Exodus Beats Expectations
By Edith Yates
Editorial Assistant
4/20/00 11:45 PM ET
Web hosting company Exodus Communications (EXDS:Nasdaq - news - boards) announced slightly better than expected first-quarter earnings on Thursday.
Net loss, excluding goodwill amortization and other charges, was $42.3 million, or 23 cents a share, 3 cents ahead of the consensus estimate of analysts polled by Thomson/First Call. Including goodwill and one-time charges, net loss for the quarter was $58.4 million, or 32 cents a share, compared to a net loss of $52.9 million, or 30 cents a share, in the fourth quarter of 1999, and a net loss of $23.2 million, or 14 cents per share, in the year-ago quarter.
The Santa Clara, Calif.-based company said net revenue was $134.1 million, a 346% increase over the year-ago quarter and a 32% increase over the previous quarter. For the first time, Exodus posted an EBITDA (earnings before interest, taxes, depreciation and amortization) profit.
"Given that they launched six new IDCs [Internet Data Centers] in the last two quarters, EBITDA profit shows very good management," said Wit SoundView analyst Marlowe Burke. Wit SoundView hasn`t done any underwriting for Exodus.
"32% revenue growth for a company of this size is very good," Burke added.
Exodus` customer base grew by 24% in the quarter compared to the previous period. The company added 540 new customers in the quarter, among them Starbucks (SBUX:Nasdaq - news - boards) and CNBC.com, to reach a total of 2,830. The company continued its global expansion with the opening of a new IDC in Frankfurt, Germany, and plans to open one in Paris and one in Amsterdam this year. Exodus said it continues to host 40% of the world`s top Web sites.
Burke said there is ample room for growth for Exodus and other Web hosting companies since only 20% of large enterprises outsource their websites.
Last month, Exodus invested $637.5 million in Mirror Image Internet, a subsidiary of Xcelera.com (XLA:AMEX - news - boards). Mirror Image competes with the likes of Akamai (AKAM:Nasdaq - news - boards). Both companies reduce online congestion by storing copies of frequently requested Web pages within service provider networks and, thus, closer to end users. Exodus will use Mirror`s technology to speed the delivery of the content it hosts.
Also in the quarter, Exodus acquired Key Labs, an e-commerce testing company, and the Professional Services Division of Network-1 Security Solutions (NSSI:Nasdaq - news - boards), an Internet security consulting group. The acquisitions increase the range of services Exodus can offer its customers beyond Web hosting. Thursday, Exodus closed down 4 3/16 at 107 11/16. The stock hit a 52-week high of 179 5/8 on March 23.
LTT
