Digital Realty financial results improve in third quarter

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 2015.

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."

Topics: Digital Realty, hybrid cloud