iWeb reports revenue increase of 94% in the second quarter; EBITDA of $2 million

MONTREAL, May 20 /CNW Telbec/ - iWeb (TSX-V: IWB), a global provider of Internet hosting services and IT infrastructure, today released its financial results for the quarter ended March 31, 2009. The complete interim financial statements and management report of the Company are available on the websites[ www.sedar.com ] and [ www.iweb.com ]. Second Quarter Highlights: -------------------------- - Growth in revenues of 94%, from $3.6 million to $6.9 million for the second quarter ending March 31, 2009, compared to the same period in 2008 - Adjusted EBITDA of almost $2.0 million for 2009, i.e. 28.5% of revenues - Operating income of $324,000, compared to $6,000 for the same period of the preceding year - Net loss of $246,000, following the additional unrealized theoretical exchange lost on long-term debt denominated in U.S. dollars "Our revenue growth is still continuing on the trend of the first quarter with an increase of more than 90% over last year." said Eric Chouinard, iWeb President and CEO. "In addition, profitability in terms of operation is demonstrated, as indicated by the operating income of more than $300,000 for the last quarter. EBITDA reaches almost $2 million, at nearly 30% of revenues. These are many factors showing the strength of our operations". "Monthly revenues reach the $2.4 million number for the month of March 2009. But, we have to work harder in order to keep that trend, given the current economic context. We noticed a slowdown in the level of our new net recurring revenues for the last few months, due to the increase in our churn rate. This increase in churn is mainly attributable to present customers who are downsizing their level of services, in order to adjust to the difficult financial times. We believe that these customers will reorder these services when the economy is back on tracks." adds Martin Leclair, President, Products and Technology. "In spite of the strong improvement of our operations in terms of profitability, it is still not apparent on our net results." indicates Philip Tousignant, Chief Financial Officer. "Once again, due to financial expenses resulting from external market conditions totalling $560,000 for the last quarter, we are reporting yet another net loss. The main element of these financial expenses is the unrealized exchange loss on the long-term debt of $10 million US." Second quarter Financial Review ------------------------------- Revenues for the second quarter ended March 31, 2009 increased by $3.4 million or 94%, compared to the same period of 2008, to reach almost $6.9 million. Revenues for the second quarter of fiscal 2009 originated from iWeb's three main service offerings as follows: Dedicated servers accounted for 85%, followed by 8% for co-location services and 7% for the shared web hosting. 78% of iWeb revenues for the quarter were generated in U.S. dollars, a significant advantage for the Company during the last quarter, as the impact of the decrease in value of the Canadian dollar against the U.S. dollar compared to the same period of last year, had a positive impact of more than $1.0 million on revenues. Without taking into account this impact, revenues would have increased by 65% compared to the quarter ended on March 31, 2008. Gross profit was 51% of revenues for the second quarter of 2009 compared to 53% for the same period of the previous year. The favourable impact of the variation of Canada/U.S. exchange rates on gross profit margin for the last quarter was more than compensated by higher payroll expenses in order to support the sustained high growth of the Company's operations. Operating expenses for the quarter went from 52.1% of revenues in 2008 to 46.3% in 2009. This improvement is explained by lower costs compared to the revenues for selling and administrative expenses, but compensated by a rise in interest expenses. Selling expenses decreased from 17.3% to 15.3% of revenues for the quarter ended March 31, 2009. Administrative expenses decreased from 26.0% to 20.2% of revenues for the quarter ended March 31, 2009. Interest expenses increased significantly (from 7.2% to 10.9% of revenues for the second quarter of 2009). This is caused by the increase in long-term debt in order to support the important addition of the infrastructures of the Company, the greater part of which carry interests in U.S. currency. The operating income of the Company was $324,000 for the quarter ended March 31, 2009, compared to $6,000 for the corresponding period of the preceding year. The other financial expenses represent elements which are the consequence of the external conditions of the market. These expenses amounted to $560,000 for the last quarter ended March 31, 2009. The most important element of these expenses is the unrealized exchange loss on the long-term debt of $10 million US. For the end of quarter ended March 31, 2009, the Canada/U.S. exchange rate was 1.26, compared to 1.225 for the beginning of quarter, explaining the unrealized loss of $356,000. Taking into account the impact of the other financial expenses, the Company recorded a net loss of $246,000 for the second quarter of 2009, compared to a net income of $19,000 for the quarter ended March 31, 2008. Key Financial Data (in thousands of Canadian dollars) ----------------------------------------------------- Second Quarter ended March 31 2009 2008 Revenues $ 6,933 $ 3,575 Gross Profit $ 3,545 $ 1,897 Operating income $ 324 $ 6 Net earnings (loss) ($ 246) $ 19 Earnings (loss) per share - basic ($ 0.0088) $ 0.0007 Adjusted EBITDA(1) $ 1,978 $ 810 As at As at March 31, September 30, 2009 2008 Total assets $ 31,268 $ 29,361 Shareholders' equity $ 4,662 $ 6,122 Cash and cash equivalents $ 1,318 $ 3,261 1- The Company defines Adjusted EBITDA as Earnings before financial expenses, income taxes, depreciation and amortization, and stock-based compensation. About iWeb Group Inc. --------------------- iWeb is a worldwide provider of Internet hosting services and IT Infrastructure, with three secure data centers in Montreal. Since 2004, the company's compounded annual growth rate has been above 75%, making it one of Canada's 100 fastest growing companies according to PROFIT Magazine. Founded in 1996 in Montreal, iWeb now generates more than 60% of its revenues from abroad; and employs over 170 full-time employees providing Dedicated Server Hosting, Co-location and Web Hosting services to more than 21,000 customers in 150 countries. iWeb's shares are listed on the TSX Venture Exchange (TSX-V : IWB); for more information please consult the Company's website: [ http://about.iweb.com ] Caution concerning forward-looking statements --------------------------------------------- This news release contains certain forward-looking statements. These statements relate to future events or iWeb's future economic performance and reflect the current assumptions and expectations of management. Certain unknown factors may affect the events, economic performance and results of operations. iWeb undertakes no obligation, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release. %SEDAR: 00018802EF

For further information: Philip Tousignant, Chief Financial Officer, iWeb Group Inc., (514) 286-4242 ext. 149, [ ptousignant@iweb.com ]; Bernard Dahl, Director, Communications and Public Relations, iWeb Group Inc., (514) 802-2801, [ bdahl@iweb.com ]

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iWeb reports revenue increase of 94% in the second quarter; EBITDA of $2 million