Internap Network Services Corporation (NASDAQ:INAP)
Drexel Hamilton Technology, Media and Telecom Conference Call
September 08, 2016 10:30 AM ET
Kevin Dotts - CFO
Barry Sine - Drexel Hamilton
Okay, again thank you. Time for our next presentation. So the next company that we have, I guess we’re doing this stuff [phon] better because we just had Inteliquent and now we have Internap. Internap is traded on the NASDAQ, the ticker symbol is I-N-A-P. We’re seeing a lot of news in the data center space, and I think it’s a very, very interesting data center company and we’re pleased to have Kevin Dotts, the Chief Financial Officer with us.
I do want to thank Internap. As you guys know we are a service-disabled veteran, owned and operated investment bank. So by coming here, and speaking at our conference, meeting with our clients, helping our veterans build the business, as well as telling the Internap story. So Kevin, thank you very much. With that I’ll turn the podium over to you.
Great, thank you very much, Barry, appreciate it. And thanks everybody for attending this morning. So I'm just going to kind of flow through and talk a little bit about the business and then hopefully I can leave some time for any questions about what's going on with Internap.
Internap, this page, basically all your forward looking non-GAAP type of information and SEC normal disclosures.
Skipping across that, I want to kind of get second quarter financial results. So as you can see, the discussion about the business here that's in the course of a transition. Revenue $74.3 million, down versus second quarter of 2015; Data Center, and Network Services, which our Data Center Network Services business is basically our co-location as well as our network IT business, revenues of about $50 million, that’s down against prior year.
Cloud and hosting services, again we’ll talk a little bit more on the transition, what’s going on there, revenues about $24 million in the second quarter results, and that was versus prior year's, down 11%. You’ll see the GAAP net losses at $0.21 per share. That has slightly improved over the prior year where it was down $0.24, and again that transitional story we’ll talk about. EBITDA $20.2 million, which is an increase of 6% versus the prior year.
So what you have is specially [ph] on the revenue line, managing through OpEx and other [indiscernible] we will be getting the turnaround at the bottom line. And adjusted EBITDA margin at 27.1%, up 330 basis points, our margin rate year-over-year. And for our second quarter results probably one of our highest second quarters in company’s history.
So the overview, founded in 1996. As Barry did mention, traded under the symbol on NASDAQ, of I-N-A-P, we have got $128 million of market cap, we have about 10,000 customers. We break that group into kind of two groups, a small medium business group of about 7,500 customers and about 2,500 customers are enterprise customers.
We’re headquartered in Atlanta. We do have a global footprint. I'll walk you through that later. The business segments, our two data center network services and the cloud hosting. So first half revenues about $150 million, GAAP net loss of $20 million, adjusted EBITDA of $41 million.
The data centers, 50 data centers of which we, company control or manage 15 of those data centers, 35 of those data centers we work with a partner data center product.
So what underpins effectively all of the Internap’s activities is its data centers. And that 50 data centers we talk about, we fill that in with the following products. We offer cloud. And when we talk about cloud, while we do offer from virtual cloud that would be akin to what most people would associate with something like AWS [ph]. What we are really focus on, the larger part of our cloud is really a fair amount of server product, which is our higher performing product, because it’s a dedicated server product. Think about all the -- call it the energy going into that server, it's dedicated to compute and storage as opposed to being used for a hyper margin layer to manage the orchestration [ph] layer of our product. So again that gives our type of customers, which we'll talk about in little bit, a certain technology advantage, that’s why they come to us. That’s how we differentiated this with people like AWS.
We have a dedicated hosting business. [indiscernible] our dedicated, our custom hosting business is more weighted towards people who need compartments that are a [indiscernible] compliant or PCI compliant. So again more of a special product, managed hosting product and then we have the co-location product. And the co-location product is basically more can we be competitive with companies like Equinix et cetera.
Around that we have again good support and expertise, but all these products are supported by accelerated network. When Internap was founded back in 1996, basically it was founded on patented technology that still exists today called managing the net routing optimization or accelerated network. And basically what it does is, is allows us to be carrier agnostic, have many carriers come into the same data center and effectively, constantly move traffic to the highest performing networks and that our customers get the best performance. And again all that is kind of managed through our portals of similar networks [ph].
So looking globally as to where our footprints are. You can see where we have our co-location footprint, generally in North America, where we company control and managed data centers, Atlanta, Boston, Dallas, Houston, New York, Silicon Valley, Santa Clara, Los Angeles, Seattle and then with the iWeb acquisition back in 2013 in Montreal.
And then we’ll fill in those data centers, and then we’ll use some of our partner data centers, as I talked about, the 35 other data centers we will put in our cloud product. Again, our bare-metal server product as well as our virtual product.
In North America, our key centers are Dallas, New York, and again Santa Clara. In EMEA, we have Amsterdam and London, and then in Asia Pacific, we’re in Hong Kong and Singapore.
And then from a managed hosting perspective, again filling in for that product lines, you will see that again within our company controlled data centers and again through our partnered data centers outside the U.S.
So how we go to market. You will see we have a product portfolio. We talked about our cloud managed hosting co-location network, how we differentiate ourselves from competition is performance. And again, we’re going to talk about the managed [indiscernible] and rounding optimization or patented network technology combined with something like a bare metal server. It’s something that provides somebody let's say in the AdTech space, 30 to 40 milliseconds of advantage in bidding the AdTech market.
And that might mean to them a couple of million dollars of revenue more per day than they could get with other providers. And again that’s why these high tech companies are going to come to Internet will take down and buy it [ph] from us as opposed to our competitors.
Routes to market, we have historically had a direct sales force, call it 15 people, kind of smile and dialing [indiscernible] et cetera, that are supported by another 20 plus roughly sales engineers, and then another folks, of sales operating managers, and back office folks that lead up to another little over a 100 people in our direct sales organization.
We have got a 100 relationships with channels sales partners. And to be transparent, let’s say about 10 out of that 100 really drive the majority of our channel sales. If you think about our bookings, I would say, really roughly, call it 60% of my bookings come through direct sales, another 20% come through channel sales, that’s actually growing. We’ve seen it strike up to closer to 25%. And then what we acquired with iWeb a couple of years [ph] ago is more the capabilities to do more online activity, shopping cart, as people are getting more comfortable with the cloud, they’re getting more comfortable with starting up, spooling up servers on clouds, scaling out the servers on the cloud or getting down on the cloud, the e-commerce shopping cart capabilities allow customers that type of flexibility.
And again, we target our market as the companies, where performance matters most. On the key vertical markets, you see on page eight here, online gambling, computed gaming, pardon me is one that is, has historically been a strength for Internap. So when you have the image on the screen and then you don’t want to have the links [ph] issue or somebody is transacting some type of [indiscernible] to make sure that they have definitely the right tool to use in the game et cetera. And basically, you don’t want that lag [ph], because gamers will immediately leave this game for another game, if they have some type of slowness or lack of user experience.
I mentioned the example earlier of AdTech. AdTech is another one, where we see a lot of strength within our verticals. Again, giving a customer the ability to bid more auctions per day, get more ad placements per day versus other competitors in that space is interesting, getting all the audience information that’s out there on the Internet, get on the Internet, on mobile, those things become very important to the AdTech space. And again, we get a speed advantage on the Internet, and that’s something that’s highly desirable.
Media and entertainment, interestingly enough we have in LA, in particular, a small burgeoning type of entertainment area, specialty, where you can do a lot of video, and image rendering, tend to drive a density of servers in a co-lo environment. And so we have capabilities of what we call future [indiscernible] for lot of our customers, where historically, you game at environment and colo space, low power densities, 4 or 5 years ago, I was talking about 4 kilowatts per square foot. We have data center capacity in, specifically in LA, Dallas Santa Clara, they can go up to possibly as much as 22 kilowatts per square foot, because that’s what customers are demanding, as they move forward in time and technology.
And then the health tech I mentioned in bonds [ph] and other spaces, that’s kind of hard road element, a smaller part of our overall portfolio, again where do you have special [ph] needs, so we can provide that [indiscernible].
We did realign the business back at the beginning of this year. We announced this back in, with the February fourth quarter earnings release back in February. We kind of broke the business away from our legacy way of reporting it into the two pieces, data center network services and cloud and hosting services. Data Center Network services is about 67% of our revenues, think of that as the business that’s probably about a 60%, possibly cash gross margin basis. And then help and control Colo for us, we’ll talk about the growth rates and some of the characteristics in the next slide, but again that’s 15 data centers. The other 35 data centers are part of our Colo, those are going to be lower margin.
The company has had a history back prior to 2009, of really focusing on a partner colo environment, as a full-through to sell the last piece, the IP connectivity. Back in 2009 they moved in a different direction, slightly more capital intensive to kind of build out their own company controlled data centers, and effectively moved away from the partner colo strategy.
Again partner colo strategy, you would think about margins that are somewhere probably on average, call it 25% to 35%, where the company controlled colo margins are closer to let's say 60%. So highly desirable low [ph] return on investment for shareholders.
IP connectivity services, this is something that Internap had decided to go ahead from a pricing perspective in the marketplace, to entrants like [indiscernible] et cetera, is going to be very difficult to compete. So we moved away from that business space in 2009. But what I will say is over 97% of all of our colo customers, our hosting customers, use IP company, our IP connectivity services, because of that patented technology to manage Internet routing optimization or MIRO. So that patented technology, many people still see as a network advantage. We put that together again with company control colo, we put that together with our hosting services, you see if you turn the other side of the page, and they see that as a technology advance for their platforms.
Cloud and hosting services 33%. Again we offer cloud services in really two forms of either cloud, again our cloud is mostly dedicated server cloud, and then hosting services again to more of a compliance on Tipper [ph], PCI that type of product.
Some of the elements when you bring that down, company controlled collocation is about 30% of our total revenues. That’s a market growth rate around 8% to 10%. You run into kind of global regional competitors in that space, in what we do as I mentioned earlier like in the LA example, LA data center example we differentiate on the density of power.
IP connectivity service is about 24% of our revenues, again somewhat of a customer convenience play. Again the business historically was still an IP only, it went to IP partner colo. Today it's really colo cloud and then IP kind of comes along with it because it is differentiated opportunity. Partner colo basically is a business that again that has been in modest decline for us, and again you can see that future business really the strategy it's gotten, produces good cash, it’s good return on investment from a shareholder perspective. But it's is really not where we would want to drive customers to. We will use that to fill in our geographically, we prefer customers using the company controlled colo.
Cloud hosting services again market growing at 20% to 25%. Our bare metal server product is more aligned, being competitively priced, [indiscernible] by IBM, again it’s a differentiated product, a higher performance product for the price versus an AWS type of product. Our margin rates above 70%. And again custom hosting as I mentioned little bit more from a compliance angle again margin rates about 70%. And then again we’ve had a commodity dedicated services product that we picked up with the iWeb acquisition a couple of years back.
Just looking at the second quarter financial summary. As you can see the revenue here on this page are going to show second quarter 2015 first quarter 2016, second quarter 2016 revenues declined. I will just show why there is decline and what we are doing about that. The thing that I would point out is the decline between second quarter -- you don't see on this page but fourth quarter 2015 to first quarter 2015, the decline was roughly around $3 million plus or minus. But the decline is attenuating, and as you see the $75.9 million to the $74.3 million is little bit of about a $1.6 million. So what we’re beginning to see is a flattening out. So what’s going on with the business?
If you heard my earlier discussion which is basically, as we orient towards very high tech type of customers, you can imagine my customer base, Santa Clara, Silicon Valley type of customers, LA, New York et cetera, OEM to high technology products, they are usually VC funded, our fast growing customers, that’s very attractive to us.
Unfortunately, those customers are highly subject to being acquired, acquired by large social media companies. Those large social media companies eventually consolidate those customers into their existing environments, and we’ve actually had a large part of our revenue decline that we talk about since probably first quarter 2015 through the second quarter of 2016 have been driven by that consolidation risk.
So that’s something that we’ve been actually trying to manage to the best of our ability. If we cannot manage that, to prevent it from happening, which is so much challenging given the types of social media companies that we’re talking about, whether it’s Yahoo!, Twitter, Facebook et cetera, who acquire our larger customers and consolidating them. At least we’re beginning to get a better handle along the past year of getting out in front of those and being what does live on [ph] these charts.
That said, right now, the revenue is attenuating, meaning it is slowing down at this point. And based on the updated guidance that we had provided back on August 4, at the end of our second quarter, we suggest in the second half of this year, we should be relatively flattish with some opportunity for modest growth.
You can also look at the churn numbers on that side of the page in revenue. And as you can see the higher churn rates in the first quarter 2016, cloud hosting at 5.2% churn rate. It really relates to one very large customer that left us at that point. So we think this is unique churn event as opposed to a higher run rate churn event. We had one of those last year as well. And again, it was higher in the first half of the year, but as you see in the second quarter is beginning to come down and we anticipate second half of the year to be lower than the second quarter type of churn rates.
On the other side of the page, here loss from operations, you can see that relatively beginning to come down from prior year same quarter, little bit high into our first quarter, to the again the lower margins coming out below revenue. The adjusted EBITDA numbers that I’m calling from 19.1 last year, up to the low 20s. And again, based on the updated guidance that we provided, our EBITDA was $88.5 million. You would expect that would be flattish to slight increase coming in the second half.
Margin rates though, because we’ve been really trying to offset any type of revenue pressures, so we can manage through [indiscernible] that’s on the probability. As you see market rates have fallen significantly when you compare second quarter of 2016 to second quarter of 2015 last year, you will see close to 400 basis points drop in market rates.
And just where the financial situation is that the company we talked about, when we try to focus investors on this so called levered free cash flow period. So that levered free cash flow positive, using effectively, but also in this reconciliation, also the part of adjusted EBITDA as we define it for the GAAP. And we take out the maintenance CapEx, we back out the growth CapEx and cash interest, as you can see from prior year, that levered free cash flow, that was passed of 2015 was $7.5 million, of levered free cash flow. We've run that down now to about $800,000 in the first half of this year.
And again, with the idea that in the second half of the year that we’ll be flattish to slightly positive. And we also probably have the opportunity as we talked about in our second quarter release, that we would be possibly flat to positive on a total cash flow basis. Okay.
So this page kind of shows where we are with our leverage. We did renegotiate our debt covenants in April. And right now, we feel like we have enough cushion in this for the foreseeable future. So well within our arrangements.
So what is the investment premise, or what is the investment thesis of the business? If you think about building out a data center, a company controlled data center, you put lot of CapEx per se into the ground initially. This is as an example of Santa Clara in its first phase, where we, initially sold and had the colo and IP, in the first year, and effectively for the first nine to 12 months you are effectively burning cash, as you are starting up operations. It takes usually about 3.5 years to 4 years before a data center is actually gotten to a payback level and then you’re in that data center usually for a minimum of 15 years, with a possibility to go out to 25 to 30 years.
So you kind of reach payback at 3.5 and then you've got a long run rate to go forward, as long as you are keeping that facility filled. In this case just selling co-location along with IP, and again as I mentioned our total customers, 97% of them actually take our IP to go with the colo. As you can see here they produce returns in that phase I of over 25%. Now if you think about product hosting services, these are roughly 60% low, high 50%, low 60% type of margin rate products. When I deploy additional capital to do cloud and hosting, into that same exact environment as opposed to reaching out a lot of space for let's say a co-location customer, at $70 a square foot, when I do a cloud or a hosting environment, I'm probably getting upwards $270 to $300 a square foot.
I deploy incremental capital for the servers, to satisfy those requirements, plus getting a much higher revenue per square footage back. And that drives my IRR over 25% you saw on the colocation, plus 25% to over 30% in the data center. So again a better return on investment to offer our customers not only colo IP but to offer them the hybrid environment of capabilities of moving to full IP and cloud hosting. So again that is really the investment of the business.
So right when we say that we realigned the business, in summary of a better response from [ph] the customers and accelerate our growth, we’re expecting a churn decline in the second half of this year, as we talked about. We’re optimizing our cost structures. We’re getting to the point where we are going to be fully leverage free cash flow positive on an ongoing basis, on a sustainable basis, a positive cash flow going forward. And again we have kind of expectations for second half of the year to return to positive growth.
And then on the back side of this is just a reconciliation to kind of non-GAAP metrics. So with that I’ll pass to see if we have any questions.
Q - Barry Sine
So Kevin, you talked about very, very favorable IRRs while you are doing this, and obviously there’s been some churn events. So how do you think about getting those types of returns that you are seeing in the business translate into the financials and then translate back into the past equity performance, what's the [indiscernible]?
Yes, so I think basically, if I understand what the question is, what I think about is we have had the churn, and obviously we restructured in back on the IRRs, what we’re able to effectively kind of release, either that space or the servers. As an example when we had a large churn event last year for it really it started in the second quarter 2015, and finished in the third quarter 2015 every one of those servers was leased by December 31st last year. So I need to kind of keep up that asset utilization on this surface, and again I needed to kind of get past these trouble with the churn events and I think we need to show the top line revenue growth again. I think with that top line revenue growth for a couple of quarters then I think basically we will take off. The cloud is probably out there in the public equity markets to really shore up the price we are trading, and so I think we should be able to overcome what we are trading at today.
So there’s a question. Go ahead.
What’s been the trend for the cloud, as you pointed out the profit growth in a number of days [indiscernible] and what I wanted to say, hasn’t the market, the data center grown dramatically over the last few years? In fact there’s been some recent consolidation in these areas. So maybe you can address that [indiscernible] how much, and along with also what happens when you lose a big client where did he go?
Yes, so a couple of things in there, [indiscernible] business. Let me do my -- so I would say -- not a problem. So infrastructure as a service, so if you think about the infrastructure as a service it's a multi-billion dollar business. I’d say globally it's a $100 million type of business right including cloud. What we can reach with colo plus what we have geographically through the cloud, let’s say that’s probably maybe a $50 billion, $60 billion marketplace, total addressable marketplace. But for the group of customers that performance matters, I would say that’s closer to maybe a $8 billion to $9 billion business. But that’s still a big -- I think we are roughly in the $300 plus million range remaining. So that's still a big opportunity for us.
There is still a large part of the total addressable market still being done in house by much larger corporations. Now of that $7 million to $9 million of where performance matters probably more of that has already been outsourced to us or to other competitors. But I still expect there is a big opportunity for that, still think it’s going to be a continuing growth opportunity for us.
So I think from a marketplace, it’s still a big marketplace for us. There is a big pool in there for us to slide in. It is growing, some of those -- going back to that $50 billion and $100 billion, some of these things are growing faster. I would say more on the commodity side as people -- for back office, like with Microsoft or they look at AWS, for a virtual cloud experience, those things are growing at faster rate. The performance space is not growing as fast but it’s still growing.
And so from that perspective we think that we still have an opportunity to continue growing that. Now we have not participated in net revenue growth because of the churn events. And when we look at those churn events there is churn events and my larger customers that have been acquired, they have been acquired by large social media companies, and then what happens is that those companies I would say have their applications on their existing server/cloud environment that they have in-house, as they constrict or effectively as they have been able to reengineer and software develop their applications, they become more efficient with more efficient servers, and their access server capacity grows in-house and so when they do an acquisition of one of our customers they bring it in-house.
So we do look at all the server, all the chart that I have in the company and everything I can tag the largest issue that I have over 40% of my chart is really driven by consolidation. Does that answer your question?
So really larger companies buying smaller companies that are fast growing that they are looking for their technology, and they are effectively, they are bringing their service away and they are bringing in-house. And my issue is, is I need to have a sales force going after and replacing that every day, in order for me to continue to grow. And that’s where we have somewhat challenged because we’ve had and we've talked about this separately, that we’ve had a couple of sales folks [indiscernible] last year they have put more pressure on that.
And we were [indiscernible].
Has this been an industry problem or has it been just for you guys?
I think it’s a smaller group of competitors like us. I don’t think it’s unique to us but I do think it’s a large group of all cloud service companies.
So [indiscernible], the cloud business what has been the trend over the last two to three years?
So the cloud marketplace -- mine has been down, not because of the chart. [indiscernible].
Just related to that how many acquisitions [indiscernible]?
I would use that off the top of my customers. Yes, towards that 40% is related to churn and that [indiscernible].
Okay, so if I separate the populations of customers I would complicate this, 7,500 are commodity customers, that sit at the side; 2,500 are really advertised customers. Of those 2,500 customers 100 are about 35% of my total company revenues. So 100 customers are really 35% of my total revenues, it’s been less, it's been about 5%.
The $7 billion to $9 billion is your clarification, that you identified as your [indiscernible] niche, what portion of that is being outsourced versus in-house?
I think, probably we don’t have exact numbers but we would be guessing 84% of those currently outsource today.
Okay, and what’s been the trend, I guess going in-house that only to the extent these companies are being acquired?
Yes, so again two dynamics, the trend would be outsourced at the smaller company level and it’s growing fast, and then getting in-sourced as they kind of go in to the larger consolidated companies.
Okay. And then a separate question, if I could on the, you shows a slide, growth and maintenance CapEx. And the growth CapEx, I think was the biggest chunk of it. What makes that growth CapEx, what has it gone to and where -- what’s the timeline for that to convert to some kind of new revenue stream?
So going back, if you look at this, we’ve said our guidance is $40 million to $50 million, and which we’ve said maintenance CapEx, and these are past year numbers, so no confusion, $40 million to $50 million was the annual CapEx investment. That has been historically over the past couple of years approaching $70 million to $80 million.
And so we really begin to track down that investment in capacity from your question of how do you determine the speed by which it produces revenue, this type of product, perfectly, because if I’m talking about a co-location, I’m talking about opening up square footage. And so as an example, probably, if you’re looking at sales execution, and how fast it’s going up to the floor space, for example, these pockets, we opened 13 second phases of pockets in December of 2014. And I will probably be needing to bring on more floor space next year. So 2 to 2.5 years of it being floored [ph] for 85% of floor space.
Okay. So that 23, in -- for year-to-date 2016, that’s stuff that's being built, currently that’s mostly empty.
So let me break this down. Growth CapEx about right now, 40% of that is for, call it capacity. So capacity in the form of use of floor space, it could be power distribution, it could be cooling and could be backup power. And the 60% more servers for cloud hosting services.
Do each of those pieces generate incremental revenue or is some to individual pooling, and necessary to satisfy…
There is -- so the majority is incremental. We do have certain customers, who basically usually in managed hosting environment, they may go three years on contract. And then they’re looking for a server refresh.
And so we made a good return on that first three years, and we may invest in a server refresh program to go another three years. So we have time, before that capital, I’m expecting to getting the return on investment before he may go away, but it may not get you a net revenue incremental.
But I think our cloud hosting, or excuse our customer hosting businesses is only about a $20 million revenue business.
Usually you get into net revenue growth. And so even as you forecast thinking about a moderation of our growth CapEx this year, or next year relative to…
Well, our guidance this year is slightly down from last year, which was dramatically down from the prior year. So we’ve been bringing the CapEx number down. We’ve pared [ph] down the OpEx with the whole idea that we had this pressure on the top line. And eventually, obviously you guys obviously feed the winners, plus we started down, we are starting revenue growth and that’s when you see us probably, maybe positive step up the investment at that point of time.
But I also feel good about the fact we brought down the OpEx to the levels that we had, it's just headcount alone, which is a large part of our OpEx, we’re down from 740s, where we were probably 18 months ago, down to about 600 employees. That will give us an opportunity to extract higher margin as we grow, get the leverage by calling on a go forward basis
How about you growth CapEx, you said you will shut down without hurting revenues?
Now, by definition, it should be hurting the revenues. It won’t hurt your revenues immediately, but it will hurt your growth capacity going forward. If I wouldn't be spending on growth, I would not spending growth CapEx, if I didn’t expect to have revenues on a go forward basis increase.
But essentially, you want to run business with cash, you still have to spend on the growth CapEx, and maintain cash flow.
Well, that’s part of the maintenance. That’s the maintenance CapEx.
I understood you have a flat revenue line.
Great. We’re talking about a flat revenue line, that’s maintenance CapEx.
Again, you got to think, it’s not like a less than 12 month pay back. My servers probably have paybacks of around 15 to 18 months. My data center will have got a payback for three and half years. So if you’re not deploying capital, then you will eventually limit your growth capabilities.
Yes. In the news recently, yesterday, we saw with the Apple launch, they announced a new gaming app, Super Mario Brothers for iPhone and then obviously Pokemon Go is a hot game, I think I’ve seen Nintendo, so I'm guessing with that space so hot, there’s a lot of new entrants coming into the space, and you are probably seeing some pretty exciting things from a pipeline perspective. [indiscernible] the pipeline but you just talked qualitatively about you are seeing pipeline growth.
Yes, one of the positive advantage in the -- within the second quarter is we have more global gamer takeout, some others in our cloud services, pay for rental servers and the nice thing is we’re picking up a lot of those servers that eventually have just come off links with large companies. So we’re seeing some activities around -- in the gaming space that continues. That's always been a strength for us and it continues to be.
And then also, I guess I'd be pretty remiss if I didn't ask last September, you announced a strategic product, you updated the Street, how that went in January. There were some interested parties, that had some challenges, you are advancing but as you said some of those parties remain interested. What can you tell us from speaking with those parties…?
Yes, and again I can probably tell you what’s going there and what we said basically back at the second quarter, that [indiscernible] which was that obviously as many of you know the debt markets have come back very strongly. That’s been no secret. With the debt markets coming back and where the share price is trading at, versus down significantly from where it was at year end, suddenly that makes mortgage facility [indiscernible] one-time with the next deal building and we just said at the end of the second quarter, turning specifically that we’re very active right now with interested parties not to suggest that anything will happen possibly in the second half.
Was that for the totality of the business, piece of the business or everything in this business.
I'm not sure to clarify that publicly and I know I’ve talked about this that we’ve said that both records first foremost deals on the totality of the business. That was something that I think [indiscernible] about one of the parts of the business, that we are really reacting to that. We just looked for the first, the last time, to the totality of the business.
So we did talk about that we have some non-strategic assets that we are also positively can monetize. Yes?
I believe [indiscernible] a very long shareholders, outside shareholder, what’s your strategy?
I would, without being specific I would say that our top three shareholders probably are covering up 40% of our shares float. So we have some very significant shareholders and I think the discussion I would suggest is we -- the Board has had exposure, discussions with shareholders, even below the top three shareholders group and remains open to their input same time when their relationship is very positive. Anything else? Okay?
Okay, thank you Internap and thank you again everyone.
Thank you very much. I appreciate it.
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