IB Net Payout Yields Model

Terremark Worldwide Reports Strong Q2 Results

Terremark Worldwide (TMRK), a leading global provider of managed IT infrastructure services, continues to report strong growth for their data center space. TMRK reported 22%YoY growth and 8% sequential growth. Also important is that growth is accelerating with only 20% growth in the prior quarter. EBITDA grew at 27% YoY and 19% QoQ showing that margins are starting to expand as TMRK is reaching critical mass and improved utilization rates. 

TMRK also upped guidance for fiscal Q3 and FY 2011 as the outlook continues to improve including growing international demand including Brazil and Amsterdam.

Cloud revenue has now grown to a $30M run rate and more then double last years run rate. While still below 10% of total revenue, it continues to grow at a fast clip and will become a more important part of the story.

Another important part of the story is the interest expense load. TMRK reported a $6M operating profit this quarter, but faced $14M in interest expenses. From the conference call, it sounds like management as a few plans to reduce the cost of capital. This will be key to the success of this company and its future growth. Any ability to tap the ultra low rates provided in this economic environment would be huge in increasing the price of this stock.

via PR:

  • Total revenues for the quarter ended September 30, 2010 were $84.9 million, representing an 22% year-over-year increase
  • EBITDA, as adjusted, for the quarter ended September 30, 2010 was $22.9 million, representing a 28% year-over-year increase
  • Bookings were $37.7 million for the quarter ended September 30, 2010
  • Income from operations for the six months ended September 30, 2010 was $11.0 million
  • 67 new customers were added in the quarter, bringing the total number of customers to 1,401

Business Outlook
  • For the third quarter of fiscal 2011, the company expects revenues to range from $89.0 million to $91.0 million and EBITDA, as adjusted, to range from $26.0 million to $27.0 million.
  • For the full 2011 fiscal year, the company increased guidance for revenues to range from $350.0 million to $353.0 million and EBITDA, as adjusted, to range from $100.0 million to $102.0 million.

Based on these bullish results and the after hours action, it's very possible that TMRK could challenge the 52 week high at $10.72. Its funny how weak the stock has traded since competitor Equinox (EQIX) reported weak numbers fueling concern at TMRK at Rackspace Hosting (RAX). Apparently the market isn't as rigged as some think. The fact that TMRK actually had good results was relatively held under wraps.


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