Interliant Announces Second Quarter 1999 Financial Results

Second Quarter 1999 Revenues Up 96% Over First Quarter 1999 PURCHASE, N.Y. (PROTEXT) - Interliant, Inc. (Nasdaq: INIT), a leading provider of Internet hosting services, today reported financial results for the second quarter of 1999, and the six months ended June 30, 1999. Revenues for the second quarter of 1999 were $10.6 million, an increase of $9.8 million over the revenue of $845,000 for the second quarter of 1998 and $5.2 million more than the $5.4 million first quarter 1999 revenues. Revenues for the six months ended June 30, 1999 were $16.1 million, an increase of $15.2 million over the revenue of $858,000 for the first six months of 1998. Through the end of the most recent period, the Company has made 17 acquisitions, including the operations of Advanced Web Creations on May 4. Second quarter EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) was negative $6.3 million, EBITA (Earnings Before Interest, Taxes and Amortization) was negative $7.6 million and the net loss was $14.1 million or $0.44 per share. EBITDA and EBITA for the six months ended June 30, 1999 was negative $10.7 million and $12.8 million, respectively, and the net loss was $21.8 million or $0.77 per share. Given Interliant's aggressive acquisition program, the Company believes that EBITA is a more useful measure of operating performance than EBITDA, because it excludes non-operating charges such as amortization expense associated with acquisitions but includes depreciation expense, which is an operating expense that appropriately reflects capital invested in the business. "Interliant offers one of the most robust sets of Internet hosting services in the market today," commented Bradley Feld, Co-Chairman. "We generate more than 40% of our revenue from application hosting, the highest value-added services in Internet hosting. Through our acquisition of Interliant Texas in March 1999, we became one of the largest application service providers ("ASP") with a track record of more than five years. We are focused on fast implementations of Internet-enabled applications that provide cost-effective solutions for our customers and provide them with a competitive advantage by speeding their time to market." "We are pleased with the increase in our revenues for the three and six month periods ended June 30, 1999. To date, Interliant's growth has been achieved primarily through aggressive execution of its acquisition strategy," commented James M. Lidestri, President. He continued: "With the net proceeds of our IPO of more than $70 million, we are now positioned to invest in new products and services and distribution capability to generate internal growth in the businesses we've acquired over the past 18 months, as well as continue our acquisition strategy." Mr. Lidestri continued: "We believe that we are one of the largest Internet web hosting providers today and we obtain more than 35% of our revenue from these services. With more than 50,000 active web hosting customers, we host more than 85,000 active domains and our customers have parked more than 130,000 domain names with us, a significant proportion of which we hope to turn into active domains over time." Mr. Feld further stated that during this quarter, "Interliant made a strategic investment in Asia On-Line, a Hong Kong-based Internet Service Provider ("ISP") which will provide us with quick access to Asian markets." He also indicated that, "the investment earlier this year by SOFTBANK Technology Ventures affords us access to many of the SOFTBANK portfolio companies." Interliant is a registered trademark of Interliant, Inc. All rights reserved. For Investor Relations Contact: investor_relations@interliant.com About Interliant, Inc. Interliant, Inc. is a leading provider of web site hosting, application hosting and enhanced Internet services. These services enable customers of all sizes to capitalize on the latest web-based technologies quickly and cost-effectively by relieving them of the burdens associated with building, managing and maintaining the infrastructure required to support mission- critical applications. By offering a comprehensive suite of hosting and IT consulting services including virtual, dedicated, co-location hosting solutions, and application and groupware hosting, they are able to meet the needs of any size business and to grow with their customers. Interliant currently has three primary state of the art data centers located in Atlanta, Houston and the Washington, D.C. area. The Company's corporate headquarters are located in Purchase, New York. Forward-Looking Statements and Associated Risks This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Certain forward-looking statements, relating to, among other things, future results of operations, profitability, growth plans, sales, expense trends, capital requirements and general industry and business conditions applicable to our business. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Our actual results and the timing of certain events may differ significantly from the results discussed in the forward-looking statements. These forward-looking statements are based largely on our current expectations and are subject to a number of risks and uncertainties. The words "anticipate," "believe," "estimate" and similar expressions used herein are generally intended to identify forward-looking statements. In addition to the other risks described elsewhere in this press release and in our Registration Statement on Form S-1 filed on March 15, 1999, as amended, important factors to consider in evaluating such forward-looking statements include but are not limited to: changes in external competitive market factors; changes in our business strategy; an inability to execute our strategy due to unanticipated changes in the emerging hosting and Internet services industries or the economy in general; difficulties in the timely expansion of our network and data centers or in the acquisition and integration of new businesses; difficulties in retaining and attracting employees or new customers; difficulties in developing or deploying new services; risks associated with rapidly changing technology, including but not limited to Year 2000 compliance, and various other competitive factors that may prevent us from competing successfully in existing or future markets. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained herein will in fact be realized and we assume no obligation to update this information. INTERLIANT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended Six Months Ended June 30, June 30, 1999 1998 1999 1998 Service revenues $10,647,650 $844,678 $16,081,813 $857,804 Costs and expenses: Cost of service revenues 6,088,440 457,059 9,339,143 510,833 Sales and marketing 4,072,779 422,842 5,969,136 533,724 General and administrative 6,738,636 1,322,829 11,501,942 1,712,954 Depreciation 1,400,754 64,170 2,100,306 73,587 Amortization of intangibles 6,190,585 370,040 8,784,915 373,879 24,491,194 2,636,940 37,695,442 3,204,977 Operating loss (13,843,544) (1,792,262) (21,613,629) (2,347,173) Interest income (expense), net (168,338) 29,957 (114,427) 43,602 Other income (expense) (70,741) -- (112,188) -- Net loss $(14,082,623) $(1,762,305)$(21,840,244) $(2,303,571) Net loss per share - basic and diluted $(0.44) $(0.33) $(0.77) $(0.55) Weighted average shares outstanding - basic and diluted 31,968,991 5,380,619 28,369,440 4,190,310 EBITDA $(6,252,205) $(1,358,052)$(10,728,408) $(1,899,707) EBITA $(7,652,959) $(1,422,222)$(12,828,714) $(1,973,294) INTERLIANT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 1999 1998 (unaudited) Assets Current assets: Cash and cash equivalents (See Note) $3,269,491 $6,813,360 Cash-restricted 1,256,772 -- Accounts receivable, net of allowance of $1,013,000 and $320,000 at June 30, 1999 and December 31, 1998, respectively 5,166,477 806,322 Prepaid and other current assets 1,002,576 639,662 Total current assets 10,695,316 8,259,344 Furniture, fixtures and equipment, net 12,417,328 5,103,123 Intangibles, net 77,486,021 12,612,228 Other assets 3,130,370 222,172 Total assets $ 103,729,035 $26,196,867 Liabilities and stockholders' equity Current liabilities: Notes payable and current portion of long-term debt $10,983,866 -- Accounts payable 3,994,192 $787,412 Accrued expenses 6,679,260 2,301,507 Deferred revenue 4,347,112 1,414,969 Total current liabilities 26,004,430 4,503,888 Long-term debt, less current portion 1,660,970 -- Series A redeemable convertible preferred stock 13,000,000 -- Stockholders' equity: Preferred stock, $.01 par value; 1,000,000 shares authorized; 0 shares issued and outstanding Common stock, $.01 par value; 200,000,000, and 100,000,000 shares authorized; 32,567,610, and 19,217,197 shares issued and outstanding, respectively 325,676 192,172 Additional paid-in capital 96,102,605 34,160,334 Deferred compensation (634,304) (1,769,429) Accumulated deficit (32,730,342) (10,890,098) Total stockholders' equity 63,063,635 21,692,979 Total liabilities and stockholders' equity $ 103,729,035 $ 26,196,867 Note: Cash and cash equivalents at June 30, 1999 do not reflect proceeds from the Initial Public Offering closed in July 1999. INTERLIANT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, 1999 1998 Operating activities Net loss $(21,840,244) $(2,303,571) Adjustments to reconcile net loss to net cash used in operating activities: Provision for uncollectible accounts 662,813 52,500 Depreciation and amortization 10,885,221 447,466 Amortization of deferred compensation 1,135,125 55,333 Other non-cash charges 163,715 -- Changes in operating assets and liabilities: Accounts receivable (456,439) (336,374) Prepaid expenses and other current assets (12,692) (212,589) Other assets (167,951) -- Accounts payable 406,561 548,702 Accrued expenses 2,931,244 770,710 Deferred revenue 548,793 (131,720) Net cash used in operating activities (5,743,854) (1,109,543) Investing activities Purchases of furniture, fixtures and equipment (3,238,932) (783,590) Payments issued in connection with non-compete agreements (1,000,000) -- Investments in restricted securities (952,969) -- Transfers to restricted cash (1,256,772) -- Acquisitions of businesses, net of cash acquired (20,701,570) (8,788,580) Net cash used in investing activities (27,150,243) (9,572,170) Financing activities Proceeds from sale of common stock 11,000,000 15,040,000 Proceeds from issuance of Series A redeemable convertible preferred stock 13,000,000 -- Proceeds from exercise of options and warrants 5,098,518 -- Proceeds from capital lease financing 1,277,255 -- Repayment of debt (243,870) -- Offering costs (781,675) -- Net cash provided by financing activities 29,350,228 15,040,000 Net increase (decrease) in cash and cash equivalents (3,543,869) 4,358,287 Cash and cash equivalents at beginning of period 6,813,360 912,085 Cash and cash equivalents at end of period (See Note) $3,269,491 $5,270,372 Supplemental Disclosures of Noncash Investing and Financing Activities Stock issued and options granted for acquisitions $45,937,237 $615,165 Stock issued for compensation agreements $ -- $498,000 Debt assumed or issued in acquisitions $10,395,000 $ -- Note: Cash and cash equivalents at June 30, 1999 do not reflect proceeds from the Initial Public Offering closed in July 1999. ots Original Text Service: Interliant, Inc. Internet: http://www.newsaktuell.de Contact: William A. Wilson, CFO, or Beth O'Byrne, VP, Finance & Assistant Treasurer, both of Interliant, Inc., 914-640-9000 Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. Protext is a commercial service providing distribution of press releases from clients, who are identified in the text of Protext reports and who bear full responsibility for their contents. PROTEXT