ISLD earnings report
Monday January 24, 4:00 pm Eastern Time
Company Press Release
SOURCE: Digital Island, Inc.
Digital Island Reports First Quarter Results
Revenues Increase 54% Quarter Over Quarter and 449% Year Over Year; AOL Adds to Growing Customer List; Strategic Alliance with Sun and Inktomi to Expand e-Business Delivery Network
SAN FRANCISCO, Jan. 24 /PRNewswire/ -- Digital Island, Inc. (Nasdaq: ISLD - news), a leading global e-Business Delivery Network, announced today financial results for the first fiscal quarter ended December 31, 1999.
Revenues for the quarter were $7.6 million, a 54% increase over revenues of $4.9 million for the quarter ended September 30, 1999, and a 449% increase over revenues of $1.4 million in the same quarter of the prior year. The loss for the three months ended December 31, 1999 was $22.3 million before amortization of goodwill and other intangible assets related to the merger with Sandpiper Networks, Inc., or $0.61 per share, compared with a net loss for the quarter ended September 30, 1999 of $22.0 million, or $0.62 per share, and net loss of $5.9 million, or $2.53 per share, for the same quarter of the prior year. The net loss for the three months ended December 31, 1999 was $24.0 million, including amortization of goodwill and other intangible assets related to the merger with Sandpiper Networks, Inc., or $0.65 per share.
The EBITDA loss (loss before interest, taxes, depreciation, amortization and other non-cash charges) in the quarter was $20.1 million, compared with an EBITDA loss of $20.4 million for the quarter ended September 30, 1999, and with an EBITDA loss of $5.3 million in the same quarter of the prior year.
``The quarter just ended has been the most important and exciting period in Digital Island's history,' said Ruann F. Ernst, chairman and CEO of Digital Island. ``We have not only experienced strong revenue and customer growth, but have also expanded the size and reach of our e-Business Delivery Network, and continued to increase the breadth and capabilities of our service offerings through key acquisitions and partnerships. With leading customers such as AOL, Blue Mountain Arts, Cisco, E*Trade, ft.com, Intuit and MasterCard, our e-Business Delivery Network has quickly become a critical part of the Internet infrastructure. With a fully integrated set of content delivery, hosting, network and application services, Digital Island offers a solution set comprehensive and flexible enough to meet the evolving demands of global e-Business.'
Digital Island's customer base increased 54% to 169 during the quarter, including the addition of Sandpiper's customers. Reaping the benefits of its European and Asian expansion, Digital Island added several new international customers, including the Canon subsidiary, FastNet, ft.com, AsiAlliance.com and Tradepac.com. Digital Island continued to meet the needs of many of the Internet's largest and most successful Web properties, where new flagship customer wins included Activision, AdForce, Blue Mountain, PBS and Value America.
Completed just before the close of the quarter, Digital Island's merger with Sandpiper Networks accelerated the execution of its content delivery strategy both by the addition of a network of 1,200 content distributors around the world, and by the addition of significant intellectual property with the Footprint content delivery technology. By combining Digital Island's capability to ensure fast, secure, and reliable, transactions with Sandpiper's fast delivery of content at the edges of the network, Digital Island's e-Business Delivery Network provides an infrastructure capable of supporting the ``two-way' nature of e-commerce. Digital Island also continued to expand the size of its e-Business Delivery Network by increasing the total reach of its intelligent network to 23 countries, opening a new network operations center in London and a new data center in San Jose, as well as announcing the planned opening of a Tokyo data center.
Announced in December, Digital Island solidified its commitment to achieving ubiquitous presence inside last-mile networks by establishing a strategic alliance with Sun Microsystems and Inktomi. By deploying content distributors at the edges of the network, close to where consumers are, Digital Island helps e-Businesses ensure a fast and reliable experience for their end users. Over the next three years, Digital Island plans to deploy up to 5,000 Sun servers inside the world's leading dial-up, cable, DSL and wireless access providers -- targeting more than 350 metropolitan areas around the world. These servers will run the Inktomi Traffic Server(TM) and Content Delivery Suite, and will be fully integrated into Digital Island's Footprint content delivery services. The partnership agreement also included equity investments and co-marketing agreements from both Sun and Inktomi.
In December, Digital Island also formed a Technology Research Alliance with SRI International, whereby Digital Island acquired patent-pending Internet technology from SRI in exchange for stock. It is expected the SRI technology will help Digital Island reduce download times by more than 50% for all content types, including e-commerce transactions.
During this quarter, Digital Island made progress in growing its Global Partner Program (GPP). In December, Digital Island announced that more than 20 leading Web design firms, systems integrators and consultants, such as Lante Corp. and Xpedior, Inc., have joined the alliance.
Digital Island announced an alliance with Rhythms NetConnections in December to co-locate content distributors at Rhythms facilities. Through this partnership, Rhythms customers will have fast and reliable access to leading e-Business sites powered by Digital Island. In addition, just after the close of the quarter, Digital Island announced a similar strategic alliance with Road Runner. Now, along with leading dial-up providers such as AOL, and leading DSL providers like Rhythms, Digital Island plans to integrate its content distributors within Road Runner's broadband cable network in order to provide quick delivery to Road Runners' more than 500,000 customers nationwide.
In January, Digital Island announced the acquisition of Live On Line, a leading provider of live and on-demand streaming media services. Combined, Digital Island and Live On Line will have more than 100 streaming media customers, including Apple Computer, American Express, Fox, HBO, Microsoft, MTV and Sony. By integrating Live On Line's proprietary technology and streaming media services, Digital Island will enable e-Businesses to provide their consumers with ``transactive multimedia' experiences -- the ability to combine streaming media with transactional capabilities.
Digital Island© is a leading global e-Business Delivery Network. The company's suite of application services for interactive e-Business allows customers and partners to readily integrate content delivery, hosting and intelligent networking to give the ultimate consumer a superior experience. Strategically located Data Centers in the United States, Europe and Asia are directly connected to leading access service providers in 23 countries. In addition, Digital Island operates a network of more than 1,200 content distributors across the Internet, which improves the performance and reduces the cost of hosting high-volume Web applications in target markets. This network is expected to grow to 6,200 content distributors in 350 locations worldwide by the year 2003. Digital Island ( www.digitalisland.net )is headquartered in San Francisco.
Important Notice
Digital Island is a registered trademark of Digital Island, Inc. All other trademarks are properties of their respective owners.
This release may contain forward-looking statements that involve risks and uncertainties. Important factors which could cause actual results to differ materially from those in the forward-looking statements, include but are not limited to: the company's short operating history which makes it difficult to predict its future results of operations; the company's history of operating losses and expected future losses which could impede its ability to address the risks and difficulties encountered by companies in new and rapidly evolving markets; the company's future operating results could fluctuate which may cause volatility or a decline in the price of the company's stock; the company may not be able to price its services above the overall cost of bandwidth causing its financial results to suffer; and other factors detailed in the Company's filings with the Securities and Exchange Commission including its recent filing on Form S-1.
DIGITAL ISLAND, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
For the three months ended
December 31,
1999 1998
(Unaudited) (Unaudited)
Revenue $7,600 $1,385
Costs and expenses:
Cost of revenue 16,264 2,923
Sales and marketing 6,315 2,046
Product development 2,543 843
General and administrative 4,698 1,260
Amortization of intangible assets 1,697 --
Stock compensation expense 755 346
Total costs and expenses 32,272 7,418
Loss from operations (24,672) (6,033)
Interest income (expense), net 697 96
Loss before income taxes (23,975) (5,937)
Provision for income taxes 5 2
Net loss $(23,980) $(5,939)
Basic and diluted net loss per share $(0.65) $(2.53)
Weighted shares outstanding
used in per share calculation 36,676,137 2,345,984
EBITDA (A) $(20,092) $(5,270)
(A)Loss before net interest expense, income taxes, depreciation,
amortization (including amortization of deferred stock Compensation
and intangible assets) and other noncash charges.
DIGITAL ISLAND, INC.
CONDENSED CONSOLIDATED
BALANCE SHEETS
(in thousands, except per share data)
December 31,September 30,
1999 1999
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $18,181 $43,315
Investments 18,923 31,691
Accounts receivable, net 6,964 3,557
Restricted cash 763 763
Prepaid expenses and other 5,213 1,825
Total current assets 50,044 81,151
Property and equipment, net 54,297 25,273
Goodwill, net 850,942 --
Intangible assets, net 124,279 --
Other assets 1,731 1,224
Total assets $1,081,293 $107,648
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank borrowings $840 $801
Capital lease obligations 5,520 3,916
Accounts payable 14,167 8,621
Accrued liabilities 19,508 4,931
Cash overdraft -- 3,058
Deferred revenue 3,357 318
Total current liabilities 43,392 21,645
Bank borrowings, less current portion 216 314
Capital lease obligations, less current portion 7,553 6,061
Deferred revenue 335 410
Other 50 --
Total liabilities 51,546 28,430
Stockholders' equity:
Common stock 61 36
Additional paid-in capital 1,130,430 156,791
Deferred compensation (3,278) (4,033)
Stockholder note receivable (424) (514)
Accumulated deficit (97,042) (73,062)
Total stockholders' equity 1,029,747 79,218
Total liabilities
and stockholders' equity $1,081,293 $107,648
SOURCE: Digital Island, Inc. |
