ChinaCache -11% in spite of revenue beat

|About: ChinaCache International (CCIH)|By:, SA News Editor

ChinaCache's (CCIH -11.4%) Q1 revenue of $52.1M beat guidance of $50.1M-$50.9M. Q2 guidance is for revenue of $54.7M-$55.5M.

At the same time, gross margin (closely watched) fell to 30.5% from 31.7% in Q4 and 31.1% a year ago. On the CC (transcript), ChinaCache noted higher equipment depreciation/migration expenses offset lower bandwidth/colocation spend (as a % of  revenue).

The company mentioned cost controls are expected to keep a lid on opex over the near-term, but added capex will "continually increase" over the next two quarters due to investments in a new resource management system. It's expected to return to a level of ~10% of revenue afterwards.

A partnership with China Telecom isn't expected to boost Q2 sales, but might have an impact in Q3. Surging Chinese mobile data traffic (boosted by 4G network rollouts) is expected to provide a 2H lift.

Q1 results, PR