iWeb revenue increased 92% in the first quarter

    MONTREAL, Feb. 27 /CNW Telbec/ - iWeb (TSX-V: IWB), a global provider of
Internet hosting services and IT infrastructure, today released its financial
results for the quarter ended December 31, 2008. The complete interim
financial statements and management report of the Company are available on the
websites www.sedar.com and investors.iweb.com.

    First Quarter Highlights:

    - Revenue increased 92% to $6.1 million for the quarter ended December
      31, 2008, compared to revenues of $3.2 million for the same period in
    - Adjusted EBITDA grew to $1.6 million, or 26% of revenues
    - New annual recurring revenues of $2.8 million generated during the
      first quarter.
    - Operating income at break-even
    - Net loss of $1.2 million, after taking into account the unrealized,
      theoretical exchange lost on the long-term debt denominated in U.S.

    "Our revenues are continuing their rapid growth, constantly reaching new
heights." proudly states Eric Chouinard, iWeb President and CEO. "Since
November, our monthly billing has exceeded $2 million! With new annual
recurring revenues of $2.8 million generated in Q1 and a more favorable
CAD/USD exchange rate, we are maintaining the pace of our growth plan.
    "Given the current economic context, we are constantly adapting our
marketing strategies to generate new revenues," adds Martin Leclair,
President, Products and Technology. "We are also actively working on the major
restructuring of customer service, which now operates with three distinct and
specialized groups. With 24/7 availability required for support services, the
planned structure is already showing signs of success; all of which is aimed
at helping our clients and improving the support we provide with our
    "Our operating results clearly show a stable level of profitability," said
Philip Tousignant, Chief Financial Officer. "We are still above the break-even
point and our Adjusted EBITDA has doubled since last year, totaling $1.6
million; that's 26% of revenue. However, the accounting results show a
significant loss for the quarter, following the booking of financial expenses
resulting from external market conditions. These costs amount to $1.4 million
for the last quarter, the most important element of which is the unrealized
exchange loss on the long-term debt of $10MUSD. Since the long-term debt is in
USD, it is affected by the current exchange rate. During the quarter, the
CAD/USD exchange rate rose from 1.06 to 1.225, causing the unrealized loss of
$1.6 million on long-term debt. "

    First quarter Financial Review

    Revenues for the quarter ended December 31, 2008 reached $6.1 million, an
increase of $2.9 million. It is 92% higher than revenues recorded for the same
period twelve months earlier.
    Income for the first 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 revenues for the quarter were generated in U.S. dollars, a significant
advantage for the Company given the weakness of the Canadian dollar to the
U.S. dollar. Compared to the same period of the previous year, this has had a
positive impact of $720,000 on earnings. Even excluding this, revenues would
still have increased by 69% compared to the same quarter one year ago.
    iWeb's gross profit margin for the quarter was 52% of revenue, compared to
54% for the first quarter of fiscal 2008. The favorable impact of CAD/USD
currency fluctuations on the gross margin for the quarter was more than offset
by higher wages to support the growth of operations, more specifically a major
restructuring of customer service, including the creation of three distinct
levels of support services (informative, application and technical). Ensuring
the "24/7" availability of staff resources in all three groups resulted in a
considerable increase of salaries for this department compared with December
2007. The gross profit margin decrease also reflects the cost of implementing
the iWeb-CO data center, for which the revenues are still at the start-up
    Overhead costs for the quarter decreased from 53.3% of revenues in 2007 to
51.8% in 2008, the result of lower for selling and administrative costs
compared to revenue, although interest expense was higher.
    Operating income for the Company amounted to $11,000 for the quarter ended
December 31, 2008, compared to $19,000 for the corresponding period of the
previous year
    The net results were affected by other financial costs, mostly the result
of external market conditions. These costs amounted to $1.4 million for the
last quarter. The main element of these expenses is the unrealized exchange
loss on the long-term debt of $10MUSD. The Company did not hedge this debt,
but plans to do so during the remaining five-year period, when the exchange
rate will be more favorable. A one-cent variation in the Canada/US exchange
rate would generate an unrealized exchange gain or loss on long-term debt of
$100,000. Such a gain or loss must be accounted for in the quarter where the
exchange rate variation is observed even though the gain or loss is not
realized, and may never be. For the quarter ended 31 December 2008, the
exchange rate CAD/USD rose from 1.06 in 1.225, resulting in the unrealized
loss of $1.6 million.
    In addition, a foreign exchange gain of $335,000, realized and unrealized,
was recorded during the last quarter. Net assets, denominated in USD during
the quarter, resulted in this gain.
    Finally, a decrease in the risk-free interest rates of similar maturity
date as the derivative embedded in the long-term debt resulted in a rise of
the fair value of such derivative. Since September 30, 2008, the risk-free
interest rate used for the fair value calculation went from 3.0% to 1.3%,
resulting in a $98,000 effect on the Company's results.
    After these financial charges, the Company recorded a net loss of $1.2
million in the first quarter compared to net income of $18,000 last year.

    Key Financial Data (in thousands of Canadian dollars)

                                             First Quarter ended December 31
                                                          2008          2007

    Revenues                                            $6,075        $3,172
    Gross Profit                                        $3,155        $1,710
    Operating income                                       $11           $19
    Net earnings (loss)                                ($1,248)          $18
    Earnings (loss) per share - basic                 ($0.0447)      $0.0007
    Adjusted EBITDA(1)                                  $1,564          $778

                                                         As at         As at
                                                      December     September
                                                      31, 2008      30, 2008

    Total assets                                       $29,696       $29,361
    Shareholders' equity                                $4,817        $6,122
    Cash and term deposits                              $1,310        $3,779

    (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, 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 according to PROFIT Magazine.
    Founded in 1996 in Montreal, iWeb now generates more than 60% of its
revenues from abroad; and employs over 160 full-time employees providing
Dedicated Server Hosting, Co-location and Web Hosting services to more than
20,000 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

    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.
    %SEDAR: 00018802EF

For further information:

For further information: Philip Tousignant, Chief Financial Officer,
iWeb Group Inc., (514) 286-4242  ext. 149, ptousignant@iweb.com; Bernard Dahl,
Director, Communications and Public Relations, iWeb Group Inc., (514) 286-4242
ext. 115, bdahl@iweb.com

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