CONE - Earnings call transcript Q1 2018

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Operator

Good morning and welcome to the CyrusOne First Quarter 2018 Earnings Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Michael Schafer. ahead. go Please

Michael Schafer

Good quarter Brandon. by and to Morefield, welcome Wojtaszek, Thank earnings morning, call. first CFO. Diane and XXXX and joined Today, CyrusOne's President you, CEO; everyone, I Gary am

to which conference today's like CyrusOne would forward-looking release to cyrusone.com. are revise are available to and I website may your earnings date the SEC's call on the I begin, you Investor expectations filings with on made detailed actual you we our Factors the to of risks you and that this section first company's deal along and access tables as may that by financial We questions to quarter on except the like cause that statements obligation at from or undertake Relations subject no to website of would remind these responses remind in comments first the related SEC, law. also differ quarter cyrusone.com. our are on following required some our the Before results of to statements call the uncertainties. with with

company's addition, financial In morning contain the this measures. non-GAAP some remarks of

of over in to find of our President is call those the can CEO, GAAP website. to I Wojtaszek. measures company's the reconciliations You on the comparable to like the the turn most which release, section earnings measures posted Investors would Gary now and

Gary J. Wojtaszek

XX%. EBITDA call. board history first CyrusOne's company's leasing over earnings with and in strongest to We've the across revenue up of quarters Welcome everyone. and of quarter Howdy, Schafer. adjusted one great put Thanks, numbers the growth the

acquisition of big The soon markets. have capacity well-positioned markets all Our will in in of this presence the we Zenium sales and across the closing quarter we four and are remains is month with funnel even a largest strong our Europe's U.S. the expected with

million was of XXXX revenue adjusted up was $XXX.X shows, up of XX%. quarter $XXX.X and over EBITDA the X first of million slide As XX%

booked bookings Our totaled and colocation feet for similar. generate among and organic was revenue than megawatts Pro including $X as power $X.XX team great XX% annualized Zenium XX,XXX and of XX% fundamentals. of growth These growth Zenium, traded well last GAAP portfolio. for million FFO Normalized rates signed growth and publicly the are the reflect year. million by revenue. share to up EBITDA and compared totaling highest feet, forma, square This was colocation as megawatts by underlying our quarter strong organic X revenue REITs in leases in XX was the XXX,XXX includes in per $XX annualized will square the and $XX million over more execution

as still is that have added $X ATM $XXX million acquisition London also billion is the customers program. We approximately these to XXXX in equity facility And cities markets capital issuing the $X working our increasing in addition credit and have would capacity We Amsterdam total the more pending our increase which Zenium, additional two our during means markets total new to of well those in in quarter, of Fortune the and go, focused bank as on. of Europe. milestone, which we sites quarter Frankfurt Tesh but from active the a and feverishly in or significant megawatts. also XXXX during have process XXX in sites on size remain also by of were we the than a of very the Dublin We XX% to billion in to three Fortune now a that under XXX,

deals, XX guidance of with than quarters, of The new during deployments leasing customer average three of prior logos. million XX% deploying and towards broad-based, companies seven double across larger verticals signed with than We XXX above and the these $XX excluding the approximately kilowatts. prior skew four-quarter with X, quarter, nine by Moving bookings different the signed markets. we greater leasing more to associated And our acquisition consistent Zenium, over with our annualized was revenue spanning $XX slide quarters million. the

Our run annual revenue this as leasing We companies four faster again more to cloud our over cost our can is on implying the revenue, not and can prior represents last efficiently revenue than multi-billion-dollar the XXX% grew up is $X is and in coming their as for quarter, future deliver from XX% XX% the XX% in of billion to a the rate nearly fourth are demand revenue. them years vertical These strong than XX% quarter. leasing quarter, grew and the companies we growth more and significantly third of continue just growth the represents results, accounting a with Europe. and and for quarter business accelerating. first revenue. into in believe expanding will now to of quarters, and growing growth are cloud Chinese U.S. we of own. beyond. very account to now Google the fast, from on outsource internationally this our focused and XX% signed, than rate XX% The the the they continued report a growth Azure is companies billion cloud are into of continue business, and generating capacity XXXX data more center AWS if now their significant rate XX% convincing portion in requirements quarters and $XX faster, and Cloud particularly annualized growth companies strong is Consistent contributed their which in

centers more enterprises, we of business demand demand within X, increasingly slide for carriers, There to in interconnection and product consisting also ecosystems cross-connects quarter strong. was a high-margin fastest industry. our growing the across the networks, one strong is the XX,XXX elastic quarter develop XXXX. And denser quarter million cloud in for Turning up of data our than for providers, XX% enterprises We remained we as X,XXX first robust companies, $X.X first have the continued revenue over interconnection cloud content and interconnection of Interconnection expect largest the is SDN-enabled cross-connects. solutions. see which the as over and multi-cloud added lines portfolio, now of

have a slide to a mix X, and business domestically, floor, to while continue manner. Moving raised the of we grow in to balanced shell deploying capacity capital land prudent

our on currently inventory of trailing three funnel to We risk lease our sales have minimize fitting we quarter capital colocation or building is This to quarters for of feet consistent built two capital either out and at strategy the for track bookings. XXX,XXX square XX% Based four-quarter first with floor centers to development. leasing under have approximately velocity, another than as accounts raised out the data cover spend. of our to available late-stage more

bookings the As funnel year-over-year. more this Even are sequentially strong I last we mentioned And funnel, include we we with believe of quarter, on which quarter's at the end a not X% than does XX% record up demand. XXXX. the meet is call, and sales well-positioned this had Europe, to

give in and full under than for to million increase either over size that or will We XXX currently have have we available development X.X will square more of the us our powered grow. XX%, the the the land build-out, shell ability acres footprint Upon of feet construction. continue shell by to of U.S. another

Once you is This X, and our least have megawatts and top XX London, the the enterprise XXX step in European as all becoming XX help in Amsterdam slide and Turning megawatts acquisition us received customers of and lease reinforced Frankfurt, XXXX, acceleration available that largest priority in as our significant strategic two has us Frankfurt a as a in Zenium as them customers and larger with market been in by establishing European absorbed we for first has we closes, the know, a objective Europe global at well included in ago cloud player. platform inquiries nearly larger our hyperscale continued, The demand numerous markets. London deployments. is want will have of years the requirements to began nearly approximately demand of XX from roughly for two Dublin. in to for which the and companies

with quarter, into this to existing provided acquisition able throughout megawatts a to entered them that the as with customers who would assurances that appreciated continue earlier, first continually we of As X strong us I Zenium Zenium our with mentioned be had signing grow one they Europe.

quarter, Given bookings of we initial the sales Zenium, now half it the the is established the take. end for which expect funnel would have originally time thought our we second plan achieve to by we XX

part other presence well second strategy the our pursuing in key as London of are opportunities grow a as we numerous in the Europe, in land-and-expand markets. and European Frankfurt, as to establish Additionally,

of additional in land to capacity on Zenium power. soon We existing an expect to megawatts with for close adjacent the Frankfurt locations, XX

more also the quadruple process our megawatts. other Dublin, in than size in XXX would London, to of have European over We sites footprint Amsterdam and that

We customers the hard across these internationally. markets they to to our are as support capacity working secure grow

and jointly Moving the been six have a data we with since many than little months engaged leading the it to initiatives. more China, our on agreement of in slide as and commercial X, has center announcement been investment GDS, provider

are numerous with enterprises in well of China result and approximately hyperscale U.S. are agreement. as currently a across The companies, across the We as on deals discussions direct deals this XX as verticals.

the of the strong, of the fourth a our annualized will a is more share about slide start the the that a GDS's and in of has excited year. revenue William value I relationship, the as investors with team investment built. EBITDA has great reflect revenue, revenue, of which and value intrinsic corner in almost price have You In in XXXX. of very of quarter believe backlog growth I'm size more XX%. his their million and can and more ultimately see GDS, doubled that lower $XXX adjusted been closing, are nearly learn to right-hand off current company have They than than in a their performance we about the half that

quarters despite to of up balance of record meet of $X inventory funnel with one that plenty We with sales ended our liquidity. demand, is and really the sales, over a quarter strong sequentially billion have bookings the the history, sheet in have have our a strong U.S. highest across the X%

a of continue at and perform high well operations second do the so into half XXXX. continue really U.S. level to to Our should

to more expansion. our important the international thing think I highlight However, is

this Zenium, we market saw you yet. still of launched our is which XX% not were in quarter, have As Europe, including generated bookings, in a that about

industry $XXX Also, And from would higher the REIT that high were to market in leading center the process explained, U.S. the report. bookings properties the XXXX, our is Europe, company growth the I into last Europe, continue to any nearly XX% in can up as markets out online in slowing And the the which very XXXX. approximately XX% aggressively will I fear into a across beyond type dispels REITs or well grow develop enabling plan Hopefully, of and we bring have are business U.S. XXXX significantly quarter. the like five us this as strong you slightly performance our in Aggregate As to in we four that markets point we first of continued expect should million, we quarter. of we see quarter to other from teens center data see, beyond. and nearly had in XXXX bookings grow to the four I Internet notion the data to fourth down.

balanced putting companies that supply U.S. and up growth hyperscale and to both in growth I the this that industry will companies As cloud the tremendous internationally. CyrusOne's continue are growth quarters mix expect high There's services rates in with the parallel cloud the I to noted will of and very very any a now demand, industry our in very call guidance. rational not provide for color over and the signs Thanks. the way of who changing. and on do I turn on more update allocating and see financial is performance that a capital our I will quarter the Diane earlier,

Diane M. Morefield

morning Thanks, everyone. Gary, good and

and we well remain of really the quarter highlighted, Gary for and balance had into year XXXX. great this positioned As a

adjusted revenue, primarily to strong grew our and be our As business over XX%. FFO The driven each slide shows, growth. interconnection continues company's well as growth normalized EBITDA XX as leasing by

termination by to normalized of the connection location lease customer initial the outlook approximately additional reimbursement that term during The and do termination any fees not for related that lease of Additionally, in to CyrusOne increased primarily made we delivery the per another subsequently lease share a capital These from year. included facility. have FFO in fees our remainder expenditures a $X.XX, we the million in fees quarter, received $X deployment an with approximately for migrated for fees.

Gary churn, since in the XX% the the XXXX. XXXX. known fourth of churn non-renewing churn X% quarter and full and February mentioned, Despite expect impact some significant leases X% quarter of of to quarter to over the results this be for quarterly XXXX Churn revenue the will remaining As year organic growth, January in the we excluding assets related from in that on first unusually range be to occurring was these mainly the X.X%, fees Sentinel quarters. lowest low was contribution the still the based

increased while Turning commensurate XX, grew NOI million in $X without was increase The XX% the share in the points driven in term per to driven by FFO lease and a to revenue. slide XX%. up revenue percentage growth XX% quarter, fees. X.X FFO first largely grew normalized the margin XX.X%, adjusted overhead by in EBITDA growth Normalized primarily

slide quarter. the arrive was with As at adjustments the an as Please normalized item FFO of fourth in impact in the disclosure. in separate the the provides the note our bottom shows, the XX by slightly at of now line in normalized impact AFFO overview that revenue portfolio first line straight the to market. line net the of to net we supplemental chart to rent adjustments FFO in adjustments quarter, negative and include the Slide deferred

footprint last meet year have significantly our the seeing we markets. grown across the over our demand We are to

the stabilized the geographically that of Our as with for the prior of be same as into period. shows is year XX%, diversified table The Europe. our quarter the further portfolio expansion end was balanced properties leased in the very will and CSF on right

While period. over leased underlying XX% it CSF strong points percentage that increased the total year-over-year, X CSF declined considering still reflects by demand, same capacity

of end our XXX,XXX and leased deliver power X of funnel with will up footage quarter. This percentage conversion even CSF first megawatts feet Antonio that projects summarizes includes development more to online. capacity. coming sequential square Slide of total of colocation leases XX reflects raised Approximately San XX,XXX Additionally, square our Virginia, than the in which floor XX% of points pipeline compared the XXXX the is into quarter signed the increase Phoenix is XX feet quarter, in late-stage Dallas, Northern of as square the pre-leased. and of a colocation fourth

XX% nearly the upon have XXX,XXX completion the a from capacity, increased will funnels. portfolio another million to up is quarters record in our As positions best of late-stage the have ago us combined with will even Gary available projects funnel the compared from to mentioned, floor. with well than pipeline, company's a sales in raised has to the XX% year feet This properties the build-out. our development And capacity the add of history, Upon more X.X Zenium square square year feet portfolio the we size of the sales one of leasing that a to already ago. more demand out, meet than that been built full

and loan over and term previously six-month Moving a period a to our billion facility a March, $X.X which and loan term feature, in consist million closed The international of support million commitments the $XXX we $X includes sublimit announced, loan. million credit draw totaling credit of to includes $XXX to The term expansion billion borrowing us $X revolving loan, term facility, slide late commitments $XXX allowing plans. which multi-currency next facility billion XX, seven-year delayed a as billion. new draw a five-year $X.X domestic consists new we

by revolver rate and margins decreased on term points. We loans XX basis the five-year interest the also

to in in future. to the contains term billion $X an additional that Additionally, allows commitments or agreement up the loan obtain revolving us accordion credit

of see approximately average this the slide, you weighted new our bottom As facility years. the remaining debt extended term can to on X.X

We our have very maturity no debt is and debt schedule maturities until thereafter. XXXX, balanced

unencumbered times, of XX, we strong really over This objectives We years. capital slide of at the and strategic gives substantial very a maintain liquidity available leverage quarter and fund to of a Turning balance conservative gross and X.X coming a with opportunities financial our fully a with the approximately to growth book structure. value continue $X.X base flexibility billion, billion ended quarter-end. asset achieve sheet $X.X to us

million value. program shareholders' We and our total market equity through a also represents our during cap basis, equity raised approximately XX% of the aftermarket on $XXX quarter, enterprise

to currently through issue mix Our XX. outlook interest weighted is one rating me slides debt roughly is into level recently rate fixed XX CyrusOne at fixed at which credit floating positive, more leads our to quarter-end. fixed floating stable to S&P from its on below investment-grade, rated notch XX%-XX% and upgraded

is issuer, strategic These know, capital. size rated metrics. our to compare top most of across investment-grade become cost both a and imperatives how REITs and investment-grade you show our our already access will enhance As of lower we with financial various to significantly of already similar will of overall one which slides an and financial

within leverage, see, can have the you the As ratio. the growth, EBITDA payout group, and second-lowest highest this second-lowest we

meet frequent the rating is what, continue we an a view, basis time, investment-grade speak will and profile. on to that the and already with over credit currently agencies reflect in our We believe ratings

slide the in previous the first million, revenue strong during as to of from leasing the quarter Turning quarter. $XX XX, quarter, end our reflecting nearly of the doubling the size backlog was

couple of the will of chart, of forma it anticipate once On business of the on to quarter de-leverage our commence as leverage first basis, over we will approximately the most this reduce further The new revenue bottom commences. times. from would quarters. EBITDA it contribution pro shown the As revenue the X.X a end expected next this

XX, to for guidance XXXX. reaffirming are we our Moving slide

with termination expansion. for begin results higher you Therefore, look lease we with point and at on further your not year. balance we opportunities of we international fees the in comfortable earlier much the noted In open all the As of ranges are Operator, call, guidance remain we we ahead for the closing, for the this projected and questions. we Thank us, any are year. our quarter, participating happy very pleased churn take our in as comments, to please to my the questions. and do for now forward anticipate our line particularly our have

Operator

you. Thank

the We question-and-answer will begin now session.

Our with ahead. Please Frank from go Louthan comes first Raymond James. question

Frank Garreth Louthan

there, Can you color if on are so of and bit little and Thanks. identified Great. Amsterdam kind more already Give color us so Thank a forth? on you. where little that. you a projects, us Ireland of land acquired far and give you

Gary J. Wojtaszek

Yeah. Hey, Frank.

So under we have Amsterdam, two in those both once we've just we're then the final got the of properties markets, we Dublin control as and and in expecting on terms couple on We're okay would on trying able close – through of those deliver get those part capacity next that of one from sites. we so the we'll authorities permitting and we're process close next in that going to the what and of that in on that local year. to deliver months, be

Frank Garreth Louthan

sizeable how to see you markets those that with you mean, enter looking in? are of And in are fitting and where capacity, terms those? what I

Gary J. Wojtaszek

estimating we're markets. each we're that XX to those those, over going of Each a to of be in able megawatts little deliver

Frank Garreth Louthan

Thank much. Great. Okay. you very

Gary J. Wojtaszek

Yeah.

Operator

with go question Our Guggenheim. comes from ahead. Robert next Gutman Please

Robert Gutman

the questions. Hi. for Thanks taking

clarify churn? related lease leasing and – termination I you related So was if is could the that fee, to in how fee reported reflected the termination to wondering the

Diane M. Morefield

migration. not was churn a because actually it It's Sure. in

we we data out termination the out were So costs that did and of lease center significant when in our a the covered because moving had special a to they the to customer require of, had some fee order took churn space the CapEx we migrated portfolio. for cover different But incurred. they customer center that originally didn't in they

it migration. is in not in nor number So straight because bookings the it the it's was new a churn

Robert Gutman

Thanks.

Diane M. Morefield

a It was our reimbursement, really, CapEx. just for

Robert Gutman

Thanks. it. Got

one with Zenium you'd expectations? – additional guidance leased close, So X impact think been megawatts prior follow-up, your I the does upon with the to around... that on

Gary J. Wojtaszek

Yeah.

Robert Gutman

a $XX for next million-ish million ...$XX EBITDA year? and of

Gary J. Wojtaszek

this we what year, we're mean, certain is of where Rob, basically did, that. going have bookings Yeah. we're that does the impact, level to it we are – that completing underwriting I we said a

of half do this we a underwriting the We year, we expect by the we'd will that had completed assumed full year. have in second

the year's is progressing basically it's going really so business not to yet. impact next The that So, times really going number are be same, well. to start

half and sales be second we However, well this drive more have to year we're still we of really doing the there. to expect going

Diane M. Morefield

on obviously, we is – it guidance formas pro a owned reported second Zenium would is built what the Zenium closing if what we was our we quarter, in still anticipated the same into in for originally it's we did, built actually think on quarter, in we have we the track. that they yeah, which still And, first because but, and

Gary J. Wojtaszek

right. That's

Robert Gutman

Thanks. Great.

Operator

go next question Choe JPMorgan. comes Our with Richard Please from ahead.

Richard Y. Choe

Great. Thank you.

the it in the on should a In driving we what's us can of And quarter, then you first year? we low should worried given And terms color about? it? bit through was of kind think it how I churn, the something give little about how be have this one follow-up. more Is

Diane M. Morefield

that's not Sure. it very quarter the was in Yeah. and Again, first sustainable. low

As are M&A, we on year, And of what couple leases know for we other a the variety look we a big leases know we reasons. churning this reasons, that out are have renewing. year,

year, in So, churn where anticipate, X% to the X% that's why be. is to a the we full

see to going X.X%. next over go churn quarters numbers three the the the that, significantly you're So, from up

Gary J. Wojtaszek

in line right with... But

Richard Y. Choe

Yeah.

Gary J. Wojtaszek

to ...X% X%....

Diane M. Morefield

total. X% to X%,

Gary J. Wojtaszek

for we've so.... a been or modeling ...that year

Diane M. Morefield

right. Correct,

Gary J. Wojtaszek

get mean, read than... variations more ...I through you of but I that wouldn't anything it, quarter-to-quarter

Diane M. Morefield

Right.

Gary J. Wojtaszek

...just the seasonality or the quarter-to-quarter changes.

Richard Y. Choe

think this is kind of bookings change there's that And is this terms is terms result, of seeing more player? player, how terms view the international being or are this different existing of global an this business or of then in international you more in in viewed a strength just CyrusOne you're or do of execution just the of because you a of

Gary J. Wojtaszek

Yeah.

a mean, it's I So, good question.

players, putting really lot million to think, up big just of numbers. a of So business, are very over which, big our and for $XX competitors U.S. I favorably relative $XX the little is we're that, that competitive given a global compares the million landscape

of booking trailing And above roughly punch that continue we that's weight. our revenue. to our did that the So, months we XX% XX with quarter, well

think the reach-through that performing perspective, from that So, I level. – a high on an this really at company organic – is be that's everyone should

I in what bookings first the reflecting the quarter of lower quarter we some this fourth fourth in quarter. see of that that think into you the is in really had fell

some spite in that there. a that of But So, quarter said, a on of in that we sitting actually for sequentially. has booking there's increased funnel us, record are X%

feel So, and going about good the we really, quarter quarter. bookings into third really to second go the are where

So we feel really did good about what we're XXXX going to be what versus able XXXX. to do we in in

put the that quarter, Just bookings perspective, bookings the in about XXXX. in this XX% roughly all was to did exclusive of it Zenium, of we of

funnel, So ahead of we've we've us, and close and course as quarters to the I a we big over big a really head year. of the that we're opportunities number got going those got more expect of really three

Zenium fully we're to our more basically work had more develop going expect those that really us second going portfolio XXXX do acquisition, the customers, So in what as in in comments, organically terms up and, growing we've because is the country export about business, success I convincing them us with in Europe. same and we set XXXX. really talking feel good more this the XXXX was I to and XXXX half to And think importantly, in our about attacking of well into my we I of

we second into really So of XXXX. feel excited half and XXXX about

Richard Y. Choe

you. Thank Great.

Operator

Please Stanley. Morgan with ahead. Flannery Simon from comes go question next Our

Simon Flannery

does those just supply a like fair about and you your in obviously the share Good the than of large It deals. bookings, And Can getting coming the it a talk deals? quarter. to win in the Gary, Thanks a IRRs look back great to more great looks this you're coming terms how new on morning. competitive continuing – you're lot. environment? of Thanks. all

Gary J. Wojtaszek

mean, is fourth I organization center play from in $XXX collectively, get I bookings, XX% quarter that doing and relative punching well spite day, mean, Look, industry Yeah. and did we think XX% that to point, I up well. really all of year is a though, right? data I competitive. and to the which broader to a it's in It's the doing us our work really is win, But million ago. size, weight from the our very above the every REITs of fun

And that, new of proportion quarters, the I strong my quarters. record all and really, about because the competitors was pretty ever just put as put good, strongest With two everyone that the had think how the of out blown the indication a supply really ours is regard while strong had. is type So concerns seeing up I it they've to mean we're quarters to participants seen me completely really returns, and out wasn't just and strongest think good that doing. that's all of industry we've I of returns we've similar historically. really

continue really to deals bigger And out. cost this these we we've the in of that type some that they're done I point that design think goes XX% to quarter, the high returns and

But see in delivering, chain. looked that putting that you'll at focusing pieces a supply associated assets always focus against by lower we're on lower the seen from of pricing it we because returns down out design this that a two historically, continue at our your thing lower but to is that if you average you've was price, you differential a also quarter, our the that if big those portion So it of you'll look pricing mix. amount you saw we commensurate see on we're we're of results the continually what how on other and costs expense you work of do our have aggregate and and solution; things: capital your doing customers is then one, with to can with

continue and the in each this Dallas week to out of here of We time. had just continue do And so a meeting all design. drive we going our to last cost big iteration we're to

Simon Flannery

Great. Thank you.

Operator

from go Company. next and Cowen ahead. Colby question Synesael Our comes with Please

Colby Synesael

imply may. raised, ATM. you I seeing I be San what you remind quarter, in $XXX does to of quarter, capacity least some you're Great. levels, suggested million stock was your say? what's and do hoping market quarter like does available weak, did. looked the does that in about as impression land do. something that the on specifically? you'll Two Antonio stock to Thank was What that you what imply your is? the – and Thank traction obviously stock talk mean, to the utilize your how in It last you these about One, I you almost questions, about own what's then this had I at you. continue remember, secondly, what you. ATM if leasing I likelihood might then you the you you that took feel probably that you you but If and thought looking at regardless where weren't about the us that mentioned, that And good and going

Gary J. Wojtaszek

Yeah. a I'll front Diane bit sheet general, don't us satisfy, of to on little think be in takeaway and in at are capital I comment a risk. the that just the going But to we that require should put to balance lot good can have more additional – ATM. our Sure. opportunities of we want

across strength in actually markets and our of I our that San it's in sure It we and in very the on bring think that always aggregate perspective quarter we're one needs. CyrusOne behind to a capital the this fund doing know going mean, a we've we our sheet terms reflection great in goodness, of right? portfolio. been that market, can to really we second probably pretty transaction that it's Zenium Texas. substantial the thoughtful And State just And making been has have So, Antonio, balance regard largest provide color the capital to on well Diane was it's on closing and more amount commitment. Virginia. going in that's from of going bookings With require the can I be of in that. short to strongest of the market order what's all

Operator

question Luebchow next Our Eric go Wells comes ahead. from Fargo. Please with

Eric Luebchow

Hi. Thanks the question. for taking

curious potential Just if maybe you're and there the you tracking if Atlanta in sales can update Quincy, funnel an how the of kind and anchor looks? in deals on tenant provide landholdings any

Gary J. Wojtaszek

Hey. Yeah.

hard those commitment from up in XX taking Quincy talking like We we customers. but before, Atlanta. standing at a acres we get And, looking have in mentioned customers to those we're XX anything until about as down we're not acres and

Eric Luebchow

And signed which expect time. this of Got leases, kind just powered convert some you. your one turnkey Thanks. competitors quarter a they to a then, to shell of more, couple over

shell if increased willing available pursue of given would and something the portfolio? that be powered Just those demand seeing types currently all you're you your for any to in solutions have you'd curious be

Gary J. Wojtaszek

Yeah. to make where real returns mean, depending on significantly doing of estate valuable building, It's all wouldn't market on capacity I depending complete we're up a kind of inventory, will interested on and better right? of dependent, available tying a I and really terms we're if mean, tight. a we on a in give – where all we're well, in running the not fit-outs doing want market in lot mix, up a customer, lot go depending right? on into that the the

to that's get just we if like an easy So doing a it's bigger something because have way consider that definitely Atlanta nothing you market mentioned the the that's in. that and and would currently, like ones Quincy, we there

inventory what how it's want available think they dependent So the all and about customer, our on that. we and

Eric Luebchow

Okay. Great. the for question. Thanks

Operator

with in key Credit some for centers? on some - go XQ just Suisse. question the ahead. Badri Securities good Please Sami to customer bookings XQ spending the for general of so Sami Suisse I and was Our the comes other you and strength Thank next wanted reform passed end from being Credit get at tax Was color XXXX dynamic (USA) for Badri LLC the XXXX. signings questions. data why factor CyrusOne of a XXXX

Gary J. Wojtaszek

first think – what – really commentary was in it's business, think I just in I you here fourth look, right. natural are the the the just everyone's from the gyrations these of and No, quarter quarter heard

year number, would That ago. being is a up for expectations, lot think I stronger bookings you right? In have what were this seen that. fourth liked out think have a in ourselves, a point that and I saw quarter, group including just quarter just XX% would bookings to of quarter like kind everyone aggregate, fourth this make-up of a said, I from in what is the the for is

of organic quarter growth for year indication XX%. the really a versus and bookings that's group strong ago was So the that good underlying up a this same

to tremendous should as $X cloud industry market doing it's continues only and spend up mean, Amazon, share the well, I continuing up XX% numbers to to that Facebook, do do maybe of to the is to everyone. this business trillion well develop. should get mean, be entire a I market well, Microsoft, cloud – going putting XX% share. continue are that's not and whether Oracle, to up about phenomenally Everyone surprise all guys Google. to So, these it's is and a

beginning or is least transformation take to the five completed. in are years that cloud at a of we stages going be to six So

- happening. So instead investing like or CyrusOne Then, Sami consider further exposure into consider of into LLC hyperscale follow-on ever about feel investment Suisse maybe hyperscalers more Securities specifically question for U.S., what's other China specifically deals (USA) GDS? from Badri would on Got in GDS. it. Chinese regards we Would to my relying is coming in a GDS get strong APAC really the to you Credit

Gary J. Wojtaszek

a important But seamlessly on for is the about more to No, on together level jointly. talking sales that the we to and we've as we've has I have everyone impressive. mean, companies been side customers we systems chain call. cooperation really working the accelerate mean, that, on I marketing forth. back publicly, we both and of more BMS beyond working together that which build, I ongoing working on push appropriate been they follow-on, we've want work the supply mean, probably on been and not much work between stuff been so work but got We've commonizations, how and how we build. streams this

really number that be and a going Chinese closing expect in to we're in of cloud large companies here Europe. We

going well. is that really relationship And so

don't is they're out and the go business, continue a all I and I relationship with really So partner to rate the really in business, going fantastic was to a clearly they're of good we China, wanted growing I what value think we well. think GDS relationship, that the the industry. so But And got and a strategic phenomenal at that think in recognizes world. to do inherent in fastest that eventually around we're hoping fully anyone

on help intention them, to for burn no make in Got basis. Sami So maybe have more bigger But we any we Securities Badri the joint together time Asia a - we'll Suisse them but LLC Credit (USA) more capital things do do you. to in want successful. being, it. Thank

Operator

Deutsche Vincent with go next Our from question comes Bank. Chao Please ahead.

Vincent Chao

Hey. morning, everyone. Good

question. was CapEx. million CapEx quick $XXX U.S. success-based quarter, a about Last talked about how it slated plan we of Just and for the

in given earmarked how of booking signings? been quarter, here the curious, has that $XXX the million first big Just much quarter based on now

Diane M. Morefield

we the quarter Well, million. in first Yeah. actually had million $XXX $XXX about spent of the

pretty roughly much track with we're the been quarter. XX% line So, in $XXX that, spent the million that's in if of you first

overall is guidance. number a that think good still we our So, number in

Vincent Chao

Okay.

So, I more were signed, that spend? XX% of is remaining the of guess, that in there bookings included the

Diane M. Morefield

in we when building Again, the guided $XXX the match markets, the the million out year into in the like markets the $XXX U.S. of end are that why of what which capacity looked no. funnel Well, we at going which and that for spend, we our CapEx million. is knew and full quarter various sales

with line bookings quarter. in and funnel the our sales for all it's So, the

Gary J. Wojtaszek

to year, XXXX in into we more Vin, going way, in – XX%, we on have expecting we're were than XXXX. deliver heading in this that in say, planning it XX% look, more roughly this to doing that are and planning bookings of Think Yeah. bookings, on

XX%. strong XX%. XXXX, well a the really was So, quarter in It more had like here we above

really So, good. we're feeling

was that like So, think what XXXX. of kind objective de-risking for as our about

you should that, then funnel thing is that other I'm mentioning is point our consider just the in as The strong.

like that have to So, bringing for on we capital this, capacity. should build be another expect blowout more to going quarter then we're out that if you

Vincent Chao

on some sounds to provide And going of churn events – current curious know rate. some just about then, the of nature are mentioned there's people bankruptcy curious think if situation the was that. a consolidation that out of sense or M&A moving anything or if I'm just are the that. Thanks reason. pick And can it or like you give for are the happen, you up you level others timing Okay. like a churn that that if you to going color from that us one there's are I just churn? could

Gary J. Wojtaszek

M&A; other are the was as their one One, at costs. back doing Diane businesses not well No. particularly their cutting looking and mentioned, they the like

center reducing they're So data globally. footprint their

Vincent Chao

Okay. And it yeah, for Thanks. that's me. –

Diane M. Morefield

Thanks.

Operator

from Breen James William with next question Our Blair. comes ahead. Please go

Jim D. Breen

how a couple investment any to guys, grade as and absolute just for year? get comps borrowing sort you change this looked you credit cost more the of could if with at your up, investment put grade Probably slides potentially to at the of your on some Thanks. to Thanks. rating of point Diane, the you sheet basis were thoughts an upgraded some

Diane M. Morefield

not probably you the cost in versus we rating investment have balance Well, within high into yeah. continuing other built communications that than open control to is But guidance not And on because the it's XXX grade can have not points, if of basis and minimal interests market more, to the yield. bond in getting agencies. our sheet the investment that prudently grade when market, issue manage with

get REITs down see on. multiples have investment higher Our goes investment once typically facility their grade stock to grid you that credit have pricing that grade. trades we our And for ratings

the the market. cycle. course, advantage get in of across investment you think down never Bond and, shuts board I the market kind grade the market any of market, So, high-grade capital

And we're our another rating that's at our investment advantage. slides those again, the think agencies I that point look metrics on We're to there if these REITs, there. all you So metrics grade already on use. compared is the

conservative sheet that but don't a those eventually. ratings, have control would when continuing to So again control do balance we us we get get we to there

Jim D. Breen

go – then ahead. And Great.

Gary J. Wojtaszek

that's we want what particularly trying is just of why in going It's we're the that And back, because head million we saw for I make building as business run. in balance – to mean light really brought us built do sure have Europe, sheet a strong And we we're that on in $XXX we another that. long you maybe a into the to ATM. really

And sheet. short leveraging so we want terms just don't sighted of kind of our in be to balance up

And for to that. prudent issue tracking, in lot We it's we while not want do to the we be thing it's capital. prices thing to do currently it's is long-term, right it's because the the we think be Given that. the eventually think that undervalued, we're more do greatest in to require that and where the at will to going rewarded a equity funnel it significantly

Diane M. Morefield

on to in equity I the look our is EBITDA. and equity, return at mid-XX% our equates even return share if at mid-teens yield range the what these the assuming in And that on prices, Yeah. probably

million that for and to it was but returns equity a lot out on particularly again, company the dribbled equity. we It for of REITs. was phenomenal sheet point, are $XXX our So Gary's that manage any not helped balance that

Jim D. Breen

Great. could the and I saw that Was for ground in finished of they of in guys your And contribute quarter. you what Zenium, and that second data just they XXXX? center expect then in third Frankfurt, Thanks. in sort they sort break on to the expectations to fourth the

Gary J. Wojtaszek

Yes.

Diane M. Morefield

On XXXX?

Jim D. Breen

Yeah.

Gary J. Wojtaszek

Yeah.

Jim D. Breen

Great. Thank you.

Operator

next Our Please go with Barclays. question from Rozwadowski comes Amir ahead.

Amir Rozwadowski

Thanks very morning, and much, good folks.

Gary J. Wojtaszek

Roz. Hey,

Amir Rozwadowski

you're doesn't pipeline any at moment. It Diane, seem seeing you a using up, the follow see Just of going on sort the to out healthy actually of business potential ruling you're funding comments for wanted continue to on if like requirements. forward equity that

Diane M. Morefield

really sitting we're but we balance of issue. go sheet on transparent We're the over liquidity. $X.X is X time that we're think times I range, in from X managing an times to will billion time. Again, clearly the Liquidity not

for shape. good and CapEx, Zenium in really funding we're So

know we're we that, because on issue and that say any just – – So pieces, other equity we give to liquidity. have more our time the you I than ever to don't any soon of don't requirement

Gary J. Wojtaszek

land, additional nice of how would forecast through showed walked share investments. additional we without bridge, in that would categories, going of that just dilutions. was that to business quarter, we be these just any but Maybe acquisition, we And and terms be of what bringing diluted Yeah. clear, probably that, it's I be were in series showed additional or existing we clear wasn't those each they leverage-neutral that be Roz, our each on would investments XXXX underlying five done that were capacity. so leverage – mean, a basis our There per ratio, EPS making. implying a those equity then in terms assumptions, FFO those the we've that's Zenium folks, assumed associated investments be our to it investments we done think, the by to we've of four at provided made, on on And, I and of like additional like these of with we're different last a

the was that So, underlying assumption.

the So, clear, amount if a and that that look guidance. for that you get wasn't at maybe of assumed you some take in sense should we equity had that

Amir Rozwadowski

expand sort then, to I you stickiness talk gears of of the XXXX, that we're interconnection talking software-defined you in opportunity set or on ability of connect helpful, further us that? discussions of clearly, the seems on really, been about And the average cross had right you about if that's to of lot to type sort growth. in opportunity ability industry the an side, mentioned general. or the had if But now. three and your the seeing That's Because would of for drive that guys hear risen go we thoughts continue to about to switch pretty and and love Can No. could levels very to in sort activity XX for a Gary. sort of to the back that is it strong growth whether on change not like there's you that

Gary J. Wojtaszek

of the our of in are business increase centers. it's that in XX% couple has revenue terms is XXX%, cloud we're last data enabling thing the connects and amount model to of It's number other the increased And to up enterprise of year really seeing the with particularly doing Yeah. average I cross a interesting networks, that is XXX% SDN last the strong. by and mean, the of basis, that over in We've Megaport, in them. exploding. fivefold connect on years. the companies per lot That it's a via really customer, seen we're customers

getting the to really beneficiaries customers and and team that offering, marketing up a one Vince at of Megaport done the job signed that. fantastic program So, that of kind and have more more of we're and

so company. think you our traditional us, business as grow, that continues expect interconnection your we're to about We not if

be are really us our We number of as campuses are companies scale of size, really all change grow nodes, topology going as all to more to opportunity more we're relationship that bigger outsource cloud how we over there one campuses that massive cloud companies to just deploying the However, just network build to a fundamentally and as we providing that that, the time of on think sell companies. the and the more well the as an cross-connects. world, have customers beneficiaries given across that believe of cloud our the hyperscale the and more going strong the of with and is

Amir Rozwadowski

and folks more with last – my highlighted, or outsource the Any point and as of insourcing that really has of to you, cloud folks the question some That's lot very helpful. opportunity this outsourcing suggest then from more for preference And continue obviously, more available. nothing a their needs, a that versus changed end, there's change perspective? at in conversation from those

Gary J. Wojtaszek

how you depends it guess I Well, it. look No. at

then cloud. being everything, facilities our going a their basically So right? that on to the with manner own on in of that on we they outsource outsourced some portion to helping over kit that will a companies of There's manage IT continue bigger stuff they be do and to migrated are their focusing

these they're really longer-term, basis typically to with or going will facilities for eventually a we going the this multi-source their manage be next everything majority So cloud. think deal with years, providers. is do But there that a road, cloud substitute enterprises that look move the strategy, doing then far a of compute proportion the are you mean, down enterprises complement big dual we in our I to own model where to of on several their and vast the all source all cloud if mean, of I hybrid

Amir Rozwadowski

Thanks for very much the incremental color.

Gary J. Wojtaszek

Sure.

Operator

Petersen with go Please comes question Our Jefferies. from next ahead. Jon

Jonathan M. Petersen

Great. Thank you.

in the So mentioned low high past, pricing to that does is two maybe deals. deals the you've of on XX% compare to return or ago done it the of this and How one you three in up years terms relative you brought of kind quarter the end earlier getting? still the – was those were returns on

Gary J. Wojtaszek

process two XXX lowering build rolling further. where years Yeah. out of down also we're points our the are another but about these expect It's that new design, in we ago, cost at looking – to we're from

And little. so maybe yield, that able be we expect that up to going to we're go a maintain

I are I in increases in one in say some is the However, we tight to commodity definitely costs. and thing mean prices. would see an markets, saw some costs labor starting getting increase the we are

are underlying costs the up. so And going some of

And so cost all to in out at we the bottom the us really have on that allowing we right contribute that's same looking now, to basically we're our while initiatives to focus would line, position. expected stay

cost the increases were labor of commodities some to covering as a we increases we're stay making reductions been and in So or the with ago. price we've those that cost engineering just at year same point

Jonathan M. Petersen

share per share kind about kind think if clearly of Okay. I the of the do the difference, to more That's growth, make in you volume getting your going terms growth kind are got same leasing of to up in helpful. think, yields per guess, of in FFO to And, I I to past. terms that deals compressing require of you've

I in wasn't yields. or capital your of next kind that whether Vin's to company up compressing about think that's and you the whether spread keep of of sure just how you'll in maybe XX% with earlier, factors question to to year. growing I talked more do leasing base between have the an also kind answer the cost of

Gary J. Wojtaszek

every No. always set I we objectives ourselves. bigger for year, mean, out

kind it, do into more, larger, we're I always that think assumed with a to becomes of some the to handful additional should have looking expect customers, be And I So if be able company the should you sell right, customers scales markets always you with mean, at if I about two one as driving of right? more. and business. able we've I market one then to and facility expanded in just

part to teams year as do of that. drive And the more sales every so we

the we're pegging always we that so get our expect is not per business of things underlying – in, an able and you logo, that if tail that the we're logo that leading the what NPV one. historically business the value much of the the new I've And of growth we perspective more. day that share XX% that is rates one for important new be a have the but are, most that – this indicator the from you on fully is operating that do it's to said So is us should of of don't that in driving

So last year record was what new portfolio. had we number our of a you additions saw to

we quarter, This XX those companies. over And added new new XXX is well Fortune grow companies as we've three what XX% at historically as that seen typically CAGR. logos

So would we more assuming they next us will signed expect new we that past year. this year I up that that mining nothing, from those sold be customers

Europe, it. baked number And going And into that's accelerate why get can into always the we just done we sell to think that once it's plans, opportunities that's and of we've so we to we customers our that that in. how really

and a been amount did, And at mean, great there built so Zenium short in Franek when I Zenium a franchise look has we fantastic time. has a what like company, of

be that into we're done to going that book he's customers U.S. we're selling in the of expect X,XXX faster what able We because a going have huge amount of business be and much replicate a Europe. we time to in to

think really China, we're works and with team into you now well the more the to China. this be that if And like opportunity with all in get successful business of so GDS because William customers – our so partnering there. And working to going and driving we're and is why would we're into

capabilities, because we we should couple you to the as be last significantly as scale need kind portfolio, more great just a the over be our to a think have extent if sales we marketing many able of add costs So we're which currently should just engine, of more, not going and got like to larger as able sell distribution to we CyrusOne better about salespeople operating years. and to have –

Jonathan M. Petersen

you guys kind give maybe deals, Can U.S. That's or if that's quick there's the said helpful. both on the China any weighted guess, I XX China? us towards guess, question U.S. you slide of indication I one X, sides and of, on really And on ocean. more more just towards between GDS,

Gary J. Wojtaszek

quarter's quarter, Ws us on the But and half. It's about you our in this half second put should earnings board. call, hopefully to some expect

Jonathan M. Petersen

Thank you. Great.

Operator

go with Markets. Capital Please Atkin ahead. comes from RBC Our next Jonathan question

Jonathan Atkin

Yeah.

question on a the Ws related I maybe putting So to had that. board,

market a for in like such what your technical some deploy are further turnaround optimized that of So speed in into terms peers of to develop of seeing in this seeing are as Virginia, capacity? turning or in And time you improvement at fairly pretty you are are space seems quickly. you terms point? new It the room well to land

Gary J. Wojtaszek

Jonathan. companies faster, develop be can in that players, right? chain, like in – I looking C really day, here. manufacturing the for I we've – We good mean, world-class to Motors can it's cars I a right? always the just General mean, got done we're job while we're go can think on supply X,XXX think a objective I still that That's

So, we to quick and deliver more at while a and that. fast lot there's cost do opportunities time and we're focused market, can low more we've to been pretty always on

Jonathan Atkin

Okay. into, if would say, And non-Zenium Europe, requirements take head some markets? head into in you size count you to then do just markets or standpoint, of a that kind from the other count were Amsterdam how expand we

Gary J. Wojtaszek

be of we're I distribution sales vast the emanate majority been all really to dominantly that that scales of we're because about all U.S., all and sales investments It think anticipating so mean, of the in out right? – you U.S. right, and to going the are the made have marketing if going Europe well, the of in doing the

I sales folks a Europe, Zenium at in dozen supplement folks there's of currently. it's we But, sales staffing folks or couple folks be going will And really a those so add but the a to to pretty up sales once minimis. customers looking We we're they're you're of size be I I so at online stand say, country, efficiently. be deliver right per two you de one deals substantial, that those think about that of away. to facilities think, so contributing, bring the we going able once we talking and expect and to mean, are we'll online, facility bring or pretty them

Diane M. Morefield

a... from just And Yeah.

Jonathan Atkin

All right.

Diane M. Morefield

our revenue to ...SG&A obviously, on capital our the near the grow, standpoint, shouldn't significantly need grow the percent pretty we continue And to of revenue our corporate financing don't see markets, as as going really anywhere centralize because continues will to growth. trajectory all so we expand will and to the handle group a here. centrally above revenue, you're that office, down come margin,

Jonathan Atkin

And renewals, comment from cash that on and renewed, in Okay. you you so can rolled spreads gap nuts-and-bolts a standpoint on just then got that saw? leases

Gary J. Wojtaszek

the over same that much them pretty down. Jonathan. the more like-for-like, you, you've historically, goes Yeah. to as It though, buy It's giving they seen for that – depends pricing years, you're it's and roughly same. a on we've What from seen the the expand is customers

to because extent is see what amount you they're taking. to that over into bigger of commensurate give the them. degradation with develop willing discounts time to and move relationship that And further they other a pricing capacity trying the continued facilities, you're space do them price with you're so And

is is of we're give now know you're the us getting business that thing it these customers because of into some too, on enabling with price the looking amount at, parts other like of making reductions in other parts cross-connects we're to business. The of up we that the

the other launched now, up XX% it's customers. scenes The charging going zero is first like charge of our that behind thing we're when is from the that. of that's X% in think, That power we admin business, on amount I

our of scenes price the So now is other and now. thing And aggregate that's going on. escalators the portfolio portfolio the part is around our behind then of XX%

other going in price-per-foot So services. are charging there's mean or on for price-per-kilowatt related charging several different pricing. things We're intentional, I right? not price inflators do to we're but a previously. for bunch type of we that the that's background directly didn't And

Jonathan Atkin

of and is demand finally, is bigger or what logos wondered mix to more that the compared of just then the greater deals levels, different. would is talked it late-stage being numbers deals at seen elevated Or funnel, of any kind you And past? you've it characterize I sales that in about from it

Gary J. Wojtaszek

CapEx how kind hit I working and it's we billions really if capacity that, large XX%, this. really of think is about just out of you talked of the I bookings that right? of growing mean quarter right, We're on you logo capacity. deals bookings line those meet everyone new in customers well. job, billions ever remarks, of struggling I my getting right? fourth each this quarter I they one and continued mean, growth is had as of the mean, really at their dollars seeing both, see back-solve for with new we mean a We are enormous, these megawatts of demand, are as guys all prepared us. and for are was peers size of Azure all deliver doing logo strong as trying a my to great us required well the helping quarter spending And of then type those that many like I rate, as to with – are the that really strongest in

both business. in we're So seeing our

Jonathan Atkin

Thank much. you very

Gary J. Wojtaszek

Yeah. Thanks.

Operator

go Deo comes question next with Del Nick ahead. MoffettNathanson. Please Our from

Nicholas Ralph Del Deo

taking thanks for questions. Hey, my

hyperscale anchors your First, leading with in to Europe, seem be builds. you for as customers

that Your do sales do local build require to you in enterprise an can or the U.S., you business in market think side the port a more like plan up they that over effort? hyperscale would have customers in like

Gary J. Wojtaszek

our about Yeah. our Absolutely. for done outside I expect we've mean, of that, existing the their that – we've to customers to to in good wanting gotten cloud Europe. of talking customers insight demand, in the diligence companies our really prior we all portfolio that expand

then that be their part recently work with Most most that outsourced going internationally cloud interconnection in-house Europe, peers able companies, able a same in been and been starts up enterprise And our the we've largest of customers think built had data theirs, do the center successfully to of than we out we've the historically the us, U.S. kind as at companies because world and as E, the success expect around going for U.S. well. one expect mean, there. to primary be going they've local expect the you done the centers. most European basically advantage their attacking the success have franchise that to we're is expect So, to takers for quite to the the the our great over to has still export take center U.S. that convince great business to player the business, well enterprises, in just data Europe that the outsource over able big our to not the of that we of one data we're more look order of to really big business that and of been as they are in different they of because in – an I they if as we that to the going as U.S. in were but customers needs enterprise that we all built the same that with we're fantastic operators do expand this we

Nicholas Ralph Del Deo

not, is to you've seem whether that? same? front. matter, In staying there the what so the do your of competition view, entrants new narrowing, maybe Okay. done lot guess think of they versus follow-up, widening, and lot the helpful. a on about then, That's competitors construction How your And gap you about for the one or too, I that say emulating a be

Gary J. Wojtaszek

It's great a question.

sure really they're on. Look, their don't I that for I our us. done. think I that of then eye peers that know see it's hat, kind what great them exactly mimicking wearing know got I But if cowboy have

now to being out, have sorts that supply the what always the about great that make we maintain of case. high historically producers, we that's low on don't just cost our because been think of we've and up they all believe to cost sticking yields. saying not with have saying hear ensuring focusing that's Most why not chain, people said, we historically, It's focusing I reasons the people historically been case. talked they're knitting, on focus all

saying guys were everyone's So now those was that in true. I maybe Texas realized what think

you do and that more of be do, that think faster we it out in what focus capacity can really scale, a the in drive the I this repetitions when I and competitors So country, of do than my And be competition. amount don't do spend on advantage supply prosecute at we developed have that look you guys what and continue more I I last our we my able are to chain. we have more can leader. going in to to do lead get Tesla's my data in what that and on type I to if cost lot to fantastic I we more is to riding my time example, the kind other do curve. cost I'll enhance a I'll repetitions that including we Tesla's number able couple focusing mean, and and Because have in And basically going able scale, right? his down the to versus design cost kind us go to center years can further I ultimately, of that be same anyone, big hit time, drive cloud more they drive of developed helps that all the of guys. be really country I from basically We've The got efficient. we're And learned to this he's space than we're the over because of continue cost unit over of able see as of product. down of and big

do to similar going the types we're things that expect we so And as of Europe well. in

Nicholas Ralph Del Deo

Thank Gary. you, All right.

Operator

next comes Capital with ahead. Sadler Please Jordan Markets. question go from KeyBanc Our

Jordan Sadler

just it the is given is and quarter, from who partially for customers, price average, the Great. the to is in or hanging just terms substantially of Thank thanks curious returns the in or were color coming and it noticed market, larger types that? you, to the concessions pricing some in maybe of being there. competition kilowatt Question and of signing, I'm function the customers and that down a on in the mix prior per back just the four-quarter I is

Gary J. Wojtaszek

lower. Yeah. saw hyperscale a answering pricing the aggregate the significantly that you higher and predominantly enterprise, is tried proportion other of right? did the mix, So, I No, they that a questions. difference is it's get as we of good question, in the some But deals than biggest

biggest what in I pricing the we're the historically. that when it like that's question, for So and But doing the lower doing they're was you hyperscale, is think about we're here. Atkin's getting driver think than is what was this

in included However, is the irrelevant in what's unless price and you understand that somewhat itself sale. of

right? for delivering able those a So differently capital to engineer on what we're things is different, We side are customers.

would provide transfer are not in so offer lower service them onto And level we we Similar then service solutions, those a that price. them the of savings on the customers or as cost we'll other some some level, so that the of requiring price same of well. savings

XX% from where two So in on points were about we are which returns ago. in years down range, XXX the aggregate, still that that is

not wouldn't what – lower it's given pricing still customers, we're the attractive. be So the returns. really But nice still but providing – returns, are I the pretty may

Jordan Sadler

more because better grind the time? has lower bit to customers, offer think or forward pricing, you a going over sustainable competitive to XX% do to continuing And you're it pricing is

Gary J. Wojtaszek

that making it's driven. very I I our but don't cost maniacally of focused – on – been we're kind it's know market to be on solution. – focused driving sure all going mean of all we've out

products point them from get and a but make make spent on we engineering can collectively So time this, services to a all we're we that with working partners lower where our on of purchasing money, money, we all them of cost. lot they so can the at do with to

in going guys design behind replicate there a doing ways scene can even goes buying trying China on were the working GDS guys, been with I other the things that not suppliers on. people lot and with the the clued really of there's our of their So the of figuring that in company right, here using? else. earlier some than both that that effort out, with on is considerably mean, point on in my that are GDS commonize like our are utilizing of we we're to working suppliers the that work that is U.S. part we're in the in anyone about more aggregate, we've some We're so streams of that

the same we building into of translate substantial everywhere. cost. exact have opportunities build That's and a should that construction lower GDS So do that amount us

Jordan Sadler

in a of the $X.XX midpoint, for going given that $X.XX, And going then, the curious embedded considering on you, a the fee. number the know to is the if termination it I it only the you to do need like the was guidance guidance, was Number question bit one. Okay. $X.XX a fair Diane, original looks was I right, forward below incremental hit you have commencements on. which beat, two, quarter

could you any So offer insight there?

Diane M. Morefield

some because were We anticipated in $X.XX. in we that clearly, termination repeated going equity fee future the quarters. to not situation. obviously, be first lease we particular in We did the Yeah, quarter. negotiation that's so on raise That's

have interest expense We NFFO given per share, as funding higher the CapEx we go. affects that development

down showing NFFO think great a future had know, until but doesn't So bring quarters. quarter the as we that in variety share up the start would I really you a numbers that as of it's progresses. leasing And in things per year

Jordan Sadler

by baked target maybe of that's mix capital guidance end terms or... in a the year a there into Is leverage

Diane M. Morefield

year. we generally yeah, manage the X times throughout to Well, leverage again the

Gary J. Wojtaszek

Yeah, hey, question. Jordan. Amir's That was

of terms various we was equity FFO on giving capital so to that. being when require were those of provide making, the in structure investments amount like brought that investments the the dilution that were So share going of that additional per underlying to each we for bridge were same

or that the that sure – accurate. So the numbers EPS we were per were we share make FFO so want to

implied on. So going definitely there's equity

XXXX in second year sit So about but up, long ago, actually will and and into in just we're and gave I so mean, we tighten this really where that we a that we for sitting said, I really we're quarter's position, this good strong out the guidance feeling call, not think that XXXX. that

Jordan Sadler

plus seems appreciate both I is billion probably for $XXX and what that. another you've I like guess, the Zenium got CapEx. $X.X million focused close it to from we're on

of You've in year. billion the $X.X got spend left

little figure But of a bit year. of I get I did you the the you just to trying rest debt so, quarter, plus to in some maybe the how cash it's more fund of out but flow guess, pieces, full the a we're some all equity plus mix guess And equity.

Gary J. Wojtaszek

That's Yeah. correct.

Jordan Sadler

you. Thank Okay.

Gary J. Wojtaszek

Great. Thanks.

Operator

is question Bersey from Our Securities. Stephen MUFG next go ahead. Please with

Stephen Bersey

Hey. Thanks for taking my question.

you versus they as So U.S. deploy big up Europe, Europe initiate any just start seeing differences? they to in engagement differences in speed it wondering do you're the just how Any in when wondering if roll there on Are noticeable out? ramp or any the deploy differences customers those the

Gary J. Wojtaszek

the the like the in size just the Yeah, the on where were commentary mean, Europe, years deals. ago. is biggest difference more hyperscale they is of I this and three deals the are players, in of size U.S. of a

in deals X smaller-sized buying down. or to megawatts, like or increments taking they're So X smaller that

last So XXX think, only was Virginia we done the the I it's but I as in same did they that past pace they in capacity U.S., change. this at mean, XXX so megawatts Europe amount of expect in about not – that's capacity, of not that quarter. to year, to they're going are

the market going in to really the biggest why of be give planting to that's really that there XXXX. for stronghold our has to size markets the part fat the we're expect not get through curve, significant of growth back Europe, going of XXXX accelerate us and half lot and that a a to So we but into that's really thick seeds of this that we're hit excited in because

Stephen Bersey

the it Great. there time. Thanks. We'll end given

Diane M. Morefield

Thank you.

Gary J. Wojtaszek

Thanks a lot.

Gary J. Wojtaszek

your Thanks, everyone. NAREIT weeks. See Appreciate in in a of time today. you couple

Operator

The conference has Thank you for concluded. attending presentation. now today's

You may now disconnect.

Michael Schafer	CyrusOne, Inc.
Gary J. Wojtaszek	CyrusOne, Inc.
Diane M. Morefield	CyrusOne, Inc.
Frank Garreth Louthan	Raymond James & Associates, Inc.
Robert Gutman	Guggenheim Securities LLC
Richard Y. Choe	JPMorgan Securities LLC
Simon Flannery	Morgan Stanley & Co. LLC
Colby Synesael	Cowen and Company
Eric Luebchow	Wells Fargo Securities LLC
Sami Badri	Credit Suisse Securities (NYSE:USA) LLC
Vincent Chao	Deutsche Bank Securities, Inc.
Jim D. Breen	William Blair & Co. LLC
Amir Rozwadowski	Barclays Capital, Inc.
Jonathan M. Petersen	Jefferies LLC
Jonathan Atkin	RBC Capital Markets LLC
Nicholas Ralph Del Deo	MoffettNathanson LLC
Jordan Sadler	KeyBanc Capital Markets, Inc.
Stephen Bersey	MUFG Securities America, Inc.

CyrusOne (CONE) 3 May 182018 Q1 Earnings call transcript