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 $67.0 million compared with $59.4 million in the first quarter of 2011;
  • Segment profit1 of $35.9 million; segment margin1 of 53.5 percent, up 240 basis points year-over-year;
  • Adjusted EBITDA2 of $12.2 million; adjusted EBITDA margin2 of 18.3 percent;
  • Announces launch of Agile Hosting offering, a global on-demand hosting service and self-service configurator.

ATLANTA, GA – April 26, 2012 – Internap Network Services Corporation (NASDAQ: INAP), a leading provider of IT infrastructure services, today announced financial results for the first quarter of 2012.

“We were pleased with the solid revenue growth we generated in the first quarter. We drove sequential and year over year increases in our organic core data center business as well as in the newly acquired services from Voxel, which remains well on track to deliver 25 percent annual revenue growth,” said Eric Cooney, President and Chief Executive Officer of Internap. “With our collective efforts set squarely on deploying high-value data center services, we were able to quickly reach a key Voxel integration milestone with today’s launch of Agile Hosting services, our new e-commerce IT Infrastructure offering.”

First Quarter 2012 Financial Summary

Revenue
Revenue totaled $67.0 million compared with $59.4 million in the first quarter of 2011 and $62.8 million in the fourth quarter of 2011. Revenue from Data center services increased year-over-year and sequentially. IP services revenue decreased compared with both the first quarter of 2011 and the fourth quarter of 2011.

  • Data center services revenue improved 27 percent year-over-year and 13 percent sequentially to $39.9 million. Both the year-over-year and the sequential increases were attributable to the fourth quarter 2011 acquisition of Voxel as well as growth in core Data center services.
  • IP services revenue totaled $27.1 million, a decrease of 3 percent compared with the first quarter of 2011 and 1 percent sequentially, as traffic growth was more than offset by per unit price declines in IP.

Net (Loss) Income

  • GAAP net income was $0.1 million, or $0.00 per share, compared with GAAP net loss of $(1.5) million, or $(0.03) per share, in the first quarter of 2011 and GAAP net income of $4.2 million, or $0.08 per share, in the fourth quarter of 2011.
  • Normalized net income, which excludes the impact of stock-based compensation expense and items that management considers non-recurring, was $1.6 million, or $0.03 per share. Normalized net loss was $(0.4) million, or $(0.01) per share, in the first quarter of 2011, and $0.3 million or $0.01 per share, in the fourth quarter of 2011.

Segment Profit and Adjusted EBITDA

  • Segment profit totaled $35.9 million in the first quarter, an increase of 18 percent year-over-year and 9 percent sequentially. Segment margin was 53.5 percent, increasing 240 basis points compared with the first quarter of 2011 and 110 basis points over the fourth quarter of 2011.
  • Segment profit in Data center services was $19.0 million, or 47.5 percent of Data center services revenue. IP services segment profit was $16.9 million, or 62.4 percent of IP services revenue. Increasing proportions of higher-margin services, specifically colocation sold in company controlled data centers and hosting services, benefited Data center services segment profit compared with both the first quarter of 2011 and the fourth quarter of 2011. Data center services segment margin increased 620 basis points year-over-year and 460 basis points sequentially to 47.5 percent. IP services segment profit decreased 3 percent compared with the first quarter of 2011. Sequentially, IP segment profit decreased 5 percent. Lower revenue drove the year-over-year and sequential decreases in segment margins. IP services segment margin increased 10 basis points year-over-year and decreased 210 basis points sequentially to 62.4 percent.
  • Adjusted EBITDA totaled $12.2 million in the first quarter, a 33 percent increase compared with the first quarter of 2011 and down 3 percent relative to Adjusted EBITDA in the fourth quarter of 2011. Adjusted EBITDA margin was 18.3 percent in the first quarter of 2012, up 280 basis points year-over-year and a decrease of 180 basis points sequentially. Higher operating costs in the first quarter were more than offset by improved segment profit relative to the first quarter of 2011. 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 $30.8 million at March 31, 2012. Total debt was $106.9 million, net of discount, at the end of the quarter, including $48.2 million in capital lease obligations.
  • Cash generated from operations for the three months ended March 31, 2012 was $18.5 million. Capital expenditures over the same period were $16.8 million.

Recent Operational Highlights
Historical trends of key financial and operational metrics can be found in a supplementary data schedule on Internap’s website at http://ir.internap.com/results.cfm.

  • We had approximately 3,700 customers under contract at the end of the first quarter 2012.
  • Today, we announced the availability of our global Agile Hosting offering, which marks one of the first key technology deliverables resulting from the combination of Internap and Voxel. Combining Internap’s premium data center footprint and Performance IPTM with Voxel’s unified hosting platform, our Agile Hosting service allows enterprises to instantly scale high-performance physical and cloud infrastructure through a new self-service configurator.
  • In March, Forbes magazine and GMI, an independent financial analytics company in Los Angeles, rated Internap as one of America’s Most Trustworthy Companies, in the small-cap category. Now in its fifth year, the list identifies 100 organizations publicly traded on U.S. exchanges – from an initial group of more than 8,000 – that have consistently demonstrated transparent and conservative accounting practices and solid corporate governance and management.

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 information 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 Loss from Operations to Adjusted EBITDA,” and “Reconciliation of Net Loss and Basic and Diluted Net 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 2012 conference call will be held today at 5:00 p.m. EDT. Listeners may connect to a webcast of the call, which will include accompanying presentation slides, on the investor services 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 26, 2012 at 8 p.m. EDT through Wednesday, May 2, 2012 at 855-859-2056 using the replay code 70585644. International callers can listen to the archived event at 404-537-3406 with the same code.

About Internap
Transform your IT Infrastructure into a competitive advantage with IT IQ from Internap, intelligent IT Infrastructure solutions that combine unmatched performance and platform flexibility. Since 1996, thousands of enterprises have entrusted Internap to deliver their online applications across our portfolio of connectivity, colocation, managed hosting, cloud and hybrid services. For more information, visit our blog at http://www.internap.com/blog, or follow us on Twitter at http://twitter.com/internap.

Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements include statements related to our strategy to drive long-term profitable growth, our expectations regarding the expansion of our hosting capabilities and our efforts to integrate Voxel into our business. 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 successfully integrate Voxel into our business; 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.

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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.

Press Contact
Mariah Torpey
Davies Murphy Group
781.418.2404
internap@daviesmurphy.com

Investor Contact
Andrew McBath
404.302.9700
ir@internap.com