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TW Telecom (NASDAQ:TWTC)

Q4 2013 Earnings Call

February 12, 2014 11:00 am ET

Executives

Carole Curtin

Larissa L. Herda - Chairman and Chief Executive Officer

John T. Blount - President and Chief Operating Officer

Mark A. Peters - Chief Financial Officer and Executive Vice President

Analysts

Michael McCormack - JP Morgan Chase & Co, Research Division

Scott Goldman - JP Morgan Chase & Co, Research Division

Brett Feldman - Deutsche Bank AG, Research Division

Frank G. Louthan - Raymond James & Associates, Inc., Research Division

Colby Synesael - Cowen and Company, LLC, Research Division

Simon Flannery - Morgan Stanley, Research Division

Barry McCarver - Stephens Inc., Research Division

Michael Rollins - Citigroup Inc, Research Division

Donna Jaegers - D.A. Davidson & Co., Research Division

Michael J. Funk - BofA Merrill Lynch, Research Division

Barry M. Sine - Drexel Hamilton, LLC, Research Division

Operator

Good morning, and welcome to tw telecom's Fourth Quarter 2013 Conference Call. Today's call is being recorded. With us from the company are: Chairman and Chief Executive Officer, Ms. Larissa Herda; President and Chief Operating Officer, Mr. John Blount; and Executive Vice President and Chief Financial Officer, Mr. Mark Peters.

At this time, I will turn the call over to Carole Curtin Jorgensen, Vice President of Investor Relations. Please go ahead.

Carole Curtin

Welcome to our conference call. We're pleased to have you join us today. To review our results for the quarter, please visit our website at www.twtelecom.com, where you can find our press release, supplemental quarterly information and SEC filings.

Before we start, I would also like to draw your attention to our Safe Harbor statement included in our supplemental materials, which you can find on our website. Information on quarterly earnings materials in our discussion today contain statements about expected future events and financial results that are forward-looking and are subject to risks and uncertainties. A discussion of those factors that may cause our results to differ materially from our expectations is contained in our filings with the SEC under Risk Factors and elsewhere available on our website.

I'd also like to point out that our earnings materials and discussion contain certain non-GAAP financial measures. You can find reconciliations between the non-GAAP and GAAP financial measures in the materials on our website.

Now I'm pleased to introduce tw telecom's Chairman and CEO, Larissa Herda.

Larissa L. Herda

Thanks, Carole. Hi, everyone. Thank you for joining us today. We had a great year as we close 2013 with strong operational, financial and strategic results. Today, I'm going to spend a bit of time on the highlights of our accomplishments as well as talk about our vision for this year. During 2013, we accelerated our efforts to further position ourselves for future enterprise demand by delivering greater innovation and market leadership through our new product development and increase customer opportunities through our sales and other growth initiatives, which led to higher sales or bookings to drive future revenue.

At the same time, we also continue to deliver strong financial results, optimize our balance sheet, strategically execute our capital allocation plan and return value to our shareholders.

Now let me turn to a few of our financial highlights. For the year, we achieved solid total revenue growth of 6.4% as we extended our track record to 37 consecutive quarters of sequential top line revenue growth. We also delivered a healthy 35.3% Modified EBITDA margin, even after absorbing the cost from our growth initiatives. And we generated $36 million of net income or $64 million after excluding debt extinguishment and certain other costs.

As we turn to our balance sheet activities, we were very active and effective. We took advantage of the attractive debt market and opportunistically refinanced over 70% of our debt from 2012 and achieved more favorable rates and terms. As part of our refinancing, we settled our convertible debt in a very shareholder-friendly manner by utilizing our cash and, therefore, avoided 20 million shares of potential equity dilution.

To return value to our shareholders, we executed $416 million of share repurchases for the year, or nearly 10% of our shares outstanding at the end of 2012.

Summing up our buyback and convertible debt, we invested nearly $1 billion of cash, or about 30% of our total assets, as of the end of 2012, while still maintaining a strong balance sheet.

Turning to our market leadership. 2013 was one of our most innovative years ever, as we upgraded our core products and advanced our innovative next-generation capabilities. We delivered customer solutions that provide a more automated environment, position enterprises closer to their critical applications and deliver greater choice and flexibility in managing their networks. We introduced many new, unique products and solutions this past year. So let me highlight just 3 of those that contributed to our delivery of automation, applications connectivity and choice and flexibility, including first, for a more automated environment, we launched our Alerts Driven Dynamic Capacity capability over Ethernet that allows a network to automatically flex up bandwidth, real-time, based on preset customer parameters, without manual intervention. In fact, we just received the Internet Telephony Product of the Year award, recognizing our Alerts Driven Dynamic Capacity.

Second, we positioned customers closer to their applications with the launch of our new, next-generation solutions, like eLynk Express. This solution provides a flexible Ethernet connection that connects businesses to the data center, but then goes one step further than other network providers, by taking their connection through the front door and all the way to the applications environment in the cloud. This provides critical technical integration and streamline processes that makes consuming the cloud environment as easy as accessing the Internet, but instead, with secure, elastic Ethernet services.

And third, we're providing greater choice and flexibility as we demonstrated with our Constellation Platform prototype. With these leading-edge capabilities, customers will be able to activate a new network connection from their enterprise environment to and through the data center exchanges, much like our eLynk Express does today. But with the Constellation Platform, they'll be able to go all the way to many cloud environments in less than a minute with a simple click and connect. Once launched, these capabilities will give customers access to the network and also to their mission-critical and best-of-breed applications on an elastic, dedicated, secure and reliable private network.

These are just 3 -- 3 examples of how we're positioning the business, to set enterprises up for greater choice and flexibility and for better, faster and easier solutions.

Now let me give you a quick recap of some of our other growth initiatives for the year. We grew our sales force by nearly 16%, exceeding our original plan of 10%, as we targeted and expanded many of our key sales areas to capture the growing demand and opportunities that we are seeing in the marketplace.

Also, in early November, we announced a strategic market expansion to 5 new markets and 27 existing markets, which we expect will increase our metro footprint by about 17%, as well expand our regional fiber footprint. This is a very targeted opportunity to rapidly increase our market density to drive additional revenue growth and greater cash flow, which John will talk about in a moment.

Before I hand the call over, let me talk about one additional financial metric, our sales or bookings. We achieved strong bookings growth in the fourth quarter, as sales grew both sequentially and year-over-year. In fact, we experienced strengthening in our bookings for the last 4 months of the year, suggesting the beginning of a positive trend going into 2014, which we believe is the direct result of our 2013 investments. Because of our investments in growth initiatives, our strong market position and leadership and our positive sales trends, we expect our full year revenue growth rate for 2014 to exceed that of 2013. And while there are no hockey sticks in this business, we believe that we've done all the right things for strong, multi-year revenue trends and that we're just at the beginning that cycle.

So with that, I am going to hand the call over to John, to update you on our market expansion and then I'll be back later to talk further about our plans for 2014. John?

John T. Blount

Thanks, Larissa. Today, I want to spend some time providing you an update for our strategic market expansion that we announced in early November, including: first, activities to integrate and activate the network; second, how we expect to sell into these additional market opportunities; and third, our financial expectations for this market expansion. As a reminder we strategically selected these markets and fiber routes because of the opportunities to leverage our proven investment model, our national network and Ethernet leadership and our integrated scalable platform to rapidly roll out products and services across our expanding national footprint, which sets us up well for success.

Let's start with our activities to integrate and activate the new network. So as we talked to you last, we've been preparing to turn up these markets for new services. And I'm pleased to say that our network deployment is on track. And while there are a lot of details and tasks in getting the deployment underway, the fact is, this is where we excel. It's who we are and we do it all the time.

So let me give you a little bit of color around our integration plans. This is a complex process that includes designing detailed engineering plans driven by our field and central office planning teams, implementing market-by-market network integration plans that include thousands of slice points, engineering our new market site locations, completing hundreds of regulatory filings, grooming traffic onto our acquired regional routes, coordinating our integration plans with marketing promotions and pre-selling efforts and integrating our new local and regional route miles into our sales and maintenance databases and tools. And that's just a partial list of the many activities that need to be coordinated in a complex acquisition of this size. However, despite all those complexities, we're planning to turn up all new routes and markets throughout the course of this year.

As the President and COO, I believe that this is the ideal acquisition and investment as it comes with all of the opportunities of an acquisition, but with few of the integration headaches. And we expect by year end, to fully integrate our networks, technology, data and tools, in order to fully provide our advanced product offerings to our new expanded reach.

This takes me to my next topic of how we expect to sell into these opportunities. We have a very coordinated effort to plan, engage and leverage our resources to make this a successful expansion. Our sales and marketing machine is driving our integration plan to identify new demand, market by market, working to anticipate and capture opportunities as soon as markets come online, including designing promotional plans and leveraging their various sales channels. This includes: Marketing to over 29,000 existing customers to leverage our embedded base; upselling our multi-market customers, that today drive the majority of our enterprise revenue; pursuing data center opportunities in high-density destinations that we could not reach before; and responding to more RFPs within our expanded network reach by leveraging our industry-leading portfolio and future product road map. And we expect to do all this by utilizing our powerful, experienced and proven sales organization with our direct and indirect sales teams.

We are very pleased with the initial conversations that we're already having with customers. I believe we have a terrific plan to jump-start this expansion.

Next, let me summarize our financial expectations for this strategic market expansion. As we shared with you last quarter, for 2014, we anticipate investing about $50 million of CapEx to integrate and activate our expansion fiber. We're also hiring sales and operational personnel to support the project in advance of the incremental revenue growth we expect in 2015. And we continue to expect to generate sales or bookings in the second half of the year, followed by revenue contribution 1 to 2 quarters later.

As we go into 2015, we expect the revenue from this market expansion to gradually ramp. And because of the efficiency of this expansion, we continue to expect to generate positive incremental Modified EBITDA in 2015 from this project. We couldn't be more excited by the strategic market expansions. Our operations and engineering teams are highly engaged. Our sales personnel are chomping at the bit and we expect to make significant progress in the next several months.

So I look forward to coming back and giving you another update.

With that, I'll turn the call over to Mark, who will walk you through our results. Mark?

Mark A. Peters

Thanks, John, and hello, everyone. Today, I'm going to review our full and fourth quarter financial results, full year and fourth quarter financial results, discuss our capital allocation plan, put some color on margin and provide some guidance on CapEx.

Let me start with our financial highlights for the full year. We delivered 6.4% total revenue growth, driven by our 14.1% growth in data and Internet services, continuing our track record of consistent results, including sequentially growing revenue every quarter for more than 9 consecutive years.

We also achieved 2.2% growth in Modified EBITDA and a healthy 35.3% Modified EBITDA margin, even after absorbing the significant investing in our growth initiatives.

Moving to the bottom line. We reported net income of $36.5 million or earnings of $0.25 per share. When we -- when excluding debt extinguishment and compensation and retirement costs, net of tax, we delivered $64.4 million of net income or earnings of $0.44 per share.

Moving to our fourth quarter results. We delivered solid overall top line revenue growth, healthy margins and a strong bottom line.

Turning to a few of the highlights for the quarter. We grew total revenue for the fourth quarter, 5.9%, year-over-year, ^^ or 6.5% when excluding a $2.2 million favorable customer settlement from the prior year, reflecting our continued ability to grow our business and take share.

Our data and Internet revenue, which reflects the growth engine of our business, now represents 56% of our total revenue and grew 13.1% year-over-year, or 14.3% excluding the prior-year customer settlement. We also delivered a 35.2% Modified EBITDA margin for the quarter, which compares to 36.6% in the same period last year. The vast majority of the year-over-year margin change is due to headcount-related costs associated with our growth initiatives, which impacted both operating and SG&A costs.

Moving to the bottom line. We generated net income of $15.4 million, reflecting earnings of $0.11 per share.

Next, I want to turn to a few thoughts about our capital allocation. First, let's start with our growth initiatives. A year ago, we talked to you about making both operating and capital investments to accelerate our revenue growth rate. This included growth initiatives to increase our network reach to serve greater market opportunities, ^^ expand sales resources and increase our product development for higher future revenue growth and advance our business automation for greater efficiencies.

As we enter 2014, these initiatives are on track and are contributing, our bookings are strengthening, and that's why we believe we can deliver a higher total revenue growth rate in 2014.

Secondly, we announced our strategic market expansion in November, which is an incremental opportunity to drive additional growth. Our plans for this initiative -- and to be clear, this is an addition to the other growth initiatives we've been talking about -- is to further contribute to our revenue growth in 2015 and beyond. This is just another example of being opportunistic and looking to drive sustained, long-term growth.

Clearly, we're seeing a lot of market opportunities to grow our business and we're being very thoughtful about our investing. Because of our strong business model and disciplined financial decision-making, our capital allocation plan allowed us to invest in business initiatives, return value to shareholders through share repurchases and maintain our balance sheet flexibility.

For 2014, we expect to allocate capital again to these areas and continue to be disciplined and deliberate in our approach, as we were this year.

Now let me turn to our citations for 2014 Modified EBITDA margin. As the result of our intentional investing in these initiatives for accelerated top line growth and ultimately higher cash flow, we expect continued Modified EBITDA pressure for 2014. As we shared with you before, we're in an investment cycle to drive higher sustained revenue growth and these investments lead the acceleration of our revenue growth rate. So naturally, the investments for our 2013 growth initiative, as well as our strategic market expansion, will continue to pressure margins in advance of accelerating revenue. These investments are primarily for sales and operational-related headcount. And as a reminder, payroll taxes will reset at the beginning of the year, which we anticipate will have about a $5 million first quarter sequential cost increase and we expect to have impact to the client throughout the year.

We're already seeing the traction from our 2013 growth initiatives in our increased bookings that we believe will increase our 2014 revenue growth rate. And likewise, we expect that our strategic market expansion will provide incremental contribution toward revenue growth in 2015.

So 2 powerful growth initiatives, both of which we expect will drive great opportunities and strong returns.

Looking forward, we expect the Modified EBITDA margin will begin expanding again as we start generating consistently higher top line growth. While it won't be a straight-line acceleration in either revenue or margin expansion, we're confident in our approach and we are on track with our growth plans.

Now let me turn to our CapEx guidance. Here's some color regarding our planned investing. First, our CapEx guidance for 2014 is $390 million to $410 million, excluding our strategic market expansion and we expect a majority to be for success-based capital, as well as investments to continue to expand our product lineup, network reach and IT and systems development.

In addition, as John mentioned, we're planning for about another $50 million of incremental CapEx to support the integration of the strategic market expansion. As a result, our combined CapEx guidance totals $440 million to $460 million for the year.

Setting aside our strategic market expansion, our CapEx spending has been on a very steady trend as a percentage of revenue, even as we bring transformational products to market, which speaks to our consistent approach in our ongoing capital efficiency, as we leverage the newest infrastructure to support our latest, next-generation product offerings.

Turning to our balance sheet. I want to quickly recap some of our highlights for this year. As Larissa mentioned, we refinanced over 70% the prior year in debt, as we opportunistically tapped a favorable debt market. As a result of our financing activities, we've pushed out our next maturity all the way to 2020, with our other maturities extending through 2023. We also executed $416 million of share repurchases in 2013 and we coupled that with the cash we used to settle a convertible debt. We invested nearly $1 billion in cash, or 30% of our total assets at the end of 2012 for those initiatives, while maintaining a strong balance sheet.

We believe that we executed a convertible debt in a very shareholder-friendly manner, by settling with 100% cash, thereby avoiding 20 million shares of potential dilution.

In summary, we actively optimized our balance sheet in 2013, as we repurchased 10% of our shares, avoided up to 13% of potential dilution as we used cash to retire the convert and we achieved even more favorable terms and rates as a result of our balance sheet activities.

In closing, I want to point to our incredibly consistent and strong performance over the years. That includes more than 9 years of consecutive, sequential, quarterly total revenue growth; more than 8 years of quarterly positive lever-free cash flow, including transaction or deal costs and we've maintained a strong balance sheet while creating a great set of assets.

As a result, we're in a great position to grow the business and drive innovation and market leadership, while continuing to return value to shareholders, all complementary activities to drive long-term value.

With that, I'll hand the call back to Larissa.

Larissa L. Herda

Thanks, Mark. All right. Well, now I'd like to provide you with an overview of our vision for 2014. So a year ago, I talked about to you about being a disruptive force in the industry by changing the game and challenging enterprises' operating paradigm through our ongoing innovation. And since then, we've rolled out many new customer solutions, as well as demonstrated our Constellation Platform prototype to the market, which previewed a new consumption model for enterprises.

Our vision for 2014 starts with the pulse of our business, which is our sales team. So traditionally, our salespeople have been selling our innovative network solutions, but what's starting to happen now is that our sales teams are bringing new best-of-breed IT solutions to enterprises by combining our own innovative network capabilities and solutions with the capabilities of our partners, which are leading data centers and world-class applications providers. So to be clear, we're not directly providing data center space or cloud applications, instead we're working with these leading industry players and together, we're developing very strong and very unique solutions that customers had never before seen in this type of integrated fashion.

Essentially, we're combining our strength with the strength of our partners. And as a result, we're making services better, faster and easier for our partners' customers to consume, as well as our own customers, while delivering these combined services in a secure, reliable and dedicated fashion, making this a win-win situation. These relationships put us in the middle of enterprise customers' increasingly complex world, as we bring customers a best-of-breed ecosystem. And we expect to do this with seamless and immediate services because of our integrated platform and the new capabilities we're layering on top of this platform to provide enterprises choice and flexibility.

We've recently talked about 2 of these powerful partnerships, including our relationship with Bluelock, where we're delivering hybrid cloud solutions by combining their recovery-as-a-service cloud capabilities with our innovative network solutions. Then the other relationship is with Amazon, where we are combining their AWS Direct Connect Program with our innovative eLynk Express Network Solutions that takes enterprises to and through the data center directly to the application, which no other network provider is doing today. I fully expect to be talking about more of these partnerships in the future.

For 2014, we expect to build on our powerful existing product lineup, as we continue to serve enterprises and partner with industry players. This will include many new capabilities and solutions. Some will be core services and some will reflect new innovation. Some will be partially automated and some will be fully automated. But make no mistake about it, we will raise the bar for the industry. We're doing that by continuing to evolve our business model.

The competitive telco industry tends to be about doing a better job than the competition. However, tw telecom has always been a bit different, by leading with innovation, like we did with the Ethernet many years ago by taking an emerging technology and leading the market with our own innovation around that technology. And now, once again, we're leading the industry. However, this time, we've created the Intelligent Network in our Constellation Platform to address rapidly changing, dynamic business needs. And with our new capabilities and evolving partnerships, we're inventing a new way for customers to drive their businesses by leveraging their network through seamless solutions, which is literally changing the way they think about and consume networks. So in essence, we've gone from consuming technology to creating technology.

Everything that we've been talking to you about for the last several years and everything that we've done has been a foundational step to get us to this point. And that includes our network reach, our innovative technology, our software-driven network and our integrated operating platform. This is all part of our broader vision of bringing better, faster and easier solutions to customers as we continue to innovate and create market differentiation.

So with that, we'll turn it over to Q&A. But first, I'd like to introduce Mike Rouleau, our SVP of Business Development and Public Policy, who'll be joining us for Q&A session.

With that, we'll now take your questions.

Question-and-Answer Session

Operator

[Operator Instructions] And we'll take our first question from Mike MacCormack with Jefferies.

Michael McCormack - JP Morgan Chase & Co, Research Division

Maybe just make a quick comment regarding the sales force, looks like you ramped up a bit, maybe a little harder than we anticipated in the fourth quarter. Is that sort of in advance of some of the market launches? And then secondly, maybe just a quick comment regarding cable competition, just to see if you're seeing any sort of movement into a higher product offering by those guys?

Larissa L. Herda

So I'm going to let John answer the sales question. I am going to say -- and with -- and why we had more -- we hired more people last year than we had originally planned. But I will say it's not in anticipation of the market launch, but those people are in the process of getting hired. You need to -- you don't want to hire them to soon. You want to make sure you hire them in advance of networks being turned up to generate interest in the marketplace. But -- and that process is actually in place right now. But John, why don't you talk a little bit about the sales force?

John T. Blount

Sure. I think when you talk about the size of the sales force, you have to first step back and look at how we hire our salespeople and what the philosophy behind that is. First and foremost is, it's not our intention to go into each and every market and to flood them with salespeople to see how many of them stick. What we do is hire salespeople to go after specific opportunities. If we have a module that we've developed, we need a salesperson that is -- in healthcare, for example, we want somebody who can speak health care, somebody who understands that environment. So as we -- as you look at the numbers of our sales force and the increase, I think it's a direct reflection of what we're seeing out there in market opportunities. And as we -- we really don't limit the number of salespeople that we have in our markets, but we do make them, justify them by telling -- letting us know where the opportunity is. And so as we see opportunity, we're going to fund that with salespeople. So I think -- the second dynamic, that's a pretty exciting dynamic for us right now, is that we're seeing the quality of salesperson coming through our door, it's really increasing. As you look at our lineup of new products and services, well, salespeople go to where they can see themselves being successful. And today, we're seeing some really talented salespeople walk through the door, wanting to sell tw telecom services. So it's a good time for us to capture the opportunity. So...

Larissa L. Herda

So Mike, just to add something on to that. One of the other things that's happened over the course of this past year is, we've deployed some very unique products. And as a result, those products have changed the conversations dramatically and we are being invited into bigger and bigger customer deals that we really didn't have access to before. And also because of the partner relationships that we've been creating, who are also very excited about this unique innovation that we're doing that they're not seeing from any other carrier, we're also getting invited into a very -- very unique opportunities as well. So bigger and better. And just ones that we wouldn't have access to. So for us, we had it targeted 10% and that was a good target. But we didn't see any reason why we would want to stop as we were finishing up the year. There were lots of great candidates and lots of great opportunities. So we're always opportunistic when it comes to those things.

Scott Goldman - JP Morgan Chase & Co, Research Division

So when you think about the 2014 market expansion, how should we be thinking about sales as we look into the year?

Larissa L. Herda

So we're going to lay -- the market expansions are going to come up over the course of the year. And so you will start seeing them, come up probably -- either -- we aren't really giving any exact time frames, but let's just say we start sometime over the summer. We start to actually turn up networks. Maybe we'll turn up a few earlier. So we'll want to start hiring -- we're actually starting to hire people right now. We've opened up headcount to actually start the hiring process to presell in those markets. But one things to understand about how we do market -- new markets, and this has been traditionally the case in our business and it's absolutely proving to be the case now, we have over 650, 670 salespeople in all of our other markets. Well, they are bring us opportunities every single day in these new markets. So we're -- they're essentially being kind of presold. And so that process is already happening when our salespeople -- most of what our salespeople sell is multi-city applications. And that gets a little bit to your cable company question. Most of what we're doing are multiple city, multiple site-type of deals. And so, the markets that we're going into and the markets that we're -- the expansions that were doing in our existing markets, we have customers that already want to go to those places. So that really helps in the sales process. But from a cost standpoint, as you're layering in, the additional headcount, you should start layering that in, really, probably, towards the end of this quarter on to the rest of the year. And then we'll -- some the markets, we won't be turning up until the end of the year. We're prioritizing, as you would expect, the markets where we're seeing some immediate revenue opportunities. So that's what we're doing. So it's kind of happening in a lot of the markets, so it's a good thing. But these are the physical limitations to how quickly you can turn up these networks. So they're going up fast, though. This is a, this is going to be -- for this type of an expansion of footprint, this is a -- this is a really swift deal, in terms of getting it all up and running and the whole integration around it has been really well done. So on your question on cable companies and keeping in mind the customers that we target, of course, we do sell to smaller business customers, too. We'll sell to anyone who's in our building and that fits our profile. But the majority of what we're selling are multi-city applications, so, and today, with the exception of maybe some regional types of deals that some the cable companies might be putting over their network in some of the tighter regions, we really don't see them as a competitor for these larger, multi-city complex deals that we're doing. But they're there. I mean, the cable companies are there. They're going after the smaller- and medium-sized businesses, especially if the business is in just one market. It's something that they're absolutely going after. I don't see that it's changed in the past year, it just has been very consistent competition coming from the cable companies.

Operator

Then we'll go next to Brett Feldman with Deutsche Bank.

Brett Feldman - Deutsche Bank AG, Research Division

I was hoping to get a little more color. In previous quarters, you talked about how bookings were up, but they were not necessarily up at the level necessary to drive accelerated revenue growth. You now seem more confident. Is that because your bookings actually reached a level where you can clearly see that revenue growth will accelerate and that's why you've given that guidance? Or do you simply see that they're on a clean trajectory to be there and so you have enough confidence to give that type of an outlook?

Larissa L. Herda

Both. We -- you know us. We're pretty conservative in giving exciting, long-term outlooks. So we felt like the 4 months of sales were consistent enough and at a consistently high enough level at the end of the year that if we can continue on that trajectory, going into this year, that we're on the right track. And we can see a direct correlation with the acceleration of our investments last year in doing that. So things are -- it's about -- it's what we thought. And when we talked about the year -- the beginning of the year last year, we were talking about starting to see the sales, increased sales, towards the end of the year that would help us into 2014. It couldn't have turned out better, I guess, in -- in that regard.

Brett Feldman - Deutsche Bank AG, Research Division

And then just to follow up, if you don't mind. If you think about what's driving the improved bookings, how much of it is you have new products, so your sort of legacy sales reps have more they can sell, and so they're generating more? And how much of it is simply you have more bodies and they're ramping up and they're bringing more bookings in the door?

Larissa L. Herda

So I would say it's probably more tilted toward the products than anything else. The existing sales force having -- there were few products that we talked about in the past that we needed to do some things with that we made some really good modifications to over the course of last year and then there's, obviously, all the new products and the new discussions that are happening. When you -- I have to tell you Dynamic Capacity is probably one of the best sales tools we have because just talking about our ability to do something like that, it excites customers and knowing that what our roadmap is excites customers because they're not hearing it from anybody else. The new salespeople that we hired, we actually started the accelerated hiring at the end of 2012. Our ramping-up as we -- in a very nice fashion, as we had expected. The results from those salespeople we would expect to see in 2014 because it takes a full year to really get people -- and even then, they're not really a quota, right? I mean, this is a -- these are complex sales that we have people doing. Certain parts of our channel -- certain of our channels sell a bit faster. Like our indirect sales channel, they ramp up faster because they already have relationship. But our direct sales channel is doing well, they're on track. They're ramping up as we would expect, but they didn't really contribute that much to our revenue growth in the last 4 months.

Operator

And we'll go next to Frank Louthan with Raymond James.

Frank G. Louthan - Raymond James & Associates, Inc., Research Division

Great. So you're looking at a couple of quarters out after you booked the network. Can you give us idea of where you start to see revenue? How long until you get through with the full contracted run rate on that revenue? And can you give us an idea of sort of the upfront CapEx that's required? And then maybe a question for Mike, looking at some of the IP trials and the NPR and the set of the SEC, how would that impact you, both either positively or negatively, if we saw more conversions towards sales of IP?

Larissa L. Herda

So, Frank, let me just make sure I understand your question on the market expansion. You're trying to understand how revenue growth starts to grow once the network is up? Is that...

Frank G. Louthan - Raymond James & Associates, Inc., Research Division

Yes, so, I think Mark made a comment that you -- with -- looking at these bookings, you typically start to see the revenue 1 to 2 quarters out. So my question is you booked the revenue 1 or 2 quarters out, you're getting the sales coming in, is that at a full run rate, or is that 3 to 4 quarters out before you hit the full run rate for these? And then what sort of the CapEx trajectory between the booking and when you start to realize the revenue?

Mark A. Peters

Sure. So you're talking more about our increased bookings that we talked affecting in the year, correct?

Frank G. Louthan - Raymond James & Associates, Inc., Research Division

Yes. Sort of comment about that.

John T. Blount

So the bookings are up. And normally, that would take 1 to 2 quarters to actually get them installed. And then from the standpoint of when you see the full impact on -- if let's say on the lower end, it takes 1 quarter. So let's say, at fourth quarter, you get to the end of the first quarter to book it, you're not going to see the revenue lift till the second quarter. On the longer end, if it doesn't get installed for the end of the second quarter, you're not going to see it till the third quarter and beyond. So it will -- and again they vary a lot from whether it takes 60 days or 6 months to get them installed. So you'll just see them feather in throughout -- through the middle of next year, the increase in bookings that we spoke about.

Larissa L. Herda

Right. So what we would hope to see is a gradual increase in our revenue each quarter as time goes on from that process. And again, some of them are going to turn up probably midyear. No one city is going to make a difference. It's the combination of all of these markets that is -- and it's the volume of stuff that goes on across all these markets where it'll really move the dial.

Mark A. Peters

And then from a CapEx timing standpoint, again depending on the complexity of project, the complex project that has 100 sites that could take 6 months to install and the CapEx could be coming in throughout that 6 months before you see any revenue. But generally, you're going to see a period of time, whether it's 30, 60, 90 days before the revenue recognition, you'll see the CapEx coming in. Again, it varies, but you'll start seeing that coming in advance. And then another feature, components, when we talked about the cost side of it, is we pay the commission, then installation, then the commencement of billing. So then with the increased installations, then was the increased commissions as well.

Larissa L. Herda

So and understand, I just want to make sure people also understand, the $50 million of CapEx that we've talked about, is really integration CapEx. And then what happens is, you start adding buildings and customers on a success-based basis, right? So and that's all part of our CapEx guidance that we've given.

Frank G. Louthan - Raymond James & Associates, Inc., Research Division

Okay. And on the IP trials?

Larissa L. Herda

Okay, you want to...

John T. Blount

Okay, so on the IP trials, I think, at this point, we're still looking for a little bit of additional clarity on what's expected out of the trials and experiments. Clearly, doing a technology trial where we're exchanging voice-over-IP traffic, for example, is not something new to us. We've been working with media gateways and soft-switch equipment for nearly 15 years, right? And so we've got that deployed through our network. We know how it works. We've been offering services for our customers since 2006. So we understand what it takes for them to convert. We know how traffic is routed, 911 traffic is routed to the PSAP with IP. Those things aren't new and all that different for us. So we're still working through, I think, what a trial or experiment looks like. And it's going to take some time to work through that, as well as work through whatever real-world trial we do. So I don't expect that to influence our business for a good long time frame.

Larissa L. Herda

And, Frank, what's really happening here is that the large incumbents want to be deregulated from providing TDM services. And so there's going to be trials that are going to -- that they want to do to prove that it's no big deal. The reality is that it really is a big deal for a lot of different types of organizations, whether it's government organizations that rely on those lines. They're very interested in getting rid of the copper infrastructure, while a lot of people use copper infrastructure. There are consumer impacts is tremendous. So I think this is -- it's a good process. I think that a lot of people will learn a lot of things. There's a lot of cost associated with the conversion over to IP from the Lex standpoint, right? We're -- we've been there for a long time. So it's a bit of a -- it's different from our perspective, but there's costs that will have to be incurred, particularly by small businesses if they suddenly can't buy DSL or they can't buy a T1 and they're forced to buy Ethernet and they don't have enough bandwidth to really justify those costs. So it'll be very interesting to see, I think, how the whole process goes. But the question will be, really, we're going to have businesses, small businesses, absorb the cost of that kind of a transition. So I think it's going to be a delicate balance in making that kind of a transition. And by all means, we think it's good for everybody to use -- to move over to IP. But it takes time for -- and a lot of customers just aren't ready to do that.

Operator

And we'll go next Colby Synesael with Cowen & Company.

Colby Synesael - Cowen and Company, LLC, Research Division

Great. My questions have to do with costs and margins. I guess I'll start by saying I know that you historically not been explicit with what you think EBITDA margins will do on large part because your business is so predictable. But obviously, there's a few unique situations happening in 2014 that will make that more difficult. And really, the genesis of my questions, I'm trying to get a sense of, if you're expecting EBITDA margins to go down tens of basis points or potentially hundreds of basis points, as a result of some of the things that you're doing. So I guess, 2 questions specific to that, then you can obviously answer it however you like. Number one is, can you give us some color on how large of a sales increase you're expecting to make? You mentioned last year you expected to grow at 10%. You ended up growing at 16% that would obviously help on the SG&A line item. And then also, just broadly speaking, do you expect your gross margins to be up or down in 2014 versus 2013?

Mark A. Peters

Okay. Let me give that a stab. And you know, Colby, from our philosophy and guidance talk about trends in our business and -- because we're not a quarter-on-quarter business. You look at the long-term trends in our business and you're right, they're very predictable within a range. I mean, you look at our revenue or EBITDA, pretty narrow range actually when you look at it from any cut. So when we talk about margins, we kind of go back a year from now and we said because of our initiatives, we'd see some pressure on our margin. And you saw the results margins come in '13, the degree of the margins. And we're not giving guidance specifically on what the pressure is. But we're going see some additional pressure this year on the margins, for the -- both the strategic market expansion, as well as the continuation of the full year impacts of the initiatives and the -- particularly, the headcount we hired last year as we go into this year. So very -- we deliver great EBITDA margins. 2013, even with the pressure, we delivered great EBITDA margins. I expect the same in 2014 from EBITDA margin standpoint. Just we're investing for the right reasons for long-term growth, with the differentiation. And we're making the right decisions. So I'm not going give you a percentage of what we think they're going to be. There's going to be some pressure, but we also think then with us saying that we expect to see higher growth rates this year and once that recurring revenue compounds, exiting this year, we think then we have opportunities to sort of expand again too. So I know that might frustrate you a little bit that we're not giving you a specific number, but we don't want to manage to a specific number other than to say, we're going to invest in the right places for the right reasons to continue that 9 years of top line total revenue growth, not just a subset of a revenue growth, but total revenue growing so consistently. And we're setting ourselves up to continue that track record.

Colby Synesael - Cowen and Company, LLC, Research Division

Any color specifically on the questions about the ramp in sales or just gross margins?

Mark A. Peters

Not specifically. Some of the headcount we'll be adding will go into our -- will hit the gross margin. Largely around product some of the field expansions in the 5 new markets. And then I expect most of the impact will be on the SG&A side because of the increase in sales, the increase in commissions that support people around that. But we're not sizing this year specifically what the -- that count is going to be.

Operator

We will go next to Simon Flannery with Morgan Stanley.

Simon Flannery - Morgan Stanley, Research Division

Mark, you returned a lot of -- value to shareholders this year, the leverage is up in the mid 2s now. Is that sort of where you're comfortable? Or do you think we might see a little bit more leveraging to get to what you consider to be the optimal capital structure? And coming back to the market expansion, is there any kind of easy way to help us understand what the increase in the total addressable market is? It sounds, obviously, you're adding new cities, but you're also going to be able to tap into some of your existing customers, as you mentioned, in terms of multicity opportunities, et cetera. I mean, are we talking about sort of a 10% increase on the TAM or a 25% increase? Any color around that would be great.

Larissa L. Herda

It's a pretty big increase. And a lot of that is because, like on the market expenses, some of the markets that we're expanding into are just very dense markets. As you look at what we're doing in the New York area, in Boston and Chicago, we have -- it's -- we're passing by a lot more new customers. So it's a good increase. We haven't sized it for the marketplace. I mean, the actual fiber itself is -- I think, the number was 17% more, but that doesn't really speak much to the opportunity. I will tell you it's a good -- we've got some really good opportunity and lots of density of buildings and just the opportunity -- customers that we're going by. So within -- we like to kind of look at it within miles of our network because that's usually good from an economic standpoint. But yes, I can't give you anything more than that. Sorry, Simon. But on the leverage?

Mark A. Peters

On the leverage, we have -- we're talking about growth in net leverage. So we're taking a growth leverage up a bit, so that's right around 3.5x. And that's, I think, about the right place to be in the right neighborhood, at least, where the gross leverage makes sense for this business. We're capital intensive for all the right growth reasons that we've been talking about and we're also very stable, as we've also talked about; very consistent performance on whichever financial metric you look at. The net leverage has gone up more over the last year, for all the specific reasons that we planned to do, specifically using that cash to take out the convert that we had on the beginning of the year and then for the share buybacks. And so we really have this kind of a rough target for cash on the balance sheet of around $300 million. We exited the year higher than that. So as we continue to, in particular execute on share buybacks and other initiatives, I expect the net leverage to trend up a bit throughout the year as a result of those activities. Again, the $300 million we're not -- our intention isn't to raise to $300 million with our initiative. And if we drift below that a little bit because of timing that doesn't trouble us either. So those are kind of the rough guidelines that we're managing the leverage to.

Operator

And we'll go next to Barry McCarver with Stephens.

Barry McCarver - Stephens Inc., Research Division

I just want to echo some of the comments that have already been made in the Q&A, that a lot of things going on for tw this year and we want to make sure we set the expectations appropriately, given that margins are going to be moving around and we do expect a little bit of a ramp in revenue probably bigger in the second half of the year in 2015. So to the extent that you can continue to give us color on that, would be incredibly helpful. My question is, Larissa, you mentioned in your prepared remarks partnerships with AWS and Bluelock. And I was wondering if you could give us an idea of maybe what the market opportunity there is for your company or what -- maybe some early success you've had with those relationships?

Larissa L. Herda

So I'm going to let John answer that call, but I'm going to start off by saying that we're just at the beginning of the marketing opportunity here. We're creating a market opportunity that nobody else has created yet. And the awareness that has been created as a result of our people going out and talking to companies and then forming these partnerships with companies like an AWS. Well, they're a very big company, so as you can imagine, that's a very big market opportunity just with that one partner. But there's a bunch more that we're lining up as well with this. So I'm going to let John talk a little bit more about that.

John T. Blount

Yes. So as we think about the partner program -- we started the partner program really strongly years ago. And the reason that we did was that we realized that enterprise customers have a need for certain business applications. So the foundation of our partner program is really what application providers sell services that make our network more valuable as we partner together. And so our indirect program, our partner program has always been based on that theory. It's not just about having more feet on the street. It's about matching an application that the enterprise customer is looking to consume. And also with the understanding the decision-making sometimes on the network comes -- starts with the application that they're trying to fulfill. So when we look at our partnerships with Bluelock and our partnership with Amazon, it's really in that spirit. It's our enterprise customers are using them. The adoption of cloud is something that's real and it's something that's growing. And so as Larissa said, we're creating a market here. And what we're trying to do is to establish a network that enables these applications much more seamlessly, much more immediately. And better, faster and easier is our mantra. So we're excited about the start. And we're going to continue to add partners. We're going to continue to build up this enterprise ecosystem and enable best-of-breed applications on our network.

Barry McCarver - Stephens Inc., Research Division

Okay. And then, John, I think another question probably for you. In terms of the market expansion and the new markets that you're going into, certainly had a challenging winter so far. And I know that the Northeast, some of those new markets are getting hit again, as we speak. Has that pushed back the calendar any from when you initially announced this late last year?

John T. Blount

Not really. As you think about what we bought in the market -- well, first, starting off, 27 the markets that we have, we already have operations there running and we're expanding kind of our existing markets to go after more opportunity. I think you're speaking specifically of the 5 new, which -- the majority of those are out on the East Coast, where there has been some issues. Today, what we're doing is we're integrating those networks into ours. And so the number of points that you're connecting are somewhat limited and so it really hasn't been a big impact. I'm sure there's been...

Larissa L. Herda

Well, the fiber's already there. So we'll be expanding off of those loops on a success-based basis. But for the integration process, the fiber is already there, so the weather doesn't really -- it doesn't really affect it, with the exception of if the technicians can't get to the central offices and things like that. But that's fairly minor.

John T. Blount

Yes, the new markets are really going to be -- take a little bit longer time. The existing markets are where we're going to probably have our initial traction as well.

Operator

And we'll go next to Michael Rollins with City Investment.

Michael Rollins - Citigroup Inc, Research Division

Usually, around this time after you finish a full year, you've given us an update on how your markets have done. I think you split them up by thirds historically: your top third, your middle third, your bottom third. I was wondering if you can give us an update in terms of the performance of these market clusters, where you're seeing some incremental successes and maybe where you're seeing some hurts or challenges.

Mark A. Peters

So we'll be posting that slide here when we do our full IR slides the next -- by the end of the week, I'm not sure what day we'll post, but you'll actually see the numbers. But the trends, when you think about the most mature markets to the less mature markets on the continuum, the -- it's, again, very gradual, we talked about no hockey sticks. It's also no straight lines. But you continue to see the growth rates and -- the growth rates and the margin expansion contribution expansion coming from the less mature markets as their margins expand because they are less dense. When you think about that model that you're referring to, it's the more investment, the more density, the more size and scale within a market is what drives the margins and drives the returns. And so similar trends that we're seeing in prior years we continue throughout those 3 buckets. The top, it's -- when you look at the top bucket -- again, we don't have the numbers out there, but they're near 60% of the local EBITDA market standpoint. 60% of EBITDA margin at a local level is great margins. So now it's a driving growth of the absolute dollars. The bottom bucket is to drive both the dollars and the margins, so you get the double positive from that category as we build density in those markets. So no change in the broad trends within those buckets. And then obviously going into '14, we'll have to put in the impact of the expansion in the new markets.

Operator

And we'll go next to Donna Jaegers with D.A. Davidson.

Donna Jaegers - D.A. Davidson & Co., Research Division

2 quick questions. On the timing of the order installs -- or on the orders, in general, can you give us some color as far as what the percentage was from existing customers versus new customers? Because obviously, in your existing network, you're talking about a faster time-to-market since it's just a click of a button and you can turn on more capacity if you already have the tail circuit in there. So just trying to get a little more color on that.

Larissa L. Herda

Donna, we haven't provided those numbers in a long, long time. We're not going to refresh it. But I will tell you that a large percentage of our revenue comes from existing customers. But at the same time, obviously, we're trying to add new customers all the time. But the more you sell to larger customers, then a larger percentage of your revenue starts to come from your existing customers because they're kind of the gift that keeps giving. You get your foot in the door -- like our national enterprise sales organization, almost all of the revenue with exception of opening up new -- some new national enterprise account, which takes a long time to do in itself, most of what they're selling is to the existing customer base. So I think as we -- that's just the nature of what's always been happening with our business. So a fair share from both.

Mark A. Peters

And I'll add something else that you -- because you made a comment that it's easier to turn up or quickly turn up an existing customer. Sometimes, that's true if it's the same location. But frequently, they'll come in with certain number of locations, say, 5 or 6 locations, or initial locations. They might add on, they might add 10 new locations that might be in different cities, different markets, they might be out of market. They could be anywhere. So it may or not be faster to the revenue from an existing customer.

Larissa L. Herda

And, Donna, the click of the button is on its way. That's part of the Constellation Platform. Now, obviously, if we have a customer who has our Dynamic Capacity on Ethernet and they want to increase that capacity for some period of time, that's a click of a button. But otherwise, there's effort involved in putting up every circuit.

Donna Jaegers - D.A. Davidson & Co., Research Division

Okay. And then on the wholesale, on your Wholesale business, that's been flatlining for a long time. Can you give us any sort of color there? Obviously, carriers going more towards the Ethernet, turning off circuit-switched. But any other color as far as the orders there? You guys had turned up the one-to-many product last year, what sort of response are seeing on that?

John T. Blount

Well, I think, you hit it exactly right, Donna. This is John. We're seeing a pretty solid growth and demand in the Ethernet products with our wholesale customers. And it's being dampened by the fact that the traditional TDM services are going away. So I think that's what you see in the flatline. Both are accelerating, in a way, right now. But we're pretty excited about the new product lineup that we have for the wholesale customers, specifically the one-to-many that you referenced and the traction that we're getting. So Ethernet's rocking in wholesale.

Larissa L. Herda

I think the more -- it's taken carriers a long time to really embrace Ethernet. And this past year is really the first year we've really seen, I think, the real traction in it. And some of it is because we made the decision to make some more investment in our carrier Ethernet products. And they've been very well received. We have -- we've been building great relationships, which are new relationships over the past year and a half or so, with international carriers that really want to have Ethernet. We've got probably the best Ethernet reach out there among the carriers. And certainly, we have the best reputation for actually providing a quality service because we've been doing it for so long. So on the carrier side, we're feeling -- flat is good, as you know, on carrier revenue after so many years. So but we like what we're seeing there. There's a lot of really good, nice opportunities there and good relationships that are building.

Operator

And we'll go next to Michael Funk with Bank of America.

Michael J. Funk - BofA Merrill Lynch, Research Division

I have 2 quick ones, actually. First earlier, you've mentioned that you're seeing some new market opportunities, some new industry opportunities with the salespeople you're bringing in. And I wanted to know, maybe some more detail on that. What type of verticals, size of customers? And then second, you have to talk about in a more multicity deals. Maybe some color on the incremental margin here. If you're seeing more off net, what the mix is with on net and off net with the new deals, and how we should think about that.

Larissa L. Herda

So on multicity deals, we've been doing them, as you know, for many, many years. We are going to have more off-net revenue, more off-net services. And so we've been, we've tried to negotiate deals for Ethernet connectivity from various different off-net carriers. And it's not just incumbent carriers because, quite frankly, sometimes they've been slower, their services isn't always the best, so -- and their pricing is not -- definitely not the best. But we need to reach. And so when we do deals, as you know, the vast majority of the revenue really has to be on our network for the margins to work for us. So we look at those things very holistically. And so we will, over time, continue to see an increase on off-net services because we're just selling to bigger customers more locations. But we look at each of those deals from a margin standpoint holistically.

Mark A. Peters

And then it's just obviously a mix between margin and CapEx, too.

Larissa L. Herda

Right.

Mark A. Peters

So it's really to drive -- we're really good at doing off-net and that's why we have so much of our services as multimarket so both within and outside of it. So it's -- we could look at it a bit as a strategic asset to us versus our competitors. But again, there can be some pressure on gross margin, but then it's -- you don't have the capital to build that out either. So there's a little bit of a trade-off going both ways. As Larissa mentioned, with Ethernet, it's the higher capacity, it's also much more efficient than non-ethernet off-net services too.

Larissa L. Herda

And then John will answer the first question.

John T. Blount

As far as the verticals that we're seeing across market, we're seeing growing strength kind of across the board in opportunities. And that's really large business, as well as medium and small fractures, which is really large business -- large -- fairly large-size enterprise customers as well. The verticals that stand out right now, we're seeing health care, there's a lot of activity in health care. Financial, there's a lot of activity in financial. Government, we're seeing a good growth in the government side. As well as education, we're seeing a lot of -- there's a lot of demand there. Legal, the law firms, there's a number of large law firms that are kind of working with us as well today. But so those are the ones that stand out. But I would say, across the board, we're not really seeing any of them drop off a cliff and we're seeing a lot of activity out there right now today. So I think it maps to our products.

Larissa L. Herda

That answer your questions, Michael?

Michael J. Funk - BofA Merrill Lynch, Research Division

It does.

Operator

We'll take our last question from Barry Sine with Drexel Hamilton.

Barry M. Sine - Drexel Hamilton, LLC, Research Division

Wanted to ask about the ramp that you're doing both in the sales force in the new market as it relates to the underlying economic backdrop and demand for enterprise services. If I look at what AT&T and Verizon both talked about in their calls, they were seeing a bit of a challenge, more a focus on products that can cut cost rather than growth feeds [ph] or growth in the number of new jobs. So what are you seeing and what are you thinking in terms of these new investments, in terms of the ultimate end demand of your services?

Larissa L. Herda

Did you -- go ahead.

Mark A. Peters

I was just going to jump in just really quickly here. When you look at how much revenue we have as a company at about $1.6 billion on annualized revenue compared to how much opportunities out there, we're a share taker. And for us to go to new locations, like Boston, expanding in New York and expanding in all these other places we're doing the market expansion, but we're not today. We're just taking share. I mean, that's just that without a growth in the economy gives us a great opportunity. So then a very macro basis, that's how I would look at it.

Larissa L. Herda

Yes. And Barry, I mean, just think about the recession when every other carrier in the industry was declining revenue significantly, we grew both years of the recession. And so I think -- and that's when there was no market growth. And so, we're really good at taking share. That's our expertise. Obviously, we love it when there's a good economy. From our perspective, the economic backdrop feels -- regardless of what all the pundits say and what happens in the stock market, it feels very stable. Customers are very interested in what we're doing. We're saving them a lot of money. We're making it easier for them, we're very easy to work with. We're flexible. We think out-of-the-box. And we're always -- and we listen to them. So I think when you -- they're very fundamental things, but that's who we are and we're known for that. And so now that we have some really cool products to go out there and talk to them about, we're being viewed -- we're at the strategic table where -- and I would say that's been really growing -- every year, our position has been growing, but this year was particularly defined in that area in terms of just greater conversations with customers who are interested in having us be part of their strategic thinking. And that's where you want to be, because the decision-making has changed, as John had said earlier, with customers. The CIOs are thinking about it. They're thinking about it from their applications. They're just thinking about so many other things than just big fat dumb pipes. And so we've gotten out of the big fat dumb pipe business a long time ago and into the more intelligent networking business. We think that's a value-add that differentiates us and it's going to help us provide us with a long-term growth prospects that we're looking for. Anybody else might add to that?

Mark A. Peters

Well, I guess I would just add, you mentioned in your remarks, Laura, too, we are putting ourselves in the middle of this transition to the cloud with the adoption of the cloud too to enable it. And that's just incremental to everything else that we're doing to differentiate what we're doing. They're -- but we're putting ourselves right in the middle that, that would also contribute to our prospects.

Larissa L. Herda

So I think to summarize, because very often people will look at the comments that the large incumbents make and try to draw a parallel to the competitive industry and companies like us. There really is no parallel. I don't see a parallel because of how we attack the market, the position that we have in the market and the fact that we're not a large incumbent that is trying to protect share. We're trying -- we're taking share. And I think that's a very, very different position. And so therefore, I think we have the ability to continue to grow while they're all still struggling with growth. That helped, Barry?

Barry M. Sine - Drexel Hamilton, LLC, Research Division

Yes, that's a very informative answer.

Larissa L. Herda

Yes. Okay, great. Well, thank you all. Sorry, we went a little bit over. Hopefully, that was all helpful to you to have some additional questions being asked. Thank you all for your support at tw telecom. Have a good day.

Operator

That concludes our program. Thank you for joining us.

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