SAVVIS Inc. (SVVS, Financial) filed Quarterly Report for the period ended 2009-09-30.
SAVVIS Inc is a global IT utility services provider that focuses exclusively on IT solutions for businesses. With an IT services platform spanning North America Europe and Asia SAVVIS has over 5000 enterprise customers and leads the industry in delivering secure reliable and scalable hosting network and application services. These solutions enable customers to focus on their core business while SAVVIS ensures the quality of their IT systems and operations. SAVVIS' strategic approach combines virtualization technology a global network and 25 data centers and automated management and provisioning systems. Savvis Inc. has a market cap of $742.3 million; its shares were traded at around $13.67 with and P/S ratio of 0.9.
Cost of Revenue. Cost of revenue includes facility rental costs, utilities, circuit costs and other operating costs for hosting space; costs of leasing local access lines to connect customers to our Points of Presence, or PoPs; leasing backbone circuits to interconnect our PoPs; indefeasible rights of use, operations and maintenance; and salaries and related benefits for engineering, service delivery and provisioning, customer service, consulting services and operations personnel who maintain our network, monitor network performance, resolve service issues, and install new sites. Cost of revenue excludes depreciation, amortization, and accretion, which is reported as a separate line item of operating costs, and includes non-cash equity-based compensation. Cost of revenue was $117.9 million for the three months ended September 30, 2009, a decrease of $6.1 million, or 5%, from $124.0 million for the three months ended September 30, 2008. This decrease was driven by $5.6 million decrease in customer related costs and a $2.5 million decrease in circuit costs, both of which were primarily a result decreased network revenues, and a $3.4 million decrease in utility costs related to lower cooling costs due to mild temperatures, partially offset by $3.0 million, $1.3 million, and $0.7 million increases in maintenance, non-cash equity-based compensation, and salary costs, respectively. Cost of revenue, as a percentage of revenue, was 55% for the three months ended September 30, 2009 compared to 57% for the three months ended September 30, 2008.
Other Income and Expense. Other income and expense represents interest on our long-term debt, interest on our capital and financing method lease obligations, certain other non-operating charges, and interest income on our invested cash balances. Other income and expense was $13.9 million for the three months ended September 30, 2009, an increase of $0.7 million, or 5%, from $13.2 million for the three months ended September 30, 2008. The $1.9 million increase in interest expense for the three months ended September 30, 2009 was due to $1.1 million of interest on our loan agreement with Lombard and a $0.8 million increase in interest on capital leases and the Cisco loan. Interest income decreased $0.6 million due to lower average interest rates during the three months ended September 30, 2009. Other income and expense increased $1.8 million due to more favorable impact from currency revaluation of foreign denominated balances during the three months ended September 30, 2009. The following table presents a quarterly overview of the components of other income and expense (dollars in thousands):
Revenue increased $20.0 million, or 3%, for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008, primarily as a result of a 15% increase in colocation revenue. Income from operations increased to $29.6 million for the nine months ended September 30, 2009 compared to income from operations of $11.5 million for the nine months ended September 30, 2008. The increase in income from operations of $18.1 million was primarily due to an increase in revenues, partially offset a slight increase in total operating expenses. Loss before income taxes for the nine months ended September 30, 2009 was $13.6 million, an improvement of $5.5 million from $19.1 million for the nine months ended September 30, 2008.
Cost of Revenue. Cost of revenue was $360.0 million for the nine months ended September 30, 2009, an increase of $0.6 million from $359.4 million for the nine months ended September 30, 2008. This increase was primarily driven by $3.3 million and $1.2 million increases in salaries, wages, and benefits and non-cash equity-based compensation, respectively, partially offset by a $2.1 million net decrease in circuit, facility, maintenance, and customer related costs and a $1.8 million decrease in travel and other costs. Cost of revenue, as a percentage of revenue, was 55% for the nine months ended September 30, 2009 compared to 57% for the nine months ended September 30, 2008.
Other Income and Expense. Other income and expense was $43.3 million for the nine months ended September 30, 2009, an increase of $12.7 million, or 41%, from $30.6 million for the nine months ended September 30, 2008. The $7.5 million increase in interest expense for the nine months ended September 30, 2009 was driven by a $3.1 million increase in interest on capital leases and the Cisco loan, a $3.1 million increase in interest on our loan agreement with Lombard, a $0.8 million increase in accreted interest on our Convertible Notes, and a $0.5 million decrease in capitalized interest. Interest income decreased $2.7 million due to lower average interest rates during the nine months ended September 30, 2009. Other income and expense decreased $2.5 million due to less favorable impact from currency revaluation of foreign denominated balances.
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SAVVIS Inc is a global IT utility services provider that focuses exclusively on IT solutions for businesses. With an IT services platform spanning North America Europe and Asia SAVVIS has over 5000 enterprise customers and leads the industry in delivering secure reliable and scalable hosting network and application services. These solutions enable customers to focus on their core business while SAVVIS ensures the quality of their IT systems and operations. SAVVIS' strategic approach combines virtualization technology a global network and 25 data centers and automated management and provisioning systems. Savvis Inc. has a market cap of $742.3 million; its shares were traded at around $13.67 with and P/S ratio of 0.9.
Highlight of Business Operations:
Revenue decreased $5.2 million, or 2%, for the three months ended September 30, 2009 compared to the three months ended September 30, 2008, primarily as a result of an 11% decline in network services revenue, partially offset by a 2% increase in total hosting services revenue. Income from operations decreased $6.6 million to $4.5 million for the three months ended September 30, 2009 compared to income from operations of $11.1 million for the three months ended September 30, 2008 primarily due to a $6.0 million increase in non-cash equity-based compensation expense. Loss before income taxes for the three months ended September 30, 2009 was $9.4 million compared to a loss before income taxes of $2.1 million for the three months ended September 30, 2008. The increase in loss of $7.3 million was primarily the result of the decrease in income from operations.Cost of Revenue. Cost of revenue includes facility rental costs, utilities, circuit costs and other operating costs for hosting space; costs of leasing local access lines to connect customers to our Points of Presence, or PoPs; leasing backbone circuits to interconnect our PoPs; indefeasible rights of use, operations and maintenance; and salaries and related benefits for engineering, service delivery and provisioning, customer service, consulting services and operations personnel who maintain our network, monitor network performance, resolve service issues, and install new sites. Cost of revenue excludes depreciation, amortization, and accretion, which is reported as a separate line item of operating costs, and includes non-cash equity-based compensation. Cost of revenue was $117.9 million for the three months ended September 30, 2009, a decrease of $6.1 million, or 5%, from $124.0 million for the three months ended September 30, 2008. This decrease was driven by $5.6 million decrease in customer related costs and a $2.5 million decrease in circuit costs, both of which were primarily a result decreased network revenues, and a $3.4 million decrease in utility costs related to lower cooling costs due to mild temperatures, partially offset by $3.0 million, $1.3 million, and $0.7 million increases in maintenance, non-cash equity-based compensation, and salary costs, respectively. Cost of revenue, as a percentage of revenue, was 55% for the three months ended September 30, 2009 compared to 57% for the three months ended September 30, 2008.
Other Income and Expense. Other income and expense represents interest on our long-term debt, interest on our capital and financing method lease obligations, certain other non-operating charges, and interest income on our invested cash balances. Other income and expense was $13.9 million for the three months ended September 30, 2009, an increase of $0.7 million, or 5%, from $13.2 million for the three months ended September 30, 2008. The $1.9 million increase in interest expense for the three months ended September 30, 2009 was due to $1.1 million of interest on our loan agreement with Lombard and a $0.8 million increase in interest on capital leases and the Cisco loan. Interest income decreased $0.6 million due to lower average interest rates during the three months ended September 30, 2009. Other income and expense increased $1.8 million due to more favorable impact from currency revaluation of foreign denominated balances during the three months ended September 30, 2009. The following table presents a quarterly overview of the components of other income and expense (dollars in thousands):
Revenue increased $20.0 million, or 3%, for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008, primarily as a result of a 15% increase in colocation revenue. Income from operations increased to $29.6 million for the nine months ended September 30, 2009 compared to income from operations of $11.5 million for the nine months ended September 30, 2008. The increase in income from operations of $18.1 million was primarily due to an increase in revenues, partially offset a slight increase in total operating expenses. Loss before income taxes for the nine months ended September 30, 2009 was $13.6 million, an improvement of $5.5 million from $19.1 million for the nine months ended September 30, 2008.
Cost of Revenue. Cost of revenue was $360.0 million for the nine months ended September 30, 2009, an increase of $0.6 million from $359.4 million for the nine months ended September 30, 2008. This increase was primarily driven by $3.3 million and $1.2 million increases in salaries, wages, and benefits and non-cash equity-based compensation, respectively, partially offset by a $2.1 million net decrease in circuit, facility, maintenance, and customer related costs and a $1.8 million decrease in travel and other costs. Cost of revenue, as a percentage of revenue, was 55% for the nine months ended September 30, 2009 compared to 57% for the nine months ended September 30, 2008.
Other Income and Expense. Other income and expense was $43.3 million for the nine months ended September 30, 2009, an increase of $12.7 million, or 41%, from $30.6 million for the nine months ended September 30, 2008. The $7.5 million increase in interest expense for the nine months ended September 30, 2009 was driven by a $3.1 million increase in interest on capital leases and the Cisco loan, a $3.1 million increase in interest on our loan agreement with Lombard, a $0.8 million increase in accreted interest on our Convertible Notes, and a $0.5 million decrease in capitalized interest. Interest income decreased $2.7 million due to lower average interest rates during the nine months ended September 30, 2009. Other income and expense decreased $2.5 million due to less favorable impact from currency revaluation of foreign denominated balances.
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