Network and facilities expense for the third quarter of 2016 was $65.8 million, or 66.2% of revenue, compared to $34.9 million, or 54.8% of revenue, for the third quarter of 2015.  The $30.9 million, or 88.5% increase in network and facilities expense was primarily due to an increase in traffic and the costs associated with provisioning transport capacity due to traffic volume growth. The cost as a percent of revenue increased during the three months ended September 30, 2016, as a result of an increase in the costs we pay to third parties to terminate certain traffic.

Combined operating expenses consisting of Operations, Sales and Marketing, and General and Administrative expenses were $15.3 million, or 15.4% of revenue for the third quarter of 2016, compared to $13.3 million, or 20.9% of revenue for the third quarter of 2015.  The $2.0 million, or 15.0% increase in operating expenses was primarily due to higher professional fees, including litigation fees, as well as higher employee related costs resulting from additional headcount necessary to grow our business. 

Depreciation and amortization expense was $3.8 million for the third quarter of 2016, or 3.8% of revenue, compared to $2.9 million for the third quarter of 2015, or 4.6% of revenue.  The increase in depreciation and amortization expense for the third quarter 2016 was due to the significant increase in the property and equipment asset base necessary to accommodate the growth in traffic.

Net Income in the third quarter of 2016 was $9.4 million, compared to $8.3 million for the third quarter of 2015. 

Adjusted EBITDA (a non-GAAP financial measure) in the third quarter of 2016 was $19.1 million, an increase of 13.0% or $2.2 million, from $16.9 million for the third quarter of 2015.  See "Use of Non-GAAP Financial Measures" below for a discussion of the presentation of Adjusted EBITDA and reconciliation to net income.

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