Exhibit 99.1
(NAVISITE LOGO)
CONTACTS:
Jeffrey Hodnett Sharon Barclay
NaviSite, Inc. Blanc and Otus
978.946.7833 (617) 451-2070
Jhodnett@NaviSite.com sbarclay@blancandotus.com
NAVISITE, INC. REPORTS FIRST QUARTER 2004 RESULTS
- Company Achieves Positive EBITDA(1) ;Gross Profit Increases to 21% -
ANDOVER, MASS. - DECEMBER 16, 2003 - NaviSite, Inc. (NASDAQ SC: NAVI), a
provider of application management, content distribution, messaging and
infrastructure management services, yesterday reported financial results for its
first quarter of fiscal 2004 which ended October 31, 2003.
For the first quarter of fiscal year 2004, total revenue increased 48% to $23.5
million from $15.9 million in the first quarter of fiscal year 2003. Gross
profit was $4.9 million (approximately 21% of revenue), including a $0.6
million impairment charge, compared to a gross deficit of $0.6 million in the
first quarter of fiscal year 2003. Net loss for the first quarter totaled $3.4
million, or $0.14 per share, versus a $10.0 million net loss, or $1.60 per
share, in the first quarter of fiscal year 2003. Comparative first quarter
fiscal year 2003 operating results have been restated to reflect, on an "as if
pooling" basis, our related party acquisitions of ClearBlue Technologies
Management, Inc. and certain subsidiaries of ClearBlue Technologies, Inc., as
explained in our filing on Form 10-Q for the three-months ended October 31,
2003. The company reported EBITDA (1) (Earnings Before Interest, Taxes,
Depreciation, and Amortization) of approximately $0.7 million for the first
quarter of fiscal year 2004, including impairment and restructuring charges of
approximately $1.1 million; excluding these charges first quarter EBITDA was
approximately $1.8 million, compared to an EBITDA (1) loss of $3.0 million in
the first quarter of fiscal year 2003. This marked the first EBITDA (1)
positive quarter in NaviSite's history.
NaviSite's unaudited financial results for the first quarter of fiscal year 2004
have also improved compared to the unaudited restated results for the fourth
quarter of fiscal year 2003 (fourth quarter 2003 results have also been restated
from originally reported results for the reason discussed in the paragraph
above). Our total revenue of $23.5 million for the first quarter of fiscal year
2004, increased approximately $1.0 million, or about 5%, from restated revenue
of $22.4 million in the fourth quarter of fiscal year 2003. First quarter gross
profit of 21% increased 11 percentage points from a gross profit of 10% in the
fourth quarter of fiscal year 2003 on a restated basis.
"NaviSite has built an integrated infrastructure platform targeting a specific
set of growth market opportunities in messaging, software distribution services,
application services and hosting," said Arthur Becker, chief executive officer
of NaviSite. "The company's first quarter performance demonstrates the potential
of this operational platform for margin improvement and profitability through
operating leverage and continued cost efficiency gains. Gross profit reached
$4.9 million in our first quarter, an improvement of 111% from NaviSite's fourth
quarter of fiscal year 2003 and reflects the ongoing realization of the cost and
infrastructure synergies that have greatly improved our
Corporate Headquarters: 400 Minuteman Road Andover MA 01810 USA
operating leverage. With our service and operational platforms now largely
assembled, we are ready to focus our efforts on achieving our market leadership
objectives."
2004 STRATEGIC OUTLOOK
During fiscal 2004, NaviSite's objective is to leverage its integrated platform
across several segments of the mid-market managed services market with content
delivery, messaging services, applications services and co-location offerings.
By focusing on the needs of the growing middle market (customers spending $1.5
million or less on technology per year) NaviSite is addressing these companies'
unmet needs by offering a flexible and modular portfolio of adaptable solutions
that help them manage and grow their businesses, simplify their technology
buying decisions, and provide low-priced entry points. Elements of this
strategic plan include:
Leverage NaviSite's unique platform: Leverage the operation and technical
synergies inherent in our platform to the delivery of services that solve
everyday problems such as the hosting and management of corporate e-mail or the
secure network-based mass distribution of software and media.
New customer acquisition: NaviSite is also marketing its comprehensive service
solutions offering to new customers, utilizing its focus on markets such as
Messaging and Application Management which allow new customers to
cost-effectively purchase multiple services from a common source.
Increase average customer spend: NaviSite is aggressively seeking to raise its
portion of existing customers' average IT budgets by cross- and up-selling three
key elements of its broad product offering. These cross selling opportunities
are:
- Offering application hosting to messaging customers
- Offering application hosting to content delivery services customers
- Offering messaging to application hosting customers
Selected future acquisitions: NaviSite continues a disciplined search for
acquisition opportunities that meet certain criteria such as being EBITDA
accretive, adding functionality to the product line, growing market share,
and/or bringing additional vertical market opportunities.
"Having nearly completed the integration of several acquisitions in fiscal year
2003 and early fiscal year 2004, including cost reductions and facilities
consolidations, NaviSite's leaner operating base can now yield significantly
increased gross profit margins from every incremental dollar of revenue," Jim
Pluntze, chief financial officer said. "During fiscal year 2004, our goals
include growing our EBITDA (1) from current levels, and achieving positive cash
flow from operations."
Becker concluded, "Fiscal 2004 is NaviSite's year to realize the benefit of the
integrated product portfolio strategy that we have successfully created over the
past year. As we move past the integration stage of the company, we have
carefully assembled the product set and the critical mass necessary to be
competitive and compelling to our customers, and are poised to enter the next
stage of NaviSite's history as a market leader in three under-served markets
that are experiencing solid annual growth."
The Company believes that its non-GAAP measure of EBITDA (1) provides investors
with a useful supplemental measure of the Company's operating performance by
excluding the impact of Interest, Taxes, Depreciation, and Amortization.
Management uses EBITDA (1) to assist in evaluating the Company's operating
performance. These non-GAAP results should be evaluated in light of the
Company's financial results prepared in accordance with United States generally
accepted accounting
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principles ("GAAP"). A table reconciling the Company's EBITDA to net loss is
included in the consolidated financial statements in this release.
CONFERENCE CALL SCHEDULED FOR DECEMBER 16TH
NaviSite will hold a conference call to discuss its fiscal 2004 first quarter
results at 8:30 a.m. Eastern Time on December 16, 2003.
CALL IN #: 888.482.0024
INTERNATIONAL CALL IN #: 617.801.9702
PASS CODE: NaviSite (verbal).
Call-in details can also be found on NaviSite's corporate website at
www.navisite.com/earningscall.
(1) EBITDA is not a recognized measure for financial statement presentation
under United States generally accepted accounting principles (U.S. GAAP).
Non-U.S. GAAP earnings measures do not have any standardized definition and are
therefore unlikely to be comparable to similar measures presented by other
reporting companies. This non-U.S. GAAP measure is provided to assist readers in
evaluating NaviSite's operating performance. Readers are encouraged to consider
this non-U.S. GAAP measure in conjunction with NaviSite's U.S. GAAP results.
ABOUT NAVISITE, INC.
Founded in 1997, NaviSite, Inc, (NASDAQ SC: NAVI) is a leading provider of
application management, content distribution, messaging and infrastructure
management services for more than 900 customers consisting of mid-market
enterprises, divisions of large multinational companies, and government
agencies. For more information, please visit http://www.navisite.com.
This release contains forward-looking statements, which address a variety of
subjects including, for example, the expected future operating and financial
results, including gross profit margins, EBITDA and cash flow, the expected
benefits, capabilities and marketability of NaviSite's integrated infrastructure
platform, NaviSite's strategic business plans for 2004, expected growth through
acquisitions, and the expected outlook for the markets in which NaviSite
operates. 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 margins, improve its cash
flows, expand its operations and revenues 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;
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 revenues; NaviSite's products,
technologies, and resources may not successfully operate with the technology,
resources and/or applications of third parties; a further slow down in general
economic conditions; 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.
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NAVISITE FINANCIAL TABLES Q1 FISCAL YEAR 2004
EBITDA SUMMARY
THREE MONTHS ENDED OCTOBER 31,
-------------------------------------
2003 2002
-------- --------
(In thousands, unaudited)
Net loss, as reported $ (3,353) $(10,005)
Depreciation and amortization 3,484 3,350
Interest, net 545 3,635
Taxes -- --
-------- --------
EBITDA $ 676 $ (3,020)
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NAVISITE FINANCIAL TABLES Q1 FISCAL YEAR 2004
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31,
-------------------------------------
2003 2002
-------- --------
(in thousands, except per share data)
Revenue:
Revenue $ 23,473 $ 14,561
Revenue, related parties -- 1,310
-------- --------
Total revenue 23,473 15,871
Cost of revenue 17,924 16,495
Impairment and restructuring 633 --
-------- --------
Total cost of revenue 18,557 16,495
-------- --------
Gross profit, (loss) 4,916 (624)
Operating expenses:
Product development 348 382
Selling and marketing 1,972 1,287
General and administrative 4,958 3,677
Impairment and restructuring 456 --
-------- --------
Total operating expenses 7,734 5,346
-------- --------
Loss from operations (2,818) (5,970)
Other income (expense):
Interest income 64 305
Interest expense (609) (3,940)
Other income (expense), net 10 (400)
-------- --------
Net loss $ (3,353) $(10,005)
-------- --------
Basic and diluted net loss per common share $ (0.14) $ (1.60)
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Basic and diluted weighted average number of common shares outstanding 24,506 6,270
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NAVISITE FINANCIAL TABLES Q1 FISCAL YEAR 2004
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, JULY 31,
ASSETS 2003 2003
--------- ---------
(in thousands, except par value)
Current Assets:
Cash and cash equivalents $ 2,898 $ 3,862
Accounts receivable, less allowance for
doubtful accounts of $1,847 and $2,030 at
October 31, 2003 and July 31, 2003, respectively 17,218 14,741
Due from related parties 125 --
Prepaid expenses and other current assets 4,674 4,011
--------- ---------
Total current assets 24,915 22,614
Property and equipment, net 20,039 22,165
Customer lists, less amortization of $4,571 and
$3,724 at October 31, 2003 and July 31, 2003,
respectively 11,181 12,052
Goodwill 3,206 3,206
Other assets 6,069 6,280
Restricted cash 2,182 3,054
--------- ---------
Total assets $ 67,592 $ 69,371
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts receivable financing line, net $ 9,269 $ 6,358
Current notes payable 1,181 1,211
Capital lease obligations, current portion 2,927 3,268
Current note payable to related party 3,000 3,000
Accounts payable 4,122 4,371
Accrued expenses 16,316 17,580
Deferred revenue 2,722 2,993
Customer deposits 129 134
--------- ---------
Total current liabilities 39,666 38,915
Capital lease obligations, less current portion 1,541 1,907
Accrued restructuring, less current portion 3,933 3,476
Note to AppliedTheory estate 6,000 6,000
Other long-term liabilities 2,111 2,194
--------- ---------
Total liabilities 53,251 52,492
Commitments and contingencies
Stockholders' equity:
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Preferred Stock, $0.01 par value. Authorized
5,000 shares; no shares issued or outstanding
at October 31, 2003 and July 31, 2003 -- --
Accumulated other comprehensive income (loss) 15 (16)
Common Stock, $0.01 par value. Authorized 395,000
shares; issued and outstanding 24,691 and 23,412
at October 31, 2003 and July 31, 2003 248 235
Additional paid-in capital 435,934 432,399
Accumulated deficit (421,856) (415,739)
--------- ---------
Total stockholders' equity 14,341 16,879
--------- ---------
Total liabilities and stockholders' equity $ 67,592 $ 69,371
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