Interxion Reports Second Quarter 2014 Results

News

Revenue growth increases; bookings momentum continues

AMSTERDAM 6 August 2014Interxion Holding NV (NYSE: INXN), a leading European provider of cloud and carrier-neutral colocation data centre services, today announced its results for the three months ended 30 June 2014.

Financial Highlights

  • Revenue increased by 9% to €83.6 million (Q2 2013: €76.5 million).
  • Adjusted EBITDA increased by 10% to €35.9 million (Q2 2013: €32.7 million).
  • Adjusted EBITDA margin increased to 42.9% (Q2 2013: 42.8%).
  • Net profit increased by 26% to €8.3 million (Q2 2013: €6.6 million).
  • Capital expenditure, including intangible assets, was €54.4 million.
  • In the quarter Interxion issued €150.0 million of 6.00% Senior Secured Notes due 2020 at 106.75.We are increasing our capital expenditure guidance for the full year to €200 million - €230 million.

Operating Highlights

  • New data centre opened in Frankfurt and expansion in Amsterdam.
  • Equipped Space increased by 3,100 square metres to 86,000 square metres.
  • Revenue Generating Space increased by 2,900 square metres to 64,300 square metres.
  • Utilisation Rate at the end of the quarter was 75%.
  • Signed an agreement to purchase a data centre in Marseille, France.

“Interxion delivered another quarter of solid operating and financial results, with strong bookings, increasing revenue growth, stable recurring ARPU, and significant additions to both equipped space and revenue generating space,” said Interxion Chief Executive Officer, David Ruberg. “We are optimistic in market trends, and based on our order backlog, we are confident in our execution.”

Quarterly Review

Revenue in the second quarter of 2014 was €83.6 million, a 9% increase over the second quarter of 2013 and a 4% increase over the first quarter of 2014. Recurring revenue was €78.7 million, a 9% increase over the second quarter of 2013 and a 4% increase over the first quarter of 2014.

Cost of sales in the second quarter of 2014 was €34.0 million, a 9% increase over the second quarter of 2013 and a 4% increase over the first quarter of 2014.

Gross profit was €49.6 million in the second quarter of 2014, a 10% increase over the second quarter of 2013 and a 3% increase over the first quarter of 2014. Gross profit margin in the second quarter of 2014 was 59.4%, compared with 59.1% in the second quarter of 2013 and 59.6% in the first quarter of 2014.

Sales and marketing costs in the second quarter of 2014 were €6.2 million, a 13% increase over the second quarter of 2013 and a 6% increase from the first quarter of 2014.

General and administrative costs1 in the second quarter of 2014 were €7.6 million, an 8% increase compared with the second quarter of 2013 and a 1% decrease over the first quarter of 2014. Depreciation and amortisation in the second quarter of 2014 was €14.9 million, a slight decrease compared with the second quarter of 2013 and a 6% increase over the first quarter of 2014.

Net financing costs in the second quarter of 2014 were €7.5 million, a 2% increase compared with the second quarter of 2013 and a 39% increase over the first quarter of 2014. During the second quarter of 2014, Interxion issued €150 million of 6.00% Senior Secured Notes due 2020 at 106.75.

Income tax expense was €3.9 million in the second quarter of 2014, a 25% increase over the second quarter of 2013 and a 7% decrease from the first quarter of 2014. The underlying effective tax rate for the quarter was 32% compared with 32% in the same period last year.

Net profit was €8.3 million in the second quarter of 2014, a 26% increase over the second quarter 2013 and a 20% decrease over the first quarter of 2014. Earnings per share were €0.12 on a weighted average of 69.8 million diluted shares in the second quarter of 2014. This result compares with earnings per share of €0.10 on a weighted average of 69.4 million diluted shares in the second quarter of 2013, and earnings per share of €0.15 on a weighted average of 69.6 million diluted shares in the first quarter of 2014. Adjusted diluted earnings per share2 for the second quarter of 2014 were €0.11, compared with €0.09 for the second quarter of 2013 and €0.14 for the first quarter of 2014.

Adjusted EBITDA in the second quarter of 2014 was €35.9 million, a 10% increase over the second quarter of 2013 and a 4% increase over the first quarter of 2014. Adjusted EBITDA margin was 42.9%, compared with 42.8% in the second quarter of 2013 and 42.9% in the first quarter of 2014.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €26.9 million in the second quarter of 2014, a 12% increase over the second quarter of 2013 and a 21% decrease over the first quarter of 2014. Capital expenditure, including intangible assets, was €54.4 million in the second quarter of 2014, compared with €28.8 million in the second quarter of 2013 and €57.0 million in the first quarter of 2014.

Cash and cash equivalents were €151.9 million at 30 June 2014, up from €45.7 million at year-end 2013, principally due to the Company adding a further €150.0 million aggregate principal amount of its 6.00% Senior Secured Notes due 2020, issued at 106.75 and resulting in net cash proceeds of €157.9 million, net of estimated offering fees and expenses of €2.3 million. Total borrowings, net of deferred revolving facility financing fees, were €529.6 million at the end of the second quarter of 2014, compared with €362.7 million at the end of 2013. During the quarter the Company terminated its €100 million interim senior secured facility, which it entered into on 14 April 2014, and repaid the €30.0 million balance on its revolving credit facility.

Equipped Space at the end of the second quarter of 2014 was 86,000 square metres, compared with 78,900 square metres at the end of the second quarter of 2013 and 82,900 square metres at the end of the first quarter of 2014.

  • AMS7 (Amsterdam): Phase 2 (1,000 square metres) became operational in 2Q 2014; phase 3 (1,300 square metres) is scheduled for 4Q 2014; phase 4 (1,300 square metres) is scheduled for 1Q 2015; phases 5 and 6 (1,300 square metres each) are scheduled for 2Q 2015.
  • FRA8 (Frankfurt): Phases 1 and 2 (900 square metres each) became operational in the second quarter of 2014; phases 3 and 4 (900 square metres each) are scheduled for 1Q 2015.
  • MRS1 (Marseille): Phases 1 and 2 (500 square metres each) are scheduled for 4Q 2014 and 1Q 2015, respectively.
  • STO3 (Stockholm): 900 square metres are scheduled to open in 4Q 2014.
  • VIE2 (Vienna): Phase 1 (600 square metres) is scheduled to be operational in 4Q 2014; phase 2 is scheduled to open 300 square metres in 1Q 2015 and the remaining 300 square metres in 2Q 2015.

Revenue Generating Space at the end of the second quarter of 2014 was 64,300 square metres, compared with 58,200 square metres at the end of the second quarter of 2013 and 61,400 square metres at the end of the first quarter of 2014. Utilisation Rate, the ratio of Revenue Generating Space to Equipped Space, was 75% at the end of the second quarter of 2014, compared with 74% at the end of the second quarter of 2013 and 74% at the end of the first quarter of 2014.

As recently announced, the Company signed an agreement with Société Française du Radiotéléphone – SFR SA (“SFR”) to purchase their data centre facilities in Marseille, France. The transaction is scheduled to close in the third quarter of 2014. The
company has increased its 2014 capex expenditure guidance to accommodate this transaction.

Business Outlook

Interxion today reaffirmed its Revenue and Adjusted EBITDA guidance and increased its capital expenditure guidance for 2014:

Revenue €334 million - €344 million
Adjusted EBITDA €145 million - €152 million
Capital expenditure (including intangibles) €200 million - €230 million


Conference Call to Discuss Results

The Company will host a conference call today at 8:30am EDT (1:30pm BST and 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 72033118. 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 12 August 2014. 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 72033118.

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, amortisation 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 €100 million revolving facility and €475 million 6.00% Senior Secured Notes due 2020. Other companies, however, 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.

Adjusted diluted earnings per share amounts are determined on Adjusted Net Profit. We define Adjusted Net Profit as net profit/loss excluding the impact of the refinancing charges, deferred tax adjustments, Dutch crisis tax, adjustments to onerous leases, capitalised interest, and the related corporate income tax effect. A reconciliation from reported Net Profit to Adjusted Net Profit is 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 37 data centres in 11 European countries. Interxion’s data centres offer customers extensive security and uptime for their mission-critical applications. With connectivity provided by over 500 connectivity providers and 20 European Internet exchanges across its footprint, 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

1 Excluding depreciation, amortisation, impairments, increase/(decrease) in provision for onerous lease contracts, and share-based payments.

2 Diluted earnings per share adjusted for the impact of the refinancing charges, deferred tax adjustments, Dutch crisis tax, adjustments to onerous leases, capitalised interest, and the related corporate income tax effect.