EasyLink Services International Corp Announces Financial Results for Fiscal First Quarter 2008

Norcross, Georgia – December 17, 2007 – EasyLink Services International Corporation (EasyLink) (NasdaqCM: ESIC), a global provider of comprehensive messaging services and e-commerce solutions, today announced financial results for its fiscal first quarter 2008 which ended on October 31, 2007.
 
"We are delighted to report the first financial results for EasyLink Services International,” said Thomas J. Stallings, EasyLink’s chief executive officer. “The strong revenues, solid Adjusted EBITDA and healthy margins demonstrate execution by a team dedicated to investing in customer relationships, leveraging our long-term roadmap for operational excellence and delivering improved fiscal year 2008 financial results.”

Mr. Stallings continued, “The first quarter delivered many positives, including progress with the integration of the recently merged Internet Commerce Corporation and EasyLink Services Corporation, transition to a combined product portfolio that maximizes company value and movement toward a larger international presence. Based on the results to-date, we are optimistic about EasyLink’s future and reaffirm our guidance that fiscal year 2008 Adjusted EBITDA will be in the high end of its reported range of $17 million to $19 millions.” 

First Quarter Fiscal Year 2008 Results

• Total revenue was approximately $21 million with a combined gross profit margin of 68.5%. Total revenue for the first quarter excludes all EasyLink Services Corporation revenue prior to the August 20, 2007 merger. The product portfolios will be reported in two segments on an on-going basis. The two segments include On Demand Messaging and Supply Chain Services.

On Demand Messaging includes all of the fax, production messaging, document capture and management and e-mail services acquired in the merger. These services facilitate the sending and receiving of documents through the EasyLink network, enabling organizations to achieve significant savings in telecommunications costs, improvements in productivity, and enhanced compliance with regulations such as Sarbanes-Oxley, Graham-Leach-Bliley, HIPPA, and the EU Data Protection Act. Revenue from the On Demand Messaging segment was approximately $9.5 million, which represented 45% of total consolidated revenue and delivered a gross margin of 68%.

Supply Chain Messaging includes all of the electronic data interchange (EDI) products and services previously offered by the company combined with all of the EDI  products and services and telex services acquired in the merger. These products and services enable the electronic exchange of mission critical documents such as invoices, purchase orders, shipping notices and bank wire transfers between business partners across the globe. Revenue from the Supply Chain Service segment was approximately $11.5 million, which represented 55% of total consolidated revenue and delivered a gross profit margin of 69%.

• Net loss for the first quarter was approximately $2.06 million or $.09 per share.

• Adjusted net income for the first quarter ended was approximately $2.1 million or $0.10 per share excluding a one-time non-cash equity charge of $930,000, an $768,000 accrual for prepayment penalties on a repayment of the company’s outstanding convertible debt to be made in December, and a non-cash interest expense of $2.7 million for accretion of the beneficial conversion feature.

• EasyLink intends to focus on Adjusted EBITDA (EBITDA that includes non-cash compensation expense) as a measure of the Company’s performance in the future as it is a better measure of the Company’s performance than net income because it excludes ongoing non-cash charges. Adjusted EBIDTA was $4.8 million.

The first quarter results are not indicative of future quarter results as the result of the exclusion of the revenue earned by EasyLink Services Corporation earned prior to the August 20, 2007 merger, the inclusion of certain expenses related to merger accounting and the creation of a $22.5 million beneficial conversion feature as a result of the accounting treatment of the merger financing that will be accreted into expense as interest expense over the life of the underlying convertible notes.

EasyLink provides adjusted net income, adjusted earnings per share and adjusted EBITDA in this press release as additional information regarding our operating results. The measures are not in accordance with — or an alternative for — generally accepted accounting principles (GAAP), and may be different from non-GAAP net income, non-GAAP earnings per share and non-GAAP EBITDA measures used by other companies. EasyLink believes that this presentation of adjusted net income, adjusted earnings per share and adjusted EBITDA facilitates investors’ understanding of our historical operating trends, because it provides important supplemental measurement information in evaluating the operating results of our business, as distinct from results that include items that are not indicative of ongoing operating results, and thus provide investors with useful insight into our profitability exclusive of unusual adjustments. This release should be read in conjunction with our Form 8-K earnings release filing for the quarter ended October 31, 2007.

Investor Conference Call

An investor conference call is scheduled to discuss EasyLink Services International Corporation’s first quarter fiscal year 2008 results. The conference call will begin at 10:00 a.m. ET on Thursday, December 20, 2007. 

The audio portion of the meeting will be accessed by dialing 800-289-0743 (US) and 913-312-1375 (International). This investor conference call will also be available for replay on the Company’s websites at www.easylink.com or www.icc.net.

About EasyLink Services International Corporation
EasyLink Services International Corporation (EasyLink) (NasdaqCM: ESIC), headquartered in Norcross, GA, is uniquely positioned to deliver a variety of messaging services that range from simple web-based fax delivery for small businesses to sophisticated fax hosting, tailored corporate e-mail messaging, EDI business-to-business exchanges, specialized Telex protocol transmissions for marine and finance industries, and so much more. With over two decades of servicing customers around the globe, EasyLink has established a proven track record for providing effective, reliable and secure communications. For more information on EasyLink, visit www.easylink.com or www.icc.net.

Except for the historical information contained herein, this press release includes forward looking statements which are subject to a number of risks and uncertainties, including the risks and uncertainties associated with rapidly changing technologies such as the Internet, the risks of technology development and the risks of competition. Actual results could differ materially. For more information about these risks and uncertainties, see the SEC filings of EasyLink Services International Corporation.