Internap Reports Third Quarter 2009 Financial Results

http://www.businesswire.com/news/home/20091105006486/en

* Revenue of $64.4 million, a decrease of 1.5 percent compared with the third
quarter of 2008;
* Segment Profit1 of $27.9 million; Segment Margin1 of 43.3 percent;
* Adjusted EBITDA1 of $7.6 million; Adjusted EBITDA1 margin of 11.9 percent;
* Announces 15,000 net sellable square foot expansion of company-controlled data
center in Seattle,
* Strengthens executive team in IP services, Engineering, and Marketing.

ATLANTA--(Business Wire)--
Internap Network Services Corporation (NASDAQ: INAP)today reported third quarter
2009 financial results. Improvements in segment profit1, adjusted EBITDA1, and
cash flow reflect the company`s actions to strengthen operations and focus on
profitable revenue opportunities.

"We see early signs of progress as we delivered profitable growth with $7.6
million in adjusted EBITDA during the quarter," said Eric Cooney, President and
Chief Executive Officer of Internap. "Further, we have achieved several
important milestones in the turnaround of Internap`s business including: halting
two years of quarterly declining segment margins; allocating $22 million for
Seattle data center build-out; and filling key leadership positions in IP
Services, Engineering, and Marketing."

Third quarter 2009 revenue was $64.4 million compared with $65.4 million in the
third quarter of 2008. Year-over-year growth in Data center services was more
than offset by lower IP services revenue. Sequentially, increased Data center
services revenue supported a slight improvement in total revenue.

GAAP net loss for the third quarter of 2009 was $(2.0) million, or $(0.04) per
diluted share compared with GAAP net loss of $(101.4) million or $(2.06) per
diluted share for the third quarter of 2008. Normalized net loss1 and normalized
net loss per diluted share1, which exclude the impact of impairments,
restructurings and stock-based compensation, was $(0.9) million, or $(0.02) per
diluted share in the third quarter of 2009.

Segment profit1 totaled $27.9 million in the third quarter of 2009, a decrease
of 6.9 percent compared with the third quarter of 2008. Sequentially, segment
profit1 increased 0.4 percent. Total segment margin1 was 43.3 percent in the
third quarter of 2009, a decrease of 260 basis points compared with the third
quarter of 2008. The year-over-year decrease in total segment margin was
attributable to weakness in the IP services business. Total segment margin1
increased sequentially, for the first time in two years, by 10 basis points as
the benefits from both top-line growth and segment margin improvement in Data
center services outweighed the revenue decline in IP services.

Third quarter 2009 adjusted EBITDA1 was $7.6 million, a decrease of $2.2 million
compared with the third quarter of 2008. Sequentially, adjusted EBITDA1
increased 12.8 percent. Adjusted EBITDA margin1 decreased 320 basis points
year-over-year to 11.9 percent. Compared with the second quarter of 2009,
adjusted EBITDA margin1 increased 140 basis points. Lower IP services segment
revenue impacted EBITDA margin1 compared with the prior year. Lower cash
operating costs and improved segment margin1 drove the improvement in adjusted
EBITDA1 relative to the second quarter of 2009.

Internap`s balance of cash totaled $67.8 million at September 30, 2009 compared
with $46.9 million at December 31, 2008. Total debt, including capital lease
obligations, was $23.3 million at September 30, 2009, approximately flat with
the outstanding balance at December 31, 2008. Cash generated from operations
totaled $27.2 million for the nine months ended September 30, 2009. Capital
expenditures over the same period were $12.9 million.

Internap had 3,039 customers under contract as of September 30, 2009. Historical
trends of key financial and operational metrics can be found in a supplementary
data schedule on Internap`s Website at http://ir.internap.com/results.cfm.

Three additions to the company`s senior management team were announced over the
past several months. Scott Hrastar was named senior vice president of IP
services and leads Internap`s business, engineering and product development
initiatives in IP services. Mr. Hrastar has more than 20 years of experience in
technical and management experience in the IP and networking industry including
entrepreneur-in-residence at the Georgia Institute of Technology`s Advanced
Technology Development Center and senior leadership positions Air Defense, Inc.,
Hitachi Telecom, and Scientific Atlanta, among others.

Robert Minnear was also recently appointed vice president of engineering to
drive strategy and execution across the Internap engineering organization. Mr.
Minnear has held numerous development and leadership positions, including
overseeing the IP routing team at Ipsilon Networks, an early developer of tag
switching capabilities that were the precursor to MPLS routing. He also founded
Springbank Networks, a startup company focused on developing CDNs for ISPs,
which was later acquired by WAN application delivery provider Blue Coat Systems.

In August, Peter Evans joined Internap as senior vice president of marketing.
Prior to joining Internap, Mr. Evans served as Director of Technology and Market
Strategy for IBM`s Internet Security Systems Division, Chief Technology Office.
Mr. Evans was the Chief Marketing Officer (CMO) at Internet Security Systems
(ISS) prior to it being acquired by IBM for $1.5 billion. His leadership -
turning ISS into a more market-driven organization - was a key part of the
company`s evolution and substantial growth.

The company announced that it would expand its company-controlled data center
presence in Seattle, Washington - allocating $22 million of a $50 million data
center expansion plan announced in August. This expansion will add 15,000 net
sellable square feet of premium data center capacity to Internap`s current
footprint in Seattle and is expected to open during the third quarter of 2010.
The new footprint is designed in keeping with Internap`s premium data center
services value proposition which includes: N+1 redundancy, SAS-70 certification,
24/7 monitoring and enhanced carrier-neutral IP services.

______________

1 Presentation of non-GAAP information and reconciliations to GAAP information
contained in this press release are provided in the tables below entitled
"Reconciliation of Loss From Operations to Adjusted EBITDA," "Reconciliation of
Net Loss and Basic and Diluted Net Loss Per Share to Normalized Net (Loss)
Income and Basic and Diluted Normalized Net (Loss) Income Per Share" and
"Segment Profit and Segment Margin." This information is also available on
Internap`s Web site under the Investor Services heading.

Conference Call Information:

Internap`s third quarter 2009 conference call will be held today at 5:00 p.m.
EST. Participants may access the call by dialing 877-723-9521. International
callers should dial 719-325-4899. Listeners may also connect to the simultaneous
webcast available from the investor relations section of the company`s web site
at http://ir.internap.com/events.cfm. A replay of the call will be accessible
from Thursday, November 5, 2009 at 8 p.m. EST through Thursday, November 12,
2009 at 888-203-1112 using the replay code 1474904. International callers can
access the archived event at 719-457-0820 with the same code.

About Internap

Internap is a leading Internet solutions company that provides The Ultimate
Online Experience by managing, delivering and distributing applications and
content with 100 percent performance and reliability. With a global platform of
data centers, managed Internet services and a content delivery network, Internap
frees its customers to innovate their business, improve service levels, and
lower the cost of IT operations. More than 3,000 companies across the globe
trust Internap to help them achieve their Internet business goals. For more
information, visit www.internap.com.

Internap "Safe Harbor" Statement

This press release may contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include statements related to Internap`s ability to deliver
profitable growth and its expectations regarding the expansion of data center
capacity. Because such statements are not guarantees of future performance and
involve risks and uncertainties, there are important factors that could cause
Internap`s actual results to differ materially from those in the forward-looking
statements. These factors include Internap`s ability to achieve or sustain
profitability ; its ability to expand margins and drive higher returns on
investment; its ability to respond successfully to technological change and the
severe economic downturn, which has required it to continue to lower the cost of
its products; the availability of services from Internet network service
providers or network service providers providing network access loops and local
loops on favorable terms, or at all; failure of third party suppliers to deliver
their products and services on favorable terms, or at all; failures in its
network operations centers, data centers, network access points or computer
systems; provide or improve Internet infrastructure services to our customers;
and its ability to protect its intellectual property, as well as other factors
discussed in Internap`s filings with the Securities and Exchange Commission.
Internap undertakes no obligation to revise or update any forward-looking
statement for any reason.

INTERNAP NETWORK SERVICES CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues:
Internet protocol (IP) services $ 30,867 $ 35,467 $ 95,175 $ 105,787
Data center services 33,547 29,932 97,535 83,990
Total revenues 64,414 65,399 192,710 189,777
Operating costs and expenses:
Direct costs of network, sales and services, exclusive of depreciation and amortization shown below:
IP services 12,047 12,654 36,844 38,840
Data center services 24,450 22,750 71,896 61,412
Direct costs of customer support 4,767 3,950 13,608 12,518
Direct costs of amortization of acquired technologies 979 3,049 7,370 5,506
Sales and marketing 5,955 7,394 20,701 23,934
General and administrative 10,626 10,713 35,062 34,579
Depreciation and amortization 7,313 6,146 20,895 17,226
Loss (gain) on disposals of property and equipment 20 - 20 (16 )
Goodwill impairment and restructuring - 100,415 54,608 100,415
Total operating costs and expenses 66,157 167,071 261,004 294,414
Loss from operations (1,743 ) (101,672 ) (68,294 ) (104,637 )

Non-operating expense (income) 170 (109 ) 301 (724 )

Loss before income taxes and equity in (earnings) loss of equity method investment (1,913 ) (101,563 ) (68,595 ) (103,913 )
Provision (benefit) for income taxes 93 (65 ) 575 232
Equity in (earnings) loss of equity-method investment, net of taxes (31 ) (93 ) 57 (242 )
Net loss $ (1,975 ) $ (101,405 ) $ (69,227 ) $ (103,903 )

Net loss per share:
Basic and diluted $ (0.04 ) $ (2.06 ) $ (1.41 ) $ (2.11 )

INTERNAP NETWORK SERVICES CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

September 30, December 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $ 67,798 $ 46,870
Short-term investments in marketable securities 7,150 7,199
Accounts receivable, net of allowance for doubtful accounts of $2,525 and $2,777, respectively 24,064 28,634
Inventory 392 381
Prepaid expenses and other assets 7,988 10,866
Deferred tax asset, current portion, net - 1
Total current assets 107,392 93,951
Property and equipment, net of accumulated depreciation of $200,819 and $185,895, respectively 92,524 97,350
Investments and other related assets, of which $- and $7,027, respectively, are measured at fair value 1,605 8,650
Intangible assets, net of accumulated amortization of $36,736 and $30,351, respectively 23,423 33,942
Goodwill 39,464 90,977
Deposits and other assets 2,726 2,763
Deferred tax asset, non-current, net 2,744 2,450
Total assets $ 269,878 $ 330,083

LIABILITIES AND STOCKHOLDERS` EQUITY
Current liabilities:
Accounts payable $ 21,128 $ 19,642
Accrued liabilities 9,413 8,756
Deferred revenues, current portion 4,257 3,710
Capital lease obligations, current portion 50 274
Restructuring liability, current portion 2,756 2,800
Other current liabilities 123 116
Total current liabilities 37,727 35,298
Revolving line of credit, due after one year 20,000 20,000
Deferred revenues, less current portion 2,691 2,248
Capital lease obligations, less current portion 3,222 3,244
Restructuring liability, less current portion 6,684 6,222
Deferred rent 15,396 14,114
Other long-term liabilities 668 762
Total liabilities 86,388 81,888
Commitments and contingencies
Stockholders` equity:
Preferred stock, $0.001 par value, 20,000 shares authorized; no shares issued or outstanding - -
Common stock, $0.001 par value; 60,000 shares authorized; 50,705 and 50,224 shares issued, respectively 51 50
Additional paid-in capital 1,220,206 1,216,267
Treasury stock, at cost, 39 and 83 shares, respectively (113 ) (370 )
Accumulated deficit (1,036,050 ) (966,823 )
Accumulated other comprehensive loss (604 ) (929 )
Total stockholders` equity 183,490 248,195
Total liabilities and stockholders` equity $ 269,878 $ 330,083

INTERNAP NETWORK SERVICES CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended
September 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (69,227 ) $ (103,903 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill and other intangible asset impairments 55,647 102,336
Depreciation and amortization 24,131 20,883
Provision for doubtful accounts 2,081 4,829
Equity in loss (earnings) from equity-method investment 57 (242 )
Non-cash changes in deferred rent 1,282 2,443
Stock-based compensation expense 4,434 6,371
Deferred income taxes (293 ) 271
Other, net 151 (48 )
Changes in operating assets and liabilities:
Accounts receivable 2,489 (1,037 )
Inventory (11 ) (143 )
Prepaid expenses, deposits and other assets 2,897 (1,489 )
Accounts payable 1,486 2,987
Accrued and other liabilities 657 (481 )
Deferred revenue 990 (511 )
Accrued restructuring liability 418 (1,498 )
Net cash flows provided by operating activities 27,189 30,768

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (12,930 ) (34,063 )
Purchases of investments in marketable securities - (19,925 )
Maturities of investments in marketable securities 7,224 19,452
Change in restricted cash - 4,120
Net cash flows used in investing activities (5,706 ) (30,416 )

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolving line of credit, due after one year 59,000 -
Principal payments on revolving line of credit, due after one year (59,000 ) -
Payments on capital lease obligations (246 ) (601 )
Stock-based compensation plans (252 ) 78
Other, net (87 ) (96 )
Net cash flows used in financing activities (585 ) (619 )

Effect of exchange rates on cash and cash equivalents 30 (177 )

Net increase (decrease) in cash and cash equivalents 20,928 (444 )
Cash and cash equivalents at beginning of period 46,870 52,030
Cash and cash equivalents at end of period $ 67,798 $ 51,586

INTERNAP NETWORK SERVICES CORPORATION
NON-GAAP (ADJUSTED) FINANCIAL MEASURES

In addition to providing financial measurements based on generally accepted
accounting principles in the United States of America (GAAP), Internap has
historically provided additional financial measures that are not prepared in
accordance with GAAP (non-GAAP), including adjusted EBITDA, normalized net
(loss) income, normalized diluted shares, segment profit and segment margin. The
most directly comparable GAAP equivalent to adjusted EBITDA and normalized net
(loss) income is net loss. The most directly comparable GAAP equivalent to
normalized diluted shares is diluted common shares outstanding. Segment profit
is defined and disclosed in the notes to our financial statements.

We define non-GAAP measures as follows:

● Adjusted EBITDA is loss from operations plus stock-based compensation expense, depreciation and amortization, loss on disposals of property and equipment, and impairments and restructuring.

● Adjusted EBITDA margin is adjusted EBITDA as a percentage of revenues.

● Normalized net loss is net (loss) income plus stock-based compensation expense and impairments and restructuring.

● Normalized diluted shares are diluted shares of common stock outstanding used in GAAP net loss per share calculation, excluding the dilutive effect of stock-based compensation using the treasury stock method.

● Normalized net (loss) income per share is normalized net (loss) income divided by basic and normalized diluted shares.

● Segment profit is segment revenues less direct costs of network, sales and services, exclusive of depreciation and amortization, as presented in the notes to our financial statements filed with the United States Securities and Exchange Commission in Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. Segment profit does not include direct costs of customer support, direct costs of amortization of acquired technologies or any other depreciation or amortization associated with direct costs.

● Segment margin is segment profit as a percentage of revenues.

Reconciliations of our non-GAAP financial measures to the most directly
comparable financial measure are detailed in the reconciliations of GAAP to
non-GAAP measures below. We believe that presentation of these non-GAAP
financial measures provides useful information to investors regarding our
results of operations.

We believe that excluding depreciation and amortization and loss on disposals of
property and equipment, as well as impairments and restructuring to calculate
adjusted EBITDA provides supplemental information and an alternative
presentation that is useful to investors` understanding of Internap`s core
operating results and trends. Not only are depreciation and amortization
expenses based on historical costs of assets that may have little bearing on
present or future replacement costs, but also they are based on management
estimates of remaining useful lives. Loss on disposals of property and equipment
is also based on historical costs of assets that may have little bearing on
replacement costs. Impairments and restructuring reflect our goodwill and other
intangible assets impairments recorded during the three months ended June 30,
2009 and September 30, 2008, the recent and significant deterioration in the
real estate market which caused us to increase our restructuring liability for
the three months ended June 30, 2009, and our reduction in workforce during the
three months ended March 31, 2009. Internap believes that these impairment and
restructuring charges were unique costs that we do not expect to recur on a
regular basis, and consequently, we do not consider these charges as a normal
component of expenses related to current and ongoing operations.

INTERNAP NETWORK SERVICES CORPORATION
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (Continued)

Similarly, we believe that excluding the effects of stock-based compensation
from non-GAAP financial measures provides supplemental information and an
alternative presentation useful to investors` understanding of Internap`s core
operating results and trends. Investors have indicated that they consider
financial measures of our results of operations excluding stock-based
compensation expense as important supplemental information useful to their
understanding of our historical results and estimating our future results.

We also believe that, in excluding the effects of stock-based compensation, our
non-GAAP financial measures provide investors with transparency into what
management uses to measure and forecast our results of operations, to compare on
a consistent basis our results of operations for the current period to that of
prior periods, to compare our results of operations on a more consistent basis
against that of other companies, in making financial and operating decisions and
to establish certain management compensation.

Stock-based compensation is an important part of total compensation, especially
from the perspective of employees. We believe, however, that supplementing GAAP
net loss and net loss per share information by providing normalized net (loss)
income and normalized net (loss) income per share, excluding the effect of
impairments and restructuring and stock-based compensation expense in all
periods, is useful to investors because it enables additional and more
meaningful period-to-period comparisons. We consider normalized diluted shares
to be another important indicator of our overall performance because it
eliminates the effect of non-cash items.

Adjusted EBITDA is not a measure of liquidity calculated in accordance with
GAAP, and should be viewed as a supplement to - not a substitute for - our
results of operations presented on the basis of GAAP. Adjusted EBITDA does not
purport to represent cash flow provided by, or used in, operating activities as
defined by GAAP. Our statement of cash flows presents our cash flow activity in
accordance with GAAP. Furthermore, adjusted EBITDA is not necessarily comparable
to similarly-titled measures reported by other companies.

We believe adjusted EBITDA is used by and is useful to investors and other users
of our financial statements in evaluating our operating performance because it
provides them with an additional tool to compare business performance across
companies and across periods. We believe that:

● EBITDA is widely used by investors to measure a company`s operating performance without regard to items such as interest expense, income taxes, depreciation and amortization, which can vary substantially from company-to-company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired; and

● investors commonly adjust EBITDA information to eliminate the effect of disposals of property and equipment, impairments, restructuring and stock-based compensation expense, which vary widely from company-to-company and impair comparability.

Our management uses adjusted EBITDA:

● as a measure of operating performance to assist in comparing performance from period-to-period on a consistent basis;

● as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; and

● in communications with the board of directors, stockholders, analysts and investors concerning our financial performance.

INTERNAP NETWORK SERVICES CORPORATION
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (Continued)

Our presentation of segment profit and segment margin excludes direct costs of
customer support, depreciation and amortization in order to allow investors to
see the business through the eyes of management. Direct costs of network, sales
and services is viewed by management as generally non-controllable, external
costs and the margin of revenues in excess of these direct costs is regularly
monitored by management. Similarly, we view the costs of customer support to
also be an important component of costs of revenues but believe that the costs
of customer support to be within our control and to some degree discretionary as
we can adjust those costs by hiring and terminating employees.

Segment margin is an important metric to our investors and analysts, as we have
regularly discussed and disclosed the effects of third party vendors` pricing
declines and the corresponding effect on our revenues. The presentation of
segment margin highlights the impact of the pricing declines and allows
investors and analysts to evaluate our revenue generation performance relative
to direct costs of network, sales and services. Conversely, we have much greater
latitude in controlling the compensation component of costs of revenues,
represented by customer support, and we analyze this component separately from
the direct external costs.

Depreciation and amortization have also been excluded from segment profit and
segment margin because, as noted above, they are based on estimated useful lives
of tangible and intangible assets. Further, depreciation and amortization are
based on historical costs incurred to build out our deployed network and the
historical costs of these assets may not be indicative of current or future
capital expenditures.

Although we believe, for the foregoing reasons, that our presentation of
non-GAAP financial measures provides useful supplemental information to
investors regarding our results of operations, our non-GAAP financial measures
should only be considered in addition to, and not as a substitute for, or
superior to, any measure of financial performance prepared in accordance with
GAAP.

Use of non-GAAP financial measures is subject to inherent limitations because
they do not include all the expenses that must be included under GAAP and
because they involve the exercise of judgment of which charges should properly
be excluded from the non-GAAP financial measure. Management accounts for these
limitations by not relying exclusively on non-GAAP financial measures, but only
using such information to supplement GAAP financial measures. Our non-GAAP
financial measures may not be the same non-GAAP measures, and may not be
calculated in the same manner, as those used by other companies.

INTERNAP NETWORK SERVICES CORPORATION
RECONCILIATION OF LOSS FROM OPERATIONS TO ADJUSTED EBITDA

A reconciliation of loss from operations, the most directly comparable GAAP measure, to adjusted EBITDA for each of the fiscal periods indicated is as follows (in thousands):

Three Months Ended
September 30, June 30, September 30,
2009 2009 2008
Loss from operations (GAAP) $ (1,743 ) $ (60,204 ) $ (101,672 )
Depreciation and amortization, including depreciation and amortization 8,292 11,937 9,195
included in direct costs of network, sales and services
Impairments and restructuring - 53,735 100,415
Stock-based compensation expense 1,071 1,308 1,922
Loss on disposals of property and equipment 20 - -
Adjusted EBITDA (non-GAAP) $ 7,640 $ 6,776 $ 9,860

INTERNAP NETWORK SERVICES CORPORATION
RECONCILIATION OF NET LOSS AND BASIC AND DILUTED
NET LOSS PER SHARE TO NORMALIZED NET (LOSS) INCOME AND
BASIC AND DILUTED NORMALIZED NET (LOSS) INCOME PER SHARE

Reconciliations of (1) net loss, the most directly comparable GAAP measure, to normalized net (loss) income, (2) diluted shares used in per share calculations, the most directly comparable GAAP measure, to normalized diluted shares used in normalized per share calculations and (3) net loss per share, the most directly comparable GAAP measure, to normalized net (loss) income per share for each of the periods indicated is as follows (in thousands, except per share data):

Three Months Ended
September 30, June 30, September 30,
2009 2009 2008
Net loss (GAAP) $ (1,975 ) $ (60,645 ) $ (101,405 )
Impairments and restructuring - 53,735 100,415
Additional impairments included in depreciation and amortization - 4,134 1,850
Stock-based compensation expense 1,071 1,308 1,922
Normalized net (loss) income (non-GAAP) $ (904 ) $ (1,468 ) $ 2,782

Net loss available to common stockholders (GAAP) (1,975 ) (60,645 ) (101,405 )
Normalized net (loss) income available to common stockholders (non-GAAP) (904 ) (1,468 ) 2,731

Shares used in per share calculation:
Basic (GAAP) 49,638 49,586 49,294
Participating securities (GAAP) 1,126 1,203 928

Diluted (GAAP) 49,638 49,586 49,294
Add potentially dilutive securities - - 7
Less dilutive effect of stock-based compensation using the treasury stock method - - -
Normalized diluted shares (non-GAAP) 49,638 49,586 49,301

GAAP net loss per share:
Basic $ (0.04 ) $ (1.22 ) $ (2.06 )
Diluted $ (0.04 ) $ (1.22 ) $ (2.06 )

Normalized net loss per share (non-GAAP):
Basic $ (0.02 ) $ (0.03 ) $ 0.06
Diluted $ (0.02 ) $ (0.03 ) $ 0.06

INTERNAP NETWORK SERVICES CORPORATION
SEGMENT PROFIT AND SEGMENT MARGIN

Segment profit and segment margin for each of the fiscal periods indicated is as follows (in thousands):

Three Months Ended
September 30, June 30, September 30,
2009 2009 2008
Revenues:
Internet protocol (IP) services $ 30,867 $ 32,099 $ 35,467
Data center services 33,547 32,273 29,932
Total $ 64,414 64,372 65,399

Direct costs of network, sales and services, exclusive of depreciation and amortization:
IP services 12,047 12,414 12,654
Data center services 24,450 24,165 22,750
Total $ 36,497 36,579 35,404

Segment profit:
IP services 18,820 19,685 22,813
Data center services 9,097 8,108 7,182
Total $ 27,917 $ 27,793 $ 29,995

Segment margin:
IP services 61.0 % 61.3 % 64.3 %
Data center services 27.1 % 25.1 % 24.0 %
Total 43.3 % 43.2 % 45.9 %

For Internap
Press Contact:
Mariah Torpey, 781-418-2404
internap@daviesmurphy.com
or
Investor Contact:
Andrew McBath, 404-302-9700
amcbath@internap.com

Copyright Business Wire 2009