RESTON, Va., May 03, 2018 (GLOBE NEWSWIRE) -- Internap Corporation (NASDAQ:INAP), a leading provider of high-performance data center services, including colocation, cloud and network, today announced financial results for the first quarter of 2018.

“INAP continues to perform by improving operations and focusing on our core strengths in data center services,” stated Peter D. Aquino, President and CEO. “As we layer on value-added products, such as advanced managed services through our SingleHop acquisition, we expect our customers to benefit by the integrated solution sets we offer them in Tier 1 markets, where addressable market demand for our services allows us to capture additional share. Our new sales team now has momentum that we can build on and expand our product set across our entire platform, providing a path toward a combination of organic and acquisition growth.”

Revenue

First quarter 2018 results include SingleHop operations as of March 1, 2018, and are therefore not comparable to prior periods.

• Revenue totaled $74.2 million in the first quarter of 2018, an increase of $4.2 million or 5.9% sequentially and 2.9% year over year. The sequential increase was primarily due to the SingleHop acquisition. Base line revenues remain generally flat sequentially, including the impact of announced planned closures.

In 2018, with the inclusion of SingleHop, INAP moved to a geographic organizational structure to better align global data center assets with management and increase sales efficiency. Beginning with first quarter 2018 reporting, INAP redefined its segment reporting into: INAP US, and INAP INTL.

• INAP US revenue totaled $57.1 million in the first quarter of 2018, an increase of 7.2% sequentially and 2.9% year over year. The sequential increase was driven by SingleHop, a full quarter of INAP's new Atlanta Data Center, and the stabilization of US revenue.
• INAP INTL revenue totaled $17.1 million in the first quarter of 2018, an increase of 1.9% sequentially and 2.7% year over year. The sequential increase was contributed by SingleHop operations in Europe, while the year over year increase is due to both consolidation of INAP Japan, and SingleHop. Post consolidation at the end of 2017, INAP Japan contributes $2 million per quarter in revenue.

Net Loss, Normalized Net Loss, Adjusted EBITDA and Business Unit Contribution

• GAAP net loss attributable to INAP shareholders was $(14.1) million, or $(0.70) per share in the first quarter of 2018, including $2.6 million of costs associated with acquisition costs, compared with $(6.9) million, or $(0.35) per share in the fourth quarter of 2017, including $0.2 million of costs associated with acquisition costs. GAAP net loss in first quarter 2017 was $(8.2) million.
• Normalized net loss was $(10.4) million in the first quarter of 2018 compared with $(5.5) million in the fourth quarter of 2017 and $(4.8) million in the first quarter of 2017.
• Adjusted EBITDA totaled $25.7 million in the first quarter of 2018, an increase of 5.3% compared with $24.4 million in the fourth quarter of 2017, and an increase of 19.1% compared with $21.6 million in the first quarter of 2017. Adjusted EBITDA margin was 34.6% in the first quarter of 2018, down 20 basis points compared to 34.8% in the fourth quarter, and up 470 basis points compared to 29.9% in first quarter 2017. The increases in Adjusted EBITDA were primarily driven by continued focus on cost savings in real estate and network facilities, INAP’s initiative to exit less profitable data center sites, and one month of SingleHop's financial statements.
• Business Unit Contribution³ - INAP US and INAP INTL business unit contribution for the first quarter 2018 is as follows:

  INAP US, includes colocation, cloud, and network services. Cloud contains AgileCloud, Managed Hosting and Services.
  -- INAP US business unit contribution totaled $26.5 million in the first quarter of 2018, a 15.4% increase compared to the fourth quarter of 2017 and a 32.7% increase from the first quarter of 2017. As a percent of revenue, INAP US business unit contribution margin was 46.5% in the first quarter of 2018 up 330 basis points sequentially and 1,040 basis points year-over-year. The year over year business unit contribution increase reflects continued focus on cost savings in real estate and network facilities, INAP's initiative to exit less profitable data center sites, and one month of SingleHop's financials.

  INAP INTL, includes colocation, cloud, and network services. Cloud contains AgileCloud, Managed Hosting and Services, iWeb and Ubersmith.
  -- INAP INTL business unit contribution totaled $6.0 million in the first quarter of 2018, a 5.2% decline compared with the fourth quarter of 2017 and a 21.9% decrease from the first quarter of 2017. The primary driver for the decline is due to the inclusion of INAP Japan in the fourth quarter 2017 which has a low contribution margin.

“We are off to a great start to the year, having worked through further operations improvement, the closing of SingleHop acquisition and repricing of our total debt,” says Robert M. Dennerlein, Chief Financial Officer. “The repricing of our debt at favorable rates creates over $5 million in annual interest savings. We also realigned our divisions along geographic reporting segments to correspond with our management reorganization to include SingleHop.”

Balance Sheet and Cash Flow Statement

• Cash and cash equivalents totaled $16.2 million at March 31, 2018. Total debt was $667.2 million, net of discount and prepaid costs, at the end of the quarter, including $233.6 million in capital lease obligations. As previously reported, on April 9, 2018, INAP entered into a Fourth Amendment to Credit Agreement, which amended INAP’s Credit Agreement, dated as of April 6, 2017 to lower the interest rate margin applicable to outstanding term loans by 125 basis points.
• Cash generated from operations for the three months ended March 31, 2018 was $3.5 million compared to $7.3 million in first quarter 2017, and $13.8 million in fourth quarter of 2017. Capital expenditures over the same periods were $6.4 million, compared to $6.0 million and $12.6 million, respectively. Adjusted EBITDA less CapEx¹ was $19.3 million, compared to $15.6 million in first quarter 2017 and $11.7 million in the fourth quarter of 2017. Free cash flow⁴ over the same periods was $(2.8) million, compared to $1.3 million in the first quarter of 2017 and $1.2 million in the fourth quarter of 2017, respectively. Unlevered free cash flow⁴ was $10.2 million for the first quarter of 2017, compared to $8.6 million in first quarter 2017 and $13.0 million in fourth quarter 2017.

Business Outlook

INAP reiterated its outlook for 2018 which, as noted above, includes projected results of acquired SingleHop operations as of February 28, 2018. Additionally, INAP’s sales momentum is expected to contribute to organic growth, offset by select planned closures of certain data center facilities.

About INAP

Internap Corporation (NASDAQ:INAP) is a leading provider of high-performance data center services, including colocation, cloud and network. INAP partners with its customers, who range from the Fortune 500 to emerging start-ups, to create secure, scalable and reliable IT infrastructure solutions that meet the customer’s unique business requirements. INAP operates in 57 primarily Tier 3 data centers in 21 metropolitan markets and has 98 POPs around the world. INAP has over 1 million gross square feet under lease, with over 500,000 square feet of data center space. For more information, visit www.inap.com.