[February 20, 2014]

Datalink Reports 2013 Fourth Quarter and Year-End Operating Results

Datalink (Nasdaq:DTLK), a leading provider of data center infrastructure and services, today reported results for its fourth quarter and the year ended December 31, 2013. Revenues for the quarter ended December 31, 2013, increased 18% to a record $173.4 million compared to $147.3 million for the quarter ended December 31, 2012. Revenues for the year ended December 31, 2013, increased 21% to a record $594.2 million compared to $491.2 million for the year ended December 31, 2012. For the year, product revenues increased 17% to $373.0 million and services revenues increased 28% to $221.2 million.

The company's results for the quarter and year ended December 31, 2013, include the results of operations from the acquisition of substantially all of the assets of Strategic Technologies, Inc. ("StraTech"), which was completed on October 4, 2012. The results for the fourth quarter of 2013 reflect the full impact of the additional 3.8 million common shares issued in connection with the follow-on stock offering which closed on August 14, 2013. The dilution on GAAP and non-GAAP earnings from the additional shares outstanding on the 2013 fourth quarter and year end was approximately $0.05 per share and $0.04 per share, respectively.

The fourth quarter of 2013 also includes a $611,000 or $0.02 per share charge for the write-down of the account receivable from StraTech to its estimated realizable value. After the end of the quarter, the company reached a settlement agreement with the former owners of StraTech. Under the terms of the agreement, the former owners of StraTech agreed to release the entire 242,805 shares of Datalink common stock that were being held in escrow in exchange for a payment of $100,000 and the release of certain other claims. Based upon the value of the Datalink common stock on the date of the agreement, the company will record income before tax of approximately $877,000 or $0.02 per share in the first quarter of 2014. The net impact on our financial statements between fourth quarter of 2013 and first quarter of 2014 will be a net gain of approximately $266,000.

GAAP Results
On a GAAP basis, the company reported net earnings of $5.2 million or $0.24 per diluted share for the fourth quarter ended December 31, 2013. This compares to net earnings of $3.2 million or $0.18 per diluted share in the fourth quarter of 2012. For the year ended December 31, 2013, the company reported net earnings of $10.0 million or $0.52 per diluted share, compared to net earnings of $10.5 million, or $0.60 per diluted share, for the year ended December 31, 2012. The decrease in net earnings per share for the year is primarily due to the amortization of intangible assets related to the acquisition of substantially all of the assets of StraTech, the additional dilution from the follow-on offering in August 2013, and the charge relating to the write down of the receivable from StraTech.

Non-GAAP Results
Non-GAAP net earnings for the fourth quarter of 2013 were $7.4 million, or $0.34 per diluted share, compared to $5.6 million, or $0.31 per diluted share, in the fourth quarter of 2012. For the year ended December 31, 2013, the company reported non-GAAP net earnings of $17.9 million, or $0.93 per diluted share, compared to $15.3 million, or $0.88 per diluted share, for the year ended December 31, 2012. A detailed reconciliation between GAAP and non-GAAP information is contained in the tables included herein.

Fourth-quarter and year-end highlights include:

• Record fourth quarter revenues exceeding initial guidance, as well as record annual revenues.
• A 17% year-over-year increase in product revenues to a record $373.0 million, including a record number of converged data center infrastructure sales.
• A 28% year-over-year increase in total services revenues to a record $222.0 million, including 26% and 39% increases in customer support and professional services, respectively.
• An expansion of the company's Advanced Services portfolio spanning data center relocation and migration services, cloud enablement and related IT-as-a-service consulting, and business continuity/disaster recovery.
• Continued growth in customers who did over $1 million of business with the company, up from 102 in 2012 to 124 in 2013.
• Generated $15.3 million of cash from operations in 2013, contributing to an end-of-year total of more than $76.1 million of cash and investments.

Outlook
Datalink projects revenues of $152.0 million to $162.0 million for the first quarter of 2014 compared to $133.6 million for the first quarter of 2013. This represents an increase in expected revenues of between 14% and 21%, based on the company's current backlog, sales pipeline, and historical trends. The company expects first quarter 2014 net earnings to be between $0.08 and $0.13 per diluted share on a GAAP basis, and net earnings of between $0.14 and $0.19 per diluted share on a non-GAAP basis. This compares to net earnings of $0.06 per diluted share and $0.18 per diluted share on a GAAP and non-GAAP basis, respectively, for the same period in 2013.

Non-GAAP earnings per share exclude the effect of acquisition accounting adjustments from the StraTech asset acquisition to deferred revenue and costs, integration and transaction costs related to acquisitions, stock-based compensation expense, amortization of intangible assets, and the related effects on income taxes. The company estimates this total effect will be approximately $0.06 per diluted share for the first quarter of 2013.

Conference Call and Webcast Today
Datalink will hold a conference call shortly afterward at 4:00 p.m. Central Time during which time Datalink president and chief executive officer, Paul Lidsky, and chief financial officer, Greg Barnum, will discuss company results and provide a business overview. Participants can access the conference call by dialing (866) 318-8618. Participants will be asked to identify the Datalink conference call and provide the designated identification number (54485769). A live webcast of the conference call can be accessed here or via Datalink's investor relations website at www.datalink.com.

About Datalink
A complete data center solutions and services provider for Fortune 500 and mid-tier enterprises, Datalink transforms data centers so they become more efficient, manageable and responsive to changing business needs. Datalink helps leverage and protect storage, server, and network investments with a focus on long-term value, offering a full lifecycle of services, from consulting and design to implementation, management and support. Datalink solutions span virtualization and consolidation, data storage and protection, advanced network infrastructures, business continuity, and cloud enablement. Each delivers measurable performance gains and maximizes the business value of IT. For more information, call 800.448.6314 or visit www.datalink.com.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. This press release contains forward-looking statements, including our internal projections of certain anticipated 2014 results, which reflect our views regarding future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including those identified below, which could cause actual results to differ materially from historical results or those anticipated. The words "aim," "believe," "expect," "anticipate," "intend," "estimate," "should" and other expressions which indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending upon a variety of factors, many of which are included under "Risk Factors" in our annual report on Form 10-K for our year ended December 31, 2012, including, but not limited to: the level of continuing demand for data center solutions and services including the effects of current economic and credit conditions and the ability of organizations to outsource data center infrastructure-related services to service providers such as us; the migration of organizations to virtualized server environments, including using a private cloud computing infrastructure; the extent to which customers deploy disk-based backup recovery solutions; the realization of the expected trends identified for advanced network infrastructures; reliance by manufacturers on their data service partners to integrate their specialized products; continued preferred status with certain principal suppliers; competition and pricing pressures and timing of our installations that may adversely affect our revenues and profits; fixed employment costs that may impact profitability if we suffer revenue shortfalls; our ability to hire and retain key technical and sales personnel; continued productivity of our sales personnel; our dependence on key suppliers; our ability to adapt to rapid technological change; success of the implementation of our enterprise resource planning system; risks associated with integrating completed and future acquisitions; the ability to execute our acquisition strategy; fluctuations in our quarterly operating results; future changes in applicable accounting rules; and volatility in our stock price. Furthermore, our revenues for any particular quarter are not necessarily reflected by our backlog of contracted orders, which also may fluctuate unpredictably. We cannot assure you that we can grow or maintain our revenue and backlog from current levels. Additional factors that may cause actual results to differ from our assumptions and expectations include those set forth in our most recent filing on Form 10-K filed with the Securities and Exchange Commission. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Non-GAAP Details
Non-GAAP financial measures exclude the impact from acquisition accounting adjustments to deferred revenue and costs, stock-based compensation expense, amortization of acquisition intangible assets, integration and transaction costs related to acquisitions and the related effects on income taxes. These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.

These non-GAAP financial measures facilitate management's internal comparisons to our historical operating results and comparisons to competitors' operating results. We include these non-GAAP financial measures in our earnings announcement because we believe they are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making, such as employee compensation planning. We believe that the presentation of these non-GAAP measures when shown in conjunction with the corresponding GAAP measures provides useful information to investors and management regarding financial and business trends relating to our financial condition and results of operations.

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