July 24, 2002 -- It's been a year of change at Internap Network Services, and there's plenty more to come.
The provider of intelligent routing services is adding new customers, expanding into secondary markets and narrowing its operating loss. At the same time, it's about to lay off 135 of its 465 staffers and move its headquarters from Seattle to Atlanta.
According to CEO Greg Peters, all this activity is driven by Internap's belief that this is a moment of unusual opportunity.
"Every day we watch CNBC and see headlines about our competitors," Peters said Tuesday. "We believe we can aggressively take market share from these competitors. We see this as a time when we need to move fast."
That's why, with the industry and the company in a state of transition, Internap is pulling up stakes and relocating to Atlanta. The move is driven partly by cost factors - including the availability of an existing long-term lease in the Inforum carrier hotel on Williams Street.
But it's also strategic, said Peters, who cited closer proximity to East Coast connectivity hubs - and potential partners - as a factor.
"We're definitely exploring partnerships large and small," said Peters. "I believe we're in a period where partnerships are crucial" to succeeding.
An example is Internap expanding its services into 17 additional cities (including Detroit, Las Vegas, Minneapolis, Phoenix, and Portland), accomplished largely through partnerships with other providers.
Peters talked about Internap's progress in a conference call following Tuesday's release of the company's second quarter earnings, in which it reported a net loss of $22.8 million on revenues of $33 million. Internap's operating (EBITDA) loss narrowed for the fifth consecutive quarter at $6.1 million, down from $9.8 million in the previous quarter.
"We continue to achieve significant milestones, including our fourth consecutive quarterly increase in direct margin and fifth consecutive quarterly decrease in EBITDA losses," said John Scanlon, Chief Financial Officer of Internap. "We set a priority of reaching EBITDA profitability during the fourth quarter of this year and these results have brought us closer to meeting our objective."
The company reported that it gained 172 new revenue-producing customers, including Callaway Golf, Charles Schwab, Keynote, Orbitz, Sharp Electronics and Southwest Airlines.
Internap finished the quarter with $42.5 million in cash, and projects that it will spend between $11 and $13 million in the third quarter, when the company expects to see flat revenue growth but further narrowing of its operating loss to between $2.0 and $4.0 million.