Terremark Ups Guidance, Adds Anchor Tenant

Terremark Worldwide (TMRK) said yesterday that "business is booming" as the company reported strong results and raised its revenue guidance for the coming year. The company also said it has pre-leased 20 percent of the space in its new NAP of the Capital Region data center, which is scheduled to open later this month. The anchor tenant in the new complex in Culpeper, Virginia will be Computer Sciences Corporation (CSC), one of the largest systems integrators working with the federal government.

Terremark added 61 new customers in the quarter ended March 31, including Microsoft (MSFT), AOL and The Library of Congress, and now has a total of 983 customers. Revenues for the quarter were $56.8 million, an 85 percent gain from the year-earlier period and a 14 percent increase from the previous quarter. Revenues for fiscal year 2008 were $187.4 million, an 86 percent improvement over fiscal year 2007.

"Our fiscal 2008 results were exceptional," said Terremark chairman and CEO Manuel Medina. "We were operating cash flow positive and expect to generate significant cash flow from operations in fiscal 2009. Our pipeline is very strong and our Q4 bookings were the best ever. In short, business is booming and based on our strong contract executions to date, we are raising guidance for fiscal year 2009."

Terremark raised its revenue guidance for the 2009 fiscal year to a range of $255 million to $260 million up from a range of $250 million to $255 million. Management's EBITDA projection was also adjusted upward to a range of $58 million to $60 million from a range of $55 million to $58 million.

Medina noted that Terremark continues to reap the benefits of strategic moves during 2007, when the company announced the acquisition of Data Return and a $250 million financing agreement that allowed the company to restructure its debt and fund new data centers in Culpeper and Santa Clara, Calif.

The Virginia expansion was designed to capitalize on expected demand for secure data center services from federal government customers. The commitment by CSC to anchor the new facility is a huge validation of that strategy, Medina said. "If I had a blank sheet of paper and you asked me to script the best possible anchor customer, CSC would fit that billing," said Medina.

The crown jewel in the Data Return deal was the company's Infinistructure utility computing platform. Terremark said sales on Infinistructure have exceeded expectations.

"Our managed hosting pipeline is very, very strong and we've signed a significant number of managed hosting deals," said Medina. "The fact that you can actually save money and at the same time increase your computing capacity through our Infinistructure computing platform, makes it a very compelling value proposition in economically challenging times. We have not seen any slowdown and we don't expect to see any slowdown in the foreseeable future."

A transcript of yesterday's conference call is available at Seeking Alpha.