Cloud Hosting

It takes a special business to capitalise on remote work trends and cryptocurrencys emergence. Data centre and cloud computing play DC Two is tracking to do exactly that.

DC Two (ASX:DC2) is a vertically integrated data centre, cloud and software business which last quarter generated a quarter-on-quarter recurring revenue increase of 20% to $568,264 impressive growth by any measure.

But management believes theres potential for exponential growth in the business, as it moves closer to securing lucrative Tier III accreditation for its flagship Bibra Lake data centre in WA, and simultaneously explores a modular space attracting attention from crypto mining plays locally and abroad.

There really is a few different aspects of this business that we are particularly excited about, DC Two executive director Blake Burton told Stockhead.

Over the last year weve been building out that data centre at Bibra Lake to get it to a point of Tier III accreditation from the Uptime Institute.

At the same time, weve got the DC Two regional modular data centre side of the business, which is growing and attracting interest from overseas because it allows us to provide energy in an ESG-friendly way.

Its clearly an exciting time for DC2 as it grows from its small business roots to something much larger.

We were all thinking it. The world of digital infrastructure is governed by an organisation called the Uptime Institute which measures facilities across the world using a tier system.

Its a measurement which allows customers to better understand the level of facility theyre using for their data. Tier III is the second-highest certification achievable.

Tier III is really important to us, because it will allow us to access contracts with a lot of government enterprises and medium-sized businesses, Burton said.

Tier III basically means that the way your data centre is built allows it to keep your services online for at least 99.982% of the time its all about keeping your data and services online.

Smaller data centres cant do that, which bigger customers view as a risk to their business. Tier III certification will allow us to actually start targeting the medium- and larger-sized businesses that our current facilities dont allow us to.

The Bibra Lake facility has already received ISO27001 certification an internationally recognised security management standard regarded as best practice for information security management systems.

Grouping Tier III and ISO27001 is a very good thing when it comes to attracting new business. Which is timely, since a $2.5 million capital raise announced in September flagged the expansion of DC2s sales team.

Business growth you love to see it. The data storage industry appears to be going exactly the same way.

The whole world has experienced changes with COVID theres been that big shift from having everything stored on a server at the office to people connecting remotely, Burton said.

People are now working from home, theyre connecting remotely to an email server or the program they use, and to facilitate that remote connection you need the data centres and cloud platforms.

People have really started to see this shift from the physical to the virtual over the last few years, and we feel it highlights the importance of this industry and what were looking to do.

At first glance this subhead may look like a list of 2021 investment buzzwords, but in DC Twos case its a real factor driving interest and growth in the companys modular offerings.

DC Twos regional modular facilities are containerised data centres which are placed on renewable energy sites, tapping the power generated onsite to run the data centre equipment.

The first of these is located in WAs Midwest, where the company recently won contracts worth more than $1.7 million and is expanding capacity to around 2 megawatts by the end of 2021.

DC Two is also delivering a modular data centre in Victoria next year, in addition to its data centre project in Western Melbourne.

What were doing mostly at the moment with modular is hosting digital currency mining equipment, Burton said.

Weve got people coming from overseas, where theres been a big clamp down in terms of crypto mining, and were able to offer it in an ESG way with renewable energy.

At the moment weve got the Midwest, which is a wind farm, were working on a site in Victoria, which is biogas, and theres another site in Collie under a non-binding MOU which is a solar farm.

We place customer equipment on these renewable energy sites, and were able to offer really cheap power to them that they cant get in the metro area. In some cases, we actually also sell crypto mining equipment to the customer.

Having built itself primarily in WA in the early stages of the business, DC Two is also looking at the east coast post Tier III accreditation at Bibra Lake.

The company currently has a Northern Territory cloud platform in operation, with Victoria potentially the next point of call according to Burton.

Our next push is going to be over east, he said.

Victoria is a really interesting state for us, because were already working on modular there.

Now we can potentially look at running our own cloud platform and services over there as well.

Thats likely shaping as our first relatively big investment outside of Western Australia.

This article was developed in collaboration with DC Two, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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Bigger contracts and crypto mining ignite DC Twos FY22 vision - Stockhead