NaviSite reports on Q1 of fiscal year with EBITDA of $1.8M, compared to a loss of $3M in 1Q03; gross profit increased to 21% from 10%

December 16, 2003

3 Min Read

ANDOVER, Mass. -- NaviSite, Inc. (NASDAQ SC: NAVI), a provider of application management, content distribution, messaging and infrastructure management services, yesterday reported financial results for its first quarter of fiscal 2004 which ended October 31, 2003.

For the first quarter of fiscal year 2004, total revenue increased 48% to $23.5 million from $15.9 million in the first quarter of fiscal year 2003. Gross profit was $4.9 million (approximately 21% of revenue), including a $0.6 million impairment charge, compared to a gross deficit of $0.6 million in the first quarter of fiscal year 2003. Net loss for the first quarter totaled $3.4 million, or $0.14 per share, versus a $10.0 million net loss, or $1.60 per share, in the first quarter of fiscal year 2003.

Comparative first quarter fiscal year 2003 operating results have been restated to reflect, on an "as if pooling" basis, our related party acquisitions of ClearBlue Technologies Management, Inc. and certain subsidiaries of ClearBlue Technologies, Inc., as explained in our filing on Form 10-Q for the three-months ended October 31, 2003. The company reported EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of approximately $0.7 million for the first quarter of fiscal year 2004, including impairment and restructuring charges of approximately $1.1 million; excluding these charges first quarter EBITDA was approximately $1.8 million, compared to an EBITDA (1) loss of $3.0 million in the first quarter of fiscal year 2003. This marked the first EBITDA (1) positive quarter in NaviSite's history.

NaviSite's unaudited financial results for the first quarter of fiscal year 2004 have also improved compared to the unaudited restated results for the fourth quarter of fiscal year 2003 (fourth quarter 2003 results have also been restated from originally reported results for the reason discussed in the paragraph above). Our total revenue of $23.5 million for the first quarter of fiscal year 2004, increased approximately $1.0 million, or about 5%, from restated revenue of $22.4 million in the fourth quarter of fiscal year 2003. First quarter gross profit of 21% increased 11 percentage points from a gross profit of 10% in the fourth quarter of fiscal year 2003 on a restated basis.

"NaviSite has built an integrated infrastructure platform targeting a specific set of growth market opportunities in messaging, software distribution services, application services and hosting," said Arthur Becker, chief executive officer of NaviSite. "The company's first quarter performance demonstrates the potential of this operational platform for margin improvement and profitability through operating leverage and continued cost efficiency gains. Gross profit reached $4.9 million in our first quarter, an improvement of 111% from NaviSite's fourth quarter of fiscal year 2003 and reflects the ongoing realization of the cost and infrastructure synergies that have greatly improved our operating leverage. With our service and operational platforms now largely assembled, we are ready to focus our efforts on achieving our market leadership objectives."

"Having nearly completed the integration of several acquisitions in fiscal year 2003 and early fiscal year 2004, including cost reductions and facilities consolidations, NaviSite's leaner operating base can now yield significantly increased gross profit margins from every incremental dollar of revenue," Jim Pluntze, chief financial officer said. "During fiscal year 2004, our goals include growing our EBITDA from current levels, and achieving positive cash flow from operations."

Becker concluded, "Fiscal 2004 is NaviSite's year to realize the benefit of the integrated product portfolio strategy that we have successfully created over the past year. As we move past the integration stage of the company, we have carefully assembled the product set and the critical mass necessary to be competitive and compelling to our customers, and are poised to enter the next stage of NaviSite's history as a market leader in three under-served markets that are experiencing solid annual growth."


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