Internap Network Services (NASDAQ:INAP, news, filings) is finally starting to see the benefits of its shift in focus toward its datacenter business, and finished the year on a profitable Q4 note. Both revenue and earnings came in ahead of expectations, and the stock market responded favorably after hours. Here's a quick table of their results in context:
|$ in millions||Q4/10||Q1/11||Q2/11||Q3/11||Q4/11|
|- Data center||31.7||31.5||32.4||34.1||35.3|
|- IP Services||28.2||27.9||27.9||27.9||27.5|
IP Services revenue declined more rapidly than they have recently, but costs actually came down faster. The data center business's growth accelerated during the quarter, bringing total revenue in ahead slightly ahead of expectations. Meanwhile, adjusted EBITDA margins surged past the 20% barrier, giving the company its first profitable quarter in a year - and one that looks like it might recur going forward - once the Voxel integration is further along.
Internap acquired hosting and cloud services provider Voxel just before New Years, the results of which will show up in next quarter's report. The integration is underway, and the company is already seeing some cross-selling opportunities. Internap says that in the fourth quarter Voxel had about $3.5M in revenue and $550K in adjusted EBITDA, which suggests first quarter revenues will come in closer to $66-67M (that's my guess, not guidance).