Exodus Reports Fourth Quarter and 1999 Annual Results - Company Financial Information

Cambridge Telcom Report, Jan 31, 2000

Exodus Communications, Inc. (NASDAQ:EXDS) Wednesday reported 1999 fourth quarter revenue of $101.4 million, a 49 percent increase over 1999 third quarter revenues of $68.0 million, and a 380 percent increase over the comparable period of the previous year.

Exodus reported a net loss of $44.0 million for the fourth quarter, or $0.25 per share, excluding the amortization of intangibles and the impact of one-time acquisition costs of Service Metrics, Inc. and Global OnLine Japan Co., Ltd. (GOL). Net loss for the quarter was $52.9 million, or $0.30 per share, compared to a net loss of $31.5 million, or $0.19 per share, in the third quarter of 1999, and a net loss of $21.9 million, or $0.14 per share in the fourth quarter of 1998.

EBITDA loss (loss before net interest expense, income taxes, depreciation, amortization and other non-cash charges) excluding the Service Metrics one-time acquisition costs of $4.1 million, was $12.6 million for the fourth quarter of 1999. EBITDA loss for the fourth quarter of 1999 was $16.7 million compared to $7.5 million for the third quarter of 1999, and $12.1 million for the fourth quarter of 1998. Historical quarterly and annual comparisons include results of Service Metrics.

"Our revenue growth remained very strong, as demand for our services continued to grow dramatically," said Ellen M. Hancock, president and CEO of Exodus. "In the fourth quarter, we added 540 Internet Data Center (IDC) customers, our largest quarterly increase ever, and our average annualized revenue per IDC customer grew from $176,000 in the third quarter to $196,000 in the fourth quarter."

"Relative to EBITDA profitability, in the fourth quarter three IDCs - Chicago, our second Washington, D.C. IDC, and our first international site, London - all turned EBITDA positive earlier than we had originally planned," said Dick Stoltz, chief operating officer and chief financial officer. This brings the total number of EBITDA positive IDCs to 12 out of a total of 19."

"We have also taken several key strategic actions recently to extend our managed and professional service offerings," said Hancock. "Most notably, we acquired Service Metrics and announced plans to acquire KeyLabs. One important dimension of our growth strategy is to expand our service offerings along our customers' life cycles. With KeyLabs, we will have services to architect and test customers' sites, and with Service Metrics we can manage the ongoing performance monitoring and measurement."

Revenues for the fiscal year ended December 31, 1999 increased 359 percent to $242.1 million compared to $52.7 million in the prior year. Exodus reported a net loss for 1999 attributable to common shareholders of $130.3 million, or $0.78 per share, compared to a net loss attributable to common shareholders of $69.3 million, or $0.55 per share, in the prior year. EBITDA loss for the year was $44.7 million compared to $41.9 million for the prior year.

Exodus Communications is a leading provider of complex Internet hosting for enterprises with mission-critical Internet operations. The Company offers sophisticated system and network management solutions, along with technology professional services to provide optimal performance for customers' web sites. Through its Service Metrics subsidiary, Exodus is a leading source of Web site performance monitoring and measurement services. Exodus manages its network infrastructure via a worldwide network of Internet Data Centers (IDCs) located in the United States, Europe and Asia Pacific. More information on Exodus can be found at www.exodus.net.

                   EXODUS COMMUNICATIONS, INC.
                     CONDENSED CONSOLIDATED
                    STATEMENTS OF OPERATIONS
              (in thousands, except per share data)

                          Three Months Ended        Year Ended
                         Dec. 31,     Dec. 31,  Dec. 31,  Dec. 31,
                           1999         1998      1999      1998
                         --------     --------  --------  --------

Revenues                 $101,386     $ 21,107  $242,140  $ 52,745
                         --------     --------  --------  --------
Costs and expenses:
 Cost of revenues(1)       78,404       22,329   197,231    61,578
 Marketing and sales       33,154        8,489    75,809    29,034
 General and administrative17,754        4,919    42,951    14,584
 Product development        3,059        1,046     8,869     3,507
 Special items:
Amortization of intangibles 4,764          141     9,438       141
Merger costs                4,135        1,474     5,058     1,474

                         --------     --------  --------  --------
Total costs and expenses  141,270       38,398   339,356   110,318
                         --------     --------  --------  --------

Operating loss            (39,884)     (17,291)  (97,216)  (57,573)

Net interest expense       13,063        4,633    33,107     9,743
                         --------     --------  --------  --------

  Net loss                (52,947)     (21,924) (130,323)  (67,316)

Cumulative dividends
 and accretion on
 redeemable convertible
 preferred stock               --           --        --    (2,014)
                         --------     --------  --------  --------

Net loss attributable
 to common stockholders  ($52,947)    ($21,924)($130,323) ($69,330)
                         ========     ========  ========  ========

Basic and diluted net
 loss per share (2)        ($0.30)      ($0.14)   ($0.78)   ($0.55)
                         ========     ========  ========  ========

Shares used in
 computing basic and
 diluted net loss
 per share                173,673      160,612   167,924   125,808
                         ========     ========  ========  ========

EBITDA (3)               ($16,744)    ($12,148) ($44,738) ($41,945)
                         ========     ========  ========  ========