UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):

May 9, 2019

Internap Corporation
(Exact Name of Registrant as Specified in Charter)



Delaware
(State or Other Jurisdiction
of Incorporation)
001-31989
(Commission File Number)
91-2145721
(IRS Employer
Identification
Number
One Ravinia Drive, Suite 1300, Atlanta, Georgia
(Address of Principal Executive Offices)
30346
(Zip Code)

Registrant’s telephone number, including area code: (404) 302-9700

Not applicable
(Former Name or Former Address, if Changed Since Last Report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Securities Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Securities Act (17 CFR 240.13e-2(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
Common stock, $0.001 par value
 
INAP
 
Nasdaq Global Market




 Item 2.02
Results of Operations and Financial Condition.

On May 9, 2019, Internap Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2019. A copy of the press release is attached hereto as Exhibit 99.1 hereto and is incorporated herein by reference.

On May 9, 2019, the Company will host a conference call to discuss its results for the quarter ended March 31, 2019. A copy of the presentation to be used during the conference call is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Copies of the press release and the presentation were posted to the Company’s website at http://www.INAP.com on May 9, 2019.

The information contained herein and in the accompanying exhibits shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to this or such filing. The information in this report, including the exhibits hereto, shall be deemed to be “furnished” and therefore shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 7.01
Regulation FD Disclosure.

The information in Item 2.02 is incorporated by reference herein.

The information contained herein and in the accompanying exhibits shall not be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to this or such filing. The information in this report, including the exhibits hereto, shall be deemed to be “furnished” and therefore shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended.

Item 9.01
Financial Statements and Exhibits.

(d)
Exhibits

The following exhibits are furnished with this Current Report on Form 8-K:

Exhibit No.
 
Description
     
 
Press Release, dated May 9, 2019
     
 
Presentation, dated May 9, 2019
     

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
INTERNAP CORPORATION
   
Date: May 9, 2019
By:
/s/ James C. Keeley
   
James C. Keeley
   
EVP, Chief Financial Officer


Exhibit 99.1


INAP Reports First Quarter 2019 Financial Results


Successfully Amended Existing Credit Facility to Gain Operational Flexibility and Position for Growth

INAP’s Significant Product Portfolio Shift Resulted in Reported Revenue of $73.6 Million, Flat YoY

o
First Quarter Revenue Represents a New Baseline. Planned Data Center Exits are Now Completed, and Offset by Growth in Cloud Enabled by the Acquisition of SingleHop

o
The Revenue Decline Sequentially Includes Timing of Customer Installs and Colocation Resizing

GAAP Net Loss Attributable to INAP Shareholders $(19.6) Million was Flat Sequentially, or $(0.83) Per Share

o
Cash Flow from Operations was $2.3 million

Adjusted EBITDA of $23.6 Million, includes Approximately $1.0 Million of Cost Savings and Customer Installation Delays

o
One-Time EBITDA Decrease in the First Quarter was Offset by Conservative Capital Expenditures of $8.6 Million to Maintain Cash Flow Objectives

RESTON, VA - (May 9, 2019) Internap  Corporation (NASDAQ: INAP), a leading-edge provider of high-performance data center and cloud solutions with global network connectivity, announced today financial results for the first quarter of 2019.

“We have significant opportunities ahead to grow INAP and gain scale with our reconstructed portfolio.  Year-over-year, management exited non-core data centers, and added a premier managed services platform through SingleHop to create a new baseline by the end of the first quarter of 2019.  This portfolio right-sizing is now completed and establishes a new and improved INAP platform of colo, cloud and network services,” said Peter D. Aquino, President and Chief Executive Officer. “In addition, we are pleased to report the completed amendment to INAP’s credit facility as a follow-on to our recent equity raise.  This operational flexibility positions the INAP platform for growth, partnerships and potential mergers.  As we evaluate the opportunities to create shareholder value, we have retained Moelis & Company LLC and LionTree Advisors LLC as Financial Advisors.”

Revenue

2018 results include SingleHop LLC (“SingleHop”) operations beginning March 1, 2018, and are therefore not comparable to prior periods.


·
Total company revenue was $73.6 million in the first quarter of 2019, a decrease sequentially of $4.7 million or 6.0% and a decrease of $0.6 million or nearly flat at 0.9% year-over-year.  The sequential decrease was primarily due to planned data centers exits and resizing of certain customer footprints of $2.0 million, lower non-recurring revenues associated with installs and timing for $1.0 million, deferred revenue adjustments of $0.6 million and other decreases of $0.9 million.  The sequential decreases are primarily related to the reshaping initiatives of the colocation product line.


o
INAP US revenue totaled $57.5 million in the first quarter of 2019, a decrease of 6.3% sequentially and an increase of 0.8% year-over-year. The sequential decrease was due primarily to all of the above.


o
INAP INTL revenue was $16.0 million in the first quarter of 2019, a decrease of 4.9% sequentially and 6.3% year-over-year. The decrease sequentially was primarily due to a decline in the Canada cloud business that targets smaller customers. The decrease year-over-year was partly offset by the addition of SingleHop.





First Quarter 2019 Financial Summary


                     
QoQ
   
YoY
 
($ in thousands)
 
1Q 2019
   
4Q 2018
   
1Q 2018
   
Growth
   
Growth
 
                               
Net Revenues
 
$
73,564
   
$
78,238
   
$
74,201
     
(6.0
)%
   
(0.9
)%
Operating Costs and Expenses
 
$
75,638
   
$
77,263
   
$
72,973
     
(2.1
)%
   
3.7
%
Depreciation and Amortization
 
$
22,178
   
$
23,579
   
$
21,158
     
(5.9
)%
   
4.8
%
Exit Activities, Restructuring and Impairments
 
$
1,416
   
$
2,266
   
$
(33
)
   
(37.5
)%
   
(4,390.9
)%
All Other Operating Costs and Expenses
 
$
52,044
   
$
51,418
   
$
51,848
     
1.2
%
   
0.4
%
GAAP Net Loss Attributable to INAP Shareholders
 
$
(19,644
)
 
$
(19,411
)
 
$
(14,288
)
   
1.2
%
   
37.5
%
GAAP Net Loss Margin
   
(26.7
)%
   
(24.8
)%
   
(19.3
)%
               
                                         
Minus Stock-Based Compensation and Other Items
 
$
3,005
   
$
3,426
   
$
3,650
     
(12.3
)%
   
(17.7
)%
Normalized Net Loss2
 
$
(16,639
)
 
$
(15,985
)
 
$
(10,638
)
   
4.1
%
   
56.4
%
                                         
Adjusted EBITDA1
 
$
23,615
   
$
27,919
   
$
26,055
     
(15.4
)%
   
(9.4
)%
Adjusted EBITDA Margin1
   
32.1
%
   
35.7
%
   
35.1
%
               
                                         
Capital Expenditures (CapEx)
 
$
8,623
   
$
12,376
   
$
6,359
     
(30.3
)%
   
35.6
%
Adjusted EBITDA less CapEx1
 
$
14,992
   
$
15,543
   
$
19,696
     
(3.5
)%
   
(23.9
)%


Net Loss, Normalized Net Loss, Adjusted EBITDA and Business Unit Contribution


·
GAAP net loss attributable to INAP shareholders was $(19.6) million, or $(0.83) per share in the first quarter of 2019 compared with $(19.4) million, or $(0.82) per share in the fourth quarter of 2018. GAAP net loss in first quarter of 2018 was $(14.3) million. GAAP Net Loss Margin was (26.7)% compared to (24.8)% in the fourth quarter of 2018 and (19.3)% in the first quarter of 2018.


·
Normalized net loss2 was $(16.6) million in the first quarter of 2019 compared with $(16.0) million in the fourth quarter of 2018 and $(10.6) million in the first quarter of 2018.


·
Adjusted EBITDA1 totaled $23.6 million in the first quarter of 2019, a decrease of 15.4% compared with $27.9 million in the fourth quarter of 2018, and 9.4% decrease compared with $26.1 million in the first quarter of 2018. The decrease is primarily due to the decline in revenues and several non-recurring adjustments.

Business Unit Contribution3 - INAP US and INAP INTL business unit contribution for first quarter of 2019 is as follows:

INAP US, includes Colocation, Cloud, and Network Services. Cloud contains AgileCloud, Managed Hosting, and SingleHop businesses.


o
INAP US business unit contribution was $24.6 million in the first quarter, a 11.5% decrease compared to the fourth quarter of 2018 and a 8.7% decrease from the first quarter of 2018. The decrease sequentially and year-over-year was primarily due to the decrease in revenue.
2




o
As a percent of revenue, INAP US business unit contribution margin was at 42.8% in the first quarter of 2019, and down 250 basis points sequentially and 450 basis points year-over-year.

INAP INTL, includes Colocation, Cloud, and Network Services. Cloud contains AgileCloud, Managed Hosting, Ubersmith, iWeb, and SingleHop.


o
INAP INTL business unit contribution was $6.4 million in the first quarter of 2019, a 1.9% increase compared with the fourth quarter of 2018 and a 6.0% increase from the first quarter of 2018.


o
As a percent of revenue, INAP INTL business unit contribution margin was 39.6% in the first quarter of 2019, up 270 basis points sequentially and up 460 basis points year-over-year. INAP INTL business unit contribution increased sequentially due to lower network cost and was up year-over-year due to the SingleHop acquisition.

“In the first quarter, we experienced some timing delays associated with customer installs and larger wholesale deals in the pipeline.  Coming out of the fourth quarter data center rationalizations, we experienced some continued revenue impact in the first quarter.  We worked to maintain cash flow consistency, while we completed these portfolio initiatives,” said Jim Keeley, Executive Vice President, Chief Financial Officer. “We are focused on maintaining strict cost and capex control, while continuing to support new sales and installs.”

Balance Sheet and Cash Flow Statement


·
Cash and cash equivalents were $8.3 million at March 31, 2019. Total debt was $686.5 million, net of discount and prepaid costs, at the end of the first quarter of 2019 including $271.0 million in finance lease obligations. The Company has $31.2 million of availability on its revolver, net of $3.8 million of letters of credit.


·
Cash generated from operations for the three months ended March 31, 2019 was $2.3 million compared to $5.4 million in the fourth quarter of 2018, and $3.7 million in the first quarter of 2018. Cash provided by operations was about $3.2 million lower than expected due to the delay of a large customer remittance and in line with prior periods when included. Capital expenditures over the same periods were $8.6 million, compared to $12.4 million and $6.4 million, respectively. Adjusted EBITDA less CapEx1 was $15.0 million, compared to $15.5 million in the fourth quarter of 2018 and $19.7 million in the first quarter of 2018. Free cash flow4 over the same periods was $(6.4) million, compared to $(7.0) million and $(2.7) million, respectively. Unlevered free cash flow4 was $7.9 million for the first quarter of 2019, compared to $9.0 million in the fourth quarter of 2018 and $10.9 million in the first quarter of 2018.

Business Outlook

INAP’s business outlook for 2019 is shown in the table below.


 
Full-Year 2019 Expected Range
Revenue
 $320 million - $330 million
Adjusted EBITDA (non-GAAP)
 $120 million - $130 million
Capital Expenditures
 $40 million - $50 million

3




1.
Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EBITDA less CapEx are non-GAAP financial measures which we define in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP information and non-GAAP information related to Adjusted EBITDA and Adjusted EBITDA margin are contained in the table entitled “Reconciliation of GAAP Net Loss Attributable to INAP Shareholders to Adjusted EBITDA” and “Reconciliation of Forward Looking GAAP Net Loss Attributable to INAP Shareholders to Adjusted EBITDA.” Adjusted EBITDA margin is Adjusted EBITDA as a percentage of revenue. A reconciliation between GAAP information and non-GAAP information related to Adjusted EBITDA less CapEx is contained in the table entitled “Reconciliation of GAAP Net Cash Flows provided by Operating Activities to Adjusted EBITDA less CapEx."


2.
Normalized net loss is a non-GAAP financial measure which we define in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP information and non-GAAP information related to normalized net loss are contained in the table entitled “Reconciliation of GAAP Net Loss Attributable to INAP Shareholders to Normalized Net Loss to INAP Shareholders.”


3.
Business unit contribution and business unit contribution margin are non-GAAP financial measures which we define in an attachment to this press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP and non-GAAP information related to business unit contribution and business unit contribution margin are contained in the table entitled “Business Unit Contribution and Business Unit Contribution Margin” in the attachment. Business unit contribution margin is business unit contribution as a percentage of revenue.


4.
Free cash flow and unlevered free cash flow are non-GAAP financial measures which we define in the attachment to the press release entitled “Non-GAAP (Adjusted) Financial Measures.” Reconciliations between GAAP and non-GAAP information related to free cash flow and unlevered free cash flow are contained in the table entitled “Free Cash Flow and Unlevered Free Cash Flow.”

Conference Call Information

INAP's first quarter 2019 conference call will be held today at 8:30 a.m. ET. Listeners may connect to a simultaneous webcast of the call, which will include accompanying presentation slides, on the Investor Relations section of INAP’s web site at http://ir.inap.com/events-and-presentations.

The call can be accessed by dialing 877-334-0775. International callers should dial 631-291-4567. An online archive of the webcast will be archived in the Investor Relations section of the Company’s website. An audio-only telephonic replay will be accessible from Thursday, May 9, 2019 at 11:30 a.m. ET through Tuesday, May 14, 2019 at 855-859-2056 using replay code 8878338. International callers can listen to the archived event at 404-537-3406 using replay code 8878338.

About INAP

Internap Corporation (NASDAQ: INAP) is a leading-edge provider of high-performance data center and cloud solutions with over 100 network Points of Presence worldwide. INAP’s full-spectrum portfolio of high-density colocation, managed cloud hosting and network solutions supports evolving IT infrastructure requirements for customers ranging from the Fortune 500 to emerging startups. INAP operates in 21 metropolitan markets, primarily in North America, with data centers connected by a low-latency, high-capacity fiber network. INAP has over one million gross square feet in its portfolio, with approximately
600,000 square feet of sellable data center space. For more information, visit www.INAP.com.
4



Forward-Looking Statements

Certain statements in this press release  contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding industry trends, our future financial position and performance, business strategy, revenues and expenses in future periods, projected levels of growth and other matters that do not relate strictly to historical facts. These statements are often identified by words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “projects,” “forecasts,” “plans,” “intends,” “continue,” “could” or “should,” that an “opportunity” exists, that we are “positioned” for a particular result, statements regarding our vision or similar expressions or variations. These statements are based on the beliefs and expectations of our management team based on information available at the time such statements are made. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by such forward-looking statements. Therefore, actual future results and trends may differ materially from what is forecast in such forward-looking statements due to a variety of factors, including, without limitation: our ability to drive growth while reducing costs; our ability to maintain current customers and obtain new ones, whether in a cost-effective manner or at all; the robustness of the IT infrastructure services market; our ability to achieve or sustain profitability; our ability to expand margins and drive higher returns on investment; our ability to sell into new and existing data center space; the actual performance of our IT infrastructure services and our ability to improve operations; our ability to correctly forecast capital needs, demand and space utilization; our ability to respond successfully to technological change and the resulting competition; the geographic concentration of our data centers in certain markets and any adverse developments in local economic conditions or the demand for data center space in these markets; our ability to identify any suitable strategic transactions; our ability to realize anticipated revenue, growth, synergies and cost savings from the acquisition of SingleHop LLC (“SingleHop”); our ability to successfully integrate SingleHop’s sales, operations, technology, and products generally; 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; the failure of third party suppliers to deliver their products and services on favorable terms, or at all; failures in our network operations centers, data centers, network access points or computer systems; our ability to provide or improve Internet infrastructure services to our customers; our ability to protect our intellectual property; our substantial amount of indebtedness, our ability to raise additional capital when needed, on attractive terms, or at all, and our ability to service existing debt or maintain compliance with financial and other covenants contained in our credit agreement; our compliance with and changes in complex laws and regulations in the U.S. and internationally; our ability to attract and retain qualified management and other personnel; and volatility in the trading price of INAP common stock.

These risks and other important factors discussed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K filed with the SEC and our other reports filed with the SEC could cause actual results to differ materially from those expressed or implied by forward-looking statements made by INAP or on our behalf.

Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements attributable to INAP or persons acting on our behalf are expressly qualified in their entirety by the foregoing forward-looking statements. All such statements speak only as of the date made, and INAP undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
5




###   
    
 Investor Contacts
 
 Richard Ramlall
 Carolyn Capaccio/Jody Burfening
 Chief Communications Officer INAP 
  LHA
 404-302-9982
 212-838-3777
 ir@inap.com 
  inap@lhai.com

6

INTERNAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(In thousands, except per share amounts)
(Unaudited)

   
Three Months Ended
March 31,
 
   
2019
   
2018
 
Net revenues
 
$
73,564
   
$
74,201
 
                 
Operating costs and expenses:
               
Cost of sales and services, exclusive of depreciation and amortization
   
25,733
     
24,607
 
Costs of customer support
   
8,790
     
7,387
 
Sales, general and administrative
   
17,521
     
19,854
 
Depreciation and amortization
   
22,178
     
21,158
 
Exit activities, restructuring and impairments
   
1,416
     
(33
)
Total operating costs and expenses
   
75,638
     
72,973
 
(Loss) income from operations
   
(2,074
)
   
1,228
 
                 
Interest expense
   
17,447
     
15,604
 
Loss (gain) on foreign currency, net
   
204
     
(215
)
Total non-operating expenses
   
17,651
     
15,389
 
                 
Loss before income taxes and equity in earnings of equity-method investment
   
(19,725
)
   
(14,161
)
(Benefit) provision for income taxes
   
(103
)
   
100
 
                 
Net loss
   
(19,622
)
   
(14,261
)
Less net income attributable to non-controlling interest
   
22
     
27
 
Net loss attributable to INAP shareholders
   
(19,644
)
   
(14,288
)
                 
Other comprehensive income:
               
Foreign currency translation adjustment
   
197
     
61
 
Total other comprehensive income
   
197
     
61
 
                 
Comprehensive loss
 
$
(19,447
)
 
$
(14,227
)
                 
Basic and diluted net loss per share
 
$
(0.83
)
 
$
(0.70
)
                 
Weighted average shares outstanding used in computing basic and diluted net loss per share
   
23,652
     
20,052
 


7

INTERNAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
(Unaudited)

             
   
March 31, 2019
   
December 31,
2018
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
8,266
   
$
17,823
 
Accounts receivable, net of allowance for doubtful accounts of $1,171 and $1,547, respectively
   
21,452
     
20,054
 
Contract assets
   
9,006
     
8,844
 
Prepaid expenses and other assets
   
7,890
     
7,377
 
Total current assets
   
46,614
     
54,098
 
                 
Property and equipment, net
   
229,185
     
478,061
 
Operating lease right-of-use assets
   
27,056
     
-
 
Finance lease right-of-use assets
   
236,077
     
-
 
Intangible assets, net
   
70,441
     
73,042
 
Goodwill
   
116,216
     
116,217
 
Contract assets
   
15,502
     
16,104
 
Deposits and other assets
   
7,251
     
7,409
 
Total assets
 
$
748,342
   
$
744,931
 
                 
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
               
Current liabilities:
               
Accounts payable
 
$
22,368
   
$
23,435
 
Accrued liabilities
   
14,178
     
15,540
 
Deferred revenues
   
7,881
     
8,022
 
Capital lease obligations
   
-
     
9,080
 
Term loan, less discount and prepaid costs of $4,058 and $4,036, respectively
   
299
     
321
 
Exit activities and restructuring liability
   
1,883
     
2,526
 
Short-term operating lease liabilities
   
5,400
     
-
 
Short-term finance lease liabilities
   
8,328
     
-
 
Other current liabilities
   
33
     
1,063
 
Total current liabilities
   
60,370
     
59,987
 
                 
Deferred revenues
   
341
     
511
 
Operating lease liabilities
   
24,149
     
-
 
Finance lease liabilities
   
262,632
     
-
 
Capital lease obligations
   
-
     
262,382
 
Term loan, less discount and prepaid costs of $8,472 and $9,508, respectively
   
415,226
     
415,278
 
Deferred tax liability
   
1,969
     
2,211
 
Other long-term liabilities
   
3,627
     
4,505
 
Total liabilities
 
$
768,314
   
$
744,874
 



8

INTERNAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
(Unaudited)
 
    March 31, 2019    
December 31,
2018
 
Commitments and contingencies
           
Stockholders' (deficit) equity:
           
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding
 
$
-
   
$
-
 
Common stock, $0.001 par value; 50,000 shares authorized; 26,746 and 25,455 shares outstanding, respectively
   
27
     
25
 
Additional paid-in capital
   
1,369,815
     
1,368,968
 
Treasury stock, at cost, 378 and 330, respectively
   
(7,914
)
   
(7,646
)
Accumulated deficit
   
(1,382,715
)
   
(1,363,019
)
Accumulated items of other comprehensive loss
   
(868
)
   
(1,065
)
Total INAP stockholders’ deficit
   
(21,655
)
   
(2,737
)
Non-controlling interest
   
1,683
     
2,794
 
Total stockholders' (deficit) equity
   
(19,972
)
   
57
 
Total liabilities and stockholders’ (deficit) equity
 
$
748,342
   
$
744,931
 

9

INTERNAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

             
   
Three Months Ended
March 31,
 
   
2019
   
2018
 
Cash Flows from Operating Activities:
           
Net loss
 
$
(19,622
)
 
$
(14,261
)
Adjustments to reconcile net loss to net cash provided by operating activities:
               
Depreciation and amortization
   
22,178
     
21,158
 
Loss on disposal of fixed asset
   
528
     
46
 
Amortization of debt discount and issuance costs
   
1,097
     
638
 
Stock-based compensation expense, net of capitalized amount
   
890
     
858
 
Provision for doubtful accounts
   
248
     
332
 
Non-cash change in finance lease obligations
   
148
     
(213
)
Non-cash change in exit activities and restructuring liability
   
1,226
     
372
 
Deferred taxes
   
(261
)
   
(30
)
Other, net
   
(66
)
   
(233
)
Changes in operating assets and liabilities:
               
Accounts receivable
   
(1,617
)
   
864
 
Prepaid expenses, deposits and other assets
   
1,043
     
(467
)
Accounts payable
   
763
     
(636
)
Accrued and other liabilities
   
(2,238
)
   
(2,904
)
Deferred revenues
   
(262
)
   
(138
)
Exit activities and restructuring liability
   
(1,903
)
   
(1,389
)
Asset retirement obligation
   
85
     
(248
)
Other liabilities
   
25
     
(52
)
Net cash provided by operating activities
   
2,262
     
3,697
 
                 
Cash Flows from Investing Activities:
               
Purchases of property and equipment
   
(8,094
)
   
(6,082
)
Proceeds from disposal of property and equipment
   
56
     
437
 
Business acquisition, net of cash acquired
   
-
     
(132,143
)
Additions to acquired and developed technology
   
(530
)
   
(277
)
Net cash used in investing activities
 
$
(8,568
)
 
$
(138,065
)

10

INTERNAP CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)



   
Three Months Ended
March 31,
 
    2019     2018  
Cash Flows from Financing Activities:
           
Proceeds from credit agreements
 
$
-
   
$
146,000
 
Proceeds from stock issuance, net
   
(37
)
   
-
 
Principal payments on credit agreements
   
(1,089
)
   
(1,089
)
Debt issuance costs
   
-
     
(5,976
)
Payments on finance lease obligations
   
(907
)
   
(1,897
)
Acquisition of non-controlling interests
   
(973
)
   
(1,130
)
Proceeds from exercise of stock options
   
-
     
31
 
Acquisition of common stock for income tax withholdings
   
(268
)
   
(270
)
Other, net
   
(23
)
   
235
 
Net cash (used in) provided by financing activities
   
(3,297
)
   
135,904
 
Effect of exchange rates on cash and cash equivalents
   
46
     
20
 
Net (decrease) increase in cash and cash equivalents
   
(9,557
)
   
1,556
 
Cash and cash equivalents at beginning of period
   
17,823
     
14,603
 
Cash and cash equivalents at end of period
 
$
8,266
   
$
16,159
 
                 
Supplemental Disclosures of Cash Flow Information:
               
Cash paid for interest
 
$
14,260
   
$
13,577
 
Additions to property and equipment included in accounts payable
   
1,850
     
2,287
 

11



INTERNAP CORPORATION
NON-GAAP (ADJUSTED) FINANCIAL MEASURES

In addition to providing financial measurements based on accounting principles generally accepted in the United States of America (“GAAP”), this earnings press release includes additional financial measures that are not prepared in accordance with GAAP (“non-GAAP”), including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA less CapEx, normalized net loss, business unit contribution, business unit contribution margin, free cash flow and unlevered free cash flow. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures can be found below.

We define the following non-GAAP measures as follows:


Adjusted EBITDA is a non-GAAP measure and is GAAP net loss attributable to INAP shareholders plus depreciation and amortization, interest expense, provision (benefit) for income taxes, other (income) expense, (gain) loss on disposal of property and equipment, exit activities, restructuring and impairments, stock-based compensation, non-income tax contingency, strategic alternatives and related costs, organizational realignment costs, acquisition costs and claim settlement.


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


Adjusted EBITDA less CapEx is Adjusted EBITDA less capital expenditures with Adjusted EBITDA for this non-GAAP measure defined as net cash flow provided by operating activities plus cash paid for interest, cash paid for income taxes, cash paid for exit activities and restructuring, cash paid for strategic alternatives and related costs, cash paid for organizational realignment costs and other working capital changes less capital expenditures.


Normalized net loss is GAAP net loss attributable to INAP shareholders plus exit activities, restructuring and impairments, stock-based compensation, non-income tax contingency, strategic alternatives, realignment and related costs and acquisition costs.


Business unit contribution is business unit revenues less direct costs of sales and services, customer support, and sales and marketing, exclusive of depreciation and amortization.


Business unit contribution margin is business unit contribution as a percentage of business unit revenue.


Free cash flow is net cash flows provided by operating activities minus capital expenditures.


Unlevered free cash flow is free cash flow plus cash interest expense.

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 (gain) loss on disposals of property and equipment, as well as restructuring and impairments, to calculate Adjusted EBITDA provides supplemental information and an alternative presentation that is useful to investors’ understanding of our current ongoing 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 expenses primarily reflect goodwill impairments and subsequent plan adjustments in sublease income assumptions for certain properties included in our previously disclosed restructuring plans.

We believe that excluding interest expense, provision (benefit) for income taxes and other (income) expense from non-GAAP financial measures provides supplemental information and an alternative presentation useful to investors’ understanding of our core operating results and trends. Investors have indicated that they consider financial measures of our results of operations excluding interest expense, provision (benefit) for income taxes and other (income) expense as important supplemental information useful to their understanding of our historical results and estimating our future results.


12

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

We also believe that, in excluding the effects of interest expense, provision (benefit) for income taxes and other (income) expense, 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 and 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.

We believe that exit activities, restructuring and impairment charges, non-income tax contingency, strategic alternatives and related costs, organizational realignment costs, acquisition costs and claim settlement costs are unique costs, and consequently, we do not consider these charges as a normal component of expenses related to current and ongoing operations.

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 our current ongoing operating results and trends. Management believes that investors consider financial measures of our results of operations excluding stock-based compensation 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 and 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 by providing normalized net loss, excluding the effect of exit activities, restructuring and impairments, stock-based compensation, non-income tax contingency, strategic alternatives and related costs, organizational realignment costs, acquisition costs and claim settlement costs, in all periods, is useful to investors because it enables additional and more meaningful period-to-period comparisons.

Adjusted EBITDA is not a measure of financial performance 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 operating activities as defined by GAAP. Our statements of cash flows present 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 which vary widely from company-to-company and impair comparability.


13


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

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, analysts and investors concerning our financial performance.

Our presentation of business unit contribution and business unit contribution margin excludes depreciation and amortization in order to allow investors to see the business through the eyes of management.

We also have excluded depreciation and amortization from business unit contribution and business unit contribution 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.

Free cash flow and unlevered free cash flow are used in addition to and in conjunction with results presented in accordance with GAAP. Free cash flow and unlevered free cash flow should not be relied upon to the exclusion of GAAP financial measures. Free cash flow and unlevered free cash flow reflect an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Management strongly encourages investors to review our financial statements and publicly-filed reports in their entirety and to not rely on any single financial measure.

We use free cash flow and unlevered free cash flow, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a useful measure of cash flows since capital expenditures are a necessary component of ongoing operations. In limited circumstances in which proceeds from sales of fixed assets exceed capital expenditures, free cash flow would exceed cash flow from operations. However, since we do not anticipate being a net seller of fixed assets, we expect free cash flow to be less than operating cash flows.

Free cash flow and unlevered free cash flow have limitations due to the fact that they do not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments made to service our debt or capital lease obligations. Therefore, we believe it is important to view free cash flow as a complement to our entire consolidated statements of cash flows.

Adjusted EBITDA less CapEx is used in addition to and in conjunction with results presented in accordance with GAAP.  Adjusted EBITDA less CapEx should not be relied upon to the exclusion of GAAP financial measures. Adjusted EBITDA less CapEx reflects an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Management strongly encourages investors to review our financial statements and publicly-filed reports in their entirety and to not rely on any single financial measure.

We use Adjusted EBITDA less CapEx, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a useful measure of cash flows since capital expenditures are a necessary component of ongoing operations.

Adjusted EBITDA less CapEx has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. Adjusted EBITDA less CapEx does not incorporate payments made to service our debt or capital lease obligations. Therefore, we believe it is important to view Adjusted EBITDA less CapEx as a complement to our entire consolidated statements of cash flows.

Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is presented as we understand certain investors use it as one measure of our historical ability to service debt. Also Adjusted EBITDA is used in our debt covenants.


14


INTERNAP CORPORATION

NON-GAAP (ADJUSTED) FINANCIAL MEASURES (Continued)

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.
15




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

RECONCILIATION OF GAAP NET LOSS ATTRIBUTABLE TO INAP SHAREHOLDERS TO ADJUSTED EBITDA

A reconciliation of GAAP net loss attributable to INAP shareholders to Adjusted EBITDA (non-GAAP) for each of the periods indicated is as follows (in thousands, unaudited):


   
Three Months Ended
 
   
March 31, 2019
   
December 31, 2018
   
March 31, 2018
 
Reconciliation of GAAP Net Loss Attributable to INAP Shareholders to Adjusted EBITDA:
 
Amount
   
Percent
   
Amount
   
Percent
   
Amount
   
Percent
 
                                     
Net revenues
 
$
73,564
     
100.0
%
 
$
78,238
     
100.0
%
 
$
74,201
     
100.0
%
                                                 
GAAP net loss attributable to INAP shareholders
 
$
(19,644
)
   
(26.7
)%
 
$
(19,411
)
   
(24.8
)%
 
$
(14,288
)
   
(19.3
)%
Add:
                                               
Depreciation and amortization
   
22,178
     
30.1
%
   
23,579
     
30.1
%
   
21,158
     
28.5
%
Interest expense
   
17,447
     
23.7
%
   
20,346
     
26.0
%
   
15,604
     
21.0
%
(Benefit) provision for income taxes
   
(103
)
   
(0.1
)%
   
253
     
0.3
%
   
100
     
0.1
%
Other expense (income)
   
204
     
0.3
%
   
(263
)
   
(0.3
)%
   
(215
)
   
(0.3
)%
Loss (gain) on disposal of property and equipment, net
   
528
     
0.7
%
   
(13
)
   
(0.0
)%
   
46
     
0.1
%
Exit activities, restructuring and impairments
   
1,416
     
1.9
%
   
2,266
     
2.9
%
   
(33
)
   
(0.0
)%
Stock-based compensation
   
890
     
1.2
%
   
1,104
     
1.4
%
   
858
     
1.2
%
Non-income tax contingency
   
150
     
0.2
%
   
6
     
0.0
%
   
-
     
-
 
Strategic alternatives and related costs
   
22
     
0.0
%
   
50
     
0.1
%
   
27
     
0.0
%
Organizational realignment costs
   
386
     
0.5
%
   
2
     
0.0
%
   
240
     
0.3
%
Acquisition costs
   
141
     
0.2
%
   
-
     
-
     
2,558
     
3.4
%
Adjusted EBITDA (non-GAAP)
 
$
23,615
     
32.1
%
 
$
27,919
     
35.7
%
 
$
26,055
     
35.1
%
Less:
                                               
Capital Expenditures (CapEx)
   
8,623
     
11.7
%
   
12,376
     
15.8
%
   
6,359
     
8.6
%
Adjusted EBITDA less CapEx (non-GAAP)
 
$
14,992
     
20.4
%
 
$
15,543
     
19.9
%
 
$
19,696
     
26.5
%
                                                 

16


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

A reconciliation of forward looking GAAP net loss attributable to INAP shareholders to Adjusted EBITDA (non-GAAP) for full-year 2019 is as follows (in millions, unaudited):

   
2019 Guidance (Reaffirmed)
 
   
Low
   
High
 
             
Net revenues
 
$
320
   
$
330
 
                 
GAAP net loss attributable to INAP shareholders
 
$
(47
)
 
$
(37
)
Add:
               
Depreciation and amortization
   
90
     
90
 
Interest expense
   
68
     
68
 
Exit activities, restructuring and impairments
   
2
     
2
 
Stock-based compensation
   
5
     
5
 
Non-income tax contingency and acquisition costs
   
2
     
2
 
Adjusted EBITDA (non-GAAP)
 
$
120
   
$
130
 

17




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

RECONCILIATION OF GAAP NET LOSS ATTRIBUTABLE TO INAP SHAREHOLDERS TO
NORMALIZED NET LOSS TO INAP SHAREHOLDERS

Reconciliations of GAAP net loss attributable to INAP shareholders, the most directly comparable GAAP measure, to normalized net loss (non-GAAP) attributable to INAP shareholders (in thousands, unaudited):

   
Three Months Ended
 
   
March 31, 2019
   
December 31, 2018
   
March 31, 2018
 
GAAP net loss attributable to INAP shareholders
 
$
(19,644
)
 
$
(19,411
)
 
$
(14,288
)
                         
Exit activities, restructuring and impairments
   
1,416
     
2,266
     
(33
)
Stock-based compensation
   
890
     
1,104
     
858
 
Strategic alternatives, realignment, and related costs
   
408
     
50
     
267
 
Acquisition costs
   
141
     
-
     
2,558
 
Non-income tax contingency
   
150
     
6
     
-
 
Normalized net loss (non-GAAP) attributable to INAP shareholders
 
$
(16,639
)
 
$
(15,985
)
 
$
(10,638
)

18


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

BUSINESS UNIT CONTRIBUTION AND BUSINESS UNIT CONTRIBUTION MARGIN

Business unit contribution and business unit contribution margin, which includes direct costs of sales and service, customer support and sales and marketing for each of the periods indicated is as follows (in thousands, unaudited):

   
Three Months Ended
 
   
March 31, 2019
   
December 31, 2018
   
March 31, 2018
 
Revenues:
                 
INAP US
 
$
57,519
   
$
61,363
   
$
57,076
 
INAP INTL
   
16,045
     
16,875
     
17,125
 
Total
   
73,564
     
78,238
     
74,201
 
Direct costs of sales and services, customer support and sales and marketing:
                       
INAP US
   
32,884
     
33,540
     
30,107
 
INAP INTL
   
9,695
     
10,641
     
11,133
 
Total
   
42,579
     
44,181
     
41,240
 
Business Unit Contribution:
                       
INAP US
   
24,635
     
27,823
     
26,969
 
INAP INTL
   
6,350
     
6,234
     
5,992
 
Total
 
$
30,985
   
$
34,057
   
$
32,961
 
Business Unit Contribution Margin:
                       
INAP US
   
42.8
%
   
45.3
%
   
47.3
%
INAP INTL
   
39.6
%
   
36.9
%
   
35.0
%
Total
   
42.1
%
   
43.5
%
   
44.4
%

19


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

FREE CASH FLOW AND UNLEVERED FREE CASH FLOW

Free cash flow and unlevered free cash flow are non-GAAP measures. Free cash flow is net cash flows provided by operating activities minus capital expenditures. Unlevered free cash flow is free cash flow plus cash interest expense (in thousands, unaudited):

   
Three Months Ended
 
   
March 31, 2019
   
December 31, 2018
   
March 31, 2018
 
Net cash flows provided by operating activities
 
$
2,262
   
$
5,415
   
$
3,697
 
Capital expenditures:
                       
Maintenance capital
   
(2,818
)
   
(1,550
)
   
(1,796
)
Growth capital
   
(5,805
)
   
(10,826
)
   
(4,563
)
Free cash flow (non-GAAP)
   
(6,361
)
   
(6,961
)
   
(2,662
)
                         
Cash paid for interest
   
14,260
     
16,005
     
13,577
 
Unlevered free cash flow (non-GAAP)
 
$
7,899
   
$
9,044
   
$
10,915
 

20



DATA CENTER PORTFOLIO

The following table presents an overview of the portfolio of data center properties that INAP leases as of March 31, 2019:


 
Gross Square
Supporting
Office &
Data Center
Current Raised
Occupied
Occupied
Market
 Feet (SF)1
Infrastructure2
Other
Footprint SF3
Floor SF 4
SF
SF %
               
Phoenix
         214,968
               87,059
        61,210
            66,717
          44,650
      30,861
69%
Atlanta5
         208,298
               64,248
        75,344
            68,706
          44,987
      13,542
30%
Montreal
         126,965
               34,572
        46,833
            45,560
          28,050
      23,890
85%
New York/New Jersey6
         105,115
               16,405
        28,468
            60,242
          37,702
      23,379
62%
Dallas
         112,085
               23,763
        21,023
            67,299
          30,432
      17,459
57%
Los Angeles
         109,181
                 9,623
        12,366
            87,192
          18,020
      13,882
77%
Seattle
         100,497
               31,326
        21,552
            47,619
          38,619
      24,547
64%
Santa Clara/San Jose
            88,659
               23,852
        23,667
            41,140
          40,840
      23,751
58%
Boston
            45,637
               18,785
          5,199
            21,653
          21,653
      10,743
50%
Houston
            43,913
                 7,925
        15,599
            20,389
          20,389
         9,196
45%
Chicago
            14,002
                 1,551
                 -
            12,451
          12,076
      10,029
83%
Other7
            35,988
                        -
              981
            34,990
          30,580
      18,181
59%
Total
      1,205,308
             319,109
      312,242
          573,958
       367,998
    219,460
60%

 (1)
Represents total SF subject to our lease.
 (2)
Represents total SF for mechanical and utility rooms.
 (3)
Represents total SF that is currently leased or available for lease but excludes supporting infrastructure, office space, and common area.
 (4)
Represents data center footprint SF less unbuilt SF.
 (5)
Includes planned resizing of Coca Cola facility moving from single tenant site to multi-tenant site, freeing up raised floor for new sales.
 (6)
Represents Bethel CT facility being removed from the “New York/New Jersey” market and placed into “Other” market.
 (7)
Represents Bethel CT, Miami, Northern Virginia, Oakland/San Francisco, London, Amsterdam, Frankfurt, Hong Kong, Singapore, Sydney, Tokyo, and Osaka.
       
 21

      
         
         
         
         
         




Exhibit 99.2

   Peter D. Aquino – President and Chief Executive OfficerJames C. Keeley – Chief Financial Officer   First Quarter 2019 Earnings ReportMay 9, 2019   © 2019 Internap Corporation (INAP) 
 

 FORWARD-LOOKING STATEMENTS  Certain statements in this presentation contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding industry trends, our future financial position and performance, business strategy, revenues and expenses in future periods, projected levels of growth and other matters that do not relate strictly to historical facts. These statements are often identified by words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “projects,” “forecasts,” “plans,” “intends,” “continue,” “could” or “should,” that an “opportunity” exists, that we are “positioned” for a particular result, statements regarding our vision or similar expressions or variations. These statements are based on the beliefs and expectations of our management team based on information available at the time such statements are made. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by such forward-looking statements. Therefore, actual future results and trends may differ materially from what is forecast in such forward-looking statements due to a variety of factors, including, without limitation: our ability to drive growth while reducing costs; our ability to maintain current customers and obtain new ones, whether in a cost-effective manner or at all; the robustness of the IT infrastructure services market; our ability to achieve or sustain profitability; our ability to expand margins and drive higher returns on investment; our ability to sell into new and existing data center space; the actual performance of our IT infrastructure services and our ability to improve operations; our ability to correctly forecast capital needs, demand and space utilization; our ability to respond successfully to technological change and the resulting competition; the geographic concentration of our data centers in certain markets and any adverse developments in local economic conditions or the demand for data center space in these markets; our ability to identify any suitable strategic transactions; our ability to realize anticipated revenue, growth, synergies and cost savings from the acquisition of SingleHop LLC (“SingleHop”); our ability to successfully integrate SingleHop’s sales, operations, technology, and products generally; 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; the failure of third party suppliers to deliver their products and services on favorable terms, or at all; failures in our network operations centers, data centers, network access points or computer systems; our ability to provide or improve Internet infrastructure services to our customers; our ability to protect our intellectual property; our substantial amount of indebtedness, our ability to raise additional capital when needed, on attractive terms, or at all, and our ability to service existing debt or maintain compliance with financial and other covenants contained in our credit agreement; our compliance with and changes in complex laws and regulations in the U.S. and internationally; our ability to attract and retain qualified management and other personnel; and volatility in the trading price of INAP common stock. These risks and other important factors discussed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K filed with the SEC and our other reports filed with the SEC could cause actual results to differ materially from those expressed or implied by forward-looking statements made by INAP or on our behalf. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements attributable to INAP or persons acting on our behalf are expressly qualified in their entirety by the foregoing forward-looking statements. All such statements speak only as of the date made, and INAP undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.  © 2019 Internap Corporation (INAP)  2 
 

 NON-GAAP MEASURES  In addition to results presented in accordance with GAAP, this presentation includes non-GAAP financial measures. INAP believes these non-GAAP financial measures provide additional information that is useful to investors in helping to understand our underlying performance and trends. Non-GAAP financial measures have inherent limitations, which are not required to be uniformly applied. Readers should be aware of these limitations and should be cautious with respect to the use of such measures. To compensate for these limitations, we use non-GAAP financial measures as comparative tools, together with GAAP financial measures, to assist in the evaluation of our operating performance or financial condition. Our method of calculating these non-GAAP financial measures may differ from methods used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for those financial measures prepared in accordance with GAAP.We have provided in this presentation reconciliations of the non-GAAP financial measures included in this presentation to the most directly comparable GAAP financial measures.   © 2019 Internap Corporation (INAP)  3 
 

 Inap product improvement completed  Revenue product composition changes YoY improving INAP’s platform for the future (+ Phoenix and Atlanta Flagships - 6 Non-Core Data Centers + SingleHop)Pipeline for larger deals continues to drive optimism as INAP shifts its model from retail-only, to retail + wholesaleConservative / success-based capex spending in Q1 2019 to help maintain cash flow objectivesCredit Facility amendment achieved as a follow-on to INAP’s recent equity raise to promote operational flexibility   © 2019 Internap Corporation (INAP)  4  Positioning INAP to Gain Scale in 2019 
 

   AtlantaBostonChicagoDallasHoustonLos AngelesMiamiMontrealNew York / New JerseyNorthern Virginia / D.C  OaklandPhoenixSeattleSilicon Valley  AmsterdamFrankfurtLondon  Hong KongSingaporeSydneyTokyo / Osaka  NORTH AMERICA  EUROPE  APAC  © 2019 Internap Corporation (INAP)  5  INAP’s Attributes AT-A-GLANCE  53DATA CENTERS  21METRO MARKETS  101GLOBAL POPs  1.2MGROSS SQ. FEET  132MW UTILITY POWER  14 FLAGSHIP1M+ GROSS SF.111MW+ POWER  8 TURNKEY100K+ GROSS SF.21MW+ POWER  31 ADDITIONAL30K+ GROSS SF.<5MW*POWER  *Power stat for 31 additional data centers not reflected in 132MW.  COLOCATION  NETWORK  CLOUD     
 

 © 2019 Internap Corporation (INAP)  6  QUARTERLY FINANCIAL SUMMARY  ($ in millions)   *Reconciliations to GAAP on pages 13-18  Revenue  Net Loss Attributable to Shareholders  Adjusted EBITDA (non-GAAP)*  Adjusted EBITDA less Capex (non-GAAP)*  Adjusted EBITDA less CapEx is Maintained Post 1Q Initiatives 
 

 © 2019 Internap Corporation (INAP)  7  CONSOLIDATED EARNINGS SUMMARY   Revenue Flat Year-over-Year Including Portfolio Improvement   *Reconciliations to GAAP on pages 13-18 
 

 © 2019 Internap Corporation (INAP)  8      INAP US BUSINESS UNIT RESULTS  ($ in millions)   *Reconciliations to GAAP on pages 13-18  Current US Colo Facilities Represent an Improved Asset Portfolio  Revenue  Business Unit Contribution (non-GAAP)* 
 

 © 2019 Internap Corporation (INAP)  9  INAP INTL BUSINESS UNIT RESULTS  Business Unit Contribution (non-GAAP)*  Revenue  ($ in millions)   *Reconciliations to GAAP on pages 13-18  Profitability Improvement Driven by Advanced Managed Services 
 

 © 2019 Internap Corporation (INAP)  10  CASH FLOW AND BALANCE SHEET   Conservative CapEx to Maintain Cash Flow Objectives   *Reconciliations to GAAP on pages 13-18 
 

   © 2019 Internap Corporation (INAP)  11  Reaffirming guidance Ranges  Revenue  Adjusted EBITDA (non-GAAP)*  Capital Expenditures  $320-$330  $120-$130  $40-$50  ($ IN MILLIONS)  Key Initiatives in Place to Drive Performance Over Remaining 2019   *Reconciliations to GAAP on pages 13-18 
 

 Transforming INAP in 2019  © 2019 Internap Corporation (INAP)  12  Relaunched our new Phoenix Data Center as a multi-tenant facility (formerly BofA single tenant site). This is INAP’s largest Tier 3 data center in a high absorption market with great upside (up to 18 MW).Upgrading second Atlanta data center for multi-tenant availability (formerly Coca Cola single tenant site). INAP’s Fiber Ring now connects our two Atlanta Flagships.Targeting new additional Cloud PODs in London, Seattle, & AshburnSales and cost saving initiatives in place to drive towards our goalsRetained Moelis & Company and LionTree Advisors to evaluate opportunities to maximize shareholder value   Taking INAP to the Next Level / Exploring Strategic Initiatives 
 

 Appendix  Reconciliation of Non-GAAP Financial Measures  © 2019 Internap Corporation (INAP)  13 
 

 © 2019 Internap Corporation (INAP)  14  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES  Normalized Net Loss Attributable to INAP Shareholders is a non-GAAP measure. Normalized Net Loss is GAAP net loss attributable to INAP shareholders plus exit activities, restructuring and impairments, stock-based compensation, non-income tax contingency, strategic alternatives, realignment, and related costs, and acquisition costs. 
 

 © 2019 Internap Corporation (INAP)  15  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES  Business Unit Contribution and Business Unit Contribution Margin are non-GAAP measures. Business Unit Contribution is defined as business unit revenues less direct costs of sales and services, customer support, and sales and marketing. Business Unit Contribution Margin is Business Unit Contribution as a percentage of business unit revenues. 
 

 © 2019 Internap Corporation (INAP)  16  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES  Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA less CapEx are non-GAAP measures. Adjusted EBITDA is GAAP net loss attributable to INAP Shareholders plus depreciation and amortization, interest expense, (benefit) provision for income taxes, other expense (income), loss (gain) on disposal of property and equipment, exit activities, restructuring and impairments, stock-based compensation, non-income tax contingency, strategic alternatives and related costs, organizational realignment costs, and acquisition costs. Adjusted EBITDA margin is adjusted EBITDA as a percentage of revenues. Adjusted EBITDA less CapEx is Adjusted EBITDA less capital expenditures. 
 

 © 2019 Internap Corporation (INAP)  17  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES  Free Cash Flow and Unlevered Free Cash Flow are non-GAAP measures. Free Cash Flow is net cash flows provided by operating activities minus capital expenditures. Unlevered Free Cash Flow is Free Cash Flow plus cash interest expense. 
 



 © 2019 Internap Corporation (INAP)  18  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES  Below is a reconciliation of forward looking GAAP Net Loss Attributable to INAP Shareholders to Adjusted EBITDA (non-GAAP) for full-year 2019 as follows: