Switch and Data Projects Higher Revenue

Switch and Data (SDXC) said demand for its services continues to be strong, and raised its revenue guidance for 2008.

Rich Miller

April 29, 2008

2 Min Read
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Colocation and interconnection specialist Switch and Data (SDXC) said it continues to see strong demand for its services, and raised its revenue guidance for 2008. The company said it expects 2008 revenue of $168 million, rather than the previous estimate of $158 million, and also hiked its EBITDA guidance from $51 million to $53 million.

Switch and Data's move comes a week after the other leading publicly-held colocation provider, Equinix (EQIX), also raised its revenue guidance and reported solid customer demand for data center space.

"Demand for our services is strong," said Keith Olsen, Switch and Data CEO and President, in the company's earnings call with analyst this afternoon. "Demand is outpacing supply (of colocation space) in our leading markets. IP traffic growth remains strong, driving greater need for our exchange points.

Switch and Data reported net income of $300,000 for the three months ended March 31, 2008, which included a loss of $700,000 related to the company's recent debt financing to fund its New Jersey data center expansion.

Total revenues were $39.8 million, a 27 percent improvement from the year-earlier period. Recurring revenues, which consist of colocation and interconnection services, were $37.6 million in the first quarter of 2008, an increase of 26 percent over the comparable period in 2007. Non-recurring revenues, representing one time installation fees and services, were $2.2 million compared to $1.6 million in the prior year.

Some quick highlights from the earnings call:

  • Switch and Data's Toronto facility has now opened, and the first phase of the New Jersey data center is scheduled to open in late September.

  • 85 percent of Switch and Data's revenue is focused in its top 10 markets, and who 89 percent of the company's sales in the first quarter came from existing customers

  • Average revenue per user cabinet was $1,900, compared to $1,761 a year ago.

  • Total interconnections are now at 19,797, up from 18,194 during the same period in 2007.

  • Among notable customer activity, content delivery network Limelight Networks (LLNW) expanded into four additional locations in Switch and Data's network of 34 facilities in 23 geographic markets.

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