Interxion Reports Second Quarter 2013 Results

News

AMSTERDAM 7 August 2013 Interxion Holding NV (NYSE: INXN), a leading European provider of carrier and cloud neutral colocation data centre services, today announced its results for the three months ended 30 June 2013. 
   
Financial Highlights

  • Revenue increased by 13% to €76.5 million (Q2 2012: €68.0 million) 
  • Big 4 reporting segment recurring revenue increased by 18% to €45.2 million (Q2 2012: €38.4 million) 
  • Adjusted EBITDA increased by 18% to €32.7 million (Q2 2012: €27.8 million)
  • Adjusted EBITDA margin increased to 42.8% (Q2 2012: 40.8%)
  • Net profit decreased by 24% to €6.6 million (Q2 2012: €8.7 million)
  • Capital expenditure, including intangible assets, was €28.8 million
  • Debt structure refinanced subsequent to quarter end to reduce interest costs and extend maturities.

Operating Highlights

  • Expansion projects in Copenhagen and Stockholm completed
  • Equipped Space increased by 800 square metres in Q2 2013  to 78,900 square metres
  • Revenue Generating Space increased by 1,200 square metres in Q2 2013 to 58,200 square metres
  • Utilisation Rate at the end of the quarter increased to 74%
  • New expansion projects in Stockholm, Vienna, and Zurich announced today


“Interxion’s second quarter results reflect solid execution against our market segmentation strategy, which has delivered sustained, profitable growth despite the effects of a continued unfavourable macroeconomic environment,” said Interxion Chief Executive Officer, David Ruberg.  “Growth in our communities of interest and structural drivers, such as the onset of migration to cloud computing, are underpinning continued demand for Interxion’s highly connected data centres.”

Quarterly Review
Revenue in the second quarter of 2013 was €76.5 million, a 13% increase over the second quarter of 2012 and 3% up on the first quarter of 2013. Recurring revenue, which was 94% of total revenue, was €72.2 million, a 15% increase over the second quarter of 2012 and 2% up on the first quarter of 2013.   Recurring revenue in the Big 4 markets was €45.2 million, an 18% increase over the second quarter of 2012 and 2% up on the first quarter of 2013.

Cost of sales in the second quarter of 2013 was €31.3 million, an 11% increase over the second quarter of 2012 and 6% up on the first quarter of 2013.

Gross profit was €45.2 million in the second quarter 2013, a 14% increase over the second quarter of 2012 and 1% up on the first quarter of 2013. Gross profit margin in the second quarter of 2013 was 59.1%, compared with 58.5% in the same quarter of 2012 and 60.2% in the first quarter of 2013.

Sales and marketing costs in the second quarter 2013 were €5.5 million, an 18% increase over the second quarter of 2012 but 0.1% lower than the first quarter of 2013.

General and administrative costs in the second quarter 2013 were €7.0 million, a decrease of 5% compared with the second quarter of 2012 and 8% lower than the first quarter of 2013. Depreciation and amortisation in the second quarter 2013 was €14.9 million, a 46% increase over the second quarter of 2012 and 6% up on the first quarter of 2013.

Net financing costs in the second quarter of 2013 were €7.3 million, an increase of 89% compared with the second quarter of 2012, and 14% up on the first quarter of 2013, and was primarily the result of a reduction in capitalized interest in the quarter. 

Net profit was €6.6 million in the second quarter 2013, a decrease of 24% compared with the second quarter of 2012, while earnings per share were €0.10 on a weighted average of 69.4 million diluted shares, compared with €0.13 on a weighted average of 68.0 million diluted shares in the second quarter of 2012.

Adjusted EBITDA in the second quarter of 2013 was €32.7 million, up 18% year-on-year.  Adjusted EBITDA margin increased to 42.8%, compared with 40.8% in the second quarter of 2012.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €24.1 million in the second quarter 2013 compared to €29.4 million in the second quarter 2012.  Capital expenditure, including intangible assets, was €28.8 million in the second quarter of 2013, compared to €42.6 million in the second quarter 2012.

Cash and cash equivalents were €59.8 million at 30 June 2013, down from €68.7 million at year-end 2012.  Total borrowings were €304.0 million at the end of the second quarter 2013 compared with €288.1 million at the end of 2012.  During the quarter, the company entered into a €6 million mortgage in connection with one of its data centres in Amsterdam. 

In July 2013, after the quarter ended, Interxion closed a refinancing transaction that replaced its €260 million 9.50% Senior Secured Notes with €325 million 6.00% Senior Secured Notes and replaced its €60.0 million revolving credit facility with a €100.0 million revolving credit facility. 

Equipped Space at the end of the second quarter 2013 was 78,900 square metres, compared with 65,300 square metres at the end of the second quarter of 2012 and 78,100 square metres at the end of the first quarter of 2013. Revenue Generating Space at the end of the second quarter 2013 was 58,200 square metres, compared with 48,600 square metres at the end of the second quarter of 2012 and 57,000 square metres at the end of the first quarter of 2013.  Utilisation rate, the ratio of Revenue Generating Space to Equipped Space, was 74% at the end of the quarter, the same as the second quarter of 2012 and up from 73% at the end of the first quarter of 2013.

Interxion is expanding three other data centres in its Rest of Europe segment:

In Stockholm, Interxion is constructing the second phase of STO 2 (STO 2.2) in response to continued demand in Stockholm. STO 2.2 will provide approximately 500 square metres of Equipped Space and is scheduled to be operational in the first quarter of 2014;

In Vienna, Interxion has constructed the fourth phase of VIE 1 (VIE 1.4) due to continued demand from financial services and cloud communities of interest. VIE 1.4 became operational in the third quarter of 2013 and provides approximately 400 square metres of Equipped Space;

In Zurich, Interxion is constructing the fourth phase of ZUR 1 (ZUR 1.4) in response to continued demand. ZUR 1.4 will provide approximately 500 square metres of Equipped Space and is scheduled to become operational in the fourth quarter of 2013.

The capital expenditure associated with these projects is approximately €11 million and are included in the company’s 2013 capex guidance.

Business Outlook

Interxion today reaffirmed its guidance for 2013:

Revenue €307 million - €322 million
Adjusted EBITDA €130 million - €140 million
Capital expenditure (including intangibles) €130 million - €150 million

Conference Call to Discuss Results

The company will host a conference call today at 8:30am ET (1:30pm BST, 2:30pm CET) to discuss the results.

To participate on this call, U.S. callers may dial toll free 1-866-966-9439; callers outside the U.S. may dial direct +44 (0) 1452 555 566. The conference ID for this call is 16893130. This event also will be webcast live over the Internet in listen-only mode at investors.interxion.com.

A replay of this call will be available shortly after the call concludes and will be available until 13 August 2013. To access the replay, U.S. callers may dial toll free 1-866-247-4222; callers outside the U.S. may dial direct +44 (0) 1452 550 000. The replay access number is 16893130.

Forward-looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the difficulty of reducing operating expenses in the short term, inability to utilise the capacity of newly planned data centres and data centre expansions, significant competition, the cost and supply of electrical power, data centre industry over-capacity, performance under service-level agreements, and other risks described from time to time in Interxion's filings with the Securities and Exchange Commission. Interxion does not assume any obligation to update the forward-looking information contained in this press release.

Use of Non-IFRS Information
EBITDA is defined as operating profit plus depreciation, amortization and impairment of assets. We define Adjusted EBITDA as EBITDA adjusted to exclude share-based payments, increase/decrease in provision for onerous lease contracts, and income from sub-leases on unused data centre sites. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of revenue. We present EBITDA, Adjusted EBITDA and Adjusted EBITDA margin as additional information because we understand that they are measures used by certain investors and because they are used in our financial covenants in our current €100 million revolving credit facility and €325 million 6.00% Senior Secured Notes that were issued on 3 July 2013. However, other companies may present EBITDA, Adjusted EBITDA and Adjusted EBITDA margin differently than we do. EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not measures of financial performance under IFRS and should not be considered as an alternative to operating profit or as a measure of liquidity or an alternative to net income as indicators of our operating performance or any other measure of performance derived in accordance with IFRS.

A reconciliation from Net profit to EBITDA and EBITDA to Adjusted EBITDA is provided in the notes to our consolidated income statement included elsewhere in this press release.

Interxion does not provide forward-looking estimates of Net profit, Operating profit, depreciation, amortisation, and impairments, share-based payments, or increase/decrease in provision for onerous lease contracts, and income from sub-leases on unused data centre sites, which it uses to reconcile to Adjusted EBITDA.  The company is, therefore, unable to provide forward-looking reconciling information for Adjusted EBITDA.
-ENDS-


About Interxion

Interxion (NYSE: INXN) is a leading provider of cloud and carrier-neutral colocation data centre services in Europe, serving a wide range of customers through 34 data centres in 11 European countries. Interxion’s uniformly designed, energy-efficient data centres offer customers extensive security and uptime for their mission-critical applications. With connectivity provided by over 450 fixed and mobile carriers and ISPs and 18 European Internet exchanges, Interxion has created cloud, content, finance and connectivity hubs that foster growing customer communities of interest. For more information, please visit www.interxion.com.


Contact:
Jim Huseby
Investor Relations
Interxion
Tel:  +1-813-644-9399
IR@interxion.com