CONE - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the CyrusOne First Quarter 2021 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

Now I’d like to turn the call over to Michael Schafer, VP of Capital Markets and Investor Relations. ahead. go Please

Michael Schafer

John Good quarter Nick. by and to CFO; welcome Duncan, Thank earnings morning, call. first and Motlagh, Katherine XXXX and joined COO. Today, CyrusOne’s President you, CEO; everyone, Hatem, I Bruce am

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

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

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

Bruce Duncan

taking impacted our and late of by during for keeping Michael, effort Texas welcome first their earnings begin team that operational customers. data acknowledging winter centers February, you, Thank our to CyrusOne's in storm and our the I thanking care quarter call. to and want tremendous

through and difficult throughout unprecedented a the these helped was manage circumstances. hard us it the state, week expertise, many our of people work dedication very While for

will electricity discuss financial of the Now Slide Katherine the Despite shortly. detail results, had storm, in we good turning Texas higher the negative beginning to quarter, in which rates X. to impact with more due

also GAAP us megawatts, quarter signing leasing a our growth $XXX from approximately for in million backlog with annualized primarily well had year the revenue, beyond. by We this in record and good positioning a bookings XX approximately We of ended markets. customers million, quarter, continued driven US totaling $XX.X hyperscale

Slide XX Moving totaling the York megawatts. on to developments feet completed Frankfurt, square We Metro and New X. XX,XXX construction in and colocation approximately area

Our as of approximately development under quarter pre-leased. development with totaling the footage projects end square of across feet XXX of XX% square US and colocation pipeline the the consisted and megawatts Europe, the XXX,XXX of

to a an the excited We markets. in one to of in leading of are execution agreement site our acquire Frankfurt announce support also XX-acre to development growth

provides maintain a with our low fund across the on X results to available of continue industry for We forward including in detail balance equity. to and our Slide million leasing as significant portfolio $XXX of end our as the March. quarter, growth, contribution well sheet revenue verticals leverage as strong liquidity the by

with hyperscale quarter, pricing of a $XXX per years, reflecting higher revenue heavily the the with customers for towards the GAAP and accounted lease lower this segment. annualized X.X average the kilowatt signed Our of of average weighted term XX% mix during

larger generating churn, despite our period, did few are of of a a impact line business have years we trailing XX% the we bookings strong This of indicates the base revenue. ago. than net that our Over totaled growth, still having XX-month much top

of hyperscale revenue from of end the quarter, enterprise customers. and from our customers the of XX% As was total XX% was

X. Slide to Turning

owned including of first the XX% in up facilities. of XX% the contribution key was of our bottom left-hand some the revenue from interconnection quarter. slide, we've Our metrics, the corner In highlighted portfolio NOI

XXXX and a with XX% from nearly base portfolio, of the customer leases. addition, revenue relatively coming young In high-quality Fortune have we a long-term

location we shows, for to We slide initiatives, announcement water take center, As year. projects continue center of consumption of a net decrease the two-thirds announced the an in natural last of all the of of second the as is as recently good and following our have of our progress important positive data towards be further we our XXXX will our in Dallas facility make most area positive resources. before data one which Phoenix net that focus discussed Carrollton ESG on resulted efficiency continue water water location, our at the side in area, stakeholders. we the right-hand conservation a Water to in Carrollton steps

results. quarter US few XXXX share last an years. this I on X. given call, of leasing Moving want highlight slide is our emphasis to over the area discussing to loss market Since third our our of

During of quarter average. Nearly the XX% signed, averaged GAAP over just million have XX over customers annualized and are quarters, fourth the quarter. to including approximately notably and megawatts Phoenix. our in markets, Northern hyperscale leasing during up compared last this we surprisingly, $XX the Not these two period the XXX% in deploying hyperscale revenue was XX% prior first with key customers, Virginia in

to and capacity customer to Importantly, our has to contributed performance. requirements our to deliver deployments specific across locations accommodate meet strong the we larger solutions ability have recent technical

quarters, opportunities first European productive discussions locations. customers While hyperscale in our in than potential it these we about was has continue leasing to the been softer with recent quarter in have

team job Overall, into demand is be the we as for And leasing across demand a by both are a particular growth. we having any drive diverse with broad dependent less we encouraged leases. key the from this particularly and the signed continue is markets US are convert portfolio seeing, One the presence that it market a of on center to benefits customers. data to Europe of to our in and hyperscale

to slide X. Turning

we of size demand This will represents acquire give continue Europe. megawatts in double about are land grow the development across would inventory excited X,XXX of to and execution data to center of in than of and I key This mentioned the earlier, shell as locations to site respond to XX US agreement materializes. have power As XX-acre our an in capacity megawatts the of additional strongest power total we us broadly, markets footprint. and one capacity it Frankfurt. the in more more potential incremental More to than Europe a

capabilities portfolio, the allow bring significant to development hyperscalers. our scale that us throughout including required are by builds Our quickly online capacity

As the the slide shows, we have megawatts XX over colocation past delivered XXX,XXX feet XX and months. square

demand liquidity, low-cost we strong Our on available strong relatively substantial capitalize sheet, are remains closing, balance at and well environment with a positioned to fund capital. capacity our us developments gives the markets. of In to across opportunities significant

you our Investor hosting Katherine, look members our the more you, and remind and our call now an strategy on financial attend, so that on the for color able will reviewing to please want that update With our and to hope XX. I to guidance other performance get Day provide the RSVP June senior on to on forward year. turn virtual I management your we business quarter be I over Katherine of will that, our the Before trends, calendar. and will Katherine? the we be for industry and team

Katherine Motlagh

you, by year-over-year. $XX.X on behind and first were in Dallas electricity the our that everyone. impact Thank This The the XX% our revenue was storm metered centers Continuing slide impacted storm winter note main XX, please with of driver rate good Uri. Houston data significantly quarter increase reimbursement results million. morning power was Bruce at and the

have know, this that NOI both to our and XX.X% you is the EBITDA pass-through margins from property and our metered margin. and but been revenue, adjusted increases operating dilutes on cost respectively. margin As expenses, zero storm exclude would impact XX.X% Adjusted a power revenue our

million. $X.X electricity Additionally, our storm by the by was costs negatively impact driven full-service electricity during rates adjusted approximately the This with leases the at EBITDA primarily associated data centers. impacted Texas of

totaled adjusted impact receipt power was of and largely a pass-through. billed a approximately $X termination million. property the This tax leases, reversal these lease offset the EBITDA not which For accrual, of fees as is by combined

items adjusting of the higher EBITDA lease after a been impact property the accrual, and the tax than the reversal have the negative reported As of result, storm of the slightly positive including EBITDA. would adjusted fees and one-time impact adjusted termination for

year. quarter's our at more expect weighted customer by the consolidation. exits with driven was call, footprint slightly the and indicated to in this quarters churn elevated had churn the X.X% to the quarter, we towards As of majority In compared we heavily first recent half last be first

to We that full anticipate with each in continue second X% churn churn churn than to the quarters X% quarter year higher last of of will two in the year. the range be of

in from backlog our XX. to leases Moving commenced. continues our to increase The European slide as revenue market contribution

the XX% of as As end quarter, up portfolio, of fourth quarter. end XX% from of of Europe our of approximately the the the represented

current backlog opportunity size these and continue given the significant in that relative of our to Europe the this in will there. expect markets business leases growth the our We trend of across proportion

and square location. small During U.S. lease lease pipeline the was and migrated exited and snapshot across markets grew by as of the approximately across at demand States Omega the were nine Total annualized with colocation XX.X%, this capacity XX,XXX feet our renew facility, development Stamford, end office rents markets approximately expiration of to in United foot not which colocation very facility our facility of other totaling We such consisting the a most as primarily elected space and quarter portfolio this space no of San well provides customers Slide at square Phoenix XX, key with Antonio. of as the Europe Europe. $XXX,XXX. we as quarter, driven a of by our projects in to Norwalk

domestically XXX,XXX is We Upon up meaningfully XX% the of will X,XXX development feet under total. at in have relatively the our approximately square quarter, of to even end split XX% those in consist under strong fourth The internationally. in begun our representing last pre-leased. XX% have footage these investment. megawatts XX,XXX markets XXX portfolio that demand capital derisking square square with feet Virginia colocation and Since in It's European of projects, development feet XXX,XXX megawatts development completion from our colocation a and nearly response square of power of and Phoenix nearly quarter, Northern markets. of with we

slide Turning to XX.

adjusted Our quarter, shares. million the in X.X million net forward X.X down equity, available $XXX issuing equity. times, in credit of million approximately $XX the debt profile end excluding with first remains drew of to At approximately of strong impact the EBITDA we

obligation during our to XX meet well as five expect Slide and settlement We consists in which annualized forward timing for as the draw range. equity record our in million mid fund $XXX.X manage shows quarters a leverage the development, our upper quarter, backlog, our targeted of to down overall commencement the in leases expected times to signed revenue. available our coming the remaining GAAP

next commence to in million expected million the the remaining amount, commence nearly quarter is We two beyond. $XX quarters. Of the expect fourth that $XX over will and nearly

in that we quarters lease bottom million of discussed the As the mid-XXXX. remaining the is megawatt customer year. annually X.X of the in the to million, noted this expected anticipated relates with at weighted deploying of prior have blocks approximately towards commence approximately $XX $XX the year slide, million this end to is second that through to $XX XXXX Of half million $X at where commence

XX, Moving ranges. impact for of guidance the we upper storm the to $XX in ends quarter. other reimbursements the power revenue account metered by of the slide total we lower our guidance first the are million are ranges reaffirming to and And increasing and for

two each think the quarter, to that have the run you plus impact that quarter, of of will second second the please first about As slightly of occurred the in rate elevated you modeling churn last the note, the year. churn quarter compared quarters elevated full

call. more commencements impact towards of end generate execution and we the end for happy is lastly, value secular We to lease the our the the And across areas significant of at that of the And our growth. a that profitable us closing, you in The in will to are quarter. focused participating now to to shareholders. additional strong create of consistent coming the issued on continue the be have in trends questions. us demand the ensure we're have disciplined business, to quarter foundation are well weighted second appreciate shares Additionally, take our benefited to expected are full all the expected first In industry the quarter. the for in providing we run-rate that you positioned team years,

we the one Given of the noon that Session Eastern. in Nick, on call you. at stay the asks Question-and-Answer we request, time conclude can so queue, person people schedule the on that open kindly And please Thank and each question, number lines.

Operator

[Operator We now Instructions] will session. Jon question-and-answer RBC. Please begin Atkin First is question the go of from ahead.

Jon Atkin

much. very Thanks

in you productive had or could anything So I going mentioned in very or parcel. give Europe, whether anything was a question as operational late-stage if as Day. the that the if able you're pipeline nature. to Analyst able of there's any in about us land is to kind strategic wondered for more financial to there's interested Frankfurt And it's And you then, Thanks you of you explore, that are of way discussions. just might characterize if headway topics the Frankfurt the Bruce What related part be Katherine much. I well hyperscale share that? preview that

Bruce Duncan

Great. Thanks Jon.

in we of going terms In we a with things we're to think how think of management what and three, team, we we thinking years, hear sort spend terms of the two, some rest of but me we're terms That's the in to about time. thinking great about goalpost goal not that about And metrics changes. Day, think achievable. looking the but Investor to of thinking going sort recycling, for with about, to be senior about time that is. business, over guidance, you will spend and four is is Katherine, next again, it And be the opportunity what be how at our thinking think what not only to of the

we to think be will it a discussion. forward And look good so And we it.

again, us everybody will that. So for we hope join

Europe In very of very quarter remarks in in in over there. signed Europe, I terms bookings. again, we're was But terms said business about, encouraged, of the my as light

there. great there's hard And demand. we've We things. -- team on are good got -- working we're We're over a

encouraged by we're So, business. report, but to nothing

Katherine Motlagh

Jon, add, would good I And morning.

all, in hyperscalers a demand business. hyperscalers. the Europe, you our of of And don't know, quarter-to-quarter really is work First most on as

So it's very our discussions active. just business. are with the customers And a lumpy

Bruce Duncan

get Investor or about would we we And talk as is. we now closed, it's you since right where the will when close hopefully, not location, it. to But Day, rather to not locution tell

Jon Atkin

follow-up that. then for just And then you on -- And thank the then.

EBITDA, you're So multiyear FFO around that per sounds the Anything that, outlook share? like of outlook would thinking type that, for of provide? would be revenues, you kind

Katherine Motlagh

Yeah.

that understand, especially consider the business, top line metrics. And we'll and how would we So help the growth Jon. framework how see and and the profitable bottom key of we growth, run you

Bruce Duncan

of But not just sort terms we But is again, guidance. the achievable. think of it's goalpost, in what

Jon Atkin

Understood. Thank you.

Bruce Duncan

Thank you.

Katherine Motlagh

you. Thank

Operator

Thank BMO Aryeh next ahead. question you. Markets. is The of Klein Capital from Please go

Aryeh Klein

go-to-market the was if seeing you wondering you the some the you. some can on U.S.? the ago. leasing in How you where out changes about Thank hyperscale quarters give I then, was talk a color markets, done in are few And of that play pipeline?

Bruce Duncan

if again, in you are I distant Phoenix Northern But leases bit. great them demand, Aryeh, again, Dallas the basically quarter, neck-to-neck. signing the just then, of of little Sure. And and a a say, Phoenix terms look demand third. at terms edged would out we're is hyperscale seeing the there. And Virginia in

we've we up we've bring product have encouraged. availability. and again, got we as we're this demand. -- what to great execute you of to team on we're that encouraged terms of focused the by that's we're tell And and in terms I leases, In it's a us seeing but and home look got signed forward, would great And

Katherine Motlagh

in Northern in Virginia line Yeah. have and markets, those Aryeh of capacity. two to of XXX Phoenix we megawatts particular or sight so a

So markets key the are for very those us.

Aryeh Klein

that from on of rate there anything was that just Has event. do of these And increases obviously And surprises? But that? prevent some of hope been differently any one-off there could to utility pushback kind customers competitors. a the on then Great. increases you seen kind haven't from we obviously is unexpected. rate your We this impact

Katherine Motlagh

Yeah.

So let me this. take

provided I collaborative providers very as with we with with And that close sites. customers customers. our all discussions the a of well to power it's are as terms in in think utility the pushback our of First our effort

the For included us metered that their customers. service provide reimbursement customers, is a And it we for is for this them all-in power rates. in for

our from So disclosed, cost that charges portion business. we of in as incurred million $X.X we've

Going in our the state we in accordingly in how and market this broader to the forward, -- see customers. the specifically of we and manage with will develop Texas power commodities have and

Aryeh Klein

you. Thank it. Got

Operator

Richard The is you. Choe, ahead. go Please question next Thank JPMorgan. from

Richard Choe

color it the get Hi. US. or little from is I going quarters? that you're like? wondering more two talking can hyperscale the you. coming customers, look you Are past Is if on in what was multiple few from customers multiple providers? one And this we business over Thank a or signing does pipeline the the forward cloud to

Bruce Duncan

of demand a terms great in say would number I there's by of -- customers.

we're again, by encouraged that. So

on we I encouraged is we're marketplace. again customers In us remarks, seeing signed. -- very it's in deliver up our the the by demand really to of leases out terms to get to funnel of as And discuss pipeline again, terms But we in we're there. and -- don't in But said that. what the solutions

Richard Choe

Thank Great. you.

Operator

next Thank Please Erik Stifel. Rasmussen question with you. The go ahead.

Erik Rasmussen

Maybe on if Maybe playing with you. tracking Phoenix roles into And see just Thank bookings Yeah. Virginia you key throughout better for team how still is quarter. plays potentially QX. the maybe and of that deals eased do off the types that? leasing you in somewhat could that, Northern the comment

Bruce Duncan

We us. roles do Phoenix Virginia strong to going feel for play Northern continue and forward

terms We in very despite us. to Europe. Europe million that off also is strong $XX for continue us But for It was of will very be quarter sales. good think an number in a

But to So we're in very in and encouraged. deliver. again, demand it's up us it's with is it's good and as that. said, Europe But the US, to again, happy I we're

Katherine Motlagh

Yes.

John Hatem

scale what and is drives drives of Just what about. diverse, really those that too -- it's sight I talking of providing and and Bruce execute that's ability of for hyperscale those enterprise, Yeah, both Erik. mean just to it's And leases that's it's signed line us is that types customers that -- to demand the right?

Katherine Motlagh

to of the of the just clarify, from hyperscale the first terms quarter our XX% orders In of came customers. mix

Erik Rasmussen

Hey, you. great. Thank

Operator

go Thank you. Guarino is Green from Please And David our with Advisors. question next Street ahead.

David Guarino

for feels Bruce. focused data a development. new like the It European A on guys. thanks one every question Hey, companies week there's you that's popping center up

development think views to start pressuring I supply to of new get asking start your love you Europe persist I'd outsized profit kind see will how guess rents? So just we long in on before margin

Bruce Duncan

land, get we right. hard would again I All it's it's Europe zoning. because Europe, we hard harder products, say get question. to like It's good find it's to -- and Europe continue the to like a the power to

have And -- get it's being that of when up decent we it's no coming terms it's there. And mind but said, us returns right can -- can competitive do So are the it customers there's special. that we in over find want. we That if But question think you do that to down. returns. in our sites our

so US more in over come time, not will rates to terms think I of returns. And but down the -- rates, they

David Guarino

environment demand top That's outside data are And what that guess markets helpful. how some the appetite of guess maybe the just in capital Could Europe. I shifting I of for hyperscale or top markets? comfortable maybe company's and the then you outside centers on about they of the talk

Bruce Duncan

that -- we'll that again, sight we think our markets Day. if we But to Well, I at we're going sure specific Day. to we'll new it in that we markets not pre-leased will want about time or go talk to de-risk talk them. leasing. going to about of But to over different Investor that to this make a at want more and really we're to markets, substantial about until line of we if with to say have And Investor customer talk we we markets. it can a terms we would have But going in are

David Guarino

for Thanks Great. the color.

Bruce Duncan

you. Thank

Operator

Thank you.

of Synesael Colby Please Cowen. from comes question go ahead. Next

Colby Synesael

the could give you. I you if Great. on update was just us Thank Dublin an market. wondering

presence broadly you. what's a can I'm been can to guys us the look there's go-to-market secondly, sales You describe you But changes speaking, you have to and on if strategy of Thank any just some happened there? what give up structure been built? what would demand just actually And just might compensation why? environment you color so, there. if curious remind then late? if have like And us And the

Katherine Motlagh

Hi, at compensation Colby. we in of know, the just I'll tweak It's question It nature. of terms every as sales was hasn't it of second your plan. you the changes beginning more been sales the as well. look take compensation includes first, our and a to year any year There Katherine. of because, targets substantial the at

And so we any really that, with impact our sales on organization. haven't seen

engaged it's was after it been at as continues team So see first $XX going leasing in to our strong sales a very pretty be the million. they're you funnel and quarter, our team, stable and

have terms co-location do today, development this are Dublin, market, square and self-build that. develop And Now keep of we there market. equates we'll you to as megawatts you have it's in remember working approximately presence we which know, working to XX and a XX,XXX feet, in but if under

Bruce Duncan

be completed It's under in fairly construction, should soon. it

John Hatem

quarter. Next

Colby Synesael

you. Thank

Operator

Thank The question Raymond next you. go is Louthan ahead. from James. of Frank Please

Frank Louthan

Thank to to of coming? about talk to lease the are future expect material you forward? Great. underwrite And any with looking downs rent your roll I you what what renewals rates to are you rents. And sort going wanted release? you. facing Are

Katherine Motlagh

in to churn point prepared we consolidations mentioned we're it. broader favorite working we framework to want of guess I one the the immaterial. first that since was But is The roll disclose. you What and some exits. I in and during guide take as think footprint about do downs relates remarks, and came basis that how came very how my my topics elevated this we and specifically I about a -- normally from to think our the renewals as customer renewal don't it quarter of quarter I'll and rent churn metrics it's

about we play that talk substantial quarter. really it But there the in to downs this go to coming some more are then. we'll as year in and further not be about renewals it's roll So talk will

Frank Louthan

very you much. Okay. Thank

Operator

ahead. go Thank Fargo. you. The next Wells from question Please of Eric Luebchow

Eric Luebchow

Great. question. taking Thanks the for

this with could kilowatt your on on And capital kilowatt? mix So, quarter. color on the give you steel a of obviously maybe us bit were to just per per pricing a yield But returns that related that are you due just development of what kind down what north average seeing US markets, you to some higher? in the your kind cost average million little stay inflation of today $X been costs those your Thank land specifically? of are in you. prices terms in mature or there any maybe to megawatt more able impacts of Have could discussion, around pricing some that build to $XXX basis higher per from came a then, drive development cost

Bruce Duncan

take can they're the with then the say first construction. term. me the to X% of I we've Let and that terms John of in in talk what before stabilized would XX% about said yields yields over consistent terms seen the we

we're term Eric the hyperscalers, we So that. of is feel the yields very The talked it's business about. the is again, the terms encouraged this range leases. terms the good And pretty about within about are of we nice thing in year But X.X that. long-term about in

John Hatem

here, nice you. talk John to it's Eric, Yes. to

We're with line right? around So build Bruce firstly, always product I mean those in customers. are looking to make is our in cost keeping construction And for our the right the place. have what like saying yields costs right build efficiency market right that to -- always we for drives it

So, that's in line.

us not anything commodity today. As seeing stuff, on far impacting we're pricing that as and inflation

a those had shelf locked of focus We looking are think pick year. think all until about achieve. right on we've our about we'll always we product equipment diverse look all when this We're FRP. versus the pricing kind end the at trying construction at cost constantly things the We time, just in we're the And to of for steel metric we it. and and

Eric Luebchow

you. Thank Great.

Operator

ahead. from next Sadler The go of Please Jordan you. comes Thank KeyBanc. question

Jordan Sadler

Thanks and good morning.

for on is terms much I how to Europe now. on we there. second. pipeline lease right percentage trying So think, focus this availability you But have leased. quarter But there? broadly if XX total is, in was know speaking a available I availability touch I lighter The high to wanted of what a really development Europe gauge to in

Bruce Duncan

We've bunch. got a

If up you of projects. and London, terms London I it other we've what bits Michael, in got of a we've would four got look added five, at be? -- some total say, we've in little the would But --

Michael Schafer

of In excess XXX markets. across megawatts our

Katherine Motlagh

of you we Yes, all process will markets be year. probably megawatts. development the that the pipeline, megawatts, in are XXX acquired the land last over then add we is we acquiring, which have just plus if the plus our in And also across land it XX that's the

have runway a and good positive we Europe, So really in we're it. about

Jordan Sadler

are yet guess, development XXX,XXX London look megs. see And XX% speaking colo Because total underdevelopment XX of is then space. you in stabilized got feet I megawatts I colo feet leased. of commence portfolio XXX,XXX among leased. largely? your not it's is square your portfolio. you're to leased XX% I Frankfurt, of Europe at Amsterdam fully you've development That's listed XX

John Hatem

Amsterdam this Jordan, Investor Day, our I mean, example. perfect but we more into mean dive a should I is -- I know, to we're at going

So land The Katherine built was megawatts Amsterdam capacity shell Plus what land out is right? capacity have shell, standing that's to. -- do another have leasable that key X.X there. this shell. XX-megawatt we megawatts into how in there's shell we three have do and we XX-megawatt We a turn additional where There's right? is leased. for speaking that's So quickly,

those. kind capacity there's depending of between buckets So capacity combination and on land they into that different execute could soon fall shell on all how capacity, build we kind and of

Jordan Sadler

over it basically? XXX give megs So

Bruce Duncan

Yes. Yes.

Jordan Sadler

this nearing on sort spreads? and on then Okay. spending at of sort you've looking up time one year And offering I business to of on, your thoughts other business. what's coming back Bruce, had thoughts metrics. of leasing What question are your this mean, a maybe just sort on

Bruce Duncan

spreads on Leasing spreads renewals? up Offering on… leasing

Jordan Sadler

Yes, yes.

Bruce Duncan

of churn how at Investor think sort of in I to going Day and we're that. look look how talk terms about we at we

think I that. to talk going So about we're

make sure you show up. So

Jordan Sadler

And I'll then you what your guys… on X.X escalators be years there. about that leases

Bruce Duncan

leases if you have at we our about of on all a with But leases. in specific look talk don't We leases. escalation X% general our

Jordan Sadler

you're And Okay. still getting that?

Bruce Duncan

Yes. combination to hyperscale in X%. terms of and it averages of But enterprise that's about a

Jordan Sadler

Okay. Thank you.

Operator

go from next the And you. Barclays. Please is of Tim Thank Long ahead. question

Tim Long

what little quarter-on-quarter. guess, of you're the seeing a side Thank was looks you. about enterprise Was hoping on to it like I down kind of bit ask leasing business. the

Just or And reentry expect little and are new Do logos what pricing the out kind office? expect in to coming give you we worse on of you. to Thank front. us that a better get as maybe that any color verticals bit you're see pipeline you the more little on to business? that seeing a

Bruce Duncan

Mike, want you that? to do take

Michael Schafer

Sure. Yes.

it's lighter mentioned what signed we million had enterprises as fourth by remarks, in encouraged a segment. and by that. it. function is markets. $XX we among It's I really So Bruce pricing, seen -- relative going bit that. his to in across right? reflect seeing is verticals, And quarter we're bigger Tim, The enterprise strong we've historically about pricing varies a little of with good part we're deal to we feel quarter the across a the the mean, in what But that first the remain deal,

So, a impacts variety sizes there's wide the which pricing. out there, deal of

customers a had In we've see lighter add. on an of in we're think pandemic, the few over than consistent think, been quarters. side brought terms years. what probably bit this once in number increase past of to other new I It's we'll logos, terms the in But we've of what prior little I new brought been we get we of able in the relatively

Tim Long

And and a a contain like that. follow-up, just lot small in new leases still but growth of the decent Okay. it sounds interconnect,

you as volume meaningful? think that Thanks. as customer you what about could for more become far getting of bit to business the little new but growth growth talk So a you

Michael Schafer

enabler to in impacted. particular. But was revenue growth enabler of seeing centers we've then And again Megaport of a that's prior data these colocation taking historically. had and mean, viewed impacted The forward. particularly interconnection a now is as SDN -- credit bit interconnection customer offerings a customers as always always this cross-connects, as what that we're business. seen viewing we're revenue. with I we expect business. have customers our going the what ecosystems We we little of enterprise as within And our really Yes. what for in we're had see advantage an we've of period churn. an colocation building quarter It's We a

Tim Long

you. Thank

Operator

you. Thank

Nick MoffettNathanson. ahead. Please from is Deo, question Del go Next

Nick Del Deo

in-source propensity Hi. in any observing Thanks questions. this conversations changes any flow? ebb taking front, and for or kind market of your or change does customer the on the intelligence usual for hyperscalers and that outsource, the suggest you Are versus is major guys

Bruce Duncan

Yes, I need in if usual all have ebb do terms a solution I depends we we're to and terms have mean they for them. and think, of flow. providing love -- right demand site if then it of -- time the they and themselves in it's the it they'd

to we them. continues of we in -- think solutions that we So think provide -- help and terms

them. keep As a that can for business we long we us think and it's as for great doing

So you anything we're encouraged. pretty Do want add John? to

John Hatem

is it business versus right? the sustainability for the or to goals a their leasing and they Yes. business, to takes team, enterprises do lease right? right about business even do expect they who Nick, lever own their would like especially these that think of have that it's their the scale they I an and think And you right? They who and Execute whatever at the they mean need we some as project deliver. mean And an they on of mean, lease goals. safety to do us us cloud So... to hit a their hit for perform people with large with going are to right? I demand view hyperscalers I I hit easy want they not an just army use, it's is people -- that extension

Katherine Motlagh

better. Or

John Hatem

or right, Better Or better.

Bruce Duncan

better. For sure

sure For better.

Nick Del Deo

thank you. Well, right. All

Operator

you. Jeff Please Wolfe The is ahead. Thank next Research. Kvaal, from question go

Jeff Kvaal

you. question. and adjusted a that reverberating the to I guess, And, effect long years perhaps? you you what the that couple I'm be extent the but the much lap ago that very long-term. were Will over but that is as will may in yield for time. sounds is actually as taking -- you point, that quarters European a for targets introduced think thought is US, little with a holding marketplace guess, some a may misinterpreted you ago how hoping I the Thanks worried in wondering that with pricing I for couple A you of the like it second also reverberate or And, Europe -- will it to at start though were of you suggested side pricing though so and harmonize U.S. you moment than it up, sounds the more I which about pricing have this the Yes. point

Bruce Duncan

we when be the to doing the market, Well, that market relates right. US already it of our are clear. lead me was we let to as to one, market the the there. and that X% All of acceptable doing yields terms Number down what to weren't we the meet to for went were threshold XX% as us in view

that. So we did

of, in have for -- clients. of us our in brought also say also I terms think, I'd the capacity the we've in that capacity developed market. We terms we

Phoenix. in Dallas had markets Virginia, the we in Northern and So like

I think helped. that's So

we're So what by we're there. seeing encouraged very

In higher terms Europe in rents in Europe. are higher of yields costs are the the

So you've factor got in. that to

right the US, of do overall traditionally some. higher. in those than much down yields in are time is is they've higher think the Europe but because it Europe terms higher -- In the there US I over have But been in than the come costs the pricing

Jeff Kvaal

two just benchmark Okay. come X% three something the financials? or How long this new to? And that this system we'll that works as then in way up to look Thank does follow-up yield its through Is visible year, quarters or in is on the kind be you. a XX%. renewals that the -- that or a will of

Bruce Duncan

like would they're see in say there. we're not again to but there yields XX I you're I'm getting saying, people weeks that in sure going what in Well you're the in

ahead, Some up a But it longer go in of longer. if takes these or are year show will developments so. would And Katherine. that take it

Jeff Kvaal

Okay.

Katherine Motlagh

our we And a the ago of passed you back so Yes. Jeff had if mean, mid-teens year deals. yield on the I and or in expectations when some we go

was business yields going by the lowered Bruce we at we We So XX%. impacted to new market that. when out were not were market. the leading X% just our And we are as pointed --

the market we the And the structure marketplace. generate that equity because in because at expectations the our pricing for drives the business that able of and we're that of cost and with on still is double-digit have. this we level to debt So same competitive leverage returns are able are be to

Bruce Duncan

Yes.

Katherine's -- Just on follow-up point. to go to

X.X look doing right? of on rates return. you're you And you you your use at interest look a say it equity you're yield all, is our at the times in return of equity -- and our deal means putting will XX%, assume leverage If on you X%. and a XX% -- X% What that

for think. so we return investors our a very And it's attractive

whatever. X% and not So range a that's again -- XX% at

So return we pretty it's still. a think attractive

Jeff Kvaal

Thank you.

Operator

Thank you.

is question of ahead. Next from Please of Michael go Bank Funk America.

Michael Funk

morning. question. good the Hi, Thank you for

the appear XX on it's back one First to pushed know got XXXX. is second quarter-over-quarter to that timing deck. slide commencement slide in the compare it does I more it's I the half of but think, number commencements hard

that commencement hope change? comment behavior? I maybe So could you comment provide ability that? the is correct, assessment your out on And the on what's it if What's it Is providing to Is time? customer pushing space? that

Michael Schafer

It's Michael.

dollars I normal we couple million So here estimates was relative estimating had to last our a that shift to in every significant last this expectations and significant and quarter. shift our But there there of maybe commencement because quarter not relative quarter we a but provided that's a there, we're think update quarter. timing the wasn't

Katherine Motlagh

quarters. I would quarter out million to the fact point expected the the are we commence within signed this And all $XX.X also that leases that the four

Michael Funk

the then highlight you I mean sales. that ESG us you Bruce, I you Day if timing think recycle mentioned Analyst you I a Great. of could if that? types And mean addressing recycling that asset looking to assets correct I'm don't think one that's You can mentioned And you for business what more give of and assuming when know…

Bruce Duncan

June to information. to look XX. that We And you you all love it. forward would give I in just tune

Michael Funk

it. Appreciate Great.

Operator

Thank you.

Morgan Flannery Please from comes Stanley. question ahead. go Next of Simon

Simon Flannery

morning. Good you. thank Great,

pre-leased markets So see nice start phases? Phoenix. your will in let How hotter the space. you thinking any and plans? you have planning some run enough space about you making How Virginia the sure focus Northern to that XX% on before you high next the of Is are like there

Bruce Duncan

a and we it's we very sure we Again to to want question. look demand because at capacity. good the see it have Simon make

those of great Virginia So is Northern Phoenix. we're both looking demand in at both because that -- there and

So capacity we're have so... that looking available sure at to and we're making going

Simon Flannery

third-tier Okay. important. There's of markets And talk you then either of these a about of customers US what or Do markets the more sort in about see opportunities been second- lot in as new the on Europe? focus there? the edge

Bruce Duncan

I primary about Clara. Santa We're talk John a our in that. it's the that excited site on development say about say will not focus. we've would I would the edge to going be very I got and it. big And

John Hatem

talk end year you. Clara the there. be done for to nice of Santa we're Simon looking by to to Yes Yes the entitlements our

I market mean I just a project. that's barrier big entry to excited high So kind that. so a we're of about And really think

Bruce Duncan

It's a huge project XX megawatts.

John Hatem

yes. Yes,

there. project And So not forward markets to looking hyperscale into. in right we're of XX-megawatt one the that getting we're

we stuff. have that's I that's going third that right? of an happen we'll scale at to it If tier anchor when stuff far the an well Bruce that look as mentioned like anchor second kind markets market at go with and is think into As to

Simon Flannery

Thank you. Okay.

Operator

from Badri Please question ahead. go Suisse. next of The you. Sami Thank Credit

Sami Badri

were one industries or we a you. regarding first What couple. verticals? thank the I the those customer consolidating saw Hi, Katherine you have from just for that maybe footprint. the customers

Katherine Motlagh

a to specific churn you're exiting the had that so referring one customers It's Sami consolidating we footprint. not and couple. customer. across the It's

So across the actually market. verticals in happened it it's as the Dallas And well.

space demand And so for we into. already out new we're looking have that that

Sami Badri

Okay. Got it.

The just you even compare that's quarter And that to I was the down now year-on-year quite had bit. per other in you the per just last quarter. signed KW guys MRR KW $XXX a question at when

down at what this Is And if just achievable? bit still I of laid out to X% $XX? understand want $XXX XX% say why dips little achievable return number reason better to you've the Now Is XX% XX% to that X% $XXX to here that $XXX? is a kind X% this an to target.

Bruce Duncan

lower that in in are in versus mix. Remember Europe is US $XXX Europe. the the rates was in reason It's quarter -- had -- That achievable. like the also whatever. because hyperscale. is the is It $XXX US The all last it's the at and because so it you was enterprise than mix with

at say would the the very returns. good $XXX we I rate So have

X% XX% return good As a in earlier the the on and to range it's $XXX very a basis. that I said leverage we're of

Katherine Motlagh

Yes.

that to our to So we yield of underwrite XX%. X% yield

these means close bookings we meets it criteria. our that underwriting fact the that So

Sami Badri

you do much Okay. modeling. for on on balance sheet How are Got the it. maybe And and the And last Katherine now. here cash guys I is different straddling running regions keep hand this then business? only need you because just question ask one to

how rate cash just basis? You on of lot a we a place, projects should run long-dated taking modeling much development quarterly have be

Katherine Motlagh

Yeah.

So on cash want to it is, the we balance minimum not think about the a keep sheet. to that way actually there's

access have credit facilities. to revolving We

that $XXX million, also a a as equity source the the – use business we which forward have find rate. all we We to and run

as are and So always access And to pretty the our if we're $X.X for development. and billion the positioned forward, fund future to find capital a our – considering leverage then much development. vehicle the of between look forward overall, to you ATM at well of we programs the looking years liquidity

John Hatem

Yeah. And Sami, different I'd add be three now. that, also currencies that with operating mindful just we're to

have those have currencies you levels across to in short-term fund Europe minimum and then to Euro, and to requirements. obviously sterling USD able be So so

Sami Badri

it, got it. Got

guys quarter need on this you asking little more bit Do differently. of balance of million sheet, maybe cash you million guys need at like $XX any sheet? question your your balance do given cash Just a $XXX or on

Katherine Motlagh

depends. on on any quarter now our to range Again, cash depends see of million. so hand you It million it $XX from $XXX

pretty range, capacity we to our a we need. and according funding good wide that that's manage but So it leverage

John Hatem

the $XX quarter. that, million quarter. that we do first And dividend the payment at next had And just equity the we of of we as at down bear very we always beginning in did funded a the draw then end mind in

Sami Badri

you. Thank it. Got

Operator

of Instructions] go [Operator from you. Okusanya Mizuho. comes Next Please Thank question Tayo ahead.

Tayo Okusanya

Yes. Good morning.

I So bit. a in focus guidance to wanted on little

And all from would negative power you your done kind when maybe number. back bit of impact situation. You items probably the better did reported have about little $X.XX talk than you the the onetime a out

to pretty And kind talking outlook kind around of of other kind decent slow Europe. have of a you're some is – expected your despite You concerns churn leasing about forward. going

of guidance? I'm raised. the the guidance rest of what's So, type at number felt year kind look from kind and of there today of course of like to XQ results maintain just it because all I could your call? one, some why of when the wasn't Just commentary that, I of was of of the some earnings over – just offsetting Maybe kind curious be on momentum some XXXX factors guess, the

Katherine Motlagh

you. Thank

me Let Tayo. that, take

the of and a nature, our Storm of were lease of others. are within staying because my Uri, during whether for lot onetime I mentioned couple activity stated we remarks example of prepared So as or positive a the quarter guidance, it's in first a were termination fees negative impact events

in guidance the quarter. down So of from bottom because a line that at guidance. the we we XX% our the also is of are which in equity range, year of so, per the terms at $XX perspective, the items we as And share the remainder we stay range within million the do look within for as took is margin, the of debt stay the raising flow and or end normalized those for onetime our if adjusted

have to the the million continue year. $XXX to take remainder for we so And of

be got you've to that So within mindful guidance. of our stated

Tayo Okusanya

you. That's Thank helpful.

Operator

Thank you.

Bruce I'll remarks. Duncan Mr. We have no over closing the to questions. back further And for call turn

Bruce Duncan

Thank you, operator.

Let me conclude with two things.

me Michael, most and to forget and work quarter. thank on XX. out feel I questions Investor finally, if any reach free Day importantly, want good their First, teammates have this you And please for to to our Katherine don't June all my CyrusOne for RSVP to or

are work, appreciated. result and your hard we're much your good a progress efforts making of As

an better. you're thank all extraordinary we you doing team, for make and You're us to

all, So Any for you thank call you. you and Thank the questions call. us. thank

Operator

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

disconnect. You may now

CyrusOne (CONE) 29 Apr 212021 Q1 Earnings call transcript