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):

August 6, 2019



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



 Delaware  001-31989  91-2145721
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification Number

 One Ravinia Drive, Suite 1300, Atlanta, Georgia

 30346
(Address of Principal Executive Offices)

(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 August 6, 2019, Internap Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2019. A copy of the press release is attached hereto as Exhibit 99.1 hereto and is incorporated herein by reference.

On August 6, 2019, the Company will host a conference call to discuss its results for the quarter ended June 30, 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 August 6, 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 August 6, 2019




Presentation, dated August 6, 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: August 6, 2019
By:
/s/ James C. Keeley
 
James C. Keeley
 
EVP, Chief Financial Officer




Exhibit 99.1


INAP Reports Second Quarter 2019 Financial Results

Second Quarter Revenue of $73.1 Million is Consistent with New 2019 Baseline as INAP Captures Sales Momentum and Records Lowest Churn Quarter in Recent Years
GAAP Net Loss Attributable to INAP Shareholders of $(18.6) Million, or $(0.78) Per Share

o
Cash Flow from Operations was $11.8 Million, up from $2.3 Million in the Prior Quarter
Adjusted EBITDA of $24.4 Million is Up 3.4%; Management Initiated Cost Savings for the Second Half of 2019
CapEx of $7.8 Million Remains Tightly Controlled, Focused on Success-Based Deals

o
INAP Closed on First Megawatt Deal of the Year as a Catalyst to Expand LA Flagship Facility
Strategic Initiatives Review Remains Active
 
RESTON, VA - (August 06, 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 second quarter of 2019.

“INAP’s solid second quarter results include positive sales progress across multiple fronts, including our first megawatt deal of 2019, advanced private cloud and bare metal growth, and the lowest churn rate in years. The other good news is that our backlog is again up over $20 million, with a growing pipeline primarily in North America with upside in Europe. We continue to improve operations and focus on growth opportunities in our INAP Data Center Flagships,” said Peter D. Aquino, President and Chief Executive Officer. “As we previously disclosed, we have retained Moelis and LionTree to assist INAP in evaluating strategic initiatives. Our advisors reached out to the most likely parties, including strategic and financial players. This activity is currently in progress, as we pursue the most actionable opportunity in the near term for the best interests of shareholders.”

Revenue

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

Total company revenue was $73.1 million in the second quarter of 2019, a decrease sequentially of $0.4 million or 0.6%, and a decrease of $8.8 million or 10.8% year-over-year. The sequential decrease was primarily due to churn from the last remaining customers in the exited data centers. The decrease year-over-year was primarily due to planned data centers exits and churn from several large customers in 2018.
 

o
INAP US revenue totaled $57.5 million in the second quarter of 2019, flat sequentially and a decrease of 10.3% year-over-year. The second quarter revenue included churn from the exited data centers offset by a global transfer pricing adjustment between segments. The decrease year-over-year was primarily due to all of the above.
 

o
INAP INTL revenue was $15.7 million in the second quarter of 2019, a decrease of 2.3% sequentially and 12.4% year-over-year. The sequential decrease was primarily due to a global transfer pricing adjustment between segments. The decrease year-over-year was primarily due to churn from iWeb legacy products.


Second Quarter 2019 Financial Summary

 
($ in thousands)
  
 
2Q 2019


 
1Q 2019


 
2Q 2018


QoQ
Growth


YoY
Growth

                               
Net Revenues
 
$
73,134
   
$
73,564
   
$
81,962
     
(0.6
)%
   
(10.8
)%
Operating Costs and Expenses
 
$
72,544
   
$
75,638
   
$
79,312
     
(4.1
)%
   
(8.5
)%
Depreciation and Amortization
 
$
21,955
   
$
22,178
   
$
22,712
     
(1.0
)%
   
(3.3
)%
Exit Activities, Restructuring and Impairments
 
$
231
   
$
1,416
   
$
826
     
(83.7
)%
   
(72.0
)%
All Other Operating Costs and Expenses
 
$
50,358
   
$
52,044
   
$
55,774
     
(3.2
)%
   
(9.7
)%
GAAP Net Loss Attributable to INAP Shareholders
 
$
(18,555
)
 
$
(19,644
)
 
$
(14,279
)
   
(5.5
)%
   
29.9
%
GAAP Net Loss Margin
   
(25.4
)%
   
(26.7
)%
   
(17.4
)%
               
                                         
Minus Stock-Based Compensation and Other Items
 
$
1,895
   
$
3,005
   
$
3,760
     
(36.9
)%
   
(49.6
)%
Normalized Net Loss2
 
$
(16,660
)
 
$
(16,639
)
 
$
(10,519
)
   
0.1
%
   
58.4
%
                                         
Adjusted EBITDA1
 
$
24,420
   
$
23,615
   
$
29,029
     
3.4
%
   
(15.9
)%
Adjusted EBITDA Margin1
   
33.4
%
   
32.1
%
   
35.4
%
               
                                         
Capital Expenditures (CapEx)
 
$
7,836
   
$
8,623
   
$
11,083
     
(9.1
)%
   
(29.3
)%
Adjusted EBITDA less CapEx1
 
$
16,584
   
$
14,992
   
$
17,946
     
10.6
%
   
(7.6
)%

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

GAAP net loss attributable to INAP shareholders was $(18.6) million, or $(0.78) per share in the second quarter of 2019 compared with $(19.6) million, or $(0.83) per share in the first quarter of 2019. GAAP net loss in second quarter of 2018 was $(14.3) million. GAAP Net Loss Margin was (25.4)% compared to (26.7)% in the first quarter of 2019 and (17.4)% in the second quarter of 2018.

Normalized net loss2 was $(16.7) million in the second quarter of 2019 compared with $(16.6) million in the first quarter of 2019 and $(10.5) million in the second quarter of 2018.

Adjusted EBITDA1 totaled $24.4 million in the second quarter of 2019, an increase of 3.4% compared with $23.6 million in the first quarter of 2019, and 15.9% decrease compared with $29.0 million in the second quarter of 2018. The increase sequentially is due to cost savings initiatives and the decline is due to lower revenues.

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

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

2


o
INAP US business unit contribution was $25.5 million in the second quarter, a 3.5% increase compared to the first quarter of 2019 and a 14.6% decrease from the second quarter of 2018. The sequential increase was primarily due to cost savings initiatives implemented at the beginning of 2019 partially offset by seasonal power increases. The year-over-year decrease was due to planned data centers exits and churn from several large customers in 2018 partially offset by ongoing cost savings initiatives beginning in the first quarter of 2019.


o
As a percent of revenue, INAP US business unit contribution margin was at 44.4% in the second quarter of 2019; and up 160 basis points sequentially and down 220 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 $5.6 million in the second quarter of 2019, an 11.4% decrease compared with the first quarter of 2019 and 6.6% decrease from the second quarter of 2018. The sequential decrease was due to lower revenue from the global transfer pricing adjustment as well as higher seasonal power and rent related to the new Colt facility. The year-over-year decrease was due to the churn from iWeb legacy products offset by ongoing cost savings initiatives.


o
As a percent of revenue, INAP INTL business unit contribution margin was 35.9% in the second quarter of 2019; down 370 basis points sequentially and up 220 basis points year-over-year.

“Second quarter revenue performance of $73 million represents baseline stability as the Company focuses on organic growth in high demand products,” said Jim Keeley, Executive Vice President, Chief Financial Officer. “Normalized for minimal data center closure revenue still included in first quarter 2019, revenues were essentially flat sequentially, replacing churn and building a larger backlog from a growing pipeline of deals. We are encouraged by this consistency and are supporting our sales teams and channel partners to grow after over two years of reconstituting our product set.”
 
Balance Sheet and Cash Flow Statement
 
Cash and cash equivalents were $10.5 million at June 30, 2019. Total debt was $687.8 million, net of discount and prepaid costs, at the end of the second quarter of 2019 including $268.4 million in finance lease obligations. The Company has $25.2 million of availability on its revolver, net of $3.7 million of letters of credit.

Cash generated from operations for the three months ended June 30, 2019 was $11.8 million compared to $2.3 million in the first quarter of 2019, and $14.8 million in the second quarter of 2018. The significant increase in cash generated from operations in the second quarter versus the first quarter was primarily due to working capital timing and a higher non-cash adjustment for leases resulting from rent abatements. Capital expenditures over the same periods were $7.8 million, compared to $8.6 million and $11.1 million, respectively. Adjusted EBITDA less CapEx1 was $16.6 million, compared to $15.0 million in the first quarter of 2019 and $17.9 million in the second quarter of 2018. Free cash flow4 over the same periods was $4.0 million, compared to $(6.4) million and $3.8 million, respectively. Unlevered free cash flow4 was $19.6 million for the second quarter of 2019, compared to $7.9 million in the first quarter of 2019 and $20.1 million in the second quarter of 2018.

3

Business Outlook

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

 
Current Outlook
 
Revenue
$290 million - $300 million
Adjusted EBITDA (non-GAAP)
 $95 million - $105 million
Capital Expenditures
 $25 million - $30 million
Adjusted EBITDA less CapEx
 $65 million - $80 million


 

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 second 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.

4

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 Tuesday, August 6, 2019 at 11:30 a.m. ET through Saturday, August 10, 2019 at 855-859-2056 using replay code 8878338. International callers can listen to the archived event at 404-537-3406 using replay code 7593511.

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.

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, availability of capital resources and liquidity 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; the uncertainty as to whether any strategic alternative will be pursued or, if pursued, closed; uncertainty as to the terms, value and timing of any such strategic alternative; the impact of the announcement of the evaluation of strategic alternatives on INAP’s common stock, its businesses, and its operating results; our ability to realize anticipated revenue, growth, synergies and cost savings from the acquisition of SingleHop LLC (“SingleHop”); 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.

5

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.
 
###

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
June 30,
   
Six Months Ended
June 30,
 
   
2019
   
2018
   
2019
   
2018
 
Net revenues
 
$
73,134
   
$
81,962
   
$
146,698
   
$
156,163
 
                                 
Operating costs and expenses:
                               
Cost of sales and services, exclusive of depreciation and amortization
   
25,949
     
27,331
     
51,682
     
51,938
 
Costs of customer support
   
8,726
     
8,841
     
17,516
     
16,228
 
Sales, general and administrative
   
15,683
     
19,602
     
33,204
     
39,456
 
Depreciation and amortization
   
21,955
     
22,712
     
44,133
     
43,870
 
Exit activities, restructuring and impairments
   
231
     
826
     
1,647
     
793
 
Total operating costs and expenses
   
72,544
     
79,312
     
148,182
     
152,285
 
Income (loss) from operations
   
590
     
2,650
     
(1,484
)
   
3,878
 
                                 
Interest expense
   
19,218
     
16,739
     
36,665
     
32,343
 
Loss (gain) on foreign currency, net
   
118
     
26
     
322
     
(189
)
Total non-operating expenses
   
19,336
     
16,765
     
36,987
     
32,154
 
                                 
Loss before income taxes and equity in earnings of equity-method investment
   
(18,746
)
   
(14,115
)
   
(38,471
)
   
(28,276
)
(Benefit) provision for income taxes
   
(211
)
   
141
     
(314
)
   
241
 
                                 
Net loss
   
(18,535
)
   
(14,256
)
   
(38,157
)
   
(28,517
)
Less net income attributable to non-controlling interest
   
20
     
23
     
42
     
50
 
Net loss attributable to INAP shareholders
   
(18,555
)
   
(14,279
)
   
(38,199
)
   
(28,567
)
                                 
Other comprehensive (loss) income:
                               
Foreign currency translation adjustment
   
(27
)
   
61
     
170
     
122
 
Total other comprehensive (loss) income
   
(27
)
   
61
     
170
     
122
 
                                 
Comprehensive loss
 
$
(18,582
)
 
$
(14,218
)
 
$
(38,029
)
 
$
(28,445
)
                                 
Basic and diluted net loss per share
 
$
(0.78
)
 
$
(0.71
)
 
$
(1.61
)
 
$
(1.43
)
                                 
Weighted average shares outstanding used in computing basic and diluted net loss per share
   
23,667
     
20,053
     
23,716
     
19,985
 

7

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
(Unaudited)

   
June 30, 2019
   
December 31,
2018
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
10,468
   
$
17,823
 
Accounts receivable, net of allowance for doubtful accounts of $1,091 and $1,547, respectively
   
18,563
     
20,054
 
Contract assets
   
9,130
     
8,844
 
Term loan, less discount and prepaid costs of $4,971
   
614
     
-
 
Prepaid expenses and other assets
   
7,807
     
7,377
 
Total current assets
   
46,582
     
54,098
 
                 
Property and equipment, net
   
223,497
     
478,061
 
Operating lease right-of-use assets
   
35,488
     
-
 
Finance lease right-of-use assets
   
229,228
     
-
 
Intangible assets, net
   
67,446
     
73,042
 
Goodwill
   
116,217
     
116,217
 
Contract assets
   
15,217
     
16,104
 
Deposits and other assets
   
7,121
     
7,409
 
Total assets
 
$
740,796
   
$
744,931
 
                 
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
               
Current liabilities:
               
Accounts payable
 
$
25,826
   
$
23,435
 
Accrued liabilities
   
11,287
     
15,540
 
Deferred revenues
   
7,917
     
8,022
 
Capital lease obligations
   
-
     
9,080
 
Revolving credit facility
   
6,000
     
-
 
Term loan, less discount and prepaid costs of $4,036
   
-
     
321
 
Exit activities and restructuring liability
   
466
     
2,526
 
Short-term operating lease liabilities
   
6,584
     
-
 
Short-term finance lease liabilities
   
5,930
     
-
 
Other current liabilities
   
70
     
1,063
 
Total current liabilities
   
64,080
     
59,987
 
                 
Deferred revenues
   
312
     
511
 
Operating lease liabilities
   
32,253
     
-
 
Finance lease liabilities
   
262,476
     
-
 
Capital lease obligations
   
-
     
262,382
 
Term loan, less discount and prepaid costs of $9,007 and $9,508, respectively
   
413,958
     
415,278
 
Deferred tax liability
   
1,617
     
2,211
 
Other long-term liabilities
   
3,633
     
4,505
 
Total liabilities
 
$
778,329
   
$
744,874
 

8

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

   
June 30, 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; 26,770 and 25,455 shares outstanding, respectively
   
27
     
25
 
Additional paid-in capital
   
1,370,835
     
1,368,968
 
Treasury stock, at cost, 387 and 330, respectively
   
(7,956
)
   
(7,646
)
Accumulated deficit
   
(1,401,270
)
   
(1,363,019
)
Accumulated items of other comprehensive loss
   
(895
)
   
(1,065
)
Total INAP stockholders’ deficit
   
(39,259
)
   
(2,737
)
Non-controlling interest
   
1,726
     
2,794
 
Total stockholders' (deficit) equity
   
(37,533
)
   
57
 
Total liabilities and stockholders’ (deficit) equity
 
$
740,796
   
$
744,931
 

9

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

   
Six Months Ended
June 30,
 
   
2019
   
2018
 
Cash Flows from Operating Activities:
           
Net loss
 
$
(38,157
)
 
$
(28,517
)
Adjustments to reconcile net loss to net cash provided by operating activities:
               
Depreciation and amortization
   
44,133
     
43,870
 
Loss (gain) on disposal of fixed asset
   
481
     
(29
)
Amortization of debt discount and issuance costs
   
2,546
     
1,712
 
Stock-based compensation expense, net of capitalized amount
   
1,901
     
2,232
 
Provision for doubtful accounts
   
380
     
604
 
Non-cash change in finance lease obligations
   
3,520
     
(371
)
Non-cash change in exit activities and restructuring liability
   
1,405
     
1,112
 
Non-cash change in deferred rent
   
-
     
(559
)
Deferred taxes
   
(612
)
   
60
 
Accreted interest
   
357
     
-
 
Other, net
   
(81
)
   
3
 
Changes in operating assets and liabilities:
               
Accounts receivable
   
1,210
     
(2,165
)
Prepaid expenses, deposits and other assets
   
298
     
(4,073
)
Operating lease right-of-use assets
   
2,151
     
-
 
Accounts payable
   
3,375
     
6,939
 
Accrued and other liabilities
   
(3,146
)
   
(585
)
Deferred revenues
   
(323
)
   
1,249
 
Exit activities and restructuring liability
   
(3,540
)
   
(2,676
)
Short and long-term operating lease liabilities
   
(1,964
)
   
-
 
Asset retirement obligation
   
147
     
(188
)
Other liabilities
   
-
     
(85
)
Net cash provided by operating activities
   
14,081
     
18,533
 
                 
Cash Flows from Investing Activities:
               
Purchases of property and equipment
   
(15,642
)
   
(16,102
)
Proceeds from disposal of property and equipment
   
100
     
541
 
Business acquisition, net of cash acquired
   
-
     
(131,748
)
Additions to acquired and developed technology
   
(817
)
   
(1,340
)
Net cash used in investing activities
 
$
(16,359
)
 
$
(148,649
)

10

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

   
Six Months Ended
June 30,
 
   
2019
   
2018
 
Cash Flows from Financing Activities:
           
Proceeds from credit agreements
 
$
6,000
   
$
146,000
 
Principal payments on credit agreements
   
(2,178
)
   
(2,178
)
Debt issuance costs
   
(2,815
)
   
(7,696
)
Payments on finance lease obligations
   
(4,696
)
   
(4,424
)
Acquisition of non-controlling interests
   
(973
)
   
(1,130
)
Proceeds from exercise of stock options
   
-
     
(108
)
Acquisition of common stock for income tax withholdings
   
(310
)
   
(471
)
Other, net
   
50
     
264
 
Net cash (used in) provided by financing activities
   
(4,922
)
   
130,257
 
Effect of exchange rates on cash and cash equivalents
   
(155
)
   
(5
)
Net (decrease) increase in cash and cash equivalents
   
(7,355
)
   
136
 
Cash and cash equivalents at beginning of period
   
17,823
     
14,603
 
Cash and cash equivalents at end of period
 
$
10,468
   
$
14,739
 
                 
Supplemental Disclosures of Cash Flow Information:
               
Cash paid for interest
 
$
29,859
   
$
29,965
 
Additions to property and equipment included in accounts payable
   
1,268
     
4,023
 

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, (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, 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 loss (gain) 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, (benefit) provision for income taxes and other expense (income) 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, (benefit) provision for income taxes and other expense (income) 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, (benefit) provision for income taxes and other expense (income), 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
 
   
June 30, 2019
   
March 31, 2019
   
June 30, 2018
 
Reconciliation of GAAP Net Loss Attributable to INAP Shareholders to Adjusted EBITDA:
 
Amount
   
Percent
   
Amount
   
Percent
   
Amount
   
Percent
 
                                     
Net revenues
 
$
73,134
     
100.0
%
 
$
73,564
     
100.0
%
 
$
81,962
     
100.0
%
                                                 
GAAP net loss attributable to INAP shareholders
 
$
(18,555
)
   
(25.4
)%
 
$
(19,644
)
   
(26.7
)%
 
$
(14,279
)
   
(17.4
)%
Add:
                                               
Depreciation and amortization
   
21,955
     
30.0
%
   
22,178
     
30.1
%
   
22,712
     
27.7
%
Interest expense
   
19,218
     
26.3
%
   
17,447
     
23.7
%
   
16,739
     
20.4
%
(Benefit) provision for income taxes
   
(211
)
   
(0.3
)%
   
(103
)
   
(0.1
)%
   
141
     
0.2
%
Other expense
   
118
     
0.2
%
   
204
     
0.3
%
   
31
     
0.0
%
Loss (gain) on disposal of property and equipment, net
   
-
     
0.0
%
   
528
     
0.7
%
   
(75
)
   
(0.1
)%
Exit activities, restructuring and impairments
   
231
     
0.3
%
   
1,416
     
1.9
%
   
826
     
1.0
%
Stock-based compensation
   
1,011
     
1.4
%
   
890
     
1.2
%
   
1,374
     
1.7
%
Acquisition costs
   
163
     
0.2
%
   
141
     
0.2
%
   
306
     
0.4
%
Strategic alternatives and related costs
   
20
     
0.0
%
   
22
     
0.0
%
   
23
     
0.0
%
Organizational realignment costs
   
470
     
0.6
%
   
386
     
0.5
%
   
431
     
0.5
%
Non-income tax contingency
   
-
     
0.0
%
   
150
     
0.2
%
   
800
     
1.0
%
Adjusted EBITDA (non-GAAP)
 
$
24,420
     
33.4
%
 
$
23,615
     
32.1
%
 
$
29,029
     
35.4
%
Less:
                                               
Capital Expenditures (CapEx)
   
7,836
     
10.7
%
   
8,623
     
11.7
%
   
11,083
     
13.5
%
Adjusted EBITDA less CapEx (non-GAAP)
 
$
16,584
     
22.7
%
 
$
14,992
     
20.4
%
 
$
17,946
     
21.9
%

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):
 
   
Current Outlook
 
   
Low
   
High
 
             
Net revenues
 
$
290
   
$
300
 
                 
GAAP net loss attributable to INAP shareholders
 
$
(82
)
 
$
(72
)
Add:
               
Depreciation and amortization
   
90
     
90
 
Interest expense
   
76
     
76
 
Exit activities, restructuring and impairments
   
4
     
4
 
Stock-based compensation
   
5
     
5
 
Non-income tax contingency and acquisition costs
   
2
     
2
 
Adjusted EBITDA (non-GAAP)
 
$
95
   
$
105
 
Capital expenditures (CapEx)
   
30
     
25
 
Adjusted EBITDA less CapEx (non-GAAP)
 
$
65
   
$
80
 

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
 
   
June 30, 2019
   
March 31, 2019
   
June 30, 2018
 
GAAP net loss attributable to INAP shareholders
 
$
(18,555
)
 
$
(19,644
)
 
$
(14,279
)
                         
Exit activities, restructuring and impairments
   
231
     
1,416
     
826
 
Stock-based compensation
   
1,011
     
890
     
1,374
 
Strategic alternatives, realignment, and related costs
   
490
     
408
     
454
 
Acquisition costs
   
163
     
141
     
306
 
Non-income tax contingency
   
-
     
150
     
800
 
Normalized net loss (non-GAAP) attributable to INAP shareholders
 
$
(16,660
)
 
$
(16,639
)
 
$
(10,519
)

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
 
   
June 30, 2019
   
March 31, 2019
   
June 30, 2018
 
Revenues:
                 
INAP US
 
$
57,461
   
$
57,519
   
$
64,067
 
INAP INTL
   
15,673
     
16,045
     
17,895
 
Total
   
73,134
     
73,564
     
81,962
 
Direct costs of sales and services, customer support and sales and marketing:
                       
INAP US
   
31,976
     
32,884
     
34,228
 
INAP INTL
   
10,049
     
9,695
     
11,872
 
Total
   
42,025
     
42,579
     
46,100
 
Business Unit Contribution:
                       
INAP US
   
25,485
     
24,635
     
29,839
 
INAP INTL
   
5,624
     
6,350
     
6,023
 
Total
 
$
31,109
   
$
30,985
   
$
35,862
 
Business Unit Contribution Margin:
                       
INAP US
   
44.4
%
   
42.8
%
   
46.6
%
INAP INTL
   
35.9
%
   
39.6
%
   
33.7
%
Total
   
42.5
%
   
42.1
%
   
43.8
%

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
 
   
June 30, 2019
   
March 31, 2019
   
June 30, 2018
 
Net cash flows provided by operating activities
 
$
11,819
   
$
2,262
   
$
14,836
 
Capital expenditures:
                       
Maintenance capital
   
(1,279
)
   
(2,818
)
   
(4,197
)
Growth capital
   
(6,557
)
   
(5,805
)
   
(6,886
)
Free cash flow (non-GAAP)
   
3,983
     
(6,361
)
   
3,753
 
                         
Cash paid for interest
   
15,599
     
14,260
     
16,388
 
Unlevered free cash flow (non-GAAP)
 
$
19,582
   
$
7,899
   
$
20,141
 

20

DATA CENTER PORTFOLIO

The following table presents an overview of the portfolio of data center properties that INAP leases as of June 30, 2019 (unaudited):

Market
 
Gross Square
Feet (SF)1
   
Supporting
Infrastructure2
   
Office &
Other
   
Data Center
Footprint SF3
   
Current Raised
Floor SF 4
   
Occupied
SF
   
Occupied
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
     
13,562
     
30
%
Montreal
   
126,965
     
34,572
     
46,833
     
45,560
     
28,050
     
23,890
     
85
%
New York/New Jersey6
   
104,865
     
16,405
     
28,468
     
59,992
     
37,652
     
22,879
     
61
%
Dallas
   
112,145
     
23,763
     
21,023
     
67,359
     
30,382
     
16,896
     
56
%
Los Angeles
   
109,181
     
9,623
     
12,366
     
87,192
     
18,020
     
13,986
     
78
%
Seattle
   
100,497
     
31,326
     
21,552
     
47,619
     
38,619
     
24,823
     
64
%
Santa Clara/San Jose
   
88,114
     
23,852
     
23,667
     
40,595
     
40,595
     
23,745
     
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
     
9,436
     
46
%
Chicago
   
13,128
     
1,551
     
-
     
11,510
     
11,510
     
9,793
     
85
%
Other7
   
34,955
     
-
     
981
     
33,957
     
29,641
     
17,938
     
61
%
Total
   
1,202,666
     
319,109
     
312,242
     
571,249
     
366,148
     
218,552
     
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, Chief Executive OfficerJames C. Keeley – Executive Vice President, Chief Financial Officer   Second Quarter 2019 Earnings ReportAugust 6, 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, availability of capital resources and liquidity 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; the uncertainty as to whether any strategic alternative will be pursued or, if pursued, closed; uncertainty as to the terms, value and timing of any such strategic alternative; the impact of the announcement of the evaluation of strategic alternatives on INAP’s common stock, its businesses, and its operating results; our ability to realize anticipated revenue, growth, synergies and cost savings from the acquisition of SingleHop LLC; 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 
 

 Positive Sales and operational progress  First Megawatt deal of the year used as a catalyst to expand LA flagship facilityPipeline for larger deals continues to drive optimism as INAP shifts its model from retail-only to retail + wholesaleLowest churn rate in years driven by investments and refinements in customer experience and network resiliencyBacklog grows to +$20MCost savings initiatives implemented in first half of 2019Conservative / success-based capex spending throughout 2019 to help maintain cash flow objectives  © 2019 Internap Corporation (INAP)  4  Focus on Organic Growth and Financial Efficiency 
 

   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  52DATA CENTERS  21METRO MARKETS  101GLOBAL POPs  1.2MGROSS SQ. FEET  132MW UTILITY POWER  14 FLAGSHIP1M+ GROSS SF.111MW+ POWER  8 TURNKEY100K+ GROSS SF.21MW+ POWER  30 ADDITIONAL30K+ GROSS SF.<5MW*POWER  *Power stat for 30 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 13-16  Revenue  Net Loss Attributable to Shareholders  Adjusted EBITDA (non-GAAP)*  Adjusted EBITDA less Capex (non-GAAP)*  Organic Revenue Stabilizing and Continued Financial Focus on Delivering Cash Flow 
 

 © 2019 Internap Corporation (INAP)  7  CONSOLIDATED EARNINGS SUMMARY   Adjusted EBITDA less Capex on track with Original Guidance   *Reconciliations to GAAP on pages 13-16 
 

 © 2019 Internap Corporation (INAP)  8      INAP US BUSINESS UNIT RESULTS  ($ in millions)  * *Reconciliations to GAAP on pages 13-16  Revenue Flat Sequentially with Improved Profitability  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 13-16  Maintaining Profitability Improvement Year-Over-Year 
 

 © 2019 Internap Corporation (INAP)  10  CASH FLOW AND BALANCE SHEET   Conservative CapEx to Maintain Cash Flow Objectives  *Reconciliations to GAAP on pages 13-16 
 

 Taking inap 2.0 to the next level  © 2019 Internap Corporation (INAP)  11  Launching from new INAP 2.0 baseline positions the company for growth and new partnerships down the roadBuilding out new, additional Cloud PODs in Seattle and Ashburn related to recent sales winsExpanding LA flagship facility related to first Megawatt deal of the yearLeveraging our global, high performance IP and transit network to attract enterprise network demandImplementing sales and cost savings initiatives to drive growth and financial efficiency  Strategic Alternatives Review Remains Active 
 

 Appendix  Reconciliation of Non-GAAP Financial Measures  © 2019 Internap Corporation (INAP)  12 
 

 © 2019 Internap Corporation (INAP)  13  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)  14  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)  15  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, 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)  16  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.