NaviSite Web Hosting Solutions Firm, Reports Fiscal Revenue Growth

Andover, Massachusetts - (Website Hosting Directory) - October 22, 2007 - Application solutions, hosting and content delivery services firm, NaviSite, has reported its fourth quarter and fiscal Year 2007 financial results, including an annual EBITDA growth of 40% on annual revenue growth of 16%.

Financial Results include: Revenue for the fourth quarter of fiscal year 2007 increased 18% to $34.7 million, compared to $29.4 million for the fourth quarter of fiscal year 2006. Sequentially, revenue for the fourth quarter increased 6% compared to $32.7 million in the third quarter of fiscal year 2007. For the full year, revenue increased 16% to $126.2 million compared to $109.1 million in fiscal year 2006.

Income from operations was $1.0 million in the fourth quarter of fiscal year 2007, as compared to $0.4 million in the fourth quarter of fiscal year 2006 and $1.1 million for the third quarter of fiscal year 2007. For the full year, income from operations was $2.3 million compared to a loss from operations of $3.9 million for fiscal year 2006.

NaviSite reported $6.6 million of EBITDA, excluding impairment costs, stock-based compensation and one-time charges EBITDA, for the fourth quarter of fiscal year 2007, representing a 3% increase over the $6.4 million of EBITDA reported in the fourth quarter of fiscal year 2006 and a 9% increase compared to the $6.0 million reported in the third quarter of fiscal year 2007. For the full year, NaviSite reported $23.1 million in EBITDA, representing a 40% increase over the $16.4 million of EBITDA reported for fiscal year 2006.

The Company reported a net loss of $17.1 million, or $(0.53) per share, for the fourth quarter of fiscal year 2007, including a loss on debt extinguishment of $15.7 million. Excluding the loss on debt extinguishment, the net loss was $1.4 million, or $(0.04) per share, as compared with a net loss of $3.0 million, or $(0.11) per share, for the fourth quarter of fiscal year 2006. For the full year, NaviSite recorded a net loss of $25.9 million, or $(0.85) per share, including the loss on debt extinguishment. Excluding the loss on debt extinguishment, the net loss for fiscal year 2007 was $10.2 million, or $(0.33) per share, as compared with a net loss of $13.9 million, or $(0.49) per share, for fiscal year 2006.

NaviSite generated positive cash flow from operations during the fourth quarter of fiscal year 2007, ending the year with a cash balance of $11.7 million, up from $3.4 million at the end of fiscal year 2006.

Arthur Becker, CEO, NaviSite offered, ''We are very pleased with our strategic, operational and financing accomplishments this year. Fiscal year 2007 was a period of solid growth for NaviSite, with significant improvements in both organic revenue and EBITDA on the strength of a record level of new bookings and an expanding customer base. We made several strategic investments in developing our sales and business development capabilities, and those investments are now working to our advantage. We look forward to continuing these positive trends in fiscal 2008 and to leveraging the recent acquisitions of Alabanza, Jupiter Hosting, and netASPx.''

Business Highlights for the Fourth Quarter of Fiscal Year 2007 include:

Achieved strong bookings in NaviSite's application management and managed hosting solutions with approximately $1.0 million of new monthly recurring revenue booked in the fourth quarter of fiscal year 2007 and $3.6 million for the full fiscal year. This represents an increase of 137% from the fourth quarter of fiscal year 2006, a sequential increase of 28% from the third quarter of fiscal year 2007 and a 49% increase from the full fiscal year 2006.
Executed $44.6 million of total contract value in our application management and hosting solutions business representing an increase of 251% from the $12.7 million executed in the fourth quarter of fiscal year 2006 and a sequential increase of 26% over the $35.5 million executed in the third quarter of fiscal year 2007. The average term of these contracts was 42 months, representing a 62% increase in contract term lengths over the fourth quarter of fiscal year 2006.
Signed professional services contracts with a total value of $7.8 million, compared to $7.6 million signed in the third quarter of fiscal year 2007 and an increase of 131% from the $3.4 million signed in the fourth quarter of fiscal year 2006.
Signed 67 new customers.
Had customer churn, defined as the loss of a customer or a reduction in a customer's monthly revenue run rate, excluding our major accounts, of 2.5% per month for the fourth quarter of fiscal year 2007 compared to 1.1% per month for the fourth quarter of fiscal year 2006 and 1.3% for the third quarter of fiscal year 2007. The higher churn in this quarter is mainly related to the loss of one customer from one of our channel partners.
Enhanced America's Job Exchange (www.americasjobexchange.com) career site and rapidly grew key metrics of traffic and page views. Monthly site visits are expected to cross one million in September and, based on public information, America's Job Exchange (AJE) has surpassed and quickly widened its lead over competing sites. The site now offers more than 600,000 job postings to seekers and provides free postings and OFCCP compliance to employers. America's Job Exchange has also begun traffic monetization through partnerships and targeted ad-serving. AJE is the successor to the America's Job Bank contract which expired on June 30.
Closed a $100 million Senior Secured Debt facility, which includes a six year $90 million term loan and a five year $10 million revolving credit facility. Proceeds from the term loan facility were used to extinguish NaviSite's previous debt with Silver Point Finance LLC, pay transaction fees and expenses and provide funds to support NaviSite's expansion plans.

NaviSite also achieved a number of significant milestones in fiscal year 2007: NaviSite celebrated its 10th anniversary, attributing its success to the expertise of its employees, partnership approach with customers, and ability to offer a broad range of flexible and scalable solutions that can be customized to meet customers's specific needs.

The Company continued to make strategic investments in its data center infrastructure. In May 2007, NaviSite opened a new Content Delivery Network node in Hong Kong, which is now actively serving customers. In that same month, NaviSite leased an additional 10,000 feet of data center space in the U.K. and signed a colocation agreement for the entire space with an $80 billion technology company.

NaviSite also continued to develop several strategic partnerships. The Company furthered its long-standing relationship with Oracle by achieving Oracle Certified Advantage Partner status. NaviSite also announced its collaboration with Sun Microsystems to offer Independent Software Vendors (ISVs) and startup companies the ability to easily develop and/or deploy their software applications in an on-demand environment hosted and supported by NaviSite on Sun's platform of products. Also in May 2007, the Company announced its partnership with vidavee, a video web services company, to combine NaviSite's managed infrastructure and content delivery network (CDN) with vidavee's patented video publishing technologies to offer NaviSite's Online Video Publishing Platform. In addition, NaviSite introduced a new Monitoring and Alerting service for the Amazon Elastic Compute Cloud (Amazon EC2) and Amazon Simple Storage Service (Amazon S3), which are web-scale infrastructure solutions offered by Amazon Web Services (AWS).

The Company also completed a secondary offering of shares held by third parties in February of nearly 10 million shares, providing additional liquidity, increasing institutional ownership, and reducing the overhang from certain shareholders.

NaviSite's Internet solutions, from colocation and web hosting to managed services and application management, are designed to service mid-market organizations, with a virtual server platform specifically designed to deliver a high-performance, flexible IT environment that rapidly scales. NaviSite is a provider of application solutions, hosting and content delivery services, with over 950 customers in 14 data centers; offices in the US, UK and India. NaviSite outsources enterprise applications and related technology services to drive IT Efficiency and Effectiveness. NaviSite delivers application implementation and management, hosting and content delivery services, along with complex application and IT services for mid sized companies.

For more information about NaviSite, please visit: www.navisite.com.

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