Terremark Loss Exceeds by a Penny

Terremark Worldwide (TMRK - Snapshot Report) announced results for the second quarter of fiscal 2010 (ended Sep 30, 2009) with reported loss per share of 12 cents exceeding the Zacks Consensus Estimate of loss of 11 cents. Net loss of $7.5 million for the quarter, represents an improvement from net loss of $8.4 million reported a year ago, boosted by higher sales. 

Consolidated revenue of $69.8 million (up 17% year over year) was near the high-end of the company’s guidance for the quarter, fueled by healthy contract bookings. Adjusted EBITDA increased 82% year over year to $18 million, in line with the company’s guidance. The company added 64 new customers during the quarter, a sequential improvement, taking its total customer base to 1,119 at the end of the second quarter. 

Total new contract bookings registered $34.2 million, an increase from $29 million reported in the previous quarter. This represents the highest quarterly contract bookings ever. Cross-connects billed to customers reached 8,789, growing 18% year over year. Additionally, total co-location space utilization increased to 29.8%, from 28.3% reported in the previous quarter. 

Utilization for build-out co-location space also increased sequentially to 64.3%. Terremark has released its guidance for the third quarter with revenues projected in the range of $73.0 million to $76.0 million with adjusted EBITDA of $19.0-$21.0 million. The company has reaffirmed its revenue guidance for full-year fiscal 2010 which is expected between $290 million and $300 million. 

Adjusted EBITDA for the year is projected to range between $80 million and $85 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 20% 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 is further expanding capacity at the NCR facility by constructing a second data center expected to be completed in the fourth quarter of fiscal 2010. 

Terremark has also expanded its portfolio of premium cloud computing solutions with the introduction of vCloud Express service in September 2009. This represents the latest addition to the company’s suite of VMware Virtualized service offerings. Terremark is one of the leading hosting service providers of VMware Inc (VMW - Snapshot Report), a major player in the virtualization software market. 

We believe the company’s industry leading product/service portfolio, coupled with a differentiated execution strategy, uniquely positions it to leverage the attractive market trends for managed hosting and co-location services.

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