CONE - Earnings call transcript Q2 2020

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Operator

Good day, and welcome to the CyrusOne Second Quarter 2020 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask question. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Michael Schafer, Vice President of Capital Markets and Investor Relations. ahead. go Please

Michael Schafer

Good Quarter Sean. by and to Morefield, welcome Duncan, Thank Earnings morning, Call. Second CFO. Diane and XXXX and joined Today, CyrusOne President you, CEO; everyone, I Bruce 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 second 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 second 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 Duncan. measures company's the reconciliations You on the comparable to like the the turn most which release, section earnings measures posted Investors would Bruce now and

Bruce Duncan

Call. Second CyrusOne's Earnings to welcome and Quarter Michael, you, Thank

would of founder and thank also in his customers, – as to early I'm the care Gary and the let reflect. also the one my taking President First win. perspective get company moment a particularly pandemic, we and CyrusOne. to like Wojtaszek my with career thank I the I've to at am a in weeks, CyrusOne part continuing on the after and vision outstanding privilege well long our of of has and that, his I'll investors, me team plan we're a strong center call, team, position my first next take guiding an very as most for the job in be done observations centric business But this hardworking, and the I to us distinguished to and months conversations other most Interim and importantly, to finish today. for have smart, Dave like to much stakeholders, fantastic visit customers, and and want assets. and company CEO broader only few the of our earnings for the current have Tesh our an teammates, our thank as acclimated. leadership, their entire is people. with Ferdman like put I'd is honor results our excited And fellow for hard It I been customer data commentary work and is follow doing footsteps. executing Helping in building to business. of as in their during which They're

per share million, FFO XXXX the of Moving in backlog XX% strong and of leasing remained well Normalized The the and the grew was revenue end in slide GAAP million nearly June volume the positions growth as beyond. on $XX for last beginning results with versus annualized quarter, to for us $XXX side. X. year, with which

XX in XXX,XXX primarily the on Turning to megawatts space quarter the of slide X. square We and U.S. in feet colocation completed construction

footage XX% square XXX,XXX megawatts We feet the with development, square have pre-leased. of another under and XX colocation nearly

available than a of as million June. total raising of $XXX strengthen million to end our giving in We forward during equity forward balance nearly our in ATM program, continue $XXX the of through more equity sheet, quarter the us

quarter. as third up to the and $X.XX signed was bookings and and increase signed announcing industry period. verticals, lease customers. diversified $XX Both range, results on quarterly across new a well also were a in we in long-term average companies also details was platform. per accounted markets XXXX the quarter. approximately MRR Hyperscale reflects segment has Slide to years, MRR within XXXX. our X on in The revenue quarter $X.XX in pricing in revenue provides our The quarter. the fourth quarterly weighted trend companies. accounted from reflects this are dividend XX% quarter. from year With term compared is per the KW X% from prior a higher seen and of appeal for the half revenue the We which leasing share recent million second Through XX% signed, term of Fortune of significant by added consistently total particularly seven up the leasing of per the years, we XX% three have for and in driven average enterprise contribution hyperscale broad significantly relatively deals The enterprise our KW long the first strong the companies the for been

year, we the to more addressing had two the They quarters. been our As XXXX. communicating discussions in productive have are early been last has reflected in near-term leasing requirements markets, capacity results leasing this and since both with we have U.S. and the across much for European compared hyperscalers

difficult certainty a and customers number on We maintain it's opportunities, are deals. the good closing predict discussions of continue obviously in although dialogue these timing with to to these of a and

of of the the total accounted rent. vertical portfolio this end for quarter XX% of As

interconnection expansion interconnection connect. for interconnection of primarily be first within ecosystems factors: had in quarter the being revenue centers, component. Moving leases a to in the compared resulting second data The our X, to our the by couple nearly to of demand And driven increased last continues year. signed slide of growth additional XX% an XX% cross

SDN implementation part continue as solutions. customers' hybrid, Additionally, offerings, our enabled we of see multi-cloud for to take-up particularly of strong of Megaport

company. we provided On of metrics the right-half have the portfolio for key slide, updated the

to signed across the driven our by year. demand Amsterdam. we footprint our will completion of the to XX% XXX annualized And markets in in markets total bookings $XXX prior London a the of second represented development from of This a had pandemic quarter, annualized rate we on total over company's produce The support to continue continues We quarter megawatts XX% in represent year footprint an X, the slide update on in strong our $XX help based current and business. have presence increase COVID-XX in the XXX results. is the should overseas. This megawatts financial very the from pipeline, quarter, the as Europe million, of leasing the they average with will line strong second up approximately Europe, and growth next these Frankfurt, and of on upon revenue we in ago total quarters. hyperscale U.S. success that the nearly the At based end continue demand Europe years, these half coming and to a of are seeing X trends across will Europe. million revenue we impact the of three increase continue for revenue, to the with nearly run contribution to customers there. projects in provides believe leasing Slide Turning our their

areas closely. as across are monitoring very of now, business. we continues developments be relatively impact the the of our to While situation And all fluid, remains minimal

have increased screening, are All adopted precautionary of centers operational requirements, mask including frequency. [Technical we safety and our measures, enhanced cleaning data Difficulty]

Operator

of and this line Pardon you. line dropped have you call. the the operator. hold Bruce will we turn reconnected reconnect proceed. off It Duncan conference his hold Mr. has may appears Thank is music while Bruce's I now everyone, the Yes from the that we Please line. Duncan.

Bruce Duncan

I my for hold music. finish hope All you right. hope that but it me was enjoyed let part my that. I and apologies soothing,

been minimal terms demand are now are COVID-XX, off impact this from and workers companies from collaboration the in and home. have left the a the to communication remains companies what notable I several are had And adoption platforms and remote recognizing use of of I requirements as situation Europe. environment. U.S. with companies We're as can significant months there been virtual see of regarding And new in monitoring across think From infrastructure and workflows IT businesses. has continue our over their how all discussions strong in observations. past to have of standpoint, and work markets address business hyperscale their limitations we of their support few and to the There increase Obviously, have earlier, the developments positive in -- our of we facilitate demand potential I mentioned deployments needs fluid. across closely. impact relatively

pandemic. the much will center changed after will be reliance lives use times, centers data in performing of in with on particular, how technology these to think needs carefully of in their play their interact only we not are this in take play, a things, significant also as have its considering care broadly over optimize economy. businesses to work, the evolved change business Additionally, buy ways. the their thinking and architecture or near-term it's ourselves, world increased and how have requirements, role Even clear areas. it's may is unprecedented in others, central data And result whether many end global the technology of and all will this a supporting longer our of well term, but how the that about We

to world-class markets about acknowledge the for any And is coming CFO, like she strong continued in for fundamentals and to how first, things; what by very, much to sees very with again and U.S. I've is positioned year-end. I XX by look and substantial importantly it forward have She and at well to thank you two and critical attribute BS. is Europe doing she Diane she with over retire who weeks across to what great thanking there it, to for is Diane, know always my are their want work is. underlying which close a liquidity to I wonderful that getting executive, good a ahead. the quality And in her known is no growth. We it but appreciated all is. secondly, I for support capacity years is our teammates a very working on and direct our demand CFO, going I want calls our and capitalize

-- effort. her on earnings third will who me for the to All will on as call our provide celebrate of everyone's call call color call Diane, forward the contribution that will this I and guidance over be look update turn With on have for and to as last our year. quarter us performance CFO the more time an Diane? ample that call our financial to on to let this that, quarter

Diane Morefield

have CyrusOne worked an run me appreciate very Thanks It been talk and and forward leasing with four continuing on comments exciting a to a has Bruce. team CyrusOne couldn't personally. orderly team. transition partner and with years solid And and really at financial about look during your that I strong rewarding I really great better quarter I here period. another been for to and It's this Bruce the let's With QX results. whole incredibly

quarter grew growth while Revenue XX. slide adjusted to in Turning X%. the was EBITDA X%,

the million quarter, in the in X%. $XX unusually second noted range more actually sales in quarter. revenue Churn growth our was to at As XXXX of sales to quarters full presentation, recent quarter the million guidance most X% growth levels of adjusted recent to were these second the year churn high similar our $X X.X%, and in continue compared excluding both with the to equipment X% maintain periods was in quarter for we line and in EBITDA approximately in

primarily Moving NOI The the impact the second negative These sales of meaningfully in quarter high to had the I adjusted to equipment second And this they margins of attributable in impact year. that the the sales EBITDA and XX. quarter the last compared X% as for range. carry to of NOI margin are increases a slide margins a in last on just typically second XX% quarter into result mentioned. year XXXX. a increased

revenue remains XX, well contribution U.S. slide our markets balanced. highlighted As the from on

consists backlog diversify markets. European expansion a will in deals of portion of substantial continued portfolio further these and Our our our

feet to of halls leasing end strong with we've square our pre-leasing and the data to U.S. As active And is Europe. which of capital have underway projects under funnel and slide toward XX, the end historical before our development shows level colocation support pre-leased pipeline construction our construction XX% upper we Nearly an of sales discussed across is results both quarter pipeline. of for our the of levels our tied late-stage derisks as investment. is range obviously this the

Slide of the credit completion continued portfolio nearly well the metrics position business. to have feet million XX and the projects will square fund investment-grade pipeline. We in upon summarizes growth our five of all across us sheet to which colocation the our balance

second quarter, upon equity. equity program, impact forward the Combined mentioned, billion forward On Bruce and our through have nearly million our sales ATM net annualized total $XXX liquidity a during in proceeds quarter executed forward million of pro $X.X resulting balance. in As in ATM the available $XXX our we first basis, a sales, this available five debt to settlement. quarter times we more than in with including ultimate our is have EBITDA of equity, forma inclusive undrawn revolver last we of

in have requirements runway pipeline cost completion having support the leasing development With million year. fund the our capital in of midpoint, into potential we total projects at $XXX a of next approximately well significant to

XXXX entered proceeds resulted in $XX the portion which million, that of amounts agreement forward-sale and down the approximately fourth the unsecured to of revolving our a credit settled this pay of we quarter, the were facility. net outstanding on quarter we in During into used

an As his yield capital. we increase XX% are return have This payout our quarter $X.XX the Bruce Since dividend on X.X%. announcing a from a highlighted represents XXX%. nearly approximately dividend. of the annualized cumulative XXXX, second remarks, increased X% was in of up In third we XXXX, of nearly a dividend $X.XX in to basis share quarter the

We also cash to payout one lowest among continue flow retain internally to of the to in the REITs reinvest ratios order business. in maintain generated

Moving slide XX. to

second quarter-end the in This $XX us into Our the growth revenue very well history end backlog backlog at million. company's highest the stood XXXX the positions as is continued for and and of of thereafter. quarter

to X.X from necessary megawatt deployed is note mid-XXXX million reminder, a annually expected this to be quarter, subject ongoing associated blocks the permitting. XXXX last of As receiving that $XX to XX.X backlog from in mid with megawatts

associated the spend with portion will even a requirement the capital deferred revenue result, of the beyond a XXXX. backlog, be As meaningful record and

third reflect this included quarter. our that This of future quarter exercise X.X revenue. paid highlighted quarter million include for signed XX exercise our $XX total. XXXX also quarter we the from not was in a actual we the included bookings of We bookings the million reservations was results $X.X time want MRR and until leasing in to Page of reservation become that at annualized of in the approximately representing out point XXXX of that do anticipated and reservation gross reservation leasing removed the was to disclosure, third that our megawatts, of to in that included supplemental On results we the in that the those reservation in intend reservations the leases. In executed impact

Slide to XX. Turning

are share. adjusted normalized reaffirming per We revenue, FFO for ranges guidance and EBITDA our

this range our half of This support a We the guidance leasing reflects to at increase additional expenditures are to first an throughout million, prior of year. increasing spending the $XXX to the guidance. $XXX midpoint to for million $XXX of our strong compared million capital increase

consideration a highlight to want I on models, results few that your basis. items a impact sequential update you will As for your

in approximately in of lease First, an early our quarter acceleration primarily million term second from which associated an termination fees $X the with revenue one is we of received customers.

quarter, third CapEx we the estimate an of during expect approximately which higher $X.XX have spend, slightly Additionally we impact a will share. maintenance

another be also estimate quarter, compared anticipating are comp in second the impact on which we and a basis. share the $X.XX will increase stock-based benefit combined We to a in income-tax reduction an per

us ever are note could growth. that Michael you imagined. continue our happy referred quarter year, have half to circumstances with million are locations. that we In under closing, and at profitable remain particularly and ensuring results to for We June, to end on call the to the we first are separate while through we equity the Bruce, and of needs well the positioned with are will approximately focused I questions. of operating Please have none We Lastly, take pleased forward support of associated of on our now the participating the the X.X and drawdown customer strong earlier. of we to impact issued the in shares appreciate full generate quarter I

you them. as So helpful direct to of questions, specifically be it would us ask you your one if

that of the to addition, to a chance questions thank the queue, your In limit in request one in participate With give everyone the and you given that, number person question you, questions we the per kindly to Sean, open please Q&A. line.

Operator

you. Thank

James. We come will now question-and-answer Please Instructions] question the session begin first Louthan with ahead. The Raymond [Operator will Frank from today go

Frank Louthan

spot, get with ago nature the Well, bookings congratulations customers of products that think And months to you. six maybe kind what and Thank on to the was that you're it ago. a a types contrast on be of customers? about congratulations the you'll Bruce the are bit the demanding year what us currently retirement. little about how out versus and of the for Great. Diane, outlook seeing and a the little bit selling should business Talk we

Bruce Duncan

Well, say that – I the I quarter say in terms great again quarter was that is would this Bruce. this of hyperscale business. a would

million – would like seeing. pretty in we're deliver is European all million and We that. – range bullish it. is doing say the would again, the on that say our business a $XX the it's we're solid. general I But demand And of We again on normal would Our having by to but It's diversification. to good. like in we're quarter. business the say $XX be fantastic. last very But good business. versus enterprise very business encouraged us just it's I is I continues what the

Frank Louthan

different any productivity? would that any kind new customers? that the maybe adjustments is environment ways how affecting either force or the channel of more And All with And Great. approach on their sales right. relying to you

Bruce Duncan

our XX%. business again, say a XX% of – very small about would it's is or I portion channel Well

of I the company is our with this our think strength relationship customers. So again,

I company As world in remarks, I've to mean, have we done and a we have fantastic have business them. we from figure it. environment up solutions we I business. center job data and care our We the very my goods deliver do this so – get where We It's think to good don't it's to trying is a tenants do a mentioned have our and major continue I to and business. this I to issues to this come job about would customers really a – is new is And business. I for the it us about again to to of we for for But say them. changes. customer-centric anticipate our that care good at good tenants. wouldn't is up good out us their share

Frank Louthan

Great. right. much. All Thank you very

Operator

will with RBC next come ahead. The go Jonathan from Atkin Please Markets. question Capital

Jonathan Atkin

thanks. Yes,

I'm some this differ key team addressed around for little think you script. retention But changes as and the in just you you of what you're or have hyperscalers? more – there forward of So if in certain that are geographic apologize, that bit compared maybe mix sales performers in from the packages? demand perhaps of are offering but the then color about might and seen And kind are year-to-date? interested you've I or happening Thanks. where the seeing to whatnot operations Going would a management

Bruce Duncan

any offering packages. done We're retention

a I And we people. a good our think I with honor privilege to an it's do everyone think work for and job here.

This the executing great not high at are people and is work. one big with this are because top. to at What the company. had I've organization look with at the two other this. people results. a have quality turmoil a love and love their but I people the that good and talked couple it and impressed throughout committed are the good the people the is They pride CEOs look in at people, are results. mean People think people organization. results we've thing, look the are results been how really -- of or people it's And people in about I this

culture. very So I this think good is a

care and results themselves. people think I for the speak

Jonathan Atkin

leasing and demand Thanks. mix? in the of then kind that terms of you're just hotspots might seeing how on influence And future geographic of

Bruce Duncan

Well, the very hyperscale to again of been versus year this is the year but has enterprise us. important enterprise,

hyperscalers for If our and don't lumpy year But this of as sales in us only changes. to last a the give and half because you the terms at well. enterprise Again a we once And goods do doing deliver and year quarter-by-quarter from look carried year lot our fantastic deliver business that terms we last right. demand. of again, We profitably give guidance we're The very is in have come a guidance, that's It's it's it the seeing important. of did back in them the us leasing of year to and upon incumbent business. it -- shareholders. it's day

of So -- demand. encouraged but we're pretty terms in

Jonathan Atkin

Thank you.

Operator

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

Simon Flannery

you you Board impressions best around Thank the congrats shared have really little to priorities your And you want difference some of that a appointment really so and the your your you can company first Bruce much And customers think they that far? on focus you Bruce of things as struck appointed going people, a make any with kind Diane you forward? other for things you you, and Great. very on? are share what Could what and future. on the bit really

Bruce Duncan

a that than think Board but mean would very make now don't have I'm invited me our ask We're and just in investors, people, out in company do with and I our say big company to it just say so been. how with not I that, and we say spending learning to to tour the this we've again going would try If know. going is I we're going great meeting and have and we got of we're to move it small. in it's better with but too terms going terms again, not even more Thank look can and our to I'm company too needle listening out to And and a you the -- the to you, good I job next call, Simon. customers. we're of our the a right We're make better. the I with work the my growth, figure much position. -- earnings join Board but try team everybody the at Board,

access So capital. real flexibility being we have to and grade financial investment

think be it's a good we're very So position in. to -- I

As out, at I I discount I our pointed we for traded us. to big that it's think at fantastic look a When a opportunity peers.

on growth So team, news see figure we're out when I'm good news. the we industry. three of as as a is The going attracts a change I'm is going a strategy is in growth on growth any get we're good we bad business but of our and to the news very this And very lot bad I'm is just months. tweak really it with say bullish its quality and news if to the business the to people. capital. more it in to bit, a much But very together have bullish bullish.

centers building lot little entering that a pricing is people our data there's So of it And a business. so bit. down means coming

So job we'll that. capital such focused to is for again, be our it's our a for us profitable in that it's it shareholders wisely and way do and allocate on and good business

Simon Flannery

much. very Thanks Great.

Bruce Duncan

Thank you.

Operator

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

Jordan Sadler

the Thanks. role. Good morning. congratulations on Bruce

Bruce Duncan

Thank you.

Jordan Sadler

prepared around. those remarks and sure for through getting fluidly first time Yes so for

So kind that? of what's I'm --

Bruce Duncan

getting just the barely through prepared No, remarks.

Jordan Sadler

into organization some to It's now Tesh spoke Gary other property broad Diane now strength can C-suite I heard between the the So and business exposed a the been you the of coming you as change a business, you've different in that and say. you're you but there's look from been represent in types this. In remarkable maybe the this relationship the and strength business customers of right? as the commentary The reflected to. the really with customers pretty is of your

Officer sort the and organization connect with here lack the specifically. Commercial sort the domain sort Board given CEO, oftentimes historically relationships at and at expertise of these even the the and to, President kind sometimes of, in the perspective sort and highest of you that, about the thought execute ability your company opportunity levels of And with of this given Europe. can the Chief how I'm has curious And of, level of, of,

Bruce Duncan

you're thinking. Jordan. the to have their going ask Well Board for to

you the In found and listen them and is listen my what to in what and them solutions of you they them. I try what wants to and find customer hear that terms business thinking you is to have

got is you're my listening that working They knows them want and sure So they're person have and trying And focused that, water I'm sure if their is. you're they who they've people. I And is issues. make the finding that the customer experience sales solutions, for you're and person to and them. very impressed great solve very, to we've many very been the years say, a care on with carrying been it team here talented I've carrying successfully. to not

the And let's that's is you we look with again own continue done is to But the proof this how in we pudding. company the I execute. turmoil But well. way very and again the company And has life will all it. It's So optimistic. do. and the But see out. believe very well I'm done pointed

Jordan Sadler

I question. a that And tough answer. appreciate it's

of you'll You know devising. that of of as about the be as a tour a be outsiders that you're aware be sort sort mentioned there's seems for been that I change we to of looking going of company need we the degree have results in, all up of do Anything now. of to or at listening more cautious right? you're on forward changes I mean you strategy look sort pretty good given putting these changes? lot going the -- say that to to feel So...

Bruce Duncan

again to to know company things have a people that bucks quarter think pay are and you The forget you is And some that's throughout make organization hard is invest doing sometimes The is Remember met price not team. people one, executing. really very, people well. I want think I've -- this care stock be whatever. big you they doing good were The the not very put and to whether and this well. your But with they numbers group is we're team out as well. team doing some a they XX/X. the -- the in decisions The plan good team how executing invest the going top special make we've that on for team with work a been shareholders. of two three people people team very It's terms it's our and that focused But organizations organization. difference. I've of We the or impressed on it's time the a locking a got team. great doing to It's I a or throughout the

Jordan Sadler

time. your for Thanks Great.

Operator

The next Please ahead. Erik will come Rasmussen go question with from Stifel.

Erik Rasmussen

Yes. luck and question on back hyperscale. my the Diane you. Maybe best upcoming one retirement I'll congrats with circle the Bruce appointment for on

and about maybe seen just improved How picking results. strong you. demand. your And We've are we're markets and seeing up. NoVA -- you're the XX can Northern ago? thought Thank momentum an been seeing opportunities? talking maybe -- days and comment there's improvement you seeing things good a sort You're Virginia just recovery versus where you market you market what this on other of

Bruce Duncan

That's activity aggressive I to it. me tough news. All pricing. seeing you're very the is would thank news no I The say it's the about interesting. it increased good right. Erik, Virginia is Northern you. very, mean pricing. question

So coming again last Virginia. hadn't stream do our had of We it? you they price different to are the we on you So the us the in we of end out? but now year what at much times now of as bow for issue us do year. what Northern -- by it and have -- And/or somewhat -- you is sort price like capacity

terms position decent And transaction. question a finding to And to the so harbor. right But activity there's in it's that accommodate of going of have there be demand. a we definitely in

Diane Morefield

Yes. To we're campuses CONCOR. we Erik, out refer Bruce's have point multiple we leased there and on and what up as to that built

large it was late it shell building that more we which that up ready But online got of months We really to that have completed couple a into to signed. as And shell our the didn't have campus until we year. have been shell until we have on there, year. Tolson a leases third capacity end newest the this won't of just mid- -- coming really and of was is but refer ago be part some going our

Erik Rasmussen

Great. the thanks next color. And XX days luck for good you for Bruce

Bruce Duncan

you. Thank

Operator

Please Richard will question JPMorgan. next with The go Choe from ahead. come

Richard Choe

Is seems being very that And running and didn't churn conservative? change a you worried follow-up. Churn to are low guidance. I have just you're Hi. you be about going or there forward, then something

Diane Morefield

said we've Yes X% Richard. X%. Thanks to

of half year It but running going it's the like consistently we've the it's that to lower after in in first end range, way year. probably the for up So been be the ended range the pretty feels of year.

So the we feel pretty good about part the range. lower probably of

Richard Choe

from seeing signings very Are over Bruce, business then were hyperscale, or too have worried with you terms few a that of you're And do past the or you for the that the to any much mix little feel changes signings conversations that? sales weeks And strong. are the in in your you of team? you skewing seen terms comfortable

Bruce Duncan

we enterprise good at good it. the say like love the would have very diversification we got It's hyperscale. business. that. and a customer great We're We've is hyperscale We lumpy. again, relationships. But between I

we're in is it back So XXXX. from where again, was glad that that business

or mean in to two lease. three execute really say, in two lot away lumpy business day. as of business would weeks So weeks, in good last a we're I a in get a conversations I again what This last have think said, conversations gone and until we've the last the it's how get weeks we we conversations don't terms got and or from

for guess focus want thing the I quarter. people report we'll are so, signed them to leases we And on and every us most

Diane Morefield

and larger said we the have of at on consistently those know sight revenue a of our XX% growing not-too-distant capital attractive. of comments, hyperscale now around these too to just is we in deals XX% the deals. of of We pretty to to the add good line it some Richard out news that is ramp. future, risk-adjusted we've size The want the put Bruce's revenue capital -- total And that XX% those deals of that the to Yes. returns to on the to range because because have are see

spend the the match can capital with ramp. you So

for again, business business. is love profitable still the baseline that us. enterprise and a very great business So we But

that we've to so in been really selling changed. always And and enterprise hasn't pretty agnostic both hyperscale and

Richard Choe

not guess seems on five, five the it the great. top seeing hyperscale, I we from top demand I to Europe you or the it in about focus think to it's is when business that is, the enterprise my driving seems are demand? the follow-up Are one used that talk in now top we more top The and five have and to expanded.

Bruce Duncan

focused right. mean just demand see I is everyone mean it. we -- No the this on five. top everyone, from It's not I

Diane Morefield

customers just category. eight of our top customers, much top the And five you larger XX our into than XX And yes, expand names. Yes. in are then if it's hyperscale

Richard Choe

Okay.

seeing of demand a lot you're places? from So

Diane Morefield

Yes.

Richard Choe

Thank you.

Operator

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

Michael Srour

year, your for Hi. Diane this of in sales size Maybe increase the And could questions. first funnel, CapEx timing This upcoming Bruce. the to overall observations the notable the of your Bruce deployment your funnel? might some appointment, you and Thanks the type? congratulations million for installation expected taking size, of deal on is Nick. regarding you anything Michael terms $XXX for Srour congratulations and retirement. one average have of your on composition light maybe my on Maybe share In

Bruce Duncan

the deals on the confident from to But that reason getting away up done. because signing. standpoint, of is we're is up end Michael, the the we We're about funnel. signed we've our from going talking about talk leases just getting are CapEx

more as to spending money, more a we're little Diane amount. So can the detail but that in go in

Diane Morefield

really almost year, related increase our in we of the is of spend is CapEx sold guidance half annualized the the we to -- -- The million $XXX revenue. directly in first Yes. --

CapEx cash strong at end we we point. we spend leasing, So to again it's projected think give full to where guidance, when the for on we guidance we'll based And given year this the raise needed -- our year. calendar up a with in

Michael Srour

roll Diane. -- one maybe that helped the lower may degree what half did EBITDA? of And this To those Thanks. for degree it. maybe Got benefits T&E second prices the to expenses into what year? And power and

Diane Morefield

reduced range. your all operating and heightened to much wash executives. frequent at were think much -- the an offset T&E by to pretty pluses and significantly point, due there pretty side, expenses much the from between corporate the well But other at things. sales obviously data center and working guidance more everybody a level on that's home, COVID pretty Since was but in EBITDA the those particularly obviously I PPE Well minuses. our our level cleaning were our But and it's there for team is captured

Michael Srour

Got it. Thank you.

Diane Morefield

You're welcome.

Operator

next question will come the Long Tim with ahead And go from Barclays. Please

Brendan Lynch

see early about to on talk is Hi, picture, you if good just you both a bit other Brendan or wanted you Lynch bigger morning. Bruce, Bruce see and talk about I Tim. joint you're partnerships there. that any But type can trimming term? holding your to Congrats for This understand I Diane. if GDS. of ventures to little I like would but maybe days, what it's very of longer that

Bruce Duncan

about do to love GDSs. I'd more six Well, right. All

is or what But got you we world, of to can what position over grow. was shares of we for. something because thing would do look left given between did profitable a value as and just to the to that we I there's of to figure that say I like that each at. But are do think that makes fantastic returns But to for we've of something and ventures ODATA relationship have ventures more lot out and beautiful our idea hopefully relationships over you're can there I in to would That some as time time. the trying joint joint them ventures, for and me done joint -- and position where life, XX% what say -- think with with about if sell more, fact helpful can expand we that. about we joint in -- partner our terms I that that I've a it the in that think the some and have in the terms team -- what to looking to our there it's -- great own can my pricing so. in a You circumstance ventures got of is terms be what there's add a accomplish XX% us terms like did investment again of deal in or we lot opportunity we sense partners this your and

Brendan Lynch

Great. color. Thanks for the

Bruce Duncan

Thank you.

Operator

Rollins Citi ahead. The next with Please Michael Research. Investment from question come will go

Michael Rollins

questions good could. for Hi, Two congrats if and Bruce and your morning, retirement. I Diane

returns And assets you an just prospective you of able time? mean secondly experienced? get then Just product? on have you're those share out that quarter. Can performance influence a Thanks. does rents first the capital the moved for can just spread question cash that over business your the renewal on the us on the for do as And have hyperscale more high-level to where during lease ultimately rates with lower, interest that what

Diane Morefield

Michael let me… Well,

Bruce Duncan

first. the take You

Diane Morefield

and rent in Bruce churn any our again, capture first the roll address number. take I'll …yeah, can down But – just we the second. we

little customer takes, there's renewing power What increase much and and we amount of positive over obviously when a as space is for is disclose that's we a an oftentimes longer the renew in then again. term X%. in signs So the don't well that lease as leases

a there these captured that So the lease long the roll total mean I churn typically in contract down on lease our is originally positive, is But the in how but net number. the sure. is underwritten rent depending net-net, completely there was again is and ago some on value for margin

down or -- roll nonrenewal. role the any Just

Bruce Duncan

relates all again anything like long-term date basis -- the the I it to to rates, to was as And points. right. as think it interest the XX And XX-year to as

last unbelievable it's how Again are. years. for the now been four three, cheap So have things two, hit low rates

much thought impacts a that the So of or again But this it's that -- in low. so not don't that like terms not. getting it's rates you're think that on -- hot. It's have would would I is who But… be not sign the economy that spreads

Diane Morefield

Yeah. business. Our

Bruce Duncan

And fantastic is this for us.

Diane Morefield

interest. saved refinancing basis points our on grade XXX And in last all our Yeah. getting investment debt, over to fall we

investment platforms as a that capital. and is paying much data a rates private competing lower have particularly low a other of low-cost margin very or REITs the between center That grade. for So may as us when spread plus huge an not with

Bruce Duncan

Diane's big, big very, you credit difficult. point terms Diane's point, is build on this think line of very to And our on advantage is about line to it construction to that of us product get in a having to And loans our when today credit able to to be point. to of

Michael Rollins

up And the just following observation. on

the a conversation achieve, just pricing about certain are at that is So to team you or cost going looking of your how pricing? or capital into you ultimately the you're it floor and defines minimum look really spread that's the return to with targeting sales customer, when you're generally and the what the

Bruce Duncan

that us… a I makes for return. for Spreads would not a total it our get on say can come that of certain the terms I spread and looking looking is again money typically try and mean, go. we're here. return in -- at just we what We're sense and return the

Diane Morefield

invested Yeah. capital. Exactly. Return on

Michael Rollins

you. Thank

Diane Morefield

You're welcome.

Operator

And the will Bank. question Please Niknam next Matthew come go ahead. with from Deutsche

Matthew Niknam

question. for thank you taking Hey, the

just tailwind into kicked on just around have later industry one whether I'm year? scale cycle. based know when hyperscale has and Any around in just go the company back customers more the past to digestion been hyperscale this pretty have demand indicators CyrusOne's very these good compete observations. positioning you guys of And the been back conversations broader the larger predictors in First and peers in I robust wondering curious guess against your could I I'm then the vertical the sort phase a competitive in. effectively take and lumpiness on the to the global needs get initial think two you in maybe Bruce, follow-up. public your space?

Bruce Duncan

Alright.

to being three not we like really what I I But need We've us nimble said to have defer So more little of the position and be space. in for earlier smaller it a do that competitors in of again terms I to months in the being terms strongly much I and an in talking opportunity don't got strategy going places terms great versus of move job. other we -- to the very our which big a great this -- like as I'm believe They going needle. gives gorillas. about bit do to

that. I like So

In we've terms been growth, successful. of

we to profitably. sure and that just are on Europe has -- again have say great for But grow got And been prices that on focus think grow continue more later. make I can we you we'll to us. to

of back and terms it's the need flow. terms a sort to as a things then in to -- hyperscalers little question and bit lumpiness ebb In is in your they lot of of end experience an most my the step up and and People doing consolidate.

then pull it been and from But this here than last bit surprised see. and working could But So I longer now, but home, happened three before this things in down four in wait next demand or we'll months back, be it's knows. past little a wouldn't a typically, to Right we'll and to the slow COVID I have if years good, bit. back thing what's big and you but pulls the very little the with slows nine years six see. think has who there's this so -- growth the been a down think

Matthew Niknam

Thank Bruce. you,

Operator

from will go with The Cowen question ahead. Please come next Colby Synesael & Company.

Michael Elias

for I this Hi, may. if Michael is Two on Colby. questions

in the about you're surrounding the there in thinking new And currently? to surrounding certain slowdown How it you. the demand the ban enterprise characterize the customers seeing to the would business? of the you demand U.S. you as tied potential concerns Thank some First headlines given applications particularly half How of potential second from in year. Chinese relates a Internet these enterprise are risk second, were

Bruce Duncan

Well our doing. good. -- again We're what the we've second with look is if line you demand in one good we're and been results enterprise quarter at

worried not we're So about that.

question Chinese think is the good In uncertainty. terms that which of I one is a there

case trying of out commitments is something in in figure I think view making in terms from how derisk that of happens. to our -- point terms of to

security and thing. of more little sort get that So a bit

of over try that. next mitigate look and to months. -- But sort how try the So see risk at just at months, look it happens extent. and all nine again we'll the what looking and this downside six at to But three some months,

Michael Elias

Perfect. Thank you.

Operator

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

Aryeh Klein

Thanks Bruce Europe in and and you're in as congrats seeing the backdrop again quarter that particularly a leasing maybe side. relates on to U.S. the of softer what strong demand it the hyperscale the the U.S. Certainly, you remains Diane. very Can versus hyperscale. balance U.S.

funnel going if the on there looks the on performance? recent could So different maybe just any you than what's elaborate and leasing

Bruce Duncan

team we love and about there. been and sights find good The it's that a great say expansion have position we've would doing again, capacity to again execution. I is all -- job and fortunate Europe, our

we Europe talked Europe been that. standpoint Northern to our from So continues that is be as if like haven't and see but with much capacity a we've I success forward very competitors the mentioned about terms pricing is function right we'll Diane very, we really pleased can how pricing to as that in that. our we and look push how of didn't think continuing to But great we in have in probably in we that's well now our been as market as that. goes Again we've the because again the but success done Virginia of had as U.S., it's

Aryeh Klein

or like but not whether that's talk are steady environment? this sounds about Got bit in it. you can on a And logo just little it additions things of side then the new enterprise holding things slowed

Bruce Duncan

we think the three quarter. logos I added No in

ours base and and a think in little if logo could And are incentive the So a by we which though we focus a got have that very bring a hyperscalers. was new that's very we've Even again good. is we diverse we our people to of client important. dominated

Diane Morefield

think, we so page supplemental great I our disclosed about Yes. disclosure the on XX. what's business And that in and

we're bring existing bring pushing in but on This on from our customers, was new to and revenue three leasing booked of customers. we always terms the of new quarter logos did XX%

a quarter just because know great So we're and we'll customer that's with baseline, we time. do add but we new what's business both key our for additional and us again customers new those existing to is continue that hyperscale we over and enterprise, customers grow leases -- every base,

Bruce Duncan

there -- is just three And so new total. to be XXXX Yes. three XX clear, Fortune

that's in So total new we've what in adding. been line terms of with logos

Aryeh Klein

Appreciate right. All that.

Operator

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

David Guarino

this leasing of year. Can most all expected Hey, the me guys. deliver guidance? into guidance. the With to you new pipeline on translate in the your why quarter more pre-lease A just and or of increase question this December, adjusted help just understand development is those function an for didn't activity Is you it it this EBITDA data tact centers guidance? conservative of delivering a in a on

Diane Morefield

would Yes. of of terms just share. then, second this versus more piece recognition in more per in leasing significantly I that, going my CapEx And to than say, increased through yes, year. walked and remarks I a one-time revenue the lot formal is that other impact the had thing timing the and maintenance of fees that to going the biggest some XXXX is other FFO impact some two that are lease term that repeat items last quarters impacts won't the is, quarter

David Guarino

helpful. That’s Okay.

Diane Morefield

also, remember, -- of almost forward $XXX quarter. of equity again the the And we settled the million end at right

half So the those of the shares now last year. fully impacting are

David Guarino

which sounds was Yes. be spent the but thinking wouldn't No, on it's on the again, adjusted in more deliveries? EBITDA, it impacted that, I time like

Diane Morefield

Correct. Right.

think, of and more, yes, other some that's CapEx I things. maintenance the

David Guarino

look you that any so on is, component last really centers, them renewal that's diesel to the change tenant with of impact just had announced given And power I'm building that week just in conversations future negotiations largest then, possibly in how near a might have they're my data costly could that wondering, the about them? future. like going with question Okay. what and your second stop And relying generators

Diane Morefield

be are visibility articles that it's call. But area. sales the to goals too we that early on to more saw have determine comment topic with about and what Yes. that that speaking really right that Obviously, by the we're now. earnings and aware customer our next should But particular people will of particular their in

David Guarino

you. Thank Great.

Diane Morefield

welcome. You’re

Operator

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

Eric Luebchow

and and Diane with Bruce for Hi. party squeezing the welcome of best Thanks to retirement. in me luck

a just Bruce, So, question. broader

allocation you of for of as with frequency you You a kind business recycling funding permanent that started on as and touched historically but capital just at bit your away and some source. CFO, this looking markets has from JVs a earlier, are shied the or a capital and look but tapped the thoughts kind new I on Cyrus appreciate equity

of So demand whether you is a at, take divestitures asset that kind stabilized something ventures or look that given the closer in joint you think assets? you'll funnel, Thanks. it's of the see

Bruce Duncan

trying look at I to terms the everything. the going to mean, business just to again, way what we're Eric, is. -- understand grow best in of

the So, yes, my got point a question I that over to I a things. a going we're would of period it's say come said, to all And next time view of I've of in But as lot ventures life. of price. on

as go part at look management on allocation. will forward. It's of and going that, to in have we capital we of job and So we'll the more very senior the next say call important a

Eric Luebchow

you. Thank Okay.

Operator

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

Sami Badri

development I you in a XX% the question the a numbers. Hi. pre-leased. you metric. earlier question obviously And of know your Thank had me good an that's pipeline that pre-lease slide reported about is for squeezing in. and I regarding very

coming trajectory all industry, is of properties construction, have And of path pre-leased. of engaged acknowledge level we growth. kind and on data that center operators the oftentimes as not elevated in However, high the as well the speculative

how industry? your more of can in going of to more get speculative in understanding the construction? get to your to you an plan running we basis? you Just engage you so going pre-lease on Are like a wanted on approach Just on kind operate take Are go-to-market CyrusOne?

Bruce Duncan

nice equipment would ready And pre-leased, about can time. inventory deal because when the I can shell -- thing they a it some is say, to us their go of you to order The have they've wants that. weeks with that out operate to six eight always The Well, nice having too. again, negative weeks usually to if want have the it and take long is operational something ready to takes and it client we something got get to now. we're build eight it's

inventory. So it's to have important

sort of that. on I’m mix a So

will it'd money in nice all we have believe go and that terms the larger certain in think and market It's you we will to invest add Diane, of to the we we demand -- that supply a anything? how because strong pre-leasing. market market. in if you function want In is deals, market. is of some think cases, the the good be But have and

Diane Morefield

Yeah. Yeah.

we what we but build data -- halls shell consider a we shell speculative to where to the data build we is but out out really don't So any need if be quickly. build halls able

and the So table what development we halls of building out is data right any XX% are is, are on now, that pre-leased. that

we we to shell a key be capacity. don't have in nine if months, you're where to to could the talking shell exactly kind six to build quickly that's able want in market a So customers to before be react more any data because we like actually hall of

capacity deals. to probably but we Nova balance, have mentioned was as enough we a and react shell to didn't bigger in period potentially some it's a that even there So

really the coming we Clara, and yet much the And should now the So ground. capacity fall start all of into the coming in out of of have Santa to our, have markets but XXXX. that pretty course start We the towards to of of give in don't markets. early shown us the top we major permit out hope ground end XXXX

Sami Badri

kind signing is of and the the I was then, to on into signing? want deal then megawatt that dynamic based Diane like Is signings per quarter X.X clarify of a on. year type be commencements in then on this is see deal? the the of see it that dynamic this megawatt followed in And XX.X U.S. quarter. as takedowns got going to like European megawatt this we versus commented to the big or more just and you guys Got you common type

Diane Morefield

that only some when or that. max. more something -- range. say say shorter what's ramp over megawatts have, of or I kind would typically ramp the six common That's but XX a XX they're deal even or we like There's months is in large nine megawatt when deals maybe megawatts much

we ramp deal only that's multiyear our in the that have So that's elongated. portfolio that

real that's So sure unique more transaction. I'm not a a It's of trend.

Sami Badri

Got it.

Okay. Thank you very much.

Diane Morefield

You're welcome.

Operator

ahead. question Nate go next come the Please Berenberg. with will from Crossett And

Nate Crossett

customers strategy as curious if the But in your new markets. largest me know, to asking kind I guided globally squeezing on I your appreciate for guys. comments Thanks to to giving of waiting or more before enter more expand guys of not? just you kind was color. are potentially what And decision

Bruce Duncan

of heard I'm last Say I the part the that not again, sure question.

Nate Crossett

are going what's than as now your to whether the global Just of be to kind more decision, or you not? guide already

Bruce Duncan

what Well with try commitment question of of sort want where a go. your terms But go I of needs. factor And at think make a they we big there. their and terms growth the these a it's they are can want there in that's again customers, and again in handle look make of internationally. But to big to there's are conversations certain in sure of we terms ongoing things you

our a So issue something where you And the in But and both focus found that this lead across have demand impact. got on new good customers life can for we're markets definitely conversations they I is there's internationally again, because on with see focus to is globe. having what to the we'll forward. going how

Nate Crossett

on from leasing that maybe Was firms? China And That's then quarter follow-up a question Chinese-based there just any in the earlier. the Okay. someone helpful. asked

Diane Morefield

No.

Bruce Duncan

No.

Nate Crossett

me. Okay. Thanks That's it for guys.

Diane Morefield

welcome. You're

Bruce Duncan

Thanks.

Operator

it any question-and-answer remarks. I turn to for over closing now will would This like session. management, conclude our to

Bruce Duncan

Thank for Diane, myself week We forward look a and forward you to the to you by Sean and joining And we to call. out CyrusOne. and video. it. appreciate thank or your look meet everyone, appreciate Michael you And interest lot we in next please it. of We reach

So thank much. very you

Diane Morefield

you. Thank

Operator

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

CyrusOne (CONE) 30 Jul 202020 Q2 Earnings call transcript