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Internap Network Services' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Because these statements are not guarantees of future performance and involve 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 first quarter 2012 results, we will also discuss recent developments.

Now let me turn the call over to Eric Cooney.

J. Eric Cooney

Thank you, Drew, and good afternoon, everyone. We appreciate you joining us for our first quarter 2012 earnings presentation.

I'll start with a brief recap of our results beginning on Slide 3.

Revenue growth continued into the first quarter, increasing 13% year-over-year and 7% over the fourth quarter 2011. In line with our company's strategic direction, the data center services business, including company-controlled data centers, managed hosting and cloud services, continues as the engine for growth of the company. With the completion of the Voxel acquisition on December 30, we have consolidated the Voxel revenue and segment profit with Internap's data center services revenue and segment profit for the first quarter of 2012.

Segment profit and segment margin were very strong in the quarter, improving on a year-over-year basis by 18% and 240 basis points, respectively. These improvements were attributable to both solid organic growth in the Internap data center services business unit, as well as acquisition-driven growth resulting from the addition of Voxel.

On Slide 4, we're highlighting the sources of change in revenue from the fourth quarter 2011 to first quarter 2012. The data center services business unit, including company-controlled co-location, hosting cloud services, and now, Voxel, are clearly the engine for top line company growth. In total, with data center services unit contributed $4.6 million of incremental revenue, offset slightly by a sequential decline in IP services revenue of $0.4 million in the first quarter.

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