STORAGE

WALTHAM, MA -- StorageNetworks, Inc. (NASDAQ: STOR), a leading provider of data storage management services, today announced revenues for the third quarter ended September 30, 2001 of $31.5 million, a 120% increase over revenues of $14.3 million in the third quarter of 2000. StorageNetworks managed services revenue for the quarter was $29.8 million equal to $29.8 million in the second quarter of this year. Total revenues were $33.4 million in the second quarter of 2001. The company reported an EBITDA loss (net loss before interest, taxes, depreciation, amortization and non-cash stock compensation) of $11.2 million, a 38% improvement over an EBITDA loss of $18.2 million in the second quarter of 2001. The company also reported a net loss of $27.0 million, or $0.28 per share, a 16% improvement from a loss of $32.2 million, or $0.33 per share, for the second quarter of 2001. The company finished the quarter with $326 million in cash and cash equivalents. "I was pleased with the financial performance of our company for the quarter ended September 30, 2001," stated Peter Bell, StorageNetworks' Chairman and Chief Executive Officer. "Revenues met expectations while results of operations exceeded expectations. Just as importantly, enterprise organizations continue to recognize the value of our software and services. New customers including Cingular Wireless, Charles Schwab, Hewitt Associates, Manulife Financial, Peregrine Systems, Salomon Smith Barney and Zurich Scudder Investments recognize the value of StorageNetworks offerings and have signed agreements for StorageNetworks(R) STORconsulting and / or managed service offerings such as STORmanage(sm) and STORbackup." "We also signed a STORfusion partnership with BellSouth. After an extensive evaluation we are proud to have been selected by BellSouth to be their partner in the delivery of managed storage services. BellSouth will provide the assets and infrastructure and will utilize our industry leading software, including the STORos(sm) operating system, Virtual Storage Portal(sm) software, STORvision(sm) software, as well as our expertise and best practices in networked storage to provide value added storage management services to their customers in their network and located in their data centers. We believe that BellSouth, and our other STORfusion customers, will be future growth drivers in 2002 and beyond," continued Bell. Repeat managed services customers or expanded engagements during the quarter included L'Oreal, Lycos, Adidas, Peoplesoft, Best Buy and Sun Microsystems. StorageNetworks repeat customers resulted in average annualized revenue per customer increasing to approximately $590,000 from $550,000 in the previous quarter. "We had strong financial results in the third quarter," stated Paul Flanagan, Executive Vice President and Chief Financial Officer. "We met top line and gross margin profitability expectations and exceeded expectations in terms of EBITDA loss, operating loss and loss per share. And very importantly, we finished the quarter with a strong balance sheet." StorageNetworks finished the quarter with $326 million in cash. Days sales outstanding in accounts receivables increased from 45 days at the end of the previous quarter to 51 days at September 30, 2001. "The increase in our days sales outstanding was related entirely to one of our very good partners filing a petition for protection under chapter 11 of the bankruptcy code. We have been actively addressing this situation with our partner and the end user customers to ensure the continued delivery of world class storage services to these customers," continued Flanagan. "As a result of this situation, we have included in the financial results for the quarter a charge to earnings of $1.5 million to provide for any collectibility issues associated with this situation." For more information visit www.StorageNetworks.com