VANCOUVER, BRITISH COLUMBIA, February 15, 2008 – PEER 1 Network Enterprises, Inc. (TSX VENTURE: PIX), a global provider of high performance Internet infrastructure, released the company's financial results for the second quarter of fiscal year 2008 for the three months ended December 31, 2007.

 

SECOND QUARTER RESULTS

 

Financial highlights from the quarter include the following (all figures are reported in US dollars):

 

- PEER 1's revenue increased 23.02% to $22.22 million for the three months ended December 31, 2007, compared to $18.07 million for the three months ended December 31, 2006.

 

- Gross profit increased 44.08% to $10.13 million for the three months ended December 31, 2007, compared to $7.03 million for the three months ended December 31, 2006.

 

- Operating income increased 76.32% to $3.91 million for the three months ended December 31, 2007, compared to $2.22 million for the three months ended December 31, 2006.

 

- Income before income taxes was $3.27 million for the three months ended December 31, 2007 compared to $0.68 million for the three months ended December 31, 2006.

 

- Net income was $1.88 million for the three months ended December 31, 2007, compared to $0.85 million for the three months ended December 31, 2006.

 

- Normalized EBITDA increased 35.20% to $6.86 million for the three months ended December 31, 2007, compared to $5.07 million for the three months ended December 31, 2006.

 

"The second quarter of fiscal 2008 was our strongest quarter ever," said Fabio M. Banducci, PEER 1's president and CEO. "This is our sixth consecutive quarter of record profitable growth, and sets our company firmly on the path to becoming the preferred provider of IT infrastructure solutions for the ever-growing SMB market."

 

KEY DEVELOPMENTS

 

- On October 3, 2007, PEER 1 began offering the latest SWsoft Plesk 8.2 for Linux control panel software for its managed hosting customers. Plesk provides server administrators with a tool to manage their servers and websites and includes an intuitive interface that allows users without a technical background to create new email accounts and manage domains. The Plesk control panel automates a large number of tasks to help service providers reduce operating costs and resources.

 

- On November 28, 2007, PEER 1 initiated SaaS3, a Software-as-a-Service (SaaS) incubation and enablement service, for Independent Software Vendor (ISV) partners. SaaS3 assists small- to mid-sized ISVs test, deploy and manage web 2.0, enterprise 2.0 and SaaS applications throughout the entire product lifecycle on the Microsoft Windows platform. The program builds on PEER 1's existing infrastructure for SaaS applications, and walks businesses through the essential aspects of building and deploying applications running on the Microsoft platform. ISVs can begin by working on products from the ground up in an online developer sandbox. Then when the product is ready for market, it can be seamlessly transitioned online, within the PEER 1 secure, managed hosting infrastructure. These services can help reduce the ISVs' IT spending and consolidate resources needed for SaaS applications. As the product and company grows, the SaaS3 program provides expert consultation and a fully scalable network to support it.

 

- On December 11, 2007, PEER 1 launched its "We get IT" marketing campaign which focuses on the people behind technology, sharing customer stories and playing on web hosting and technology issues in a humorous manner. PEER 1 is using traditional marketing mediums in addition to popular social media tools, such as viral video pieces, to reach business and technology operators in all fields. PEER 1's viral marketing includes "Growing Pains," a humorous video short series telling the story of a home business start-up that quickly grows out of control and overtakes the house with new employees, computers and servers. Video customer stories featuring leading VoIP provider Vonage, free online dating site PlentyofFish.com, and interactive design agency Blast Radius are currently featured on PEER 1's web site.

 

- During the quarter ended December 31, 2007, the company continued its implementation of its substantial upgrade of the PEER 1 IP network. This upgrade includes the installation of carrier class routers purchased from the leaders in high performance networking, Cisco and Juniper. These two suppliers were chosen as part of the PEER 1 multi-vendor strategy to leverage the capabilities of each supplier to provide a best fit to each area of the PEER 1 backbone. The Juniper M series multiservice edge routing portfolio uniquely combines best-in-class IP/MPLS capabilities with reliability, stability, security, and service richness, while the Cisco 7600 series provides the same features with the added benefit of having highdensity Ethernet switching capabilities. Each router series has 10 gigabit interface capabilities allowing PEER 1 to upgrade existing areas of the backbone, as well as keeping an eye to the future for further capacity expansion. As a result of this purchase the company will have substantially increased bandwidth capacity, IP performance and the ability to accommodate new feature sets such as MPLS. The total estimated capital expenditure related to this upgrade is approximately $4 million.

 

For complete details on any of the above, please refer to the Financial Statements and Management's Discussion & Analysis which will be available at www.sedar.com within 24 hours of the time of this release.

 

 

EBITDA Reconciliation

(unaudited - prepared by management)

(in $ thousands)                                      Quarter Ended

                                            ------------------------------

                                                  31-Dec-07      31-Dec-06

 

Net Profit                                                         1,882            849

Income tax expense (recovery)                         1,385           (169)

Interest expense                                                 564             851

Interest accretion on notes payable                    22               54

Amortization of preferred share discount                 -         374

Amortization - licences, fixed assets and

 deferred network costs                                     2,429        2,671

Stock based compensation                                   429           111

Loss (gain) on disposal of assets                             7            51

Amortization of deferred gain                                (20)          (10)

Foreign exchange loss (gain)                                   157            (5)

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EBITDA                                                               6,855          4,777

 

Integration costs                                                           -           293

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Normalized EBITDA                                                      6,855          5,070

 

 

Non-GAAP Measures

 

PEER 1 reports EBITDA because it is a key measure used by management to evaluate the company's performance. PEER 1 believes that EBITDA is useful supplemental information as it provides an indication of the results generated by PEER 1's main business activities prior to taking into consideration how those activities are financed and expensed. EBITDA is not a recognized measure under Canadian GAAP, and accordingly investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with Canadian GAAP as an indicator of financial performance of PEER 1 or as a measure of the company's liquidity and cash flows. PEER 1's method of calculating EBITDA may differ from other issuers and, accordingly, EBITDA may not be comparable to similar measures presented by other issuers. The schedule above sets out PEER 1's EBITDA calculations.

 

About PEER 1

 

PEER 1, a leading Internet infrastructure solutions company, provides full services to handle the needs of customers requiring 100% uptime for their online presence including network, co-location, and dedicated hosting services. Since its inception in 1999, the company has grown to include data centers and network points of presence in 17 major cities across North America and Europe, all connected by PEER 1's world class IP (Internet Protocol) network. PEER 1 serves a variety of customers including hosting providers, online gaming companies, Internet phone (VoIP) companies and many small and medium-sized businesses. The company's headquarters are in Vancouver, Canada and the stock is traded on the TSX Venture exchange under the symbol PIX. For more information visit http://www.peer1.com.

 

Statements in this release relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, changes in technology, reliance on third party manufacturing, managing rapid growth, global sales risks, limited intellectual property protection and other risks and uncertainties described in PEER 1's public filings with securities regulatory authorities.

 

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