(Source: Business Wire)
NaviSite, Inc. (NASDAQ: NAVI), a leading provider of cloud enabled
enterprise-hosting and application-management services, today reported
financial results for the fourth quarter and full fiscal year 2009 that
ended on July31, 2009.
Total revenue for the quarter ended in July31, 2009, was
$36.9million, representing a year-over-year decrease of 9%. Total
revenue for the full fiscal year 2009 was $152.7million, representing
a 1% decrease over revenue of $154.9million in fiscal year 2008. The
expected decrease in total revenue for the quarter and fiscal year was
due to the planned decline in NaviSite's professional-services revenue
during these periods.
Recurring hosting revenue was $34.5million for the fourth quarter,
compared to $34.4million in the fourth quarter of fiscal year 2008.
The fourth quarter of fiscal year 2008 included $0.9million of
hosting revenue from NaviSite's former Los Angeles data center, whose
lease NaviSite did not renew at the end of the third quarter of fiscal
year 2009. Excluding the Los Angeles hosting revenue in the fourth
quarter of fiscal year 2008, recurring hosting revenue increased 3%.
Recurring hosting revenue was $140.5million for the year,
representing a growth of 7% over the $131.3million recorded in fiscal
year 2008.
Gross margin improved to 35% for the fourth quarter, representing a
four-percentage-point increase from the 31% recorded in the fourth
quarter of the previous year and a two-percentage-point increase from
the 33% recorded in the prior quarter. Gross margin for fiscal year
2009 was 33%, representing a three-percentage-point increase from the
30% recorded in fiscal year 2008.
Loss from operations for the fourth quarter was $3.5million. Income
from operations for the full fiscal year was $0.2million. Operating
income was impacted negatively for both periods from the $5.7million
charge from the arbitration settlement entered into during the
quarter. Excluding the settlement, income from operations for the
fourth quarter would have been $2.2million, or an increase of 62%
over the fourth quarter of fiscal year 2008, and $5.9million for the
fiscal year, representing a 39% year-over-year increase.
EBITDA, excluding impairment costs, stock-based compensation,
severance and other non-operational charges ("EBITDA, as adjusted")
for the fourth quarter was $8.8million, representing a year-over-year
increase of 4%. EBITDA, as adjusted for the full fiscal year 2009 was
$35.1million, representing an increase of 10% over the EBITDA, as
adjusted of $32.0million in fiscal year 2008. Significant non
operational charges that were excluded from EBITDA, as adjusted,
include the $5.7 million arbitration settlement charge in the fourth
quarter of fiscal year 2009, and the $1.6 million gain on settlement
in the fourth quarter of fiscal year 2008.
Net loss attributable to common shareholders, including the settlement
charge and gain, for the fourth quarter was $8.6million, or $(0.24)
per share, compared to a loss of $1.2million, or $(0.04) per share,
in the fourth quarter of fiscal year 2008. Net loss attributable to
common shareholders, including the settlement charge and gain, for the
full fiscal year 2009 was $18.5 million, or $(0.52) per share,
compared to a loss of $11.3million or ($0.33) per share for the
fiscal year 2008. Net loss attributable to common shareholders
excluding the arbitration settlement charge would have been $2.8
million or $(0.08) per share for the fourth quarter of fiscal year
2009 and $12.7 million or $(0.36) per share for fiscal year 2009.
Cash generated from operating activities for the fourth quarter of
fiscal year 2009 was $4.1million, representing an increase of 4% from
the $3.9million recorded in the fourth quarter of fiscal year 2008.
Cash generated from operating activities for the full fiscal year 2009
was $21.6million, representing an increase of 261% from the
$6.0million recorded in fiscal year 2008.
"Despite the expected top line revenue decline, recurring hosting
revenue continued to show growth during fiscal year 2009 -- improving
overall gross margin and operating cash flow. In addition, the reduction
and repositioning of our professional services business during the
fiscal year was the first step in NaviSite's strategy to focus on
enterprise hosting, application management and cloud computing," said
Arthur Becker, Chief Executive Officer of NaviSite.
Quarterly Business Highlights
Booked approximately $0.8 million of new monthly recurring hosting
revenue ("MRR") in the fourth quarter of fiscal year 2009, an increase
from the $0.5million booked in the third quarter of fiscal year 2009,
and booked approximately $2.5million of new MRR in fiscal year 2009.
Signed $21.0million of total hosting contract value with an average
contract term of 27 months during the fourth quarter for recurring
applications services and enterprise-hosting business, compared to
bookings of $11.3million in hosting contract value in the previous
quarter, and $63.9million in fiscal year 2009.
Signed professional-services contracts with a total value of
$1.1million during the fourth quarter of fiscal year 2009, compared
to bookings of $0.9million of professional-services contract value in
the previous 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 1.7% per month during the quarter, compared to 1.0% in the prior
quarter and 1.2% a year ago. Reported churn for the fourth quarter of
fiscal year 2009 excludes the impact of the Company's decision not to
renew its' Los Angeles datacenter lease.
Conference Call Scheduled for October 15, 2009
NaviSite, Inc., Chief Executive Officer Arthur Becker and Chief
Financial Officer Jim Pluntze will host a conference call on Thursday,
October15, 2009, at 5:00p.m. Eastern Time to discuss the Company's
results for its fourth quarter and 2009 fiscal year financial results.
NaviSite's conference call can be accessed by dialing 800.901.5218
(International: +1.617.786.4511) and entering passcode 99866058.
Alternatively, participants can listen to a live webcast of the call
available through NaviSite's website at http://navisite.com/investors/events.
A replay of the call will be accessible following the conference call by
dialing 888.286.8010 (International: +1.617.801.6888) and using passcode
97261837.
EBITDA
EBITDA is not a recognized measure for financial-statement presentation
under United States generally accepted accounting principles (U.S.
GAAP). The Company believes that the non-GAAP measure of EBITDA, as
adjusted provides investors with a useful supplemental measure of the
Company's actual and expected operating and financial performance by
excluding the impact of interest, taxes, depreciation and amortization.
The Company also excludes impairment costs, stock-based compensation,
severance, and other non-recurring charges from its non-GAAP measure, as
such items may be considered to be of a non-operational nature. EBITDA
does not have any standardized definition and therefore may not be
comparable to similar measures presented by other reporting companies.
Management uses EBITDA, as adjusted to assist in evaluating the
Company's actual and expected operating and financial performance. These
non-GAAP results should not be evaluated in isolation from, or as a
substitute for, the Company's financial results prepared in accordance
with U.S. GAAP. A table reconciling the Company's net loss, as reported,
to EBITDA, as adjusted is included in the condensed consolidated
financial statements in this release. The Company believes that using
EBITDA, as adjusted as a performance measure, together with net loss,
will help investors better understand the Company's underlying financial
performance.
About NaviSite
NaviSite is a leading provider of cloud enabled enterprise-hosting and
application-management services offering a comprehensive suite of
customized IT-as-a-Service solutions. We enable companies to reduce the
cost and complexity of IT and focus on their core business. Our
innovative, flexible and scalable enterprise class solutions complement
IT departments, allowing companies to lower costs, increase service
levels, and free IT resources to concentrate on true business
priorities. Over 1,400 customers depend on NaviSite for customized
solutions delivered through its global footprint, comprising 16
state-of-the-art data centers supported by approximately 650
professionals. For more information, please visit www.navisite.com.
This release contains forward-looking statements, which address a
variety of subjects including NaviSite's expected future operating and
financial results, including profitability, revenue growth and EBITDA,
success and performance of NaviSite's product and service offerings and
NaviSite's strategic business plans for growing its customer base and
increasing sales. All statements other than statements of historical
fact including, without limitation, those with respect to NaviSite's
goals, plans and strategies set forth herein are forward-looking
statements. The following important factors and uncertainties, among
general economic conditions and changes in economic conditions and
others, could cause actual results to differ materially from those
described in these forward-looking statements. NaviSite's success
including its ability to improve its gross profit, to improve its cash
flows, to expand its operations and revenue and to reach and sustain
profitability depends on its ability to execute on its business
strategy and the continued and increased demand for, and market
acceptance of, its products and services. The financial forecasts
of the Company may not be achieved, including those as to expected
EBITDA and revenue. NaviSite may be unable to raise the necessary funds
to meet its payment obligations to its lending group under its senior
secured credit facility and other creditors. NaviSite may not be able to
expand its operations in accordance with its business strategy. NaviSite
may experience difficulties integrating technologies, operations and
personnel in accordance with its business strategy. NaviSite's products,
technologies and resources may not successfully operate with the
technology, resources and applications of third parties. NaviSite
derives a significant portion of its revenue from a small number of
customers and the loss of any of those customers could significantly
damage NaviSite's financial condition and results of operations.
Competition has increased, and technological changes made, in the
markets in which NaviSite's competes. For a detailed discussion of
cautionary statements that may affect NaviSite's future results of
operations and financial results, please refer to NaviSite's filings
with the Securities and Exchange Commission, including NaviSite's most
recent Annual Report on Form10-K and its Quarterly Reports on
Form10-Q. Forward-looking statements represent management's current
expectations and are inherently uncertain. We do not undertake any
obligation to update forward-looking statements made by us. All logos,
company and product names may be trademarks or registered trademarks of
their respective owners.
NaviSite Financial Tables Condensed Consolidated Statements of Operations
For the Three Months Ended For the Fiscal Year Ended
July 31, 2009 July 31, 2008 July 31, 2009 July 31, 2008
Unaudited
(In thousands, except per share amounts)
Revenue $ 36,800 $ 40,288 $ 152,326 $ 154,507
Revenue, related parties 64 152 346 372
Total revenue 36,864 40,440 152,672 154,879
Cost of revenue, excluding stock compensation, restructuring, depreciation and amortization 18,171 22,049 78,072 85,561
Depreciation and amortization 5,472 5,346 22,948 20,360
Stock compensation 292 375 1,268 1,794
Restructuring charge - - 209 -
Cost of revenue 23,935 27,770 102,497 107,715
Gross profit 12,929 12,670 50,175 47,164
Operating expenses:
Selling and marketing, excluding stock compensation and restructuring 4,816 5,012 19,723 19,370
General and administrative, excluding settlement, stock compensation, restructuring and transaction fees 5,402 5,467 21,820 20,678
Loss on settlement 5,736 - 5,736 -
Stock compensation 374 768 1,855 2,576
Restructuring charge - - 180 -
Transaction fees 145 71 662 265
Total operating expenses 16,473 11,318 49,976 42,889
Income (loss) from operations (3,544 ) 1,352 199 4,275
Other income (expense):
Interest income 7 50 43 264
Interest expense (3,753 ) (3,188 ) (14,164 ) (12,033 )
Loss on debt extinguishment - - - (1,651 )
Other income (expense), net 10 1,748 705 2,295
Loss from continuing operations before income taxes (7,280 ) (38 ) (13,217 ) (6,850 )
Income taxes (397 ) (420 ) (1,894 ) (1,834 )
Net loss (7,677 ) (458 ) (15,111 ) (8,684 )
Accretion of preferred stock dividends (874 ) (779 ) (3,350 ) (2,656 )
Net loss attributable to common stockholders $ (8,551 ) $ (1,237 ) $ (18,461 ) $ (11,340 )
Basic and diluted net loss per common share:
Net loss attributable to common stockholders $ (0.24 ) $ (0.04 ) $ (0.52 ) $ (0.33 )
Basic and diluted weighted average number of common shares outstanding 35,714 35,130 35,528 34,731
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NaviSite Financial Tables Net Loss to EBITDA, as adjusted Reconciliation
For the Three Months Ended
July 31, 2009 July 31, 2008
Unaudited
(In thousands)
Net loss, as reported $ (7,677 ) $ (458 )
Depreciation 3,947 3,835
Interest income/expense, net 3,746 3,138
Income taxes 397 420
Amortization 1,696 1,829
EBITDA 2,109 8,764
Stock based compensation 666 1,143
Severance 145 101
Transaction fees, integration costs and settlement charge (gain) 5,863 (1,557 )
EBITDA, as adjusted (excludes impairment costs, stock based compensation, severance, loss on debt extinguishment and transaction fees, integration costs and settlement charge (gain) $ 8,783 $ 8,451
For the Fiscal Year Ended
July 31, 2009 July 31, 2008
Unaudited
(In thousands)
Net loss, as reported $ (15,111 ) $ (8,684 )
Depreciation 16,439 13,329
Interest income/expense, net 14,121 11,769
Income taxes 1,894 1,834
Amortization 7,197 7,893
EBITDA 24,540 26,141
Stock based compensation 3,123 4,370
Severance 933 506
Loss on debt extinguishment - 1,651
Transaction fees, integration costs and settlement charge (gain) 6,525 (662 )
EBITDA, as adjusted (excludes impairment costs, stock based compensation, severance, loss on debt extinguishment and transaction fees, integration costs and settlement charge (gain)) $ 35,121 $ 32,006
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NaviSite Financial Tables Condensed Consolidated Balance Sheets
July 31, 2009 July 31, 2008
ASSETS Unaudited
(In thousands)
Current assets:
Cash and cash equivalents $ 10,534 $ 3,261
Accounts receivable, less allowance for doubtful accounts of $1,820
and $897 at July 31, 2009 and July 31, 2008, respectively 16,417 18,927
Unbilled accounts receivable 1,361 1,711
Prepaid expenses and other current assets 6,337 11,370
Total current assets 34,649 35,269
Non-current assets 129,031 140,444
Total assets $ 163,680 $ 175,713
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable, current portion $ 10,603 $ 6,100
Capital lease obligations, current portion 3,040 3,166
Accounts payable 5,375 7,033
Accrued expenses, deferred revenue, deferred
other income and customer deposits 16,605 16,921
Total current liabilities 35,623 33,220
Total non-current liabilities 132,280 133,736
Total liabilities 167,903 166,956
Preferred stock 30,879 27,529
Total stockholders' equity (deficit) (35,102 ) (18,772 )
Total liabilities, preferred stock and stockholders' equity (deficit) $ 163,680 $ 175,713
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NaviSite Financial Tables Condensed Consolidated Statements of Cash Flow
For the Three Months Ended
July 31, 2009 July 31, 2008
Unaudited
(In thousands)
Net cash provided by operating activities $ 4,099 $ 3,930
Net cash provided by (used for) investing activities (1,140 ) 1,771
Net cash provided by (used for) financing activities 4,537 (7,378 )
Effect of exchange rate changes on cash 149 -
Net increase (decrease) in cash 7,645 (1,677 )
Cash and cash equivalents, beginning of period 2,889 4,938
Cash and cash equivalents, end of period $ 10,534 $ 3,261
For the Fiscal Year Ended
July 31, 2009 July 31, 2008
Unaudited
(In thousands)
Net cash provided by operating activities $ 21,575 $ 5,977
Net cash used for investing activities (10,571 ) (29,812 )
Net cash provided by (used for) financing activities (3,571 ) 15,395
Effect of exchange rate changes on cash (160 ) -
Net increase (decrease) in cash 7,273 (8,440 )
Cash and cash equivalents, beginning of period 3,261 11,701
Cash and cash equivalents, end of period $ 10,534 $ 3,261
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