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FOR IMMEDIATE RELEASE
COMPANY CONTACT
Matt Bell
Verio Inc.
303.645.1961
mbell@verio.net
investors@verio.net
VERIO ANNOUNCES FOURTH QUARTER RESULTS AND $258.3 MILLION IN TOTAL 1999 REVENUE
RECENT HIGHLIGHTS:
o ANNOUNCED $350 MILLION CAPITAL BUDGET FOR 2000, FOCUSED ON RAPIDLY
EXPANDING HOSTING OPERATIONS
o FURTHERED ASP STRATEGY WITH ORACLE AGREEMENT TO OFFER HOSTED DATABASE
APPLICATIONS ON VERIO'S SHARED SERVER PLATFORM
o CREATED AN ASP JOINT VENTURE WITH CIBER TO HOST COMPLEX APPLICATIONS FOR
LARGER BUSINESSES
o ADDED QWEST COMMUNICATIONS AS ITS THIRD "POWERED BY VERIO" DISTRIBUTION
PARTNER
o JOINED WITH LYCOS TO COMBINE THE BENEFITS OF VERIO'S MARKET LEADING
E-COMMERCE OFFERINGS WITH THE LYCOS SHOP ON-LINE SHOPPING DESTINATION
o LAUNCHED NEW DOMAIN NAME REGISTRATION SERVICES IN PARTNERSHIP WITH
MELBOURNE IT
ENGLEWOOD, COLO., MARCH 1, 2000 -- Verio Inc. (Nasdaq:VRIO), the world's
largest operator of Web sites for businesses and a leading provider of
comprehensive Internet services, today announced that revenue for the quarter
ended December 31, 1999 rose to $73.0 million from $37.1 million in the fourth
quarter of 1998. Revenue for 1999 totaled $258.3 million, an increase of 114%
from $120.7 million in 1998. Net loss attributable to common stockholders for
the quarter was $55.2 million, or ($.71) per share, compared to $33.7 million,
or ($.51) per share, for the quarter ended December 31, 1998.
Dedicated hosting, co-location services, electronic commerce, and virtual
private networks showed the strongest growth in the fourth quarter. Compared to
the third quarter of 1999, dedicated hosting revenue increased 48%, co-location
revenue rose 34%, and hosted eCommerce sites rose by more than 4,000 bringing
the total to more than 10,000 packages sold. Sales of virtual private networks
increased 22% from the prior quarter to over 170 units. Enhanced and Other
revenues rose to 56% of revenue compared to 55% in the prior quarter and 38% in
the fourth quarter of 1998.
Gross margin for the fourth quarter of 1999 was 70%, equal to the gross
margin for the third quarter of 1999 after adjusting for the one time credit
received in the third quarter from Qwest Communications. Operating expenses for
the quarter improved to 69% of revenue compared to 70% in the third quarter.
EBITDA for the fourth quarter was positive $0.5 million. During the quarter,
Verio began to incur costs associated with the previously announced expansion of
its hosting operations. Despite this increase, the net improvement in the
results reflects the continued efficiencies associated with Verio's scalable
operating cost structure.
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"Our recent announcements and fourth quarter results demonstrate Verio's
continued success in expanding our array of value added products, and partnering
with industry leaders to enhance our products and extend our distribution
channels." said Justin L. Jaschke, chief executive officer of Verio. "In
particular, our agreements with Qwest, Lycos, Melbourne IT and Oracle result in
significant enhancements to our e-commerce, domain name registration, web
hosting and ASP services. Our recently announced plans to significantly expand
our hosting infrastructure are moving rapidly. By continuously expanding its
services, Verio will further build upon its position as the leading provider of
eBusiness services to the middle market."
In the fourth quarter, Verio increased the number of web sites hosted by
more than 40,000, to a new total of 340,000. In addition, parked domain names
increased by over 40,000 to a new total of 210,000. Verio actively telemarkets
to new parked domain customers with a high conversion rate to recurring revenue
web hosting services. High speed access customers increased by more than 1,500
to a new total of 16,700 as our sales force increased its efficiency by 10% -
generating over $5,500 in new recurring revenues per account executive.
Customers continued to show interest in bundled solutions as 15% of new hosting
customers chose an e-commerce package and over 30% of new DSL customers chose a
web hosting product. In a recent survey of its installed base of T-1 customers,
over 15% were also web hosting customers. During the fourth quarter, Verio sold
60% more e-commerce packages than in the third quarter, a further illustration
of the acceleration of e-tailers' interest in a complete, fully bundled package.
During the quarter, Verio added Qwest Communications to its fast-growing
`Powered by Verio' distribution program. Qwest joins NTT and Infostrada as an
early participant in this program, started in the third quarter of 1999, whereby
they can offer their customers Verio hosting products in a co-branded marketing
environment. Under the agreement, Qwest may also offer Verio's e-commerce
services to its customers.
In December, Verio entered into an agreement with Melbourne IT to offer
enhanced domain name registration services. Verio's new self-serve domain name
registration services provide customers with an easy-to-use and faster way to
register and manage domain names. Combined with its leading Web hosting,
e-commerce and Internet access solutions, the new service dramatically
simplifies the customer experience by enabling companies to work with a single
service provider for all of their e-business needs.
In the burgeoning ASP market, Verio has created an Applications Service
Provider (ASP) joint venture with CIBER, Inc. to deliver Internet-enabled,
complex end-to-end enterprise solutions. Through this joint venture, the
companies plan to create the industry's premier ASP by teaming the leading IT
and application integration expertise of CIBER with Verio's Tier One national
network, global data center capacity, and content hosting services. More
recently, Verio also announced plans to offer the Oracle8i(TM) database in a
hosted or "rented" environment. This product, along with Verio's web hosting
solutions, is expected to be distributed initially through Oracle's reseller
channels. This new service will enable small and medium-sized business customers
to access the world's leading database without paying significant up-front
licensing fees, in a cost-effective and customizable manner.
As previously announced, a capital budget of $350 million has been
established for the year 2000. Approximately $300 million will be directed
toward the expansion of hosting operations. Specifically, the expenditures
include $200 million for hosting centers, $45 million for servers, and the
balance for product development, software licenses, IT systems, a new Web
Operations Control Center, and leasehold improvements. Approximately $50 million
of capital has been budgeted for network equipment, systems and facilities to
support the growth of the high-speed access business.
ABOUT VERIO INC.
Verio Inc. is the world's largest operator of Web sites for businesses and
a leading provider of comprehensive Internet services, with an emphasis on
serving the small and mid-sized business market. The
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company offers customers a broad range of Internet solutions, including
high-speed access, Web hosting, e-commerce, virtual private networks and other
enhanced services. Verio supports its operations with highly reliable and
scalable national infrastructure and systems including a Tier One national
network. Verio delivers locally based sales and engineering support in markets
across the U.S. under the Verio brand name and provides Web-hosting services to
customers in more than 170 countries.
For more information on Verio, visit the company's Web site at
www.verio.com or call 1-888-GET-VERIO. Corporate headquarters are located at
8005 S. Chester St., Suite 200, Englewood, Colorado 80112, (303) 645-1900.
Except for the historical information contained herein, certain matters set
forth in this press release concerning Verio are forward-looking statements
within the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
risks and uncertainties, including but not limited to fluctuations in operating
results, additional capital requirements, competition, integration of
acquisitions, and implementation of network infrastructure. Readers are also
encouraged to refer to Verio's reports from time to time filed with the
Securities and Exchange Commission, including the Company's Current Quarterly
Report on Form 10-Q filed on November 12, 1999, for a further discussion of
Verio's business and risk factors that may affect operating and financial
results.
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VERIO INC.
SUMMARY CONSOLIDATED FINANCIAL DATA
(amounts in millions, except per share amounts)
3 MONTHS ENDED 3 MONTHS ENDED
12/31/98 12/31/99
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(UNAUDITED) (UNAUDITED)
STATEMENT OF OPERATIONS DATA:
Dedicated ........................................... $ 16.4 $ 26.3
Dial-up ............................................. 6.6 5.9
Enhanced services and other ......................... 14.1 40.8
Total revenue ..................................... 37.1 73.0
Cost of service ..................................... 16.1 21.7
Sales and marketing ................................. 10.4 15.6
General and administrative .......................... 22.7 35.1
Total costs and expenses ............................ 50.0 105.7
Loss from operations ................................ (25.8) (32.7)
Net interest expense ................................ (7.9) (16.5)
Net loss attributable to common stockholders ........ $ (33.7) $ (55.2)
Loss per common share - basic and diluted ........... $ (.51) $ (.71)
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Weighted average common shares outstanding -
basic and diluted ................................. 66.0 77.3
OTHER DATA:
EBITDA (1) .......................................... $ (12.9) $ .5
Cash flow used by operations ........................ (28.0) (15.2)
Capital expenditures ................................ 11.6 61.1
12/31/98 12/31/99
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(UNAUDITED)
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments ......................................... $ 577.4 $ 756.5
Restricted cash and securities ...................... 14.8 20.5
Property and equipment - net ........................ 50.5 205.1
Goodwill - net ...................................... 236.7 546.9
Total assets ........................................ 933.7 1,675.1
Long-term debt and capital lease obligations -
net of current portion ............................ 674.6 1,087.2
Stockholders' equity ................................ 202.7 444.5
(1) EBITDA represents earnings (loss) from operations before interest, taxes,
depreciation, amortization and provision for loss on write-offs of
investments in ISPs and fixed assets. The primary measure of operating
performance is net earnings (loss). Although EBITDA is a measure commonly
used in the Company's industry, it should not be construed as an
alternative to net earnings (loss), determined in accordance with generally
accepted accounting principles ("GAAP"), as an indicator of operating
performance or as an alternative to cash flows from operating activities,
determined in accordance with GAAP. In addition, the measure of EBITDA
presented herein by the Company may not be comparable to other similarly
titled measures of other companies.