Presidio Notches Strong Sales From Digital Infrastructure Projects

Presidio reported strong fourth-quarter sales in digital infrastructure as customers in the health-care and government sectors looked to upgrade their technology.

CEO Bob Cagnazzi told investors, however, that growth in cloud was down for the quarter and for the year, while security sales were flat for the quarter.

“We delivered solid revenue growth, further enhanced our financial profile through our debt reduction and refinancing transaction. ... Despite choppiness in security and cloud services during the quarter, we continue to see growing demand for these solutions as evident in our growing backlog,” Cagnazzi said during the company’s fourth-quarter earnings call Thursday.

In year-over-year comparisons, fourth-quarter revenue for the period ended June 30 was up 5.1 percent to $766.3 million, while net income rose 40 percent to $14.6 million, or diluted earnings per share of $0.15.

For the year, revenue was up 1.4 percent to $2.85 billion, with net income of $134 million, or earnings per share of $1.39.

The increase in digital infrastructure revenue came as health-care, federal government and state finanical agency customers sought networking upgrades that would allow for next-generation, software-defined infrastructure with automation analytics, Cagnazzi said.

[Related: 10 Big Bets Presidio CEO Bob Cagnazzi Is Making In 2018 ]

Meanwhile, cloud revenue declined 22.7 percent in the fourth quarter, which Cagnazzi said was due to a greater percentage of projects featuring three-year contracts. For the fiscal year, cloud revenue declined 10.1 percent, where Presidio experienced reduced spending from midmarket health-care and education customers.

Tax reform, however, is leading Presidio to see deals for larger, more complex projects than it saw 12 months ago, according to Cagnazzi.

“So customers are getting a little more aggressive about the scope for the projects that they want to roll out, which is great for us. It's typically where we thrive -- in more complex, larger project situations -- but it does take a little bit longer to get to revenue because of that,” he said.

The ongoing shift to recurring revenue services models and larger, more complex projects will continue to impact near-term growth, according to Cagnazzi.

“We view this development positively as the increasing mix of recurring revenues will bring greater stability and visibility to our business,” he said.