Presidio Earnings Reinforce Recurring Revenue Transition
Presidio’s latest quarterly results reinforce the challenges IT solutions providers face as they strive to balance CapEx data center projects, vertical market expertise along with OpEx cloud and security services. The midmarket company says overall revenue and EBITDA guidance for its current fiscal year remain on track, though Presidio’s latest quarterly results fell short of Wall Street’s expectations.
Indeed, total revenue for the quarter ended December 31, 2017 decreased $60.2 million or 8.3% to $661.6 million compared to total revenue of $721.8 million in the prior year, Presidio said yesterday.
Presidio CEO Bob Cagnazzi offered context for the revenue dip, pointing to some solution delivery challenges; some federal agencies curtailing their IT spending; and the fact that Presidio’s cloud push means recurring revenue will be recognized over time rather than delivering immediate lump-sums to the company.
In a prepared statement, Cagnazzi said:
“Our second quarter results were impacted by delays in the delivery of certain solutions to our clients. However, we are encouraged to see the delayed activity reflected in our robust and growing revenue backlog and client bookings so far in the third quarter, which we expect to accelerate our revenue growth in the second half of our year. Therefore, we are reaffirming our revenue and adjusted EBITDA guidance for the full fiscal year ended June 30, 2018.”
Presidio didn’t disclose which vendor products triggered the solution delivery challenges. But delays in product availability and delivery contributed to the company’s backlog growth, Presidio indicated.
Cloud, Recurring Revenues and Security
Cagnazzi also reinforced Presidio’s “strong growth” in services revenue, and the ongoing shift toward recurring revenues in the cloud sector. On the cloud front, the company’s multi-cloud solutions approach coupled with recurring revenues will drive greater customer stickiness over time, he asserted.
Among the big bright spots for the quarter: Presidio’s security revenue surged 22 percent to $85.3 million. “We are seeing growth across our portfolio of security services and technology partners driven by higher demand in middle-market and large clients,” Cagnazzi said.
Presidio ranked among the world’s Top 100 Managed Security Services Providers in 2017, according to our sister site MSSP Alert.