Data center companies Xand and Access Northeast have merged to form a single company with three data centers in the Northeastern U.S., and unveiled plans to grow the combined business via a combination of new facilities and further acquisitions.
The merger stems not from a need to cut costs but from a need to grow to be ready for changing customer requirements, said Rob Stephenson, former CEO of Access Northeast and now chief marketing officer of the combined entity, which for now will be called Xand.
About 60 percent to 70 percent of Xand's revenue comes from traditional co-location services, with the rest from managed services and the cloud, Stephenson said. However, it is the cloud business which is growing fastest.
"We've seen a combined growth of 20 percent over the last three to four years," he said. "What's getting our growth this year to up to 25 percent is the growth in cloud services. We anticipate at least a 70 percent growth in cloud services, maybe even a doubling in revenue, from 2011 to 2012."
Because of the expected growth, Xand will see no layoffs as a result of the merger, and will probably hire an additional six or seven personnel in the near future, Stephenson said.
The company, with data centers in Waterbury, Conn., Hawthorne, N.Y., and Marlboro, Mass., also plans to expand its presence on the East Coast from the Carolinas through the Northeastern U.S., Stephenson said.
"We're looking to build greenfield data centers as well as make strategic investments," he said. "We're looking a strategic growth, not cost savings."
Funding for the expansion should be no problem. Xand was acquired by private equity investment firm ABRY Partners in October of 2011, which also funded the merger with Access Northeast, Stephenson said.
How the company grows depends on the differences in the various data center markets, Stephenson said.
"Some markets are over built, some are under built," he said. "We're looking at the best way to deploy our capital. Our three current data centers will be expanded this year to create more white floor, or raised floor, space. We'll be leasing and taking new space, and modifying our existing space. We feel all three are in under built markets.
Xand serves a wide range of customers, including large hospitals and publicly traded companies. Stephenson said he was unable to provide specific customer names per agreement with customers. Customer monthly billing ranges from $1,000 to $2,000 per month for smaller clients to up to $200,000 per month for the largest client, he said.
Xand's pre-merger annual revenue reached between $13 million and $15 million, while Access Northeast's annual revenue hit between $19 million and $20 million, he said.
Before the next move to expand operations starts, Stephenson said he has one other task to fulfill.
"We'll probably come up with a new name," he said. "My job will be to come with a new snazzy name."