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AMEX: IIP Investor Presentation March, 2004

AMEX: IIP Investor Presentation March, 2004.

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AMEX: IIP Investor Presentation March, 2004

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  1. AMEX: IIP Investor Presentation March, 2004 P:\docs\401/s40100429.ppt

  2. This presentation includes certain forward-looking statements with respect to Internap for which we claim the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve certain risks and uncertainties and include statements preceded by, followed by or that include words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "project" and other similar expressions. Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, such statements are influenced by our financial position, business strategy, budgets, projected costs, and plans and objectives of management for future operations. Actual results and developments may differ materially. Further information on other factors that could affect the financial results of Internap is included in Internap’s filings with the Securities and Exchange Commission. Safe Harbor Statement

  3. Internap Highlights • Unique carrier-neutral, high performance Internet connectivity solution • Network of networks architecture • Proprietary route optimization technologies • Industry leading service level agreements • Growing revenues and blue-chip customer base • Significant operating leverage • Operational restructuring complete • Strong management team

  4. Financial Services Media & Entertainment Technology Retail VoIP Travel Lucent Technologies Bell Labs Innovations Selected Customers in Key Vertical Segments

  5. The Problem: The Internet Is Inefficient Internet Customer Router AT&T MCI HQ XO Level 3 Sprint User/Customer Cogent Traditional carriers do not guarantee performance beyond their own networks

  6. CHI NYC LA NYC LA CHI LA NYC LA NYC HQ HQ or Data Center Carrier A DEN DEN DEN NSP 1 NSP 2 NSP 3 NSP 4 Carrier B SF SF Carrier C Carrier D The Problem: Multi-homing is Sub-Optimal Fewer “hops” does not mean better performance

  7. AT&T Internap P-NAP Cogent Internap P-NAP Server Farm Workstation GX Level 3 MCI Sprint Verio XO Remote User Flow Control Platform Internap’s Solution • Internap solves the problems inherent to the Internet through: • Network of networks architecture • Intelligent route control technology • Industry leading customer service

  8. Total: $90k 45% $25k IP Access Annual Savings $18k Local Access Total: $48k People Cost $32k $22k IP Access $7k Local Access People Cost $12k Equipment $15k $7k Equipment Customer Managed IP Internap Managed IP Connectivity Connectivity Multi-Homed network Multi-NSP Network The Internap Value Proposition

  9. Seattle Boston Newark Newark New York / Jersey City San Francisco San Jose San Francisco San Jose Chicago Chicago Philadelphia Philadelphia Washington DC Washington DC Denver Los Angeles Los Angeles Phoenix Orange County Orange County San Diego San Diego Dallas Dallas Atlanta Atlanta Austin Austin Internap P-NAP Virtual Extension (VEX) Network Access Point Internap Connectivity available viapartnership Houston Houston Miami Network Access Point Locations Highly redundant network architecture includes 29 P-NAPs interconnecting all relevant top-tier carriers

  10. Growth Strategy • Leverage our unique model and technology to capitalize on growing demand • Expand geographic reach of our services to satisfy current and future customers • Enhance suite of managed Internet service offerings • Focus customer acquisition efforts on larger enterprise customers

  11. High-Performance Internet Connectivity Market CAGR = 35% Source: IDC, NetsEdge Research, TIA Analysis, ADVENTIS Analysis Growth Strategy 1: Capitalize on Growing Demand Increased reliance on and acceptance of the Internet for mission-critical applications is driving demand for high-performance connectivity solutions

  12. Shanghai Hong Kong Mexico City Amsterdam Caracas London Frankfurt Singapore Paris Zurich Milan Madrid São Paulo Buenos Aires Growth Strategy 2: Expand Reach Based on Customer Need Internap plans to expand into cities where customers require connectivity

  13. Growth Strategy 3: Offer Enhanced Suite of Services Data Center Services IP Services / Applications Edge Services Managed Router Services (NEC, Dimension Data, Cisco) Managed Security Services (Verisign, ISS) Video Conferencing(Hitachi) VoIP Flow Control Platform IP Connectivity Application Specific Routing CDN (Akamai) VPN(Blue Ridge) Firewall(Verisign, ISS, Cisco) Colocation Managed Storage (MSI)

  14. DS3 OC3+ T - 1 Growth Strategy 4: Focus on Larger Enterprise Customers Small Business SME Segment Fortune 1000 Direct Sales Agent Sales Sales Method Alliance Partners Connectivity Revenue Opportunity and Service Offering VPN CDN Storage Connectivity Security VPN Connectivity CDN VoIP Bandwidth Requirement = Internap’s Target Market

  15. Strong Management Team Name / Title Previous Experience Years in Industry

  16. Financial Overview

  17. Financial Metrics Revenues • Significant revenue growth during period of substantial bandwidth pricing declines and difficult market conditions

  18. Financial Metrics Number of Customers • New management team has added high-quality customers while restructuring operations

  19. Financial Metrics Gross Profit Gross Margin • Variable nature of backbone purchase agreements and reduction of excess real estate commitments have driven significantly increased margins

  20. Financial Metrics Fixed Operating Expenses (1) % of Revenues • Operational restructuring has rationalized cost structure (1) Fixed operating expenses include customer support, product development, sales & marketing and general & administrative expenses.

  21. Financial Metrics CAPEX • Substantial operating leverage exists in the business model - Internap is currently utilizing only 33% of available capacity

  22. Financial Metrics Free Cash Flow 10.0 FCF + 0.0 ($14.9) (50.0) ($48.9) (US$ in millions) (100.0) (150.0) ($152.8) ($155.1) (200.0) 2000 2001 2002 2003 2004 • Revenue growth and disciplined approach to operating and capital expenditures have positioned Internap at a FCF inflection point - Company achieved FCF positive at end of Q403

  23. 12/31/03 Improving Capital Structure Issued 9/30/03 Series A Preferred Shares Outstanding(1) 3,517,403 2,505,722 1,751,385 Underlying Common Shares(2) 114,788,988 84,403,267 58,994,032 % of Issued Series A Preferred Shares That Have Converted 50.2% (1) In September 2004, these shares are mandatorily convertible. (2) Reflects adjustment of conversion price to $.95 in August 2003 and reflects conversion of preferred shares prior to conversion price reset.

  24. Internap Highlights • Unique carrier-neutral, high performance Internet connectivity solution • Network of networks architecture • Proprietary route optimization technology • Industry leading service level agreements • Growing revenues and blue-chip customer base • Significant operating leverage • Operational restructuring complete • Strong management team

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