Here is the second part of our coverage of Interxion's IPO. Click here for the first part.:
SELECTED FINANCIAL DATA
For the nine months ended September 30, 2010, Interxion’s total revenue was €152.8 million, the operating profit was €34.3 million and Adjusted EBITDA was €57.8 million, compared to €126.6 million in revenue, €24.5 million in operating profit and €45.8 million in Adjusted EBITDA in the nine months ended September 30, 2009. (click to enlarge)
Here is a chart with Interxion’s latest revenues reported and quarterly increase:
In 2009, Interxion invested about €100.0 million ($130 Million) in property, plant and equipment to expand its data center footprint. The company will invest roughly the same amount in 2010 (€79.1 million in the first nine months of 2010, and committed to an additional €18.6 million expected to be fully deployed during the remainder of 2010).
NOLs - Net Operating Losses
LEASES AND COLO CONTRACTS
Interxion leases all its facilities, with contracts that are typically for 10 to 15 years (excluding extension options). The majority of the leases are subject to an annual inflation-linked increase in rent.
Some leases in France, Ireland, Belgium and the United Kingdom do not contain contractual options to renew or extend the lease, and Interxion has exhausted or may in the future exhaust such options in the other leases. Wholesale providers of data center space may compete, in the future, not only to offer space to larger Interxion’s customers, but also for the acquisition of new sites, thereby increasing the average rental prices for suitable sites.
Revenues are derived primarily from colocation and managed infrastructure services.
Colocation contracts with customers are typically for three to five years, but it is mentioned that they can last up to 10 years. Contracts usually include price escalators that adjust for inflation.
Typically 60-70% of new bookings in any given year are generated from existing customers, in line with industry standards.
It is interesting to note that about fifty-three percent of Interxion’s Monthly Recurring Revenue for the nine months ended September 30, 2010 was generated by contracts with terms of one year or less remaining. However, the company has, so far, experienced a very low churn of less than 2% per quarter, similar to its peers (Average Monthly Churn rate was 0.6% in the nine months ended September 30, 2010).
International Data Corporation, or IDC, projects the market for carrier-neutral colocation data center services in the United Kingdom, France, Germany and The Netherlands to grow from €922 million in 2009 to €2.245 billion in 2014, a compound annual growth rate of 19%. According to Tier1 Research, the shortfall in supply versus demand for data center capacity in Europe will continue for the next three years.
INTERXION’S MAJOR SHAREHOLDER
Following the offering, private equity investment funds affiliated with Baker Capital will indirectly own 47.5%, on a fully diluted basis, of Interxion’s equity. Upon completion of this offering, the company will also enter into a shareholders agreement with affiliates of Baker Capital. For so long as Baker Capital or its affiliates continue to be the owner of shares representing more than 25% of Interxion’s outstanding ordinary shares, Baker Capital will have the right to designate for nomination a majority of the members of the board of directors, including the right to nominate the chairman of our board of directors.
If Baker Capital or its affiliates continues to be the owner of shares representing less than or equal to 25% but more than 15% of the outstanding ordinary shares, Baker Capital will have the right to designate for nomination three of the seven members of the Board, at least one of whom shall satisfy the criteria for independent directors. For so long as Baker Capital or its affiliates continues to be the owner of shares representing less than or equal to 15% but more than 10% of the outstanding ordinary shares, Baker Capital will have the right to designate for nomination two of the seven members of our Board, none of whom shall be required to be independent. At such time that the ownership of Baker Capital or its affiliates is less than or equal to 10% but more than 5% of the outstanding ordinary shares, Baker Capital will have the right to designate for nomination one of the seven members of our Board, who shall not be required to be independent.
Furthermore, for so long as Baker Capital or its affiliates continues to be the owner of shares representing more than 25% of the outstanding ordinary shares, Baker Capital will have the right, but not the obligation, to nominate the Chairman of our Board.
As long as Baker Capital or its affiliates continues to be the owner of shares representing more than 15% of the outstanding ordinary shares, at least one of Baker Capital’s director nominees shall be appointed to each of our standing committees, provided that such Baker Capital nominees shall meet any independence or other requirements of the applicable listing standards.
LISTED IN THE USA, HEADQUARTERED IN THE NETHERLANDS
Shareholders rights and responsibilities will be governed by Dutch law and will differ in some respects from the rights and responsibilities of shareholders under U.S. law. The SEC filing includes a clarification on some of these aspects. As a curiosity, Interxion anticipates that all shareholder meetings will take place in The Netherlands.
Souces: Interxion’s web site, press releases and filing with the Sec. We also performed channel checks and sector research.
< Disclosure: I am long EQIX.