Virgin Mobile USA's Q2 profits up, revenues down

Virgin Mobile USA reported second quarter income of $17.2 million, up from $3.5 million a year earlier. Revenue decreased 3.8 percent to $307.6 million. The operator--which agreed to a $483 million acquisition offer [1] from Sprint Nextel late last month--lost 269,239 net customers during the quarter, more than double the number it lost a year earlier, and ended Q2 with about five million subscribers, flat from a year earlier. Churn dropped to 5.3 percent from 5.6 percent a year ago.

According to Virgin Mobile USA, average revenue per user for the second quarter of 2009 was $18.98, off five percent over Q1 and down 3 percent year-over-year. The company attributed the decline to accelerated migrations of its $79.99 unlimited plan to its new $49.99 unlimited offer, launched during the quarter, adding that the $49.99 unlimited offer totaled 21 percent of gross customer additions in May and June, with those customers representing an initial ARPU of approximately $56. Data now accounts for 22 percent of total net service revenue, compared to 18 percent a year ago. Average monthly messaging rates grew 4 percent quarter-over-quarter. In early April, Virgin Mobile USA introduced Texter's Delight [2], a nationwide prepaid plan promising users unlimited SMS, IM, email, photo and video messaging for $19.99 per month.  

"We're reporting 0.8 minutes of voice usage to every text message--the industry average is about 5 minutes to every text," said Virgin Mobile USA CEO Dan Schulman in an interview with FierceMobileContent. "People are buying our higher-end handsets, and adding messaging and data packs on top of that. Social networking is still a phenomenon, of course--we've spent a lot of time and effort on our interfaces into various social networks, like Facebook, MySpace and Twitter. Data increased to 22 percent of our revenues in the quarter, and as I look forward, I see no stopping those trends."

For more Virgin Mobile USA's Q2 results:
- read this release [3]

Related article:
Hybrid plans galvanize Virgin Mobile USA [4]'s Q1 growth