The information below is a summary. Click here to view the entire release which includes our unaudited GAAP financial statements and supplemental non-GAAP financial measures.
- Revenue of $69.7 million, up 4% versus the first quarter of 2012;
- Segment profit1 of $36.8 million grew 3% year-over-year;
- Adjusted EBITDA2 of $14.1 million increased 16% versus the first quarter of 2012;
- Adjusted EBITDA margin of 20.3%, up 200 basis points year-over-year;
- Announces new “cloudy colo” services, delivering on-demand cloud and colocation hybridization via integrated portal.
ATLANTA, GA – (April 25, 2013) Internap Network Services Corporation (NASDAQ: INAP), a provider of intelligent IT Infrastructure services, today announced financial results for the first quarter of 2013.
“We begin 2013 with solid first quarter results reflecting our continued shift to data center services including colocation, hosting and cloud offerings. In the first quarter, we successfully drove sequential and year-over-year growth in our data center services segment while also delivering record data center services segment margin,” said Eric Cooney, President and Chief Executive Officer of Internap. “With compelling new offerings planned for 2013, such as our recent ‘cloudy colo’ announcement, we expect to further differentiate Internap’s data center services and sustain long-term profitable growth for the business.”
First Quarter 2013 Financial Summary
- Revenue totaled $69.7 million compared with $67.0 million in the first quarter of 2012 and $69.7 million in the fourth quarter of 2012.
- Data center services revenue improved 11% year-over-year and 2% sequentially to $44.4 million. Both the year-over-year and sequential increases were attributable to increased sales of colocation in company-controlled data centers and favorable growth in hosting and cloud services.
- IP services revenue totaled $25.3 million, a decrease of 7% compared with the first quarter of 2012 and 3% sequentially, as traffic growth was more than offset by per unit price declines in IP and the loss of legacy contracts.
Net (Loss) Income
- GAAP net loss was $(1.6) million, or $(0.03) per share, compared with GAAP net income of $0.1 million, or $0.00 per share, in the first quarter of 2012 and $0.0 million, or $0.00 per share, in the fourth quarter of 2012.
- Normalized net income, which excludes the impact of stock-based compensation expense and items that management considers non-recurring, was $0.2 million, or $0.00 per share, compared with $1.5 million, or $0.03 per share, in the first quarter of 2012. Normalized net income was $2.1 million or $0.04 per share, in the fourth quarter of 2012.
Segment Profit and Adjusted EBITDA
- Segment profit totaled $36.8 million in the first quarter, an increase of 3% year-over-year. Sequentially, segment profit increased 2%. Segment margin1 was 52.8%, a decline of 70 basis points compared with the first quarter of 2012. Segment margin increased 100 basis points compared with the fourth quarter of 2012.
- Segment profit in data center services was $21.7 million, or 49% of data center services revenue. IP services segment profit was $15.1 million, or 59.6% of IP services revenue. Data center services segment profit increased 15% year-over-year and 7% sequentially. An increasing proportion of higher-margin services, specifically colocation sold in company controlled data centers, hosting and cloud services, benefited data center services segment profit year-over-year and sequentially. Data center services segment margin increased 150 basis points year-over-year and 260 basis points sequentially. IP services segment profit decreased 11% year-over-year and 5% sequentially. Lower IP transit revenue and the loss of legacy contracts drove the year-over-year and sequential decreases in segment profit. IP services segment margin decreased 280 basis points year-over-year and 140 basis points sequentially.
- Adjusted EBITDA totaled $14.1 million in the first quarter, a 16% increase compared with the first quarter of 2012 and a 5% decrease from the fourth quarter of 2012. Adjusted EBITDA margin was 20.3% in the first quarter of 2013, up 200 basis points year-over-year and down 120 basis points sequentially. The year-over-year increase in Adjusted EBITDA was attributable to increased segment profit in our data center services segment. Sequentially, seasonally higher general and administrative costs outweighed the quarter-over-quarter increase in segment profit.
Balance Sheet and Cash Flow Statement
- Cash and cash equivalents totaled $34.6 million at March 31, 2013. Total debt was $161.7 million, net of discount, at the end of the quarter, including $57.1 million in capital lease obligations.
- Cash generated from operations for the three months ended March 31, 2013 was $6.1 million. Capital expenditures over the same period were $7.4 million.
Recent Operational Highlights
1 Segment profit and segment margin are non-GAAP financial measures and are defined in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP and non-GAAP information related to segment profit and segment margin are contained in the table entitled “Segment Profit and Segment Margin” in the attachment.
2 Adjusted EBITDA and Normalized Net Income (Loss) are non-GAAP financial measures and are defined in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP information and non-GAAP information related to Adjusted EBITDA and Normalized Net Income (Loss) are contained in the tables entitled “Reconciliation of Income (Loss) from Operations to Adjusted EBITDA,” and “Reconciliation of Net Income (Loss) and Basic and Diluted Net Income (Loss) Per Share to Normalized Net Income (Loss) and Basic and Diluted Normalized Net Income (Loss) Per Share” in the attachment.
Conference Call Information:
Internap’s first quarter 2013 conference call will be held today at 5:00 p.m. ET. Listeners may connect to a webcast of the call, which will include accompanying presentation slides, on the investor relations section of Internap’s web site at http://ir.internap.com/events.cfm. The call can be also accessed by dialing 866-515-9839. International callers should dial 631-813-4875. An online archive of the webcast presentation will be available for one month following the call. An audio-only replay will be accessible from Thursday, April 25, 2013 at 8 p.m. ET through Wednesday, May 1, 2013 at 855-859-2056 using the replay code 35977042. International callers can listen to the archived event at 404-537-3406 with the same code.
Internap provides intelligent IT Infrastructure services that combine unmatched performance and platform flexibility to enable our customers to focus on their core business, improve service levels and lower the cost of IT operations. Our unique trio of route-optimized enterprise IP, TCP acceleration and a global content delivery network improves website performance and delivers superior end-user experiences. Our scalable colocation, hosting, private cloud, public cloud and hybrid offerings provide enterprises the flexibility to adapt to changing business needs and future-proof their IT Infrastructure. Since 1996, thousands of companies have entrusted Internap with the protection and delivery of their online applications. Transform your IT Infrastructure into a competitive advantage with IT IQ from Internap. For more information, visit http://www.inap.com, our blog at http://www.inap.com/blog or follow us on Twitter at http://twitter.com/internap.
This press release contains forward-looking statements. These forward-looking statements include statements related to our expectations regarding new offerings and our ability to sustain long-term profitable growth. Because such statements are not guarantees of future performance and involve risks and uncertainties, there are important factors that could cause Internap’s actual results to differ materially from those in the forward-looking statements. These factors include our ability to achieve or sustain profitability; our ability to expand margins and drive higher returns on investment; our ability to complete expansion of company-controlled data centers within the expected timeframe; our ability to sell into new data center space; the actual performance of our IT Infrastructure services; our ability to maintain current customers and obtain new ones, whether in a cost-effective manner or at all; our ability to correctly forecast capital needs, demand planning and space utilization; our ability to respond successfully to technological change and the resulting competition; the availability of services from Internet network service providers or network service providers providing network access loops and local loops on favorable terms, or at all; failure of third party suppliers to deliver their products and services on favorable terms, or at all; failures in our network operations centers, data centers, network access points or computer systems; our ability to provide or improve Internet infrastructure services to our customers; and our ability to protect our intellectual property, as well as other factors discussed in our filings with the Securities and Exchange Commission. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. We undertake no obligation to update, amend or clarify any forward-looking statement for any reason.
The information above is a summary. Click here to view the entire release which includes our unaudited GAAP financial statements and supplemental non-GAAP financial measures.
Davies Murphy Group