You can See Growth if you look carefully.

The running joke today is flat is the new up when it comes to company revenue. If gallows humor is a sign of the times then you have to wonder what “up” or growth represents today because if any company is growing revenue it must be a monumental achievement. That is why Cbeyond Inc.’s second quarter financial results caught my eye this week when the company reported a strong uptick in sales.

Cbeyond is basically a managed services provider serving up voice, broadband, mobile services and applications to small businesses. That is a business model that has gained a great deal of attention over the past two years as solution providers move toward a more services and annuity-based model. It is also a model that stands to benefit from customer movement to cloud-based or SAAS solutions. Cbeyond is a Microsoft partner offering hosted Exchange services and Windows Mobile smart phones.

The company’s sales surged nearly 20 percent to $101.8 million in the second quarter compared with the year-earlier period. Sales for the first half are up nearly 21 percent. Still, a quarterly sales gain of 20 percent is certainly something to celebrate in this market. But the company did post a loss of some $2.2 million, or 8 cents a share, compared with a year-earlier profit of $496,000, or 2 cents a share. That is certainly the down side for Cbeyond but it softened the release of a loss with news it had net new customer acquisitions of 2.063 in the quarter.

Since the company serves the small business market is was interesting that its average monthly revenue per customer location did not plunge despite the beating many companies are taking. The average revenue per customer dipped to $748 during the second quarter compared with $754 a year ago and $755 in the first quarter. So it was not exactly a disaster. The financials do offer a glimpse into the managed services model which is a valuable tool for any solution taking the plunge or working with the likes of N-Able or Level Platforms. Even though the average monthly revenue per customer location edged downward, Cbeyond was closing  three-year contracts  with customers vs. shorter-term. Certainly, a positive direction.

“The economic recession has continued to create a challenging business environment for Cbeyond,” said Jim Geiger, chief executive officer of Cbeyond, in an earnings statement. “The business climate continues to challenge our small business customers and, in turn, continues to pressure our historic norms in both average revenue per customer, or ARPU, and churn. Despite the pressure on ARPU in the quarter, we still posted year-over-year revenue growth of approximately 20 percent, and we foresee improvements in adjusted EBITDA over the next few quarters.”

The company said its total adjusted EBITDA was  $13.8 million during the second compared with $13.7 million in the second quarter of 2008, another encouraging trend.

Tell me about your reaction to Cbeyond’s results are your results in the managed services space by responding to this blog.