iWeb Communities: Blog

Organic growth drives 71% increase in revenue and more than 93% improvement in EBITDA

MONTRÉAL, QUÉBEC December 17, 2007 ? iWeb Group Inc. (TSX-V: IWB) (?iWeb? or the ?Company?), a worldwide internet hosting infrastructure provider, announces its financial results for the three-month period and year ended September 30, 2007. All results are reported in Canadian dollars unless otherwise stated.

Fiscal 2007 Summary

• - Revenue of $9.8 million, a 71% increase over fiscal 2006
• - Gross profit margin of 57%, compared to 54% in fiscal 2006
• - Adjusted EBITDA* (as defined at the end of this release) of $2.8 million, compared to $1.5 million in fiscal 2006
• - Earnings before income tax of $0.9 million, compared to $0.7 million in fiscal 2006
• - Net earnings of $0.5 million, or $0.02 per share, in-line with $0.5 million, or $0.02 per share in fiscal 2006
• - Obtained TSX Venture Exchange (TSX-V) Tier 1 Issuer status
• - Company shares qualified for SMB Growth Stock Plan (ACCRO)
• - Subsequent to year end, announced plans to open an 850 cabinet co-location data centre in Montreal
• - Subsequent to year end, closed $4.1 million public offering, with net proceeds to primarily fund the third and fourth phase installation of the Company?s second data centre

?Our strong fiscal 2007 performance reflects the passion and dedication of the entire iWeb team and demonstrates our ability to successfully capitalize on the robust demand in the Internet infrastructure market,? said Eric Chouinard, President and CEO iWeb. ?We delivered significant organic revenue and EBITDA growth, and, in the second half of the year, we completed the installation of phase two of our second data centre, which expanded our dedicated and co-location hosting capacity. Longer-term, with the build-out of phase three and four of our second data centre already in construction, our third data centre scheduled to open in the beginning of 2008 and a team that is now more than 80 strong people, we believe we are well positioned to continue our growth momentum.?

Fiscal 2007 Financial Review

Total revenue for fiscal 2007 was $9.8 million, an increase of 71% over revenue of $5.8 million in fiscal 2006. iWeb?s year-over-year revenue improvement was driven solely by organic sales growth. For fiscal 2007, iWeb generated 80% of revenue from dedicated hosting, while shared hosting and co-location hosting each accounted for 10% of the Company?s revenue for the year. Revenue for Q4 fiscal 2007 was $3.0 million, a 74% increase over revenue of $1.7 million for Q4 fiscal 2006.

For fiscal 2007, gross profit margin was 57%, compared to 54% in fiscal 2006. The year-over-year improvement reflects increased sales volume and improved cost controls.
Total operating expenses in fiscal 2007 were $4.7 million, or 48% of revenue, compared to $2.5 million, or 43% of revenue in fiscal 2006. During fiscal 2007, iWeb increased its investment in sales and marketing and incurred higher administrative expenses in support of the Company?s current and future growth.

iWeb generated Adjusted EBITDA of $2.8 million, or 29% of revenue in fiscal 2007, compared to Adjusted EBITDA of $1.5 million, or 25% of revenue in fiscal 2006. The combination of higher revenue performance and tighter cost controls led to the year-over-year improvement.

For fiscal 2007, net earnings were $0.5 million, or $0.02 per share, relatively in-line with $0.5 million, or $0.02 million per share for fiscal 2006. Net earnings for Q4 fiscal 2007 was $0.2 million, or $0.01 per share, compared to $0.1 million, or $0.00 per share for Q4 fiscal 2006.

During fiscal 2007, iWeb invested significantly in the infrastructure required to support its growth throughout the year and into the future. As a result, the Company incurred a year-over-year doubling in amortization expense and added approximately $0.5 million in interest expense, which was driven by the Company?s increased level of debt. In addition, as 70% of the Company?s revenue is denominated in U.S. dollars, the reduction in the value of the U.S. dollar relative to the Canadian dollar during fiscal 2007 negatively impacted net earnings by a difference of approximately $0.1 million for the year. Finally, income tax expenses were lower in fiscal 2006 compared to fiscal 2007, since the Company recognized future tax assets of approximately $0.1 million during fiscal 2006.

Subsequent Events

On October 2, iWeb announced plans to open an 850 cabinet equivalent co-location data centre. Scheduled to open in the first quarter of calendar year 2008, the facility will be the Company?s third data centre in Montreal. As iWeb?s two other data centres are both primarily dedicated server hosting facilities, management believes the addition of a strictly co-location hosting data centre will enable the Company to diversify its revenue base, extend its footprint in the Montreal marketplace and target a broader customer base.

On November 30, iWeb closed a public offering of 3.3 million common shares at a price of $1.25 per common share, for gross proceeds of $4.1 million. iWeb intends to use the net proceeds of the offering primarily to fund phases three and four of the installation of its second data centre.

Selected Financial Information

A full set of financial statements and MD&A for iWeb will be available at www.iweb8.com and at www.sedar.com.

* The Company defines Adjusted EBITDA as Earnings before interest, taxes,depreciation and amortization, stock based compensation.

About iWeb Group Inc.

Founded in 1996, iWeb offers a full line of advanced IP hosting services either through shared hosting, dedicated servers or co-location in three data centers, featuring over 52,000 square feet of floor space and the latest technological equipment. iWeb provides services in English, French and Spanish to clients in more than 130 countries. For more information, please visit www.sedar.com or the Company?s website at www.iweb8.com.

Caution concerning forward-looking statements

This news release contains certain forward-looking statements. These statements relate to future events or iWeb?s future economic performance and reflect the current assumptions and expectations of management. Certain unknown factors may affect the events, economic performance and results of operations. iWeb undertakes no obligation, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

For more information

Marc Guindon
Groupe iWeb Inc.
Vice-President and Chief Financial Officer
(514) 286-4242 ext. 121
mg@iweb.com

Kristen Dickson
The Equicom Group Inc.
Investor Relations
(416) 815-0700 ext. 273
kdickson@equicomgroup.com