SAVVIS Reports $212.9 Million of Revenue and $44.7 Million of Adjusted EBITDA* for Second Quarter 2008

ST. LOUIS, MO. – July 29, 2008 – SAVVIS, Inc. (NASDAQ: SVVS), a global leader in IT infrastructure services for business applications, announced today that its revenue for the second quarter 2008 totaled $212.9 million, income from operations was $0.9 million, and net loss was $7.4 million, or $(0.14) per share. Adjusted EBITDA for the quarter was $44.7 million.

Revenue increased 6% from the same period a year ago and 5% from the first quarter 2008, driven by growth in hosting. Adjusted EBITDA was up 5% from a year ago and 11% from the first quarter. The second quarter of 2007 included results from low-growth assets subsequently divested, which contributed $12.7 million of revenue and $5.0 million of Adjusted EBITDA in the year-earlier period.

Chief Executive Officer Phil Koen said, “I’m pleased with the results we achieved in the second quarter against continuing broader economic challenges. The 26% year-over-year pro forma growth in hosting revenue reflects the demand by enterprise customers for our highly differentiated value proposition of greater agility, greater visibility and lower cost for IT infrastructure. We continue to expect 10-14% pro forma revenue growth in 2008 and approximately $175-190 million of Adjusted EBITDA, for pro forma growth of 19-29% for fiscal 2008. Our team remains mindful of the economic environment as we focus on driving improved Adjusted EBITDA margin, as reflected in expanding margins for the quarter and the full-year projection.”

Second Quarter Results

(US$ millions)

Three months ended:


June 30, 2008

March 31, 2008

June 30, 2007

June 30, 2007

pro forma(1)







       $   74.8

       $   67.9

       $   68.4

       $   60.0

      Managed hosting





   Total Hosting





   Network services





   Other services





Total Revenue

       $ 212.9

       $ 203.3

       $ 200.6

       $ 187.9

Cost of Revenue(2)

       $ 122.9

       $ 118.7

       $ 113.8

       $ 105.2

Sales, Gen. & Admin. Expenses(2)

       $   55.0

       $   53.3

       $   52.3

       $   45.2

Income (Loss) from Operations

       $    0.9

       $   (0.4)

       $ 192.5


Net Income (Loss)

       $   (7.4)

       $   (4.2)

       $ 133.3


Adjusted EBITDA

       $   44.7

       $   40.3

       $   42.6

       $   37.6

Adjusted EBITDA Margin





(1)Pro forma results for the three months ended June 30, 2007, exclude the impact of non-cash equity-based compensation cost; 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)Both cost of revenue and sales, general and administrative expenses exclude depreciation, amortization, and accretion and include the effect of non-cash equity-based compensation. Total non-cash equity-based compensation in cost of revenue for the three months ended June 30, 2008, March 31, 2008, and June 30, 2007, was $1.6 million, $1.5 million and $1.5 million and in sales, general and administrative expenses was $8.0 million, $7.5 million and $6.7 million respectively.

Second-quarter Results
Total revenue for the second quarter was $212.9 million, an increase of 6% compared to the second quarter 2007. On a pro forma basis, excluding the impact of the sale of data-center assets to Microsoft in June 2007 and the sale of CDN assets in January 2007 and a concluded contract, revenue increased 13% from the prior year. Revenue increased 5% compared to the first quarter 2008, reflecting strong growth in colocation and managed hosting revenue.

Growth in hosting revenue, up 17% from a year ago, reflected 27% growth in managed hosting revenue and 9% growth in colocation revenue. On a pro forma basis, hosting revenue increased 26% from the year-earlier period, with colocation revenue up 25% and managed hosting revenue up 27%. Compared to the first quarter, hosting revenue rose 8%, driven by growth in both colocation and managed hosting. Virtualized and utility services contributed $20.6 million of managed hosting revenue in the second quarter, up 50% from a year ago and 10% from the first quarter.

In the second quarter, network services revenue declined 4% from the second quarter 2007, to $73.4 million, and 1% from the first quarter 2008. Revenue from SAVVIS’ Hosting Area Network increased 16% from a year ago on a pro forma basis, to $17.2 million, and 2% from the first quarter 2008, partially offsetting the declines in revenue from managed network and bandwidth services.

Adjusted EBITDA for the second quarter of $44.7 million increased from the second quarter 2007 by 5% and by 19% on a pro forma basis, and by 11% from the first quarter 2008. SAVVIS opened four new data centers in late 2007 and three new data centers in the first half of 2008. Those new data centers generate operating costs ahead of revenue, initially adversely affecting Adjusted EBITDA.

SAVVIS’ consolidated net loss was $7.4 million in the second quarter, compared to net income of $133.3 million in the same period last year, which included a gain of $180.8 million on the sale of non-strategic assets and a charge of $45.1 million related to retirement of subordinated notes, and compared to a net loss of $4.2 million in the first quarter 2008. Expenses in the current quarter compared to the first quarter included higher depreciation and amortization expense as a result of new investments being put into service. Loss per share was $(0.14) in the second quarter 2008, compared to diluted earnings per share of $2.36 in the same period a year previously and a loss per share of $(0.08) in the first quarter 2008.

Cash Flow and Balance Sheet
Net cash provided by operating activities was $21.4 million in the second quarter. Cash capital expenditures for the quarter totaled $97.1 million, which included $62.0 million for the build-out of new data centers.

SAVVIS’ long-term debt and capital leases as of June 30, 2008, totaled $568.5 million, including $33.3 million of new debt incurred through a loan established to fund construction of SAVVIS’ London-area data center, as announced on June 30, 2008. SAVVIS’ cash position at June 30, 2008, was $118.2 million, compared to $164.6 million at March 31, 2008.

Operational Highlights
SAVVIS continued to extend its Proximity Hosting service, targeted at the growing electronic securities-trading community. The company expanded its offering significantly by launching Proximity Hosting services in London, Chicago and Singapore and successfully securing strategic relationships with a number of key exchanges in each market that included the London Stock Exchange, Chi-X, BATS (UK), Intercontinental Exchange, Chicago Mercantile Exchange and the Singapore Exchange.

SAVVIS announced new or expanded relationships with customers including CMPi, Cognisco, Ellie Mae, iJet and Star Compliance. Additionally, Thomson Reuters extended its master services agreement with SAVVIS, including provisions for deployment of IT infrastructure services in Asia.

In the United Kingdom, SAVVIS won that country’s Home Office’s Supplier Value Award for the Best Technology Implementation for on-time, on-budget delivery of a complex shared services infrastructure platform that speeded application deployment times and saved costs for that government agency.

SAVVIS has opened three new and one expanded data center this year, on time and on budget, in Boston, Chicago, Dallas and most recently Singapore. The company expects to expand a facility in the New York metro area significantly and open a new facility in the London metro area in the fourth quarter 2008.

Financial Outlook
Chief Financial Officer Jeff Von Deylen said, “SAVVIS continues to drive new revenue dollars to the Adjusted EBITDA line, with a 21% Adjusted EBITDA margin in the second quarter. Revenue results in our hosting lines, including 10% sequential-quarter growth in colocation and 6% growth in managed hosting, position us well in 2008.”

For the full year 2008, SAVVIS management’s current expectations for financial results reaffirm previously-announced expectation and 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, driven by 5-9% sequential-quarter growth;
    • growth of approximately 20% in managed hosting revenue, driven by 2-6% sequential-quarter growth, 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.

Investor Conference Call
SAVVIS will webcast an investor conference call today, July 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 +1 703-639-1307 and 866-793-1301 (in North America, toll free). Recorded replays will be available on the website for six months, and by telephone through Friday, August 8, at +1 703-925-2533 and 888-266-2081 (in North America, toll free) with the access code 1260579, beginning by 8:00 pm EDT that day.

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, July 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
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