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How Much Are Cloud Providers Making?
February 22nd, 2010 : Linda LeungHow much are the major players in cloud computing making from their cloud operations? The answers are all over the map.
Many cloud computing providers are private, and don’t disclose their revenue. Most of the leading publicly-held companies see cloud computing as a promising source of future growth, though perhaps not a large percentage of current revenue. And there’s some significant differences between companies providing software as a service (SaaS) and those offering infrastructure as a service (IaaS). Here’s a look at some of the public companies and their cloud computing revenues:
SERVICE PROVIDERS
Salesforce.com
In February 2009, chairman and CEO Marc Benioff boasted that Salesforce.com (CRM) was the “first billion-dollar cloud computing company,” when the company announced 2009 year-end revenue of $1.077 billion, a 44 percent increase from 2008. All eyes will be on Salesforce.com on Feb. 24 to see if the SaaS provider will maintain its $1 billion revenue status when it reports its fiscal year end results.“At a time when capital is precious, big-ticket software purchases just don’t make sense,” said Benioff at the time.
Subscription and support, which accounts for around 92% of Salesforce.com’s total revenue was $984.5 million in fiscal year 09, with professional services contributing $92.2 million. Gross profit was $856.3 million, compared to $577.1 million for 2008, and $378.2 million in 2007. Net paying customers rose 14,400 during fiscal 2009 at 55,400. In November, the company raised its full year revenue guidance to $1.294 billion. (SaaS)
Amazon Web Services
Online retailing behemoth Amazon (AMZN) has been touting cloud computing since August 2006. Despite the ongoing publicity and a sizable ecosystem of third-party management and monitoring services around Amazon Web Services, cloud computing represents a small portion of Amazon’s financials. On its balance sheet, Amazon includes AWS under “Other,” which represented just 3 percent ($735 million) of Amazon’s $24.5 billion total revenue in 2009. “Other” also represented 3 percent of Amazon’s 2008 financials in which it reported total revenue of $19.2 billion. Until Amazon provides more detailed reporting on AWS revenues, the best guesstimate of its annual cloud revenues is “less than $735 million.” (IaaS)Rackspace Hosting
Rackspace (RAX) increased its cloud revenue 124.8% for its fiscal 2009 to $56.4 million, compared to $25.1 million for 2008. Cloud revenue contributed about 8% of its total net revenue for the year ($629.0 million). Rackspace finished the year with 71,621 cloud customers, compared to 34,820 cloud users in 2008. The 2009 customer count includes SaaS customers for Rackspace’s Jungle Disk online backup offering using Rackspace storage. Jungle Disk customers using third-party storage are excluded. Rackspace acquired Jungle Disk in October 2008, the same month in which it announced its cloud business. (IaaS, SaaS)Savvis
Cloud computing revenue contributed $7.4 million to Savvis’ full-year 2009 revenue, a 93% increase from 2008 for the colocation and managed hosting provider. However, that’s less than 1 percent of Savvis’ total revenue of $874.4 million, which increased 2 percent from 2008. Hosting remained the biggest part of Savvis’ business, raking in a total revenue of $607.3 million in 2009, an 8 percent increase from 2008. During the company’s year-end financials announcement, CFO Greg Freiberg said Savvis (SVVS) experienced churn in its flagship colocation business late in Q4. Savvis announced its first foray into cloud computing in February 2009. (IaaS, PaaS)Terremark Worldwide
This Miami-based managed hosting and colocation specialist increased its annualized cloud computing run rate to $17.2 million during the third quarter, a 30% increase from the previous quarter. Back in November, Terremark (TMRK) attributed the majority of its then annual run rate of $13.2 million to customers in the federal government. At that time, Terremark said it had booked $3 million in additional business from existing customers and expanded into additional space at its campus in Santa Clara, Calif. Terremark launched its Enterprise Cloud in June 2008. (IaaS)NetSuite (N), which provides on-demand CRM and ERP applications through a Software as a Service model, reported revenue of $166 million in 2009, an increase of 9 percent from a year earlier. The company reported a net loss of $6.5 million for the fourth quarter and $23.3 million for the year. “In a year that saw many of our ERP competitors’ sales decline, NetSuite achieved record financial results,” said Zach Nelson, CEO of NetSuite. (SaaS)
HARDWARE VENDORS
3PAR
A leading global provider of utility storage, 3PAR (PAR) reported a 4 percent increase in its fiscal third quarter revenue ending Dec. 31 to $50.1 million. This represented a 9 percent uptick to its revenue in the prior quarter, which ended Sept. 30. The company enables customers to deliver software and hardware as a service through server and storage virtualization.Cisco Systems
As well as provide networking infrastructure equipment to service providers to build out cloud platforms, Cisco (CSCO) is also a SaaS provider through its $3.2 billion acquisition of WebEx in March 2007, and its $215 million purchase of PostPath in August 2008. The acquisitions are part of Cisco’s Advanced Technologies division, which also houses cable set-top box maker Scientific Atlanta and Cisco’s Linksys home networking unit.For Cisco’s fiscal second quarter results for 2010, Advanced Technology contributed 24.3 percent ($2.4 billion) of the company’s total net sales of $9.8 billion. That share of the pie was slightly down from the 25.2 percent revenue share that Advanced Technology contributed in Q110. In comparision, Cisco’s largest revenue-generating division in Q210 was Switches, which accounted for 34.9 percent ($3.4 billion) of revenue.
Oracle
The headlines that appeared after Oracle (ORCL) won European regulatory go-ahead to swallow Sun read as though Oracle wants nothing to do with cloud computing. While Oracle has stated that it does not plan to be in the rent-by-minute computer business, thus leaving Sun Cloud in the cold, Oracle is a SaaS provider. Among its products include Oracle CRM On Demand, and Oracle Beehive On Demand, a set of collaboration services. It also provides the Oracle Platform for SaaS, which includes the Oracle Database, Oracle Fusion Middleware, Oracle Enterprise Manager, and Oracle VM, all aimed at ISVs to build SaaS and cloud-based applications.In terms of financials, Oracle’s On Demand portfolio stayed more or less level to contribute $188 million in revenue for its Q210, compared to $189 million in Q209. For its 2009 year end, On Demand contributed $779 million (a 12 percent increase from 2008) to Oracle’s total revenue of $23.3 billion.
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Terremark: Strong Growth, But Shares Droop
February 10th, 2010 : Rich Miller
An aerial view of the NAP of the Capital Region, showing both completed data center buildings at the Terremark campus.
On Monday Terremark Worldwide (TMRK) reported strong growth in customers in the government and cloud computing sectors, and growing demand for its colocation and managed hosting services.
But Wall Street was keenly focused on the numbers, and the company’s quarterly results and revenue guidance came in slightly below analysts’ expectations. As a result, Terremark shares declined 16 percent in Tuesday’s session, closing down $1.37 at $6.52 a share.
Terremark reported revenue of $74.3 million, and a loss of 13 cents per share, while the Wall Street consensus had been looking for $75.1 million and a loss of 8 cents. For fiscal; year 2011, the company projected revenue of $335 million to $340 million and EBITDA of $95 million to $100 million, while the Street had been looking for $348.6 million in revenue and $108.4 million in EBITDA.
Conservative Approach on Project Revenue
Terremark’s guidance now reflects more conservative projections in one area of its business. It now expects that 5 percent of its revenue will come from non-recurring projects, which have historically accounted for about 10 percent of revenue. ”It does not mean that we’re not going to focus on (non-recurring revenue),” said Terremark CEO Manuel Medina. “But trying to identify what those project revenues are going to be is very challenging, so I think that a 5 percent figure is a conservative figure.”Beyond the quarterly numbers, Terremark said the second phase of its NAP of the Capital Region in Culpeper, Va. opened last week, with the project coming in on time and on budget.
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Terremark Leases Expansion Space in Dallas
January 13th, 2010 : Rich MillerTerremark Worldwide (TMRK) has built huge data centers around the world. But when it needed to expand its data center footprint in Dallas, it opted to lease “plug and play” space from Digital Realty Trust (DLR), the largest provider of wholesale data centers.
Digital Realty said this morning that Terremark has leased 10,000 square feet of space in one of its Dallas area facilities. The location was not announced, but a likely suspect is Digital’s huge new campus in Richardson, where it plans to build out up to 800,000 square feet of mission-critical space.
The deal underscores the appeal of Digital Realty’s Turn-key Datacenter program, which offers customers finished raised-floor data center space, shifting the data center development costs from the tenant to the landlord. This approach allows for much quicker deployment than if the customer built a new facility on its own.
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Terremark Acquires Storage Provider DS3
November 12th, 2009 : Rich MillerJust weeks after announcing a focus on seeking acquisition opportunities, managed hosting provider Terremark Worldwide (TMRK) has acquired DS3 DataVaulting for $11.5 million in cash, the company said today. DS3 provides customers with offsite, online data backup and restore services which enable enterprises and government agencies to rapidly and securely backup and restore files, databases and operating systems. The company is based in Fairfax, Va. and was founded in 2002.
“Acquiring DS3 enhances our overall data storage offering and helps us accelerate the development of our solutions in the area of managed storage, which is a key growth opportunity driven by the escalating data demands created by new technologies and increasingly stringent regulatory compliance,” said Marvin Wheeler, Terremark’s Chief Strategy Officer.
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Surge in Federal Cloud Revenue for Terremark
November 10th, 2009 : Rich Miller
The NAP of the Capital Region in Culpeper, Virginia is hosting many of Terremark's cloud computing customers.
The Obama administration’s plan to shift federal IT services to a cloud computing model is beginning to boost revenues for Terremark Worldwide, one of the early leaders in the government cloud services market. The Miami-based company said yesterday that its revenue from cloud computing has surged to an annual rate of $13.2 million, with the majority of that growth coming from the federal government.
Terremark (TMRK) is hosting two of the earliest federal web sites to seek out a cloud hosting model, the USA.gov information portal and Data.gov, an ambitious project to provide the public with better access to government activities through machine-readable data feeds. “Our early success with the federal government has clearly validated our technology leadership which is accelerating our commercial customer’s interest in an adoption of cloud computing,” said Terremark chairman and CEO Manuel Medina.
Medina said the Terremark cloud platform is becoming a gateway to selling additional value-added services to its customers. “Really what gives the premium to our cloud is the services we wrap around it. We don’t expect those (profits) to come down any time soon. To be perfectly honest with you, I’m a lot happier today when we sign a cloud deal than when we sign 1,000 square feet of colo.”
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Alliances Key to Terremark Growth Strategy
October 27th, 2009 : Rich MillerIn a sign that it is focusing on partnerships and acquisitions, Terremark Worldwide (TMRK) today announced the appointment of Marvin Wheeler as Chief Strategy Officer. Wheeler, who was previously Chief Operations Officer and President of the U.S. Commercial Business Unit, will be responsible for identifying key opportunities to drive continued growth for the company, including potential acquisitions.
“While Terremark has experienced exponential growth over the past several years, our continued focus on execution and tightly aligning our business plan with market demand and technological advancements will be vital as we continue our growth,” said Manuel Medina, Terremark’s Chairman and CEO. “Marvin’s vast experience and deep understanding of our dynamic industry, combined with his proven track record of success, will help us develop strategic alliances with key partners and capitalize on various opportunities to extend our successful growth trajectory.”
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Roundup: Digital Realty, Terremark, Riverbed
October 23rd, 2009 : John RathHere’s a roundup of news announcements from the data center and hosting industry:
- Digital Realty Trust Outlines Third Quarter Leasing Activity. Digital Realty Trust announced 3rd quarter leasing activity Thursday, reflecting strong incremental revenue growth for the company. For the period ending September 30, 2009 leases totaled 101,000 square feet. Approximately 90,000 square feet of this was Turn-Key Datacenter space and 11,000 square feet was non-technical space. For the year to date the company has signed leases totaling approximately 278,000 square feet of space. “The continued demand for our Turn-Key Datacenter product has produced strong leasing results in the third quarter,” said CEO Michael Foust. On a year-to-date basis, the leases that have commenced will contribute approximately $54.1 million of incremental revenue recognized in 2009. Digital’s stock price has been steadily climbing since July 2009 and closed Thursday up 1.57 at $46.39
- Terremark launches cloud-enabled disaster recovery services. On Thursday Terremark announced an addition to its portfolio of virtualized services by launching cloud-enabled disaster recovery (DR) services. The new offering leverages their cloud computing platform and delivers pre-provisioned computing and network capacity along with data replication and fully managed data center failover. The new DR service is based on NetApp and VMware vSphere technologies. VMware announced Thursday that vSphere 4 has surpassed 500,000 downloads. Tom Mays, Vice President for Advanced Data Solutions at Terremark said “Our cloud-based disaster recovery offering is more than just a remote-replication solution; it is a complete cloud-based service that incorporates the enterprise-class services necessary to run IT operations securely in the event of a disaster declaration.”
- Riverbed 3rd quarter 2009 financial results. IT infrastructure performance company Riverbed announced record 3rd quarter 2009 results Thursday, with revenue exceeding $100 million. Key financial statistics included revenue increases 12% over prior quarter and 18% over prior year, cash flow from operations of $38 million and $297 million in cash and marketable securities and no debt. Riverbed CEO Jerry Kennelly said “as a critical enabler of fundamental business initiatives including virtualization, cloud computing and reducing data infrastructure costs, WAN optimization continues to be a top IT priority.” In the third quarter of 2009 Riverbed was positioned by Gartner in the leaders quadrant for WAN Optimization Controllers, added 8 Fortune 500 customers, and introduced the Central Management Console – Virtual Edition, designed for managed service providers.
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Terremark’s vCloud Express in Spotlight
September 2nd, 2009 : Rich MillerTerremark (TMRK) was featured in the opening keynote of VMworld 2009 on Tuesday and VMware CEO Paul Maritz showcased its new vCloud Express, a service to create and host virtual machines on VMware vSphere. In this video from VMworld TV, Terremark’s Simon West discusses his company’s implementation of vCloud Express and gives a quick demo of setting up a virtual server. Users can launch a single server and pay by credit card, with rates starting at less than $1 a day. This video runs about 2 minutes, 30 seconds.
For additional video, check out our DCK video archive and the Data Center Videos channel on YouTube.
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Terremark Offers SAP Cloud Hosting
August 27th, 2009 : Rich Miller
Terremark Worldwide (TMRK) will offer hosting services for SAP solutions on its Enterprise Cloud infrastructure platform, the company said today. The agreement offers expanded options for customers looking for a cloud environment to run business applications from SAP, as the German software giant has been slow in deploying its own cloud platform.“Terremark’s hosting services will offer several benefits to both small and large SAP customers,” said Michael Ressemann, global head of BPO Solution Delivery and Partner Enablement at SAP. “Our partnership with Terremark will provide customers the ability to experience significant cost savings, while not having to sacrifice the reliability of their hosted SAP applications.”
The announcement continues the recent momentum for the Enterprise Cloud, which is hosting several of the federal government’s cloud-hosted sites and also backing cloud offerings from partners like CSC.
The Enterprise Cloud is a managed infrastructure service running on Terremark’s Infinistructure utility computing platform. The service seeks to marry the advantages of Amazon’s utility computing platform – especially scalability and rapid deployment – with enterprise-ready reliability to support mission-critical applications.
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