Earnings, hyperscale expansions, Europe, Italy, Spain, self-builds, M&A

  • August 15, 2022
  • Analyst: Philbert Shih

It was another busy week across the sector, with earning season in full swing, hyperscale expansions, new market entry in Europe and a number of developments around hyperscale self-builds.

Earnings season continues to show pockets of slowing growth across the sector, with Rackspace dropping off a bit more than others like Digital Ocean, Akamai, GoDaddy and Digital Realty. For the likes of Digital Realty, leasing remains steady and slowing growth has been incremental for Digital OceanGoDaddy and Akamai. In the hyperscale world, Alibaba Cloud continues to turn in sluggish performance, and has dropped off quite a bit, while Cloudflare seems to be the exception and is still growing at over 50% y/y. The slowing is not necessarily unexpected given the current environment and all of the listed providers are still moving in a positive direction with nothing too out of the ordinary in the numbers. Notably, the growth that is happening is being propelled by new services offsetting slow growth and even attrition from legacy services.

Hyperscale clouds continue to expand their global footprints. Google confirmed plans to build cloud regions in three more markets in APAC, while Oracle Cloud is set to roll out sovereign cloud infrastructure in Europe.

Europe continues to drive hyperscale cloud expansions and data centre operators are following closely. behind. Compass Data Centers confirmed plans to enter the Milan, Italy market, while media reports point to Compass and Prime Data Centers close to entering the developing market in Madrid, Spain. Elsewhere on the continent, Colt DCS is expanding in Paris, we had a chance to speak with the Start Campus in Portugal and Digital Realty reported strong earnings from the Frankfurt and Paris markets.

Hyperscale expansion continues to drive demand for third party colocation, but self-built data centres are increasingly a reality. In the past week, reporting points to AWS continuing to self-build in Hilliard, Ohio and possibly doing the same in Chile. Meanwhile, Digital Realty shared some views on the self-build dynamic on its earnings call and confirmed that there remains a strong mix between self-perform and leasing.

The M&A arena was relatively quiet, but we saw an acquisition in APAC made by new market entrant FLOW and Lincoln Rackhouse partnered to acquire an enterprise data centre in Atlanta.