Good day, ladies and gentlemen, and welcome to the fourth quarter 2010 NaviSite earnings conference call. (Operator Instructions) I would now turn the call over to Jim Pluntze, Chief Financial Officer.

Thank you. Good afternoon and welcome to NaviSite's fourth quarter and fiscal year 2010 earnings conference call. Today, Brooks Borcherding, NaviSite's President and Chief Executive Officer, will begin by discussing our business transformation and highlight some key accomplishments over the past year. I'll then review our financial results and business highlights for the fourth quarter and fiscal year 2010, which ended July 31, 2010. I'll then conclude with an outlook for first quarter 2011 before turning the call back to Brooks for closing comments. Before we begin, I'll read the required Safe Harbor statement. Please be aware that the information we're about to discuss includes forward-looking statements for the purposes of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties. The company's actual results could differ materially from those discussed in this call. Factors that could contribute to such differences include, but are not limited to, those items noted and included in the company's SEC filings. The forward-looking information that is provided by the company in this call represents the company's outlook as of today and we do not undertake any obligation to update forward-looking statements made by us. Subsequent events and other developments may cause the Company's outlook to change from that which is discussed today. We will also discuss NaviSite's adjusted EBITDA performance for the fourth quarter of fiscal year 2010. Please note that adjusted EBITDA is not a recognized measure in financial statement presentation under the United States Generally Accepted Accounting Principles, U.S. GAAP. The company believes that the non-GAAP measure of EBITDA provides investors with a useful supplemental measure of the company's actual and expected operating and financial performance by excluding the impact of interests, taxes, depreciation and amortization. The company also excludes impairment costs, stock-based…

Thank you for that, Jim, and welcome everyone to today's call. I'm glad you're here with us. I'm pleased to report that our Q4 results were strong and above guidance for both revenue and adjusted EBITDA, demonstrating the successful execution of our strategy throughout the fiscal year. Total revenue for Q4 was $32.7 million, representing an 8% increase year-over-year and 4% increase versus prior quarter. Adjusted EBITDA for Q4 was $7.2 million, representing a 13% increase year-over-year and 20% increase versus prior quarter. And we again successfully managed churn at 1.1% for the quarter, consistent with prior quarter, but down significantly from the 1.7% churn we experienced in Q4 of fiscal year 2009. Jim will provide more details on our financial performance later in the call, but I'd like to start with a few observations of our business. As planned, fiscal year 2010 was a year of significant transformation for NaviSite. We sharpened our focus on the enterprise market, divested non-core assets, de-levered our balance sheet and upgraded our core infrastructure. In addition, we established our leadership position in the nascent and explosive enterprise cloud market, a multibillion dollar opportunity adjacent to our core businesses, transforming the IT industry. Let me take a moment to speak to our accomplishments in a bit more detail. First, in regards to our enterprise focus, NaviSite has a strong legacy of providing exceptional, innovative solutions for customers tailored to their specific needs, and delivered with unparalleled service and support. However, our unique value proposition was frequently diminished in the highly cost-conscious small and middle markets where we historically struggled to upsell our value versus more generic lower cost solutions. And as a result, we decided to sunset our SMB business, narrow our solution focus, expand our marketing efforts and restructure our sales organization to…

Thank you, Brooks. During the call today, I will be providing some additional details into the financial results of NaviSite's fourth quarter and fiscal year 2010 which ended on July 31, 2010. Then provide an update on NaviSite's first quarter fiscal year 2011 guidance. Please note that the results presented now exclude the results of our discontinued operations for all periods discussed. The fourth quarter and fiscal year are solid across the board from an execution standpoint. Our performance was primarily driven by our recent focus on our enterprise strategy combined with the divestiture of non-cooperations and the de-leveraging of our balance sheet. Our solid execution enables us to exceed the high end of our revenue and adjusted EBITDA guidance. As reported in our press release earlier today, total revenue for the quarter ended in July 31, 2010 with $32.7 million which is above our guidance range and represented a year-over-year increase of 8% and a sequential increase of 4%. Total revenue of fiscal year 2010 was $126.1 million representing a 1% increase over revenue of $125.4 million in fiscal year 2009. Recurring hosting revenue was $32.4 million for the fourth quarter compared to $29.2 million in the fourth quarter of fiscal year 2009 and $31 million in the prior quarter of fiscal year 2010, representing an increase of 11% over the prior year and a sequential increase of 5%. Recurring hosting revenue for the fiscal year was $123.6 million representing a growth of 4% over the $119.2 million recorded in fiscal year 2009 and an increase of 6% excluding the impact of our Los Angeles data center exited in fiscal year 2009. During the quarter, recurring hosting revenue accounted for 99% of our revenue. During the fourth quarter, we recorded bookings of approximately $553,000 of new monthly recurring revenue,…

Thank you, Jim. Well the past year for us was one of transformation, I expect fiscal year 2011 to be one of acceleration and execution. Our strategy is to lead with our innovative cloud offering to both capture share in this emerging new market, and accelerate growth in our traditional enterprise hosting and application management portfolio. We will also look to leverage zero raw market interest in cloud to strengthen our brands and increase the awareness of our unique offerings to accelerate the growth and conversion of our pipeline of enterprise opportunities. Finally, we will continue our execution discipline to ensure we convert on this opportunity, to drive topline and bottomline results. And with that, I'd like to open up the call for questions.

(Operator Instructions) And the first question comes from the line of Alex Kurtz of Merriman & Company. Alex Kurtz - Merriman & Company: Jim, just to clarify a couple of things in the press release, I got right here my model. You guys talked about $28.8 million of hosting value in the quarter.

That's annualized revenue. And that was actually for the year, I believe. Alex Kurtz - Merriman & Company: What was the number for the quarter?

So if you looked at $553,000 of recurring revenue times 12, that would be annual number of about $6.6 million. Alex Kurtz - Merriman & Company: So if I look at the number, just correct me if I'm wrong, but the number last quarter was 15.4, is that the comparable number?

We started reporting annualized revenue. We are reporting total contract value last quarter. So again, if you look at last quarter, the number was about $711,000 of recurring revenue, so times 12, would be about $8.5 million. So it was down sequentially by the commensurate annualized to now. Alex Kurtz - Merriman & Company: I guess if you're to think about what sort of the key factors on the EBITDA performance, and what was your highlight in the quarter, was is better OpEx control?

Well, I think last quarter Q3 was the quarter when we had the asset divestitures. So we haven't fully realized any kind of the cost savings that we were going to be able to realize from those fully in the quarter. So the full impact of the divestitures, plus the revenue growth is probably the major reason for the EBITDA improvement. Alex Kurtz - Merriman & Company: And guys started revenuing the NaviCloud? If we were looking through the October quarter and the January quarter, can we expect some revenue contribution like maybe 5% to 10% of revenue, or just how should we think about that?

Well, our guidance is our guidance for the quarter, we think which will include our revenue from the cloud offering, first of all. And it's very early to tell. We launched in June, we've got some live customers, we are recording revenues in the fourth quarter. But I just probably will wait to answer that question more clearly at the end of the first quarter when we've had little more of a track record on how customers are going to be realizing or utilizing the cloud for revenue generation. Alex Kurtz - Merriman & Company: Can you just talk about the margin difference between that business and the hosting business, just sort of a refresh on that?

We expect in the end higher margins for the cloud service. We've made significant investment in our cloud right now, so until we start realizing the revenue potential, it's going to be difficult to see the real impact. But I think we expect that it takes less people to run the cloud, its more efficient. So as a company, we should be able to generate higher margins from our cloud offering.

Let me just jump on that as well. I feel the earlier observations we are making is certainly it's a faster-time-to-revenue for us for cloud-based services. So we can turn customers on very, very quickly and allow them to almost immediately start consuming resources which would then translate into revenue. That's one of the earlier observations that we have, is that that will be quite a positive effect for us going forward. I think also, the early indications that I referenced in the prepared remarks were that we have the $5000 license fee that we charge per month and we apply that as a minimum to customers. And our early customers have been exceeding that number. So we're seeing positive results there as well.

(Operator Instructions) We do have a follow-up question from the line of Alex Kurtz representing Merriman Curhan & Company. Alex Kurtz - Merriman Curhan & Company: So Equinox obviously had some news earlier this week. I know colocation's becoming obviously a de minimis focus for you guys. Any color on your views on the colocation market this time?

I think that's a fair observation, what you've already made is that we've divested from our colocation assets. It doesn't really impact our strategy and potential as a company, and so as I think those are somewhat unique concerns in that segment of the market that they are addressing. Alex Kurtz - Merriman Curhan & Company: And Brooks, can you just talk about the outlook for hosting that you are seeing going into the end of the year, just with the contracts that you're working on and the sense of urgency around customers (inaudible). Is there a change in pace from the summer going into the fall, or would you say those are steady as she goes? What's your sort of sense talking to customers in the sales force about closing deals?

The customers I that speak to as well as the ecosystem around cloud of other vendors and suppliers is quite positive overall. So it is a real transformation that's happening in the marketplace. I think the early adopters have shown that they can become much more dynamic and efficient and responsive to their business needs. So from that perspective, I just will address it that cloud pipeline which is hopefully a leading indicator for us has developed quite nicely for us. Alex Kurtz - Merriman Curhan & Company: And just the straightforward hoisting business, what's the competitive outlook, the pricing outlook in that market from your perspective?

I would say there's been a significant change in those fundamentally, but for us the opportunity does continue to become more positive as our brand increases related to the innovation, kind of leadership position we take into cloud. So that is working as a pull-through effect for us to get more recognition in the marketplace overall for even our traditional solutions and then more opportunities to compete. Alex Kurtz - Merriman Curhan & Company: And a last question for you, Brooks. Obviously, you have a nice install base of hosting customers. I mean what has your sales force done? How are you tracking sort of going back to those customers and talking with them on cloud and getting them into a trial? Is it too soon to say that's something that we should be tracking here, or there is some movement along those lines?

That's certainly one of our execution priorities both for Q4 and currently. So we are going back to all those customers and making sure, one, that there is an awareness of the offering that we have. And two, discussing opportunities with them as we looked at how we would pursue opportunity development in the marketplace. The install base was clearly the top priority for us. And those conversations have gone well. We have completed that at this point in time, and now moving forward with the opportunities that we have identified to work together and to pursue. And by the way, Alex, I know there's always a concern about cannibalization. We haven't really experienced any cannibalization of any significance at this point. And I think that's been something that's been messaged as well by some of our peers.

At this time, there are no additional questions. I would now turn the call back over to Mr. Brooks Borcherding.

And just in closing comment, I just want to thank everyone for your interest and for attending today's call. We certainly do appreciate you listening in and your engagement and look forward to speaking with you all again quite soon. Thanks, everyone.

Thank you for your participation in today's call. This concludes the presentation, and you may now disconnect. Have a wonderful day.