Navisite 8-K NaviSite Reports Third Quarter Fiscal Year 2006 Results

Exhibit 99.1

Contacts:
Amber Blaha	Darlene Doyle
NaviSite, Inc.	Lois Paul & Partners
978.946.8647	781.782.5868
ablaha@navisite.com	darlene_doyle@lpp.com

NaviSite Reports Third Quarter Fiscal Year 2006 Results

• Revenue Growth of 6.2% Over Q2 FY06 and 4.2% Over Q3 FY05

• Record Quarterly EBITDA of $4.2 million, an Increase of 29% Over Q3 FY05

• Continued Strong Customer Bookings

Andover, MA. May 30, 2006— NaviSite, Inc. (NASDAQ: NAVI), a leading provider of IT hosting, outsourcing, and professional services for mid- to large-sized organizations, today reported financial results for its third quarter of fiscal year 2006, which ended April 30, 2006.

Revenue for the third quarter of fiscal year 2006 was $27.9 million, an increase of 6.2% from $26.3 million for the second quarter of fiscal year 2006. Revenue for the third quarter of fiscal year 2006 increased 4.2% from $26.8 million in the third quarter of fiscal year 2005, and increased 7.6% for this same period, excluding $0.8 million in revenue recorded in the third quarter of fiscal year 2005 from the Microsoft Business Solutions Software and Professional Services Practice sold in July 2005.

NaviSite recorded $4.2 million of EBITDA, excluding impairment, stock-based compensation and other one-time charges for the third quarter of fiscal year 2006, marking a record EBITDA performance and the Company’s eleventh consecutive quarter of positive EBITDA. The $4.2 million of EBITDA recorded in the third quarter of fiscal year 2006 represents a 46% increase from the $2.9 million of EBITDA recorded in the second quarter of fiscal year 2006 and an increase of 29% from the $3.3 million of EBITDA recorded in the third quarter of fiscal year 2005. Excluding non-cash, stock-based compensation expense of $236,000, NaviSite generated gross profit of $9.0 million, or 32% of revenue, for the third quarter of fiscal year 2006, as compared to $7.5 million, or 28% of revenue, for the same fiscal quarter of 2005 and $7.9 million, or 30% of revenue, for the second quarter of fiscal year 2006. NaviSite recorded a net loss of $3.4 million, or a loss of $0.12 per share, for the third quarter of fiscal year 2006, as compared to a loss of $3.0 million, or a loss of $0.11 per share, for the

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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same fiscal quarter of 2005. Excluding one-time costs related to the Silver Point transaction, fees associated with the terminated public offering and the withdrawn registration statement on Form S-2, and non-cash compensation, net loss for the third quarter of fiscal year 2006 was $1.8 million (a net loss of $0.06 per share) or a net loss reduction of 41% from the third quarter of fiscal year 2005.

The Company’s cash balance at the end of the third quarter of fiscal year 2006 was $0.7 million, down from $1.9 million at the end of the second quarter of fiscal year 2006. The decrease in cash during the third quarter is primarily attributed to the use of operating cash to pay the closing costs associated with the Silver Point transaction. As part of the Silver Point financing facility, NaviSite closed a $3 million revolving credit facility with Silver Point Finance, as well as a $5 million credit facility with Atlantic Investors. There were no borrowings under these revolving credit facilities as of the end of the third quarter of fiscal year 2006.

“The third quarter of fiscal year 2006 was another strong quarter for NaviSite,” said Arthur Becker, CEO, NaviSite. “Our continued revenue growth, record EBITDA performance, and strong customer bookings are indicative of the market need for IT hosting, outsourcing, and professional services, as well as evidence of NaviSite’s ability to meet our customers’ needs. We expect to accelerate this positive momentum in the fourth quarter of fiscal year 2006.”

“We are also pleased about the successful refinancing of our maturing debt during the third quarter,” said John Gavin, CFO, NaviSite. “Our new, five year, $70 million term loan and $3 million revolving credit facility with Silver Point Finance, as well as the $5 million credit facility with Atlantic Investors, have strengthened our balance sheet and will enable the Company to focus on longer-term financial objectives.”

Business highlights for the third quarter of fiscal year 2006 include:

• Completed the refinancing of our maturing debt with a new facility from Silver Point Finance for a $70 million term loan and $3 million revolving credit facility. NaviSite also closed a $5 million credit facility with Atlantic Investors and restructured the terms of an existing $3 million secured promissory note issued to Atlantic Investors by NaviSite, extending the maturity date to five years and 90 days after the closing date of the Silver Point Finance transaction.

• Generated record EBITDA of $4.2 million.

• Achieved strong bookings in our hosting business, booking approximately $522,000 of new monthly recurring revenue in the third quarter of fiscal year 2006, compared to approximately $398,000 of new monthly recurring revenue in the third quarter of fiscal year 2005. The total

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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	contract value of hosting and professional services bookings was $23.2 million during the third quarter of fiscal year 2006, compared to $9.5 million during the third quarter of fiscal year 2005.
•	Signed 46 new customers in the third quarter of 2006, including Sling Media, Harmony Information Systems, MaineGeneral Medical Center, and Sapphire Technologies.
•	Maintained low customer churn, defined as the loss of a customer or a reduction in a customer’s monthly revenue run rate, excluding our major accounts, at 1.0% per month for the quarter, compared to 2.5% per month for the third quarter of fiscal year 2005 and well below NaviSite’s goal of 2% per month.
•	Further expanded NaviSite’s global delivery footprint by growing the India operations to more than 100 people, making the Network Operations Center (NOC) fully-operational in India with failover back to the U.S., and extending our capabilities in remote infrastructure management for messaging, database management, server management, and enterprise application monitoring and management (for Oracle and PeopleSoft applications) in a global model for all customers.
•	Attained Microsoft Gold Certified Partner Status in the Microsoft Partner Program for the fifth consecutive year with competencies in Advanced Infrastructure Services and Microsoft Business Solutions.
•	Launched two new microsites for NaviSite colocation (http://colocation.navisite.com) and dedicated hosting (http://dedicatedhosting.navisite.com) services to provide detailed information to customers and prospective customers when they are making purchasing decisions.

Guidance:
NaviSite projects revenue for the fourth quarter of fiscal year 2006 to be between $29.0 and $29.5 million, expected growth of 5% over the third quarter of fiscal year 2006 and 13% over the fourth quarter of fiscal year 2005. EBITDA, excluding impairment, stock-based compensation and one-time charges, is projected to be between $5.5 and $6.0 million for the fourth quarter of fiscal year 2006.

Conference Call Scheduled for May 31, 2006:
NaviSite’s Chief Executive Officer, Arthur Becker, and Chief Financial Officer, John J. Gavin, Jr., will host a conference call to discuss NaviSite’s third quarter fiscal year 2006 financial results at 9:00 a.m. Eastern Time on May 31, 2006.

Call In Details:
Date and Time: Wednesday, May 31, 2006, 9:00 a.m. Eastern Time
Call In #: 866-713-8567 (International: 617-597-5326)
Enter PIN#: 77925734
Dial In Replay: 888-286-8010 (International: 617-801-6888)

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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Enter PIN#: 47699693
Available 30 minutes following the conclusion of the call and archived through May 31, 2007.
Archived Replay:http://www.navisite.com/earningscalls. Available 24 hours following conclusion of the call.
Call-in and replay details can also be found on NaviSite’s website at
http://www.navisite.com/sublevel.aspx?id=112.

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 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, non-cash stock-based compensation and other one-time 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 to assist in evaluating the Company’s actual and expected operating and financial performance. These non-GAAP results should not be evaluated in isolation of, 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 is included in the consolidated financial statements in this release. The Company believes that using expected EBITDA as a performance measure, together with expected net loss, will help investors better understand the Company’s underlying financial performance. A table reconciling expected net loss to expected EBITDA for the fourth quarter of fiscal year 2006 is also included in this release.

About NaviSite, Inc.
NaviSite provides IT hosting, outsourcing, and professional services for mid- to large-sized organizations. Leveraging a proven set of technologies and extensive subject matter expertise, we deliver cost-effective, flexible solutions that provide responsive and predictable levels of service for our clients’ businesses. Over 900 companies across a variety of industries rely on NaviSite to build, implement and manage their mission-critical systems and applications. NaviSite is a trusted advisor committed to ensuring the long-term success of our customers’ business applications and technology strategies. NaviSite has 14 state-of-the-art data centers and eight major office locations across the U.S., U.K. and India. For more information, please visit www.navisite.com.

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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This release contains forward-looking statements, which address a variety of subjects including the
expected future operating and financial results, including profitability, revenue growth and
EBITDA, success and performance of NaviSite’s product and service offerings, NaviSite’s strategic
business plans for growing its customer base and increasing sales, the expected benefits,
efficiencies, synergies and integration efforts of the Surebridge acquisition, and the expected
financial results and growth of the combined entity. 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 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, improve its cash flows, expand its operations and revenue, and 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 possibility that
financial forecasts of the Company may not be achieved, including those as to expected EBITDA and
revenue, or an inability to realize expected synergies or make expected future investments in
NaviSite’ businesses or NaviSite may be unable to raise the necessary funds to meet its payment
obligations to Silver Point Finance and other creditors; NaviSite’s management may face strain on
managerial and operational resources as they try to oversee the expanded operations; 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 acquisition of companies and businesses may not produce expected cost
savings, operational efficiencies or revenue; NaviSite’s products, technologies, and resources may
not successfully operate with the technology, resources and/or 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 would significantly damage NaviSite’s financial condition and results of
operations; and increased competition and technological changes 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 Quarterly Report on Form 10-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.

###

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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NAVISITE FINANCIAL TABLES — THIRD QUARTER FISCAL YEAR 2006

EBITDA Summaries

	For the Three Months Ended
	April 30, 2006			April 30, 2005
	Unaudited
	(In thousands)
Net loss, as reported	$	(3,448	)	$	(3,033	)
Depreciation		1,989			2,311
Interest expense, net		2,240			1,975
Taxes		293			287
Amortization		1,237			1,420
Non-cash compensation		992			198
EBITDA		3,303			3,158
Impairments		136			(67	)
Severance, Avasta settlement and acquisition migration costs		132			179
S2 Fees		600			—
Silverpoint Deal cost		52			—
EBITDA, excluding impairments, severance, Avasta settlement and other one time items	$	4,223		$	3,270

	For the Nine Months Ended
	April 30, 2006			April 30, 2005
	Unaudited
	(In thousands)
Net loss, as reported	$	(10,886	)	$	(14,241	)
Depreciation		5,767			6,814
Interest expense, net		6,178			5,772
Taxes		880			1,052
Amortization		3,710			4,271
Non-cash compensation		3,112			578
EBITDA		8,761			4,246
Impairments		513			1,472
Severance, Avasta settlement and acquisition migration costs		140			1,378
S2 Fees		600			—
Silverpoint Deal cost		52			—
EBITDA, excluding impairments, severance, Avasta settlement and other one time items	$	10,066		$	7,096

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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NAVISITE FINANCIAL TABLES — THIRD QUARTER FISCAL YEAR 2006

Reconciliations of Expected GAAP Net Loss to Expected EBITDA

	For the Three Months Ended
	July 31, 2006
	Range Low			Range High
	(In thousands)
Expected Net loss	$	(2,199	)	$	(1,699	)
Expected Depreciation		2,048			2,048
Expected Interest expense, net		3,130			3,130
Expected Taxes		294			294
Expected Amortization of intangible assets		1,237			1,237
Expected Non-cash compensation		990			990
Expected EBITDA	$	5,500		$	6,000

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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NAVISITE FINANCIAL TABLES — THIRD QUARTER FISCAL YEAR 2006

Condensed Consolidated Statements of Operations

	For the Three Months Ended						For the Nine Months Ended
	April 30, 2006			April 30, 2005			April 30, 2006			April 30, 2005
	Unaudited						Unaudited
	(In thousands, except per share amounts)						(In thousands, except per share amounts)
Revenue	$	27,850		$	26,762		$	79,524		$	83,969
Revenue, related parties		73			34			144			102
Total revenue		27,923			26,796			79,668			84,071
Cost of revenue (includes stock-based compensation expense under SFAS 123R of $236 and $730 for three and nine months ended April 30, 2006, respectively; $0 for comparable periods of 2005		19,125			18,881			55,495			62,335
Impairment, restructuring and other		—			381			—			415
Total cost of revenue		19,125			19,262			55,495			62,750
Gross profit		8,798			7,534			24,173			21,321
Operating expense:
Operating expenses (includes stock-based compensation expense under SFAS 123R of $756 and $2,382 for three and nine months ended April 30, 2006, respectively, $0 for comparable periods of 2005		9,722			8,842			27,906			27,846
Impairment, restructuring and other		136			(448	)		513			1,057
Total operating expenses		9,858			8,394			28,419			28,903
Loss from operations		(1,060	)		(860	)		(4,246	)		(7,582	)
Other income (expense):
Interest income		137			21			191			49
Interest expense		(2,377	)		(1,996	)		(6,369	)		(5,821	)
Other income (expense), net		145			89			418			165
Loss before income tax expense		(3,155	)		(2,746	)		(10,006	)		(13,189	)
Income tax expense		(293	)		(287	)		(880	)		(1,052	)
Net loss	$	(3,448	)	$	(3,033	)	$	(10,886	)	$	(14,241	)
Basic and diluted net loss per common share	$	(0.12	)	$	(0.11	)	$	(0.38	)	$	(0.51	)
Basic and diluted weighted average number of common shares outstanding		28,554			28,463			28,505			28,108

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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NAVISITE FINANCIAL TABLES — THIRD QUARTER FISCAL YEAR 2006

Condensed Consolidated Balance Sheets

	April 30, 2006			July 31, 2005
	Unaudited
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	732		$	6,816
Accounts receivable, less allowance for doubtful accounts of $2,131 and $2,887 at April 30, 2006 and July 31, 2005, respectively		12,146			10,688
Unbilled accounts receivable		510			363
Due from related party		43			101
Prepaid expenses and other current assets		9,002			2,806
Total current assets		22,433			20,774
Non-current assets		79,575			80,403
Total assets	$	102,008		$	101,177
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts receivable financing line, net	$	—		$	20,347
Notes payable, current portion		1,171			1,145
Notes payable, current portion, Waythere, Inc.		—			35,361
Notes payable, to Applied Theory Estate, current portion		6,000			6,000
Note payable to related party		—			3,000
Capital lease obligations, current portion		1,978			1,259
Accounts payable		8,730			8,122
Accrued expenses, deferred revenue, deferred other income and customer deposits		15,855			23,100
Total current liabilities		33,734			98,334
Total non-current liabilities		69,056			5,515
Total liabilities		102,790			103,849
Stockholders’ equity (deficit)		(782	)		(2,672	)
Total liabilities and stockholders’ equity (deficit)	$	102,008		$	100,117

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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NAVISITE FINANCIAL TABLES — THIRD QUARTER FISCAL YEAR 2006

Condensed Consolidated Statements of Cash Flows

	For the Three Months Ended
	April 30, 2006			April 30, 2005
	Unaudited
	(In thousands)
Net cash provided by (used for) operating activities	$	(7,209	)	$	1,079
Net cash used for investing activities		(2,029	)		(751	)
Net cash provided by (used for) financing activities		8,070			(279	)
Net increase (decrease) in cash		(1,168	)		49
Cash and cash equivalents, beginning of period		1,900			1,517
Cash and cash equivalents, end of period	$	732		$	1,566

	For the Nine Months Ended
	April 30, 2006			April 30, 2005
	Unaudited
	(In thousands)
Net cash provided by (used for) operating activities	$	(7,713	)	$	2,597
Net cash used for investing activities		(4,327	)		(2,872	)
Net cash provided by (used for) financing activities		5,956			(1,354	)
Net decrease in cash		(6,084	)		(1,629	)
Cash and cash equivalents, beginning of period		6,816			3,195
Cash and cash equivalents, end of period	$	732		$	1,566

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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NAVISITE FINANCIAL TABLES — THIRD QUARTER FISCAL YEAR 2006

Reconciliation of Non-GAAP financial metrics to GAAP financial metrics

	For the Three Months Ended				For the Nine Months Ended
	April 30, 2006		April 30, 2005		April 30, 2006		April 30, 2005
	Unaudited				Unaudited
	(In thousands, except per share amounts)				(In thousands, except per share amounts)
Revenue	$	27,850	$	26,762	$	79,524	$	83,969
Revenue, related parties		73		34		144		102
Total revenue		27,923		26,796		79,668		84,071
Cost of revenue (includes stock-based compensation expense under SFAS 123R of $236 and $730 for three and nine months ended April 30, 2006, respectively, $0 for comparable periods of 2005.)		19,125		18,881		55,494		62,335
Impairment, restructuring and other		—		381		—		415
Total cost of revenue		19,125		19,262		55,494		62,750
Gross profit		8,798		7,534		24,174		21,321
Add back stock-based compensation		236		—		730		—
Non-GAAP Gross profit		9,034		7,534		24,904		21,321

Corporate Headquarters: 400 Minuteman Road Andover MA, 01810 USA

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