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Exhibit 99.01
For Immediate Release
Contact:
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Maureen O'Connell (media)
Exodus Communications
408/346-2218
[email protected]
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Jane Underwood (investors)
Exodus Communications
408/346-2191
[email protected]
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EXODUS REPORTS THIRD QUARTER RESULTS
Annualized Recurring Revenue Run Rate Surpasses $1 Billion Milestone
SANTA CLARA, Calif. - October 19, 2000 - Exodus Communications, 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 profit (earnings before net interest expense, income taxes, depreciation,
amortization and other noncash charges) 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
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 as the web hosting provider for their mission-
critical Internet operations," said Ellen M. Hancock, Chairman and CEO. "In the
third quarter, we added 414 Internet Data Center (IDC) customers bringing our
total IDC customer count to 3,747. Our average annualized revenue per IDC
customer increased to $299,000 in the third
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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, L'oreal USA, BlueCross
BlueShield Association, Nikko Salomon Smith Barney, Medtronic, France Telecom,
GE Bayer Silicones, Avanade (a joint venture between Andersen Consulting and
Microsoft), EFSS Limited (a joint venture between Investia Limited and Chase
Manhattan Bank), World Savings, Honeywell's new e-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, Oracle Business OnLine and Oracle
Management Services.
Exodus booked $270 million of new annualized recurring revenue from both new and
existing customers in the third quarter. Assuming the backlog 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, 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. 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
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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.
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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 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 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, Europe and Asia Pacific. More
information on Exodus can be found at www.exodus.net.
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Forward Looking Statements
This press release contains forward-looking statements, 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; difficulties
associated with international operations or expansion; and the impact from any
mergers, acquisitions or business combinations that may be consummated 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. Exodus assumes no
obligation to update any forward-looking information contained in this press
release.
# # #
Exodus Communications and Exodus are trademarks of Exodus Communications, Inc.
and are registered in certain jurisdictions.
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EXODUS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
-------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
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
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Total operating expenses (2) 101,069 35,776 256,798 79,259
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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)
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</TABLE>
(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).
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EXODUS COMMUNICATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
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<S> <C> <C>
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
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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
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$ 3,655,352 $ 1,742,890
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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
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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
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Total liabilities 3,087,708 1,725,275
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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
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Total stockholders' equity 567,644 17,615
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$ 3,655,352 $ 1,742,890
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</TABLE>
