Data center major Equinix Inc. (EQIX - Analyst Report) continues to expand. The company recently revealed its plan to expand operations in the capital of Finland, Helsinki. It intends to open Equinix Internet Exchange in the city by the first quarter of fiscal 2017. This will enable the company to meet the fast-growing demand for Internet usage and data storage capacity.
Equinix Internet Exchange significantly reduces the cost of critical transit, peering and traffic exchange operations by eliminating costs associated with private peering or local loops. With around 22 Internet Exchange Point (IXP) located worldwide across APAC, North America and Europe, it provides speed, and reliability, which helps to solve business critical issues. The difficulty and cost associated with changing infrastructure providers serves as a barrier to entry. As a result, Equinix has a loyal customer base, which continues to increase slowly with new wins.
Going forward, by providing this connectivity, Equinix enables customers to increase the efficiency of their IT infrastructure, and remove some complexities of administering and managing their infrastructure, while significantly reducing costs. This is the advantage, which attracts customers to use the Equinix platform.
Equinix have more than 145 data centers across the world. The recent move will bode well for Equinix as the expansion of connectivity will strengthen its portfolio and contribute toward total revenue growth.
As per the press release, worldwide Internet traffic is growing at a CAGR (2012 and 2016) of more than 33%. Moreover, IP traffic is expected to grow 22% per year over the next three years. Given these predictions, the company’s decision to expand its Internet Exchange in Finland seems like a step in the right direction.
Expansion in important markets and consolidation of facilities in the existing ones are a part of Equinix’s core strategy. The company is continuously striving to boost its revenue base as well as profitability by improving its technology to attract more clients. Moreover, its recurring revenue model provides much needed support to its revenue stream. The company’s cloud and IT service businesses are its fastest growing segments and account for approximately one fourth of its total revenue.
Equinix remains positive on the growing demand for data centers attributed to the Big Data exchanges. To meet this demand, the global interconnection and data center company is expanding its IBX data centers globally and gaining popularity among tech companies looking for data management. It expects its total addressable market for retail data centers to increase at a CAGR of 8% from 2013 to 2017 and reach $24.0 billion. Based on this projection, the company projects a 10% revenue growth rate through 2017.
Nonetheless, Equinix competes with established communications carriers such as AT&T (T - Analyst Report) , Level 3 Communications (LVLT - Analyst Report) and Verizon Communications (VZ - Analyst Report) , which also operate date centers.
Currently, Equinix has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
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