Exodus Reports Third Quarter Results; Annualized Recurring Revenue Run Rate Surpasses $1 Billion Milestone.Business Editors/High-Tech Writers SANTA CLARA Santa Clara, city, Cuba Santa Clara (sän`tä klä`rä), city (1994 est. pop. 217,000), capital of Villa Clara prov., central Cuba. , Calif.--(BUSINESS WIRE)--Oct. 19, 2000 Exodus Communications Exodus Communications was a high-flying internet hosting and service provider to dot-com businesses that went broke along with their customers. Exodus inception Exodus was founded in 1992 as Fouress, Inc., and reincorporated in 1994 to Exodus Communications. (TM), Inc. (Nasdaq:EXDS) today reported third quarter 2000 revenues of $229.6 million, a 28 percent increase over the second quarter 2000, and a 238 percent increase over the third quarter 1999. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become profit (earnings before net interest expense, income taxes, depreciation, amortization and other noncash charges Noncash charge A cost, such as depreciation, depletion, and amortization, that does not involve any cash outflow. That is, this is treated as an accounting expense -- not a real expense that demands cash. ) increased 134 percent to $20.2 million for the third quarter 2000, compared to an $8.6 million EBITDA profit for the second quarter 2000, and a $7.5 million EBITDA loss in the third quarter 1999. Net loss excluding the impact of amortization of goodwill and intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. was $60.6 million in the third quarter 2000, or $0.14 per share. Net loss for the quarter was $69.5 million, or $0.17 per share, compared with a net loss of $51.3 million, or $0.12 per share, in the second quarter 2000, and a net loss of $31.5 million, or $0.09 per share, in the third quarter 1999. "Enterprise customers currently represent 53 percent of our total revenues and bookings compared to 39 percent one year ago, as we continue to see more Fortune 1000 companies choose Exodus Exodus (ĕk`sədəs), book of the Bible, 2d of the 5 books of the Law (the Pentateuch or Torah) ascribed by tradition to Moses. The book continues the story of the ancestors of Israel in Egypt, now grown in number to a large landless (R) as the web hosting Making a Web site available on the Internet. Many ISPs host a few personal Web pages for an individual at no additional cost above the monthly service fee, but the address is subordinate to the ISP; for example, www.friendlyisp.com/pat_smith. provider for their mission-critical Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the operations," said Ellen El·len , Mount A peak, 3,514.2 m (11,522 ft) high, of southern Utah. M. Hancock, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "In the third quarter, we added 414 Internet Data Center (IDC) customers bringing our total IDC customer count to 3,747. Our average annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenue per IDC customer increased to $299,000 in the third quarter compared to $259,000 in the second quarter, reflecting substantial growth from both new and existing customers. New customers during the quarter included Adidas ADIDAS All Day I Dream About Sex (song by Korn) ADIDAS Adolph (Adi) Dassler (founder of Adidas) , L'oreal USA, BlueCross BlueShield Association, Nikko Nikko (nēk`kō), town (1990 pop. 20,128), Tochigi prefecture, central Honshu, Japan, in Nikko National Park. It is a tourist resort and religious center, famous for its ornate temples and shrines, dating from the Yedo period (1600–1868) Salomon Noun 1. Salomon - American financier and American Revolutionary War patriot who helped fund the army during the American Revolution (1740?-1785) Haym Salomon Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. , Medtronic Medtronic Cardiology A major manufacturer of pacemakers, defibrillators, and other cardiac devices , France Telecom, GE Bayer Silicones, Avanade Avanade, Inc. is a joint venture between Accenture and Microsoft which was founded on April 4 2000. The company is a global IT consulting company that specializes in solutions using Microsoft enterprise technology. (a joint venture between Andersen Consulting See Accenture. and Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. ), EFSS EFSS Expeditionary Fire Support System (USMC) EFSS Experimental Flight Systems Section (NASA) Limited (a joint venture between Investia Limited and Chase Manhattan Bank The Chase Manhattan Bank, now part of JPMorgan Chase, was formed by the merger of the Chase National Bank and the Bank of the Manhattan Company in 1955. The bank is headquartered in New York City. ), World Savings, Honeywell's new e-hub See Web hub. myFacilities.com, and Crane Paper Makers. Existing customers that expanded their business with Exodus included Yahoo!, eBay, StarMedia, Inktomi, GE International, Starbucks, Novell, Lenox Incorporated, U.S. News & World Report U.S. News & World Report Weekly newsmagazine published in Washington, D.C. U.S. News was founded in 1933 by David Lawrence (1888–1973) to cover important domestic events; he founded World Report in 1945 to treat world news. The two magazines were merged in 1948. , Oracle Business OnLine and Oracle Management Services. Exodus booked $270 million of new annualized recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue from both new and existing customers in the third quarter. Assuming the backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. is installed today and combined with Exodus' current installed customer base, the annualized revenue run rate of recurring revenue would exceed $1.15 billion, which represents a 31 percent increase from the prior quarter. "In order to meet growing market demands in Chicago and Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, , we opened two IDCs, which represent 560,000 gross square feet, since the second quarter," said R. Marshall Case, executive vice president, finance and chief financial officer. "In the fourth quarter, we expect to open five additional IDCs, representing approximately 1.2 million gross square feet, in the Washington, D.C., Santa Clara, New Jersey, Seattle and Boston markets Boston Market (known before 1995 as Boston Chicken), headquartered in Golden, Colorado, is a chain of American fast-food restaurants. Founded in December 1985 in Newton, Massachusetts, the chain grew rapidly in the early and mid-1990s, filed bankruptcy in the late 1990s, and . Overall, we are on track to have an aggregate of 3.9 million gross square feet in operation by the end of the year." Third Quarter Highlights
Additional operational and financial highlights for the third
quarter are as follows:
-- Approximately 40 percent of the world's top web sites are
hosted at Exodus.
-- Over 62,000 servers are hosted at Exodus worldwide.
-- Revenue mix consisted of:
44 percent hosting services
20 percent Internet connectivity
36 percent managed and professional services
-- Gross margins were:
31 percent of revenue or $71.1 million
47 percent of revenue or $108.2 million, excluding
depreciation and amortization
-- 18 IDCs are currently EBITDA positive, up from 17 in the
second quarter
The Atlanta IDC turned EBITDA positive in eight months
-- Cash and marketable securities were $1.2 billion at quarter
end
-- Annualized customer churn was less than two percent
-- Capital expenditures were $521 million and principally
represented investments to build and expand IDCs
-- Days Sales Outstanding was 53 days in the third quarter and is
within Exodus' target range.
Business Outlook
The following business outlook contains forward-looking statements
intended to provide the high and low end range of management's current
expectations. These forward-looking statements are subject to numerous
risks and uncertainties. As a result, actual results may differ
materially from what is expected. These statements do not reflect the
potential impact of any mergers or acquisitions that may be completed
after the date of this release.
Exodus expects revenue for the fourth quarter 2000 to be in the
range of $270 million to $280 million.
EBITDA profit is expected to increase from 9 percent of revenue in
the third quarter to 11 to 13 percent of revenue for the fourth
quarter 2000.
Gross margin for fourth quarter 2000 is expected to be
approximately 32 percent of revenue, plus or minus one point.
Operating expenses for fourth quarter 2000 are expected to decline
as a percentage of revenue and represent 42 percent, plus or minus one
point.
Exodus expects net interest expense to be $47 million to $50
million for the fourth quarter 2000. The rate of sequential growth of
net interest expense will be affected by the timing of Exodus'
anticipated bank line, which is expected to close in the first half of
the fourth quarter. Net interest expense is dependent in part on the
timing of capital expenditures, future borrowings, interest rates,
cash balances, and the realization of gains on investments.
Exodus expects a net loss, excluding the impact of amortization of
goodwill and intangible assets, of $60 million to $70 million, or
$0.15 per share, plus or minus $0.01 per share, for the fourth quarter
2000.
Depreciation is expected to be approximately $51 million for the
fourth quarter 2000 and will be a function of capital spending, which
is expected to be slightly in excess of $400 million for the fourth
quarter 2000.
On a stand-alone basis, Exodus expects to achieve significant
growth and financial results for 2001 as follows:
-- Revenues of approximately $1.8 billion
-- Gross margins of 36 percent to 39 percent of revenues
-- EBITDA margin of 19 percent to 22 percent
-- Net loss, excluding the impact of amortization of goodwill, of
10 percent to 13 percent
-- Capital expenditures of $800 million to $1.0 billion
-- Additional IDC capacity of 1.5 million to 2.0 million gross
square feet
"Overall, the third quarter marked significant financial achievements as we continued to see strong customer demand for Exodus' core complex web hosting and managed services An umbrella term for third-party monitoring and maintaining of computers, networks and software. The actual equipment may be inhouse or at the third-party's facilities, but the "managed" implies an ongoing effort; for example, making sure the equipment is running at a certain quality business," said Ms. Hancock. "Exodus surpassed $1 billion in annualized recurring revenue, our average revenue per IDC customer more than doubled from 18 months ago, and the company reported record EBITDA performance." About Exodus Communications Exodus Communications is the leading provider of complex Internet hosting for enterprises with mission-critical Internet operations. The company offers sophisticated system and network management solutions along with professional services (job) professional services - A department of a supplier providing consultancy and programming manpower for the supplier's products. to provide optimal performance for customers' Web sites. Exodus manages its network infrastructure via a worldwide network of Internet Data Centers (IDCs) located in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , Europe and Asia Pacific. More information on Exodus can be found at www.exodus.net. Forward Looking Statements This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including financial projections, descriptions of management's plans and objectives, and statements related to future operations, including those related to the growth in Exodus' business, additional IDCs, revenues, EBITDA, revenue per customer, gross margin, bookings and other anticipated financial results. Actual results may differ materially from those projected in the forward looking statements contained in this press release. Factors that could affect these forward-looking statements include: the operational challenges of developing, deploying and delivering Exodus' services; competition from existing and new competitors; the risk that customers who have placed orders may not install or may delay installations; the ability to open new IDCs and deliver services when requested by our customers; possible delays in obtaining anticipated credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities ; difficulties associated with international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. or expansion; and the impact from any mergers, acquisitions or business combinations that may be consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. in the future. The matters discussed in this press release also involve risks and uncertainties described from time to time in Exodus' filings with the SEC such as in its most recent Forms 10-Q, Forms 8-K, and Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . Exodus assumes no obligation to update any forward-looking information contained in this press release. Note to Editors: Exodus Communications and Exodus are trademarks of Exodus Communications, Inc. and are registered in certain jurisdictions.
EXODUS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
------------------------- ------------------------
Revenues $ 229,637 $ 68,028 $ 543,331 $ 140,754
Cost of revenues (1) 158,579 55,641 378,101 118,827
---------- --------- --------- ---------
Gross profit 71,058 12,387 165,230 21,927
Operating expenses:
Marketing
and sales 48,152 18,836 123,315 42,473
General and
administrative 40,907 10,520 97,498 25,548
Product development 3,160 2,255 10,573 5,641
Amortization of
goodwill and
intangible assets 8,850 4,165 25,412 5,597
---------- --------- --------- ---------
Total operating
expenses (2) 101,069 35,776 256,798 79,259
---------- --------- --------- ---------
Operating loss (30,011) (23,389) (91,568) (57,332)
Interest and other
income (expense):
Interest and
other income 23,546 3,712 47,571 10,625
Interest and
other expense (63,017) (11,828) (135,129) (30,669)
---------- --------- --------- ---------
Total interest
and other
expense, net (39,471) (8,116) (87,558) (20,044)
Net loss $ (69,482) $ (31,505) $(179,126) $ (77,376)
========== ========= ========= =========
Basic and diluted
net loss per
share (3) $ (0.17) $ (0.09) $ (0.45) $ (0.23)
========== ========= ========= =========
Shares used in
computing basic
and diluted net
loss per share 418,375 336,596 398,512 331,948
========== ========= ========= =========
EBITDA (4) $ 20,167 $ (7,527) $ 30,513 $ (27,994)
========== ========= ========= =========
(1) Cost of revenues includes depreciation and amortization of $37.1
million and $10.7 million for the three-months ended September
30, 2000 and 1999, respectively, and $85.7 million and $21.0
million for the nine-months ended September 30, 2000 and 1999,
respectively.
(2) Total operating expenses include depreciation and amortization
of $13.0 million and $5.3 million for the three-months ended
September, 2000 and 1999, respectively, and $36.3 million
and $8.4 million for the nine-months ended September 30, 2000
and 1999, respectively.
(3) Basic and diluted net loss per share before amortization of
goodwill and intangible assets for the three-months ended
September 30, 2000 was ($0.14).
(4) Earnings before net interest expense, income taxes,
depreciation, amortization (including amortization of deferred
stock compensation) and other noncash charges (including fixed
asset write-offs).
EXODUS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
2000 1999
------------- ------------
Assets
Current assets:
Cash and cash equivalents $ 1,246,550 $ 1,015,960
Accounts receivable, net 134,417 61,916
Prepaid expenses and other
current assets 38,219 16,121
------------- ------------
Total current assets 1,419,186 1,093,997
Property and equipment, net 1,262,446 368,239
Restricted cash equivalents
and investments 73,051 35,390
Goodwill and other intangible assets 191,003 156,002
Other assets 709,666 89,262
------------- ------------
$ 3,655,352 $ 1,742,890
============= ============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of equipment loans
and line of credit facilities $ 7,149 $ 6,897
Current portion of capital
lease obligations 38,183 17,162
Accounts payable 324,929 60,203
Accrued expenses 82,063 38,318
Accrued interest payable 65,056 23,829
------------- ------------
Total current liabilities 517,380 146,409
Equipment loans and line of credit
facilities, less current portion 11,834 8,353
Capital lease obligations,
less current portion 52,339 40,343
Convertible subordinated notes 562,494 749,800
Senior notes 1,936,062 776,231
Other non-current liabilities 7,599 4,139
------------- ------------
Total liabilities 3,087,708 1,725,275
------------- ------------
Stockholders' equity:
Common stock 424 356
Additional paid-in capital 915,227 247,805
Deferred stock compensation (1,261) (2,894)
Accumulated deficit (407,342) (228,216)
Accumulated other
comprehensive income 60,596 564
------------- ------------
Total stockholders' equity 567,644 17,615
------------- ------------
$ 3,655,352 $ 1,742,890
============= ============
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