Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Rai Way SpA (FRA:4RW, Financial) reported a 3% increase in adjusted EBITDA for the first half of 2024, indicating strong financial performance.
- Revenues grew by 1.2% to EUR137.6 million, driven by positive trends in both media distribution and digital infrastructure segments.
- The company successfully completed the first five Edge data centers, meeting the timeline and standards, and has initiated commercialization efforts.
- Rai Way SpA (FRA:4RW) maintained a healthy net financial position with recurring cash generation of EUR64 million, despite significant dividend payments.
- The company has revamped its organizational structure to better support market expansion and diversification, enhancing operational efficiency.
Negative Points
- The absence of electricity incentives, which were present in the first half of 2023, impacted operational costs negatively.
- Energy costs increased by 6.9% due to higher tariffs, despite a decrease in raw energy prices.
- The company faces rising startup costs for diversification initiatives, which could limit growth potential.
- Personnel costs are expected to realign to previous levels in the second half, potentially impacting profitability.
- The commercialization of the Edge data centers is in its early stages, with limited immediate revenue impact expected.
Q & A Highlights
Q: When do you expect to start commercialization of the edge data centers, and have you had any conversations with potential customers?
A: The edge data centers have just become operational, and we have started commercialization. We have some outstanding commercial offers, including an agreement with Oracle. The first small contract was signed recently, and we aim to finalize indirect partnerships to create an ecosystem for small and medium customers.
Q: Can you elaborate on the EBITDA guidance and the impact of nonrecurring items?
A: The EBITDA guidance includes impacts from nonrecurring items such as start-up cost reversals and personnel capitalization. Additionally, we expect some penalties to aid our growth. The inflation rate is in line with our business plan guidance, and media distribution revenues have increased due to regional broadcasting contributions.
Q: What is the status of the hyperscale data center project, and when can we expect it to be operational?
A: We are optimistic about receiving the final authorization by year-end. The project involves significant investment, and we will move to the executive design phase after approval. The construction and operational phase is expected to take 12-18 months.
Q: Could you provide more details on the strategy for edge data centers, especially in Southern Italy?
A: We are focusing on indirect channels like system integrators for commercialization. The Southern Italy market needs high-quality data centers, and we are planning expansions in regions like Puglia, Campania, and Sicily. We have already purchased a field in Bari and are looking for strategic locations in other regions.
Q: What are the expectations for the utilization of existing data centers by the end of 2025?
A: We expect limited impact in 2025, with significant occupancy levels reached in three to four years. Our target is an average occupancy rate of 80-90%, consistent with our industrial plan.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
