SUMMARY: Although Datalink’s revenues are mainly driven by product sales (65%), the double digit growth (CAGR >20%) is coming both from products and services sales.

Product sales is a reseller business of OEM’s equipment and services sales come from support contracts, installations and configurations services as well as consulting. Obviously there is some relationship between product sales and installations & configurations services, but support contracts make up to 85% of services sales and these seem to be doing well with continued growth in the last five years (CAGR ~20%).

Revenues have been driven by regular acquisitions and by broaden the range of services to a more comprehensive service of total data center as a reflection of its strategic guidance.

In the last five years, revenues have more than doubled as a consequence of multiple acquisitions but also organic growth.

CAGR (2007-2011) is over 20% and in 2011 revenues grew 29%. Although, there a few things to notice in the last year. First, Midwave acquisition (see Acquisitions) which brought about $13 million to DTLK revenue or 3,4%. Second, the adoption of a new accounting policy regarding revenue recognition brought an additional $34.3 million. This means comparable growth with Midwave acquisition was 25%, and organic growth was about 13%. 

The company resells OEM’s hardware and software needed in its deployments and that accounts for about 65% of its total revenue. 

Product Sales


  • Revenues from product sales increased 121% in the last five years;
  • CAGR (2007-2011) = 22%;
  • 36% increase last year (not adjusted by new accounting policy);
  • 2011 increase is due to Midwave Acquisition, change in revenue recognition policy and the increase in product offerings due to its transition to servicing the complete data center;
  • Recent product sales continue to reflect customers' closer scrutiny of expenditures as they focus on the impact that current economic conditions may have on their businesses;
  • 2010: 90% increase due to Incentra’s acquisition (see Acquisitions) in late 2009, general increase in IT spending and the impact of diversification in the mix of product offerings related to the transition to servicing the complete data center.

Service Sales

  • Revenues from service sales increased 102% in the last five years;
  • CAGR (2007-2011) = 19%;
  • 2011: increase in customer support contract sales of 18.9% and an increase in installation and configuration services of 22.5% over 2010;
  • 2010: 36% gain over 2009 due to Incentra’s acquisition (see Acquisitions), 31% and 78% increase in customer support contract sales and installation and configuration services, respectively.

Customers Support Contracts and Installation and Configuration services account for more than 95% of services revenues.

Support contracts have been a reliable source of revenues over the past five years with a CAGR (2007-2011) of 19% accounting for 30% of total revenue.

Installation and configuration services have a more volatile stream of revenues as it is more related and dependent on product sales. Nevertheless it represents 4% of total revenue and is growing at a CAGR (2007-2011) of 31%. 


  • In the last ten quarters, QoQ revenue growth was positive in 8 of them;
  • CAGR (1Q2010-2Q2012) = 7.5%.

  • With the exception of 1Q2011, services sales growth QoQ has been positive for the last 10 quarters;
  • Services Sales CAGR (1Q2010-2Q2012) = 6.5%;
  • Product sales present some seasonality around 4Q that could be related to the full integration of businesses acquired;
  • Product Sales CAGR (1Q2010-2Q2012) = 8%.


  • YoY growth in total revenues has been between 25% and 40%;
  • YoY growth in product sales and services sales has been 30%-50% and 15%-30%, respectively;


Product sales drive revenue growth with an increase of 40% compared to 1H2011 mainly due to Midwave acquisition and continued increase in product offerings as a reflection of the company’s strategy.

Services sales increased 30% facing the same period last year as more product sales lead to more installation and configuration services, support contracts and consulting.

Expectations remain cautious as customers continue to closer scrutiny expenditures.