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Internap Network Services' CEO Discusses Q4 2011 Results - Earnings Call Transcript

Because these statements are not guarantees of future performance and involves risks and uncertainties, important factors could cause our actual results to differ materially from those in the forward-looking statements. We discuss these factors in our filings with the Securities and Exchange Commission. We undertake no obligation to amend, update or clarify these statements.

In addition to reviewing the fourth quarter and full year 2011 results, we will also discuss recent developments.

Now let me turn the call over to Eric Cooney.

J. Eric Cooney

Thanks, Drew, and good afternoon, everyone. We are very pleased to be here this afternoon to present our fourth quarter and full year 2011 financial results.

I'll start the discussion with the summary of our results before George takes you through our financial results in detail. From there, I'll briefly wrap up our prepared remarks, and then we'll take your questions.

Beginning on Slide 3, you will see we delivered total revenue for the quarter of $62.8 million, representing our third consecutive quarter of sequential revenue growth and an improvement of 5% over fourth quarter 2010. Solid growth in the data center services business, including the company-controlled colocation and managed hosting product lines, underpins the fourth quarter results. The successful strategic shift to company-controlled collocation and increasing emphasis on our cloud/hosting business also continues to have a positive impact on the company's operating leverage. Segment profit and segment margin reached record levels for the second consecutive quarter. In fact, both measures in the fourth quarter and all of 2011 were the highest they've been since Internap's founding in 1996. An increasing proportion of our data center services revenue is generated within our own facilities, which has helped drive both margin gains and absolute profit increases.

In the fourth quarter, segment profit was $32.9 million, an increase of 12% year-over-year and 5% quarter-over-quarter. Segment margin was 52.4%, an increase of more than 330 basis points compared with the prior year period and 200 basis points sequentially.

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