Pandemic, earnings, supply chains, edge, M&A
The sector continues to show signs of resilience as the exact nature of the impact stemming from the COVID-19 pandemic comes into clearer focus.
Earnings season has provided a window into the financial impact, albeit it is a somewhat smaller sample size given parts of the world were not on lockdown for much of the early part of the year. Last week, the results we took a closer look at were steady and this week was similarly in line. Equinix, CoreSite, CyrusOne and Akamai all performed within expectations. Certain supply chain issues have crept into the picture and all providers have some exposure to hard-hit industries. But serving hyperscale can offset a good deal of that weakness, while Equinix showed that interconnection can benefit significantly from the rise in video streaming and video conferencing.
Edge is an area facing a bit of uncertainty in this new environment, with a big part of the edge build out requiring supply chain and logistics to be in synch – not the easiest thing to accomplish in the current environment. But edge data centre providers continue to push their growth ambitions. Both Dartpoints and EdgeMicro raised funding to support growth and expansion initiatives. Meanwhile, Equinix provided guidance on the Packet edge compute business it acquired. Packet is projected to grow at an aggressive pace under Equinix and this suggests there is significant demand for edge and bare metal compute sitting within Equinix’s existing data centres.
Hyperscale cloud continues to expand and push into global markets. Oracle Cloud opened a new region in South Korea, Amazon is expanding its self-build in Ohio, while Microsoft was busy confirming expansions in Poland, Italy and New Zealand.
It was relatively quiet in the M&A and strategic arena, though there was a deal on the SMB side, the PE investors in UKFast took over majority control and Accenture picked up another AWS consultancy, this time in France. Larger strategic deals continue to be worked on and Equinix disclosed a public offering as it looks at potentially making a significant acquisition that is likely to come in a non-US market.
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