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 $80.8 million, down 1% versus the first quarter of 2014
  • Data center services revenue of $59.1 million, up 1% versus the first quarter of 2014
  • Segment margin1 of 58.7%, up 230 basis points year-over-year
  • Adjusted EBITDA2 of $17.9 million increased 1% versus the first quarter of 2014
  • Adjusted EBITDA margin2 of 22.2%, up 50 basis points year-over-year

ATLANTA, GA – April 28, 2015 – Internap Corporation (NASDAQ: INAP), a provider of high-performance Internet infrastructure services, today announced financial results for the first quarter of 2015.

“Higher than anticipated churn, predominantly from a small number of larger data center services customers, has led us to reduce guidance for our full-year 2015 revenue. Nonetheless, our continued strategic investment in core data center services is delivering significantly stronger segment margins and enabling us to reiterate our full-year adjusted EBITDA guidance in the range of $89 million to $95 million,” said Eric Cooney, President and Chief Executive Officer of Internap. “With a return to sequential revenue growth in the second quarter of 2015, we are positioned to accelerate profitable growth and are excited by the implications for long-term shareholder value.”

First Quarter 2015 Financial Summary
Revenue

  • Revenue totaled $80.8 million in the first quarter, a decrease of 1% year-over-year and 4% sequentially. The slight year-over-year decrease was due to lower IP revenue, partially offset by increased data center revenue. Sequentially, revenue declined in IP services and data center services.
  • Data center services revenue totaled $59.1 million in the first quarter, an increase of 1% year-over-year and a decrease of 4% sequentially. The year-over-year increase was attributable to increased sales of core data center services, partially offset by decreased sales in our partner data centers. The sequential decrease was primarily attributable to churn from a small number of significant colocation and hosting customers.
  • IP services revenue totaled $21.7 million in the first quarter, a decrease of 8% year-over-year and 6% sequentially. Both decreases were driven by per unit price declines in IP and the loss of legacy contracts at higher effective prices, partially offset by an increase in overall traffic.

Net Loss

  • GAAP net loss was $(10.4) million, or $(0.20) per share, compared with $(10.7) million, or $(0.21) per share, in the first quarter of 2014 and $(8.3) million, or $(0.16) per share, in the fourth quarter of 2014.
  • Normalized net loss was $(8.6) million, or $(0.17) per share, compared with normalized net loss of $(7.3) million, or $(0.14) per share, in the first quarter of 2014, and normalized net loss of $(5.2) million, or $(0.10) per share, in the fourth quarter of 2014.

Segment Profit and Adjusted EBITDA

  • Segment profit totaled $47.4 million in the first quarter, a 3% increase compared with the first quarter of 2014 and a 3% decrease from the fourth quarter of 2014. Segment margin was 58.7%, an increase of 230 basis points year-over-year and 80 basis points sequentially.
  • Data center services segment profit totaled $34.8 million in the first quarter, an 8% increase compared with the first quarter of 2014 and a 1% decrease from the fourth quarter of 2014. Data center services segment margin was 58.9% in the first quarter, up 330 basis points year-over-year and 130 basis points sequentially. An increasing proportion of higher-margin services, specifically colocation sold in company-controlled data centers, hosting and cloud services drove data center services segment profit and margin higher compared with the first quarter of 2014. Sequentially, lower data center revenue resulted in a decrease in data center services segment profit.
  • IP services segment profit totaled $12.6 million in the first quarter, a 9% decrease compared with the first quarter of 2014 and a 6% decrease from the fourth quarter of 2014. IP services segment margin was 58.1% in the first quarter, down 20 basis points year-over-year and 60 basis points sequentially. Decreased IP services revenue more than offset lower costs, driving declines in IP services segment profit and segment margin.
  • Adjusted EBITDA totaled $17.9 million in the first quarter, a 1% increase compared with the first quarter of 2014 and a 21% decrease from the fourth quarter of 2014. Adjusted EBITDA margin was 22.2% in the first quarter, up 50 basis points year-over-year and down 480 basis points sequentially. The year-over-year increase in adjusted EBITDA and adjusted EBITDA margin was attributable to increased segment profit in our data center services segment. Sequentially, seasonally higher cash operating expense3 weighed on adjusted EBITDA and adjusted EBITDA margin.

Balance Sheet and Cash Flow Statement

  • Cash and cash equivalents totaled $16.2 million at March 31, 2015. Total debt was $370.3 million, net of discount, at the end of the quarter, including $58.7 million in capital lease obligations.
  • Cash used in operations for the three months ended March 31, 2015 was $1.5 million. Capital expenditures over the same period were $15.7 million.

Business Outlook
We are providing the following guidance for full-year 2015:

  • Revenue: $331 million – $337 million
  • Adjusted EBITDA: $89 million – $95 million
  • Capital Expenditures: $70 million – $80 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 11,871 customers at March 31, 2015.
  • Internap announced the next generation of its Managed Domain Name System (DNS) service, which leverages 24 points of presence (POPs) across four continents to prevent DNS bottlenecks and increase the reliability, velocity and flexibility of websites and Web applications. Internap’s enhanced Managed DNS service also includes automatic high availability failover to ensure that Web applications are always up and running.

1Segment margin and segment profit are non-GAAP financial measures which we define 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.

2Adjusted EBITDA, adjusted EBITDA margin and normalized net loss are non-GAAP financial measures which we define 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 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 Loss and Basic and Diluted Normalized Net Loss Per Share” in the attachment.

3Cash operating expense is a non-GAAP measure which we define in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.”

Conference Call Information
Internap’s first quarter 2015 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 Tuesday, April 28, 2015 at 8:00 p.m. ET through Monday, May 4, 2015 at 855-859-2056 using replay code 28242545. International callers can listen to the archived event at 404-537-3406 with the same code.

About Internap
Internap is the high-performance Internet infrastructure provider that powers the applications shaping the way we live, work and play. Our hybrid infrastructure delivers performance without compromise – blending virtual and bare-metal cloud, hosting and colocation services across a global network of data centers, optimized from the application to the end user and backed by rock-solid customer support and a 100% uptime guarantee. Since 1996, the most innovative companies have relied on Internap to make their applications faster and more scalable. For more information, visit www.internap.com.

Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements include statements related to our ability to accelerate profitable growth and our expectations for full-year 2015 revenue, adjusted EBITDA and capital expenditures. Our ability to accelerate profitable growth and our expectations for full-year 2015 revenue, adjusted EBITDA and capital expenditures are based on certain assumptions, including anticipated new product launches, leveraging of multiple routes to market, expanded brand awareness for high-performance Internet infrastructure services and customer churn levels. These assumptions may prove to be inaccurate in the future. Because such forward-looking 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 execute on our business strategy; the robustness of the IT infrastructure services market; 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.

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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
Michael Nelson
404.302.9700
ir@internap.com