Terremark Worldwide Reports Second Quarter FY 2007 Results

November 10, 2006; 08:11 AM

Miami, FL. – Terremark Worldwide, Inc. (AMEX:TWW), a leading operator of integrated Internet exchanges and a global provider of managed IT infrastructure solutions for government and private sectors, today reported its results for the quarter ended September 30, 2006. 

Total revenues for the quarter ended September 30, 2006 were $24.2 million, exceeding guidance of $22.0 million to $23.0 million and representing an increase of 13% over the previous quarter and 73% over the same period the prior year.  Total revenues for the quarter ended September 30, 2006 included $3.7 million of project type revenues related to the resale of equipment and consulting projects. 

EBITDA, as adjusted, for the quarter ended September 30, 2006 was $3.2 million, compared to EBITDA, as adjusted, of $3.0 million the prior quarter. EBITDA, as adjusted, also exceeded guidance of $2.0 million to $3.0 million. EBITDA, as adjusted, for the quarter ended September 30, 2006 included $1.1 million related to the project type revenue.  EBITDA, as adjusted, is defined as income (loss) from operations less depreciation, amortization and stock based compensation.  EBITDA, as adjusted, should be considered in addition to, but not in lieu of, income (loss) from operations reported under GAAP. 

“We are pleased with the results of the quarter, particularly the growth and profitability of our recurring revenue business, which represented over 70% of our EBITDA in the quarter,” said Manuel D. Medina, Chairman and CEO of Terremark Worldwide, Inc.  “We also saw strong growth in our managed service offerings, where we are gaining traction in both the US and Europe. Our managed services offerings are a key differentiator with customers often indicating they selected Terremark as their datacenter outsourcing partner because of our full suite of product offerings.” 

Mr. Medina concluded, “We believe the results of the quarter speak to the strength of our core business, and we look to leverage this success through our stated strategy to expand our footprint in California and the Washington D.C. area.” 

Data center expenses were $14.8 million for the quarter ended September 30, 2006. Gross profit margins, excluding depreciation and amortization, were 39% during the September 30, 2006 quarter.   

As of September 30, 2006, Terremark’s cash and cash equivalents were $11.4 million and working capital of approximately $3.5 million. 

Total colocation space utilization increased to 15.7% as of September 30, 2006 from 12.9% as of June 30, 2006.  Utilization of built-out colocation space increased to 56.3% as of September 30, 2006 from 46.2% as of June 30, 2006. Additionally, utilization of total net collocation space based on both deployed and yet to be deployed customers was 16.2% at September 30, 2006 an increase from 15.3% at June 30, 2006. 

Cross connects billed to customers increased to 4,865 as of September 30, 2006 from 4,245 the previous quarter and 3,182 a year earlier, representing an increase of 15% and 53%, respectively. 

During the quarter ended September 30, 2006, Terremark added 39 new customers, for a total of 566 customers at the end of the period.

Terremark booked $10.0 million of new annual contract value during the quarter ended September 30, 2006.  Over 70% of the bookings during the September 2006 quarter were generated from existing customers. 

For the quarter ended September 30, 2006, annualized data center services revenue per utilized square foot decreased slightly to $1,827 compared to $1,848 for the previous quarter.  For the quarter ended September 30, 2006, data center services revenue churn was less than 1% for the commercial sector and 0% churn for the federal government sector.  The Company defines churn as annualized data center services revenue lost as a percentage of annualized data center services revenue for the most recent quarter. 

Medina added, “The second quarter was an important period, as we demonstrated the continued strengthening of our business fundamentals and are beginning to benefit from the leverage in our model.” 

Business Outlook  

For the quarter ending December 31, 2006, the Company expects revenue to range from $24.0 million to $26.0 million and EBITDA, as adjusted, to range from $4.0 million to $6.0 million. These revenue estimates include approximately $1.5 million to $2.5 million of project related revenues. 

For the full 2007 fiscal year, the Company is maintaining its previously announced guidance and expects revenues to be in the range of $100.0 million to $105.0 million, EBITDA, as adjusted, to range from $18.0 million to $22.0 million and capital expenditures to range from $10.0 million to $11.0 million.   

The Company will hold a conference call today, November 9, 2006 at 5:00 p.m. ET, to discuss all of the above.  To hear the conference call live, please dial 866-831-6162 (domestic) or 617-213-8852 (international) five to ten minutes before the call and reference the passcode: TWW Call. A simultaneous live Webcast of the call will be available over the Internet at http://www.terremark.com, under the Investor Relations heading.

A replay of the call will be available beginning on Thursday, November 9, 2006 at 7:00 p.m. (ET) by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and providing the following replay code: 24550642. In addition, the Webcast will be available on the Company's web site at http://www.terremark.com. 

Additional information regarding the Company’s financial performance as of and for the quarter ended  September 30, 2006 and a comparison to the quarter ended September 30, 2005 can be found on the attached balance sheet and statement of operations and in the Company’s Quarterly Report on Form 10-Q.

About Terremark Worldwide, Inc.

Terremark Worldwide, Inc. (AMEX:TWW) is a leading operator of integrated Internet exchanges and a global provider of managed IT infrastructure solutions for government and private sectors. Terremark delivers its portfolio of services from seven locations in the U.S., Europe and Latin America and from four service aggregation and distribution locations, which aggregate network traffic and distribute network-based services in Europe and Asia to meet specific customer needs. Terremark’s flagship facility, the NAP of the Americas, is the model for the carrier-neutral Internet exchanges the company has in Santa Clara, California (NAP of the Americas/West), in Sao Paulo, Brazil (NAP do Brasil) and in Madrid, Spain (NAP de las Americas - Madrid). The carrier-neutral NAP of the Americas is a state-of-the-art facility that provides exchange point, colocation and managed services.  Terremark is headquartered at 2601 S. Bayshore Drive, 9th Floor, Miami, Florida USA, (305) 856-3200. More information about Terremark Worldwide can be found at www.terremark.com. 

Statements contained in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Terremark’s actual results may differ materially from those set forth in the forward-looking statements due to a number of risks, uncertainties and other factors, as discussed in Terremark’s filings with the SEC. These factors include, without limitation, Terremark’s ability to obtain funding for its business plans, uncertainty in the demand for Terremark’s services or products and Terremark’s ability to manage its growth. Terremark does not assume any obligation to update these forward-looking statements.

Non-GAAP Financial Measures

Terremark continues to provide all information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results may be difficult if limited to reviewing only GAAP financial measures. Accordingly, Terremark uses non-GAAP financial measures, such as EBITDA, as adjusted. In presenting these non-GAAP financial measures, Terremark excludes certain non-cash items that it believes are not good indicators of the Company's current or future operating performance. These non-cash items are depreciation, amortization and stock-based compensation.

Terremark intends to calculate the various non-GAAP financial measures in future periods on a basis consistent with its calculation of those measures for the three and six months ended September 30, 2006 and 2005 and June 30, 2006, presented within this press release.