Savvis to Expand Facilities in Three Markets

Savvis Communications will expand its data center facilities in three cities as it continues to add capacity to accommodate the growth of its managed hosting and cloud computing business. In its quarterly earnings call Tuesday, Savvis (SVVS) outlined plans to add space to existing projects in Atlanta, Seattle and Piscataway, N.J.

The company plans to add 15,000 square feet of space in Atlanta, 16,700  square feet of new space in Seattle, and 15,600 square feet of space in Piscataway in central New Jersey. The new space will come online in the third and fourth quarters of 2011, and Savvis expects to invest approximately $41 million in the expansions.

More Expansion to Come?

Savvis executives said the company is considering expansion in other markets as well. The company has allocated $69 million for capital expenditures for 2011, leaving about $28 million for additional capacity. Savvis CFO Gregory Freiberg said the company has "other projects that we're evaluating but not yet ready to announce."

That means the company's 2011 data center deployment could exceed the 55,000 square feet of sellable data center space added during 2010, when the the company added space in northern New Jersey, northern Virginia, downtown Chicago and at a UK facility in Slough.  "All these were bolt-on expansions to existing locations," said Savvis CEO Jim Ousley. " Thus, we had a low average cost of approximately $1,100 per square foot."

Revenue for the fourth quarter was $252.7 million, a 15 percent increase from $219.8 million in the fourth quarter of 2009. Adjusted EBITDA came at $67.8 million, compared to $54.9 million in the fourth quarter of 2009, a 24 percent growth rate compared to the same quarter last year.

For the full year, revenue was $933.0 million, up 7 percent when compared to full year 2009 revenue of $874.4 million, and adjusted EBITDA for 2010 was $236.2 million, up 7percent over the $220.0 million reported in 2009. The company also increased by ~15 bps its adjusted EBITDA margin, compared to 2009.

For a quick look at some of Savvis most important metrics in the last two years, you may refer to the attached spreadsheet, downloadable at this link.

Savvis Symphony line of cloud products, which is a part of its Managed Services offerings, achieved revenue of $15.2 million in 2010, up 106% over 2009 revenue of $7.4 million.

For 2011, Savvis expects to achieve revenue of $1,030 to $1,060 million, and Adjusted EBITDA of $265 to $290 million. CapEx is expected to range between $220 and $240 million.Colocation revenue was up both quarterly and annually in the fourth quarter, achieving a 5 percent growth in total 2010, compared to the previous year.

Data Center Knowledge contributor Paolo Gorgo contributed to this article. Paolo writes about the colocation and CDN sector at Nortia Research and Seeking Alpha.