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iWeb continues its growth with a 94% increase in second quarter revenues

May 21, 2009 by  

Webmaster ToolsMontreal, Quebec – iWeb (TSX-V: IWB), a global provider of Internet hosting services and IT infrastructure, today released its financial results for the quarter ended March 31, 2009.

The complete interim financial statements and management report of the Company are available on the websites www.sedar.com and investors.iweb.com.

Second Quarter Highlights:
• Revenues have increased by 94%, reaching $6.9 million for the second quarter; almost doubling the performance for the same quarter of 2008
• Adjusted EBITDA of almost $2.0 million for 2009, or 28.5% of revenues
• Operating income of $324,000, compared to $6,000 12 months earlier
• Net loss of $246,000, following the additional unrealized theoretical exchange lost on long-term debt in U.S. dollars

“Our revenue growth is consistent, almost double what it was 12 months ago.” said Eric Chouinard, iWeb President and CEO. “And, with operating income over $300,000, EBITDA close to $2 million, which is nearly 30% of revenues, the strength and full potential of our business is becoming easier to understand”.

“Monthly revenues reached the $2.4 million mark in March, though we have to work even harder to maintain that pace, given the current economic context.” adds Martin Leclair, President, Products and Technology. He then said that “In recent months, we noticed a slowdown in new net recurring revenues, mostly due to an increase in the churn rate. This increase in churn is mainly attributable to current clients who are downsizing the level of certain services which were not considered essential at this time. We believe that these same services will be reintroduced when our customers’ situation will allow them to pursue more ventures.”

“The strong improvement of our operations, in terms of profitability, is not yet reflected in our net results.” indicates Philip Tousignant, Chief Financial Officer. ” Due to financial expenses resulting from external market conditions, totalling $560,000 for the last quarter, we are reporting a net loss. For the second consecutive quarter, the main element of these financial expenses is the unrealized exchange loss on the long-term debt of $10 million US.”

Second quarter Financial Review
Revenues for the second quarter ended March 31, 2009 increased by $3.4 million or 94%, compared to the same period of 2008, to reach almost $6.9 million.

Revenues for the second quarter of fiscal 2009 originated from iWeb’s three main service offerings as follows: Dedicated servers accounted for 85%, followed by 8% for co-location services and 7% for the shared web hosting. 78% of iWeb revenues for the quarter were generated in U.S. dollars, a significant advantage for the Company during the last quarter, as the impact of the decrease in value of the Canadian dollar against the U.S. dollar compared to the same period of last year, had a positive impact of more than $1.0 million on revenues. Without taking into account this impact, revenues would have increased by 65% compared to the quarter ended on March 31, 2008.

Gross profit was 51% of revenues for the second quarter of 2009 compared to 53% for the same period of the previous year. The favourable impact of the variation of Canada/U.S. exchange rates on gross profit margin for the last quarter was more than compensated by higher payroll expenses in order to support the sustained high growth of the Company’s operations.

Operating expenses for the quarter went from 52.1% of revenues in 2008 to 46.3% in 2009. This improvement is explained by lower costs compared to the revenues for selling and administrative expenses, but compensated by a rise in interest expenses. Selling expenses decreased from 17.3% to 15.3% of revenues for the quarter ended March 31, 2009. Administrative expenses decreased from 26.0% to 20.2% of revenues for the quarter ended March 31, 2009. Interest expenses increased significantly (from 7.2% to 10.9% of revenues for the second quarter of 2009). This is caused by the increase in long-term debt in order to support the important addition of the infrastructures of the Company, the greater part of which carry interests in U.S. currency.

The operating income of the Company was $324,000 for the quarter ended March 31, 2009, compared to $6,000 for the corresponding period of the preceding year.

The other financial expenses represent elements which are the consequence of the external conditions of the market. These expenses amounted to $560,000 for the last quarter ended March 31, 2009. The most important element of these expenses is the unrealized exchange loss on the long-term debt of $10 million US. For the end of quarter ended March 31, 2009, the Canada/U.S. exchange rate was 1.26, compared to 1.225 for the beginning of quarter, explaining the unrealized loss of $356,000.

Taking into account the impact of the other financial expenses, the Company recorded a net loss of $246,000 for the second quarter of 2009, compared to a net income of $19,000 for the quarter ended March 31, 2008.

About iWeb Group Inc.
iWeb is a worldwide provider of Internet hosting services and IT Infrastructure, with three secure data centers in Montreal. Since 2004, the company’s compounded annual growth rate has been above 75%, making it one of Canada’s 100 fastest growing companies in 2008 according to PROFIT Magazine.

Founded in 1996 in Montreal, iWeb now generates more than 60% of its revenues from abroad; and employs over 170 full-time employees providing Dedicated Server Hosting, Co-location and Web Hosting services to more than 21,000 customers in 150 countries. iWeb’s shares are listed on the TSX Venture Exchange (TSX-V : IWB); for more information please consult the Company’s website: http://about.iweb.com

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