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 $70.0 million, up 2% versus the second quarter of 2012;
  • Data center services revenue of $45.6 million, up 10% versus the second quarter of 2012;
  • Adjusted EBITDA1 of $14.1 million increased 15% versus the second quarter of 2012;
  • Adjusted EBITDA margin of 20.1%, up 240 basis points year-over-year.

ATLANTA, GA – July 25, 2013 – Internap Network Services Corporation (NASDAQ: INAP), a provider of high-performance hosting services, today announced financial results for the second quarter of 2013.

“The solid financial results for the second quarter of 2013 are underpinned by continued growth in our data center services segment and the associated strong operating leverage in the business. Our integrated platform of high-performance colocation, hosting and cloud solutions continues to provide a compelling basis for competitive differentiation and has enabled us to secure recent successes in the on-line advertising, healthcare and media sectors,” said Eric Cooney, President and Chief Executive Officer of Internap. “As we continue into the second half of 2013, the Internap team is keenly focused on execution of the strategy to drive profitable growth and create superior shareholder value.”

Second Quarter 2013 Financial Summary

Revenue

  • Revenue totaled $70.0 million compared with $68.7 million in the second quarter of 2012 and $69.7 million in the first quarter of 2013.
  • Data center services revenue improved 10% year-over-year and 3% sequentially to $45.6 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 $24.4 million, a decrease of 10% compared with the second quarter of 2012 and 4% 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 $(3.7) million, or $(0.07) per share, compared with $(2.0) million, or $(0.04) per share, in the second quarter of 2012 and $(1.6) million, or $(0.03) per share, in the first quarter of 2013.
  • Normalized net loss, which excludes the impact of stock-based compensation expense and items that management considers non-recurring, was $(1.3) million, or $(0.03) per share. Normalized net income was $0.3 million, or $0.01 per share, in the second quarter of 2012, and $0.2 million, or $0.00 per share, in the first quarter of 2013.

Segment Profit and Adjusted EBITDA

  • Segment profit totaled $37.3 million in the second quarter, an increase of 4% year-over-year. Sequentially, segment profit increased 1%. Segment margin was 53.3%, an increase of 80 basis points compared with the second quarter of 2012. Segment margin increased 50 basis points compared with the first quarter of 2013.
  • Segment profit in data center services was $22.9 million, or 50.3% of data center services revenue. IP services segment profit was $14.4 million, or 59.0% of IP services revenue. Data center services segment profit increased 22% year-over-year and 5% 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 490 basis points year-over-year and 130 basis points sequentially. IP services segment profit decreased 16% 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 430 basis points year-over-year and 60 basis points sequentially.
  • Adjusted EBITDA totaled $14.1 million in the second quarter, a 15% increase compared with the second quarter of 2012 and a 1% decrease from the first quarter of 2013. Adjusted EBITDA margin was 20.1% in the second quarter of 2013, up 240 basis points year-over-year and down 20 basis points sequentially. The year-over-year increase in adjusted EBITDA was attributable to increased segment profit in our data center services segment. Sequentially, higher sales and marketing costs outweighed the quarter-over-quarter increase in segment profit.

Balance Sheet and Cash Flow Statement

  • Cash and cash equivalents totaled $26.7 million at June 30, 2013. Total debt was $159.7 million, net of discount, at the end of the quarter, including $55.9 million in capital lease obligations.
  • Cash generated from operations for the three and six months ended June 30, 2013 was $8.7 million and $14.2 million, respectively. Capital expenditures over the same period were $14.9 million and $22.3 million, respectively.

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 3,500 customers at June 30, 2013.
  • Internap’s Los Angeles data center was recently awarded Leadership in Energy and Environmental Design (LEED) Gold certification by the U.S. Green Building Council. In addition to receiving LEED certification, this facility achieved Green Building Initiative’s Green Globe® certification in September 2012.

1 Adjusted EBITDA and Normalized Net (Loss) Income 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 (Loss) Income are contained in the tables entitled “Reconciliation of (Loss) Income from Operations to Adjusted EBITDA,” and “Reconciliation of Net (Loss) Income and Basic and Diluted Net (Loss) Income Per Share to Normalized Net (Loss) Income and Basic and Diluted Normalized Net (Loss) Income Per Share” in the attachment.

2 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.

Conference Call Information:
Internap’s second 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, July 25, 2013 at 8 p.m. ET through Wednesday, July 31, 2013 at 855-859-2056 using the replay code 15354381. International callers can listen to the archived event at 404-537-3406 with the same code.

About Internap
Internap provides intelligent IT infrastructure services that combine platform flexibility and hybridization with unmatched performance, enabling customers to focus on their core business, improve service levels and lower the cost of IT operations. The company’s cloud, hosting and colocation services are delivered from a geographically distributed platform of high-density, redundant data centers. Its patented, performance-optimized IP connectivity guarantees 100% uptime and lowest latency, resulting in a seamless user experience. For more information, visit http://www.internap.com, 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 ability to execute on our business strategy and to drive 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 execute on our business strategy; 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