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17 February 2017
Digital Realty has posted better than expected financial results for the third quarter of 2016, beating analyst predictions.
Digital Realty (DLR) announced its financial results for the
third quarter of 2016. The trust’s revenues were
$546 million for the third quarter of 2016. This was a 6%
increase from the previous quarter and 25% more than the same
quarter of 2015.
Net income for the quarter was $222 million. This was $1.25
per share, compared to $0.19 per share in the second quarter of
2016, down from $0.28 per share in the third quarter of
The results were better than Wall Street expected, beating
the analyst’s consensus by $0.15 – many
had settled on $1.43 as an estimate. The company posted revenue
of $577 million, compared to analysts’
expectations of $550 million. DLR’s revenues were
up 15.3% compared to the same quarter last year.
Adjusted EBITDA was $307 million for the third quarter of
2016, a 3% increase from the previous quarter and a 22%
increase over the same quarter last year.
During the third quarter of 2016, it completed the
acquisition of eight carrier-neutral data centres in Europe
from Equinix in a transaction valued at $874 million.
Digital Realty CEO Bill Stein said: "We also advanced our
goal of diversifying our product offerings, with the launch of
our Service Exchange in November, the continued growth of our
Partners and Alliances Program and the expansion of our
colocation footprint beyond the original 20 Telx locations. We
also made solid progress towards our goal of achieving
operating efficiencies to accelerate growth in cash flow and
value per share. We hit our target for 200 basis points of
EBITDA margin expansion two years ahead of plan."
One of the major solutions which the Trust is offering,
which almost certainly helped its share price to increase, was
the confirmation of CEO Stein during the earnings conference
call that the company will be again offering Layer 3
capabilities during the second quarter. As Stein said: "Layer 3
capabilities are a requirement to enable enterprise customers
to reliably consume SaaS or Software-as-a-Service offerings
from a private cloud environment. This means that our customers
will be able to realise the benefits of a full suite of public
cloud services, including infrastructure, platform and
Software-as-a-Service, without incurring exposure of a
traditional public internet connection.
"In a nutshell, this offering will allow our customers to
realise the benefit of the public cloud without the complexity
or security issues associated with hybrid cloud architectures.
In addition to the launch of Service Exchange, we saw an
acceleration of our activity in our Partners and Alliances
Program during the fourth quarter."