Interxion Reports Third Quarter 2014 Results

News

AMSTERDAM 5 November 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 September 2014. 

Financial Highlights

  • Revenue increased by 11% to €86.4 million (Q3 2013: €78.1 million). 
  • Adjusted EBITDA increased by 11% to €37.3 million (Q3 2013: €33.7 million).
  • Adjusted EBITDA margin was 43.1% (Q3 2013: 43.1%).
  • Net profit increased to €9.0 million (Q3 2013: €16.5 million loss). 
  • Capital expenditure, including intangible assets, was €57.0 million.

Operating Highlights

  • Revenue Generating Space increased by 4,200 square metres to 68,500 square metres.
  • Equipped Space increased by 2,600 square metres to 88,600 square metres.
  • Utilisation Rate at the end of the quarter was 77%.
  • Expansion in Amsterdam and a new data centre opened in Stockholm.
  • Completed the purchase of the SFR data centre in Marseille, France, as previously announced.

“Interxion delivered solid operating and financial results in the quarter.  Revenue Generating Space increased by 4,200 square meters (+7%) over Q2 2014 and revenue growth improved to 11% year over year,” said Interxion Chief Executive Officer, David Ruberg.  “Our community of interest strategy continues to show attractive results, as magnetic cloud service providers are being installed with signs of increased activity among community members starting to emerge.”

Quarterly Review

Revenue in the third quarter of 2014 was €86.4 million, an 11% increase over the third quarter of 2013 and a 3% increase over the second quarter of 2014. Recurring revenue was €80.9 million, a 10% increase over the third quarter of 2013 and a 3% increase over the second quarter of 2014.  

Cost of sales in the third quarter of 2014 was €35.5 million, a 12% increase over the third quarter of 2013 and a 5% increase over the second quarter of 2014.

Gross profit was €50.9 million in the third quarter of 2014, a 10% increase over the third quarter of 2013 and a 3% increase over the second quarter of 2014. Gross profit margin in the third quarter of 2014 was 58.9%, compared with 59.2% in the third quarter of 2013 and 59.4% in the second quarter of 2014.

Sales and marketing costs in the third quarter of 2014 were €5.9 million, an 8% increase over the third quarter of 2013 and a 5% decrease from the second quarter of 2014.

General and administrative costs1 in the third quarter of 2014 were €7.7 million, a 9% increase compared with the third quarter of 2013 and a 2% increase over the second quarter of 2014. Depreciation and amortisation in the third quarter of 2014 was €16.0 million, a 5% increase compared with the third quarter of 2013 and an 8% increase over the second quarter of 2014.

Net financing costs in the third quarter of 2014 were €7.0 million, an 82% decrease compared with the third quarter of 2013 and a 7% decrease over the second quarter of 2014. During the third quarter of 2013, Interxion closed a refinancing transaction that resulted in a €31.0 million one-time charge. Excluding this charge, net financing costs in the third quarter of 2014 were 1.4% lower than adjusted third quarter 2013 net financing costs.

Income tax expense was €3.9 million in the third quarter of 2014, compared to a €4.1 million income tax benefit in the third quarter of 2013, and a 2% decrease from the second quarter of 2014. The underlying effective tax rate for the quarter was 30% unchanged from the 30% in the same period last year.

Net profit was €9.0 million in the third quarter of 2014, compared to a net loss of €16.5 million in the third quarter 2013 and an 8% increase over the second quarter of 2014.  Earnings per share were €0.13 on a weighted average of 70.0 million diluted shares in the third quarter of 2014. This result compares with a net loss of €0.24 on a weighted average of 69.5 million diluted shares in the third quarter of 2013, and earnings per share of €0.12 on a weighted average of 69.8 million diluted shares in the second quarter of 2014. Adjusted diluted earnings per share2 for the third quarter of 2014 were €0.11, compared with €0.10 for the third quarter of 2013 and €0.11 for the second quarter of 2014.

Adjusted EBITDA in the third quarter of 2014 was €37.3 million, an 11% increase over the third quarter of 2013 and a 4% increase over the second quarter of 2014.  Adjusted EBITDA margin was 43.1%, compared with 43.1% in the third quarter of 2013 and 42.9% in the second quarter of 2014.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €33.6 million in the third quarter of 2014, a 5% increase over the third quarter of 2013 and a 25% increase over the second quarter of 2014. Capital expenditure, including intangible assets, was €57.0 million in the third quarter of 2014, compared with €26.5 million in the third quarter of 2013 and €54.4 million in the second quarter of 2014.

Cash and cash equivalents were €112.8 million at 30 September 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 €542.7 million at the end of the third quarter of 2014, compared with €362.7 million at the end of 2013. In the quarter, the company entered into a finance lease obligation of €13.4 million relating to our AMS7 facility. The company’s €100 million revolving credit facility was undrawn at 30 September 2014.

During the quarter, the company completed its purchase of the data centre facilities in Marseille, France from Société Française du Radiotéléphone – SFR SA (“SFR”).  The company expects capital expenditure associated with the purchase of the freehold land and buildings together with the construction of the first two phases of equipped space totalling approximately 1,000 square metres to be approximately €20 million.

Equipped Space at the end of the third quarter of 2014 was 88,600 square metres, compared with 79,300 square metres at the end of the third quarter of 2013 and 86,000 square metres at the end of the second quarter of 2014.

  • AMS7 (Amsterdam):   Phase 3 (1,500 square metres) became operational in 3Q 2014; phase 4 (1,300 square metres) is scheduled for 4Q 2014; phases 5 and 6 (1,300 square metres each) are scheduled for 1Q 2015 and 2Q 2015, respectively;
  • FRA8 (Frankfurt):  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 opened in 3Q 2014;
  • STO4 (Stockholm):  1,100 square metres are scheduled to open in 2Q 2015;
  • VIE2 (Vienna):  Phase 1 (600 square metres) is scheduled to be operational in 4Q 2014; Phases 2 and 3 will deliver 1,000 square metres scheduled to be operational in 1Q 2015 and 300 square metres scheduled to be operational in 2Q 2015, and Phase 4 (900 square metres) is scheduled to open in the second half of 2015.

Revenue Generating Space at the end of the third quarter of 2014 was 68,500 square metres, compared with 59,100 square metres at the end of the third quarter of 2013 and 64,300 square metres at the end of the second quarter of 2014.  Utilisation Rate, the ratio of Revenue Generating Space to Equipped Space, was 77% at the end of the third quarter of 2014, compared with 75% at the end of the third quarter of 2013 and 75% at the end of the second quarter of 2014.

Business Outlook

Interxion today reaffirmed its 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 ET (1:30pm GMT 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 15649465. This event will also 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 11 November 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 15649465.

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. 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.

Other companies, however, may present EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Profit differently than we do. EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Profit 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.

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 38 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.