TMCnet News

Internap Reports Second Quarter 2016 Financial Results
[August 04, 2016]

Internap Reports Second Quarter 2016 Financial Results


ATLANTA, Aug. 4, 2016 /PRNewswire/ -- Internap Corporation (NASDAQ: INAP), a provider of high-performance Internet infrastructure services, today announced financial results for the second quarter of 2016.

"We are pleased with the improvement in adjusted EBITDA margin, driven by improved operational efficiencies as a result of the organizational structure changes made in the first quarter. As we previously communicated, churn from a small number of large customers impacted our revenue performance in the second quarter of 2016. We did see revenue begin to stabilize in the second quarter as the major churn events declined and bookings improved. Given our first half 2016 results, we are updating our full-year 2016 guidance," said Michael Ruffolo, President and Chief Executive Officer of Internap.  "With a return to sequential revenue growth expected in the second half of 2016, we remain confident in our ability to accelerate profitable growth and drive long-term shareholder value."

Second Quarter 2016 Financial Summary

 














YoY


QoQ






2Q 2016


2Q 2015


1Q 2016


Growth


Growth


Revenues:












Data center and network services

$     50,459


$     53,521


$     50,872


-6%


-1%



Cloud and hosting services

$     23,856


$     26,911


$     25,052


-11%


-5%




Total Revenues

$     74,315


$     80,432


$     75,924


-8%


-2%
















Operating Expenses

$     76,789


$     86,270


$     78,125


-11%


-2%
















GAAP Net Loss

$   (10,693)


$   (12,534)


$     (9,644)


-15%


11%
















Normalized Net Loss1

$   (7,300)


$  (10,290)


$    (6,108)


-29%


20%
















Segment Profit2

$    42,945


$   47,454


$    44,847


-10%


-4%


Segment Profit Margin2

57.8%


59.0%


59.1%


-120 BPS


-130 BPS
















Adjusted EBITDA

$    20,167


$   19,109


$    20,476


6%


-2%


Adjusted EBITDA Margin

27.1%


23.8%


27.0%


330 BPS


10 BPS















Revenue

  • Revenue totaled $74.3 million in the second quarter, a decrease of 8% year-over-year and 2% sequentially. Both decreases were driven by churn from a small number of large customers.
  • Data Center and Network Services revenue totaled $50.5 million in the second quarter, a decrease of 6% year-over-year and 1% sequentially. Both decreases were attributable to lower IP connectivity revenue related to the continued decline in pricing for new and renewing customers and the loss of legacy contracts and a decrease in partner colocation revenue, offset by an increase in company-controlled colocation revenue.
  • Cloud and Hosting Services revenue totaled $23.9 million in the second quarter, a decrease of 11% year-over-year and 5% sequentially. Both decreases were driven by churn from a small number of large customers.

Net Loss

  • GAAP net loss was $(10.7) million, or $(0.21) per share, compared with $(12.5) million, or $(0.24) per share, in the second quarter of 2015 and $(9.6) million, or $(0.19) per share, in the first quarter of 2016.
  • Normalized net loss was $(7.3) million, or $(0.14) per share, compared with normalized net loss of $(10.3) million, or $(0.20) per share, in the second quarter of 2015, and normalized net loss of $(6.1) million, or $(0.12) per share, in the first quarter of 2016.

Segment Profit and Adjusted EBITDA

  • Segment profit totaled $42.9 million in the second quarter, a 10% decrease compared with the second quarter of 2015 and a 4% decrease from the first quarter of 2016. Segment margin was 57.8%, a decrease of 120 basis points year-over-year and 130 basis points sequentially.
  • Data Center and Network Services segment profit totaled $25.8 million in the second quarter, a 6% decrease compared with the second quarter of 2015 and a 3% decrease from the first quarter of 2016. Data Center and Network Services segment margin was 51.1% in the second quarter, down 10 basis points year-over-year and 100 basis points sequentially. Lower IP connectivity revenue and partner colocation revenue offset higher company-controlled colocation revenue and resulted in a decrease in Data Center and Network Services segment profit and segment margin.
  • Cloud and Hosting Services segment profit totaled $17.1 million in the second quarter, a 15% decrease compared with the second quarter of 2015 and a 7% decrease from the first quarter of 2016. Cloud and Hosting Services segment margin was 71.8% in the second quarter, down 270 basis points year-over-year and 140 basis points sequentially. Decreased Cloud and Hosting Services revenue resulted in declines in segment profit and segment margin.   
  • Adjusted EBITDA totaled $20.2 million in the second quarter, a 6% increase compared with the second quarter of 2015 and a 2% decrease from the first quarter of 2016. Adjusted EBITDA margin was 27.1% in the second quarter, up 330 basis points year-over-year and up 10 basis points sequentially. The year-over-year increase in adjusted EBITDA and adjusted EBITDA margin was attributable to lower cash operating expense4 primarily from optimizing our cost structure and improved marketing program efficiencies. Benefits included a decrease in cash-based compensation, a decrease in marketing costs and the elimination of non-core functions, primarily the result of our business unit realignment. Sequentially, lower segment profit weighed on adjusted EBITDA.

Balance Sheet and Cash Flow Statement

  • Cash and cash equivalents totaled $13.9 million at June 30, 2016. Total debt was $377.8 million, net of discount and prepaid costs, at the end of the quarter, including $57.7 million in capital lease obligations.
  • Cash generated from operations for the three months ended June 30, 2016 was $14.0 million. Capital expenditures over the same period were $14.4 million.

Business Outlook

Internap updated its financial outlook for full-year 2016:

 


Full-Year 2016

Full-Year 2016


Current Guidance

Previous Guidance

Revenue                         

$300 million - $305 million

$310 million - $320 million

Adjusted EBITDA            

$83 million - $87 million

$80 million - $90 million

Capital Expenditures       

$40 million - $50 million

$40 million - $50 million

 

__________________________________________________

1   Adjusted 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.

2   Segment 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.

Conference Call Information:

Internap's second quarter 2016 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, August 4, 2016 at 8:00 p.m. ET through Wednesday, August 10, 2016 at 855-859-2056 using replay code 41861490. 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 expectations for full-year 2016 revenue, adjusted EBITDA and capital expenditures and our ability to accelerate profitable growth and drive long-term shareholder value. Our ability to achieve these forward-looking statements is based on certain assumptions, including our ability to execute on our business strategy, 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 and drive growth; our ability to maintain current customers and obtain new ones, whether in a cost-effective manner or at all; 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 sell into new and existing data center space; the actual performance of our IT infrastructure services; 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.

 




Press Contact:

Investor Contact:

Mariah Torpey

Mary Ann Arico

(781) 418-2404

(404) 302-9982

[email protected]

[email protected]

 









INTERNAP CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)















Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015

Revenues:








   Data center and network services

$              50,459


$              53,521


$            101,331


$            107,589

   Cloud and hosting services

23,856


26,911


48,908


53,629

       Total revenues

74,315


80,432


150,239


161,218









Operating costs and expenses:








   Direct costs of sales and services, exclusive of

    depreciation and amortization, shown below:








     Data center and network services

24,650


26,116


49,023


52,597

     Cloud and hosting services

6,720


6,862


13,424


13,727

   Direct costs of customer support

7,919


9,090


16,723


18,208

   Sales, general and administrative

18,131


21,577


37,061


43,544

   Depreciation and amortization

19,217


22,566


38,330


42,774

   Exit activities, restructuring and impairments

152


59


353


325









Total operating costs and expenses

76,789


86,270


154,914


171,175









Loss from operations

(2,474)


(5,838)


(4,675)


(9,957)









Non-operating expenses:








   Interest expense

8,082


6,825


15,067


13,689

   Other, net

116


55


471


(474)

Total non-operating expenses

8,198


6,880


15,538


13,215









Loss before income taxes and equity in earnings of

   equity-method investment

(10,672)


(12,718)


(20,213)


(23,172)

Provision (benefit) for income taxes

62


(137)


200


(111)

Equity in earnings of equity-method investment, net of taxes

(41)


(47)


(77)


(85)









Net loss

$            (10,693)


$            (12,534)


$            (20,336)


$            (22,976)









Basic and diluted net loss per share

$                (0.21)


$                (0.24)


$                (0.39)


$                (0.45)









Weighted average shares outstanding used in computing

  net loss per share:








    Basic and diluted

52,062


51,579


52,241


51,590

















 






INTERNAP CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)













June 30,


December 31,



2016


2015






ASSETS





Current assets:





Cash and cash equivalents


$           13,868


$           17,772

Accounts receivable, net of allowance for doubtful accounts of $1,319 and
 
$1,751, respectively


18,358


20,292

Prepaid expenses and other assets


11,975


12,405






Total current assets


44,201


50,469






Property and equipment, net


325,136


328,700

Investment in joint venture


3,020


2,768

Intangible assets, net


31,159


32,887

Goodwill


130,313


130,313

Deposits and other assets


8,998


9,474

Total assets


$         542,827


$         554,611






LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Accounts payable


$           26,054


$           22,607

Accrued liabilities


10,467


10,737

Deferred revenues


6,540


6,603

Capital lease obligations


9,586


8,421

Term loan, less discount of $2,192 and $1,784, respectively


808


1,215

Exit activities and restructuring liability


1,432


2,034

Other current liabilities


1,358


2,566

Total current liabilities


56,245


54,183






Deferred revenues


4,967


4,759

Capital lease obligations


48,149


48,692

Revolving credit facility


35,500


31,000

Term loan, less discount of $5,721 and $5,703 respectively


283,779


285,298

Exit activities and restructuring liability


1,486


1,844

Deferred rent


7,879


8,879

Deferred tax liability


1,223


880

Other long-term liabilities


4,424


4,640

Total liabilities


443,652


440,175











Commitments and contingencies





Stockholders' equity:





Preferred stock, $0.001 par value; 20,000 shares authorized; no shares issued





or outstanding


-


-

Common stock, $0.001 par value; 120,000 shares authorized; 56,689 and 55,971 shares





outstanding, respectively


57


56

Additional paid-in capital


1,281,762


1,277,511

Treasury stock, at cost; 962 and 826 shares, respectively


(6,736)


(6,393)

Accumulated deficit


(1,174,293)


(1,153,957)

Accumulated items of other comprehensive loss


(1,615)


(2,781)

Total stockholders' equity


99,175


114,436

Total liabilities and stockholders' equity


$         542,827


$         554,611











 











INTERNAP CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)






















Three Months Ended June 30,


Six Months Ended June 30,




2016


2015


2016


2015


Cash Flows from Operating Activities:










Net loss


$            (10,693)


$            (12,534)


$            (20,336)


$            (22,976)


Adjustments to reconcile net loss to net cash provided by

 operating activities:










   Depreciation and amortization


19,217


22,566


38,330


42,774


   Amortization of debt discount and issuance costs


711


499


1,233


990


   Stock-based compensation expense, net of capitalized amount


1,542


2,185


3,464


3,764


   Equity in earnings of equity-method investment


(41)


(47)


(77)


(85)


   Provision for doubtful accounts


239


207


580


606


   Non-cash change in capital lease obligations


40


120


527


(640)


   Non-cash change in exit activities and restructuring liability


272


165


619


536


   Non-cash change in deferred rent


(516)


(386)


(1,000)


(788)


   Deferred taxes


(38)


(211)


39


(157)


   Payment of debt lender fees


(1,716)


-


(1,716)


-


   Other, net


(15)


263


186


19


Changes in operating assets and liabilities:










   Accounts receivable


1,165


77


1,702


(1,647)


   Prepaid expenses, deposits and other assets


2,660


582


4,606


(962)


   Accounts payable


4,084


(510)


2,269


(8,162)


   Accrued and other liabilities


(2,028)


(651)


(3,931)


(1,554)


   Deferred revenues


(97)


1,409


94


1,153


   Exit activities and restructuring liability


(775)


(679)


(1,579)


(1,342)


   Asset retirement obligation


-


-


(174)


-


   Other liabilities


8


17


(35)


35


Net cash flows provided by operating activities


14,019


13,072


24,801


11,564












Cash Flows from Investing Activities:










Purchases of property and equipment


(14,032)


(15,699)


(26,314)


(30,689)


Additions to acquired and developed technology


(370)


(98)


(769)


(810)


Net cash flows used in investing activities


(14,402)


(15,797)


(27,083)


(31,499)












Cash Flows from Financing Activities:










Proceeds from credit agreements


3,000


4,000


4,500


17,000


Principal payments on credit agreements


(750)


(750)


(1,500)


(1,500)


Payments on capital lease obligations


(2,468)


(1,947)


(4,827)


(3,717)


Proceeds from exercise of stock options


675


1,906


675


4,489


Acquisition of common stock for income tax withholdings


(127)


(250)


(343)


(868)


Other, net


(116)


(37)


(192)


943


Net cash flows (used in) provided by financing activities


214


2,922


(1,687)


16,347


Effect of exchange rates on cash and cash equivalents


139


(4)


65


(84)


Net decrease in cash and cash equivalents


(30)


193


(3,904)


(3,672)


Cash and cash equivalents at beginning of period


13,898


16,219


17,772


20,084


Cash and cash equivalents at end of period


$              13,868


$              16,412


$              13,868


$              16,412






















 

INTERNAP CORPORATION
NON-GAAP (ADJUSTED) FINANCIAL MEASURES

In addition to providing financial measurements based on accounting principles generally accepted in the United States of America ("GAAP"), Internap has historically provided additional financial measures that are not prepared in accordance with GAAP ("non-GAAP"), including adjusted EBITDA and adjusted EBITDA margin, normalized net loss, normalized diluted shares outstanding, segment profit and segment margin, levered free cash flow and cash operating expense. The most directly comparable GAAP equivalent to adjusted EBITDA and normalized net loss is loss from operations and net loss, respectively. The most directly comparable GAAP equivalent to normalized diluted shares outstanding is diluted common shares outstanding.

We define non-GAAP measures as follows:

  • Adjusted EBITDA is loss from operations plus depreciation and amortization, loss (gain) on disposals of property and equipment, exit activities, restructuring and impairments, stock-based compensation, strategic alternatives and related costs, organizational realignment costs and acquisition costs.
  • Adjusted EBITDA margin is adjusted EBITDA as a percentage of revenues.
  • Normalized net loss is net loss plus exit activities, restructuring and impairments, stock-based compensation, acquisition costs and strategic alternatives and related costs.
  • Normalized diluted shares outstanding are diluted shares of common stock outstanding used in GAAP net loss per share calculations, excluding the dilutive effect of stock-based compensation using the treasury stock method.
  • Normalized net loss per share is normalized net loss divided by basic and normalized diluted shares outstanding.
  • Segment profit is segment revenues less direct costs of sales and services, exclusive of depreciation and amortization for the segment, as presented in the notes to our consolidated financial statements. Segment profit does not include direct costs of customer support or any depreciation or amortization associated with direct costs.
  • Segment margin is segment profit as a percentage of segment revenues.
  • Levered free cash flow is adjusted EBITDA less capital expenditures, net of equipment sale-leaseback transactions and cash paid for interest.
  • Cash operating expense is GAAP operating expense less direct cost of sales and services, depreciation and amortization, loss (gain) on disposals of property and equipment, exit activities, restructuring and impairments, stock-based compensation, acquisition costs and strategic alternatives and related costs.

We detail reconciliations of our non-GAAP financial measures to the most directly comparable financial measure in the reconciliations of GAAP to non-GAAP measures below. We believe that presentation of these non-GAAP financial measures provides useful information to investors regarding our results of operations.

We believe that excluding depreciation and amortization and loss on disposals of property and equipment, as well as impairments and restructuring, to calculate adjusted EBITDA provides supplemental information and an alternative presentation that is useful to investors' understanding of our core operating results and trends. Not only are depreciation and amortization expenses based on historical costs of assets that may have little bearing on present or future replacement costs, but also they are based on management estimates of remaining useful lives. Loss on disposals of property and equipment is also based on historical costs of assets that may have little bearing on replacement costs. Impairments and restructuring expenses primarily reflect goodwill impairments and subsequent plan adjustments in sublease income assumptions for certain properties included in our previously disclosed restructuring plans.

We believe that exit activities, restructuring and impairment charges, strategic alternatives and related costs and organizational realignment costs are unique costs that we do not expect to recur on a regular basis, and consequently, we do not consider these charges as a normal component of expenses related to current and ongoing operations.

Similarly, we believe that excluding the effects of stock-based compensation from non-GAAP financial measures provides supplemental information and an alternative presentation useful to investors' understanding of our core operating results and trends. Investors have indicated that they consider financial measures of our results of operations excluding stock-based compensation as important supplemental information useful to their understanding of our historical results and estimating our future results.

INTERNAP CORPORATION
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (Continued)

We also believe that, in excluding the effects of stock-based compensation, our non-GAAP financial measures provide investors with transparency into what management uses to measure and forecast our results of operations, to compare on a consistent basis our results of operations for the current period to that of prior periods and to compare our results of operations on a more consistent basis against that of other companies, in making financial and operating decisions and to establish certain management compensation.

Stock-based compensation is an important part of total compensation, especially from the perspective of employees. We believe, however, that supplementing GAAP net loss and net loss per share information by providing normalized net loss and normalized net loss per share, excluding the effect of exit activities, restructuring and impairments, stock-based compensation and acquisition costs in all periods, is useful to investors because it enables additional and more meaningful period-to-period comparisons. We consider normalized diluted shares to be another important indicator of our overall performance because it eliminates the effect of non-cash items.

Adjusted EBITDA is not a measure of liquidity calculated in accordance with GAAP, and should be viewed as a supplement to — not a substitute for — our results of operations presented on the basis of GAAP. Adjusted EBITDA does not purport to represent cash flow provided by operating activities as defined by GAAP. Our statements of cash flows present our cash flow activity in accordance with GAAP. Furthermore, adjusted EBITDA is not necessarily comparable to similarly-titled measures reported by other companies.

We believe adjusted EBITDA is used by and is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. We believe that:

  • EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, income taxes, depreciation and amortization, which can vary substantially from company-to-company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired; and
  • investors commonly adjust EBITDA information to eliminate the effect of disposals of property and equipment, impairments, restructuring and stock-based compensation which vary widely from company-to-company and impair comparability.

Our management uses adjusted EBITDA:

  • as a measure of operating performance to assist in comparing performance from period-to-period on a consistent basis;
  • as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; and
  • in communications with the board of directors, analysts and investors concerning our financial performance.

Our presentation of segment profit and segment margin excludes direct costs of customer support and depreciation and amortization in order to allow investors to see the business through the eyes of management. Management views direct costs of network, sales and services as generally less controllable, external costs and management regularly monitors the margin of revenues in excess of these direct costs. Similarly, we view the costs of customer support to also be an important component of costs of revenues but believe that the costs of customer support to be more within our control and to some degree discretionary as we can adjust those costs by hiring and terminating employees.

Segment margin is an important metric to our investors and analysts, as we have regularly discussed and disclosed the effects of third party vendors' pricing declines and the corresponding effect on our revenues. The presentation of segment margin highlights the impact of the pricing declines and allows investors and analysts to evaluate our revenue generation performance relative to direct costs of network, sales and services. Conversely, we have much greater latitude in controlling the compensation component of costs of revenues, represented by customer support, and we analyze this component separately from the direct external costs.

We also have excluded depreciation and amortization from segment profit and segment margin because, as noted above, they are based on estimated useful lives of tangible and intangible assets. Further, depreciation and amortization are based on historical costs incurred to build out our deployed network and the historical costs of these assets may not be indicative of current or future capital expenditures.

INTERNAP CORPORATION
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (Continued)

Although we believe, for the foregoing reasons, that our presentation of non-GAAP financial measures provides useful supplemental information to investors regarding our results of operations, our non-GAAP financial measures should only be considered in addition to, and not as a substitute for, or superior to, any measure of financial performance prepared in accordance with GAAP.

Use of non-GAAP financial measures is subject to inherent limitations because they do not include all the expenses that must be included under GAAP and because they involve the exercise of judgment of which charges should properly be excluded from the non-GAAP financial measure. Management accounts for these limitations by not relying exclusively on non-GAAP financial measures, but only using such information to supplement GAAP financial measures. Our non-GAAP financial measures may not be the same non-GAAP measures, and may not be calculated in the same manner, as those used by other companies.

RECONCILIATION OF LOSS FROM OPERATIONS TO ADJUSTED EBITDA

A reconciliation of loss from operations, the most directly comparable GAAP measure, to adjusted EBITDA for each of the periods indicated is as follows (in thousands):   


Three Months Ended


June 30, 2016


March 31, 2016


June 30, 2015

Loss from operations (GAAP)

$              (2,474)


$              (2,201)


$              (5,838)

Depreciation and amortization

19,217


19,113


22,566

Loss on disposal of property and equipment, net

31


28


137

Exit activities, restructuring and impairments

152


201


59

Stock-based compensation

1,542


1,922


2,185

Strategic alternatives and related costs

282


141


-

Organizational realignment costs

1,417


1,272


-

Adjusted EBITDA (non-GAAP)

$              20,167


$              20,476


$             19,109







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

Reconciliations of (1) net loss, the most directly comparable GAAP measure, to normalized net loss, (2) diluted shares outstanding used in per share calculations, the most directly comparable GAAP measure, to normalized diluted shares used in normalized per share outstanding calculations and (3) net loss per share, the most directly comparable GAAP measure, to normalized net loss per share for each of the periods indicated is as follows (in thousands, except per share data):   

 








Three Months Ended


June 30, 2016


March 31, 2016


June 30, 2015

Net loss (GAAP)

$       (10,693)


$           (9,644)


$          (12,534)

Exit activities, restructuring and impairments

152


201


59

Stock-based compensation

1,542


1,922


2,185

Strategic alternatives and related costs

282


141


-

Organizational realignment costs

1,417


1,272


-

Normalized net loss (non-GAAP)

$        (7,300)


$           (6,108)


$         (10,290)







Weighted average shares outstanding used in per share calculation:






Basic and diluted (GAAP)

52,062


51,774


51,579

Add potentially dilutive securities

-


-


-

Less dilutive effect of stock-based compensation under the treasury

 stock method

-


-


-

Normalized diluted shares (non-GAAP)

52,062


51,774


51,579







Loss per share (GAAP):






Basic and diluted

$          (0.21)


$             (0.19)


$            (0.24)







Normalized net loss per share (non-GAAP):






Basic and diluted

$         (0.14)


$             (0.12)


$            (0.20)













 

INTERNAP CORPORATION
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (Continued)

INTERNAP CORPORATION
SEGMENT PROFIT AND SEGMENT MARGIN

Segment profit and segment margin, which does not include direct costs of customer support or any depreciation or amortization, for each of the periods indicated is as follows (dollars in thousands):   

 









Three Months Ended


June 30, 2016


March 31, 2016


June 30, 2015

Revenues:






   Data center and network services:






      Company-controlled

$          22,933


$          22,357


$          21,801

      Partner

9,793


9,938


10,711

      IP connectivity

17,733


18,577


21,009

      Total data center and network services

50,459


50,872


53,521

   Cloud and hosting services

23,856


25,052


26,911

      Total

74,315


75,924


80,432







Direct cost of sales and services, exclusive of






      depreciation and amortization:






   Data center and network services:






      Company-controlled

9,994


9,712


9,510

      Partner

7,051


7,172


7,963

      IP connectivity

7,605


7,489


8,643

      Total data center and network services

24,650


24,373


26,116

   Cloud and hosting services

6,720


6,704


6,862

      Total

31,370


31,077


32,978







Segment Profit:






   Data center and network services






      Company-controlled

12,939


12,645


12,291

      Partner

2,742


2,766


2,748

      IP connectivity

10,128


11,088


12,366

      Total data center and network services

25,809


26,499


27,405

   Cloud and hosting services

17,136


18,348


20,049

      Total

$           42,945


$          44,847


$          47,454







Segment Margin:






   Data center and network services






      Company-controlled

56.4%


56.6%


56.4%

      Partner

28.0%


27.8%


25.7%

      IP connectivity

57.1%


59.7%


58.9%

      Total data center and network services

51.1%


52.1%


51.2%

   Cloud and hosting services

71.8%


73.2%


74.5%

      Total

57.8%


59.1%


59.0%













INTERNAP CORPORATION
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (Continued)

LEVERED FREE CASH FLOW

Levered free cash flow is a non-GAAP measure and is adjusted EBITDA less capital expenditures, net of equipment sale-leaseback transactions and cash paid for interest (in thousands):

 








Three Months Ended


June 30, 2016


March 31, 2016


June 30, 2015

Adjusted EBITDA (non-GAAP)

$             20,167


$              20,476


$             19,109

Capital expenditures, net of equipment sale-leaseback transactions

(14,402)


(12,681)


(15,797)

Unlevered free cash flow (non-GAAP)

5,765


7,795


3,312







Cash interest expense

(7,816)


(6,540)


(6,602)

Levered free cash flow (non-GAAP)

$             (2,051)


$                1,255


$             (3,290)







 

CASH OPERATING EXPENSE

Cash operating expense is a non-GAAP measure and is operating expense defined by GAAP, less direct costs of sales and services, depreciation and amortization, (loss) gain on disposal of property and equipment, exit activities, restructuring and impairments, stock-based compensation, acquisition costs and strategic alternatives and related costs (in thousands):

 








Three Months Ended


June 30, 2016


March 31, 2016


June 30, 2015

Total operating costs and expenses

$             76,789


$             78,125


$             86,270

Direct costs of sales and services, exclusive of depreciation and amortization

(31,370)


(31,077)


(32,978)

Depreciation and amortization

(19,217)


(19,113)


(22,566)

Loss on disposal of property and equipment, net

(31)


(28)


(137)

Exit activities, restructuring and impairments

(152)


(201)


(59)

Stock-based compensation

(1,542)


(1,922)


(2,185)

Strategic alternatives and related costs

(282)


(141)


-

Organizational realignment costs

(1,417)


(1,272)


-

Cash operating expense (non-GAAP)

$             22,778


$             24,371


$             28,345







 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/internap-reports-second-quarter-2016-financial-results-300309466.html

SOURCE Internap Corporation


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