NaviSite, Inc. (NASDAQ: NAVI), a leading provider of cloud enabled enterprise-hosting and application-management services, reported financial results for the first quarter fiscal year 2010, which ended on October 31, 2009.
* Recurring hosting revenue was $35.0 million for the first quarter, compared to $35.4 million for the first quarter of fiscal year 2009. The first quarter of fiscal year 2009 included $0.8 million of hosting revenue from NaviSite’s former Los Angeles data center, whose lease NaviSite did not renew at the end of the third quarter of fiscal year 2009. Excluding the Los Angeles hosting revenue in the first quarter of fiscal year 2009, recurring hosting revenue increased 1%.
* Total revenue for the quarter ended on October 31, 2009, was $36.8 million, compared to $40.2 million in the first quarter of fiscal year 2009, representing a year-over-year decrease of 8%. The expected decrease in total revenue for the quarter was due to the planned decline in NaviSite’s recurring hosting revenue resulting from the nonrenewal of the Los Angeles data center and due to a reduction of professional-services revenue during these periods.
* Gross margin improved to 34% for the first quarter, representing a three-percentage-point increase from the 31% recorded in the first quarter of the previous year.
* Income from operations improved 256% for the first quarter, increasing to $1.9 million, compared to $0.5 million in the first quarter of fiscal year 2009.
* EBITDA, excluding impairment costs, stock-based compensation, severance and other non-operational charges (“EBITDA, as adjusted”), for the first quarter was $8.8 million, representing a year-over-year increase of 2%.
* Net loss attributable to common shareholders for the first quarter of fiscal year 2010 was $3.3 million, or $(0.09) per share, compared to a loss of $3.3 million, or $(0.09) per share, in the first quarter of fiscal year 2009.
* Cash generated from operating activities for the first quarter of fiscal year 2010 was $4.6 million, representing a decrease of 52% from the $9.5 million recorded in the first quarter of fiscal year 2009. The first quarter of fiscal year 2009 included the return of a $5.0 million facility deposit. Cash generated from operating activities, after adjusting for the return of the deposit, improved 2%.
“Our decreased bookings this past quarter reflect our greater focus on Enterprise Customers, which resulted in more of these types of opportunities in our pipeline but longer transaction times,” said Arthur Becker, Chief Executive Officer of NaviSite.
Quarterly Business Highlights
* Booked approximately $0.40 million of new monthly recurring hosting revenue (“MRR”) in the first quarter of fiscal year 2010, a decrease from the $0.80 million booked in the fourth quarter of fiscal year 2009 and the $0.55 million booked in the first quarter of fiscal year 2009.
* Signed $8.9 million of total hosting-contract value, with an average contract term of 29 months during the first quarter of fiscal year 2010 for recurring applications services and enterprise-hosting business, compared to bookings of $21.0 million in hosting-contract value in the previous quarter and $13.4 million in hosting-contract value in the first quarter of 2009.
* Signed professional-services contracts with a total value of $0.7 million during the first quarter of fiscal year 2010, compared to bookings of $1.1 million of professional-services-contract value in the previous quarter.
* Customer churn, defined as the percentage loss of a customer or a reduction in a customer’s monthly recurring revenue from our active customer pool, was 1.3% per month during the quarter, compared to 1.7% in the prior quarter and 1.4% a year ago. Reported churn for the fourth quarter of fiscal year 2009 excludes the impact of the company’s decision not to renew its Los Angeles data-center lease.
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