Andover, MA, March 15, 2011 — NaviSite, Inc. (NASDAQ:NAVI, news, filings), a premier provider of enterprise-class hosting, managed application, managed messaging and managed cloud services, today reported financial results for the second quarter of fiscal year 2011 ended January 31, 2011.
NaviSite completed the sale of its Dallas colocation data center during the second quarter of fiscal year 2011, for gross cash proceeds of $12.75 million. The results of operations reported exclude the results of discontinued operations for the periods presented.
Financial Results for the Second Quarter of Fiscal Year 2011
· Total revenue for the quarter ended January 31, 2011 was $32.4 million, representing a year-over-year increase of 7% and a sequential increase of 1%.
· Recurring hosting revenue was $31.3 million for the second quarter, representing a year-over-year increase of 8% and a sequential increase of 1%.
· EBITDA, excluding impairment costs, stock-based compensation, severance and other non-operational charges (“EBITDA, as adjusted”) for the second quarter was $7.4 million, representing a year-over-year increase of 13% and a sequential increase of 3%.
· Net income attributable to common shareholders for the second quarter was $4.8 million, or $0.13 per share, compared to a loss of $2.9 million, or $(0.08) per share, in the second quarter of fiscal year 2010. The net income for the second quarter was mainly due to the gain on the sale of our Dallas colocation data center.
Financial and Business Highlights
· Time Warner Cable Inc. (NYSE:TWC, news) and NaviSite announced an agreement under which Time Warner Cable will acquire NaviSite for $5.50 per common share in cash, or a total equity value of approximately $230 million.
· Announced the sale of our Dallas, Texas colocation business to Cologix Dallas, Inc., a subsidiary of Cologix, Inc., for $12.75 million in cash.
· Booked $0.6 million of incremental monthly revenue with an average term of 16 months in the second quarter of fiscal year 2011 compared to $0.7 million booked in the second quarter of fiscal year 2010 with an average term of 24 months.
· Booked $0.1 million of cloud expected monthly recurring revenue in our second quarter of cloud availability, an increase of 34% from the prior quarter and representing over 17% of our total bookings for the quarter.
· Customer churn, defined as the loss of a customer or a reduction in a customer’s monthly recurring revenue from our active customer pool, was 1.1% per month during the quarter, compared to 1.1% per month in second quarter of fiscal year 2010 and 1.2% in the prior quarter.
EBITDA and Other Non-GAAP Measures
EBITDA is not a recognized measure for financial-statement presentation under United States generally accepted accounting principles (“GAAP”). NaviSite believes that non-GAAP measures, such as EBITDA and adjusted EBITDA, provide investors with useful supplemental measures of our actual and expected operating and financial performance by excluding the impact of interest, taxes, depreciation and amortization from net income (loss). We also exclude impairment costs, stock-based compensation, severance, discontinued operations, related gain on discontinued operations, and other non-recurring charges, as such items may be considered to be of a non-operational nature. EBITDA, as adjusted, does not have any standardized definition and therefore may not be comparable to similar measures presented by other reporting companies. We use EBITDA, as adjusted, to assist in evaluating our actual and expected operating and financial performance. The non-GAAP results should not be evaluated in isolation from, or as a substitute for, our financial results prepared in accordance with GAAP. A table reconciling our net income (loss), as reported, to EBITDA, as adjusted are included in the condensed consolidated financial statements in this release. We believe that using EBITDA and adjusted EBITDA together with net income (loss) will help investors better understand our underlying financial performance.
NaviSite, Inc. (NASDAQ: NAVI) is a leading worldwide provider of enterprise-class, cloud-enabled hosting, managed applications and services. NaviSite provides a full suite of reliable and scalable managed services, including Application Services, industry-leading Enterprise Hosting, and Managed Cloud Services for enterprises looking to outsource IT infrastructures and lower their capital and operational costs. Enterprise customers depend on NaviSite for customized solutions, delivered through a global footprint of state-of-the-art data centers. For more information about NaviSite’s services, please visit www.navisite.com.
This release contains forward-looking statements that address a variety of subjects, including NaviSite’s expected future operating and financial results, such as profitability, revenue growth and EBITDA, the success and performance of our product and service offerings and our strategic business plans for growing our customer base. All statements other than statements of historical fact — including, without limitation, those with respect to our goals, plans and strategies set forth herein — are forward-looking statements. The following important factors and uncertainties, along with general economic conditions, changes in economic conditions and others, could cause actual results to differ materially from those described in these forward-looking statements. Our success — including our ability to improve our gross profit, to improve our cash flows, to expand our operations and revenue and to reach and sustain profitability — depends in part on our ability to execute on our business strategy and the continued and increased demand for, and market acceptance of, our products and services. We may not remain compliant with our agreement with our senior secured lenders, including financial covenants. Our financial forecasts may not be achieved, including those as to expected EBITDA and revenue. We may be unable to raise the necessary funds to meet our payment obligations to our lending group under our senior secured credit facility and other creditors. We may not be able to expand our operations in accordance with our business strategy. We may experience difficulties integrating technologies, operations and personnel in accordance with our business strategy. Our products, technologies and resources may not successfully operate with the technology, resources and applications of third parties. We derive a significant portion of our revenue from a small number of customers, and the loss of any of those customers could significantly damage our financial condition and results of operations. Competition has increased, and technological changes made, in the markets in which we compete. For a detailed discussion of cautionary statements that may affect our future results of operations and financial results, please refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q. Forward-looking statements represent our current expectations and are inherently uncertain. We do not undertake any obligation to update forward-looking statements that we make. All logos, company and product names may be trademarks or registered trademarks of their respective owners.
Additional Information and Where to Find It
NaviSite, Inc. has filed a preliminary proxy statement on March 1, 2011 and intends to file with the Securities and Exchange Commission (the “SEC”) a definitive proxy statement and other relevant materials in connection with the proposed merger (the “Merger”) with Avatar Merger Sub Inc. (“Merger Sub”), pursuant to which NaviSite would be acquired by Time Warner Cable Inc. (“TWC”). The preliminary proxy statement contains, and the definitive proxy statement will contain, important information about the proposed Merger and related matters. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE MERGER, INVESTORS AND STOCKHOLDERS OF NAVISITE ARE URGED TO READ THE PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER. The proxy statement and other relevant materials (when they become available), and any other documents filed by NaviSite with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov or from NaviSite by contacting NaviSite at NaviSite, Inc., Attention: Investor Relations, 400 Minuteman Road, Andover, MA 01810 or by telephone at (978) 682-8300.
Participants in the Solicitation
NaviSite and its directors and executive officers may be deemed to be participants in the solicitation of proxies from NaviSite’s stockholders in connection with the Merger. Information about NaviSite’s directors and executive officers is set forth in NaviSite’s preliminary proxy statement on Schedule 14A, filed with the SEC on March 1, 2011 and NaviSite’s Annual Report on Form 10-K filed with the SEC on October 22, 2010. These documents are available free of charge at the SEC’s web site at www.sec.gov and from NaviSite by contacting NaviSite at NaviSite, Inc., Attention: Investor Relations, 400 Minuteman Road, Andover, MA 01810 or by telephone at (978) 682-8300. Additional information regarding the interests of participants in the solicitation of proxies in connection with the Merger will be included in the proxy statement that NaviSite intends to file with the SEC.
NaviSite has retained D.F. King & Co., Inc. to assist it in the solicitation of proxies for the special meeting. D.F. King can be contacted at:
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005
Toll free: 1-800-628-8532
Banks and brokers call: (212) 269-5550