Earnings, Europe, expansion, China, hyperscale
Long weekends in many countries did not slow activity online and this continues to reflect across the sector on a global basis.
We are mostly through earnings season and in the past week we took a closer look at the results coming from Microsoft and Cloudflare. Both companies saw demand surges stemming from the new pandemic-driven environment. Microsoft saw more than one service line grow and its comments on CapEx suggest that more expansion activity is coming. It recently announced expansions in Poland, New Zealand and Italy, while Google also confirmed cloud expansions in Italy.
Two of the primary China-based operators that are publicly listed also recently reported results. Not surprisingly, both GDS and 21Vianet saw demand coming from the hyperscale cloud sector. 21Vianet has not been as focused on hyperscale to this point, but that is starting to change as more demand and activity moves there.
The appetite hyperscale cloud has for data centres shows no signs of slowing down and NEXTDC recently disclosed material leasing activity that was on top of leases (multi-MW deals that are likely hyperscale) already signed in the Melbourne market. And this demand profile continues to draw new entrants to the sector. In the past week, we tracked a new platform coming together in the US, a hyperscale build that emerged in Brussels and a new provider in India.
There was not a lot of M&A activity, though Lefda Mine Datacenter in Norway brought in new private equity investors. We could be entering a period of relative quiet in the strategic markets as most deals done before the pandemic have been announced and like many things, deals have been put on hold until the pandemic situation sees some clarity.
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