Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 02, 2018 | |
Document and Entity Information Abstract | ||
Entity Registrant Name | Internap Corp | |
Entity Central Index Key | 1,056,386 | |
Trading Symbol | inap | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 21,218,434 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Net revenues | $ 81,962 | $ 69,642 | $ 156,163 | $ 141,775 |
Operating costs and expenses: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 27,976 | 26,429 | 53,013 | 55,474 |
Costs of customer support | 8,841 | 6,133 | 16,228 | 13,397 |
Sales, general and administrative | 19,602 | 15,571 | 39,456 | 32,135 |
Depreciation and amortization | 22,590 | 18,934 | 43,667 | 36,679 |
Exit activities, restructuring and impairments | 826 | 4,628 | 793 | 5,651 |
Total operating costs and expenses | 79,835 | 71,695 | 153,157 | 143,336 |
Income from operations | 2,127 | (2,053) | 3,006 | (1,561) |
Non-operating expenses: | ||||
Interest expense | 15,860 | 17,145 | 30,887 | 25,282 |
Loss (gain) on foreign currency, net | 26 | 191 | (189) | 288 |
Total non-operating expenses | 15,886 | 17,336 | 30,698 | 25,570 |
Loss before income taxes, non-controlling interest and equity in earnings of equity-method investment | (13,759) | (19,389) | (27,692) | (27,131) |
Provision (benefit) for income taxes | 141 | (50) | 241 | 468 |
Equity in earnings of equity-method investment, net of taxes | 0 | (56) | 0 | (86) |
Net loss | (13,900) | (19,283) | (27,933) | (27,513) |
Less net income attributable to non-controlling interest | 23 | 0 | 50 | 0 |
Net loss attributable to INAP stockholders | (13,923) | (19,283) | (27,983) | (27,513) |
Other comprehensive income: | ||||
Foreign currency translation adjustment | 61 | 32 | 122 | 105 |
Unrealized gain on foreign currency contracts | 0 | 60 | 0 | 145 |
Total other comprehensive income | 61 | 92 | 122 | 250 |
Comprehensive loss | $ (13,862) | $ (19,191) | $ (27,861) | $ (27,263) |
Basic and diluted net loss per share (in dollars per share) | $ (0.69) | $ (0.96) | $ (1.40) | $ (1.52) |
Weighted average shares outstanding used in computing basic and diluted net loss per share (in shares) | 20,053 | 19,876 | 19,985 | 17,992 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 14,739 | $ 14,603 |
Accounts receivable, net of allowance for doubtful accounts of $1,689 and $1,487, respectively | 20,251 | 17,794 |
Contract assets | 8,474 | 0 |
Prepaid expenses and other assets | 9,689 | 8,673 |
Total current assets | 53,153 | 41,070 |
Property and equipment, net | 452,958 | 458,565 |
Intangible assets, net | 77,112 | 25,666 |
Goodwill | 116,705 | 50,209 |
Non-current contract assets | 12,760 | 0 |
Deposits and other assets | 12,019 | 11,015 |
Total assets | 724,707 | 586,525 |
Current liabilities: | ||
Accounts payable | 29,806 | 20,388 |
Accrued liabilities | 17,059 | 15,908 |
Deferred revenues | 5,837 | 4,861 |
Capital lease obligations | 10,246 | 11,711 |
Revolving credit facility | 16,000 | 5,000 |
Term loan, less discount and prepaid costs of $3,995 and $2,133, respectively | 362 | 867 |
Exit activities and restructuring liability | 2,968 | 4,152 |
Other current liabilities | 4,050 | 1,707 |
Total current liabilities | 86,328 | 64,594 |
Capital lease obligations | 220,721 | 223,749 |
Term loan, less discount and prepaid costs of $11,546 and $7,655, respectively | 415,418 | 287,845 |
Exit activities and restructuring liability | 284 | 664 |
Deferred rent | 907 | 1,310 |
Deferred tax liability | 1,928 | 1,651 |
Other long-term liabilities | 4,142 | 7,744 |
Total liabilities | 729,728 | 587,557 |
Commitments and contingencies (Refer to Note 9) | ||
Stockholders’ deficit: | ||
Preferred stock, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock, $0.001 par value; 30,000 shares authorized; 21,256 and 20,804 shares outstanding, respectively | 21 | 21 |
Additional paid-in capital | 1,329,368 | 1,327,084 |
Treasury stock, at cost, 328 and 293 shares, respectively | (7,630) | (7,159) |
Accumulated deficit | (1,328,502) | (1,323,723) |
Accumulated items of other comprehensive loss | (1,202) | (1,324) |
Total INAP stockholders’ deficit | (7,945) | (5,101) |
Non-controlling interests | 2,924 | 4,069 |
Total stockholders’ deficit | (5,021) | (1,032) |
Total liabilities and stockholders’ deficit | $ 724,707 | $ 586,525 |
CONDENSED CONSOLIDATED BALANCE4
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 1,689 | $ 1,487 |
Term loan current, discount and prepaid costs | 3,995 | 2,133 |
Term loan deferred, discount and prepaid costs | $ 11,546 | $ 7,655 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares outstanding (in shares) | 21,256,000 | 20,804,000 |
Treasury stock, shares (in shares) | 328,000 | 293,000 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (27,933) | $ (27,513) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 43,667 | 36,679 |
Gain on disposal of fixed asset | (29) | 0 |
Amortization of debt discount and issuance costs | 1,712 | 1,292 |
Stock-based compensation expense, net of capitalized amount | 2,232 | 1,132 |
Equity in earnings of equity-method investment | 0 | (86) |
Provision for doubtful accounts | 604 | 520 |
Non-cash change in capital lease obligations | (371) | 258 |
Non-cash change in exit activities and restructuring liability | 1,112 | 5,391 |
Non-cash change in deferred rent | (604) | (1,199) |
Deferred taxes | 60 | 150 |
Loss on extinguishment and modification of debt | 0 | 6,785 |
Other, net | 3 | 200 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,165) | 1,485 |
Prepaid expenses, deposits and other assets | (4,073) | (1,039) |
Accounts payable | 6,939 | 477 |
Accrued and other liabilities | (585) | 3,150 |
Deferred revenues | 1,249 | (697) |
Exit activities and restructuring liability | (2,676) | (2,466) |
Asset retirement obligation | (188) | 103 |
Other liabilities | (85) | 12 |
Net cash provided by operating activities | 18,869 | 24,634 |
Cash Flows from Investing Activities: | ||
Purchases of property and equipment | (16,102) | (12,293) |
Proceeds from disposal of property and equipment | 541 | 0 |
Business acquisition, net of cash acquired | (131,748) | 0 |
Acquisition of non-controlling interests | (1,130) | 0 |
Additions to acquired and developed technology | (1,340) | (444) |
Net cash used in investing activities | (149,779) | (12,737) |
Cash Flows from Financing Activities: | ||
Proceeds from credit agreements | 146,000 | 295,500 |
Proceeds from stock issuance | 0 | 40,162 |
Principal payments on credit agreements | (2,178) | (326,500) |
Debt issuance costs | (7,696) | (8,277) |
Payments on capital lease obligations | (4,760) | (5,371) |
Proceeds from exercise of stock options | (108) | 36 |
Acquisition of common stock for income tax withholdings | (471) | (210) |
Other, net | 264 | (240) |
Net cash provided by (used in) in financing activities | 131,051 | (4,900) |
Effect of exchange rates on cash and cash equivalents | (5) | 70 |
Net increase in cash and cash equivalents | 136 | 7,067 |
Cash and cash equivalents at beginning of period | 14,603 | 10,389 |
Cash and cash equivalents at end of period | 14,739 | 17,456 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for interest | 28,509 | 14,899 |
Non-cash acquisition of property and equipment under capital leases | 214 | 147,788 |
Additions to property and equipment included in accounts payable | $ 4,023 | $ 1,269 |
NATURE OF OPERATIONS AND BASIS
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS AND BASIS OF PRESENTATION | NATURE OF OPERATIONS AND BASIS OF PRESENTATION Internap Corporation (“we,” “us,” “our,” “INAP,” or “the Company”) is a leading provider of high-performance data center services, including colocation, cloud and network. INAP partners with its customers, who range from the Fortune 500 to emerging start-ups, to create secure, scalable and reliable IT infrastructure solutions that meet the customer’s unique business requirements. INAP operates in 56 , primarily Tier 3, data centers in 21 metropolitan markets and has 99 points of presence ("POPs") around the world. INAP has over 1 million gross square feet in its portfolio, and nearly 600,000 square feet of sellable data center space. We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated all intercompany transactions and balances in the accompanying financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the interim results have been reflected therein. All such adjustments were of a normal and recurring nature with the exception of those related to the adoption of new accounting standards as discussed in Note 2, "Recent Accounting Pronouncements." We have condensed or omitted certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP. The accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, necessary for a fair statement of our financial position as of June 30, 2018 and our operating results and cash flows for the interim periods presented. The balance sheet at December 31, 2017 was derived from our audited financial statements, but does not include all disclosures required by GAAP. You should read the accompanying financial statements and the related notes in conjunction with our financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission (“SEC”). The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the 2018 fiscal year or any future periods. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606"). This standard update, along with related subsequently issued updates, clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP. The standard update also amends current guidance for the recognition of costs to obtain and fulfill contracts with customers such that incremental costs of obtaining and direct costs of fulfilling contracts with customers will be deferred and amortized consistent with the transfer of the related good or service. ASC 606 intends to provide a more robust framework for addressing revenue issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; and provide more useful information to users of financial statements through improved disclosure requirements. The Company adopted this guidance on January 1, 2018 using the modified retrospective method. Following the adoption of this guidance, the revenue recognition for our sales arrangements remained materially consistent with our historical practice. For more information, see Note 3, "Revenues." In February 2016, the FASB issued ASU No. 2016-02, Leases, (Topic 842) which states that a lessee should recognize the assets and liabilities that arise from leases. The guidance is effective for annual and interim periods beginning after December 15, 2018. Earlier adoption is permitted. Based on the results of our assessment to date, we anticipate this standard will have an impact, which could be significant, on our consolidated financial statements. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact relates to recognition of a right-of-use asset and lease liability. The lease liability will be initially measured at the present value of the lease payment; the asset will be based on the liability, subject to adjustment, such as for initial direct costs. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification. For income statement purposes, operating leases will result in a straight-line expense while finance leases will result in a front-loaded expense pattern. The Company currently plans to adopt this standard using the modified retrospective transition approach with optional practical expedients. The Company is continuing to assess all potential impacts of the standard, the impact of the standard on current accounting policies, practices and system of internal controls, in order to identify material differences, if any, that would result from applying the new requirements. On August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, a consensus of the FASB’s Emerging Issues Task Force. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. We adopted this guidance in the first quarter of 2018 and it did not have a significant impact on our condensed consolidated financial statements. On January 2017, the FASB issued final guidance that revises the definition of a business, ASU No. 2017-01: Clarifying the Definition of a Business (Topic 805). The definition of a business affects many areas of accounting (e.g., acquisitions, disposals, goodwill impairment, or consolidation). The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. We adopted this guidance in the first quarter of 2018 and it did not impact our condensed consolidated financial statements. On May 2017, the FASB issued guidance ASU No. 2017-09: Scope of Modification Accounting (Topic 718), to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. We adopted this guidance in the first quarter of 2018 and it did not impact our condensed consolidated financial statements. |
REVENUES
REVENUES | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | REVENUES Upon adoption of ASC 606, the Company applied certain transition practical expedients available for modified retrospective adoption. The Company adopted the practical expedient for the portfolio approach of contracts with similar characteristics in which the Company reasonably expects that the effects on the financial statements of applying this practical expedient to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio. The Company also adopted the practical expedient to not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts for which INAP recognizes revenue at the amount to which the Company has the right to invoice for services performed, and (iii) the value for variable consideration that is applied to individual performance obligations in a series. The Company elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer (e.g., sales, use, and value added taxes). Changes in Accounting Policies The most significant impact of the adoption of the new standard is the requirement for incremental costs to obtain a customer, such as commissions, which previously were expensed as incurred, to be deferred and amortized over the period of contract performance or a longer period if renewals are expected and the renewal commission is not commensurate with the initial commission. In addition, installation revenues are recognized over the initial contract life rather than over the estimated customer life, as they are not significant to the total contract and therefore do not represent a material right. Most performance obligations, with the exception of certain sales of equipment or hardware, are satisfied over time as the customer consumes the benefits as we perform. For equipment and hardware sales, the performance obligation is satisfied when control transfers to the customer. In evaluating the treatment of certain contracts, the Company exercised heightened judgment in deferring installation revenue as well as expense fulfillment and commission costs over the appropriate life. With the exception of the revenues noted above, revenue recognition remains materially consistent with historical practice. However, neither caused a material difference in the financial statement. Adjustments to Reported Financial Statements from the Adoption The following table presents the effect of the adoption of ASC 606 on the Company’s consolidated balance sheet as of January 1, 2018 (in thousands): December 31, 2017, as reported Adjustments January 1, 2018, as adjusted ASSETS Prepaid expenses and other assets $ 8,673 $ 6,814 $ 15,487 Deposits and other assets 11,015 11,234 22,249 LIABILITIES AND STOCKHOLDERS’ DEFICIT Deferred revenues 4,861 (749 ) 4,112 Deferred tax liability 1,651 209 1,860 Other long-term liabilities 7,744 (4,616 ) 3,128 Accumulated deficit (1,323,723 ) 23,204 (1,300,519 ) Current Impact from the Adoption In accordance with the new revenue standard requirements, the disclosure of the current period impact of adoption on our condensed consolidated statement of operations and comprehensive loss and balance sheet is as follows (in thousands, except for per share amounts): For the Three Months Ended June 30, 2018 As Reported Balances without Adoption of ASC 606 Effect of Change Higher/ (Lower) Net revenues $ 81,962 $ 81,757 $ 205 Sales, general and administrative 19,602 19,624 (22 ) Total operating costs and expenses 79,835 79,857 (22 ) Income from operations 2,127 1,900 227 Loss before income taxes and equity in earnings of equity-method investment (13,759 ) (13,986 ) 227 Net loss (13,900 ) (14,127 ) 227 Less net income attributable to non-controlling interest 23 23 — Net loss attributable to INAP stockholders (13,923 ) (14,150 ) 227 Comprehensive loss $ (13,862 ) $ (14,150 ) $ 227 For the Six Months Ended June 30, 2018 As Reported Balances without Adoption of ASC 606 Effect of Change Higher/ (Lower) Net revenues $ 156,163 $ 155,717 $ 446 Sales, general and administrative 39,456 39,572 (116 ) Total operating costs and expenses 153,157 153,273 (116 ) Income from operations 3,006 2,444 562 Loss before income taxes and equity in earnings of equity-method investment (27,692 ) (28,254 ) 562 Net loss (27,933 ) (28,495 ) 562 Less net income attributable to non-controlling interest 50 50 — Net loss attributable to INAP stockholders (27,983 ) (28,545 ) 562 Comprehensive loss $ (27,861 ) $ (28,423 ) $ 562 June 30, 2018 As Reported Balances without Adoption of ASC 606 Effect of Change Higher/ (Lower) ASSETS Contract assets $ 8,474 $ 7,490 $ 984 Non-current contract assets 12,760 12,153 607 LIABILITIES AND STOCKHOLDERS’ DEFICIT Deferred revenues 5,837 5,271 566 Other long-term liabilities 4,142 3,341 801 Accumulated deficit (1,328,502 ) (1,328,726 ) 224 ASC 606 did not have a significant impact on the Company's condensed consolidated statement of cash flows. The Company accounts for revenue in accordance with ASC 606. Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. The Company’s contracts with customers often include performance obligations to transfer multiple products and services to a customer. Common performance obligations of the Company include delivery of services, which are discussed in more detail below. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together requires significant judgment by the Company. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in ASC 606. A contracts transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Total transaction price is estimated for impact of variable consideration, such as INAP’s service level arrangements, additional usage and late fees, discounts and promotions, and customer care credits. The majority of our contracts have multiple performance obligations, as the promise to transfer individual goods or services is separately identifiable from other promises in the contracts and, therefore, is distinct. For contracts with multiple performance obligations, we allocate the contracts transaction price to each performance obligation based on its relative standalone selling price. The stand-alone selling price (“SSP”) is determined based on observable price. In instances where the SSP is not directly observable, such as when the Company does not sell the product or service separately, INAP determines the SSP using information that may include market conditions and other observable inputs. The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, the Company may use information such as the size of the customer and geographic region in determining the SSP. Revenue by source, with sales and usage-based taxes excluded, is as follows (in thousands): Three Months Ended June 30, 2018 Three Months Ended June 30, 2017 INAP US INAP INTL INAP US INAP INTL Colocation $ 30,866 $ 1,459 $ 29,614 $ 1,229 Network services 13,563 2,792 15,119 1,530 Cloud 19,638 13,644 9,380 12,770 $ 64,067 $ 17,895 $ 54,113 $ 15,529 Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 INAP US INAP INTL INAP US INAP INTL Colocation $ 61,802 $ 2,977 $ 59,626 $ 2,579 Network services 27,382 5,763 30,623 3,047 Cloud 31,958 26,281 19,326 26,574 $ 121,142 $ 35,021 $ 109,575 $ 32,200 Revenue by geography is as follows (in thousands): Three Months Ended June 30, 2018 Three Months Ended June 30, 2017 INAP US INAP INTL INAP US INAP INTL United States $ 65,168 $ — $ 55,206 $ — Canada — 9,549 — 9,531 Other countries — 7,245 — 4,905 $ 65,168 $ 16,794 $ 55,206 $ 14,436 Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 INAP US INAP INTL INAP US INAP INTL United States $ 123,319 $ — $ 111,751 $ — Canada — 18,659 — 19,899 Other countries — 14,185 — 10,125 $ 123,319 $ 32,844 $ 111,751 $ 30,024 For the six months ended June 30, 2018, revenue recognized that was included in the contract liability balance at the beginning of each year was $1.1 million . Management expects that fulfillment costs and commission fees paid to sales representative as a result of obtaining service contracts and contract renewals are recoverable and therefore the Company capitalized them as contract costs in the amount of $27.6 million at June 30, 2018. Capitalized fulfillment and commission fees are amortized on a straight-line basis over the determined life, which vary based on the customer segment. For the three and six months ended June 30, 2018, amortization recognized was $2.9 million and $5.8 million , respectively. There was no impairment loss recorded on capitalized contract costs in the six months ended June 30, 2018. Applying the practical expedient pertaining to contract costs, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in "Sales, general and administrative" expenses in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. |
ACQUISITION
ACQUISITION | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
ACQUISITION | ACQUISITION On February 28, 2018, the Company acquired SingleHop LLC ("SingleHop"), a provider of high-performance data center services including colocation, managed hosting, cloud and network services for $132.0 million net of working capital adjustments, liabilities assumed, and net of cash acquired. The transaction was funded with an incremental term loan and cash from the balance sheet. As part of the financing, INAP obtained an amendment to its credit agreement to allow for the incremental term loan and to provide further operational flexibility under the credit agreement covenants. The amendments to the credit agreement are described in more detail in Note 7, "Debt." The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date and reflects purchase accounting adjustments subsequent to the acquisition date (in thousands): Preliminary Valuation as of March 31, 2018 Measurement Period Adjustments Preliminary Valuation as of June 30, 2018 Cash $ 2,857 $ (34 ) $ 2,823 Prepaid expenses and other assets 1,683 544 2,227 Property, plant and equipment 14,885 — 14,885 Other long term assets 39 537 576 Intangible assets: Noncompete agreements 4,000 — 4,000 Trade names 1,700 — 1,700 Technology 15,100 — 15,100 Customer relationships 34,100 — 34,100 Goodwill 67,868 (1,372 ) 66,496 Total assets acquired 142,232 (325 ) 141.907 Accounts payable and accrued liabilities 5,098 (224 ) 4,874 Deferred revenue 1,600 (101 ) 1,499 Long term liabilities 534 — 534 Net assets acquired $ 135,000 $ — $ 135,000 The above estimated fair values of consideration transferred, assets acquired and liabilities assumed are provisional and are based on the information that was available as of the acquisition date. Measurement period adjustments reflect new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period adjustments primarily related to working capital and ASC 606. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed. Thus, the preliminary measurements of fair value set forth above are subject to change. The Company expects to finalize the valuation as soon as practicable but no later than one year from the acquisition date. The fair value assigned to identifiable intangible assets acquired was based on estimates and assumptions made by management. The intangible assets are being amortized over periods which reflect the pattern in which economic benefits of the assets are expected to be realized. The customer relationships are being amortized on an accelerated basis over an estimated useful life of ten years and the noncompete agreements, trade names, and technology are being amortized on a straight-line basis over four , eight , and seven years , respectively. Goodwill represents the excess of the consideration transferred over the aggregate fair values of assets acquired and liabilities assumed. The goodwill recorded in connection with this acquisition was based on operating synergies and other benefits expected to result from the combined operations and the assembled workforce acquired. The goodwill acquired is deductible for tax purposes. Acquisition-related costs recognized during the six months ended June 30, 2018 including transaction costs such as legal, accounting, valuation and other professional services, were $2.9 million and are included in "Sales, general and administrative" expenses on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. Pro Forma Financial Information The following unaudited pro forma financial information presents the combined results of operations of INAP and SingleHop as if the acquisition had occurred on January 1, 2017. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the INAP and SingleHop acquisition been completed as of January 1, 2017, and should not be taken as indicative of our future consolidated results of operations. The pro forma results are as follows (in thousands except for per share amounts): Three Months Ended Six Months Ended 2018 2017 2018 2017 Revenues $ 81,962 $ 81,792 $ 164,288 $ 165,999 Net loss (13,900 ) (19,462 ) (29,134 ) (28,108 ) Basic and diluted net loss per share (0.69 ) (0.98 ) (1.46 ) (1.56 ) Weighted average shares outstanding used in computing basic and diluted net loss per share 20,053 19,876 19,985 17,992 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: • Level 1: Quoted prices in active markets for identical assets or liabilities; • Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Assets and liabilities measured at fair value on a recurring basis are summarized as follows (in thousands): Level 1 Level 2 Level 3 Total June 30, 2018 Asset retirement obligations (1) $ — $ — $ 1,771 $ 1,771 December 31, 2017 Asset retirement obligations (1) — — 1,936 1,936 (1) We calculate the fair value of asset retirement obligations by discounting the estimated amount using the current Treasury bill rate adjusted for our credit risk. At June 30, 2018, the balance is included in “Other long-term liabilities,” in the accompanying Condensed Consolidated Balance Sheets. At December 31, 2017, $0.2 million and $1.7 million were included in "Other current liabilities" and "Other long-term liabilities," respectively, in the accompanying Condensed Consolidated Balance Sheets. The following table provides a summary of changes in our Level 3 asset retirement obligations for the six months ended June 30, 2018 (in thousands): Balance, January 1, 2018 $ 1,936 Accretion 85 Payments (250 ) Balance, June 30, 2018 $ 1,771 The fair values of our other Level 3 debt liabilities, estimated using a discounted cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements, are as follows (in thousands): June 30, 2018 December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value Term loan $ 431,321 $ 435,096 $ 298,500 $ 301,485 Revolving credit facility 16,000 16,140 5,000 5,050 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill During the six months ended June 30, 2018, we changed our operating segments, as discussed in Note 10, “Operating Segments,” and, subsequently, our reporting units. We now have seven reporting units: US Colocation, US Cloud, US Network, INTL Colocation, INTL Cloud, INTL Network, and Ubersmith. We allocated goodwill to our new reporting units using a relative fair value approach. In addition, we completed an assessment of any potential goodwill impairment for all reporting units immediately prior to and after the reallocation and determined that no impairment existed. During the six months ended June 30, 2018, our goodwill activity is as follows (in thousands): December 31, 2017 Re-allocations SingleHop Acquisition (Note 4) June 30, 2018 Operating segments: INAP COLO $ 6,003 $ (6,003 ) $ — $ — INAP CLOUD 44,206 (44,206 ) — — INAP US — 28,304 66,496 94,800 INAP INTL — 21,905 — 21,905 Total $ 50,209 $ — $ 66,496 $ 116,705 Other Intangible Assets The components of our amortizing intangible assets, including capitalized software, are as follows (in thousands): June 30, 2018 December 31, 2017 Gross Carrying Amount AccumulatedAmortization Gross Carrying Amount AccumulatedAmortization Acquired and developed technology $ 69,419 $ (49,936 ) $ 52,825 $ (48,063 ) Customer relationships, trade names and noncompete 110,766 (53,137 ) 71,116 (50,212 ) $ 180,185 $ (103,073 ) $ 123,941 $ (98,275 ) During the three months ended June 30, 2018 and 2017, amortization expense for intangible assets was approximately $3.1 million and $1.1 million , respectively. Amortization expense for intangible assets was approximately $4.8 million and $2.2 million for the six months ended June 30, 2018 and 2017, respectively. As of June 30, 2018, remaining amortization expense is as follows (in thousands): Six months remaining in 2018 $ 6,291 2019 12,868 2020 11,989 2021 10,386 2022 8,406 Thereafter 27,172 Total $ 77,112 |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Credit Agreement On April 6, 2017, we entered into a new Credit Agreement (the “2017 Credit Agreement”), which provides for a $300 million term loan facility ("2017 term loan") and a $25 million revolving credit facility (the "2017 revolving credit facility"). The proceeds of the 2017 term loan were used to refinance the Company’s existing credit facility and to pay costs and expenses associated with the 2017 Credit Agreement. Certain portions of refinancing transaction were considered an extinguishment of debt and certain portions were considered a modification. A total of $5.7 million was paid for debt issuance costs related to the 2017 Credit Agreement. Of the $5.7 million in costs paid, $1.9 million related to the exchange of debt and was expensed, $3.3 million related to term loan third party costs and will be amortized over the term of the loan and $0.4 million prepaid debt issuance costs related to the 2017 revolving credit facility and will be amortized over the term of the 2017 revolving credit facility. In addition, $4.8 million of debt discount and debt issuance costs related to the previous credit facility were expensed due to the extinguishment of that credit facility. The maturity date of the 2017 term loan is April 6, 2022 and the maturity date of the 2017 revolving credit facility is October 6, 2021. As of June 30, 2018, the balance of the 2017 term loan and the 2017 revolving credit facility was $431.3 million and $16.0 million , respectively. As of June 30, 2018, the interest rate on the 2017 term loan and the revolving credit facility was 7.80% and 8.99% , respectively. Borrowings under the 2017 Credit Agreement bear interest at a rate per annum equal to an applicable margin plus, at our option, a base rate or an adjusted LIBOR rate. The applicable margin for loans under the 2017 revolving credit facility is 4.5% for loans bearing interest calculated using the base rate (“Base Rate Loans”) and 5.50% for loans bearing interest calculated using the adjusted LIBOR rate. The applicable margin for loans under the 2017 term loan is 5.00% for Base Rate Loans and 6.00% for adjusted LIBOR rate loans. The base rate is equal to the highest of (a) the adjusted U.S. Prime Lending Rate as published in the Wall Street Journal, (b) with respect to term loans issued on the closing date, 2.00% , (c) the federal funds effective rate from time to time, plus 0.50% , and (d) the adjusted LIBOR rate, as defined below, for a one-month interest period, plus 1.00% . The adjusted LIBOR rate is equal to the rate per annum (adjusted for statutory reserve requirements for Eurocurrency liabilities) at which Eurodollar deposits are offered in the interbank Eurodollar market for the applicable interest period (one, two, three or six months), as quoted on Reuters screen LIBOR (or any successor page or service). The financing commitments of the lenders extending the 2017 revolving credit facility are subject to various conditions, as set forth in the 2017 Credit Agreement. As of June 30, 2018, the Company has been in compliance with all covenants. First Amendment On June 28, 2017, the Company entered into an amendment to the 2017 Credit Agreement (“First Amendment”), by and among the Company, each of the lenders party thereto, and Jefferies Finance LLC, as Administrative Agent. The First Amendment clarified that for all purposes the Company’s liabilities pursuant to any lease that was treated as rental and lease expense, and not as a capital lease obligation or indebtedness on the closing date of the 2017 Credit Agreement, would continue to be treated as a rental and lease expense, and not as a capital lease obligations or indebtedness, for all purposes of the 2017 Credit Agreement, notwithstanding any amendment of the lease that results in the treatment of such lease as a capital lease obligation or indebtedness for financial reporting purposes. Second Amendment On February 6, 2018, the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent, entered into a Second Amendment to Credit Agreement (the “Second Amendment”) that amended the 2017 Credit Agreement. The Second Amendment, among other things, amends the 2017 Credit Agreement to (i) permit the Company to incur incremental term loans under the 2017 Credit Agreement of up to $135 million to finance the Company’s acquisition of SingleHop and to pay related fees, costs and expenses, and (ii) revise the maximum total net leverage ratio and minimum consolidated interest coverage ratio covenants. The financial covenant amendments became effective upon the consummation of the SingleHop acquisition, while the other provisions of the Second Amendment became effective upon the execution and delivery of the Second Amendment. This transaction was considered a modification. A total of $1.0 million was paid for debt issuance costs related to the Second Amendment. Of the $1.0 million in costs paid, $0.2 million related to the payment of legal and professional fees which were expensed, $0.8 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement. Third Amendment On February 28, 2018, INAP entered into the Incremental and Third Amendment to the Credit Agreement among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the “Third Amendment”). The Third Amendment provides for a new incremental term loan facility under the 2017 Credit Agreement of $135 million (the “Incremental Term Loan”). The Incremental Term Loan has terms and conditions identical to the existing loans under the 2017 Credit Agreement, as amended. Proceeds of the Incremental Term Loan were used to complete the acquisition of SingleHop and to pay fees, costs and expenses related to the acquisition, the Third Amendment and the Incremental Term Loan. This transaction was considered a modification. A total of $5.0 million was paid for debt issuance costs related to the Third Amendment. Of the $5.0 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $4.9 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement. Fourth Amendment On April 9, 2018, the Company entered into the Fourth Amendment to 2017 Credit Agreement, among the Company, the Lenders party thereto and Jefferies Finance LLC, as Administrative Agent (the “Fourth Amendment”). The Fourth Amendment amends the 2017 Credit Agreement to lower the interest rate margins applicable to the outstanding term loans under the 2017 Credit Agreement by 1.25% . In addition, the Fourth Amendment amends the 2017 Credit Agreement such that if the Company incurs a “Repricing Event” (as defined in the 2017 Credit Agreement), before October 9, 2018, then the Company will incur a 1.00% prepayment premium on any term loans that are subject to such Repricing Event. This transaction was considered a modification. A total of $1.7 million was paid for debt issuance costs related to the Fourth Amendment. Of the $1.7 million in costs paid, $0.1 million related to the payment of legal and professional fees which were expensed, $1.6 million related to term loan lender fees and will be amortized over the term of the 2017 Credit Agreement. |
EXIT ACTIVITIES AND RESTRUCTURI
EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES | EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES During 2017 and 2018, we recorded exit activity charges due to ceasing use of office space. We include initial charges and plan adjustments in “Exit activities, restructuring and impairments” in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2018 and 2017. The following table displays the transactions and balances for exit activities and restructuring charges during the six months ended June 30, 2018 and 2017 (in thousands). Our real estate and severance obligations are substantially related to our INAP US segment. Balance Balance December 31, 2017 Initial Charges Plan Adjustments Cash Payments June 30, Activity for 2018 restructuring charge: Real estate obligations $ — $ 741 $ 45 $ (163 ) $ 623 Activity for 2017 restructuring charge: Real estate obligations 3,380 — 143 (1,896 ) 1,627 Activity for 2016 restructuring charge: Severance 46 — 34 (34 ) 46 Real estate obligations 247 — 14 (77 ) 184 Activity for 2015 restructuring charge: Real estate obligation 64 — 9 (28 ) 45 Service contracts 388 — 14 (99 ) 303 Activity for 2014 restructuring charge: Real estate obligation 691 — 112 (379 ) 424 $ 4,816 $ 741 $ 371 $ (2,676 ) $ 3,252 Balance Balance December 31, 2016 Initial Charges Plan Adjustments Cash Payments June 30, Activity for 2017 restructuring charge: Real estate obligations $ — $ 4,024 $ 322 $ — $ 4,346 Activity for 2016 restructuring charge: Severance 1,911 — 605 (1,679 ) 837 Real estate obligations 933 — 379 (370 ) 942 Activity for 2015 restructuring charge: Real estate obligation 111 — (8 ) (14 ) 89 Service contracts 565 — 10 (99 ) 476 Activity for 2014 restructuring charge: Real estate obligation 1,183 — 59 (304 ) 938 $ 4,703 $ 4,024 $ 1,367 $ (2,466 ) $ 7,628 |
COMMITMENTS, CONTINGENCIES AND
COMMITMENTS, CONTINGENCIES AND LITIGATION | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS, CONTINGENCIES AND LITIGATION | COMMITMENTS, CONTINGENCIES AND LITIGATION We are subject to legal proceedings, claims and litigation arising in the ordinary course of business. Although the outcome of these matters is currently not determinable, we do not expect that the ultimate costs to resolve these matters will have a material adverse impact on our financial condition, results of operations or cash flows. |
OPERATING SEGMENTS
OPERATING SEGMENTS | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
OPERATING SEGMENTS | OPERATING SEGMENTS The Company has two reportable segments: INAP US and INAP INTL. These segments are comprised of strategic businesses that are defined by the location of the service offerings. Our INAP US segment consists of US Colocation, US Cloud, and US Network services based in the United States. Our INAP INTL segment consists of these same services based in countries other than the United States, and Ubersmith. During the three months ended March 31, 2018, we changed our organizational structure in an effort to create more effective and efficient operations and to improve customer and product focus. In that regard, we revised the information that our chief executive officer, who is also our Chief Operating Decision Maker (“CODM”), regularly reviews for purposes of allocating resources and assessing performance. As a result, we report our financial performance based on our revised segment structure. We have reclassified prior period amounts to conform to the current presentation. The prior year reclassifications, which did not affect total revenues, total costs of sales and services, operating loss or net loss, are summarized as follows (in thousands): Three Months Ended June 30, 2017 As Previously Reported Reclassification As Reported Revenues: INAP COLO $ 52,044 $ (52,044 ) $ — INAP CLOUD 17,598 (17,598 ) — INAP US — 54,113 54,113 INAP INTL — 15,529 15,529 Costs of sales and services, exclusive of depreciation and amortization: INAP COLO $ 22,070 $ (22,070 ) $ — INAP CLOUD 4,359 (4,359 ) — INAP US — 21,137 21,137 INAP INTL — 5,292 5,292 Six Months Ended June 30, 2017 As Previously Reported Reclassification As Reported Revenues: INAP COLO $ 105,383 $ (105,383 ) $ — INAP CLOUD 36,392 (36,392 ) — INAP US — 109,575 109,575 INAP INTL — 32,200 32,200 Costs of sales and services, exclusive of depreciation and amortization: INAP COLO $ 46,876 $ (46,876 ) $ — INAP CLOUD 8,598 (8,598 ) — INAP US — 44,684 44,684 INAP INTL — 10,790 10,790 Each segment is managed as an operation with well-established strategic directions and performance requirements. Each segment is led by a separate General Manager who reports directly to the Company’s CODM. The CODM evaluates segment performance using business unit contribution which is defined as business unit revenues less direct costs of sales and services, customer support, and sales and marketing, exclusive of depreciation and amortization. Our services, which are included within both our reportable segments, are described as follows: Colocation Colocation involves providing conditioned power with back-up capacity and physical space within data centers along with associated services such as interconnection, remote hands, environmental controls, monitoring and security while allowing our customers to deploy and manage their servers, storage and other equipment in our secure data centers. We design the data center infrastructure, procure the capital equipment, deploy the infrastructure and are responsible for the operation and maintenance of the facility. Cloud Cloud services involve providing compute resources and storage services on demand via an integrated platform that includes our automated bare metal solutions. We offer our next generation cloud platforms in our high density colocation facilities and utilize the INAP performance IP for low latency connectivity. Network Network services includes our patented Performance IP™ service, content delivery network services, IP routing hardware and software platform. By intelligently routing traffic with redundant, high-speed connections over multiple, major Internet backbones, our IP connectivity provides high-performance and highly-reliable delivery of content, applications and communications to end users globally. We deliver our IP connectivity through 99 POPs around the world. The following table provides segment results with prior period amounts reclassified to conform to the current presentation (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Revenues: INAP US $ 64,067 $ 54,113 $ 121,142 $ 109,575 INAP INTL 17,895 15,529 35,021 32,200 Net revenues 81,962 69,642 156,163 141,775 Cost of sales and services, customer support and sales and marketing: INAP US 34,873 32,776 65,396 68,232 INAP INTL 11,872 8,463 23,005 17,465 Total costs of sales and services, customer support and sales and marketing 46,745 41,239 88,401 85,697 Segment profit: INAP US 29,194 21,337 55,746 41,343 INAP INTL 6,023 7,066 12,016 14,735 Total segment profit 35,217 28,403 67,762 56,078 Exit activities, restructuring and impairments 826 4,628 793 5,651 Other operating expenses, including sales, general and administrative and depreciation and amortization expenses 32,264 25,828 63,963 51,988 Income (loss) from operations 2,127 (2,053 ) 3,006 (1,561 ) Non-operating expenses 15,886 17,336 30,698 25,570 Loss before income taxes and equity in earnings of equity-method investment $ (13,759 ) $ (19,389 ) $ (27,692 ) $ (27,131 ) The CODM does not manage the operating segments based on asset allocations. Therefore, assets by operating segment have not been provided. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE We compute basic net loss per share by dividing net loss attributable to our common stockholders by the weighted average number of shares of common stock outstanding during the period. We exclude all outstanding options and unvested restricted stock as such securities are anti-dilutive for all periods presented. Basic and diluted net loss per share is calculated as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, 2018 2017 2018 2017 Net loss $ (13,900 ) $ (19,283 ) $ (27,933 ) $ (27,513 ) Less net income attributable to non-controlling interests 23 — 50 — Net loss attributable to common stock $ (13,923 ) $ (19,283 ) $ (27,983 ) $ (27,513 ) Weighted average shares outstanding, basic and diluted 20,053 19,876 19,985 17,992 Net loss per share, basic and diluted $ (0.69 ) $ (0.96 ) $ (1.40 ) $ (1.52 ) Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans 1,345 1,563 1,345 1,563 |
RECENT ACCOUNTING PRONOUNCEME17
RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Basis of Presentation | We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These financial statements include all of our accounts and those of our wholly-owned subsidiaries. We have eliminated all intercompany transactions and balances in the accompanying financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the interim results have been reflected therein. All such adjustments were of a normal and recurring nature with the exception of those related to the adoption of new accounting standards as discussed in Note 2, "Recent Accounting Pronouncements." We have condensed or omitted certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP. The accompanying financial statements reflect all adjustments, which consist of normal recurring adjustments unless otherwise disclosed, necessary for a fair statement of our financial position as of June 30, 2018 and our operating results and cash flows for the interim periods presented. The balance sheet at December 31, 2017 was derived from our audited financial statements, but does not include all disclosures required by GAAP. You should read the accompanying financial statements and the related notes in conjunction with our financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission (“SEC”). |
Use of Estimates | The preparation of financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Actual results may differ materially from these estimates. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the 2018 fiscal year or any future periods. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standard Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606"). This standard update, along with related subsequently issued updates, clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP. The standard update also amends current guidance for the recognition of costs to obtain and fulfill contracts with customers such that incremental costs of obtaining and direct costs of fulfilling contracts with customers will be deferred and amortized consistent with the transfer of the related good or service. ASC 606 intends to provide a more robust framework for addressing revenue issues; improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; and provide more useful information to users of financial statements through improved disclosure requirements. The Company adopted this guidance on January 1, 2018 using the modified retrospective method. Following the adoption of this guidance, the revenue recognition for our sales arrangements remained materially consistent with our historical practice. For more information, see Note 3, "Revenues." In February 2016, the FASB issued ASU No. 2016-02, Leases, (Topic 842) which states that a lessee should recognize the assets and liabilities that arise from leases. The guidance is effective for annual and interim periods beginning after December 15, 2018. Earlier adoption is permitted. Based on the results of our assessment to date, we anticipate this standard will have an impact, which could be significant, on our consolidated financial statements. While we are continuing to assess all potential impacts of the standard, we currently believe the most significant impact relates to recognition of a right-of-use asset and lease liability. The lease liability will be initially measured at the present value of the lease payment; the asset will be based on the liability, subject to adjustment, such as for initial direct costs. Consistent with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification. For income statement purposes, operating leases will result in a straight-line expense while finance leases will result in a front-loaded expense pattern. The Company currently plans to adopt this standard using the modified retrospective transition approach with optional practical expedients. The Company is continuing to assess all potential impacts of the standard, the impact of the standard on current accounting policies, practices and system of internal controls, in order to identify material differences, if any, that would result from applying the new requirements. On August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, a consensus of the FASB’s Emerging Issues Task Force. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. We adopted this guidance in the first quarter of 2018 and it did not have a significant impact on our condensed consolidated financial statements. On January 2017, the FASB issued final guidance that revises the definition of a business, ASU No. 2017-01: Clarifying the Definition of a Business (Topic 805). The definition of a business affects many areas of accounting (e.g., acquisitions, disposals, goodwill impairment, or consolidation). The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606. We adopted this guidance in the first quarter of 2018 and it did not impact our condensed consolidated financial statements. On May 2017, the FASB issued guidance ASU No. 2017-09: Scope of Modification Accounting (Topic 718), to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. We adopted this guidance in the first quarter of 2018 and it did not impact our condensed consolidated financial statements. |
Fair Value Measurements | We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: • Level 1: Quoted prices in active markets for identical assets or liabilities; • Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
Operating Segments | Each segment is managed as an operation with well-established strategic directions and performance requirements. Each segment is led by a separate General Manager who reports directly to the Company’s CODM. The CODM evaluates segment performance using business unit contribution which is defined as business unit revenues less direct costs of sales and services, customer support, and sales and marketing, exclusive of depreciation and amortization. |
Net Loss Per Share | We compute basic net loss per share by dividing net loss attributable to our common stockholders by the weighted average number of shares of common stock outstanding during the period. We exclude all outstanding options and unvested restricted stock as such securities are anti-dilutive for all periods presented. |
REVENUES (Tables)
REVENUES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of new accounting pronouncements and changes in accounting principles | The following table presents the effect of the adoption of ASC 606 on the Company’s consolidated balance sheet as of January 1, 2018 (in thousands): December 31, 2017, as reported Adjustments January 1, 2018, as adjusted ASSETS Prepaid expenses and other assets $ 8,673 $ 6,814 $ 15,487 Deposits and other assets 11,015 11,234 22,249 LIABILITIES AND STOCKHOLDERS’ DEFICIT Deferred revenues 4,861 (749 ) 4,112 Deferred tax liability 1,651 209 1,860 Other long-term liabilities 7,744 (4,616 ) 3,128 Accumulated deficit (1,323,723 ) 23,204 (1,300,519 ) In accordance with the new revenue standard requirements, the disclosure of the current period impact of adoption on our condensed consolidated statement of operations and comprehensive loss and balance sheet is as follows (in thousands, except for per share amounts): For the Three Months Ended June 30, 2018 As Reported Balances without Adoption of ASC 606 Effect of Change Higher/ (Lower) Net revenues $ 81,962 $ 81,757 $ 205 Sales, general and administrative 19,602 19,624 (22 ) Total operating costs and expenses 79,835 79,857 (22 ) Income from operations 2,127 1,900 227 Loss before income taxes and equity in earnings of equity-method investment (13,759 ) (13,986 ) 227 Net loss (13,900 ) (14,127 ) 227 Less net income attributable to non-controlling interest 23 23 — Net loss attributable to INAP stockholders (13,923 ) (14,150 ) 227 Comprehensive loss $ (13,862 ) $ (14,150 ) $ 227 For the Six Months Ended June 30, 2018 As Reported Balances without Adoption of ASC 606 Effect of Change Higher/ (Lower) Net revenues $ 156,163 $ 155,717 $ 446 Sales, general and administrative 39,456 39,572 (116 ) Total operating costs and expenses 153,157 153,273 (116 ) Income from operations 3,006 2,444 562 Loss before income taxes and equity in earnings of equity-method investment (27,692 ) (28,254 ) 562 Net loss (27,933 ) (28,495 ) 562 Less net income attributable to non-controlling interest 50 50 — Net loss attributable to INAP stockholders (27,983 ) (28,545 ) 562 Comprehensive loss $ (27,861 ) $ (28,423 ) $ 562 June 30, 2018 As Reported Balances without Adoption of ASC 606 Effect of Change Higher/ (Lower) ASSETS Contract assets $ 8,474 $ 7,490 $ 984 Non-current contract assets 12,760 12,153 607 LIABILITIES AND STOCKHOLDERS’ DEFICIT Deferred revenues 5,837 5,271 566 Other long-term liabilities 4,142 3,341 801 Accumulated deficit (1,328,502 ) (1,328,726 ) 224 |
Summary of revenue by source | Revenue by source, with sales and usage-based taxes excluded, is as follows (in thousands): Three Months Ended June 30, 2018 Three Months Ended June 30, 2017 INAP US INAP INTL INAP US INAP INTL Colocation $ 30,866 $ 1,459 $ 29,614 $ 1,229 Network services 13,563 2,792 15,119 1,530 Cloud 19,638 13,644 9,380 12,770 $ 64,067 $ 17,895 $ 54,113 $ 15,529 Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 INAP US INAP INTL INAP US INAP INTL Colocation $ 61,802 $ 2,977 $ 59,626 $ 2,579 Network services 27,382 5,763 30,623 3,047 Cloud 31,958 26,281 19,326 26,574 $ 121,142 $ 35,021 $ 109,575 $ 32,200 Revenue by geography is as follows (in thousands): Three Months Ended June 30, 2018 Three Months Ended June 30, 2017 INAP US INAP INTL INAP US INAP INTL United States $ 65,168 $ — $ 55,206 $ — Canada — 9,549 — 9,531 Other countries — 7,245 — 4,905 $ 65,168 $ 16,794 $ 55,206 $ 14,436 Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 INAP US INAP INTL INAP US INAP INTL United States $ 123,319 $ — $ 111,751 $ — Canada — 18,659 — 19,899 Other countries — 14,185 — 10,125 $ 123,319 $ 32,844 $ 111,751 $ 30,024 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of fair value of acquired assets | The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date and reflects purchase accounting adjustments subsequent to the acquisition date (in thousands): Preliminary Valuation as of March 31, 2018 Measurement Period Adjustments Preliminary Valuation as of June 30, 2018 Cash $ 2,857 $ (34 ) $ 2,823 Prepaid expenses and other assets 1,683 544 2,227 Property, plant and equipment 14,885 — 14,885 Other long term assets 39 537 576 Intangible assets: Noncompete agreements 4,000 — 4,000 Trade names 1,700 — 1,700 Technology 15,100 — 15,100 Customer relationships 34,100 — 34,100 Goodwill 67,868 (1,372 ) 66,496 Total assets acquired 142,232 (325 ) 141.907 Accounts payable and accrued liabilities 5,098 (224 ) 4,874 Deferred revenue 1,600 (101 ) 1,499 Long term liabilities 534 — 534 Net assets acquired $ 135,000 $ — $ 135,000 |
Summary of unaudited pro forma financial information | The following unaudited pro forma financial information presents the combined results of operations of INAP and SingleHop as if the acquisition had occurred on January 1, 2017. The unaudited pro forma financial information is not intended to represent or be indicative of our consolidated results of operations that would have been reported had the INAP and SingleHop acquisition been completed as of January 1, 2017, and should not be taken as indicative of our future consolidated results of operations. The pro forma results are as follows (in thousands except for per share amounts): Three Months Ended Six Months Ended 2018 2017 2018 2017 Revenues $ 81,962 $ 81,792 $ 164,288 $ 165,999 Net loss (13,900 ) (19,462 ) (29,134 ) (28,108 ) Basic and diluted net loss per share (0.69 ) (0.98 ) (1.46 ) (1.56 ) Weighted average shares outstanding used in computing basic and diluted net loss per share 20,053 19,876 19,985 17,992 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring basis | Assets and liabilities measured at fair value on a recurring basis are summarized as follows (in thousands): Level 1 Level 2 Level 3 Total June 30, 2018 Asset retirement obligations (1) $ — $ — $ 1,771 $ 1,771 December 31, 2017 Asset retirement obligations (1) — — 1,936 1,936 (1) We calculate the fair value of asset retirement obligations by discounting the estimated amount using the current Treasury bill rate adjusted for our credit risk. At June 30, 2018, the balance is included in “Other long-term liabilities,” in the accompanying Condensed Consolidated Balance Sheets. At December 31, 2017, $0.2 million and $1.7 million were included in "Other current liabilities" and "Other long-term liabilities," respectively, in the accompanying Condensed Consolidated Balance Sheets. |
Schedule of changes in asset retirement obligations | The following table provides a summary of changes in our Level 3 asset retirement obligations for the six months ended June 30, 2018 (in thousands): Balance, January 1, 2018 $ 1,936 Accretion 85 Payments (250 ) Balance, June 30, 2018 $ 1,771 |
Schedule of fair value of term loan and revolving credit facility | The fair values of our other Level 3 debt liabilities, estimated using a discounted cash flow analysis based on incremental borrowing rates for similar types of borrowing arrangements, are as follows (in thousands): June 30, 2018 December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value Term loan $ 431,321 $ 435,096 $ 298,500 $ 301,485 Revolving credit facility 16,000 16,140 5,000 5,050 |
GOODWILL AND OTHER INTANGIBLE21
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of re-allocated goodwill | During the six months ended June 30, 2018, our goodwill activity is as follows (in thousands): December 31, 2017 Re-allocations SingleHop Acquisition (Note 4) June 30, 2018 Operating segments: INAP COLO $ 6,003 $ (6,003 ) $ — $ — INAP CLOUD 44,206 (44,206 ) — — INAP US — 28,304 66,496 94,800 INAP INTL — 21,905 — 21,905 Total $ 50,209 $ — $ 66,496 $ 116,705 |
Schedule of components of amortizing intangible assets | The components of our amortizing intangible assets, including capitalized software, are as follows (in thousands): June 30, 2018 December 31, 2017 Gross Carrying Amount AccumulatedAmortization Gross Carrying Amount AccumulatedAmortization Acquired and developed technology $ 69,419 $ (49,936 ) $ 52,825 $ (48,063 ) Customer relationships, trade names and noncompete 110,766 (53,137 ) 71,116 (50,212 ) $ 180,185 $ (103,073 ) $ 123,941 $ (98,275 ) |
Schedule of remaining amortization expense for intangible assets | As of June 30, 2018, remaining amortization expense is as follows (in thousands): Six months remaining in 2018 $ 6,291 2019 12,868 2020 11,989 2021 10,386 2022 8,406 Thereafter 27,172 Total $ 77,112 |
EXIT ACTIVITIES AND RESTRUCTU22
EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of transactions and balances for exit activities and restructuring charges | The following table displays the transactions and balances for exit activities and restructuring charges during the six months ended June 30, 2018 and 2017 (in thousands). Our real estate and severance obligations are substantially related to our INAP US segment. Balance Balance December 31, 2017 Initial Charges Plan Adjustments Cash Payments June 30, Activity for 2018 restructuring charge: Real estate obligations $ — $ 741 $ 45 $ (163 ) $ 623 Activity for 2017 restructuring charge: Real estate obligations 3,380 — 143 (1,896 ) 1,627 Activity for 2016 restructuring charge: Severance 46 — 34 (34 ) 46 Real estate obligations 247 — 14 (77 ) 184 Activity for 2015 restructuring charge: Real estate obligation 64 — 9 (28 ) 45 Service contracts 388 — 14 (99 ) 303 Activity for 2014 restructuring charge: Real estate obligation 691 — 112 (379 ) 424 $ 4,816 $ 741 $ 371 $ (2,676 ) $ 3,252 Balance Balance December 31, 2016 Initial Charges Plan Adjustments Cash Payments June 30, Activity for 2017 restructuring charge: Real estate obligations $ — $ 4,024 $ 322 $ — $ 4,346 Activity for 2016 restructuring charge: Severance 1,911 — 605 (1,679 ) 837 Real estate obligations 933 — 379 (370 ) 942 Activity for 2015 restructuring charge: Real estate obligation 111 — (8 ) (14 ) 89 Service contracts 565 — 10 (99 ) 476 Activity for 2014 restructuring charge: Real estate obligation 1,183 — 59 (304 ) 938 $ 4,703 $ 4,024 $ 1,367 $ (2,466 ) $ 7,628 |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of change in organizational structure | The prior year reclassifications, which did not affect total revenues, total costs of sales and services, operating loss or net loss, are summarized as follows (in thousands): Three Months Ended June 30, 2017 As Previously Reported Reclassification As Reported Revenues: INAP COLO $ 52,044 $ (52,044 ) $ — INAP CLOUD 17,598 (17,598 ) — INAP US — 54,113 54,113 INAP INTL — 15,529 15,529 Costs of sales and services, exclusive of depreciation and amortization: INAP COLO $ 22,070 $ (22,070 ) $ — INAP CLOUD 4,359 (4,359 ) — INAP US — 21,137 21,137 INAP INTL — 5,292 5,292 Six Months Ended June 30, 2017 As Previously Reported Reclassification As Reported Revenues: INAP COLO $ 105,383 $ (105,383 ) $ — INAP CLOUD 36,392 (36,392 ) — INAP US — 109,575 109,575 INAP INTL — 32,200 32,200 Costs of sales and services, exclusive of depreciation and amortization: INAP COLO $ 46,876 $ (46,876 ) $ — INAP CLOUD 8,598 (8,598 ) — INAP US — 44,684 44,684 INAP INTL — 10,790 10,790 |
Schedule of operating results for business segments, along with reconciliation from segment profit to loss before income taxes and equity in (earnings) of equity-method investment | The following table provides segment results with prior period amounts reclassified to conform to the current presentation (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Revenues: INAP US $ 64,067 $ 54,113 $ 121,142 $ 109,575 INAP INTL 17,895 15,529 35,021 32,200 Net revenues 81,962 69,642 156,163 141,775 Cost of sales and services, customer support and sales and marketing: INAP US 34,873 32,776 65,396 68,232 INAP INTL 11,872 8,463 23,005 17,465 Total costs of sales and services, customer support and sales and marketing 46,745 41,239 88,401 85,697 Segment profit: INAP US 29,194 21,337 55,746 41,343 INAP INTL 6,023 7,066 12,016 14,735 Total segment profit 35,217 28,403 67,762 56,078 Exit activities, restructuring and impairments 826 4,628 793 5,651 Other operating expenses, including sales, general and administrative and depreciation and amortization expenses 32,264 25,828 63,963 51,988 Income (loss) from operations 2,127 (2,053 ) 3,006 (1,561 ) Non-operating expenses 15,886 17,336 30,698 25,570 Loss before income taxes and equity in earnings of equity-method investment $ (13,759 ) $ (19,389 ) $ (27,692 ) $ (27,131 ) |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net loss per share | Basic and diluted net loss per share is calculated as follows (in thousands, except per share amounts): Three Months Ended Six Months Ended June 30, 2018 2017 2018 2017 Net loss $ (13,900 ) $ (19,283 ) $ (27,933 ) $ (27,513 ) Less net income attributable to non-controlling interests 23 — 50 — Net loss attributable to common stock $ (13,923 ) $ (19,283 ) $ (27,983 ) $ (27,513 ) Weighted average shares outstanding, basic and diluted 20,053 19,876 19,985 17,992 Net loss per share, basic and diluted $ (0.69 ) $ (0.96 ) $ (1.40 ) $ (1.52 ) Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans 1,345 1,563 1,345 1,563 |
NATURE OF OPERATIONS AND BASI25
NATURE OF OPERATIONS AND BASIS OF PRESENTATION - Narrative (Details) ft² in Millions | 6 Months Ended |
Jun. 30, 2018ft²datacentermarketpoint_of_presence | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of datacenters (datacenter) | datacenter | 56 |
Number of metropolitan markets (market) | market | 21 |
Number of POPs (point of presence) | point_of_presence | 99 |
Area under lease (sqft) | 1 |
Area of data centers (sqft) | 0.6 |
REVENUES - Schedule of Adjustme
REVENUES - Schedule of Adjustments to Previously Reported Financial Statements from the Adoption (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
ASSETS | |||
Prepaid expenses and other assets | $ 9,689 | $ 15,487 | $ 8,673 |
Deposits and other assets | 12,019 | 22,249 | 11,015 |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||
Deferred revenues | 5,837 | 4,112 | 4,861 |
Deferred tax liability | 1,928 | 1,860 | 1,651 |
Other long-term liabilities | 4,142 | 3,128 | 7,744 |
Accumulated deficit | (1,328,502) | (1,300,519) | (1,323,723) |
Balances without Adoption of ASC 606 | |||
ASSETS | |||
Prepaid expenses and other assets | 8,673 | ||
Deposits and other assets | 11,015 | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||
Deferred revenues | 5,271 | 4,861 | |
Deferred tax liability | 1,651 | ||
Other long-term liabilities | 3,341 | 7,744 | |
Accumulated deficit | (1,328,726) | $ (1,323,723) | |
Effect of Change Higher/ (Lower) | Accounting Standards Update 2014-09 | |||
ASSETS | |||
Prepaid expenses and other assets | 6,814 | ||
Deposits and other assets | 11,234 | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||
Deferred revenues | 566 | (749) | |
Deferred tax liability | 209 | ||
Other long-term liabilities | 801 | (4,616) | |
Accumulated deficit | $ 224 | $ 23,204 |
REVENUES - Schedule of Current
REVENUES - Schedule of Current Impact from Adoption on Consolidated Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Total revenues | $ 81,962 | $ 69,642 | $ 156,163 | $ 141,775 |
Sales, general and administrative | 19,602 | 15,571 | 39,456 | 32,135 |
Total operating costs and expenses | 79,835 | 71,695 | 153,157 | 143,336 |
Income from operations | 2,127 | (2,053) | 3,006 | (1,561) |
Loss before income taxes, non-controlling interest and equity in earnings of equity-method investment | (13,759) | (19,389) | (27,692) | (27,131) |
Net loss | (13,900) | (19,283) | (27,933) | (27,513) |
Less net income attributable to non-controlling interest | 23 | 0 | 50 | 0 |
Net loss attributable to INAP stockholders | (13,923) | (19,283) | (27,983) | (27,513) |
Comprehensive loss | (13,862) | $ (19,191) | (27,861) | $ (27,263) |
Balances without Adoption of ASC 606 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Total revenues | 81,757 | 155,717 | ||
Sales, general and administrative | 19,624 | 39,572 | ||
Total operating costs and expenses | 79,857 | 153,273 | ||
Income from operations | 1,900 | 2,444 | ||
Loss before income taxes, non-controlling interest and equity in earnings of equity-method investment | (13,986) | (28,254) | ||
Net loss | (14,127) | (28,495) | ||
Less net income attributable to non-controlling interest | 23 | 50 | ||
Net loss attributable to INAP stockholders | (14,150) | (28,545) | ||
Comprehensive loss | (14,150) | (28,423) | ||
Effect of Change Higher/ (Lower) | Accounting Standards Update 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Total revenues | 205 | 446 | ||
Sales, general and administrative | (22) | (116) | ||
Total operating costs and expenses | (22) | (116) | ||
Income from operations | 227 | 562 | ||
Loss before income taxes, non-controlling interest and equity in earnings of equity-method investment | 227 | 562 | ||
Net loss | 227 | 562 | ||
Less net income attributable to non-controlling interest | 0 | 0 | ||
Net loss attributable to INAP stockholders | 227 | 562 | ||
Comprehensive loss | $ 227 | $ 562 |
REVENUES - Schedule of Curren28
REVENUES - Schedule of Current Impact from Adoption on Consolidated Balance Sheet (Details) (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
ASSETS | |||
Contract assets | $ 8,474 | $ 0 | |
Non-current contract assets | 12,760 | 0 | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||
Deferred revenues | 5,837 | $ 4,112 | 4,861 |
Other long-term liabilities | 4,142 | 3,128 | 7,744 |
Accumulated deficit | (1,328,502) | (1,300,519) | (1,323,723) |
Balances without Adoption of ASC 606 | |||
ASSETS | |||
Contract assets | 7,490 | ||
Non-current contract assets | 12,153 | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||
Deferred revenues | 5,271 | 4,861 | |
Other long-term liabilities | 3,341 | 7,744 | |
Accumulated deficit | (1,328,726) | $ (1,323,723) | |
Effect of Change Higher/ (Lower) | Accounting Standards Update 2014-09 | |||
ASSETS | |||
Contract assets | 984 | ||
Non-current contract assets | 607 | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||
Deferred revenues | 566 | (749) | |
Other long-term liabilities | 801 | (4,616) | |
Accumulated deficit | $ 224 | $ 23,204 |
REVENUES - Summary of Revenue b
REVENUES - Summary of Revenue by Source (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | $ 81,962 | $ 69,642 | $ 156,163 | $ 141,775 |
INAP US | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 64,067 | 54,113 | 121,142 | 109,575 |
INAP US | Colocation | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 30,866 | 29,614 | 61,802 | 59,626 |
INAP US | Network services | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 13,563 | 15,119 | 27,382 | 30,623 |
INAP US | Cloud | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 19,638 | 9,380 | 31,958 | 19,326 |
INAP INTL | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 17,895 | 15,529 | 35,021 | 32,200 |
INAP INTL | Colocation | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 1,459 | 1,229 | 2,977 | 2,579 |
INAP INTL | Network services | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 2,792 | 1,530 | 5,763 | 3,047 |
INAP INTL | Cloud | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | $ 13,644 | $ 12,770 | $ 26,281 | $ 26,574 |
REVENUES - Summary of Revenue30
REVENUES - Summary of Revenue by Geography (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | $ 81,962 | $ 69,642 | $ 156,163 | $ 141,775 |
INAP US | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 65,168 | 55,206 | 123,319 | 111,751 |
INAP INTL | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 16,794 | 14,436 | 32,844 | 30,024 |
United States | INAP US | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 65,168 | 55,206 | 123,319 | 111,751 |
United States | INAP INTL | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 0 | 0 | 0 | 0 |
Canada | INAP US | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 0 | 0 | 0 | 0 |
Canada | INAP INTL | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 9,549 | 9,531 | 18,659 | 19,899 |
Other countries | INAP US | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | 0 | 0 | 0 | 0 |
Other countries | INAP INTL | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Net revenues | $ 7,245 | $ 4,905 | $ 14,185 | $ 10,125 |
REVENUES - Narrative (Details)
REVENUES - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Revenue recognized that was included in the contract liability balance at the beginning of the year | $ 1.1 | |
Fulfillment Costs and Commission Fees | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Capitalized contract cost | $ 27.6 | 27.6 |
Amortization of capitalized contract costs | $ 2.9 | $ 5.8 |
ACQUISITION - Narrative (Detail
ACQUISITION - Narrative (Details) - SingleHop, LLC - USD ($) $ in Millions | Feb. 28, 2018 | Jun. 30, 2018 |
Business Acquisition [Line Items] | ||
Payment to acquire business | $ 132 | |
Acquisition related costs | $ 2.9 | |
Customer relationships | ||
Business Acquisition [Line Items] | ||
Weighted Average | 10 years | |
Noncompete agreements | ||
Business Acquisition [Line Items] | ||
Weighted Average | 4 years | |
Trade names | ||
Business Acquisition [Line Items] | ||
Weighted Average | 8 years | |
Technology | ||
Business Acquisition [Line Items] | ||
Weighted Average | 7 years |
ACQUISITION - Schedule of Fair
ACQUISITION - Schedule of Fair Value of Acquired Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | |
Intangible assets: | |||
Goodwill | $ 116,705 | $ 50,209 | |
SingleHop, LLC | |||
Business Acquisition [Line Items] | |||
Cash | 2,823 | $ 2,857 | |
Measurement Period Adjustments, Cash | (34) | ||
Prepaid expenses and other assets | 2,227 | 1,683 | |
Measurement Period Adjustments, Prepaid expenses and other assets | 544 | ||
Property, plant and equipment | 14,885 | 14,885 | |
Measurement Period Adjustments, Property, plant and equipment | 0 | ||
Other long term assets | 576 | 39 | |
Measurement Period Adjustments, Other long term assets | 537 | ||
Intangible assets: | |||
Goodwill | 66,496 | 67,868 | |
Measurement Period Adjustments, Goodwill | (1,372) | ||
Total assets acquired | 141,907 | 142,232 | |
Measurement Period Adjustments, Total assets acquired | (325) | ||
Accounts payable and accrued liabilities | 4,874 | 5,098 | |
Measurement Period Adjustments, Accounts payable and accrued liabilities | (224) | ||
Deferred revenue | 1,499 | 1,600 | |
Measurement Period Adjustments, Deferred revenue | (101) | ||
Long term liabilities | 534 | 534 | |
Measurement Period Adjustments, Long term liabilities | 0 | ||
Net assets acquired | 135,000 | 135,000 | |
Measurement Period Adjustments, Net assets acquired | 0 | ||
SingleHop, LLC | Noncompete agreements | |||
Intangible assets: | |||
Finite lived intangible assets | 4,000 | 4,000 | |
Measurement Period Adjustments, Intangible assets | 0 | ||
SingleHop, LLC | Trade names | |||
Intangible assets: | |||
Finite lived intangible assets | 1,700 | 1,700 | |
Measurement Period Adjustments, Intangible assets | 0 | ||
SingleHop, LLC | Technology | |||
Intangible assets: | |||
Finite lived intangible assets | 15,100 | 15,100 | |
Measurement Period Adjustments, Intangible assets | 0 | ||
SingleHop, LLC | Customer relationships | |||
Intangible assets: | |||
Finite lived intangible assets | 34,100 | $ 34,100 | |
Measurement Period Adjustments, Intangible assets | $ 0 |
ACQUISITION - Summary of Unaudi
ACQUISITION - Summary of Unaudited Proforma Financial Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Business Combinations [Abstract] | ||||
Revenues | $ 81,962 | $ 81,792 | $ 164,288 | $ 165,999 |
Net loss | $ (13,900) | $ (19,462) | $ (29,134) | $ (28,108) |
Net Income per share (in dollars per share) | $ (0.69) | $ (0.98) | $ (1.46) | $ (1.56) |
Basic and diluted (in shares) | 20,053 | 19,876 | 19,985 | 17,992 |
FAIR VALUE MEASUREMENTS - Summa
FAIR VALUE MEASUREMENTS - Summary of Assets and liabilities measured at fair value on recurring basis (Details) - Recurring basis - Asset retirement obligations - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Total | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Asset retirement obligations | $ 1,771 | $ 1,936 |
Total | Other Noncurrent Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Asset retirement obligations | 200 | |
Total | Other Current Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Asset retirement obligations | 1,700 | |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Asset retirement obligations | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Asset retirement obligations | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Asset retirement obligations | $ 1,771 | $ 1,936 |
FAIR VALUE MEASUREMENTS - Sum36
FAIR VALUE MEASUREMENTS - Summary of changes in Level 3 financial asset - Asset retirement obligation (Details) - Asset retirement obligations $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance, beginning of period | $ 1,936 |
Accretion | 85 |
Payments | (250) |
Balance, end of period | $ 1,771 |
FAIR VALUE MEASUREMENTS - Sum37
FAIR VALUE MEASUREMENTS - Summary of fair value Level 3 debt - Term loan (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term loan | $ 431,321 | $ 298,500 |
Revolving credit facility | 16,000 | 5,000 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Term loan | 435,096 | 301,485 |
Revolving credit facility | $ 16,140 | $ 5,050 |
GOODWILL AND OTHER INTANGIBLE38
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)reporting_unit | Jun. 30, 2017USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Number of reportable units (reporting unit) | reporting_unit | 7 | |||
Amortization expense for intangible assets | $ | $ 3.1 | $ 1.1 | $ 4.8 | $ 2.2 |
GOODWILL AND OTHER INTANGIBLE39
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Re-allocations of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Operating segments: | |
Goodwill, beginning of period | $ 50,209 |
Re-allocations | 0 |
SingleHop Acquisition | 66,496 |
Goodwill, end of period | 116,705 |
INAP COLO | |
Operating segments: | |
Goodwill, beginning of period | 6,003 |
Re-allocations | (6,003) |
SingleHop Acquisition | 0 |
Goodwill, end of period | 0 |
INAP CLOUD | |
Operating segments: | |
Goodwill, beginning of period | 44,206 |
Re-allocations | (44,206) |
SingleHop Acquisition | 0 |
Goodwill, end of period | 0 |
INAP US | |
Operating segments: | |
Goodwill, beginning of period | 0 |
Re-allocations | 28,304 |
SingleHop Acquisition | 66,496 |
Goodwill, end of period | 94,800 |
INAP INTL | |
Operating segments: | |
Goodwill, beginning of period | 0 |
Re-allocations | 21,905 |
SingleHop Acquisition | 0 |
Goodwill, end of period | $ 21,905 |
GOODWILL AND OTHER INTANGIBLE40
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Components of Amortizing Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 180,185 | $ 123,941 |
Accumulated Amortization | (103,073) | (98,275) |
Acquired and developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 69,419 | 52,825 |
Accumulated Amortization | (49,936) | (48,063) |
Customer relationships, trade names and noncompete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 110,766 | 71,116 |
Accumulated Amortization | $ (53,137) | $ (50,212) |
GOODWILL AND OTHER INTANGIBLE41
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Remaining Amortization Expense for Intangible Assets (Details) $ in Thousands | Jun. 30, 2018USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Six months remaining in 2018 | $ 6,291 |
2,019 | 12,868 |
2,020 | 11,989 |
2,021 | 10,386 |
2,022 | 8,406 |
Thereafter | 27,172 |
Total | $ 77,112 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - USD ($) | Apr. 09, 2018 | Feb. 06, 2018 | Jun. 28, 2017 | Apr. 06, 2017 | Mar. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2017 |
Short-term Debt [Line Items] | |||||||
Debt issuance costs | $ 7,696,000 | $ 8,277,000 | |||||
Loss on extinguishment and modification of debt | $ 0 | $ 6,785,000 | |||||
Term Loan | Base Rate | |||||||
Short-term Debt [Line Items] | |||||||
Interest rate during period for the credit agreement | 5.00% | ||||||
Term Loan | London Interbank Offered Rate (LIBOR) | |||||||
Short-term Debt [Line Items] | |||||||
Interest rate during period for the credit agreement | 6.00% | ||||||
Revolving credit facility | Base Rate | |||||||
Short-term Debt [Line Items] | |||||||
Interest rate during period for the credit agreement | 4.50% | ||||||
Revolving credit facility | London Interbank Offered Rate (LIBOR) | |||||||
Short-term Debt [Line Items] | |||||||
Interest rate during period for the credit agreement | 5.50% | ||||||
2017 Credit Agreement | Line of Credit | |||||||
Short-term Debt [Line Items] | |||||||
Debt issuance costs | $ 5,700,000 | ||||||
2017 Credit Agreement | Term Loan | |||||||
Short-term Debt [Line Items] | |||||||
Total amount available under Credit Agreement | 300,000,000 | ||||||
Debt issuance costs | 3,300,000 | ||||||
Debt balance | $ 431,300,000 | ||||||
Interest rate at period end | 7.80% | ||||||
2017 Credit Agreement | Term Loan | Line of Credit | |||||||
Short-term Debt [Line Items] | |||||||
Loss on extinguishment and modification of debt | 1,900,000 | ||||||
2017 Credit Agreement | Revolving credit facility | |||||||
Short-term Debt [Line Items] | |||||||
Total amount available under Credit Agreement | 25,000,000 | ||||||
Debt issuance costs | 400,000 | ||||||
Debt balance | $ 16,000,000 | ||||||
Interest rate at period end | 8.99% | ||||||
2017 Credit Agreement | Incremental Term Loan | |||||||
Short-term Debt [Line Items] | |||||||
Total amount available under Credit Agreement | $ 135,000,000 | ||||||
Credit Agreement | |||||||
Short-term Debt [Line Items] | |||||||
Loss on extinguishment and modification of debt | $ 4,800,000 | ||||||
Credit Agreement | London Interbank Offered Rate (LIBOR) | |||||||
Short-term Debt [Line Items] | |||||||
Basis spread on variable rate | 1.00% | ||||||
Credit Agreement | Prime Rate | |||||||
Short-term Debt [Line Items] | |||||||
Basis spread on variable rate | 2.00% | ||||||
Credit Agreement | Federal Funds Effective Swap Rate | |||||||
Short-term Debt [Line Items] | |||||||
Basis spread on variable rate | 0.50% | ||||||
Second Amendment to 2017 Credit Agreement | Line of Credit | |||||||
Short-term Debt [Line Items] | |||||||
Debt issuance costs | 1,000,000 | ||||||
Legal and professional expenses | 200,000 | ||||||
Second Amendment to 2017 Credit Agreement | Term Loan | Line of Credit | |||||||
Short-term Debt [Line Items] | |||||||
Debt issuance costs | $ 800,000 | ||||||
Third Amendment To 2017 Credit Agreement | Line of Credit | |||||||
Short-term Debt [Line Items] | |||||||
Debt issuance costs | $ 5,000,000 | ||||||
Legal and professional expenses | 100,000 | ||||||
Third Amendment To 2017 Credit Agreement | Term Loan | Line of Credit | |||||||
Short-term Debt [Line Items] | |||||||
Debt issuance costs | $ 4,900,000 | ||||||
Fourth Amendment to Credit Agreement | Term Loan | Line of Credit | |||||||
Short-term Debt [Line Items] | |||||||
Debt issuance costs | $ 1,700,000 | ||||||
Debt issuance costs | 1,600,000 | ||||||
Legal and professional expenses | $ 100,000 | ||||||
Reduction of interest rate margins | 1.25% | ||||||
Prepayment premium percentage | 1.00% |
EXIT ACTIVITIES AND RESTRUCTU43
EXIT ACTIVITIES AND RESTRUCTURING LIABILITIES - Exit activities and restructuring charges for Real estate obligations (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Restructuring Reserve [Roll Forward] | ||
Balance, beginning of period | $ 4,816 | $ 4,703 |
Initial Charges | 741 | 4,024 |
Plan Adjustments | 371 | 1,367 |
Cash Payments | (2,676) | (2,466) |
Balance, end of period | 3,252 | 7,628 |
Activity for 2018 restructuring charge: | Real estate obligations | ||
Restructuring Reserve [Roll Forward] | ||
Balance, beginning of period | 0 | |
Initial Charges | 741 | |
Plan Adjustments | 45 | |
Cash Payments | (163) | |
Balance, end of period | 623 | |
Activity for 2017 restructuring charge: | Real estate obligations | ||
Restructuring Reserve [Roll Forward] | ||
Balance, beginning of period | 3,380 | 0 |
Initial Charges | 0 | 4,024 |
Plan Adjustments | 143 | 322 |
Cash Payments | (1,896) | 0 |
Balance, end of period | 1,627 | 4,346 |
Activity for 2016 restructuring charge: | Real estate obligations | ||
Restructuring Reserve [Roll Forward] | ||
Balance, beginning of period | 247 | 933 |
Initial Charges | 0 | 0 |
Plan Adjustments | 14 | 379 |
Cash Payments | (77) | (370) |
Balance, end of period | 184 | 942 |
Activity for 2016 restructuring charge: | Severance | ||
Restructuring Reserve [Roll Forward] | ||
Balance, beginning of period | 46 | 1,911 |
Initial Charges | 0 | 0 |
Plan Adjustments | 34 | 605 |
Cash Payments | (34) | (1,679) |
Balance, end of period | 46 | 837 |
Activity for 2015 restructuring charge: | Real estate obligations | ||
Restructuring Reserve [Roll Forward] | ||
Balance, beginning of period | 64 | 111 |
Initial Charges | 0 | 0 |
Plan Adjustments | 9 | (8) |
Cash Payments | (28) | (14) |
Balance, end of period | 45 | 89 |
Activity for 2015 restructuring charge: | Service contracts | ||
Restructuring Reserve [Roll Forward] | ||
Balance, beginning of period | 388 | 565 |
Initial Charges | 0 | 0 |
Plan Adjustments | 14 | 10 |
Cash Payments | (99) | (99) |
Balance, end of period | 303 | 476 |
Activity for 2014 restructuring charge: | Real estate obligations | ||
Restructuring Reserve [Roll Forward] | ||
Balance, beginning of period | 691 | 1,183 |
Initial Charges | 0 | 0 |
Plan Adjustments | 112 | 59 |
Cash Payments | (379) | (304) |
Balance, end of period | $ 424 | $ 938 |
OPERATING SEGMENTS - Narrative
OPERATING SEGMENTS - Narrative (Details) | 6 Months Ended |
Jun. 30, 2018point_of_presencesegment | |
Segment Reporting [Abstract] | |
Number of reportable segments (segment) | segment | 2 |
Segment Reporting Information [Line Items] | |
Number of POPs (point of presence) | 99 |
Network services | |
Segment Reporting Information [Line Items] | |
Number of POPs (point of presence) | 99 |
OPERATING SEGMENTS - Schedule o
OPERATING SEGMENTS - Schedule of Change in Organizational Structure (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Total revenues | $ 81,962 | $ 69,642 | $ 156,163 | $ 141,775 |
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 27,976 | 26,429 | 53,013 | 55,474 |
Inap Colo [Member] | ||||
Revenues: | ||||
Total revenues | 0 | 0 | ||
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 0 | 0 | ||
INAP CLOUD | ||||
Revenues: | ||||
Total revenues | 0 | 0 | ||
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 0 | 0 | ||
INAP US | ||||
Revenues: | ||||
Total revenues | 64,067 | 54,113 | 121,142 | 109,575 |
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 21,137 | 44,684 | ||
INAP INTL | ||||
Revenues: | ||||
Total revenues | $ 17,895 | 15,529 | $ 35,021 | 32,200 |
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 5,292 | 10,790 | ||
Previously Reported [Member] | Inap Colo [Member] | ||||
Revenues: | ||||
Total revenues | 52,044 | 105,383 | ||
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 22,070 | 46,876 | ||
Previously Reported [Member] | INAP CLOUD | ||||
Revenues: | ||||
Total revenues | 17,598 | 36,392 | ||
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 4,359 | 8,598 | ||
Previously Reported [Member] | INAP US | ||||
Revenues: | ||||
Total revenues | 0 | 0 | ||
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 0 | 0 | ||
Previously Reported [Member] | INAP INTL | ||||
Revenues: | ||||
Total revenues | 0 | 0 | ||
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 0 | 0 | ||
Restatement Adjustment [Member] | Inap Colo [Member] | ||||
Revenues: | ||||
Total revenues | (52,044) | (105,383) | ||
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | (22,070) | (46,876) | ||
Restatement Adjustment [Member] | INAP CLOUD | ||||
Revenues: | ||||
Total revenues | (17,598) | (36,392) | ||
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | (4,359) | (8,598) | ||
Restatement Adjustment [Member] | INAP US | ||||
Revenues: | ||||
Total revenues | 54,113 | 109,575 | ||
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | 21,137 | 44,684 | ||
Restatement Adjustment [Member] | INAP INTL | ||||
Revenues: | ||||
Total revenues | 15,529 | 32,200 | ||
Cost of sales and services, customer support and sales and marketing: | ||||
Costs of sales and services, exclusive of depreciation and amortization | $ 5,292 | $ 10,790 |
OPERATING SEGMENTS - Summary of
OPERATING SEGMENTS - Summary of operating results for business segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues: | ||||
Total revenues | $ 81,962 | $ 69,642 | $ 156,163 | $ 141,775 |
Cost of sales and services, customer support and sales and marketing: | ||||
Total costs of sales and services, customer support and sales and marketing | 46,745 | 41,239 | 88,401 | 85,697 |
Segment profit: | ||||
Total segment profit | 35,217 | 28,403 | 67,762 | 56,078 |
Exit activities, restructuring and impairments | 826 | 4,628 | 793 | 5,651 |
Other operating expenses, including sales, general and administrative and depreciation and amortization expenses | 32,264 | 25,828 | 63,963 | 51,988 |
Income from operations | 2,127 | (2,053) | 3,006 | (1,561) |
Non-operating expenses | 15,886 | 17,336 | 30,698 | 25,570 |
Loss before income taxes, non-controlling interest and equity in earnings of equity-method investment | (13,759) | (19,389) | (27,692) | (27,131) |
INAP US | ||||
Revenues: | ||||
Total revenues | 64,067 | 54,113 | 121,142 | 109,575 |
Cost of sales and services, customer support and sales and marketing: | ||||
Total costs of sales and services, customer support and sales and marketing | 34,873 | 32,776 | 65,396 | 68,232 |
Segment profit: | ||||
Total segment profit | 29,194 | 21,337 | 55,746 | 41,343 |
INAP INTL | ||||
Revenues: | ||||
Total revenues | 17,895 | 15,529 | 35,021 | 32,200 |
Cost of sales and services, customer support and sales and marketing: | ||||
Total costs of sales and services, customer support and sales and marketing | 11,872 | 8,463 | 23,005 | 17,465 |
Segment profit: | ||||
Total segment profit | $ 6,023 | $ 7,066 | $ 12,016 | $ 14,735 |
NET LOSS PER SHARE - Schedule o
NET LOSS PER SHARE - Schedule of basic and diluted net loss per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Net loss | $ (13,900) | $ (19,283) | $ (27,933) | $ (27,513) |
Less net income attributable to non-controlling interest | 23 | 0 | 50 | 0 |
Net loss attributable to INAP stockholders | $ (13,923) | $ (19,283) | $ (27,983) | $ (27,513) |
Weighted average shares outstanding, basic and diluted (in shares) | 20,053 | 19,876 | 19,985 | 17,992 |
Net loss per share, basic and diluted (in dollars per share) | $ (0.69) | $ (0.96) | $ (1.40) | $ (1.52) |
Anti-dilutive securities excluded from diluted net loss per share calculation for stock-based compensation plans (in shares) | 1,345 | 1,563 | 1,345 | 1,563 |