iWeb Communities: Blog

A milestone year for the Montreal web hosting company: a 59% revenue increase, opening of a third data center and closing of a major financing deal with Goldman Sachs.

MONTREAL, QUEBEC – January 20, 2009 – iWeb, a global provider of Internet hosting service and IT infrastructure, today released its audited financial results for the fiscal year ended September 30, 2008. In line with its growth strategy, revenue increased 59% to $15.6 million and EBITDA grew to $3.7 million, though a weak US dollar and charges related to early debt repayment combined to produce the Company’s first net loss.

“The revenue increase is an excellent result, in line with our growth strategy. This has certainly been our most challenging year, as our sustained growth has consistently created new challenges and opportunities,” said Eric Chouinard, President and CEO of iWeb. “The key to reaching our main strategic targets has been our flexibility and the strong work ethic of our team. Our sales growth is consistent, and with the punctual opening of our third data center and the final expansion phase of the second one, we are meeting demand and helping our clients succeed online through these uncertain times.”

Martin Leclair, iWeb co-founder and President, Products and Technology added that “The IP hosting market remains vibrant and active, a powerful statement considering the roller-coaster events of the past twelve months. A good sign is our net recurring revenues, which are improving in the three first months of new new fiscal year.”

Recently appointed Chief Financial Officer Philip Tousignant confirmed that iWeb’s first net loss is the result of two factors, “As a result of the financing agreement with Goldman Sachs, we incurred charges from our other financial partners; penalties related to early debt repayment, basically.” The other significant factor is the record devaluation of the US dollar compared to the Canadian dollar during that period; “Almost 80% of iWeb’s revenues are in USD” added Mr. Tousignant, “which has had a net negative impact of $865,000 before income taxes on our results for the year compared to last year results. A good thing though, the situation seems to have returned recently to a more favourable conversion rate for our operations.”

Financial Highlights

• Record revenue total of $15.6 million, a 59% improvement
• EBITDA increases to $3.7 million, 24% of revenue.
• Net loss of $552,000
• $22 million US financial agreement with Goldman Sachs in August
• $4.1 million public offering in November 2007

Operational Highlights

• Opened third Montreal Data center for co-location services
• Tripled Network capacity and expanded IP network to 8 carriers
• Second Data center began Phase IV (Final Phase) of its deployment, total capacity will be 12,000 dedicated servers and 122 cabinets

Corporate Highlights

• iWeb named to TSX Venture 50, Profit 100 and Branham 300.
• Inaugurated new Headquarters in September, with Montreal Mayor Gerald Tremblay and Nicole Menard, then Parliamentary Assistant of the Minister of Economic Development of Quebec addressing iWeb’s staff, clients and partners and shareholders.

Fiscal 2008 Financial Review

Revenues for the year ended September 30, 2008 were $15.6 million, compared to $9.8 million for the same period of 2007, an increase of $5.8 million or 59%. Management assesses than in spite of the present difficult economic situation, the maintained growth in monthly recurring revenues and the increase in product offerings will enable the Company’s growth in terms of revenues.

Cost of services sold were at 49% of revenues for the year ended September 30, 2008, compared to 43% in the preceding year, an increase of 6%. Gross profit was therefore 51% of revenues for the last year compared to 57% of revenues for 2007. This decrease is explained by the impact of a stronger Canadian dollar over the U.S. currency over the last 12 months (impact of $1.0 million) and by costs incurred in the Nuns’ Island facility, for which revenues are still at an early stage (impact of $300,000). Excluding these two items, gross profit for the year ended September 30, 2008 would have been higher by $1.3M or 56% of revenues (compared to 57% of revenues for the same period of 2007).

Operating expenses were 42% of revenues for 2008, compared to 41% for 2007. The increase is due to administrative expenses growing from 23% to 24% of revenues due to stock based compensation expense and costs related of moving the head office to new premises.

The final results for the year was an operating profit at almost break-even, $82,000 after interest expenses, compared to $880,000 in 2007. The main reason for this is the increase in value of the Canadian dollar against the US dollar which has had a negative impact of $865,000.

This operating profit was impacted by the cost of $547,000 of the early retirement of certain long-term debts and by an unrealised exchange loss of $152,000 on long-term US$ debt for and after tax final loss of $552,000.

Earnings before financial expenses, taxes, depreciation and amortization, and stock-based compensation (“Adjusted EBITDA”) was $3.7 million (23.8% of revenues) for the last year compared to $2.8 million in 2007 (28.9% of revenues).

Key Financial Data

1- The Company defines Adjusted EBITDA as Earnings before financial expenses, income taxes, depreciation and amortization, and stock-based compensation.

About iWeb Group Inc.
iWeb is a worldwide provider of Internet hosting services and IT Infrastructure, and is listed on the TSX Venture Exchange (TSX-V : IWB). With three secure data centers, all in Montreal, iWeb has carved out an enviable position on the international scene with more than 60% of its revenues from abroad.

Founded in 1996 in Montreal, iWeb has recently completed a $22M financing agreement with investment banking giant Goldman Sachs. iWeb now has over 150 full-time employees providing Dedicated Server Hosting, Co-location and Web Hosting services to more than 19,000 customers in 150 countries. More information is available at the Company’s website. 

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

Philip Tousignant
iWeb Group Inc.
Chief Financial Officer
514-286-4242 ext. 149
ptousignant@iweb.com

Bernard Dahl
iWeb Group Inc.
Director, Communications and Public Relations
514-286-4242 ext. 115
bdahl@iweb.com