Chief Financial Officer and Secretary



Good morning, and welcome to the EasyLink Services International Corporation's fiscal 2010 third quarter conference call. If you do not have a copy of the earnings release, you may access it through the investor relations section of the Company's web site at Easylink.com.

This call is being recorded for future playback and will be available later today in the events and presentations tab in the investor relations portion of the Company's Web site.

I would now like to turn the call over to Andrew Kaminsky for opening remarks.

Andrew Kaminsky

Thank you Mary. Good morning and thank you for joining us. Joining me today is Tom Stallings, EasyLink's Chief Executive Officer, and Glen Shipley, EasyLink's Chief Financial Officer.

Please note that during this conference call, we may make forward-looking statements regarding future events or financial performance and outlook that are based on information currently available to management. You are cautioned that any forward-looking statements are not a guarantee of future performance and are subject to a number of uncertainties and other factors which could cause the actual results to differ materially from those currently expected.

For a more detailed description of factors that can cause such a difference, please see EasyLink's filings with the Securities and Exchange Commission. In providing forward-looking statements, the Company does not intend and is not undertaking any duty or obligation to update these statements as a result of new information, future events or otherwise. I refer you to the documents that EasyLink Services International Corporation files from time to time with the Securities and Exchange Commission, particularly the Company’s annual report on Form 10-K for the fiscal year ended July 31, 2009, filed with the SEC on October 29, 2009, including the risk factor discussion in Item 1A of that report and the risk factor discussion in Part II, Item 1A of our subsequent quarterly reports on Form 10-Q. These documents contain and identify important factors that could cause actual results to differ materially from those contained in our projections. EasyLink Services International Corporation undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes in future operating results.

Also note that all dollar figures and percentages are approximations and that the detailed reconciliations of GAAP to adjusted results can be found in the press release we issued yesterday that is posted on our Web site. After we review the third quarter results, we will open the lines for questions.

At this time, I would like to turn the conference call over to Tom.

Thomas Stallings

Thank you, Andrew. Good morning and thank you for joining us today. I am going to provide an overview of our third quarter accomplishments and financial results, comment on our 2010 outlook and then Glen will make some brief remarks before we take any questions that you may have.

As many of you may have read, last month we redeemed our series E preferred shares. Glen will discuss the redemption in greater detail later in the call. However, I would note the continued support of Easylink demonstrated by SunTrust and our lender group as evidenced by their funding of an additional $5 million under the accordion feature of our term note, which was used to redeem the series E preferred.

Turning to the quarterly overview, we are very pleased with our third quarter results and continue to be enthusiastic about the rest of our fiscal year. Our sales and marketing team have continued to aggressively market our products and services around the world and are focusing our efforts on building our pipeline in a number of sectors such as healthcare and financial services. Additionally, we are taking advantage of the sale and consolidation of some of our larger EDI competitors and refocused our efforts on winning over new accounts.

During the third quarter we added twenty-one new names to our roster of premier clients with key customer wins at Commerzbank AG, Union Bank of California, Faurecia Services Group, Mizuno USA and Mrs. Fields Companies to name a few. These twenty-one new accounts represent $815,000 in additional annual recurring revenue.

As we mentioned last quarter, our continued focus on superior customer service has allowed us to expand our presence within our existing larger accounts with additional annual billings of $735,000 This further demonstrates our status as a trusted partner providing tangible value to our client’s businesses.

In order to build upon our product offerings, we signed a strategic agreement to become a private label reseller with DataMotion. This agreement will allow us to accelerate our deployment of a secure e-mail solution that automates the transmission of encrypted information without requiring additional capital investments by us or our clients.

As we have said previously, our software-as-a-service model is very compelling to companies as they strive to create more efficient operations and drive additional profitability within their own organizations. The continual increase in compliance and the necessity for security grow on a daily basis throughout the global enterprise. As a result, the value proposition of our products and services increase and become more integral for our clients to cost effectively and securely communicate with their customers, employees and trading partners.

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