Converged Infrastructure, Virtualized Data Center Business Drive Datalink's 2Q Revenue, Earnings

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Midrange storage and converged infrastructure solution provider Datalink on Thursday reported solid revenue and earnings growth over last year thanks to all-around growth in product and services sales.

A record level of professional services sales for the company, as well as a growing business in converged infrastructure and virtualized data centers, were key factors in driving both revenue and profit growth, the company said.

Eden Prairie, Minn.-based Datalink is one of the few midrange solution providers to be publicly listed, forcing it to open its kimono every three months and provide at least a small glimpse at how well the IT channel is doing.

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For its second fiscal quarter 2012, which ended June 30, Datalink reported total revenue of $120.0 million, a big 34-percent increase over the $89.5 million the company recorded for the second quarter of 2011.

Datalink also reported earnings of $3.2 million, or 18 cents per share, up from the $2.7 million, or 16 cents per share, it reported last year.

The revenue and earnings growth included the results of operations from its acquisition in October of Midwave.

Product sales for the second quarter accounted for about 64 percent of revenue, or about $77.3 million, up from $56.5 million last year. Customer services revenue in the quarter was $33.5 million, up from $28.4 million last year, while professional services revenue hit $9.2 million compared to last year's $4.6 million, Datalink reported.

About 36 percent of Datalink's total revenue came from services, 36 percent from storage sales, 18 percent from networking and server sales, 8 percent from software sales, and 2 percent from tape sales.

While Datalink enjoyed a 34-percent growth in revenue over last year, the quarter's revenue total was below previous guidance, said Paul Lidsky, Datalink's president and CEO, during the company's financial analyst call.

The lower-than-expected revenue resulted from a lengthening of the sales cycle, and not from a drop in large projects, Lidsky said.

"Sales cycles are lengthening because we are selling larger projects, which require a longer time," he said.

Customer demands for modernizing their data centers has not abated, Lidsky said. "It is simply taking longer," he said.

NEXT: Converged Infrastructure, Virtualized Data Center Sales Growing

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