Web Host PEER 1 Reports Fiscal 2009 2Q Results

Managed and dedicated Web hosting revenue increased by 15.1% and 14.9%, respectively, over the same periods in the prior year.

VANCOUVER, BC – February 11, 2009 – PEER 1 Network Enterprises, Inc. (TSX: PIX), a leading provider of online IT hosting, today announced the results for the three and six months ended December 31, 2008. All amounts are stated in US dollars.

Selected financial highlights comparing the quarters ended December 31, 2008 and 2007:

* Revenue increased 6.4% to $23.6 million from $22.2 million;
* Gross profit increased 6.4% to $10.8 million from $10.1 million;
* Operating income decreased 5.2% to $3.7 million from $3.9 million;
* EBITDA increased by 11.1% to $7.6 million from $6.9 million;
* EBITDA margin increased to 32.2% compared with 30.9%; and
* Net income increased by 6.5% to $2.01 million compared with $1.88 million.

Operational highlights:

* 5,478 square feet of additional data center space at 151 Front Street in Toronto became operational during the quarter representing 120 normalized cabinet equivalents;
* The PEER 1 Partner Network, an integrated referral and reseller program that offers revenue incentives to web developers, system integrators and IT consultants who refer business, was launched on October 2, 2008. Since then, more than 50 partners have joined the program;
* On October 15, 2008 the Company entered into a partnership agreement with Absolute Performance to enhance IT systems monitoring solutions across its core business segments;
* PEER 1’s backup services, utilizing IBM’s Tivoli Storage Manager software, expanded on October 21, 2008 to include ServerBeach and co-location customers. PEER 1 now offers enhanced hosting backup services across all of its hosting product lines; and
* Effective October 1, 2008, the Company fixed for a period of 12 months, the LIBOR Rate (as defined in the Loan and Security Agreement (“LSA”) with Fortress Credit Opportunities 1 LP) at a rate of 3.84%. As at today’s date, the interest rate accruing on the Company’s loan balance is 6.84%.

“Continued growth in the managed and dedicated hosting segment was offset by the impact of decreased co-location services revenues due to the declining value of the Canadian dollar over the quarter,” said Fabio Banducci, President and CEO of PEER 1. “While the current economic environment presents challenges for all businesses, the fundamentals of the online IT hosting industry remain relatively stable, and we continue to see healthy demand for all of PEER 1’s core service offerings.”

Review of the Three and Six Months Ended December 31, 2008

Revenue for the three and six months ended December 31, 2008 was $23.6 million and $47.1 million, increasing by 6.4% and 9.2%, respectively, compared with the same periods of the prior year. However, when adjusted for the effect of foreign exchange rates between the comparative periods, revenue grew 10.8% and 11.4% for the three and six months ended December 31, 2008. On a sequential basis, revenue for the second quarter of 2009 increased by 0.6% compared with $23.5 million for first quarter, but increased by 3.6% when adjusted for the difference in exchange rates between quarters. Overall, the increase in revenue for the quarter can be attributed to organic growth partially offset by the declining value of the Canadian dollar.

Managed and dedicated hosting revenue for the three and six months ended December 31, 2008 was $17.5 million and $34.3 million, increasing by 15.1% and 14.9%, respectively, over the same periods in the prior year. Compared with revenue of $16.8 million for the first quarter of 2009, managed and dedicated hosting revenues increased by a combined 4.3% in the second quarter. The increase in managed and dedicated hosting revenues for the quarter can be attributed to organic growth.