ST. LOUIS, MO. – April 29, 2008 – SAVVIS, Inc. (NASDAQ: SVVS), a global leader in IT infrastructure services for business applications, announced today that its revenue for the first quarter 2008 totaled $203.3 million, loss from operations was $0.4 million, and net loss was $4.2 million, or $0.08 per share. Adjusted EBITDA for the quarter was $40.3 million.

Chief Executive Officer Phil Koen said, “Colocation and managing hosting remain important growth businesses for us, in both the near and longer term. We are continuing the strategies we launched in 2007 to invest in these service lines, and remain focused on growing them above industry growth rates. Both showed solid growth in the first quarter, and we expect continued growth for 2008.

“Looking forward, we see overall pro forma* revenue growth of 10 to 14% for the full year. This reflects pro forma growth of approximately 27% in colocation and approximately 20% growth in managed hosting. Our network business declined slightly in the first quarter, and we expect it to decline by about 6% in 2008 as we work to improve its performance. We expect Adjusted EBITDA margin to exceed 20% – even after our investments in growing our core businesses.”

First-quarter Results

(US$ millions)

Three months ended:


March 31, 2008

Dec. 31, 2007

March 31, 2007

March 31, 2007

pro forma(1)







       $   67.9

       $   62.3

       $   69.4

       $   57.7

      Managed hosting





   Total Hosting





   Network services





   Other services





Total Revenue

       $ 203.3

       $ 197.8

       $ 205.2

       $ 188.4

Cost of Revenue(2)

       $ 118.7

       $ 111.6

       $ 116.7

       $ 107.8

Sales, Gen. & Admin. Expenses(2)

       $   53.3

       $   55.8

       $   53.2

       $   46.1

Income (Loss) from Operations

       $   (0.4)

       $    2.8

       $ 139.0


Net Income (Loss)

       $   (4.2)

       $   (2.5)

       $ 114.5


Adjusted EBITDA

       $   40.3

       $   39.4

       $   43.2

       $   34.5

Adjusted EBITDA Margin





(1)Pro forma results for the three months ended March 31, 2007, exclude the impact of non-cash equity-based compensation costs, $3.6 million of revenue associated with settlement of a customer dispute, and revenue and related costs from the sale of data center assets to Microsoft in June 2007; CDN assets sold in January 2007; and a network contract with Telerate.
(2)Cost of revenue excludes depreciation, amortization, and accretion. Both cost of revenue and sales, general and administrative expenses include the effect of non-cash equity-based compensation. Total non-cash equity-based compensation in cost of revenue was $1.5 million, $1.4 million, and $1.4 million and in sales, general and administrative expenses was $7.5 million, $7.6 million, and $6.4 million for the three months ended March 31, 2008, December 31, 2007, and March 31, 2007, respectively.

Total revenue for the first quarter was $203.3 million, a decrease of 1% compared to the first quarter of 2007, primarily due to the sale of data-center assets to Microsoft at the end of June 2007 and the sale of CDN assets in January 2007, and an increase of 3% compared to the fourth quarter 2007, reflecting strong growth in colocation revenue. Revenue grew 8% from the first quarter a year ago on a pro forma basis.

Growth in hosting revenue, up 8% from a year ago, reflected 22% growth in managed hosting revenue. Pro forma hosting revenue grew 20% from a year ago, driven by strength in both managed hosting and colocation. Compared to the fourth quarter, hosting revenue rose 6%, reflecting strong 9% growth in colocation, as SAVVIS installed new business.

In the first quarter, network services revenue of $74.1 million declined 8% from the first quarter of 2007 and 3% from the fourth quarter 2007. Network services revenue continued to decline as a result of pricing pressure and lower demand for these services.

Adjusted EBITDA for the first quarter of $40.3 million was down 7% from a year ago as reported, up 2% from the fourth quarter 2007, and up 17% from a year ago on a pro forma basis. First quarter 2008 Adjusted EBITDA grew from the prior quarter despite a $2.7 million negative impact as costs associated with eight new and expanded data centers exceeded revenue generated by those data centers. Adjusted EBITDA excludes non-cash compensation expenses.

SAVVIS’ consolidated net loss was $4.2 million in the first quarter, compared to net income of $114.5 million in the same period last year, which included a gain of $125.2 million on the sale of CDN assets, and compared to a net loss of $2.5 million in the fourth quarter 2007. Expenses in the current quarter compared to the fourth quarter included higher depreciation and amortization expense as a result of new data center investments being put into service. Loss per share was $0.08 in the first quarter 2008, compared to earnings per share of $2.20 in the same period a year previously and a loss per share of $0.05 in the fourth quarter 2007.

Cash Flow and Balance Sheet

Net cash provided by operating activities was $32.0 million in the first quarter, an increase of $3.7 million and $4.9 million compared to the first quarter 2007 and fourth quarter 2007 respectively. Cash capital expenditures for the quarter totaled $43.3 million, which included $35.7 million for the build-out of new data centers.

SAVVIS’ long-term debt as of March 31, 2008, totaled $362.0 million. SAVVIS’ cash position at March 31, 2008, was $164.6 million, compared to $183.1 million at December 31, 2007, and $221.6 million at March 31, 2007.

Operational Highlights

SAVVIS recently announced that it has been positioned in the Leaders segment of the Gartner Magic Quadrant for North American Hosting, 2008 (announced separately April 15). The Gartner Magic Quadrant is widely recognized as one of the most influential benchmarks for enterprises seeking to evaluate hosting services. The new 2008 report can be accessed from SAVVIS' web site at

Also in the first quarter, SAVVIS opened new data center facilities in Chicago and Dallas, launched low latency Proximity Hosting services in its London data center, and launched new managed security and storage services.

SAVVIS announced new or expanded relationships with customers including Avid Technology, Inc., BATS Trading, Inc., Omniture, Inc., Perfect Commerce and Vovici Corporation.

Financial Outlook

Jeff Von Deylen, Chief Financial Officer, said, “We are pleased with the healthy performance SAVVIS achieved in the first quarter, in particular the strong Adjusted EBITDA and our colocation growth. However, we are revising our revenue outlook for the full year to reflect our current view of the growth opportunity in the second half of the year to be consistent with recent market experience. We now expect total revenue for 2008 to be in a range of $840-870 million, or a pro forma growth rate of 10-14%. Our expectation for Adjusted EBITDA is $175-190 million as a result of the lower revenue growth expectation, versus $200-210 million previously. However, we do expect to expand Adjusted EBITDA margin to 21-22% of revenue for the year as a result of strong cost controls and the higher contribution of higher margin hosting services. We continue to believe the strength of our balance sheet and modest leverage positions us favorably to deliver our long term outlook.”

For the full year 2008, SAVVIS management’s current expectations for financial results include: 

  • Total revenue growth, on a pro forma basis, of 10-14%, for approximately $840-870 million of revenue, including:
    • pro forma growth of approximately 27% in colocation revenue, or approximately 18% on an as-reported basis;
    • growth of approximately 20% in managed hosting revenue, and
    • a decline of approximately (6)% in network services revenue; and
  • Adjusted EBITDA of approximately $175-190 million, and
  • Capital expenditures of $280-300 million, including approximately $145-150 million for development of data centers in the Boston, Chicago, Dallas, London, New York and Singapore metropolitan areas.

* Non-GAAP Measures SAVVIS includes information pertaining to certain non-GAAP measures in conjunction with reporting of its quarterly financial results. “Adjusted EBITDA” represents income from operations before depreciation, amortization and accretion, gains and losses on sales of assets, and non-cash equity-based compensation. We have included information concerning Adjusted EBITDA because we believe that in our industry such information is a relevant measurement of a company's operating financial performance and liquidity. “Pro forma” results exclude certain revenue and costs related to exited contracts and sold assets. We have included information concerning pro forma results because we believe they enable investors to better compare current results to results of prior periods. The calculations of Adjusted EBITDA and pro forma results are not specified by United States generally accepted accounting principles. Our calculations of Adjusted EBITDA and of pro forma results may not be comparable to similarly-titled measures of other companies. The accompanying tables have additional detail on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

 Financial Tables

Investor Conference Call
SAVVIS will webcast an investor conference call today, April 29, 2008, at 5:30 pm EDT. Both the webcast and supporting presentation will be available at on the Investor Relations page. A live conference call will also be available by telephone at +1-(703) 639-1369 and (866) 814-8470 (in North America, toll free). Recorded replays will be available on the website for six months, and by telephone through Friday, May 9, at +1-(703) 925-2533 and (888) 266-2081 (in North America, toll free) with the access code 1229845, beginning by 8:00 pm EDT today.

Forward-Looking Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from SAVVIS’ expectations. Certain factors that could adversely affect actual results are set forth as risk factors described in SAVVIS’ SEC reports and filings, including its annual report on Form 10-K for the year ended December 31, 2007, and subsequent filings. Those risk factors include, but are not limited to, uncertainties in economic conditions, including conditions that could pressure enterprise IT spending; demand for and market acceptance of SAVVIS’ products and services; variability in pricing for those products and services; merger and acquisition activity by SAVVIS customers or other customer activity that affects the level of business done with SAVVIS; rapid evolution of technology; changes in our operating environment; and changes in regulatory environments. The forward-looking statements contained in this document speak only as of the date of publication, April 29, 2008. Subsequent events and developments may cause the company’s forward-looking statements to change, and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.

SAVVIS, Inc. (NASDAQ: SVVS) is a global leader in IT infrastructure services for enterprise applications. With an IT services platform spanning North America, Europe, and Asia, SAVVIS leads the industry in delivering secure, reliable, and scalable hosting, network, and application services. These solutions enable customers to focus on their core business while SAVVIS ensures the quality of their IT systems and operations. SAVVIS’ strategic approach combines virtualization technology, a global network and multiple data centers, and automated management and provisioning systems. For more information about SAVVIS, visit

Elizabeth Corse
(703) 667-6984


Carter Cromley


(703) 667-6110