Terremark Worldwide (TMRK), a leading global provider of IT infrastructure solutions, announced results for the third quarter of fiscal 2010 with a loss per share of 13 cents exceeding the Zacks Consensus Estimate of loss of 8 cents. Net loss of $8.3 million for the quarter, however, represents an improvement from a net loss of $8.9 million reported a year ago, boosted by higher sales.
Revenue & EBITDA
Consolidated revenue increased 13% year-over-year to $74.3 million, in line with the company’s guidance, fueled by record contract bookings. Managed service accounted for 56% of the total revenue with colocation representing 38%. Revenue from Federal government business registered $16.7 million. Cloud computing run rate increased 30% sequentially to $17.2 million. Adjusted EBITDA increased 8% year-over-year to $19.8 million.
Subscribers & Bookings
Terremark has added 46 new customers during the quarter, a sequential decline, bringing its total customer base to 1,320 at the end of the quarter. The company’s high service standard has been able to keep overall churn (customer switch) in check at below 2%. Total new contract bookings registered $37.6 million, the highest ever in the company’s history, partly boosted by strong Federal bookings of $9.7 million.
Data Center Space & Utilization
Total colocation space utilization increased to 29.6%, a modest decline from 29.8% reported in the previous quarter. Utilization for build-out colocation space also declined sequentially to 63.9% while total net colocation space remained flat at approximately 448,000 square feet. Colocation space is expected to increase by 55,000 square feet in the fourth quarter. Cross-connects billed to customers reached 8,883, growing 13% year-over-year.
Outlook
Terremark has revealed its guidance for the fourth quarter with revenues projected in the range of $80.1 ? $85.1 million with adjusted EBITDA of $25.4 ? $30.4 million. For full year fiscal 2010, revenue is expected between $290 million and $295 million while adjusted EBITDA is projected to range between $80 million and $85 million. Capital expenditure is expected in the range of $95 million to $100 million. For fiscal 2011, the company expects revenues between $335 million and $340 million with adjusted EBITDA in the range of $95 ? $100 million.
Terremark remains a key player in the IT infrastructure solutions market with a vast portfolio of premium products and services, wide geographic coverage and a diversified customer base. The company continues to broaden its data center space to handle increased demand, especially from federal government customers, which accounted for 22% of the revenues for the quarter.
Leveraging the newly constructed 130-mile long fiber optic network, Terremark has increased carrier connectivity at its NAP (network access point) of the Capital Region (NCR) data center facility in Virginia. The company has reportedly expanded capacity at the NCR facility by constructing a 50,000 square foot second data center. Moreover, Terremark has leased a 10,000 square foot data center facility in Dallas under a pact with Digital Realty Trust (DLR).
Terremark is one of the leading hosting service providers to VMware Inc (VMW), a major player in the virtualization software market. The company expanded its portfolio of premium cloud computing solutions with the introduction of vCloud Express service in September 2009, representing the latest addition to its VMware Virtualized services. Moreover, the acquisition of remote backup service provider DS3 DataVaulting has further strengthened Terremark’s managed IT infrastructure solutions.
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