CONE - Earnings call transcript Q4 2019

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Operator

Good day and welcome to the CyrusOne LLC Fourth Quarter 2019 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instruction] Please note this event is being recorded.

I would now like to turn the conference over to Mr. Capital Investor President, Vice Schafer, Markets Relations. and Michael go ahead. Please

Michael Schafer

Durvasula, Good Thank Today welcome Tesh and morning to Sean. Morefield I’m and CFO. Diane CyrusOne’s by call. and earnings everyone you, CEO; XXXX fourth joined President quarter

like begin, fourth cyrusone.com. that the our remind we section at tables financial are earnings Before the to along of Investor website quarter Relations release you would I with quarter fourth available on our

the some are made I the would Statements remind to expectations your actual Company’s today’s of deal responses cyrusone.com. Factors in the of on required also are risks to SEC, results We filings undertake and from questions you that no which call these conference to detailed by our uncertainties. on related date website call comments access the may to subject like with SEC’s law. statements and following obligation are the differ as cause to that on Forward-Looking CyrusOne except revise to this with you and may

some In contained financial morning non-GAAP Company’s this remarks the measures. of addition,

those reconciliations comparable Investor You posted of the GAAP website. release, which measures the of to is on the can Section Company’s the measures find in most earnings

President to call turn I would now like Tesh over and to Durvasula. the our CEO,

Tesh Durvasula

Thanks, Michael. fourth Good CyrusOne’s morning call. everyone and earnings quarter welcome to

Wojtaszek this our Gary CyrusOne. announced separating is my mentor long morning, and from we good As time CEO friend and

we Gary probably and in seven of Company. Directors accomplishments culture Let me and On REIT. data for building family this contributions Board over it it the pause become tremendous created. for and taking and public expanding our globally years for Company Gary’s CyrusOne Words largest a to the has of center third the thank entire team, describe Cyrus, he had behalf moment. He and cannot a vision

on on both interim on strategic and vision. to I’m the I’m execute continuing of to our incredibly fully basis. take excited and CEO role an humbled Also, focused President

XXXX. and XXXX performance X. accomplishments closed revenue, results in adjusted X high share financial and per good put outstanding us very an a with financial in a out with that begin significant and number had growth. FFO strong including We Beginning we Slides of year as the EBITDA We position

in We leasing and outlook, to while significant Europe diversified and contributions The was XXXX and contributing across million our $XXX markets the XXXX product for backlog year our had million enterprises growth. the $XX types. de-risks also from

XX what support an market. acquire delivered recently We XXX in has megawatts in megawatts we to nearly XXXX, nearly our our Europe. growth agreement strongest been of to Frankfort in execute And capacity European including in land

Our year-end refinancing development interest pipeline of January, closed projects the XX% investment XX U.S. We decreased pre-leased. bonds by Europe offering. Euro inaugural our in both And is nearly and our we in significantly megawatts grade market. includes U.S. in and expense

$XXX equity, We raised including $XXX also XXXX in equity forward million in to fund million requirements.

again and X. in Consistent on in since pricing is average revenue with from logos. leasing million Turning Fortune was $XXX third quarter the $XX to with three we Slide The going which kilowatt, very XXXX recent quarters, QX contributions annualized was our new pricing diversified added significant public. trend per the the enterprises highest in signed

all of have we seen compared late-stage a head the positive our we XXXX really activity Xst, markets, new two sign X%, having year-end, year. funnel is January was the since to in declined approximately which as Furthermore, QX sales after of quarters. each increased As across into prior

XX% the per to the year customer by we the XXXX, $ up of was annualized kilowatt, the signed million year. revenue compared XX at above we the $XXX Pricing mix. driven For totaling $XXX guided to that of million megawatts the $XXX to million primarily full-year, beginning for

accounted Europe average average annual seven enterprises KW X.X% approximately for XX% significantly. signed. represented contributing was nearly revenue lease-term the XXX with and years XX% deals was the sub weighted of The percent. escalation The nearly

Slide X. to Moving

fourth XX% quarter, believe wide grew industry, in still margin. is revenue the interconnection a which Our interconnection the I by fairly the business fastest in growing

We change topology. network a in that, the there has mentioned have been

Since around The our value will hyperscalers centers their we are compute continue benefit creating years. and tremendous scale storage coming these building in trend this to from nodes. competency, core data is the

revenue than mix the We in the $XX signed implying end portfolio. across as we XXXX of of million continued more strong year, the have GAAP and XX,XXX annualized cross for in growth year, the had

keep about quarter as metrics, Just here. we every show done portfolio we have

particularly the very time, While the high have credit compared REITs, quality to of base a other continued been for metrics has long to customer our improve.

is our a a customers term Fortune of customers half XX portfolio year a now escalation, of revenue includes is up and from points five our average Nearly XX% lease top is approximately XX% XXXX which weighted ago. and of XX years. from remaining percentage the

Slide to Turning X.

past As year you perform was continues to and Fourth quarter leading very to revenue EBITDA adjusted $XX know, that I of and and for privilege operations the XX was team million months XX%, compared prior had the XX%. annualized have the growth the of business up well. European nearly

been As for deals. larger has in demand robust, we footprint particularly anticipated, Europe

the continued For in we full-year, implying annualized signed million strong growth XXXX. $XX in revenue,

Amsterdam of these nearly London, We megawatts, which account XX% portfolio. have overall in taking is our projects Dublin underway XXX footprint projects Frankfurt and and into future nearly represent will or our

capacity control megawatts, that have XXX megawatts. position XXX also will us center as would largest us of perspective one total under This giving allow sites data us Europe. to deliver of additional portfolios over in the a We an

X. Moving to Slide

deal horrible GDS, region at and Let crisis. development. me friends safety pause as health again, We with all the wish has the this they Corona a Virus that impacted our of is

company quarter to rapidly, growth much EBITDA they in grow even though are XX% the of Regardless now, GDS grown of events, XX% result GDS. as our bigger and has footprint. in at the in with direct represents over backlog of those least hyperscalers partnership continues quarter megawatts existing their another a fourth with compared their two to leased XX megawatts We Chinese and unique nearly total, third

is as we recall million, investment year. nearly has since ago. at $XXX monetize original $XXX half a share million XX% five an almost by currently years additional higher may last remaining our and valued than two times initial you our Their which is million investment, risen investments price early a $XXX almost Our nearly and

ODATA our center growing up months megawatts quickly time footprint XX their This is more one ago. of is than and in also Latin investment the including America data megawatts Brazil. the XX from XX at of original now largest consists of campuses

they tremendous in Latin Also, upside investment significant there particularly They to America. hyperscale scale companies success, builds. deliver the to continue U.S. large expand had their is $XX million leasing as to in ability given our

summarizes continue Slide taken XX to steps have as possible improving the key efficiently position XX. we to profitability. Slide Company while grow to as

our and land and key the markets in shell Europe. We both U.S. have powered across

to speed building customer out to rising market data meet competitive advantage demands. Our halls in to continues provide a

very We identifying have our structure cost proactive continue and to focused be opportunities efficiencies. create to been on and

was full-year margins. very it guidance While a workforce, right a XXXX mid-point difficult, our our the than half and to actions our size percentage is enhances margins XXXX our higher recent point

continued further particularly we anticipate in Europe, With business scales as market expansion. growth, the

sheet growth a with have our significant to support also balance very capacity We strong

the year. Slide some XX accomplishments key summarizing XX. our Slide for of

in have are a billion one that handful We in now footprint REIT just of investment and is international revenue rates. $X a grade of credit

continuing solution. to growth CyrusOne hybrid providers part in the data as continue migrating very a high grow is are have of third-party Enterprises driven and outsourcing their applications to The expected secular industry years. are demand centers companies cloud for are the Data the coming at to rates. that and to trends

partnerships. As continue our we which to four and of spans scale currently inclusive expand our platform, continents

the to as overtime. particularly positioning the maximize opportunity, suppliers number are our rely on of customers further Company reduce this We they

with thought saw would, volumes In in down from leasing record closing, levels with XXXX XXXX. how played the much out pretty we it we in-line

We to profitably have best been Company ensuring and capitalize opportunities. efficiently maximum grow on while to laser-focused on flexibility maintaining is positioned the

we the we can very about marketplace. with on mentioned very that those been by in been hearing markets. observing Europe have what remain we why encouraged and see As what those earlier, have our made discussions excited recently in are you We now customers and fund, we from the investments our demand

With years. in to very our can capacity current bring do development online, coming we well the additional that plus the we expect

While our some which one-time for Diane XXXX slower be fourth items quarter, will the cover. adjusting in in growth will

generate attractive share growth expect FFO to per to We relative is. most REIT other

over marketplace. most significant the fundamentals, opportunity capabilities five XX We next given strong are to our business the fund in propositions, our the shareholders, and we value the one our We and underlying have of our and a on balance position believe, we create growth. bullish have compelling investment to very the years sheet to for offer the

for guidance our on now turn XXXX. provide for Diane. the the everyone. quarter over will you color will discuss who to and our I Diane, financial performance Thank call more

Diane Morefield

minute in its inception. like Thanks partner, a to I for I was forward since recognize now to future. too with fun lot Gary vision CFO since to Tesh. amazing to would the look Good in his everyone. of CyrusOne the quite morning joining in and be XXXX. just leading take company frankly pleasure a a It partnering Tesh

As pleased strategic a objectives. number key our very Tesh of results with mentioned, we are XXXX achieved and

shows, growth metrics. financial in the XX our rates all quarter, we high maintained fourth key of As our Slide across

second churn and at full-year our was total our annual low X.X% Churn X.X%, since lowest at was our and finished IPO.

terminations, range, and to churn include also our as we total the we of reductions to year, in be expect is rate X% do in practice, this metric. addition churn For our the X% impact in

with grew expense. adjusted driven basis the flat interest year-over-year. and primarily in-line grew margin Turning increase FFO was adjusted lower NOI NOI increased Adjusted normalized in on was XX% growth to in EBITDA and the XX. EBITDA essentially an the Slide and by

Slide portfolio. revenue relatively the XX which contribution across shows, level balanced market is the

the up stabilized in end are markets from development year-over-year, was compared capacity. XXXX nearly portfolio the XX% increase pre-leased for healthy percentage but will the XX%, remains European lease contribution put increase Our despite slightly these as in revenue service. to a The XX% projects and down is properties of

megawatts XX be of delivered this significant expected year. on the European a pipeline in our footage pipeline Slide of these nearly currently construction a overall capacity towards is basis, our weighted activity shows four and is markets. XX% the nearly square pipeline with sales XXX of slightly XXXX, end development with pre-leased markets pipeline The to as

the square of On footprint projects, of more million size with X.X than bigger co-location feet. be a our XX% these completion will

feet will across And customers. one to million development internationally. demand three response shell to of give the our million data existing house markets, in nearly from our shell quickly powered under shell, square us have us combined also seven and with of square both position feet We domestically nearly capacity, powered deliver this

the remain metrics strong. see, credit Slide year of as and sheet our XX balance can of end the of snapshot our provides as a you

the months, been which few have will We shortly. in last active the over bond I discuss market

including times, us ample with development go impact that. five at pipeline the Our forward, low fund leverage our remains room to providing

In X.XX addition, available we of had billion year-end. as of liquidity

the available development XXX issued which leverage. the to manage under have we and any fund million XXX November can of a the to our We approximately through pursuant forward needed program equity sale fourth ATM, time drawn ATM in under be additional quarter, as our million our and

XX XXX year million of our million we EURO dollar bonds. grade our XXX billion X.X inaugural last five-year refinance investment Slide of X.XX% and Late XX to year, and issued recent X.X% notes previously recaps, outstanding of offering. notes

As XXX basis result coupon decreased approximately we the of a by the blended offering, points.

continued of notes. fund Euro development used cross XXX currency month EUR Europe. were repay to X.XX% we denominated issued swaps, million Proceeds last in seven borrowings revolver year settle and Additionally,

of our our to inclusive of debt the result average exposure of rate On percentage floating out increase we pro-forma our third A nearly rate nearly six Euro fixed interest the decreasing the X.X%. interest. basis a As on approximately offering our decreased significantly remaining percentage points approximately from impact end term rate have a is and quarter, up of years weighted average debt XX schedule. weighted the extended the offerings, debt and now maturity of year-end XX% smoothed the to

tenure. reduce month As terms interest market our our This facility our remaining and our to coming the will we and decrease extend I term maturities, credit also debt. renegotiate average mentioned on last average weighted in call, plan current further in recast order the to the on all weighted to rate quarter’s XXXX extend of

XX. Slide to Moving

Our and half a in come full-year back revenue of reduces This on significant proportion of third deals in to few the of revenue second was backlog impact pushed XXXX, expected next $XX the shift as been signed impact year. through very we growth but positive out year’s more a will the has rate. million. the commencement the a much estimated is for year approximately of have timing the there large end quarter The

increase XX on our EBITDA each X% the XX.X%, higher year. margin. percentage than adjusted the Based compared half XXXX point margin and shows EBITDA initial these midpoint is adjusted for Slide EBITDA reflected revenue adjusted XXXX midpoints, implied results. guidance a outlook to The for the

second the as slightly expect a in that first the material will with in revenue be of half margin We of year margin half the higher the overhead. of the result the incremental growth year, than no

to the increase. midpoint per adjusted guidance grow FFO in-line a revenue EBITDA share normalized and X% with expect We representing with

update you a As quarter want models, to I your for your few items there highlight are fourth consideration.

over midpoints fee these of a received tax $X in million. approximately per represent $X our items, accrual XXXX. expense and quarter resulting approximately the we a increase property termination also was First, normalized XXXX share a X% in guidance reduction million lease fourth FFO would for Adjusting non-recurring reversed

had associated this were the we stock additional X.X associated million and will in an XXX the only issue million sale. a impact down when with we shares the of million shares forward quarter issued common proceeds X.X we Additionally, draw partial that year with

Finally, mind lower those that weighted although of by interest savings interest average offset are following our refinancing the the realize of savings and we keep interest application U.S. But capitalized rate expense a calculation. bonds. our in partially will

equity requirements. XXXX across and In are we great development strong markets, substantial was all funnel, sheet and really fund well and very for capacity our we year with positioned closing, a begin as XXXX us, a balance improving with healthy a key forward liquidity to sales

call. participating appreciate We on our everyone

sure for the the night earnings morning, open this we and the last are announcement to to we given call always do. limiting call questions, announcements going our our as question. are of We hour and one will Thus of your will questions. all an but ultimately you respect to their for ask we and have asked limit I’m questions opportunity to to one others analyst do each that answers, be

operator, line. please the open With that,

Operator

Our Please Stifel. go Thank today ahead. you. [Operator Instructions] first will come Rasmussen question with from Erik

Erik Rasmussen

Yes. Thank you.

guidance your back. of towards timing your Just prepared pushed being few about on the you talked of large deals remarks, end

was pretty You also and little U.S. line demand in is a sort in a in impact bit know of hyperscale leasing, obviously, we then for hyperscale, X.X% having, still on of just top talking markets? are general But, sort especially being what in conservative the about that surprise. expectations of Thanks.

Diane Morefield

backlog put hyperscalers, but to you out third fourth Sure. dress of that from demand just will commencement our Thanks, disclosure compare I Tesh last Eric. the let quarter if the night. quarter and then we

of see pushed the of will and construction quarter was a that You European from projects. there back fourth push first third more back most those and into deals half got and the year are that

it would where a to longer commence optimistic backlog. might been we and takes I them put in when think develop those just bit in have know You initially we of when Europe,

but will it as that XXXX. revenue So, but portion, largest pushed the you back growth, is gets full-year revenue as in impact our be know, recognition XXXX a affects

Tesh Durvasula

just saw comment, months we and definitely follow-up terms so here. zoning to there. How markets of XX a the on you? on commentary Hey in I the movement do. heavy over spend have in in seen cannot of can construction you different think and lots last of and people what We Yes, Tesh making Eric. lot are Diane’s

little bit. have out of Europe, we through need those in we these to across but just a working some done So, environmental really things well push situations

said, is it overall the outlook. On it when is, is demand conservative think right I at hyperscale a you still

my to take some know, being But that actually early quarters, sometimes things like said fulfilled. get are We as in some talked I about. we the more these months, years year around bigger can have seen activity, in comments footprints

they are at. them the act don’t with speed, want the act at world’s to we greatest always companies, though Even dealing we

being have have And seen, so seen I we of seen footprints some like requested bigger but earlier we some across markets. key have we our the year, some - said, in size

Erik Rasmussen

Thank you.

Operator

come Our Please James. Louthan will go with next question from Frank ahead. Raymond

Frank Louthan

Great. Thank you.

you to role. you clearly have now a moved a that been that? plan What for weaker year, revive of more effort kind And little do bit. of this to do down operational going a little So, And sales Tesh, control? has since forward the out bit you

Tesh Durvasula

you. Frank, I since talk Good good to Well, been have morning. I first, to born. commercial was

think we to some in said earlier of Like in I are that pickup interesting has interesting we forward comments, XXXX announcements. some looking So that some I have stuff. really the hyperscale our seen

more But importantly, of all customer all it types. of we across markets have seen our and our

our or So all of a is have what separated, way from Cyrus I I the we we lot both what and think been is always to of made Fortune able attack XXXX. enterprise do competitors the think

XXXX happened company, that company, pharmaceutical same an the to chunks. bigger were and feeding. bought and they with Whether be a just all just we are services Fortune them insurance The financial kind care hyperscalers bigger of treat

us able XXXX. I’m for continue that to be So in to expecting

Frank Louthan

guidance Does that of range implies the is conservative?

Diane Morefield

of guidance is to year. this going are we to No, the range be where execute feel able we

Frank Louthan

great. Okay, very much. you Thank

Operator

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

Simon Flannery

morning. And there if particularly, you priorities - Tesh role, little And interim the in regards what much. wonder as with has Thank out your could options? Great. bit set the I priorities? are a role. that Good your for a is it congratulations on I very strategic new any you share and ongoing, know the search Thanks. Board you but

Tesh Durvasula

Sure.

So, Simon, thank you.

congratulations. say appreciate to I one first the are You really that.

of at to started. is I have asked look strategy will what forward seeing to our in But we has your say, Second, terms conference. me to Board you - again the execute

Europe. our it on me We put to grow are excited in about team about opportunity. that and The place foundational that elements continue talked the to Gary and sound opportunity, we are is how

execute And the about to way continue it. think as a XXXX. be in that we will is I that think I theme major

all want the to this transition think for that But common I in type of you think search. of it for I to a interim that. status, terms a conduct I’m is know candidate a boards In

fight So for we will good put up a it.

Simon Flannery

you Thank Great.

Tesh Durvasula

Thanks.

Operator

will come next go with from Please Credit Badri Sami Suisse. Our question ahead.

Sami Badri

Hi, thank you That makes congratulations. this the you Also much. conference call. to second congratulate on very Tesh, me person

capacity standing focus wanted today in REIT are internet and that come done historically a nine we into at I Texas? where should in well. relatively are Now market maybe very under it and is instead reason this color And why other a capacities Texas from give under-development relatively in demand and Texas low a where you of into? obviously cloud be. have see Arizona, to large actually companies Or Is and time. going flowing LatAm major has to into capacities us a where I on Is and providers there across is CyrusOne at just the taken low? development on Is you Texas maybe under-development more why like is the could Vegas megawatts

Diane Morefield

Yes. No.

under development is We fully but not is Allen, that built finished. hall have because a and showing data data out it hall

So we Allen. have in inventory the

data completed have is in still I of a couple the think Carrollton, two megawatts last Carrollton. We also the available not but there a halls in lot, and

is is it So, and finished, CIP. it development into goes once out it active the in

we built can one. have data seven I definitely in out have six So, out only we adequate we inventory. and or total And like then think build halls

shell for inventory in hyperscale have we between of Dallas plenty and the market. So, capacity actual

Sami Badri

will Thank you. it. stick I to one question. Got

Tesh Durvasula

you. Thank

Diane Morefield

Thank you.

Operator

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

Nick Del Deo

congratulations and taking for question Tesh. Thanks my Okay.

Tesh Durvasula

Nick. Thanks

Nick Del Deo

investors sense facilities too for JVs. rates. some wanted were that You of development JVs assets, might more skeptical once know recently I because pretty you a market much or the saw said shifted asset guys side. they than And little sales stabilized Obviously, cap stabilized on such digital you Has did? past in think appealing in the make part has the

Diane Morefield

other company or have of the at from we talked some done JVs and look, REIT come us background have at know, about places. You JVs

I always are it to-date. opportunity the to for consider We came going a think, anything particularly to stabilized that. haven’t So is had right up, we just announce

and out. would certainly So, something it is we consider rule

Nick Del Deo

Okay. Thank you.

Operator

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

Eric Luebchow

to Frankfurt over of you will had look requirements for interest. outlook lot of, in spent fairly this believe us Thanks just wanted on Europe leasing you the are since Alright. one could in size seems check seeing Tesh. time there. other you where, taking Thanks. maybe environment demand It European year, of congrats we and a what where are was in footprint? know, on you an I the the to but Paris in like concentrated some terms question in might what you environment addition, any want kind I establish XXXX there markets indicated deal in a and give

Tesh Durvasula

appreciate us. Eric. tremendous the has for Europe Sure. Thanks I question. been

I in. we I than comments did think - like was It million. we said XX% my walked much when XX think and in I even better anticipated, really we there

we we for regulatory our got wait our us really and have think momentum and there is as you out kind our to recall, we particular. in really, things the delayed brand I and One, team there two of do and do to so get with what filings well.

After [Hale the full-year Boris] got with a was going, Brexit (Ph). one in challenge market then

some they will Now have seen care we take London. activity more if solved got see of let’s have that and in that

But, been Frankfurt extremely strong. has

got lot Dublin. interest have in a Amsterdam and We of

four like all of now that right or the that think nicely. sides our so opposite And, and I coming stuff are are just do they the long patience and it our on to sound spectrum. speed together So, markets takes

I kind work are all to patience get of the permits, work the our to think issues you deliver who issues their XXXX. going well of ability with it each in once need is really But, but pay-off market our we and have, through that product to individual through our

new terms right. markets, of those are In I think

think we so at flat on out to have don’t our traditional the markets, is future. that nice of Paris in Paris, a look - I the might thing be not

Zurich. in activity some seen have We

about our we ask portfolio. got if end think will on have just that, day, we But at I the and And customers in Warsaw. some fine. of the had us some we have Madrid focus We do plenty

Operator

will go come question next Our Please Richard Choe ahead. from Morgan. with JP

Richard Choe

go to guidance wanted through of kind just I the Hi. again.

about development But pipeline the both pipeline. and this think development talked but about and How go X%, still positively in exiting rate you. you the aggressive about exiting how into the we next for things can a through you loaded. to might think XXXX? Thank are going is overall, we make the talked we year? termination and of lease terms double-digit growth return X.X%, year as from the the should You I think, tough do comp, back-end going

Diane Morefield

Richard for XXXX thanks asking Well, for guidance.

Just tried are we was fourth would were assumed reversed there get But some about reduced times, that to I the full day and asked $X.XX. was through another the and why if worth fees accrual gave actually. or the impact of probably for of rather of ending kind $XXX lease is that bridge the probably a the term quarter a whole then is the couple the FFO That quarter. penny have million property you equity tax equity,

quarters. was of inflated that on the a number there four So things margin

table coming So look into supplemental, a the backlog to, year, it is back those last out, really you run that a the year, you would benefit the going backlog there if at in back will which significant be on lower is But XXXX. be again, if of to the a some rate. half

is meant development a point the out lot of I I Santa a development Tom. shown just our on now the - well dirt. Clara want for has back-ended, up the Antonio hasn’t I’m not moving thanks Europe shown up sorry in basically development San And is again, it correction table yet to table, as, because particularly right table on as

on coming development the the of out table. be the But once it will we definitely any end of have halls, the is actual year ground, pre-leasing. that starts data any the But build out delivery and of a shell shelf

recognition all regarding you does developments. those factors, really healthier a like to XXXX of these lot more full-year revenue a it certainly So point combine from

Richard Choe

Got you. it. Thank

Diane Morefield

Welcome.

Operator

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

Colby Synesael

is Also, Tesh. congratulations appointment. Great. permanent a Hopefully it

leasing suggested guess $XX year million quarterly $XX my - you still question had expect and you for I that to you the $XXX million did the last in million full-year. Secondly,

assumed what revenue if your And that what is Thanks. are curious or the for guidance is XXXX? XXXX in Just the expectations what guidance.

Diane Morefield

leasing. guide kind we Again, don’t that get to Yes. of into but really guidance quarterly locked number,

We do leasing the was year, of some of enterprise. more one we it just But, definitely averaged large are as last -. have deals over the four XXXX year we muted in cloud larger is over sort four averages last more evident is quarters, and it if saying that course and

Colby Synesael

differently based seeing, or that on you uptick expect quarter see Well, the that in demand are seeing XXXX, you made Tesh leasing commentary you at to ask XXXX? let XXXX you based on in already think of conversations me in greater are the least you guys it then. would an first Do what now versus

Tesh Durvasula

first Yes, same that I They to well operate I congratulations like wishes Colby, year. always permanent. interest, we towards I the at I said, which because the coming well, is like believe you. Colby, do. thank appreciate timeline the was and really just a the said, it there don’t nice of see out

be and different some markets is they unique have around all of as get are about to them laws you they you accommodate. Europe, they more guess these especially years to take in get can some think can my bigger, the and So, take if when things even complicated, quarters that of done, can

and and Especially is generally multi-year just something bigger that larger.

happy ready the new said, are about we So, like it XXXX is interest, to to I yet. to we but are translate really going comment when not on

Colby Synesael

Great, thanks.

Tesh Durvasula

Thank you.

Operator

a will have of Our from head. America. Funk Bank Please Michael with next come question

Michael Funk

past think more hyperscale this in Great. the hyperscale. your you downturn the a earlier to X-K low I you mean, referring from about once talking in the of kind question. comments call were new a Yes, where comments the and some on for congratulations of the thank I the kind role. together Putting prolonged year again the Tesh, in of tense.

the we leasing the what vision I is as And Just in wondering towards well. less the more revenue the mean, well maybe if if seeing is are in that here enterprise, potentially your guidance hyperscale salesforce, customers of XXXX, as XXXX. of repositioning strategic as a

Tesh Durvasula

or my look ability Thanks you it large markets. was like whether on Michael of XXXX, we what have we ourselves said strong financial I for always a that back is Yes, comments, weren’t $XXX enterprise always and in had for And not been across we services, so the the million question if and kind have It enterprise had the on that. sell multiple focused We demand into it energy to oil market, our pride salesforce. well on, year. have if enterprise, strong and a wishes. would

focus anyone Fortune know to ones, So, we probably don’t and I Like are else to logos. we reports going focused are on always who have the continue it. that said, on I XXXX

we that. It We are about success they the salesforce in is metric great that. talk that that done something a is pride constantly our having a job great It ourselves and pride in ones of who have takes on.

of to terms hyperscale, going hit getting and again a is for said I our it of such big like determine But comments, we everybody. is really to so types those in many when back XXXX that levels happen was Globally might not had activity up. around to my interest right year seen good start away. markets. I In some of key mean, that difficult

seen and some activity have interest really specifically We our markets in good European

we what well there to from feel, all and do perspective. in what expand and hyperscale into Europe and able long-term. operating, And a did we will XXXX think what strategic of we to think, do be enterprise XXXX, I both I vision then the was exactly I So Company did to in needed

Michael Funk

luck. good Thank Okay. you and

Tesh Durvasula

Thank you.

Operator

Please ahead. come will Street Guarino Green go next David with question Our from Advisors.

David Guarino

by great. on is and you that a tenant can would if in one that current elevated. being you that maybe give particular roll downs, full-year more market for be is Is departures that or rent guidance guys, the if churn maybe breakdown then on - Hey and question is a that driven

Diane Morefield

- the is half comes half trend and year from roughly generally from is reductions. about just rent You non-renewals know churn every

trend think be the don’t I will different that. So than this year materially

management XX First we of an the work all, have over all account team is due months XX that are next month on coming renewals period. that they to

in bottoms-up will turning manner. aware we do specific customers And we that some are be of if

and reduce like space space The and other fully but they thing not - their the margin they utilizing is if just customer, a it. they power, reduced are power, may say

And our type the the that and and of reduction. the of this year, customers always range again, roughly are in coming particularly, to we again, some rate are again renewals and account all in will again based this teams yes, we probably up. X% we half all So management of feel, X% bottoms-up, in front of non-renewals on be front

The because concession there true willing I they talked do and will are another with before about some business And the overall but to data is or to other this they it if are additional is give is thing, it actually negotiation. at a associated rate rate break space at a that other times take center. reduction, on we going

David Guarino

Okay, thanks.

Diane Morefield

You are welcome.

Operator

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

Jon Petersen

be team. thanks. announced congratulations of see but now, It some CyrusOne the part assume getting say reductions I it you the was bit we I guys with Tesh. Great, us to still the you amount cliché, year? be there that. going anyway, may you to Glad I will some Can on a costs will throughout Gary. feel expect It And there should assume timing question are that give a and on is related be is workforce and the like housekeeping little to that G&A. are indication of Obviously associated severance some

Diane Morefield

cost, gets pure the is is back Well, which anything severance common NFFO, to all at REITs. added that

rate this as basically. that wouldn’t be filed rate Tesh of year. that going last affect year as So do in Run took reduction earlier will compared year and to next be in we agreements down X-K sometime a this we the for Gray The XX-hours run force SG&A the result SG&A. both an the will

Jon Petersen

Okay.

will that. watch Thank you. We for

Diane Morefield

You are welcome.

Tesh Durvasula

Jon. Thanks

Operator

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

Jordan Sadler

Tesh, and position, to on public Thanks, a up congratulations step on offer really a a quarterly but do to guess this, on for the ability want CEO on call the me I like speaking first also notice on. company I having your moment’s thanks call. a for

that. on congrats So,

Tesh Durvasula

Thank you.

Diane Morefield

To me him and really pressed be [indiscernible] lot. fair a

Jordan Sadler

going probably Well, here, most due of to to I was credit say the but... was Diane

Tesh Durvasula

me. around of lot scaffolding here A

Jordan Sadler

is Gary bit and is is going is leaving on you why renewed talks. maybe wouldn’t give what staying, there a us here? what guys call? on month ago, maybe you going really leaving M&A is a more on Can are little on a is color speculation were Gary question this be here My there you that Tesh now

Tesh Durvasula

Sure.

all into that individually. out those parse let So, of me questions

team We First, thank was effort. you. it really appreciate and that a

make got you last hard worked So for that we sure night we to guys. have very ready

also In consult terms the July is of and I the basically between on and read Gary lots that had was fulfilling was the you the Board a through came through midway of board and Gary. decision, it have to now Gary and to year, duties Xst mutual be I going through original On I think me, Board. all transition between my if duties was release, and

was like was I still So, you pick. it It just, it will. if wasn’t I think - was was easy an so, here I

an the I mom for was Board. think my it easy pick thinks

was Board it that really saw the it the same So, way. nice

that sense. makes so And

two months on across across months, mean, spent the since alongside and perspective, Europe, in I started to been that just last years, markets, and then XX and here America, internationally. continue eight IPO, expanded North been in expanding XX Gary the globally Europe,

both of business, as in So, four involved the we was what three in understanding do of out terms a acquisitions. I

So when think trying strategy. business, into what to what we the we do have our are about our you done are, customers with who

I that it chosen. made was I think sense

the know market on was and think last In of, comment you terms I what going we was rumors. market or that speculation speculation question on, don’t

Jordan Sadler

quarter, for think or least this company sale and Well, quarter you confirm of that? last the Gary I not I quarters is on said guess is - I couple last at it think Can now running going like I seemed a was for not process. mean, a -

Tesh Durvasula

that. I definitely confirm can

that, last if said at the look you from transcript you yes. quarter, If

Jordan Sadler

dismissing not are a this process You at point.

Diane Morefield

speculation comment on don’t We rumors. market or

Jordan Sadler

well Okay, Di. done

Sorry.

ask to I it. had I think,

It in to think, was everybody apologies, room, this what so elephant is know. I but the wants the

a minute with So I taking guys you appreciate me. you. Thank

Tesh Durvasula

Thanks Absolutely. Jordan.

Diane Morefield

You are welcome.

Operator

next Our go come from ahead. BMO Aryeh Markets. Capital will Please question with Klein

Aryeh Klein

headcount vision your again, maybe growth any ago? for of talk potentially in with actually bit that Thanks. that reduction leasing and increase juxtaposes the Can month to about there need was little a sales maybe how marketing Tesh. you And momentum? a And increase that you announced around sense investments the XX% congrats Is the Company?

Diane Morefield

force were in and just come Tesh sizing But working the was a today. XX last yes, me it it company the guidance first, double-digit we was plans provided from in-line right can reduction and and night be then on what off to knew going there. and had take that Let clearly growth. We our address the with

skis reduction on probably to did the salesforce. our again And roughly address But still continue margin, headcount XX%. bit total to and our so over slower the are staffed business little the the with growth, were we of so we run grow, we can a on well to Tesh

time-to-time know you go from sizing. right look all But a companies through

have common all and had feel painful, at CyrusOne, headcount do pretty we it it able at to be continue the we that is we so good is grow but in it It We and a our do thing. with companies never to now worked always to business. are is shape and really support that to

Tesh Durvasula

Aryeh, question. for the thanks Yes,

presence when center ago, created hyperscale time and half, Coast years and Phoenix. where ago, like division, So a shifting a the perspective started West we the four already furthest we offices, West division. three a was We force data years several our had Coast from focused have cloud at sales

the covered all half, sure said, three of got important is then, like would and a And Europe. that heavy and we already the we on market have years other be done it now lifting since So I ago. had markets four that most making the front, just

the about was When legacy for that business, in more now than since of almost effectively overall then in the in the to the we we there XX% have over is funnel Europeans, contributing added business. XX%, one people salesperson the organization, took funnel and

people balance our good and market Europe. coming now America North is it see that I in and So in up got a of really

coverage, full-year operations. of those we come on will a June. have got came not April, X, January lot on people They of have in XXXX. A did and We May

are marketing a out of sort full-year going name get of of there. out full-year them, we to our prospecting, of full-year So of productivity getting

for and good think have hyperscalers who building that message are with And looking have capacity. building, North both got Europe are we and have capability the we and a America the footprint and for I that enterprises of really we

Aryeh Klein

Thanks, appreciate color.

Tesh Durvasula

Thank you.

Operator

like will turn Mr. for to session. conference to the remarks. Durvasula This conclude any closing today’s I over question-and-answer would back Tesh

Tesh Durvasula

Thank you everyone.

some a really to voyage, As and it nice avoid the advice iceberg. got, I was maiden quote

that. think we I So, did

nice a have day So, everyone.

will look forward We to the calls. follow-up

Diane Morefield

you. Thank

Operator

you may Thank now attending for and has disconnect. conference today’s presentation The you concluded. now

CyrusOne (CONE) 20 Feb 202019 Q4 Earnings call transcript