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ATM publishes its results for the first quarter of 2015 and a new company strategy. The ambitious plans of the leader in the Polish data center market

The company has published its first quarterly report for 2015. During the first quarter, in its two main operating segments data center services and telecommunications services it recorded total sales of 30.3m PLN (+1% year-on-year), a profit on sales of 16.5m PLN (4% year-on-year), and an operating profit of 3.3m PLN (32% year-on-year).

Warsaw, 15 May 2015 The results for the first quarter of 2015, compared with those from the first quarter of the previous year, are not ideal. They are a consequence of falls in subscription revenue in the weak year of 2014. Although in the first quarter of 2015, for the second time in a row, there was a slight rise in subscription revenue in both operating segments data center and telecommunications services it was still not possible to attain fully satisfactory results. Overall, total revenue (excluding OST 112 in 2014) increased by 8% in the first quarter of this year over the first quarter of last year (to reach 32.7m PLN), but the profit on sales was down by 8%. The fall in profitability is a result of the constant price pressure in the telecommunications market, and the ending of the OST 112 contract. With fixed costs rising by several percent (due to such factors as higher depreciation, resulting from the large amount of capital expenditure in 2014) there was a significant drop in the operating profit for the period. Results on financial activity were more favorable than last year, however, as a result of both the lower level of market interest rates and the positive contribution from the companys share of the profit made by its affiliate Linx.

In the most important segment, data center services, which accounts for the greatest proportion of ATMs profits, the company recorded a rise of around 10% in revenue compared with the first quarter of 2014 (to more than 16.7m PLN). This revenue remains at a similar level to the fourth quarter of 2014, in view of the absence of any noticeable increase in billed colocation space. The slowing of growth in revenue in this segment was partly due to a slight slowdown in demand for colocation services in the Polish market overall, but also, it would appear, to mistakes made in product and sales policy in the previous year, with failure to adapt the services offered to the changing needs of customers, and neglect of foreign markets. It should be noted, however, that according to the latest reports from the PMR research firm, ATM is not only still the leader in the Polish data center market (in terms of gross colocation space), but also takes third place in the whole of Central and Eastern Europe based on the same criterion.

Following a poor 2014, which had a negative effect on the results for the first quarter of 2015, we have made huge changes in the way the company operates in the areas of sales and marketing, even though much remains to be done. However, we expect to see positive results from these changes only in the second half of this year. These changes and the expected results are discussed in our strategy for 20152017, which was published on the companys website yesterday, said Tadeusz Czichon, President of ATM.

The companys new strategy is a response to the changes taking place in the market, as well as new development challenges. Our mission, in which we promise uninterrupted access to data, indicates the direction in which ATM S.A. is heading. The changing world of data communications, with computing functions being moved away from business locations, requires expert knowledge, modern solutions and unimpeachable service quality, so that customers for IT services are enabled to make secure and continuous use of their information resources.

Our modern data centers and well-designed fiber-optic networks enable us to promise our customers secure and uninterrupted access to data. Thanks to the use of our expert knowledge, we are able to supply customers with solutions and services adapted to their needs, said Jacek Krupa, Vice President of ATM S.A. The new and more complex products that we plan to launch will enable us to reach a new group of customers, and also to respond to the new requirements being reported by existing customers. This is the path to even better utilization of the companys resources and increased levels of revenue, he added.

In accordance with its new strategy, ATM is intensifying its marketing activities directed at customers in other countries, particularly in Europe and the USA. The geopolitical location of Warsaw and the high technical standard of our services create opportunities to set up a strong data center services hub in this part of Europe, an alternative to Amsterdam, Frankfurt and London. The company expects that by the end of 2017 sales to foreign customers will account for 2535% of overall revenue. Achievement of this result will be helped by expansion of the partnership program as a method for effective offering and sale of services to foreign organizations, in particular standard services sold via the Internet.

The published strategy for the coming years sets the goal of increasing EBITDA to at least 60m PLN in 2017. On the one hand this is an ambitious goal in the context of the results currently attained, but on the other hand the potential latent in the market and in the capabilities of our company indicates the possibility of achieving this kind of results, or even better. Another key to success is adapting our services to meet the needs of Polish and foreign customers, so that ATMs services find an important and needed place in the face of the unquestioned trend for IT functions to be moved out into the cloud. This should ensure the rapid commercialization of free space in data centers and available fiber-optic network bandwidth, bringing a satisfying growth in revenue and profits, and consequently the possibility of sharing those profits with shareholders in the form of a solid dividend, said Tadeusz Czichon, President of ATM S.A.

The full contents of the strategy can be found on the companys website at www.atm.com.pl/investor.

ATM S.A. is the WSE listed Polish data center market leader as well as an expert in security of data transmission and processing. Under the ATMAN and Thinx Poland brands the company provides colocation, hosting and cloud computing services in its data centers with 10,600 sq m (114,100 sq ft) of the total space. Using own international links and fiber-optic networks in the largest Polish cities, ATM offers broadband IP services including Internet access and data transmission. Major recipients of the services are telecommunications operators, traditional media, Internet portals, financial institutions, commercial and industrial companies. More information at www.atm.com.pl.

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