Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 01, 2018 | |
Document Information [Line Items] | ||
Entity Registrant Name | Switch, Inc. | |
Entity Central Index Key | 1,710,583 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 36,067,311 | |
Class B | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 173,624,316 | |
Class C | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 42,944,647 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 238,561 | $ 264,666 |
Accounts receivable, net of allowance of $301 and $472, respectively | 18,511 | 16,386 |
Prepaid expenses | 5,162 | 5,037 |
Other current assets | 3,679 | 2,101 |
Total current assets | 265,913 | 288,190 |
Property and equipment, net | 1,183,165 | 1,133,572 |
Long term deposit | 4,197 | 3,842 |
Other assets | 9,194 | 9,155 |
TOTAL ASSETS | 1,462,469 | 1,434,759 |
CURRENT LIABILITIES: | ||
Long term debt, current portion | 5,194 | 5,194 |
Accounts payable | 18,717 | 18,934 |
Accrued salaries and benefits | 4,679 | 5,211 |
Accrued expenses | 7,783 | 6,469 |
Accrued construction payables | 19,656 | 7,052 |
Deferred revenue, current portion | 11,665 | 11,482 |
Customer deposits | 9,004 | 8,634 |
Capital lease obligations, current portion | 2,309 | 2,309 |
Total current liabilities | 79,007 | 65,285 |
Long term debt, net | 585,268 | 586,566 |
Capital lease obligations | 19,466 | 19,466 |
Accrued interest, capital lease obligations | 1,871 | 1,927 |
Deferred revenue | 19,299 | 19,382 |
TOTAL LIABILITIES | 704,911 | 692,626 |
Commitments and contingencies (Note 5 and Note 6) | ||
STOCKHOLDER’S EQUITY | ||
Preferred stock | 0 | 0 |
Additional paid in capital | 111,073 | 107,008 |
Retained earnings | 2,273 | 1,602 |
Accumulated other comprehensive income | 79 | 31 |
Total stockholder’s equity | 113,678 | 108,894 |
Non-controlling interest | 643,880 | 633,239 |
TOTAL STOCKHOLDERS’ EQUITY | 757,558 | 742,133 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | 1,462,469 | 1,434,759 |
Class A Common Stock | ||
STOCKHOLDER’S EQUITY | ||
Common stock | 36 | 36 |
Class B Common Stock | ||
STOCKHOLDER’S EQUITY | ||
Common stock | 174 | 174 |
Class C Common Stock | ||
STOCKHOLDER’S EQUITY | ||
Common stock | $ 43 | $ 43 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Allowance for accounts receivable | $ 301 | $ 472 |
Preferred stock | ||
Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 10,000,000 | 10,000,000 |
Shares issued (in shares) | 0 | 0 |
Shares outstanding (in shares) | 0 | 0 |
Class A Common Stock | ||
Common stock | ||
Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 750,000,000 | 750,000,000 |
Shares issued (in shares) | 36,066,544 | 35,937,500 |
Shares outstanding (in shares) | 36,066,544 | 35,937,500 |
Class B Common Stock | ||
Common stock | ||
Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 300,000,000 | 300,000,000 |
Shares issued (in shares) | 173,624,316 | 173,624,316 |
Shares outstanding (in shares) | 173,624,316 | 173,624,316 |
Class C Common Stock | ||
Common stock | ||
Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Shares authorized (in shares) | 75,000,000 | 75,000,000 |
Shares issued (in shares) | 42,944,647 | 42,944,647 |
Shares outstanding (in shares) | 42,944,647 | 42,944,647 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Revenue | $ 97,717 | $ 89,157 |
Cost of revenue | 54,856 | 45,375 |
Gross profit | 42,861 | 43,782 |
Selling, general and administrative expense | 33,451 | 19,343 |
Income from operations | 9,410 | 24,439 |
Other income (expense): | ||
Interest expense, including $409 and $253, respectively, in amortization of debt issuance costs | (6,273) | (4,020) |
Equity in net losses of investments | (331) | (441) |
Other | 1,029 | 350 |
Total other expense | (5,575) | (4,111) |
Income before income taxes | 3,835 | 20,328 |
Income tax benefit | 115 | 0 |
Net income | 3,950 | 20,328 |
Less: net income attributable to non-controlling interest | 3,279 | 0 |
Net income attributable to Switch, Inc. | $ 671 | $ 20,328 |
Net income per share/unit (Note 10): | ||
Basic (in dollars per share) | $ 0.02 | $ 0.10 |
Diluted (in dollars per share) | $ 0.02 | $ 0.10 |
Weighted average shares/units used in computing net income per share/unit (Note 10): | ||
Basic (in shares) | 36,003,087 | 199,776,051 |
Diluted (in shares) | 252,552,205 | 205,493,272 |
Other comprehensive income: | ||
Foreign currency translation adjustments | $ 331 | $ 272 |
Comprehensive income | 4,281 | 20,600 |
Less: comprehensive income attributable to non-controlling interest | 3,562 | 0 |
Comprehensive income attributable to Switch, Inc. | $ 719 | $ 20,600 |
Consolidated Statements of Com5
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Amortization of debt issuance costs | $ 409 | $ 253 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - 3 months ended Mar. 31, 2018 - USD ($) $ in Thousands | Total | Common StockClass A | Common StockClass B | Common StockClass C | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Income | Non-controlling Interest |
Balance (in shares) at Dec. 31, 2017 | 35,937,500 | 173,624,316 | 42,944,647 | |||||
Balance at Dec. 31, 2017 | $ 742,133 | $ 36 | $ 174 | $ 43 | $ 107,008 | $ 1,602 | $ 31 | $ 633,239 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 3,950 | 671 | 3,279 | |||||
Equity-based compensation expense | 12,357 | 5,278 | 7,079 | |||||
Issuance of Class A common stock upon settlement of restricted stock unit awards, net of shares withheld for tax (in shares) | 129,044 | |||||||
Issuance of Class A common stock upon settlement of restricted stock unit awards, net of shares withheld for tax | (1,213) | $ 0 | (1,213) | |||||
Foreign currency translation adjustments | 331 | 48 | 283 | |||||
Balance (in shares) at Mar. 31, 2018 | 36,066,544 | 173,624,316 | 42,944,647 | |||||
Balance at Mar. 31, 2018 | $ 757,558 | $ 36 | $ 174 | $ 43 | $ 111,073 | $ 2,273 | $ 79 | $ 643,880 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 3,950 | $ 20,328 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization of property and equipment | 24,603 | 20,037 |
Loss on disposal of property and equipment | 214 | 20 |
Income tax benefit | (115) | 0 |
Amortization of debt issuance costs | 409 | 253 |
Bad debts | 83 | 507 |
Equity in losses on investments | 331 | 441 |
Equity-based compensation | 12,357 | 2,250 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (3,077) | (4,215) |
Prepaid expenses | (125) | 127 |
Other current assets | (530) | (433) |
Other assets | (129) | (92) |
Accounts payable | 262 | 4,712 |
Accrued interest, capital lease obligations | (56) | (53) |
Accrued salaries and benefits | (532) | (295) |
Accrued expenses | 1,314 | (5,912) |
Deferred revenue | 100 | 5,347 |
Customer deposits | 370 | 407 |
Net cash provided by operating activities | 39,429 | 43,429 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Acquisition of property and equipment | (61,387) | (107,015) |
Acquisition of intangible asset | 0 | (13) |
Escrow deposit | (1,047) | (1,350) |
Proceeds from notes receivable | 0 | 7 |
Purchase of portfolio energy credits | (32) | (30) |
Net cash used in investing activities | (62,466) | (108,401) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payment of tax withholdings upon settlement of restricted stock unit awards | (1,213) | 0 |
Proceeds from borrowings | 0 | 70,000 |
Change in long term deposit | (355) | 0 |
Proceeds from borrowings | (1,500) | (2,500) |
Distributions paid to members | 0 | (3,532) |
Net cash (used in) provided by financing activities | (3,068) | 63,968 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (26,105) | (1,004) |
CASH AND CASH EQUIVALENTS—Beginning of period | 264,666 | 22,713 |
CASH AND CASH EQUIVALENTS—End of period | 238,561 | 21,709 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Cash paid for interest, net of amounts capitalized | 5,266 | 4,294 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING INFORMATION: | ||
Increase (decrease) in liabilities incurred to acquire property and equipment | 13,023 | (12,227) |
Distributions declared but not paid | 0 | 118 |
Distributions used for payment of option loans and related interest | $ 0 | $ 3 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Switch, Inc. was formed as a Nevada corporation in June 2017 for the purpose of completing an initial public offering (“IPO”) and related organizational transactions in order to carry on the business of Switch, Ltd. and its subsidiaries (collectively, “Switch,” and together with Switch, Inc., the “Company”). Switch is comprised of limited liability companies that provide colocation space and related services to global enterprises, financial companies, government agencies, and others that conduct critical business on the internet. Switch develops and operates data centers in Nevada, which are Tier IV Gold certified, and in Michigan, and is developing data centers in Georgia, delivering redundant services with low latency and super capacity transport environments. As the manager of Switch, Ltd., Switch, Inc. operates and controls all of the business and affairs of Switch. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Accounting The accompanying consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), and include the accounts of the Company. All significant intercompany transactions and balances have been eliminated. As the sole manager of Switch, Ltd., Switch, Inc. operates and controls all of the business and affairs of Switch, and has the sole voting interest in, and controls the management of, Switch, and has the obligation to absorb the losses of, and receive benefits from, Switch. Accordingly, Switch, Inc. identifies itself as the primary beneficiary of Switch and began consolidating Switch in its consolidated financial statements as of October 11, 2017, the closing date of the IPO, resulting in a non-controlling interest related to the common units held by members other than Switch, Inc. on its consolidated financial statements. Switch has been determined to be the predecessor for accounting purposes and, accordingly, the consolidated financial statements for periods prior to the IPO and the related organizational transactions have been adjusted to combine the previously separate entities for presentation purposes. Amounts for the period from January 1, 2017 through March 31, 2017 presented in the consolidated financial statements and condensed notes to consolidated financial statements herein represent the historical operations of Switch. The amounts as of December 31, 2017 and for the period from January 1, 2018 reflect the consolidated operations of the Company. The Company periodically evaluates entities for consolidation either through ownership of a majority voting interest, or through means other than voting interest, in accordance with the Variable Interest Entity (“VIE”) accounting model. A VIE is an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The accompanying unaudited interim consolidated financial statements have been prepared in accordance with GAAP for interim financial information and with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for quarterly reports on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. These unaudited interim consolidated financial statements should be read in conjunction with the Company’s 2017 Annual Report on Form 10-K for the year ended December 31, 2017 . Management believes that the accompanying interim consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of these unaudited interim consolidated financial statements. The consolidated results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 , or for any other future annual or interim period. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to the allowance for doubtful accounts, useful lives of property and equipment, equity-based compensation, deferred revenue, fair value of leased property at inception of lease term, fair value of deliverables under multiple element arrangements, and probability assessments of exercising renewal options on leases. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable. Significant Accounting Policies A description of the Company’s significant accounting policies is included in the audited financial statements within its Annual Report on Form 10-K for the year ended December 31, 2017 . No other changes to significant accounting policies have occurred since the year ended December 31, 2017 , with the exception of those detailed below. Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. Cash equivalents as of March 31, 2018 were comprised of money market funds totaling $212.2 million . Cash equivalents comprised of money market funds totaling $241.4 million were incorrectly classified as cash as of December 31, 2017 . Derivative Financial Instruments During the three months ended March 31, 2018 , the Company operated under two agreements for the purchase of electricity ( Note 6 ). The accounting guidance for derivative instruments provides a scope exception for commodity contracts that meet the normal purchase and sales criteria specified in the standard. The normal purchases and normal sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that are designated as normal purchases and normal sales are not recorded on the consolidated balance sheets at fair value. Concentration of Credit and Other Risks Although the Company operates primarily in Nevada, realization of its customer accounts receivable and its future operations and cash flows could be affected by adverse economic conditions, both regionally and elsewhere in the United States. During the three months ended March 31, 2018 and 2017 , the Company’s largest customer and its affiliates comprised 9.0% and 9.7% , respectively, of the Company’s revenue. Only one customer accounted for 10% or more of accounts receivable as of March 31, 2018 and December 31, 2017 . The Company generally carries cash on deposit with financial institutions in excess of federally insured limits. Through May 31, 2017, the Company was also exposed to a limited extent, to a risk of unfavorable price increases from its principal provider of power, Nevada Power Company dba NV Energy, whose rates are set by and services are regulated by the Public Utilities Commission of Nevada. On June 1, 2017, the Company became an unbundled purchaser of energy in Nevada. Income Taxes The Staff of the SEC issued Staff Accounting Bulletin No. 118 (“SAB No. 118”) to provide guidance to registrants in applying Accounting Standards Codification Topic 740 (“ASC 740”) in connection with the Tax Cuts and Jobs Act. SAB No. 118 provides that in the period of enactment, the income tax effects of the Tax Cuts and Jobs Act may be reported as a provisional amount based on a reasonable estimate to the extent a reasonable estimate can be determined, which would be subject to adjustment during a “measurement period.” The measurement period begins in the reporting period of the Tax Cuts and Jobs Act’s enactment and ends when a registrant has obtained, prepared, and analyzed the information that was needed in order to complete the accounting requirements under ASC 740. SAB No. 118 also describes supplemental disclosures that should accompany the provisional amounts. The Company has applied the guidance in SAB No. 118 to account for the financial accounting impacts of the Tax Cuts and Jobs Act as of December 31, 2017 . During the three months ended March 31, 2018 , there were no changes made to the provisional estimates that were recorded in the fourth quarter of 2017. The Company will continue to analyze the effects of the Tax Cuts and Jobs Act on the consolidated financial statements. Recent Accounting Pronouncements ASU 2014-09–Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). The standard supersedes much of the current guidance regarding revenue recognition including most industry-specific guidance. The core principle of the standard is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity will be required to identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligation in the contract, and recognize revenue when (or as) the entity satisfies a performance obligation. In addition to the new revenue recognition requirements, entities will be required to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard also provides guidance on the recognition of costs related to obtaining customer contracts. Entities may choose between two retrospective transition methods when applying the standard. In July 2015, the FASB voted to defer the effective date by one year (ASU 2015-14) to December 15, 2018 for annual reporting periods beginning after that date, and interim periods within annual periods beginning after December 15, 2019, and permitted early adoption of the standard, but not before the original effective date of December 15, 2017. Companies may use either a full retrospective or a modified-retrospective approach to adopt the standard. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”). The core principle of the guidance in Revenue from Contracts with Customers in ASU 2014-09 is not changed by the amendments in ASU 2016-08. The amendments clarify the implementation guidance on principal versus agent considerations. Per ASU 2016-08, when another party is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself (principal) or to arrange for that good or service to be provided by the other party (agent). When an entity that is a principal satisfies a performance obligation, the entity recognizes revenue in the gross amount of consideration to which it expects to be entitled in exchange for the specified good or service transferred to the customer. When an entity that is an agent satisfies a performance obligation, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled. The effective date and transition requirements for ASU 2016-08 are the same as the effective date and transition requirements for ASU 2014-09. In April 2016 and May 2016, the FASB issued guidance which amends certain other aspects of ASU 2014-09. The amendments include the identification of performance obligations and the licensing implementation guidance (ASU 2016-10) and the collectability of revenue, presentation of sales tax and other similar taxes collected from customers, contracts containing noncash considerations, and contract modifications and completed contracts at transition (ASU 2016-12). In December 2016, the FASB amended ASU 2014-09 to make minor corrections and minor improvements to the guidance that are not expected to have a significant effect on current accounting practice or create a significant administrative cost (ASU 2016-20). The effective date and transition provisions in these amendments are aligned with the requirements of ASU 2014-09. The Company is in the initial stages of evaluating the impact of the standard on the Company’s accounting policies, processes, and system requirements. The Company has assigned internal resources and engaged consulting service providers to assist in the evaluation. The Company continues to assess the potential impacts of the new standard and determine the effect of this guidance on its consolidated financial statements. ASU 2016-02–Leases On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The principle of ASU 2016-02 is that a lessee should recognize the assets and liabilities that arise from leases. Lessees will need to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability. For income statement purposes, ASU 2016-02 requires leases to be classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. ASU 2016-02 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The new standard must be adopted using a modified-retrospective transition, and provides for certain practical expedients. In addition, in January 2018, the FASB also issued ASU 2018-01, which permits an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expired before the entity’s adoption of ASU 2016-02 and were not previously accounted for as leases. The Company is evaluating the potential effects of the adoption of these ASUs on its consolidated financial statements. The Company has not decided if early adoption will be considered. ASU 2016-13–Financial Instruments–Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). Under this guidance, a company will be required to use a new forward-looking “expected loss” model for trade and other receivables that generally will result in the earlier recognition of allowances for losses. The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, and requires a modified-retrospective approach to adoption. Early adoption is permitted in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is evaluating the potential effects the adoption of this standard will have on its consolidated financial statements. The Company has not decided if early adoption will be considered. ASU 2016-15–Statement of Cash Flows In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). The areas affected by ASU 2016-15 are debt prepayment and debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. Specifically, under this guidance, cash payments for debt prepayment or debt extinguishment costs will be classified as cash outflows for financing activities. The amendments in ASU 2016-15 are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in ASU 2016-15 will be applied using a retrospective transition method to each period presented. The adoption of ASU 2016-15 is not expected to materially impact the Company’s consolidated financial statements. The Company has not decided if early adoption will be considered. ASU 2017-09–Compensation–Stock Compensation In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). This update provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718, Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. For all entities, the amendments in ASU 2017-09 are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance during the first quarter of 2018 did not impact the Company’s consolidated financial statements. ASU 2018-02–Income Statement–Reporting Comprehensive Income In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. For all entities, the amendments in ASU 2018-02 are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption of this ASU is permitted, including adoption in any interim period. The Company is evaluating the potential effects the adoption of this standard will have on its consolidated financial statements. The Company has not decided if early adoption will be considered. |
Property and Equipment, Net
Property and Equipment, Net | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net, consists of the following as of the dates indicated below (in thousands): March 31, 2018 December 31, 2017 Land and land improvements $ 152,811 $ 151,286 Data center equipment 796,244 763,790 Capitalized leased assets 36,076 35,974 Buildings, building improvements and leasehold improvements 353,258 338,763 Substation equipment 4,247 4,247 Cloud computing equipment 5,661 5,661 Fiber facilities 8,708 8,459 Computer equipment, furniture and fixtures 32,606 30,745 Vehicles 1,647 1,573 Construction in progress 132,238 110,559 Core network equipment 32,776 31,472 Deferred installation charges 4,671 4,436 Property and equipment, gross 1,560,943 1,486,965 Less: accumulated depreciation and amortization (377,778 ) (353,393 ) Total property and equipment, net $ 1,183,165 $ 1,133,572 During the three months ended March 31, 2018 and 2017 , depreciation and amortization expense was $24.6 million and $20.0 million , respectively. Accumulated amortization for the capitalized leased assets totaled $8.7 million and $8.3 million as of March 31, 2018 and December 31, 2017 , respectively. During the three months ended March 31, 2018 and 2017 , capitalized interest was $1.0 million and $588,000 , respectively. The Company capitalized internal use software costs of $681,000 and $690,000 during the three months ended March 31, 2018 and 2017 , respectively. |
Equity Method Investments
Equity Method Investments | 3 Months Ended |
Mar. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method Investments The Company currently holds two investments accounted for under the equity method of accounting, SUPERNAP International, S.A. (“SUPERNAP International”) and Planet3, Inc. (“Planet3”), in which the Company holds a 50% ownership interest and a 45% ownership interest, respectively. As of March 31, 2018 and December 31, 2017 , the Company determined that it continued to have a variable interest in both SUPERNAP International and Planet3, as the entities do not have sufficient equity at risk. However, the Company concluded that it is not the primary beneficiary of SUPERNAP International or of Planet3 as it does not have deemed control of either entity. As a result, it does not consolidate either entity into its consolidated financial statements. As of March 31, 2018 , the Company’s carrying value of its investment in SUPERNAP International was reduced to zero as a result of recording its share of the investee’s losses. Accordingly, as the Company does not have any guaranteed obligations and is not otherwise committed to provide further financial support to SUPERNAP International, the Company discontinued the equity method of accounting for its investment in SUPERNAP International as of March 31, 2018 and will not provide for additional losses until its share of future net income or comprehensive income, if any, equals the share of net losses not recognized during the period the equity method was suspended. The Company’s share of net loss recorded for the three months ended March 31, 2018 and 2017 amounted to $331,000 and $441,000 , respectively. As of March 31, 2018 and December 31, 2017 , the Company had recorded amounts consisting of reimbursable expenses due from SUPERNAP International of $415,000 and $337,000 , respectively, within accounts receivable on the consolidated balance sheets. Additionally, as of December 31, 2016 , as the Company does not have any guaranteed obligations and is not otherwise committed to provide further financial support to Planet3, the Company discontinued the equity method of accounting for its investment in Planet3 and will not provide for additional losses until its share of future net income, if any, equals the share of net losses not recognized during the period the equity method was suspended. The summarized income statement information of the Company’s equity method investment in SUPERNAP International is as follows (in thousands): Three Months Ended 2018 2017 Revenue $ 195 $ 16 Gross loss $ (371 ) $ (1,877 ) Net loss $ (1,321 ) $ (1,166 ) |
Leases
Leases | 3 Months Ended |
Mar. 31, 2018 | |
Leases [Abstract] | |
Leases | Leases During the three months ended March 31, 2018 and 2017 , rent expense related to operating leases was approximately $1.9 million and $1.7 million , respectively. Related party rent included in these amounts was approximately $1.2 million and $1.1 million for the three months ended March 31, 2018 and 2017 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Purchase Commitments In January 2018, a wholly-owned subsidiary of Switch, Ltd. entered into a Master Power Purchase & Sale Agreement of electricity with Tenaska Power Services Co. to purchase a firm commitment of 10 megawatts per energy hour for a term of 23 months, or a purchase commitment of $4.9 million during the term, which started February 1, 2018. Additionally, scheduling services for the purchased power from the agreement are provided by Morgan Stanley Capital Group Inc., resulting in an additional purchase commitment of $300,000 during the term, for a total purchase commitment of $5.2 million related to this agreement. The remaining total purchase commitment is $4.7 million as of March 31, 2018. Future power purchase commitments for the remainder of 2018 and 2019 are $2.0 million and $2.7 million , respectively, with no additional commitments upon termination of the agreement thereafter. Legal Proceedings On August 7, 2017, Switch filed a lawsuit in the U.S. District Court for the Eastern District of Texas against Aligned Data Centers LLC, or (“Aligned”), and MTechnology Inc. The lawsuit alleges, among other things, that Aligned has used and promoted technology at its data centers to attract clients to its facility, directly and indirectly infringing at least three of Switch’s patents and using Switch’s patented technology to attempt to unlawfully compete with Switch. The complaint also alleges that Aligned hired a consultant to design their data centers; that this consultant had toured Switch under non-disclosure agreement; and that this consultant breached his confidentiality agreements with Switch by using Switch’s designs to design the Aligned data centers. Switch is seeking an injunction to prevent the defendants in the lawsuit from infringing Switch’s patents, as well as other remedies. On August 16, 2017, Aligned filed an answer to the complaint and a motion to dismiss the lawsuit. Among other things, Aligned alleges in its answer that Switch’s patents in question should be declared invalid, and countersued for declaratory judgment of the non-infringement of certain of Switch’s patents, injunctive relief, and damages for alleged anti-competition practices involving Aligned’s trademarks in violation of the Lanham Act, tortious interference with Aligned’s business, and disparagement of Aligned’s business. Switch has retained outside counsel to represent it and is vigorously defending its rights and interests. Given certain jurisdictional issues, Switch filed a separate complaint in the Eighth Judicial District of Nevada against the consultant, Stephen Fairfax, and his business, MTechnology, on September 12, 2017. Among other claims, Switch has raised allegations of breach of contract and misappropriation of trade secrets. On September 7, 2017, Switch, Ltd. and Switch, Inc. (collectively, the “Defendants”), were named in a lawsuit filed in the U.S. District Court for the District of Nevada by V5 Technologies formerly d/b/a Cobalt Data Centers (now defunct). The lawsuit alleges, among other things, that the Defendants have monopolized the Las Vegas Metropolitan area of Southern Nevada’s data center colocation market and have engaged in unfair business practices leading to the failure of Cobalt Data Centers in 2015 and seeks monetary damages in an amount yet to be disclosed. The Defendants have retained outside counsel and are vigorously pursuing their rights and interests. The outcomes of the legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to the Company’s financial condition, results of operations, and cash flows for a particular period. For the matters described above, it is not possible to estimate the reasonably possible loss or range of loss. |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation Common Unit Awards Common unit award activity is summarized as follows as of the dates indicated below (number of units in thousands): Number of Nonvested Common Units Outstanding Weighted Average Grant Date Fair Value per Common Unit Nonvested common unit awards outstanding—December 31, 2017 4,783 $ 11.11 Common unit awards vested (199 ) $ 11.11 Nonvested common unit awards outstanding—March 31, 2018 4,584 $ 11.11 As of March 31, 2018 , total equity-based compensation cost related to all unvested common unit awards is $39.2 million , which is expected to be recognized over a weighted average period of 3.53 years. If a forfeiture of unvested common unit awards occurs, the associated shares of Class B common stock and Class C common stock, as applicable, are also forfeited. Total fair value of common unit awards vested for the three months ended March 31, 2018 was $7.1 million . 2017 Incentive Award Plan On September 22, 2017, Switch, Inc.’s Board of Directors adopted the 2017 Incentive Award Plan (the “2017 Plan”). The 2017 Plan, effective as of its adoption date, provides that the initial aggregate number of shares of Class A common stock reserved and available for issuance be 25,000,000 shares of Class A common stock plus an increase each January 1, beginning on January 1, 2018 and ending on and including January 1, 2027, equal to the lesser of (A) 17,000,000 shares of Class A common stock, (B) 5% of the aggregate number of shares of Switch, Inc.’s Class A common stock, Class B common stock and Class C common stock outstanding on the final day of the immediately preceding calendar year and (C) such smaller number of shares of Class A common stock as is determined by the Board of Directors. Effective January 1, 2018, Switch, Inc.’s Board of Directors approved an annual increase of 7,933,534 shares (the “2018 Annual Increase”) in the aggregate number of shares of Class A common stock reserved and available for issuance under the 2017 Plan. The 2018 Annual Increase, and each annual increase thereafter, is subject to adjustment in the event of a stock split, stock dividend or other defined changes in Switch, Inc.’s capitalization. The following table summarizes information related to stock options as of the dates indicated below (number of stock options and aggregate intrinsic value in thousands): Number of Stock Options Weighted Average Exercise Price per Stock Option Weighted Average Remaining Contractual Life (Years) Aggregate (1) Stock options outstanding—December 31, 2017 5,725 $ 17.00 9.77 $ 6,813 Stock options forfeited (85 ) $ 17.00 Stock options outstanding—March 31, 2018 5,640 $ 17.00 9.52 $ — Stock options vested and exercisable—December 31, 2017 5,626 $ 17.00 9.77 $ 6,695 Stock options vested and exercisable—March 31, 2018 5,541 $ 17.00 9.52 $ — ________________________________________ (1) The intrinsic value is calculated as the difference between the fair value of the stock option on March 31, 2018 and December 31, 2017 and the exercise price of the stock option. There is no intrinsic value of options outstanding and vested and exercisable as of March 31, 2018 as the closing stock price at the end of the first quarter of 2018 creates a negative intrinsic value. The number and weighted average grant date fair value for nonvested stock options granted and outstanding are as follows as of the dates indicated below (number of stock options in thousands): Number of Stock Options Weighted Average Grant Date Fair Value Nonvested stock options outstanding—December 31, 2017 99 $ 5.37 Nonvested stock options outstanding—March 31, 2018 99 $ 5.37 As of March 31, 2018 , total equity-based compensation cost related to all unvested stock options is $381,000 , which is expected to be recognized over a weighted average period of 2.51 years. The following table summarizes information related to RSUs as of the dates indicated below (number of RSUs in thousands): Number of RSUs Weighted Average Grant Date Fair Value per RSU RSUs outstanding—December 31, 2017 31 $ 18.01 RSUs granted 2,343 $ 17.03 RSUs vested (186 ) $ 15.47 RSUs outstanding—March 31, 2018 2,188 $ 17.17 As of March 31, 2018 , total equity-based compensation cost related to all unvested RSU awards is $35.2 million , which is expected to be recognized over a weighted average period of 3.75 years. Total fair value of RSU awards vested during the three months ended March 31, 2018 was $2.9 million . Total equity-based compensation recognized in the consolidated statements of comprehensive income is as follows for each of the periods presented (in thousands): Three Months Ended 2018 2017 Cost of revenue $ 416 $ 50 Selling, general and administrative 11,941 2,200 Total equity-based compensation expense $ 12,357 $ 2,250 |
Fair Value of Financial Informa
Fair Value of Financial Information | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Information | Fair Value of Financial Instruments The carrying amounts as of March 31, 2018 and December 31, 2017 for cash and cash equivalents, accounts receivable, and accounts payable approximate their estimated fair values due to the short maturity of these instruments. Management believes the fair value of the Company’s long term debt was $601.1 million and $599.2 million based on Level 2 inputs using quoted market prices on or about March 31, 2018 and December 31, 2017 , respectively. Management has elected not to adopt the option available under GAAP to measure any of its eligible financial instruments or other items at fair value. Accordingly, the Company continues to measure all of its assets and liabilities on the historical cost basis of accounting except as otherwise required under GAAP. |
Non-controlling Interest
Non-controlling Interest | 3 Months Ended |
Mar. 31, 2018 | |
Noncontrolling Interest [Abstract] | |
Non-controlling Interest | Non-controlling Interest Switch, Inc. owns an indirect economic interest in Switch, Ltd., where “economic interests” means the right to receive any distributions, whether cash, property or securities of Switch, Ltd., in connection with common units. Switch, Inc. presents interest held by non-controlling interest holders within non-controlling interest in the consolidated financial statements. As of March 31, 2018 and December 31, 2017 , non-controlling interest holders of Switch, Ltd. owned 85.5% of the outstanding common units, with the remaining 14.5% owned by Switch, Inc. The ownership of the common units is summarized as follows: March 31, 2018 December 31, 2017 Units Ownership % Units Ownership % Switch, Inc.’s ownership of common units (equal to outstanding Class A common stock) 36,066,544 14.5 % 35,937,500 14.5 % Non-controlling interest holders’ ownership of common units (1) 211,874,755 85.5 % 211,675,452 85.5 % Total common units 247,941,299 100.0 % 247,612,952 100.0 % ________________________________________ (1) Common units held as of March 31, 2018 exclude 4,583,983 of unvested common unit awards and 110,225 of vested and exercisable unit options. Common units held as of December 31, 2017 exclude 4,783,286 of unvested common unit awards and 110,225 of vested and exercisable unit options. The Company uses the weighted average ownership percentages during the period to calculate the pretax income attributable to Switch, Inc. and the non-controlling interest holders of Switch, Ltd. |
Net Income Per Share_Unit
Net Income Per Share/Unit | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Income Per Share/Unit | Net Income Per Share/Unit The following table sets forth the calculation of basic and diluted net income per share/unit during the periods presented (in thousands, except share/unit and per share/unit data): Three Months Ended 2018 2017 Net income per share/unit: Numerator—basic: Net income attributable to Switch, Inc.—basic $ 671 $ 20,328 Numerator—diluted: Net income attributable to Switch, Inc.—basic $ 671 $ 20,328 Effect of dilutive securities: Shares of Class B common stock and Class C common stock 3,279 — Net income attributable to Switch, Inc.—diluted $ 3,950 $ 20,328 Denominator—basic: Weighted average shares/units outstanding—basic (1) 36,003,087 199,776,051 Net income per share/unit—basic $ 0.02 $ 0.10 Denominator—diluted: Weighted average shares/units outstanding—basic (1) 36,003,087 199,776,051 Weighted average effect of dilutive securities: Effect of dilutive options 90,380 129,065 Effect of unvested incentive unit awards — 5,588,156 Shares of Class B common stock and Class C common stock 216,458,738 — Weighted average shares/units outstanding—diluted (1) 252,552,205 205,493,272 Net income per share/unit—diluted $ 0.02 $ 0.10 ________________________________________ (1) Amounts for the three months ended March 31, 2018 represent shares of Class A common stock outstanding. Amounts for the three months ended March 31, 2017 represent common units outstanding. Shares of Class B common stock and Class C common stock do not share in the earnings or losses of Switch, Inc. and are therefore not participating securities. As such, separate presentation of basic and diluted net income per share for each of Class B common stock and Class C common stock under the two-class method has not been presented. The following table presents potentially dilutive securities excluded from the computation of diluted net income per share/unit for the periods presented because their effect would have been anti-dilutive. Three Months Ended 2018 2017 Weighted average unvested incentive unit awards — 491,450 Stock options (1) 5,639,790 — RSUs (1) 2,187,117 — ________________________________________ (1) Represents the number of instruments outstanding at the end of the period. Application of the treasury stock method would reduce this amount if they had a dilutive effect and were included in the computation of diluted net income per share. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The Company’s chief operating decision maker is its Chief Executive Officer. The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions. All of the Company’s assets are maintained in the United States. The Company derives a substantial majority of its revenue from sales to customers in the United States, based upon the billing address of the customer. Revenue derived from customers outside the United States, based upon the billing address of the customer, were less than 3% and 1% of revenue for the three months ended March 31, 2018 and 2017 , respectively. The Company’s revenue is comprised of the following (in thousands): Three Months Ended 2018 2017 Colocation $ 77,719 $ 71,979 Connectivity 18,218 15,857 Other 1,780 1,321 Revenue $ 97,717 $ 89,157 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Subsequent events through May 15, 2018 , the date on which the unaudited interim consolidated financial statements as of and for the three months ended March 31, 2018 were available to be issued, were evaluated by the Company to determine the need, if any, for recognition or disclosure in its consolidated financial statements. In April 2018, Switch, Inc.’s Board of Directors declared a dividend of $0.0147 per share of Class A common stock to holders of record as of the close of business on April 13, 2018 for the first quarter of 2018, and was paid on April 23, 2018. Prior to the payment of this dividend, Switch, Ltd. also made a cash distribution to all holders of record of common units of Switch, Ltd., including Switch, Inc., of $0.0147 per common unit for a total distribution of $3.7 million , of which $530,000 was distributed to Switch, Inc. and $3.2 million was distributed to the other holders of record of common units of Switch, Ltd. In April 2018, a wholly-owned subsidiary of Switch, Ltd. closed on the purchase of 515.96 acres in Storey County, Nevada, in the aggregate amount of $15.9 million . In April and May 2018, three substantially similar putative class action complaints, captioned Martz v. Switch, Inc., Palkon v. Switch, Inc., and Chun v. Switch, Inc. were filed in the Eighth Judicial District of Nevada against Switch, Inc., certain current and former officers and directors, and certain underwriters of Switch, Inc.’s initial public offering alleging federal securities law violations in connection with Switch, Inc.’s initial public offering. These lawsuits were brought by purported stockholders of Switch, Inc. seeking to represent a class of stockholders who purchased Class A common stock in or traceable to Switch, Inc.’s IPO, and request unspecified damages and other relief. Management believes that these lawsuits are without merit and intends to defend against them vigorously. The outcomes of these legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to the Company’s financial condition, results of operations, and cash flows for a particular period. For the matters described above, it is not possible to estimate the reasonably possible loss or range of loss. In May 2018, Switch, Inc.’s Board of Directors declared a dividend of $0.0147 per share of Class A common stock to holders of record as of the close of business on May 29, 2018 for the second quarter of 2018. The dividend will be payable on June 8, 2018. Prior to the payment of this dividend, Switch, Ltd. will make a cash distribution to all holders of record of common units of Switch, Ltd., including Switch, Inc., of $0.0147 per common unit. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Accounting | Basis of Presentation and Accounting The accompanying consolidated financial statements are presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”), and include the accounts of the Company. All significant intercompany transactions and balances have been eliminated. As the sole manager of Switch, Ltd., Switch, Inc. operates and controls all of the business and affairs of Switch, and has the sole voting interest in, and controls the management of, Switch, and has the obligation to absorb the losses of, and receive benefits from, Switch. Accordingly, Switch, Inc. identifies itself as the primary beneficiary of Switch and began consolidating Switch in its consolidated financial statements as of October 11, 2017, the closing date of the IPO, resulting in a non-controlling interest related to the common units held by members other than Switch, Inc. on its consolidated financial statements. Switch has been determined to be the predecessor for accounting purposes and, accordingly, the consolidated financial statements for periods prior to the IPO and the related organizational transactions have been adjusted to combine the previously separate entities for presentation purposes. Amounts for the period from January 1, 2017 through March 31, 2017 presented in the consolidated financial statements and condensed notes to consolidated financial statements herein represent the historical operations of Switch. The amounts as of December 31, 2017 and for the period from January 1, 2018 reflect the consolidated operations of the Company. The Company periodically evaluates entities for consolidation either through ownership of a majority voting interest, or through means other than voting interest, in accordance with the Variable Interest Entity (“VIE”) accounting model. A VIE is an entity in which either (i) the equity investors as a group, if any, lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. |
Use of Estimates | Management believes that the accompanying interim consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of these unaudited interim consolidated financial statements. The consolidated results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 , or for any other future annual or interim period. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to the allowanc |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents. |
Derivative Financial Instruments | Derivative Financial Instruments During the three months ended March 31, 2018 , the Company operated under two agreements for the purchase of electricity ( Note 6 ). The accounting guidance for derivative instruments provides a scope exception for commodity contracts that meet the normal purchase and sales criteria specified in the standard. The normal purchases and normal sales exception requires, among other things, physical delivery in quantities expected to be used or sold over a reasonable period in the normal course of business. Contracts that are designated as normal purchases and normal sales are not recorded on the consolidated balance sheets at fair value. |
Concentration of Credit and Other Risks | Concentration of Credit and Other Risks Although the Company operates primarily in Nevada, realization of its customer accounts receivable and its future operations and cash flows could be affected by adverse economic conditions, both regionally and elsewhere in the United States. During the three months ended March 31, 2018 and 2017 , the Company’s largest customer and its affiliates comprised 9.0% and 9.7% , respectively, of the Company’s revenue. Only one customer accounted for 10% or more of accounts receivable as of March 31, 2018 and December 31, 2017 . The Company generally carries cash on deposit with financial institutions in excess of federally insured limits. Through May 31, 2017, the Company was also exposed to a limited extent, to a risk of unfavorable price increases from its principal provider of power, Nevada Power Company dba NV Energy, whose rates are set by and services are regulated by the Public Utilities Commission of Nevada. On June 1, 2017, the Company became an unbundled purchaser of energy in Nevada. |
Income Taxes | Income Taxes The Staff of the SEC issued Staff Accounting Bulletin No. 118 (“SAB No. 118”) to provide guidance to registrants in applying Accounting Standards Codification Topic 740 (“ASC 740”) in connection with the Tax Cuts and Jobs Act. SAB No. 118 provides that in the period of enactment, the income tax effects of the Tax Cuts and Jobs Act may be reported as a provisional amount based on a reasonable estimate to the extent a reasonable estimate can be determined, which would be subject to adjustment during a “measurement period.” The measurement period begins in the reporting period of the Tax Cuts and Jobs Act’s enactment and ends when a registrant has obtained, prepared, and analyzed the information that was needed in order to complete the accounting requirements under ASC 740. SAB No. 118 also describes supplemental disclosures that should accompany the provisional amounts. The Company has applied the guidance in SAB No. 118 to account for the financial accounting impacts of the Tax Cuts and Jobs Act as of December 31, 2017 . During the three months ended March 31, 2018 , there were no changes made to the provisional estimates that were recorded in the fourth quarter of 2017. The Company will continue to analyze the effects of the Tax Cuts and Jobs Act on the consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements ASU 2014-09–Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). The standard supersedes much of the current guidance regarding revenue recognition including most industry-specific guidance. The core principle of the standard is to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity will be required to identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligation in the contract, and recognize revenue when (or as) the entity satisfies a performance obligation. In addition to the new revenue recognition requirements, entities will be required to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standard also provides guidance on the recognition of costs related to obtaining customer contracts. Entities may choose between two retrospective transition methods when applying the standard. In July 2015, the FASB voted to defer the effective date by one year (ASU 2015-14) to December 15, 2018 for annual reporting periods beginning after that date, and interim periods within annual periods beginning after December 15, 2019, and permitted early adoption of the standard, but not before the original effective date of December 15, 2017. Companies may use either a full retrospective or a modified-retrospective approach to adopt the standard. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”). The core principle of the guidance in Revenue from Contracts with Customers in ASU 2014-09 is not changed by the amendments in ASU 2016-08. The amendments clarify the implementation guidance on principal versus agent considerations. Per ASU 2016-08, when another party is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself (principal) or to arrange for that good or service to be provided by the other party (agent). When an entity that is a principal satisfies a performance obligation, the entity recognizes revenue in the gross amount of consideration to which it expects to be entitled in exchange for the specified good or service transferred to the customer. When an entity that is an agent satisfies a performance obligation, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled. The effective date and transition requirements for ASU 2016-08 are the same as the effective date and transition requirements for ASU 2014-09. In April 2016 and May 2016, the FASB issued guidance which amends certain other aspects of ASU 2014-09. The amendments include the identification of performance obligations and the licensing implementation guidance (ASU 2016-10) and the collectability of revenue, presentation of sales tax and other similar taxes collected from customers, contracts containing noncash considerations, and contract modifications and completed contracts at transition (ASU 2016-12). In December 2016, the FASB amended ASU 2014-09 to make minor corrections and minor improvements to the guidance that are not expected to have a significant effect on current accounting practice or create a significant administrative cost (ASU 2016-20). The effective date and transition provisions in these amendments are aligned with the requirements of ASU 2014-09. The Company is in the initial stages of evaluating the impact of the standard on the Company’s accounting policies, processes, and system requirements. The Company has assigned internal resources and engaged consulting service providers to assist in the evaluation. The Company continues to assess the potential impacts of the new standard and determine the effect of this guidance on its consolidated financial statements. ASU 2016-02–Leases On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The principle of ASU 2016-02 is that a lessee should recognize the assets and liabilities that arise from leases. Lessees will need to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability. For income statement purposes, ASU 2016-02 requires leases to be classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. ASU 2016-02 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The new standard must be adopted using a modified-retrospective transition, and provides for certain practical expedients. In addition, in January 2018, the FASB also issued ASU 2018-01, which permits an entity to elect an optional transition practical expedient to not evaluate land easements that exist or expired before the entity’s adoption of ASU 2016-02 and were not previously accounted for as leases. The Company is evaluating the potential effects of the adoption of these ASUs on its consolidated financial statements. The Company has not decided if early adoption will be considered. ASU 2016-13–Financial Instruments–Credit Losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). Under this guidance, a company will be required to use a new forward-looking “expected loss” model for trade and other receivables that generally will result in the earlier recognition of allowances for losses. The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021, and requires a modified-retrospective approach to adoption. Early adoption is permitted in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is evaluating the potential effects the adoption of this standard will have on its consolidated financial statements. The Company has not decided if early adoption will be considered. ASU 2016-15–Statement of Cash Flows In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). The areas affected by ASU 2016-15 are debt prepayment and debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactions, and separately identifiable cash flows and application of the predominance principle. Specifically, under this guidance, cash payments for debt prepayment or debt extinguishment costs will be classified as cash outflows for financing activities. The amendments in ASU 2016-15 are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The amendments in ASU 2016-15 will be applied using a retrospective transition method to each period presented. The adoption of ASU 2016-15 is not expected to materially impact the Company’s consolidated financial statements. The Company has not decided if early adoption will be considered. ASU 2017-09–Compensation–Stock Compensation In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”). This update provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718, Compensation – Stock Compensation, to a change to the terms or conditions of a share-based payment award. The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. For all entities, the amendments in ASU 2017-09 are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The adoption of this guidance during the first quarter of 2018 did not impact the Company’s consolidated financial statements. ASU 2018-02–Income Statement–Reporting Comprehensive Income In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”). The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. For all entities, the amendments in ASU 2018-02 are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption of this ASU is permitted, including adoption in any interim period. The Company is evaluating the potential effects the adoption of this standard will have on its consolidated financial statements. The Company has not decided if early adoption will be considered. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and equipment, net, consists of the following as of the dates indicated below (in thousands): March 31, 2018 December 31, 2017 Land and land improvements $ 152,811 $ 151,286 Data center equipment 796,244 763,790 Capitalized leased assets 36,076 35,974 Buildings, building improvements and leasehold improvements 353,258 338,763 Substation equipment 4,247 4,247 Cloud computing equipment 5,661 5,661 Fiber facilities 8,708 8,459 Computer equipment, furniture and fixtures 32,606 30,745 Vehicles 1,647 1,573 Construction in progress 132,238 110,559 Core network equipment 32,776 31,472 Deferred installation charges 4,671 4,436 Property and equipment, gross 1,560,943 1,486,965 Less: accumulated depreciation and amortization (377,778 ) (353,393 ) Total property and equipment, net $ 1,183,165 $ 1,133,572 |
Equity Method Investments (Tabl
Equity Method Investments (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Summarized Income Statement Information of the Equity Method Investment in SUPERNAP International | The summarized income statement information of the Company’s equity method investment in SUPERNAP International is as follows (in thousands): Three Months Ended 2018 2017 Revenue $ 195 $ 16 Gross loss $ (371 ) $ (1,877 ) Net loss $ (1,321 ) $ (1,166 ) |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Common Unit Award Activity | Common unit award activity is summarized as follows as of the dates indicated below (number of units in thousands): Number of Nonvested Common Units Outstanding Weighted Average Grant Date Fair Value per Common Unit Nonvested common unit awards outstanding—December 31, 2017 4,783 $ 11.11 Common unit awards vested (199 ) $ 11.11 Nonvested common unit awards outstanding—March 31, 2018 4,584 $ 11.11 |
Information Related to Stock Options and the Number and Weighted Average Grant Date Fair Value of Nonvested Stock Options Granted and Outstanding | The following table summarizes information related to stock options as of the dates indicated below (number of stock options and aggregate intrinsic value in thousands): Number of Stock Options Weighted Average Exercise Price per Stock Option Weighted Average Remaining Contractual Life (Years) Aggregate (1) Stock options outstanding—December 31, 2017 5,725 $ 17.00 9.77 $ 6,813 Stock options forfeited (85 ) $ 17.00 Stock options outstanding—March 31, 2018 5,640 $ 17.00 9.52 $ — Stock options vested and exercisable—December 31, 2017 5,626 $ 17.00 9.77 $ 6,695 Stock options vested and exercisable—March 31, 2018 5,541 $ 17.00 9.52 $ — ________________________________________ (1) The intrinsic value is calculated as the difference between the fair value of the stock option on March 31, 2018 and December 31, 2017 and the exercise price of the stock option. There is no intrinsic value of options outstanding and vested and exercisable as of March 31, 2018 as the closing stock price at the end of the first quarter of 2018 creates a negative intrinsic value. The number and weighted average grant date fair value for nonvested stock options granted and outstanding are as follows as of the dates indicated below (number of stock options in thousands): Number of Stock Options Weighted Average Grant Date Fair Value Nonvested stock options outstanding—December 31, 2017 99 $ 5.37 Nonvested stock options outstanding—March 31, 2018 99 $ 5.37 |
Information Related to RSUs | The following table summarizes information related to RSUs as of the dates indicated below (number of RSUs in thousands): Number of RSUs Weighted Average Grant Date Fair Value per RSU RSUs outstanding—December 31, 2017 31 $ 18.01 RSUs granted 2,343 $ 17.03 RSUs vested (186 ) $ 15.47 RSUs outstanding—March 31, 2018 2,188 $ 17.17 |
Total Equity-Based Compensation Recognized in the Consolidated Statements of Comprehensive Income | Total equity-based compensation recognized in the consolidated statements of comprehensive income is as follows for each of the periods presented (in thousands): Three Months Ended 2018 2017 Cost of revenue $ 416 $ 50 Selling, general and administrative 11,941 2,200 Total equity-based compensation expense $ 12,357 $ 2,250 |
Non-controlling Interest (Table
Non-controlling Interest (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Noncontrolling Interest [Abstract] | |
Ownership of Common Units | The ownership of the common units is summarized as follows: March 31, 2018 December 31, 2017 Units Ownership % Units Ownership % Switch, Inc.’s ownership of common units (equal to outstanding Class A common stock) 36,066,544 14.5 % 35,937,500 14.5 % Non-controlling interest holders’ ownership of common units (1) 211,874,755 85.5 % 211,675,452 85.5 % Total common units 247,941,299 100.0 % 247,612,952 100.0 % ________________________________________ (1) Common units held as of March 31, 2018 exclude 4,583,983 of unvested common unit awards and 110,225 of vested and exercisable unit options. Common units held as of December 31, 2017 exclude 4,783,286 of unvested common unit awards and 110,225 of vested and exercisable unit options. |
Net Income Per Share_Unit (Tabl
Net Income Per Share/Unit (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Net Income Per Share/Unit | The following table sets forth the calculation of basic and diluted net income per share/unit during the periods presented (in thousands, except share/unit and per share/unit data): Three Months Ended 2018 2017 Net income per share/unit: Numerator—basic: Net income attributable to Switch, Inc.—basic $ 671 $ 20,328 Numerator—diluted: Net income attributable to Switch, Inc.—basic $ 671 $ 20,328 Effect of dilutive securities: Shares of Class B common stock and Class C common stock 3,279 — Net income attributable to Switch, Inc.—diluted $ 3,950 $ 20,328 Denominator—basic: Weighted average shares/units outstanding—basic (1) 36,003,087 199,776,051 Net income per share/unit—basic $ 0.02 $ 0.10 Denominator—diluted: Weighted average shares/units outstanding—basic (1) 36,003,087 199,776,051 Weighted average effect of dilutive securities: Effect of dilutive options 90,380 129,065 Effect of unvested incentive unit awards — 5,588,156 Shares of Class B common stock and Class C common stock 216,458,738 — Weighted average shares/units outstanding—diluted (1) 252,552,205 205,493,272 Net income per share/unit—diluted $ 0.02 $ 0.10 ________________________________________ (1) Amounts for the three months ended March 31, 2018 represent shares of Class A common stock outstanding. Amounts for the three months ended March 31, 2017 represent common units outstanding. |
Potentially Dilutive Securities Excluded from the Computation of Diluted Net Income Per Share/Unit | The following table presents potentially dilutive securities excluded from the computation of diluted net income per share/unit for the periods presented because their effect would have been anti-dilutive. Three Months Ended 2018 2017 Weighted average unvested incentive unit awards — 491,450 Stock options (1) 5,639,790 — RSUs (1) 2,187,117 — ________________________________________ (1) Represents the number of instruments outstanding at the end of the period. Application of the treasury stock method would reduce this amount if they had a dilutive effect and were included in the computation of diluted net income per share. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Composition of Revenue | The Company’s revenue is comprised of the following (in thousands): Three Months Ended 2018 2017 Colocation $ 77,719 $ 71,979 Connectivity 18,218 15,857 Other 1,780 1,321 Revenue $ 97,717 $ 89,157 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Concentration Risk [Line Items] | |||
Money market funds | $ 212.2 | $ 241.4 | |
Customer Concentration Risk | Revenue | Largest Customer | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 9.00% | 9.70% | |
Customer Concentration Risk | Accounts Receivable | One Customer | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% | 10.00% |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 1,560,943 | $ 1,486,965 |
Less: accumulated depreciation and amortization | (377,778) | (353,393) |
Total property and equipment, net | 1,183,165 | 1,133,572 |
Land and land improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 152,811 | 151,286 |
Data center equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 796,244 | 763,790 |
Capitalized leased assets | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 36,076 | 35,974 |
Buildings, building improvements and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 353,258 | 338,763 |
Substation equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 4,247 | 4,247 |
Cloud computing equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,661 | 5,661 |
Fiber facilities | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 8,708 | 8,459 |
Computer equipment, furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 32,606 | 30,745 |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,647 | 1,573 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 132,238 | 110,559 |
Core network equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 32,776 | 31,472 |
Deferred installation charges | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,671 | $ 4,436 |
Property and Equipment, Net - N
Property and Equipment, Net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense | $ 24,603 | $ 20,037 | |
Accumulated amortization for capitalized leased assets | 8,700 | $ 8,300 | |
Capitalized interest | 1,000 | 588 | |
Internal use software costs capitalized | $ 681 | $ 690 |
Equity Method Investments - Nar
Equity Method Investments - Narrative (Details) | 3 Months Ended | ||
Mar. 31, 2018USD ($)investment | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||
Number of equity method investments | investment | 2 | ||
Share of net loss from equity method investment | $ 331,000 | $ 441,000 | |
SUPERNAP International | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest in equity method investment | 50.00% | ||
Carrying value of equity method investment | $ 0 | ||
Share of net loss from equity method investment | 331,000 | $ 441,000 | |
SUPERNAP International | Equity Method Investee | |||
Schedule of Equity Method Investments [Line Items] | |||
Reimbursable expenses due from equity method investment | $ 415,000 | $ 337,000 | |
Planet3, Inc. | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest in equity method investment | 45.00% |
Equity Method Investments - Sum
Equity Method Investments - Summarized Income Statement Information of the Equity Method Investment in SUPERNAP International (Details) - SUPERNAP International - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Schedule of Equity Method Investments [Line Items] | ||
Revenue | $ 195 | $ 16 |
Gross loss | (371) | (1,877) |
Net loss | $ (1,321) | $ (1,166) |
Leases (Details)
Leases (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating Leased Assets [Line Items] | ||
Rent expense related to operating leases | $ 1.9 | $ 1.7 |
Related Parties | ||
Operating Leased Assets [Line Items] | ||
Rent expense related to operating leases | $ 1.2 | $ 1.1 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | 1 Months Ended | ||
Jan. 31, 2018USD ($)MWh | Mar. 31, 2018USD ($) | Feb. 01, 2018USD ($) | |
Long-term Purchase Commitment [Line Items] | |||
Purchase commitment | $ 5,200 | $ 4,700 | |
Future power purchase commitments for the remainder of 2018 | 2,000 | ||
Future power purchase commitments for 2019 | $ 2,700 | ||
Energy | |||
Long-term Purchase Commitment [Line Items] | |||
Number of megawatts per hour required under purchase commitment | MWh | 10 | ||
Term of purchase commitment | 23 months | ||
Purchase commitment | $ 4,900 | ||
Scheduling Services | |||
Long-term Purchase Commitment [Line Items] | |||
Purchase commitment | $ 300 |
Equity-Based Compensation - Com
Equity-Based Compensation - Common Unit Award Activity (Details) - Common Unit Awards | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Number of Nonvested Common Units Outstanding | |
Outstanding (in shares) | shares | 4,783,286 |
Vested (in shares) | shares | (199,000) |
Outstanding (in shares) | shares | 4,583,983 |
Weighted Average Grant Date Fair Value per Common Unit | |
Outstanding (in dollars per share) | $ / shares | $ 11.11 |
Vested (in dollars per share) | $ / shares | 11.11 |
Outstanding (in dollars per share) | $ / shares | $ 11.11 |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Sep. 22, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 12,357 | $ 2,250 | ||
2017 Incentive Award Plan | Class A Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares reserved and available for issuance (in shares) | 25,000,000 | |||
Number of additional shares to be issued (in shares) | 17,000,000 | |||
Percent of shares outstanding for potential increase in authorized shares | 5.00% | |||
Annual increase in the aggregate number of shares reserved and available for issuance (in shares) | 7,933,534 | |||
Common Unit Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Equity-based compensation expense | $ 39,200 | |||
Weighted average equity-based compensation cost recognition period | 3 years 6 months 11 days | |||
Fair value of vested equity instruments | $ 7,100 | |||
Stock Options | 2017 Incentive Award Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average equity-based compensation cost recognition period | 2 years 6 months 4 days | |||
Equity-based compensation expense | $ 381 | |||
RSUs | 2017 Incentive Award Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted average equity-based compensation cost recognition period | 3 years 9 months | |||
Fair value of vested equity instruments | $ 2,900 | |||
Equity-based compensation expense | $ 35,200 |
Equity-Based Compensation - Inf
Equity-Based Compensation - Information Related to Stock Options (Details) - 2017 Incentive Award Plan - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Number of Stock Options | ||
Stock options outstanding (in shares) | 5,725 | |
Stock options forfeited (in shares) | (85) | |
Stock options outstanding (in shares) | 5,640 | 5,725 |
Stock options vested and exercisable (in shares) | 5,541 | 5,626 |
Weighted Average Exercise Price per Stock Option | ||
Stock options outstanding (in dollars per share) | $ 17 | |
Stock options forfeited (in dollars per share) | 17 | |
Stock options outstanding (in dollars per share) | 17 | $ 17 |
Stock options vested and exercisable (in dollars per share) | $ 17 | $ 17 |
Weighted Average Remaining Contractual Life | ||
Stock options outstanding | 9 years 6 months 7 days | 9 years 9 months 7 days |
Stock options vested and exercisable | 9 years 6 months 7 days | 9 years 9 months 7 days |
Aggregate Intrinsic Value | ||
Stock options outstanding | $ 0 | $ 6,813 |
Stock options vested and exercisable | $ 0 | $ 6,695 |
Equity-Based Compensation - Num
Equity-Based Compensation - Number and Weighted Average Grant Date Fair Value of Nonvested Stock Options Granted and Outstanding (Details) - 2017 Incentive Award Plan - $ / shares shares in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Number of Stock Options | ||
Nonvested stock options outstanding (in shares) | 99 | 99 |
Weighted Average Grant Date Fair Value | ||
Nonvested stock options outstanding (in dollars per share) | $ 5.37 | $ 5.37 |
Equity-Based Compensation - I38
Equity-Based Compensation - Information Related to RSUs (Details) - 2017 Incentive Award Plan - RSUs shares in Thousands | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Number of RSUs | |
Outstanding (in shares) | shares | 31 |
Granted (in shares) | shares | 2,343 |
Vested (in shares) | shares | (186) |
Outstanding (in shares) | shares | 2,188 |
Weighted Average Grant Date Fair Value per RSU | |
Outstanding (in dollars per share) | $ / shares | $ 18.01 |
Granted (in dollars per share) | $ / shares | 17.03 |
Vested (in dollars per share) | $ / shares | 15.47 |
Outstanding (in dollars per share) | $ / shares | $ 17.17 |
Equity-Based Compensation - Tot
Equity-Based Compensation - Total Equity-Based Compensation Recognized in the Consolidated Statements of Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Equity-based compensation expense | $ 12,357 | $ 2,250 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Equity-based compensation expense | 416 | 50 |
Selling, general and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Equity-based compensation expense | $ 11,941 | $ 2,200 |
Fair Value of Financial Infor40
Fair Value of Financial Information (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value of long-term debt | $ 601.1 | $ 599.2 |
Non-controlling Interest (Detai
Non-controlling Interest (Details) - shares | Mar. 31, 2018 | Dec. 31, 2017 |
Common Units | ||
Ownership % | ||
Unvested common unit awards (in shares) | 4,583,983 | 4,783,286 |
Unit Options | Common Unit Plan | ||
Ownership % | ||
Unit options vested and exercisable (in shares) | 110,225 | 110,225 |
Switch, Ltd. | ||
Units | ||
Switch, Inc.’s ownership of common units (equal to outstanding Class A common stock) (in shares) | 36,066,544 | 35,937,500 |
Non-controlling interest holders’ ownership of common units (in shares) | 211,874,755 | 211,675,452 |
Total common units (in shares) | 247,941,299 | 247,612,952 |
Ownership % | ||
Switch, Inc.’s ownership of common units (equal to outstanding Class A common stock) | 14.50% | 14.50% |
Non-controlling interest holders’ ownership of common units | 85.50% | 85.50% |
Net Income Per Share_Unit - Cal
Net Income Per Share/Unit - Calculation of Basic and Diluted Net Income Per Share/Unit (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Numerator—basic: | ||
Net income attributable to Switch, Inc.—basic | $ 671 | $ 20,328 |
Numerator—diluted: | ||
Net income attributable to Switch, Inc.—basic | 671 | 20,328 |
Effect of dilutive securities: | ||
Shares of Class B common stock and Class C common stock | 3,279 | 0 |
Net income attributable to Switch, Inc.—diluted | $ 3,950 | $ 20,328 |
Denominator—basic: | ||
Weighted-average shares/units outstanding-basic (in shares) | 36,003,087 | 199,776,051 |
Net income per share/unit-basic (in dollars per share) | $ 0.02 | $ 0.10 |
Weighted average effect of dilutive securities: | ||
Incremental Common Shares Attributable to Dilutive Effect of Contingently Issuable Shares | 216,458,738 | 0 |
Weighted average shares/units outstanding-diluted (in shares) | 252,552,205 | 205,493,272 |
Net income per share/unit-diluted (in dollars per share) | $ 0.02 | $ 0.10 |
Stock Options | ||
Weighted average effect of dilutive securities: | ||
Effect of dilutive securities | 90,380 | 129,065 |
Incentive Units | ||
Weighted average effect of dilutive securities: | ||
Effect of dilutive securities | 0 | 5,588,156 |
Net Income Per Share_Unit - Pot
Net Income Per Share/Unit - Potentially Dilutive Securities Excluded from the Computation of Diluted Net Income Per Share/Unit (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Incentive Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted net income per unit (in shares) | 0 | 491,450 |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted net income per unit (in shares) | 5,639,790 | 0 |
RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of diluted net income per unit (in shares) | 2,187,117 | 0 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Outside of the United States | Revenue | Geographic Concentration Risk | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 3.00% | 1.00% |
Segment Reporting - Composition
Segment Reporting - Composition of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue from External Customer [Line Items] | ||
Revenue | $ 97,717 | $ 89,157 |
Colocation | ||
Revenue from External Customer [Line Items] | ||
Revenue | 77,719 | 71,979 |
Connectivity | ||
Revenue from External Customer [Line Items] | ||
Revenue | 18,218 | 15,857 |
Other | ||
Revenue from External Customer [Line Items] | ||
Revenue | $ 1,780 | $ 1,321 |
Subsequent Events (Details)
Subsequent Events (Details) $ / shares in Units, $ in Thousands | Apr. 23, 2018USD ($) | May 31, 2018$ / shares | Apr. 30, 2018USD ($)a$ / shares | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) |
Subsequent Event [Line Items] | |||||
Payments to acquire land | $ 1,047 | $ 1,350 | |||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Area of land acquired (in acres) | a | 515.96 | ||||
Payments to acquire land | $ 15,900 | ||||
Switch, Ltd. | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Distributions made | $ 530 | ||||
Other Holders | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Distributions made | 3,200 | ||||
Switch, Ltd. | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Cash distributions to common unit holders (in shares) | $ / shares | $ 0.0147 | $ 0.0147 | |||
Distributions made | $ 3,700 | ||||
Class A Common Stock | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividends declared (in dollars per share) | $ / shares | $ 0.0147 | $ 0.0147 |