Savvis Reports 11% Revenue Gain in 3Q, Targets EBITDA Breakeven

📅 October 29, 2001 - Savvis Communications Corporation (savvis.com), a globalnetwork services provider, announced that consolidated revenue for the thirdquarter ended Sept. 30, 2001 increased 11% to $58.4 million compared with$52.8 million in the third quarter of 2000, and increased 1% compared with$57.7 million in the second quarter of 2001. Non-Bridge revenue increased64% compared to the year-ago third quarter and was up 6% compared to thesecond quarter of 2001.

Savvis consolidated net loss for the quarter increased to $81.4 millionversus a $47.2 million consolidated loss for the same quarter in 2000, butdecreased 34% from the second quarter of 2001. The increase in the net lossrecorded in the third quarter was primarily due to $31.5 million in one-timeasset impairment charges related to the suspension of the company's darkfiber project. Excluding these charges, the consolidated net loss for thequarter was $49.9 million or $0.54 per basic and fully diluted share. Thisrepresents a 6% increase in the net loss over the same quarter in 2000, anda 17% decrease compared with the net loss in the prior quarter of 2001.
This year's third-quarter consolidated loss before interest, taxes,depreciation, amortization, non-cash compensation, asset impairment andrestructuring charges (adjusted EBITDA) was $19.0 million, compared withadjusted EBITDA losses of $24.5 million in the comparable period a year agoand $24.1 for the second quarter of this year. The $5.5 million improvementyear-over-year, and a $5.1 million improvement versus the prior quarter, wasdue to revenue growth and the execution of a significant cost reductionprogram.
Commenting on the results for the quarter, Rob McCormick, chairman and CEOof Savvis, said, "Savvis has dramatically improved its bottom-lineperformance over the past three quarters as a result of revenue growth thathas outpaced the industry, and an effective cost-cutting plan. Our adjustedEBITDA loss for the third quarter narrowed to $19.0 million, and we expectthis improvement in our operating performance to continue, with Savvisreaching adjusted EBITDA breakeven during the fourth quarter of this year, ayear ahead of our original projections."
Savvis president and COO, Jack Finlayson, said "Recently, we signed a letterof intent with Moneyline Telerate which, combined with our Reuters networkservices agreement provides Savvis with approximately a half-billion dollarsin minimum committed revenues over the next five years. In addition, webooked over 70 new Intelligent IP Networking customers, reflecting positivereception to our market-leading VPN product. We believe we will begin thenew year in a very strong position for growth."
Non-Bridge Intelligent IP Networking revenue for the quarter ended Sept. 30,2001 was $5.7 million, a $1.4 million (34%) increase over the second quarterof 2001, and a $5.2 million increase over the third quarter of 2000.
Intelligent Hosting revenue for the third quarter decreased slightly overthe previous quarter of 2001, totaling $2.6 million versus $2.8 million.Savvis' Intelligent Hosting product was launched mid-way through the fourthquarter of 2000.
Internet access revenue was $7.4 million in the third quarter of 2001,representing a 2% decrease over the prior quarter and a 15% decrease fromthe comparable period in 2000. The decreases were due to the economicdownturn affecting the Internet sector, the loss of approximately 730 DSLcustomers due to Northpoint Communications' and Rhythms' bankruptcies,pricing pressure in the Internet access business, and Savvis initiativesdesigned to encourage customers to purchase access services as part of theirmanaged network service.
Other revenue, principally consisting of installation and equipment sales,increased to $0.8 million in the third quarter of 2001, up from $0.5 millionin the third quarter of 2000.