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AMEX: IIP Investor Presentation May, 2004

AMEX: IIP Investor Presentation May, 2004.

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AMEX: IIP Investor Presentation May, 2004

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  1. AMEX: IIP Investor Presentation May, 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 Internap 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. 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

  9. 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

  10. 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

  11. 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

  12. 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, Cisco) Firewall(Verisign, ISS, Cisco) Colocation Managed Storage (MSI)

  13. 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

  14. Growth Strategy 5: Strategic Carrier and Distribution Alliances, Most Recently with AT&T AT&T AT&T IDC 4 NSP 2 NSP 3 Internap FCP NSP 4 NSP 5 NSP 6 Internap PNAP If Dual Homed withAlternative Carrier NSP 7 Customer AT&T Internap • Accelerates the migration to public IP infrastructure • Customer advantaged by multi-homed performance and reliability benefits in single-vendor solution • Scaleable, secure, high-performance network solution for distributing mission- critical applications and information • Enables powerful unique, multi-homed solution to customers • Addresses competitive offers in the market • Improves ability to offer broader networking solutions to support mission-critical applications across multiple networks • Dramatic expansion of distribution capabilities • Further legitimizes Internap’s Intelligent Route Control leadership position • Positions Internap to further penetrate IP solutions market within the F1000 • Decreases sales cycle by leveraging customers’ relationships with AT&T

  15. AT&T GlobalIDCs Are Located in Cities with Internap Presence Internap Service Point AT&T IDC Lynnwood, WA AT&T IDC Seattle AT&T IDC Watertown Boston Boston AT&T IDC Lisle AT&T IDC Redwood AT&T IDC New York City/ Secaucus Ashburn, VA AT&T IDC Hawthorne, CA AT&T IDC Lithia Springs AT&T IDC San Diego Atlanta EUROPE AT&T IDC Mesa, AZ AT&T IDC Allen Asia-Pac AT&T IDC Orlando London Tokyo 10 Internap Confidential

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

  17. Financial Overview

  18. Financial Metrics Revenues 8-12% growth • Significant revenue growth during period of substantial bandwidth pricing declines and difficult market conditions

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

  20. Financial Metrics Gross Profit $70.8 Gross Margin Annualized • Variable nature of backbone purchase agreements and reduction of excess real estate commitments have driven significantly increased margins

  21. 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.

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

  23. Financial Metrics Cash Flow From Operations 10.0 $1.2 0.0 ($11.1) (50.0) ($42.2) (US$ in millions) (100.0) ($95.1) (150.0) ($123) (200.0) 2000 2001 2002 2003 1Q04 • Revenue growth and disciplined approach to operating and capital expenditures have positioned Internap at a CF inflection point - Company achieved positive CF from Operations in 1Q04

  24. 3/31/04 Improving Capital Structure Issued 9/30/03 Series A Preferred Shares Outstanding(1) 3,517,403 2,505,722 1,672,674 Underlying Common Shares(2) 114,788,988 84,403,267 56,342,704 % of Issued Series A Preferred Shares That Have Converted 53% (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.

  25. 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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