Terremark Finds $2.5 Million in the Cloud

Terremark Worldwide is beginning to measure the impact of its year-old enterprise cloud services business. And the numbers look promising. Take a look.

During the company’s earnings conference call this week, Terremark CEO Manny Medina cited a cloud-related revenue run rate of $2.5 million on an annualized basis. He said the company has been working closely with large enterprises and federal government agencies to develop their cloud strategies.

Cloud compute may be fledgling service line, but it’s won some firms consider an important source of growth. Savvis executives recently pointed to cloud services along with SaaS as fueling the company’s expansion going forward.

Still, the cloud has its doubters. And while Terremark’s ability to attach a revenue number to the cloud won’t entirely dispel the skepticism, it at least provides some evidence of traction.

One source of that traction is somewhat surprising: the government sector.

“The Obama administration’s mandate to drive down costs and increase the efficiency of the federal government’s IT systems is driving the federal government to move into the cloud faster than we anticipated,” Medina said.

Medina quoted research from Input Inc. to back up his observations. Input last month stated that the cloud will transform federal IT infrastructure, adding that it expects the market to grow nearly 30 percent over the next five years to more than $1 billion.

“The National Institute of Standards & Technology ... helped create the momentum for cloud initiatives on a federal level by crafting security standards and definitions for cloud projects,” according to Input. “[Service oriented architecture] implementations by the Air Force, Navy, Army and other government agencies are helping to drive the adoption of cloud computing.”

Medina, meanwhile, noted the importance of security in winning customers over to the cloud.

“Without exception, every meeting we have with a potential cloud customer includes a detailed conversation around data security,” he said. “As larger enterprises and the federal government are adopting the cloud, the conversations have shifted beyond firewalls and intrusion detection systems to integrating our entire suite of managed security services.”

To bolster its cloud offering, Terremark has added such security services as vulnerability assessment, data loss prevention, intrusion prevention, and network forensics.

For its first fiscal quarter ended June 30, Terremark generated revenue of $65.8 million, a 17 percent increase over the same period last year. EBITDA for the quarter was $16.7 million compared with $11 million last year. The company posted a net loss of $15.4 million in Q1 compared with net income of $1.7 million last year.

Contributing blogger John Moore covers Master MSPs, Web hosts and emerging opportunities. Follow MSPmentor via RSS; Facebook; Identi.ca; and Twitter. And sign up for our Enewsletter; Webcasts and Resource Center.

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