Internap Reports Record Revenues in 3rd Quarter; 5% Year-Over-Year and Sequential Growth Reported; Free Cash Flow Guidance Reaffirmed
ATLANTA, Oct 28, 2003 (BUSINESS WIRE) --Internap Network ServicesCorporation (NASDAQ: INAP), the leading provider of performance-basedrouting services over the Internet, today reported fiscal thirdquarter results for the period ended September 30, 2003. Revenuestotaled $34.4 million, an increase of 5.1% compared to the thirdquarter 2002; an increase over the preceding quarter; and a historicalhigh revenue mark for Internap.
Subsequent to the third quarter, the company also announced theacquisition of netVmg, Inc. and of Sockeye Networks. Therefore, thefinancial impact and results of these acquisitions are not reflectedin the third quarter report.
"Internap has produced record quarterly revenues in spite ofexpected seasonal softness in the third quarter," said Gregory A.Peters, Internap's president and chief executive officer. "In additionto our record revenues, we have reduced operating expenses by 12% andimproved operating earnings performance by 47% year-over-year. Theseachievements, coupled with a focused strategy for expanding ourproduct offerings and leveraging our core strengths, keep us on trackfor free cash flow by year-end and continued solid financialperformance."
Quarterly Highlights:
-- The customer base grew to 1,566 enterprise customers as of September 30, 2003, an increase of 79 net new customers in the quarter. Among the new customers are: Acer America; Checkfree, Inc.; Circuit City Stores; Crate & Barrel; Hitachi Software; Integrated Network Technologies; King & Spalding, LLC; Polaris Companies; Rackspace; Red Envelope; and Sotheby's.
-- Direct margin improved to 44.4% year-to-date, compared to 34.9% for the same period a year earlier.
-- Annualized revenue per employee was $413,000, up from $376,000 per employee in the third quarter 2002.
-- Year-to-date operating expenses totaled $129.8 million, a decline of more than $24.6 million, or approximately 16%, compared to the same year-to-date period for 2002. Internap's net loss was $7.9 million in the third quarter, or$0.05 per share, compared to a loss of $15.2 million, or $0.10 pershare, in the third quarter of 2002. Internap's net loss attributableto common stockholders was $42.5 million, for a reported loss pershare of $0.25. This included a non-cash charge of approximately $34.6million resulting from a reduction in the conversion price of commonstock underlying the Series A preferred shares due to the company'sprivate placement of equity in August. As a result of approval fromshareholders to changes in the company's charter, the Series APreferred stock of the company has been reclassified from mezzanine toequity, resulting in shareholders equity of $62.2 million as ofSeptember 30, 2003.
Net use of cash during the third quarter was $3.7 million, whichincluded $0.1 million in restructuring payments. Net cash used inoperating activities totaled $2.0 million.
"We continue to focus on revenue growth, stringent cost controlsand integration of our recent acquisitions," said Robert Jenks,Internap's chief financial officer. "Internap's financial performancewill benefit from the company's stronger balance sheet and heightenedliquidity."
Conference Call Information:
Internap's third quarter teleconference will be held todaybeginning at 5:00 p.m. Eastern. The dial-in numbers are 800-901-5217,passcode 75079954 for domestic callers, and 617-786-2964, passcode75079954 for international participants. The simultaneous web castwill be available from the Investor Relations section of the web siteat: www.internap.com.
Internap will provide a replay of the teleconference on itswebsite.
About Internap
Internap offers business customers enhanced network servicesthrough a portfolio of Internet-based solutions that utilize all majordomestic IP backbones. The company's patented and patent-pending routemanagement technology and industry-leading service level guaranteesprovide 100 percent Internet availability, allowing customers tobypass congestion points and avoid other difficulties that plagueconventional Internet connectivity.
Internap currently serves more than 1,500 Fortune 1000 andmid-tier business customers in the financial services;travel/hospitality; manufacturing; media/entertainment; technology andretail industries. The company provides services in numerous keymarkets throughout the United States, Europe and Japan includingAtlanta, Boston, Chicago, London, Los Angeles, New York, SanFrancisco, San Jose, Seattle, Tokyo and Washington, D.C. For moreinformation, please visit www.internap.com.
Internap "Safe Harbor" Statement
The foregoing are "forward-looking statements" which are based onmanagement's beliefs as well as on a number of assumptions concerningfuture events based on information currently available to management.Readers are cautioned not to put undue reliance on suchforward-looking statements, which are not a guarantee of performanceand are subject to a number of uncertainties and other factors, manyof which are outside Internap's control, that could cause actualresults to differ materially from such statements. For a more detaileddescription of the factors that could cause such a difference, pleasesee Internap's filings with the Securities and Exchange Commission.Internap disclaims any intention or obligation to update or revise anyforward-looking statements, whether as a result of new information,future events or otherwise. This information is presented solely toprovide additional information to further understand Internap'sresults.
Internap Network Services Corporation Condensed Consolidated Balance Sheets (unaudited, in thousands except per share amounts)
September 30, December 31, 2003 2002 --------------------------- ASSETS Current assets: Cash and cash equivalents $17,210 $25,219 Accounts receivable, net 15,700 15,232 Prepaid expenses and other assets 3,883 5,632 -------- -------- Total current assets 36,793 46,083
Property and equipment, net 63,845 88,394 Restricted cash -- 2,053 Investments 2,359 3,047 Goodwill and other intangibles assets, net 27,340 30,579 Deposits and other assets 2,060 2,813 -------- -------- Total assets $132,397 $172,969 ========= =========
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS EQUITY Current liabilities: Accounts payable $10,203 $13,247 Accrued liabilities 9,413 11,020 Deferred revenue 4,478 6,850 Notes payable, current portion 2,846 4,514 Revolving credit facility 9,054 10,000 Capital lease obligations, current portion 5,524 2,831 Restructuring liability, current portion 3,337 6,574 -------- -------- Total current liabilities 44,855 55,036
Deferred revenue 307 1,317 Notes payable, less current portion 2,976 5,196 Capital lease obligations, less current portion 18,012 22,717 Restructuring liability, less current portion 4,091 7,078 -------- -------- Total liabilities 70,241 91,344 -------- -------- Series A convertible preferred stock, $0.001 par value, 3,500 shares authorized -- 79,790 -------- -------- Stockholders' equity: Common stock, $0.001 par value, 600,000 shares authorized 187 160 Series A convertible preferred stock, $0.001 par value, 3,500 shares authorized 68,194 -- Additional paid-in capital 820,457 798,344 Deferred stock compensation -- (396) Accumulated deficit (826,905) (796,422) Accumulated items of other comprehensive income 223 149 -------- -------- Total stockholders' equity 62,156 1,835 -------- -------- Total liabilities, convertible preferred stock and stockholders' equity $132,397 $172,969 ========= =========
Internap Network Services Corporation Condensed Consolidated Statements of Operations (unaudited, in thousands, except per share data)
For the Three Months Ended --------------------- September 30, September 30, 2003 2002 ----------------------------
Revenues $34,379 $32,711 -------- -------- Costs and expenses: Direct cost of network (exclusive of depreciation) 19,795 17,302 Customer support 2,125 2,867 Product development 1,694 1,836 Sales and marketing 4,688 5,330 General and administrative 4,700 4,548 Depreciation and amortization 7,931 12,390 Amortization of intangible assets 362 1,165 Amortization of deferred stock compensation -- (316) Restructuring costs 132 352 Loss(gain) on sale and retirement of property and equipment (53) 1,510 *** STORY TRUNCATED due to excessive length. *** - |
