SCIENCE

WALTHAM, MA -- StorageNetworks, Inc. (NASDAQ: STOR), a leading provider of data storage management services, today announced revenues for the second quarter ended June 30, 2001 of $33.4 million, a 23% increase over revenues of $27.1 million in the first quarter of 2001 and a 318% increase over revenues of $8.0 million in the second quarter of 2000. The company reported an EBITDA loss (net loss before interest, taxes, depreciation, amortization and non-cash stock compensation) of $18.2 million, an 18% improvement over a EBITDA loss of $22.1 million in the first quarter of 2001. The company also reported a net loss of $32.2 million, or $0.33 per share, compared with a loss of $32.9 million, or $0.34 per share, for the first quarter of 2001. "I am pleased with our second quarter results in terms of revenue growth, gross margin improvement, EBITDA loss, and net loss per share," stated Peter Bell, StorageNetworks' Chairman and Chief Executive Officer. "During the quarter, we continued to execute on our strategy -- to make our software the industry standard for data storage management. Our recently announced STORfusion service gained traction through partnerships with Fujitsu and Pihana. This offering allows our partners to offer our proprietary software, processes, and global monitoring as storage management services." New customers for StorageNetworks STORmanage and fully managed PACS offerings include Cisco, Enron, Martha Stewart, American Greetings and Saksdirect, the Saks Fifth Avenue online initiative. "Despite this quarter's strong financial performance, signing of key new customers, immediate traction of our newest service offering STORfusion, and the interest our services are receiving in enterprise companies, we are disappointed at the speed of which new bookings are occurring," continued Bell. "We recognize that the challenging macroeconomic environment has caused a worldwide slowdown in information technology spending. Today, companies are taking longer to make purchasing decisions because of this challenging economic environment." "As a result of lengthened sales cycles, a reduction in our backlog, and the longer turn-on times from contract signing to when we begin recognizing revenue within existing enterprise accounts, we are reducing our revenue guidance for the year. We are projecting that revenues for 2001 will be between $120MM and $127MM," continued Bell. "I am very pleased with the overall financial results for the quarter," stated Paul Flanagan, Executive Vice President and Chief Financial Officer. "We saw our gross margin, EBITDA loss, net loss and loss per share continue to improve toward profitability. Additionally, our balance sheet remains strong with $350 million in cash and our days sales outstanding of our accounts receivables balance remains at less than 45 days."