LinkedIn plans to add another data center next year to support its continued growth. The company recently began operating its first data center in Ashburn, Virginia and is preparing its second facility in Dallas.
In its quarterly earnings call last week, LinkedIn said it intends to open a third data center in 2015. It didn't indicate the location of the facility, but a West Coast site appears likely, given the company's existing footprint. LinkedIn is likely to use wholesale data center space, as it has for its first two data centers, which have been leased from Digital Realty Trust. In a wholesale deal, a tenant leases a finished “turn-key” data hall from a third-party provider.
"Colocating LinkedIn across these three locations will improve both the site’s speed and experience for our members," said Steven Sordello, Chief Financial Officer of LinkedIn, the social network for business. "Our goal is to host LinkedIn on a self-managed infrastructure, ultimately enabling us to control capacity growth while more efficiently managing our cost structure, with approximately 50 percent in opex savings per data center once each facility is fully tested and operating at scale."
Big Data Drives Need For Big Data Centers
The computing horsepower to store and analyze information for 277 million users requires data center space. Professionals are signing up to join LinkedIn at a rate of more than two new members per second. LinkedIn has built a success story by focusing on job seekers, recruiters and corporate networking. LinkedIn’s data scientists have access to a rich trove of data about trends in hiring and careers, and the company has developed extensive software and tools to process and analyze its data.
Last year LinkedIn secured a new data center in northern Virginia, leasing 6 megawatts of space from Digital Realty. The $109 million, 11-year deal marked LinkedIn’s first use of wholesale data center space, in which it leases a finished “turn-key” data hall from a third-party provider.
In November, the company signed a $116 million, 11-year lease for a large chunk of data center space at a Digital Realty campus in Dallas. LinkedIn also rents space in data center facilities operated by Equinix, which offers colocation space, in which servers are housed in dedicated cages within a data hall that may also house other tenants.
The need for additional data center space is one reason that LinkedIn recently announced plans to raise $1 billion in a secondary stock offering last year. Sordello said the new data center capacity would boost capital expenses for the company over the next three years.
"In order to ensure each new data center’s security and performance, we must build new server capacity while growing legacy facilities in parallel," said Sordello. "In 2013, we spent approximately $75 million on our first facility, and an additional $25 million in parallel capacity. As we exit this project over the next two to three years, we plan to resume a more normal capex level toward our eventual 10% of revenue goal."