I'm looking to find financial information on a small to medium-sized
web hosting company (say $10 to $100 million in revenue, the smaller
the better).  I'm looking for a company that is a "pure" web host
(rather than offering other services like consulting, network design,
etc.) and preferably one that caters primarily to individuals or small
businesses.

The financial info that I'm looking for is a breakdown of their cost
structure.  How much is spent on bandwidth, hardware, software,
customer support, marketing, corporate, etc.  The more detailed, the
better.

Please let me know if this question requires any clarification.

Hi jpbischke-ga,

Thank you for your question!

To find the data you're seeking, I spoke with Eric Renouf, founder of
Xenolutions, LLC, a two-man New Hampshire web hosting company.
Xenolutions, at present, has ten web hosting clients and an income of
$50/month after expenses.

Here is the expense breakdown for Xenolutions:

Bandwidth - $110/month for a co-location cost (space and UPS at an
ISP, bandwidth up to 128k per second average which has proved more
than adequate)

Hardware - Spent $500 building first computer, which has been
sufficient thus far with 130 GB hard drive space and 750 MB of RAM
Parts were purchased via eBay and Pricewatch.com

Software - $0.00 
Xenolutions uses freeware exclusively: Linux, Apache, Postfix, iptables, Tripwire

Customer support - $0.00
No employee base for customer support - handled by co-founders

Marketing:
Ad in musician trade publication - $16.00
Business cards - $60.00
A number of Xenolutions web-hosting clients are bands and musicians,
and the company gains much of its business via word-of-mouth. However,
Renouf notes that musicians often straddle the poverty line and aren't
always a good source of income. :)
- May consider using Google Adwords in future as the business expands.

Corporate expenses
LLC registration and associated paperwork - $500
The company has credit remaining with their lawyer, which may be used
as the need for further documentation arises (e.g. non-disclosure
agreements).
- Office expenses: $0.00 (home-based business)
- $100 paid annually to state of New Hampshire for filing of annual report
- Since there are no hired employees at present, Xenolutions hasn't
yet incurred fees for Medicare, Social Security and Income Tax.

Source:
Eric Renouf, founder, Xenolutions, LLC

I hope that this information will be useful to you. Please let me know
if you need further information or clarification - I'd be pleased to
obtain further details. All the best!

Emjay-ga

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Request for Answer Clarification by jpbischke-ga on 27 Apr 2004 14:15 PDT

Hey emjay.  In my question, I specified that I was looking for a
company that was $10 to $100 million in revenue.  The company that you
mentioned doesn't qualify.  I apologize if the question wasn't clear
enough but I am looking for a company that has annual sales between
$10 million and $100 million.

I do thank you for your information but hope that you (or someone
else) can provide the information that I am looking for.

---

Clarification of Answer by emjay-ga on 27 Apr 2004 20:55 PDT

Hi jpbischke-ga,

No worries about the confusion! These things happen. :) Unfortunately,
I don't happen to know anyone with a company in the 10 million to 100
million revenue range. Please go ahead and repost the question, and
perhaps another researcher may be of service!

Emjay-ga

The researcher misunderstood my question (I wanted financial details
for a web hosting company between $10 and $100 million.).  I would
like to re-post so that I can get the information that I am looking
for.

There are only 3 web hosting companies on the internet who earn
revenue in excess of $10 million per year. I cannot give you a
detailes breakup of their expenses but I can however give you a decent
idea about how much they actually spend.

The leading money earning hosts on the web are verisign/ verios
hosting solutions which are into other businesses but treat their
hosting as a seperate entity. The amount of money they spend to
running their hosting business runs into millions of dollars each
year.

This is mainly due to server maintainence charges, new servers and
hardware added each quarter and increasing salaries of software and
hardware engineers. They spend a lot of money on marketing their
hosting solutions mainly done through the help of their affiliate
partners. All in all at the end of the day they make a good neat cut
as a profit margin.

For example if they spend $50 million a year for running and marketing
their hosting solutions they claim to make a sales turnover of over
$200 million dollars which is staggering.

If you need more clarifications about them you could visit their
website and speak directly to one of their executives. Perhaps they
will be able to help you get your answers.

Thanks for the comment.  I hadn't realized that there were so few
hosting companies with greater than $10 million in revenues.  Having
given it some thought, a company with $1 million+ in revenues would
certainly suffice.  The one that was given before was too small but
something of a magnitude of a million plus should be sufficient.  I
would like to get a detailed breakdown of costs as a % of revenues
though.  I'm not sure if any of these companies are public (I'm
guessing not) which is why I've had difficulty finding numbers.