The Q4 results of Internap Network Services (NASDAQ:INAP, news, filings) show that the company continues to transform itself internally, as they deliberately churn off less profitable partner data center revenues while driving growth in the ones they own. Quarterly revenues fell sequentially once again, now dipping below the $60M mark, though it does still round up to that figure, and loss per share was $0.01. Both were somewhat below analyst projections, which Yahoo Finance had averaging at $60.5M and a profit of $0.01 per share.
On the other hand, adjusted EBITDA rose sequentially to $10.3M. Datacenter revenues rose slightly sequentially, but that was more than offset by declines in IP services. However, datacenter margins have been going up while IP services margins have been mostly holding steady above 60%. Since the end of 2009, their own space has risen as a percentage of their total footprint from 52% to 68% as they have returned more than 30k square feet. The remaining partner datacenter facilities have margins of over 20%, as compared with more like 5% before - I hadn't realized it was that low.
Internap says they have completed their initiative to churn off that partner datacenter revenue. Hopefully that means we can look forward to a return to growth by the company in 2011. To that end, the company announced an expansion of its footprint into the Dallas/Fort Worth metro area, where they will construct a state of the art 55K square foot facility designed for more than 200W/square foot. The project is expected to be ready in the first quarter of 2012.
They have also been making more noise lately about managed and cloud services, including managed hosting and a new cloud storage product last month. That will help them make the best of their datacenter footprint, assuming they continue to gain traction.
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