Surge in Federal Cloud Revenue for Terremark

The NAP of the Capital Region in Culpeper, Virginia is hosting many of Terremark's cloud computing customers.

The Obama administration's plan to shift federal IT services to a cloud computing model is beginning to boost revenues for Terremark Worldwide, one of the early leaders in the government cloud services market. The Miami-based company said yesterday that its revenue from cloud computing has surged to an annual rate of $13.2 million, with the majority of that growth coming from the federal government.

Terremark (TMRK) is hosting two of the earliest federal web sites to seek out a cloud hosting model, the USA.gov information portal and Data.gov, an ambitious project to provide the public with better access to government activities through machine-readable data feeds. "Our early success with the federal government has clearly validated our technology leadership which is accelerating our commercial customer’s interest in an adoption of cloud computing," said Terremark chairman and CEO Manuel Medina.

Medina said the Terremark cloud platform is becoming a gateway to selling additional value-added services to its customers. "Really what gives the premium to our cloud is the services we wrap around it. We don’t expect those (profits) to come down any time soon. To be perfectly honest with you, I’m a lot happier today when we sign a cloud deal than when we sign 1,000 square feet of colo."

Medina also said he perceives a thaw in the spending freezes in place at many major companies, who said the bookings for the current quarter are among the best in the company's history. "The IT budgets of many of these large enterprises were virtually frozen over the last 18 to 24 months, but they have now begun undertaking projects like widespread hardware refresh or data center consolidation and expansion," said Medina. "These conversations represent an ideal opportunity to introduce the benefits of the cloud to a very receptive budget conscious customer."

Terremark said it has already booked $3 million in additional business from existing customers that are expanding into additional space at Terremark's campus in Santa Clara, Calif. The company is building 14,000 square feet of expansion space in Santa Clara, which is already fully sold out.

"As we expected, existing customers like Akamai and Shutterfly have already signed contracts to expand in to this new space," said Medina. "It is opportunities like these with customers that are growing well and have a very long term prospects that we remain very confident in the Santa Clara market."