Interxion Holding, one of the largest data center colocation providers in Europe, reported strong revenue growth in the second quarter and announced three new expansion projects. Its aggressive expansion program, however, has resulted in negative cash flow and a sizable drop in profit when compared to its results for the same period last year.

The company’s revenue for the quarter was up 13% year over year, reaching €76.5m. Profit was €6.4m – down 24% from the second quarter of 2012.

About 74% of the data center space the company owns was occupied by customers as of the end of the quarter.

Interxion CEO David Ruberg said the results were strong in the context of a downward economy. “Interxion’s second quarter results reflect solid execution against our market segmentation strategy, which has delivered sustained, profitable growth despite the effects of a continued unfavorable macroeconomic environment,” he said.

The company completed expansion projects in Copenhagen and Stockholm during the quarter. The amount of fully equipped data center space in its inventory grew by 800 sq m, reaching 58,200 sq m by the end of the second quarter.

Interxion announced data center expansion projects in three European cities. The company is adding another 500 sq m of raised floor at its STO 2.2 facility in Stockholm and also 500 sq m at its ZUR 1 data center in Zurich.

The Stockholm expansion is due to come online in the first quarter of 2014, and the Zurich build-out is due for completion in the fourth quarter of this year.

Interxion has also completed construction of the fourth phase of its VIE 1 data center in Vienna, adding about 400 sq m of data center space.

Credit rating agency Moody's Investor Service assigned a B2 rating to Interxion in July, saying the positive rating was supported by the provider's leading market position in Europe. Favorable supply-demand dynamics in the market as a whole were another reason.

Moody's rating was still a conservative one because of the “modest size and scope of the company's operations relative to its globally rated peers.”

The rating was also “constrained” because the rating agency perceived risk of oversupply in the market and was being cautious about Interxion's ability to increase utilization rates of its assets and getting returns on its developments. Moody's was also careful because of the negative cash flow those development projects had resulted in.