Colocation and hosting provider Savvis (SVVS) reported earnings today, with some rare good news. Revenues of $218.4M were up 3% sequentially as expected, adjusted EBITDA of $47.7M was likewise solid, and the loss per share of 0.01 was better than anticipated. Current 2008 guidance was reaffirmed despite the economic climate, and overall the results were perhaps Savvis's best quarter in some time. But more important in the near term was what the company said about its financial vertical.
Savvis has been perceived to be at greater risk in the current financial crisis than other hosting providers because of its substantial exposure to financial companies themselves. After all, with investment banks falling like flies and gloom everywhere, how could Savvis not see its revenues suffer? With their stock price falling to $5 and change from over $50 a year and half or so ago, shareholders have definitely been feeling long term pain. But today the company made these comments about this at-risk revenue stream:
Despite the turmoil in the banking industry during the third quarter, the financial vertical posted revenue of $58.6 million, or 27% of overall revenue. Compared to the third quarter of 2007, revenue increased 22%. On a quarter-over-quarter basis, revenue in the financial vertical increased 6% over the second quarter of 2008.
That's a heck of a nice quarter from a segment having its worst crisis in 75 years. Now it should be noted that the financial sector didn't crash until the end of the quarter, and the company still may see deterioration in results in Q4. Yet they don't see it yet and didn't go all wishy washy on guidance, could it be that financial companies need their data services whether they are in trouble or not?
With its datacenter expansion projects finishing up, Savvis seems ready to reap the rewards with decreasing capital expenditures and increasing margins as they put all that new square footage to work. Yes, they're settling in just in time for economic armageddon, haha.
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