Interxion Reports Q4 and Full Year 2015 Results

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AMSTERDAM 2 March 2016Interxion Holding NV (NYSE: INXN), a leading European provider of cloud and carrier-neutral colocation data centre services, announced its results today for the three months and year ended 31 December 2015.

“Our 2015 performance demonstrates the continued strength of our business model and the value that our customers receive from being colocated in our connectivity-rich and cloud-rich data centres across our European footprint. Our 2015 results include 14% recurring revenue growth, 17% adjusted EBITDA growth, attractive margin gains, and high utilization, all of which lead to increased value for our shareholders.” said David Ruberg, Interxion’s Chief Executive Officer. “Our Communities of Interest market strategy helped drive our growth in 2015 and positions us well for growth in the future as the IT industry is in the early stages of investing in the shift from legacy IT implementations to the cloud.”

Financial Highlights

  • Revenue for the fourth quarter and full year (FY) increased by 12% and 13% to €100.7 million and €386.6 million, respectively (4Q 2014: €89.9 million; FY 2014: €340.6 million)
  • Adjusted EBITDA1 for the fourth quarter and full year increased by 16% and 17% to €44.9 million and €171.3 million, respectively (4Q 2014: €38.7 million; FY 2014: €146.4 million)
  • Adjusted EBITDA margin for the fourth quarter and full year increased by 160 bps and 130 bps to 44.6% and 44.3%, respectively (4Q 2014: 43.0%; FY 2014: 43.0%)
  • Net profit for the fourth quarter and full year increased by 64% and 39% to €12.1 million and €48.6 million, respectively (4Q 2014: €7.4 million; FY 2014: €35.1 million)
  • Earnings per diluted share for the fourth quarter and full year increased by 55% and 38% to €0.17 and €0.69, respectively (4Q 2014: €0.11; FY 2014: €0.50)
  • Adjusted net profit2 for the fourth quarter and full year increased by 69% and 17% to €12.1 million and €37.9 million, respectively (4Q 2014: €7.2 million; FY 2014: €32.5 million)
  • Adjusted earnings per diluted share2 for the fourth quarter and full year increased by 70% and 17% to €0.17 and €0.54, respectively (4Q 2014: €0.10; FY 2014: €0.46)
  • Capital Expenditures, including intangible assets3, were €42.0 million in the fourth quarter and €192.6 million for full year 2015

Operating Highlights

  • Equipped Space increased by 1,000 square metres in the fourth quarter and 7,700 square metres for the full year to 101,200 square metres
  • Revenue Generating Space increased by 1,100 square metres in the fourth quarter and 8,100 square metres for the full year to 79,100 square metres
  • Utilisation Rate was 78% at the end of the year
  • During the fourth quarter, Interxion opened the first phase of its DUS2 data centre in Dusseldorf and completed an expansion of its VIE2 data centre in Vienna
  • During the first quarter of 2016, Interxion opened the first phase of its FRA10 data centre in Frankfurt.

Quarterly Review

Revenue for the fourth quarter of 2015 was €100.7 million, a 12% increase over the fourth quarter of 2014 and a 3% increase over the third quarter of 2015. Recurring revenue was €95.1 million, a 14% increase over the fourth quarter of 2014 and a 3% increase over the third quarter of 2015. Recurring revenue in the quarter was 94% of total revenue.

Cost of sales in the fourth quarter of 2015 was €39.2 million, a 6% increase over the fourth quarter of 2014 and a 2% increase over the third quarter of 2015.

Gross profit was €61.4 million in the fourth quarter of 2015, a 16% increase over the fourth quarter of 2014 and a 3% increase over the third quarter of 2015.

Sales and marketing costs in the fourth quarter of 2015 were €7.4 million, a 13% increase compared to the fourth quarter of 2014 and a 6% increase over the third quarter of 2015. Other general and administrative costs4 were €9.2 million, a 19% increase compared to the fourth quarter of 2014 and a 4% increase compared to the third quarter of 2015.

Adjusted EBITDA for the fourth quarter of 2015 was €44.9 million, a 16% increase compared to the fourth quarter of 2014 and a 3% increase compared to the third quarter of 2015. Adjusted EBITDA margin was 44.6% in the fourth quarter of 2015 compared to 43.0% in the fourth quarter of 2014 and 44.6% in the third quarter of 2015.

Depreciation, amortisation, and impairments in the fourth quarter of 2015 was €20.2 million, an increase of 17% compared to the fourth quarter of 2014 and a slight decrease compared to the third quarter of 2015.

Operating profit during the fourth quarter of 2015 was €22.8 million, a 21% increase compared to the fourth quarter of 2014 and a 6% increase compared to the third quarter of 2015.

Net finance expense for the fourth quarter of 2015 was €8.1 million, a 1% increase compared to the fourth quarter of 2014, and a 26% increase compared to the third quarter of 2015, during which Interxion reported a €2.3 million gain as part of its net finance expense following the sale of a financial asset.

Income tax expense for the fourth quarter of 2015 was €2.6 million, a 26% decrease compared to the fourth quarter of 2014, and a 46% decrease compared to the third quarter of 2015.

Net profit was €12.1 million in the fourth quarter of 2015, a 64% increase compared to the fourth quarter of 2014 and a 17% increase compared to the third quarter of 2015.

Adjusted net profit was €12.1 million in the fourth quarter of 2015, a 69% increase compared to the fourth quarter of 2014 and a 39% increase compared to the third quarter of 2015.

Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €38.1 million in the fourth quarter of 2015, a 6% decrease compared to the fourth quarter of 2014, and an 11% decrease compared to the third quarter of 2015.

Capital expenditures, including intangible assets, were €42.0 million in the fourth quarter 2015 compared to €47.8 million in the fourth quarter of 2014 and €35.3 million in the third quarter of 2015.

Cash and cash equivalents were €58.6 million at 31 December 2015, compared to €99.9 million at year end 2014. Total borrowings, net of deferred revolving facility financing fees, were €555.1 million at year end 2015 compared to €560.6 million at year end 2014. As of 31 December 2015, the company’s revolving credit facility was undrawn.

Equipped space at year end 2015 was 101,200 square metres compared to 93,500 square metres at year end 2014 and 100,200 square metres at the end of the third quarter 2015. Revenue generating space at year end 2015 was 79,100 square metres compared to 71,000 square metres at year end 2014 and 78,000 square metres at the end of the third quarter 2015. Utilisation rate, the ratio of revenue-generating space to equipped space, was 78% at year end 2015 compared to 76% at year end 2014 and 78% at the end of the third quarter 2015.

Annual Review

Revenue for 2015 was €386.6 million, a 13% increase compared to 2014. Recurring revenue for 2015 was €365.2 million, a 14% increase compared to 2014, and accounted for 94% of total revenue in both 2015 and 2014.

Gross profit was €234.9 million in 2015, a 17% increase compared to 2014.

Sales and marketing costs for 2015 were €28.2 million, a 15% increase compared to 2014.

Adjusted EBITDA for 2015 was €171.3 million, a 17% increase compared to 2014. Adjusted EBITDA margin for 2015 was 44.3%, an increase of 130 bps compared to 2014.

Net profit was €48.6 million in 2015, an increase of 39% compared to 2014. Diluted earnings per share in 2015 were €0.69 on a weighted average of 70.5 million diluted shares, a 38% increase compared to €0.50 on a weighted average of 69.9 million diluted shares in 2014. Net profit and earnings per share in 2015 were impacted by €11.8 million of M&A transaction costs, €20.9 million of M&A transaction break fee income, and a €2.3 million gain on the sale of a financial asset. Net profit and earnings per share in 2014 were impacted by €0.3 million of M&A transaction costs and €0.6 million of refinancing costs.

Adjusted net profit was €37.9 million in 2015, a 17% increase compared to 2014. Adjusted earnings per diluted share were €0.54 on a weighted average of 70.5 million diluted shares, a 17% increase compared to €0.46 on a weighted average of 69.9 million diluted shares in 2014.
Cash generated from operations, defined as cash generated from operating activities before interest and corporate income tax payments and receipts, was €169.4 million in 2015, an increase of 25% compared to 2014.

Capital expenditures, including intangible assets, were €192.6 million in 2015 compared to €216.3 million in 2014.

During 2015, Interxion opened 7,700 square metres of new Equipped Space capacity, and installed a net 8,100 Revenue Generating Square Metres, increasing utilisation to 78% from 76%.

Business Outlook

The company today is providing guidance for full year 2016:

Revenue €416 million €431 million
Adjusted EBITDA €185 million €195 million
Capital Expenditures (including intangibles) €200 million – €220 million

Conference Call to Discuss Results

Interxion will host a conference call today at 8:30 a.m. ET (1:30 pm GMT, 2:30 pm CET) to discuss Interxion’s 4Q and 2015 year end results.
To participate on this call, U.S. callers may dial toll free 1-866-966-1396; callers outside the U.S. may dial direct +44 (0) 2071 928 000. The conference ID for this call is ‘INXN’. 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 8 March 2016. 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 25907881.

Forward-looking Statements

This communication contains forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such forward-looking statements. Factors that could cause actual results and future events to differ materially from Interxion’s expectations include, but are not limited to, the difficulty of reducing operating expenses in the short term, the 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, certain other risks detailed herein and other risks described from time to time in Interxion’s filings with the United States Securities and Exchange Commission (the “SEC”).

Interxion does not assume any obligation to update the forward-looking information contained in this report.

Use of Non-IFRS Information

We define EBITDA as operating profit plus depreciation, amortization and impairment of assets. We define Adjusted EBITDA as EBITDA adjusted to exclude share-based payments, M&A transaction costs, increase/(decrease) in provision for onerous lease contracts, M&A transaction break fee income, and income from sub-leases of 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 credit facility and €475 million 6.00% Senior Secured Notes due 2020.

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

Adjusted earnings per diluted share amounts are determined on Adjusted net profit. Adjusted net profit is defined as Net profit excluding the impact of refinancing charges, M&A transaction costs, M&A transaction break fee income, profit on sale of financial asset, increase/(decrease) in the provision for onerous lease contracts, interest capitalised, and the related corporate income tax effect with respect to the foregoing items. 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, M&A transaction costs, increase/(decrease) in provision for onerous lease contracts, M&A transaction break fee income, 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-

1We define Adjusted EBITDA as EBITDA adjusted to exclude share-based payments, M&A transaction costs, increase/(decrease) in provision for onerous lease contracts, M&A transaction break fee income, and income from sub-leases of unused data centre sites.

2Adjusted net profit is defined as Net profit excluding the impact of refinancing charges, M&A transaction costs, M&A transaction break fee income, profit on sale of financial asset, increase /(decrease) in the provision for onerous lease contracts, interest capitalised, and the related corporate income tax effect with respect to the foregoing items. Adjusted earnings per diluted share amounts are determined on Adjusted net profit.

3Capital expenditures, including intangible assets, represent payments to acquire property, plant, and equipment and intangible assets, as recorded in the consolidated statement of cash flows as "Purchase of property, plant and equipment" and "Purchase of intangible assets", respectively.

4Other general administrative costs represents general and administrative costs excluding depreciation, amortisation, impairments, share based payments, M&A transaction costs, and increase/(decrease) in provision for onerous lease contracts.

About Interxion

Interxion (NYSE: INXN) is a leading provider of carrier and cloud-neutral colocation data centre services in Europe, serving a wide range of customers through 42 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 over 600 connectivity providers, 21 European Internet exchanges, and most leading cloud and digital media platforms across its footprint, Interxion has created connectivity, cloud, content and finance hubs that foster growing customer communities of interest. For more information, please visit www.interxion.com.