QTS - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the QTS First Quarter 2018 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 that this event is being recorded. I would now like to turn the conference over to Stephen Douglas, Head of Investor Relations. ahead. go Please

Stephen Douglas

by Hello, Financial XXXX operator. of welcome QTS’ Jeff here to Relations Chief Chairman Thank Officer; Executive conference everyone, call. quarter and today joined I’m earnings QTS, our Head Williams, I’m first our at and Chief you, Berson, and and Chad Officer. Stephen Investor Douglas,

also joined by team, in participate will are additional executive We Q&A. who members of our

www.qtsdatacenters.com of on are information Investors Our earnings our in Investor website Relations supplemental at release posted section the the tab. financial and

We provided the and hope them webcast to made and it we today. follow make also which slides have available our presentation on with our will easier website,

on start, call SEC are materially. subject certain provided me let risks that you to during a we number may some uncertainties, our statements this forward-looking may in of as described information results vary based assumptions Before include and filings, and remind are future and that

business, FFO, In well realigning the our Today’s duty announced core MRR, in them core statements its as include undertake FFO, QTS realigned press the CX-Cloud and will our Colocation no and EBITDA our support which focus actual this to materials the we we are expect of growth of together our FFO, in adjusted and and Cloud while certain Hybrid issued and in around measures, various the core following QTS Colocation, our Services exiting that Hybrid non-GAAP offerings, Hyperscale certain and information attached today, product also which around key to primary we technology operating customers, adjusted revenue, will strategic of Cloud business post and business unfold. Services as Company’s EBITDA. of Managed business Hyperscale events colocation included non-core with consists adjusted today operating offerings customers core revenue Forward-looking conjunction to completion as metrics growth and its as our remarks guidance along and services plan, with ROIC, be Services that the businesses, Managed is certain previously not with strategic Hyperscale performance our QTS has Colocation with and along remarks Hybrid from update release that remain plan. including morning transition. earnings Managed made primarily

our with regarding turn its our further reconciliation on documents For these measures financial release estimated the available reports now, press the to with. And of morning periodic certain QTS These over Non-Core for and from Relations this call I a filed will non-GAAP our issued website. Chad. information of use excluded that financial informational has SEC and operating refer business purposes, and of GAAP you the to we page We to Investor statistics or furnished our our are them results.

Chad Williams

Thanks, Steve. Hello and welcome everyone.

was our performance highest second our represented quarter in colocation positive hyperscale net first history in total markets. Core in QTS momentum hybrid million the of a our we to more our prepared I’ll forward strategic brought conference delivered XXXX As very the arrangement which first quarter you’ve detail seen, have discuss our of strong the both and business. $XX continued predominantly remarks. QTS leasing coincide supported by importantly releasing within with partnership GDT, existing in my announcement in has with and earnings call accomplished

our were expectations reflect strong core and the results demand datacenter in the business and positive momentum during consistent Our the sector. with for financial quarter continued underlying

positioning to for and with in executing These our team’s pleased our strategic profitability. QTS growth value unlock are an Slide plan business we to performance X, on I that by growth initiatives the quarter. us laid out Turning am last enabling accelerated significant

positive already seeing are flow through performance. we the Importantly,

a represents core in QX a reported XX%, customer in of one-time XX% which XX% increase year-over-year. a growth basis adjusted year-over-year from XXX and QX sequentially. EBITDA core During the we growth million a revenue quarter, year-over-year. payment excluding first reflected a EBITDA $X point revenue adjusted grew Core of X% margin Core

our core material, can you the this our disclosures fundamental in provided we business. to core have into see non-core an breaking quarter and performance visibility forward additional go earnings As enhanced in enable out

As colocation managed these a includes and consists cloud of hybrid support which and and reminder our businesses. that hyperscale core business services businesses, technology

our as discussed X last we main strategic Slide there of on plan. three quarter, are Next elements growth

accelerated growth. – of in revenue organization our around aligned hyperscale primary collocation two our realigned demand sales drive the have we drivers and First, activity hybrid-enabled to business: and

We our in and financial momentum evidenced these build. to performance expect and leasing each are to of significant verticals by as seeing traction first quarter continue

will of and and services we capability broader effort and are solution want hybrid are to cloud strategies. more also further efficiency more directly service our in and predictability managed cloud This on are solutions We CX advanced scalable hybrid the our that the both our customers. and our be for our and focus will enable clear scope business customers and that our to automated enabled platform. hybrid to business managed narrowing operating a and Next, colocation enhance support diverse integrated improve provide enable for we overall continuing their that

through managed versus will example for platform directly solutions these of QTS. partner now delivered enabled hosting a some by However be

later QTS. profitability into service enabling this in with IT continue of infrastructure platforms which services directly example differentiated the I GDT, and and is a we partnership. partner integrate customers’ of platform, the to discuss delivery solution able more type deliver for are one Through presentation, agreement to enhanced detail cloud while Our in will our hybrid

The a narrowed simplified we a the our with structure that closely more of cost broader growth will third business implementation the involves aligned initiative our reduction on focused more for product plan delivering element set. cost model strategic of more

will business. our We for core margin forward significant enable EBITDA adjusted costs expect initiatives these go expansion

this Importantly, the all with executable. improvement margin cost association and are identified

the confident that in next recognized steps value continued creation market are we’re enhanced work we’ve in the the enable more foundation and ahead will differentiation strong that a we While taking future. of there provide for QTS, is us,

Moving X. to Slide

fact plan. already hyperscale execute lease efficiently our software leading are a our Manassas taking offering a strategic service perpetual call. the of effectively and development of March, in during CapEx actions with discuss in hyperscale March, leasing previously greater efficient quarter sales guidance. $XXX this raising approximately support to strong structure of with disclosed capital QX our plan. later the within proceeds as lease great within stock and existing combined in that occurred a announced in markets net for win growth agreement detail our ability which our provider mean growth the bookings preferred this Later that In our our XX-megawatt We on supported of during we a a early a number representing demonstrate are million our public team’s we to teams, launched balance we’ll development The

our this colocation leveraging of first his hiring place the the our sales and importantly joins represents funding as of enabled we direct pre-configured QTS’s the Link. sales capacity with center confident to organization. $X.XX Clint of by organization to in of centers as network professionalism look team second the QTS to execute future our Dan wish and market growth to and QTS we having completion of realignment this April, want CloudRamp cloud Atlanta deliver announced sites now Atlanta new drive source customers scale QTS the data and The leveraging years Head pre-renewable role Jon of funding rates a we team to preferred available Bennewitz to IBM in and March, signed hand-off per Clint QTS’s incremental with veteran hired pre-built, has partner cost in of anchor renewal entire to as via and provided sub he kilowatt QTS CloudRamp Heiden, support largest Atlanta-Metro our managing southeast Direct comprising above sell pricing as interconnection to strategic continued sales spent two right well the provider provides and lowest and go In Also forward IBM Cloud thank and capacity mega we Operational pre continued market. known extensive the and April to hyperscale the range power options as IBM we tenants. I the the of at Commercial our of for was strategy. leadership in remains a where our footprint. public data Dan center hybrid XX-megawatts industry, features sales marketing through AWS strong announced official the forward colocation and up drive Last to capacity open one growth we Direct Link. integrated the demonstrating center most in in to fit delivery in to sub-station a IBM previous expected joins of are the momentum our data Greaves one onsite cloud and We in background a the we and QTS. we cloud a Dan performance Clint the Atlanta-Metro adding Clint’s renewed, connected our week, transition market our business. levels more success well. than colocation region of head case Clint’s in XX-megawatts to helped Cloud capacity of CTO strategic at and well in him continued providers lead have and data Chief are that solution. customers. world hyperscale pleased day successfully value I’m continue our as Colo for was for Hybrid in critical for excited the and major colocation in is hybrid at X, his will in Officer of respected company a in service of evaluate seamless platform platform another Cloud to hybrid XXX-megawatt announced our CloudRamp interconnected five

strategic Cloud be partnership Irving, to with mega customer in with our data IBM Texas pleased our center initial also an order. We’re launching

continued CloudRamp customer public momentum our for cloud providers. partnerships this small, solution strategic Although with leveraging win reflects

Finally, plan executing continued I’m over last strategic A plan team performance to announced yesterday off for initiatives. provider the the of The in are growth forward the to busy leading implement afternoon QTS strategic GDT. a to the year. solutions, we partnership quarter. framework announcing we our since us been with that growth strategic IT great course at pleased XXXX has the look fast of and a which start provides our strong pace the managed

U.S. the Slide partnership provider a solutions IT of we headquartered and is to now strategic afternoon like I’d one customer additional X, GDT with yesterday Dallas, international detail partner. in the on vendors the announced GDT and multi-vendor an that GDT largest Cisco to QTS Turning in also current provide is Texas

As QTS our in we and of a transition new part services while plan partnership contract GDT scope consistent QTS. our to support and and directly of service to cloud driving of partnership will profitability the certain for enhanced deliver customer managed non-core and growth consistent that a our support enables QTS with cloud The and managed narrow GDT. maintain customers, source potential to for

receiving As be reoccurring and for transitioned service will revenue cloud and customers are between XX% XX% of channel migrated. over has non-core QTS that partner fee platform, managed to GDT’s a

initial as agreement the to GDT within tool clients to presence customers are the facilities In they effectively leveraging one as Last of their assist will more move migrated GDT colocation to GDT them as QTS the of its platform. support workloads enable to addition, we the AWS. cloud under ramp to a terms announced customers quarter, expand

to seamlessly growth we to represents the cost. the enhanced continue GDT we service platforms customers dynamically partners plan. customers diverse into extending an enable and various result, without integrate integrate through delivery partner important able automation our infrastructure This to seamlessly GDT enabling in QTS complete complexity service solutions. a our hybrid platform platform, platforms QTS Through or service to As hybrid like for solutions delivery customers. and are allows Leveraging strategic to agreement their were step able

over complete expect financial we to this over XXXX to of be of expect the modest. we year course the relatively will transition to QTS As GDT’s customers platform during benefits the

and growth XXXX this cost revenue QTS to beyond. without in However, partnership support significant arrangement will future and profitability

AWS rather takes integrating solutions are has single, security able providers, be hybrid to but top the infrastructure always to differentiator the them software-defined approach top been ability additional sits variety through and top achieve providers and value the market. an the at our that as to data partners approach exchange of driving model as in refer platform infrastructure Moving SDN of space provide edge Megaport in on a incremental power the cloud-like seamlessly it scalable and down We’ve overlay for on continues is cloud to infrastructure, services for X, enables Slide integrated connecting to solutions that to gen And platform our to high-end launch customer hybrid customers differentiation with In capability up on generation the next physical and center delivery introductions public co-location and next network technology a key QTS deliver QTS to and the for through to way experience. technology and about shareholders. of on co-location services across customers the a what same makes of this support. QTS’ value software been QTS’ a approach of innovator. remotely compliance, led not such to unified expand solutions platform has our it’s and our providing service are our chain whether providers customers, of physical this as and This QTS industry-leading of able connectivity just the platform. like into and by PacketFabric extend and co-location hybrid cloud and leading customers innovating dynamically or through view hybrid We focus like our CloudRamp. platform, we cloud accessibly access And solutions, platform defining solutioning service co-location.

through our refine own managed now strategic services while In the now hosting initiatives Nutanix for set enabling addition, and and partner Megaport through we leveraging like IT broader our our platform of able Private Hosted for plan GDT structure, that as deliver universal and service of cloud much platforms delivery we defined services public providers, Cloud, services. part cost the list PacketFabric growth connectivity to for a software are

an storage example. Let’s take as

[indiscernible] data customers both part To to and the of manage As the up set on need product the IT and QTS provision solution, an hardware, storage. basis. historically software to nearly has every deliver needed solution that personnel ongoing

new integrate storage. of platform for our range storage accelerate IT QTS are seamlessly now as like can delivery Box, introduction SaaS actually have SX cloud like others, that platforms part the comprehensive hybrid the of And and we solution. expand wide now with With we through a and and for enabled options platforms Dropbox, service customers a Amazon, customers services a these based of

the manage without increasingly every from integrated of so and directly to economics advantage allow of co-location infrastructure these do ourselves. together. that one the of take them and solutions QTS can we connectivity, having dedicated Importantly, are cloud attractive single services cost to with deliver the providers, Enterprises looking seamlessly for hybrid combined

performance our infrastructure customer differentiation on cloud Our within foundation combined on [ph] premium with co-location ability leverage to connectivity Slide high to partner now QTS’ service business. and through and operating security broad a will our STP And to of ecosystem continue enable compliance, and end continued our core lays solutions for the that X.

the up QX. ended backlog signed trends pricing churn core aggregate incremental for quarter in approximately and capacity hyperscale accomplished than second in Atlanta-Metro partially the rent, by approximately revenue our Core commenced strength rates of strong remains $XX prior megawatt increased this but pricing in average. XX annualize pricing modified reported, market. X% not leases in at the our across to year X% In strongest Core we Core to in at of Center, rates. increased quarter first anchor mix, quarter renewal we represents with quarter, our our for adjusted This core a history in renewal first leasing competitive four in one our leases million, core and have more supported $XX.X environment. for We two the with X.X% renewal positive, consistent our million This healthy, markets. QTS’ up business continued product demand footprint million clients the $XX Data a totaling renewal which the relative of annualized highest of guidance X% of renewal reflecting from continued quarter within signed, During yet double reflecting of existing pre of was general, QTS and was was full came new

leasing As leases Virginia specific Hyperscale quarter with lease customer. customer. incremental we results I of does signed that our business existing want any with the in megawatt in mentioned previously to the is entirety included be other affect XX the QTS lease an Manassas, to our clear this not this and

commencement upon Only the shell our turnkey of shell megawatt powered within agreement this lease will full reflected turnkey XXXX. and approximately also shell the megawatts five capacity X are in leasing of of XX XX part and lease the the QX lease datacenter As in megawatt megawatt customer lease results. powered new the record upfront early lease

affect the performance recognize pipeline leasing the for capital in results relatively expected efficiency. facility able we QTS’ due turnkey full growth. to powered agreement capital our period, growth the as this additional approximately into customer on capacity, customer stranded our leasing the guidance. on providing future and commitments this quarterly full the a focus will go a capital period is additional and modest spread We forward outlay to shell into power additional of two-year day believe avoid in two-year We By for signs the and a illustrates over which XXXX visibility XX megawatt structure initial over one, having plan ramps were CapEx project the doesn’t

in to which sales team approximately are top accounts, implemented six of the around momentum months realignment seeing Hyperscale performance ago. XX our Hyperscale we be pleased positive the We resulting from

the forward the to look world. continuing technology remains Hyperscale Our pipeline growth we to for in opportunity companies and leading robust support

contributed remains performance where the are Atlanta, the XX% we is in software-defined through our Virginia capabilities team. the in a the differentiate business. through particular Hybrid and included by of business quarter of leasing was of solution. Hybrid our datacenter net Northern a Colocation previously the Approximately QX demand within sector leasing quarter platform Virginia, signed, in source continue first While compliance Northern Hyperscale, cloud pace Markets we public engine Colocation of security and to included encouraged Dallas our announced in lease and colo ramp by are volume facility stream side this contract signing our sales our

solution government previously team a up sales sector to only center may recall, accelerant stemming find contractor as pleased for this demonstrates of but space. early are This value not it vacated by also an differentiation deal security stepped our from As efforts. XXXX we our serves data public federal our and enhancing that compliance that business this you CX our been and to in capabilities

hard our to capabilities to returns required drive strong clients are government We for albeit are specifications predict to federal to with to our opportunities. future enhanced and remains able the for Potential unique to compete leverage growth positioned well we clients. due continue

In and delivery across addition that platform provides, becoming the remains considering is Colocation our the which Hybrid control within for to datacenter market. service the access QTS a Customers’ software-defined how distributed security data key infrastructure and visibility platform compliance, value differentiator our to is logical industries.

solution. this been as serves are platform helped feedback customers and to win to us deals. has market This our the we other In CloudRamp difference with overwhelmingly service head providers, early customers negotiations platform delivery a absolutely our foundation from platform, head for versus While positive. made a has also initial with

pace demand seen for solution CloudRamp of a We marketplace. available through consistent AWS our have

cabinet primarily capital that expected return attractive smaller an deals As we carry on for seeing QTS. are size

deployed markets strategic by in deals we encouraged initial we collaboration has activity good early seeing still in remain with of are we the on capitalizing QTS seeing. AWS. are AWS of with are We where CloudRamp pipeline and been each four the But

to are we earlier, Cloud CloudRamp welcome onto platform. the mentioned I recently the As IBM pleased

launching features with with mega Cloud platform CloudRamp our with As pre-built, customer in integrate center providers. solution IBM the pre-direct leveraging initial providers public strategic a Irving, largest look leveraging reflects the reminder, an Texas cloud endorsement from technology for data continued our And and connected colocation world partnerships We’ll time. order, two the in validation strategic momentum directly market. our solutions represents QTS the partnership service public the future delivery CloudRamp public be pre-configured cloud with which QTS We our differentiating to truly with cloud forward potential that of over are to solution additional cloud believe growth the opportunities we strong providers providers. in enabled

During started see our the to larger deals first also we an colocation quarter, in in increase pipeline.

we realignment, sales of As solution broaden of size. integrated market Colocation all our an part of enterprise approach our recent to regardless addressable customers Hybrid team needing sales include the

by initial results the deals megawatts. are X of XXXX two during We and XXX enterprise that signed encouraged kW between QTS change, of only

to I momentum currently and And Hybrid sales growth, to Following X the in in diversification. the more the Officer outlook Financial megawatt sales colocation board the enterprise on and I’ll over turn have range kW returns potential and leading Berson, Heiden discuss we’re accelerated in our team, Chief balance Jeff will realignment am to Colocation Chief results, with it our of detail. as to of our that, Clint and Officer sheet Revenue financial strong our dozens confident build continued and our XXX now deals Jeff? With continue efforts. now pipeline. support marketing customer

Jeff Berson

Chad morning. good Thanks and

results financial our XX. Slide on to Turning

we and year-over-year the healthy expectations. consistent metrics core delivered reported FFO core a per growth quarter operating revenue of EBITDA year-over-year. up of core $X.XX year-over-year with plan of our in $XXX.X million, first adjusted our this up XXXX, core initiatives. increase to the XX% For strategic reflect expanded our $XX.X quarter share We We’ve revenue growth Core XX% key a over first representing million, across year disclosures financial ago. quarter XX%

in disclosure visibility performance isolate to go-forward core of focused the trends managing course we’re better the over provide the will be around guidance and unit our how of metrics business February, organization. our and As business we discussed into in key XXXX

excludes support core which and our business portion of Hybrid colo to core as these and Our managed the categorized GDT, also to example products. deals, have in includes business provide visibility. managed managed technology separated that well non-core be CX which certain cloud and transitioned and hosting loss we attached product to specific services businesses, full comprises services that performance aggregate, will Hyperscale Colocation business for We’ve our The the non-core. estimated revenue in as as cloud

currently the As complete products the and of our GDT services non-core customers over transition Chad discussed, end to we taking expect to XXXX. partner by of

such beyond based be our XXXX business. go-forward As models exclusively should core on

through see During likely subject pace course XXXX, our customers and you decline continue than GDT’s GAAP fully the the a transition will migrating be the lag By Non-core will and to rate out of financial of faster this revenue to at non-core and and the loss cost end XXXX migration revenues would These over expenses over revenue business non-core within non-core results. revenue both of expense to removal. expense our timeline due year the of platform. to natural on to a decline of between results. the

liquidity and I’ll Now sheet balance our current Slide review XX, moving position. to

business, quarter approximately annualized up net business, a Due March nearly XX, and had assigned times ability total but on availability XXXX, credit cash We to cash adjusted debt with provide under enhanced made $XXX subsequent to commenced flow we leverage we the not to growth. facility the of EBITDA. backlog yet X.X future consolidated ended liquidity of of of As million in hand. our

an offering stock in with comfortable funding leverage we with in which plan X/X capital current approximately demonstrates additional resulted We’re provide efficient [ph] for $XXX dividend launch common ability development perpetual To capital to March, growth preferred this market level. us perpetual The our our other net provides business additional a means year preferred of and equity. options the than fund million. through of proceeds raising

options to including year JV a within will divestitures. of Over range evaluate asset and structured financings, the we partnerships business, potential course of continue our financing the

nearly development available of pleased we’ll sheet. balance and consistently IPO allocation $X cumulative across capital of will structure a fraction in Since efficiencies Chicago. rich to and are employed infrastructure ranging the in monitor that key of and CapEx for with projects in our To our data has QTS. overall success above billion in like always enterprise capital. what deployed We’ve business with leaseback was facilities. infrastructure taken a where data center Texas competitors acquired Irving, on our to invested Fort Worth, opportunistic basis existing opportunities low already like That allocation to developments we more at faculty projects Texas, approach markets integrated sale We development an Georgia through market from a an liquidity market value incremental Jersey. focus our significant drive are in like new be capital our We’ve de-risk our Suwanee, Effective said, in And large tenants. demonstrated around subsequent drive capital and center and capital successfully platform ability wrapped expansion into we’ve been New opportunity generating services numerous allocation. to to continue health acre from recently return we’ve with incremental them Piscataway, Greenfield

business record track assets. our within and will successful solid and of approach capital our to differentiated creation that model deployment drive continue confident are value We

Slide XXXX, our average and profile. credit to initiative ensure profile our overall backlog in materially Turning with lease weighted term, XX, visibility the strengthen churn strategic associated believe growth we of plan terms our remaining for of and months quarter base non-core. last quarter, customer core the first as from XX remaining XX average length reflected approximately which up reported months contract is The both core approximately

on couple which Focusing customers signed non-core. currently months XX XX included last approximately Visibility core represent quarter, of to of length first also enhanced. top months for future lease our including and approximately our sits to This customers, remaining revenue, top at the XX both average recurring approximately the which reported total during XX quarter. XX% compares contract core extension growth is

backlog which at increase sits approximately relative not recurring core last but assigned basis. core consolidated percent to XX%, as currently of a a our yet revenue XX% a on As annualized quarter of revenue material commenced represents

X%. in also churn business the on to X% business. core we Our our is QX guidance our And in strategic core pace based that growth plan to of churn predictability guidance. XXXX from our meet increases on Annual X% currently are

X%. for our consolidated relative X% reduction for range represents the XXXX a to historical XXX basis business guidance point to core Our of

to XX, XXXX. we Slide moving reaffirming guidance Finally, for our are

is our a core As on business. based our financial exclusively results of reminder, the guidance

to expect XXXX $XXX revenue and between continue We $XXX be to million core million.

We million, improvement our initiatives. which adjusted expect EBITDA cost $XXX a in be between million reflects significant adjusted and XXXX core reduction margin will resulting $XXX from our EBITDA

Our guidance per at of share to core range share. $X.XX unchanged $X.XX also per XXXX FFO is operating a

assumes the business core rental and guidance X% of for between Our annual churn X%.

to opening Chicago capacity Virginia new expenditures growth expect support spend newest Atlanta, delivering in million continue this Ashburn, our in as and our capital We to $XXX XXXX and million data Piscataway, Dallas, center mega future in in $XXX between summer. to well cash as by

lease we this to addition, is development we capital in to early year In XX hyperscale related Virginia, scheduled commence which signed in Manassas, that megawatt the will XXXX. deploy

meet executing Chad. growth call discussed, lease initiatives the our disclosed and occurred over remain on allowed on our bookings with As to objectives financial structure strategic back across levels the our multiple footprint, plan turn our capital to And hyperscale CapEx a to previously I’ll and fact our focused reiterate XXXX on Chad us record that track now We existing are this combined in guidance efficient range. beyond.

Chad Williams

Thanks, Jeff.

and SEC we our out call with support your filed We’ve continue and we annual briefly posted that our provides our QTS. strategic have directly about speaking been address May and We shareholders our value attention on have to that website shareholders and to regarding misrepresentations presentation will moving that like of Before plan I’d to QTS to the to on, the appreciate certain I’d upcoming many additional a input feedback discuss detail meeting growth and and X. reach received. like to on execution.

strategic shareholder who actively the of individuals and Our enhancing execution initiatives. board are engaged our comprises are experienced who to and value overseeing committed

the right has place creation. value to QTS of team track profitable that in continue and and record confident the growth plan company’s are strategic We

want on the Finally to Slide XX, to on our I pleased opportunity reiterate team’s I take how with execution growth strategic plan. our am

core $XX but Our first in That in the which rent performance of the highest during annualized growth. is seeing leasing of rent, the annualized in core the second in we’re build of signed. performance contributed momentum resulted evidence at million Strong strong increased QTS our future not provides to business. our $XX leasing book quarter into million quarter momentum backlog visibility history

in of excited the further Clint our our leasing a Heiden With Revenue Chief performance. industry as extend proven we’re the Officer, center new data leader sales addition to

successfully we our drove basis implement strategic demonstrated friendly core growth improvement XX% XXX the going that we during ability our EBITDA through ago. demonstrated funding a year-over-year revenue GDT our forward. are To compared offering sources the first plan additional quarter partnership in execution short shareholder margin quarter, we momentum And the growth leasing as our perpetual quarter. open significant QTS up maintain in can in strategic growth, yesterday announced the progress Our a to made afternoon, core recently point also preferred while we we In adjusted growth we first confident our to continued support of since to time, our agreement the initiatives. current with have enabling and announcing the pace most plan, already year

hard start work XXXX across we’ll We in that, off QTS work through us, to Operator? your glad With a of the questions. have our much but and dedication ahead be to take country. the strong we’re of

Operator

Thank you.

question-and-answer Instructions] Jordan go our from begin comes Capital question And ahead. Please session. We [Operator first Markets. will Sadler of now the KeyBanc

Jordan Sadler

Thanks. commentary, spoke Chad address you I your pretty the Good colo the in pipeline pipeline and to think enterprise significantly. increasing to morning. wanted hybrid the I

deals XXX a what how that how only closed maybe said said what I’m sorry I X megawatt a as XXX ago pipe. the last year think like you to for you curious curious you changed? but that’s in pipeline those megawatt of deals, compares pipeline look – deals. know the to dozens the to quarter of even I couple I’m kilowatt

Chad Williams

thanks. Jordan, Chad. is Hey, This

started dynamic has up I that organization changed artificial team Dan XXXkW. really has months and picked seen, that cap and few run we ago realignment the Clint a with because a sales think the kind a historically of that had on that, of had of deals that the the were

team focus the just laser more our last on call of teams And we performance the the the of deals. focus we of that Tag us was colocation. It a simplification business when get also hyperscale more allowing just change to have largest led year, the we’re on and needed group we hybrid services that refocused focus top XX organization evaluating Greason to sales commercial in So I how larger on unleashed accounts. just of is up opened account sales And the the We do what just the sellers our dramatically and that. we by that.

dramatic the first get team pipeline ability deal deals have federal with And in we just the seen a XXXkW in opportunities in in more of So more that. multiple that books that a quarter. we’ve in increase the literally pretty just lot business. ability to our addressing are have the we the a And to put

We that. about builds organization that we’re effective in So it. the very is excited realignment being think

Jordan Sadler

the the about deals What And then pipeline quarter. and of and signed hyperscale this types at in I know that of plan throughout strategic of look what those should how the you nice about first today think this like is is part year? aimed hyperscale we flow lease

Chad Williams

Yes.

us customers is as Hyperscale our get we business customers in speed, to win column. win our deals past That our share going one and with about now structured type know. Chief year talked we We We go we location, in directly efficient. year, Greason, certainly the a to going very the demonstrate numbers the we’re and we’ve reports the confident to we are significant when have always don’t those lumpy arrangement of mean to team but all of feel couldn’t – a we Xx. value as to I about far Mr. that fair in our hyperscale to And the think I quarter be allow ability were the partnership our current put as wins in this and more capital encouraged. a in is like experience, to pipeline excited the each first prop the kind that. friendly of that operational leading being Officer me we’re

think have we couldn’t space excited the we in existing I about build we a in where but be and will we’re momentum. that be more continues win to its space opportunity, I will player So measured excited and about economics advantage

Jordan Sadler

And Okay. one Jeff. for then just

expectation sheet, year balance is the to in we an But think On you there throughout got the what level you’ve you range the you here. leverage said, of way of of with as the leverage upper hit… make sort of liquidity comfortable plenty I our terms and of

Jeff Berson

Sure, Jordan. Yes.

we mentioned book higher the year. on over our and turns, we in although of deleveraging the see has maintain in leverages As our a bill last long-term focus which the given revenue around not fact we sort of percentage course visibility natural as backlog, the never quarter, the plan of X.X the been do in that and have the business

a turns next We comfortable that the leverage then call quarter down. back coming are getting with over so that at around closer and to X

with. lot to there do since we’ve outside on and and comfortable a just with perpetual, business point also the equity we for capital on something comparable demonstrate some you of to has bring at our been we’re business options needs We’re that, higher fund having the comfortable other the were that have markets. to business. to focus that up of leverage this is the visibility it the We mentioned relying But in slightly preferred given excited something

Jordan Sadler

Okay, thank you.

Operator

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

Robert Gutman

the question. Hi, thanks taking for

base would just the overall. quarter-over-quarter. due by I typically tenants you revenue. And hyperscale hybrid – XX of basis timing was in it So helpful up to migration was seasonality points I for the year-over-year, I of but be XXX provide. broken lastly, recoveries the the see compositions was don’t revenue And out basis have margin if that and you the wondering from addition, it was wondering leasing to points of quarter could provide if that rent of just the gross declined not EBITDA

Chad Williams

the revenue Again still colocation. the our but win in was is great hyperscale a Chad. that I the the which take This quarter, I’ll Hey, kind is excited. mixture business had of of Robert. bookings, we engine of the basis or is the our of hybrid

momentum of on mixture both about business bookings, was was so sides mix business. a that is So which the what our encouraging XX-XX of seeing our in we’re

that a have other bit talked So with little Jeff about questions. I’ll the

Jeff Berson

you’ve if about level P&L over thinking core and the is cloud of business, core say in see down obviously our to towards revenue transition we as managed. the terms Yes. What Hi, partner. in Rob. cloud coming I’d you’re services businesses rental recoveries managed and that and the

recovery more out the most a been so power a traditional lot we’ve of getting of on And been of that core. been that’s recovery space From standpoint, pulled has in business.

recoveries terms to question exactly last terms in then recoveries your to power And typically going core. margin not to QX. seasonality, QX, impact is that’s payroll that What where this right. a of from tapers see transition you’re So or historically do which see QX the from big big a shift seen you just margin, of to outwards we’ve in tax, drop is

this year last this margin to we continuing year QX course QX QX. some if at place over the XXX get plus quarter-over-quarter, much QX, cost the as you then the go you basis So in the put year you improvement and continues of revenue business, look of margin of tend to to see in and in in improvement steps as can point to higher it’s down But see savings of ramp. we impact margin

that are we’ve we underway year all feel just out the drive do So be now a pulling of end It’s the will business. which of the like through the we’re by significant of and identified going the customers we growth. that transitioning continuing question well be of costs margin completed to

Robert Gutman

thanks. Okay,

would the to Just gross of XX% clarify core hybrid. so number be

Jeff Berson

Yes.

Robert Gutman

of leasing. In terms

Jeff Berson

Yes.

Robert Gutman

Okay. And coming what estimate keeps back for the year. benefit would tax up, benefit the the you tax

Jeff Berson

Yes.

be noise QX. going the past. quite that that some we’re in think created because It even lower tax that has is It’s coming the bit, in going down than about to a was I happy forward. benefit $XXX,XXX

anticipating this course the in benefit. So of side that from a the tax we’re impact of core over material not business year the

Robert Gutman

you. Thank

Chad Williams

you. Thank

Operator

Cho from Richard question ahead. comes Our next JPMorgan. Please of go

Richard Cho

Thank you.

revenue kilowatt to earlier deals. close actually think, about X question you from XXX megawatt one long will to the them for your been what of customer of your from the you sense What then in following up a could also see get has it How hearing are on take terms to them. wanted feedback transition. And starting mentioned, you customers? Just do and this

Chad Williams

Chad. This I’ll Richard. of take part the thanks first Yes, that. is

of the I to sales of I X process colocation, that characterize cycle is around KW four on to longer XXX month out. quarter-by-quarter hybrid megawatt three that think larger complexity just deals, in the the a plays the because so would as typically that deal.

Certainly transition, the So a shorter is you see to a expect the customer six goes here a hybrid could typical leading in cycle of Jon cycle cycle, have I some Greaves that around hyperscale on. much business add to year on feedback a comments see colocation materializes which and might nine is months deal. we our date. than hyperscale him to

Jon Greaves

excited Particularly following end the ranges been GDT. Certainly since a feedback customers really they has can We’ve all high have have, the services, to today. of Thanks, customers lot with the The had positive through latest with way Richard, imagine announcement managed from scope capabilities interactions the understanding the very announced change. which the with been spoke on. we very what’s you Chad. we’ve to GDT security And the some going services. of of

really to formally. we So more I fit kind assume engaging of I’m that a and great have looking forward GDT with there

Richard Cho

thank Great, you.

Operator

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

Eric Luebchow

question. change taking talk about the megawatt expectations little And hybrid capital any as recent in your maybe then Manassas? space? What are to in of the colo also pressure all been planning return size? solution there’s additionally, you for a for XX more well. lease are deals Manassas support given that you customer returns the on Thanks hyperscale Could in right. whether And the All a

get out primarily hyperscale be larger can builds. that more what some yield you property of for So used the or

Chad Williams

that we’ve even see yields about talked change a question. side down It’s that’s still capital lot historical with which other economics of you infrastructure with the We Eric, care ton the chasing X% of in lower to about speed, beyond Hey, handful operational, to are yield. a relevant the be near-term. operated transaction discussing of have XX% of that We haven’t and in how when least expect focused of things the a can the is view you list, on into good short business. a pretty We’ve consistent hyperscale. and hyperscalers with location, you on, get can’t to been that what and seen because this them. Chad. to and historical in that, still on And and scale, at expect show don’t value to talked that it. about really that up hyperscale relationship, to Great people comes bring a this It’s down I comes point in think point they you put the in are you do capital have good hyperscale,

You have team to executing have the right that’s a of locations it. and capable

the have price. not speed time and I of on reliant people, successful and relationships again They it to this. with execution of good is shows time the just been think that those people handful and in that them, is huge because hyperscale have a part

out be and that think is Richmond play earlier, will the or and whether Jeff’s we’ll have be way could give a us I cost we’ve some that do see infrastructure can Atlanta. we Irving tremendous or more stuff. look rich you advantage, want us little encouraged Chicago think yields seen to at or Where point assets to our the competitive out So that’s I continue you with to play

we have that be where end building on So, see higher the on cost could better might of yields advantage that. a you those

have we now. is Manassas building to under forward that. be The is shared acre property, property the right a look just XX a building. that not are we’ll So so we to going It building contract

XXX support built handle the it on we co-location business. always power property on full being property are that’s But infrastructure at we and be build giving have to the to property going the could designing it on that We megawatts some to our our we’re that adjacent point where any hybrid future in our have the company. actually substation does property building because

access tremendous to there a have XX we So acre Manassas, site. fiber power in and

right a have hybrid very, but campus higher drive returns possible building that future the to So could not is very thought the we in co-location now. that

Eric Luebchow

XX% based you’re your in on some follow-up curious efforts the looks the supplemental at in Great. Thanks. more going were a of for all the like if I’m stabilized of changed quick it returns expectation invested just kind your capital on through? And that has just core like your XX% returns restructuring range.

Jeff Berson

This Jeff. is Sure.

check business So can and designed even are point in on the and for other the getting the multi-tenant about were opportunity in nice lower of the upside purpose are it hybrid-colo certainly that early that And see are as the have that we hybrid-colo utilization. over gives returns that. fill a builds still that thing deals in drive is from facilities us with mid-teens still Those development at that quarter number a the you scale factor hyper still their for we back time. on then that returns, profile

mix I can early it want get you mid-teens a are we in hybrid-colo and those product overall drive hyper on will way higher scale higher as higher being out deals imply don’t And to to becomes utilization you so significantly returns. the drive in and returns as to dependent but that said, continue the build this build facility and then go. a utilization That great to that certainly facilities be hybrid-colo

Eric Luebchow

Okay. Great. Thanks.

Jeff Berson

Thank you.

Operator

go next Louthan from ahead. Our question Please Raymond of James. Frank comes

Alex Brown

just to supplement. company is Alex the lumpiness some you Can quarter? part in Yes. in into But customer up. and a successful was quarter? or lease some were you I us in program Brown that like extending It the pricing for a leases activity seems schedule extend Frank. to customer through the expirations broader dig of leases Hi, is this Thanks. new walk the the wanted just the on

Jeff Berson

a were a that those big those excited to we product continue that partner. size kind get reliable long was XX megawatts to relationship a we continue just up of term would an expansion, expansion two scalars see for and normal our their deliver to course go done hyper large it’s just to The them coming service pricing was strategic of natural business. nice had were and to two and and up vendor great to that a I of of partnership whose be totaling It was customers deals We Yes. customers with. say part and early had leases executed. a were we that

Chad Williams

of inherent Alex, whether we’re and over towards to with enhance on that or revenue business through in. to unlocking to terms CX that mix left through you in GDT going some of in value It’s years a XX%. the another the the we’ve down we’re I see process next just from demonstrate how we’re side. the business way migration What jump it’s that the that with support hyper weighted our XX% leases colo couple gone hybrid of drop scale end customer of that’s up or services expiring with where

leases enormous up months. coming couple terms of of top longer average you’ve going those years. months length drop XX visibility to customers got the of next weighted customers from in a So We’ve in XX in seen with much XX the an terms

and credit that visibility builds profile So a of and the great you’ve seen just extension business. supports which the the of

Alex Brown

XX install to can question a large going pacing This for why Where be is remind then XX we year. a of for the a you Thanks. over is now? And just commencement months then the more And maybe from such other one backlog the of color phenomenon here. bit us little this can on new months? – QTS, with percentage

Chad Williams

Alex. Sure,

number that. larger of driver a of is But is XX that to at overall recently the it’s your look that a facility That’s year XXXX. given That’s of of over up ramp megawatt Manassas size backlog backlog then tremendous next again next So I of And percentage time. think starting a it large it customers from a book-to-bill of we’ve obviously that not that just over the won’t have visibility point a provides the number the and our as that the a other unusual just revenue couple. ramps at ramps our of come in not period be big lot a beginning us. the to of all until if for some you signed deals of

it relative than think of then consistent. rolls over or billing so length years couple past. the between for what that been is that’s just we materially wholesale hyper terms off split and you’ve pretty not in the how I different the waited book-to-bill Because that deals booking seen the given backlog in scale next

Alex Brown

Okay. Thank you.

Operator

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

Simon Flannery

be the more customers percent Coming Good to a us over year? just the bit just sort to what of Great. that’s morning. you can And And your going think customers? color are should on then progress loaded. you’d we the that other little second the for of how that And balance EBITDA account before XXX in about non-core it the pursuing with what similar companies? over deals GDT said on business the plans back other guidance, provide of Are would non-core year? deal, for? particular I half the How that you think

ramp pacing Your Thanks. year. that? just and QX EBITDA little a the half rest bit a color more that of the guide what in significant implies through give you on the exact of Perhaps driving is second us

Chad Williams

Yes. Simon. Thanks

excited extremely been years. of partner a GDT, We’ve I our to on sit think, ours a advisory each the first they’ve partner have of committee. for know getting thing been were other. couple They to

that. top process one through exciting that kind rose they to the to was see the of it So and

a for some I on was carrying to their How very your the be element I successfully in this very, and of think a have more and their advancements relationships. take little on our take then bit some Jeff customers and of going the have a that ability we the they’re of GDT that to will substantial little questions. about of migrate and business phenomenal have? And other job maybe up think which I And and customers, profile. think and forward. a very do QTS’s – bit care helpful broad going best their important very about might do be Jon, talk on services of services And of business is capability I grow margin it to our details picking set we good integrated decision.

Jon Greaves

talking Yes, here are about Simon, list. business is these And full the of absolutely, book customer Chad. Thanks, impacted we’re

to migrating CX scope. So additional of the is there’s we’re And the narrowing customers, be imagined beyond no the business. expecting this GDT

the is this So complete list.

Chad Williams

the And of side, this Simon list going is just all on and the second is customers to complete GDT. this

quarter, with thrilled we ways. and a on GDT. to covered be can ability last services for the and this that customers partners be intends talked various to So in other that to platform by about bring But to SDP of we support that transition XXX% covered are

transition. another to on So find we execute do to partner not need that

Simon Flannery

So non-core Is revenue will about kind way the of think decline zero it? to to XXXX. exceeding that

Chad Williams

expectation schedule that in full on end the of ahead correct. of track, if of the terms year. not transition our by We of That’s remain

think two natural based comment my on little question as I over course the your sort this was a of bit factors. about deleveraging that business And year. of on a ramps

new The coming is bringing of of end first online the give is we year. CapEx that facility, A front portion on is by first that the CapEx the Virginia a our guidance half loaded. Ashburn, good which

of months that we’re So online. next excited within the bringing couple of

for we on that business unlocking bright at the we the to continues growth analysts grow so continue others loaded. the about the we’re over year seeing that strong And and course front and shine capital of provides it’s and the and which that’s underlying love growth that business drive have light ability really other being course side is of a things just when the been experiencing that that able going why as business some and and forward. of core that is is like to more the to end investors EBITDA see And then ramp to business

Simon Flannery

benefit come through right study that of rents, so really they’ll or over just the of quarter? the these versus to maybe towards quarter did the renewals end QX And have some a QX they or

Jeff Berson

They were throughout the quarter.

you. Thank Okay.

Operator

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

Nick Del Deo

my taking for question. thanks Hi,

us cost the what cutting tied specifically were directly CX share run were stand or reductions give First, some a question. in your I and perspective what up is of plan the to on you Can into cuts Simon’s cost recognized business not just rate total from following of insights kind executed. costs recognized like where quarter wanted you are the

Jeff Berson

hey, Sure, Nick.

to want the costs business already out that plan, I have thing of of out the first is intend identified. that the take on again that been the cost all point we to So

people we sort think that targets to costs, of in those So to you have costs soft number no portion or of still breakdown severance, good there’s we’ve of A go if achieve. the those about but real sizing some within decisions correctly and managing tough business love it’s that we’re the of providing. simplified important and infrastructure the didn’t in made QTS, business decisions for that making, we terms the services

savings from ongoing are hardware just licenses, repair infrastructure of costs. on then that support R&M maintenance maintenance general some coming cost and software Additional and

really about were year. easy to see They over think come costs of out out we’re will early the course come the are while some remainder business. you that sort be you of expect come in year If still we out consistently cost of fully of over from to should of until to What transition on business how those the out transitioning cost the is course the pull the the customers. But the those see customers. you going do out those

of out fully and have business customers that of the those customers in towards to down business transitioned we the from the lot at over closer to fully the the end But year that year, transition revenue side support we You point. will quarters of to over of a come next starting continue before will non-core the until couple as stay costs the time. the of see end the

Nick Del Deo

any become you or few going great GDT and on way, how or as to a GDT customer’s with transferred large post-transition business That’s And your can, how that’s color. forward? they Thanks lease today the is sort And GDT status be to a is then reset get Okay. give do big underlying clarifications more do Jeff. interested of they if will somehow? preferred going

Chad Williams

partnership for is in as hyperscale they a in find either partner their partnership key that the just opportunity direct business as the that QTS wasn’t competitive of think would mind, business hybrid we I to growing. co-location. grow today elements this to of GDT Yes, somebody to or business and a for of was Keep our one wanted

they They space that’s business you physical to add and us thought it. I like a places need think makes natural grow the their Jon, to that’s that. anything and how about customers is to they what partners put do providing their So power such to part their it not need that of fit. business, and have

Jon Greaves

Chad. Yes,

and about natural the we’re all in summed I think deliver to talking a very transition. it very again, you fit, that well. think would I services ability be up It’s that overlapping no of services

hand So expecting smooth very we’re over customer. a of

Chad Williams

excited these the was pickup centers, And to because we’ve expansion QTS a our in another think in something we forward couple partnership. us and were of years, of for have all they keep was just partnership key have it partner committed which customers been already be those And I to element a great with. move experience data the commitments to do have with to way them that and

Nick Del Deo

And all large can is you will Okay. at comment and GDT how on become?

Chad Williams

entity private employees XXX approaching in but over are $X There and revenue… billion

Jeff Berson

than than GDT rather contribution business, I’m your side the to Rather itself. sorry.

Chad Williams

Sure.

the payment that So from have channel in details a GDT transition we talked XX%. depending contracted is we range on the we if about to payment that customer customers, of revenues the channel with to there that XX% as script the

a that QTS channel, extremely provide profit and it nice from that It can some is operating and the way, you some is for return the upside think, just we high we margin. provides provide which were margin higher us for when look overall also So ourselves to nice of had frankly that. business one we the at

customer, see to the going nice get going big hard the year it’s that the impact really the terms because to over In that dependent see in these in but because site do what you’re of revenue going to provides think the upside what how that a we impact is, business. be will impacted payment, in it not lot exactly of course XXXX, dollars be from absolute over transitions to you’ll transition customers channel a on to XXXX we

Nick Del Deo

Okay. Thanks everyone.

Operator

Our from Lynch. of go ahead. of Bank Please Michael Funk America Merrill question next comes

Michael Funk

the you guys, morning good Hey, questions. thank for taking

transitioning have the pipeline in for sales rent about XX%, results. a couple the First a X first. assigned. help sign deals the quarter higher say per XXX the implies estimates probably could and the be mean me about that And kind realignment just pipeline you we the me think the force think past being Help think back I annualized that that to type years about I $XX between based commentary on million with megawatt of to line envelope XX% drawing kW a one of see want customer. into to million to commentary $XX Maybe XX%, that going now forward.

Chad Williams

Michael. Sure. Hey

the As leasing about think net you statistic.

a very be need and that hyperscale to thrilled on people that creating that but million a of nor number is growth. was hyperscale to do of continue that basis continue lumpy, We’re nice strong do don’t quarter-to-quarter high think part we anticipate will acceleration should by driven diversified we $XX top core that on that

over that We that they to You’re do on sort quarters, couple in to last have million $XX $XX unleashing the anywhere continue per $XX last but close be we business $XX grow exactly about to be million the average accelerated we’ve million the quarter it than the averaged million, momentum don’t right of to will will expect of quarter. talked growth that based leasing from number support growth. mid-teens there, higher level and

Michael Funk

the commentary Atlanta a course. the quick and rates the in you those resign rates and market versus you previous mean mentioned obviously was ones. renewal stand on general one I rates the to, higher more where maybe one And about then of the believe Sure larger I

Chad Williams

exactly That’s yes. Yes, right.

make what’s to our don’t of over X%. X% last And So clear try pricing. our four we we’re sort consistently core years the change increased to anywhere customers always has been reviewing when their and really footage see very from that renewal average you that to happening they square rate

can apples-to-apples what the out the largely customers to diversification So renewed price pricing we’re on because as enables for we’re drive modestly do. we increase they giving have higher us pricing they of enthusiasm value. to a support of keep sort lowering we’re renewing the think conversation able And an commoditize I customers higher at basis which on your us that and demonstrates we’re

our power continue increasing the that knew always at did the still great bit renewed larger hyperscale deals prices us that business of high We two renew that that but core the the been of fact we most in number in just that renewal rate because and the large Atlanta our customers You north two which deals assets business years. cheapest in we the think in quarter to have two little X% the quarter a business the renew bring fact in saw the to those to unusually with increased the market and that size And the and because that love for we base, We Atlanta grow right the seen shot X% pricing and up of number X% the the of you’re in exactly up. critical right. diversified fact is we higher that in customers, We’ve a across puts position of in it we strength those to customers. some multiple market market. attract did confident to our we’ve got that those

market. the it that our final stamp think strength demonstrates a just Atlanta puts in I on

Michael Funk

could renewal more And fear In renewals about QTS? some new this Jeff if maybe the to in there competition. competitive differentiated focus the more around that risk Atlanta commentary was is some bit some on those coming process given was what was you here, there some any a capacity that how and

Jeff Berson

Yes, Michael.

we till new be competition you the reality. noise are environment outside such is Atlanta the know in that to time to have but town, the from internal There – open facilities of coming kind some do was separating think I in no that competitors some those going XXXX.

through to know terrific up standing came of which Atlanta. customer. we show We like to we our has to just customers a significant Colocation is disrupt business And something that truth try work providers. take customers customers value that long partnership a that you is not to and and make just especially hundreds it the that So people point I in that I’d and Hybrid be and other what is knew the don’t on leaving service have where confirm cloud tell momentum

the for or facilities to try dozens the kilowatt to the connectivity us that the other Atlanta. been XX universe Atlanta to in of And we’re is one outside and into It’s you’re them The power here town. Jeff’s disconnect infrastructure customer ability on some some away trying it’s us sub the have miles about there. for paralleled. of take in customers forced out hear entire of to move country, and the assets at scale point not we to me is, And center cheapest we take XX, for our have of we of taking have

out continues think will vibrant grow to which at good us column we value that because that and continue is tremendous coming will flows strong in pick a we’re other be places we’re to market we in in that there, the of and because is up just to the be for more excited and people is excited us to be competition the will mine up Atlanta obvious of. So the gaining reasons more market give Atlanta momentum going And because southeast opportunities that competitors and also is and is looking we deal strength. becoming shops going deal Atlanta feel be to growing because and only flows pick other more

there glad we’re such and a we’re early, glad we’re we’re We’re there, just with scale. glad we’re there

Michael Funk

the time. Thank Okay. for you

Operator

Badri question Please Sami Our from of Credit ahead. next Suisse. comes go

Sami Badri

you. thank Hi,

Sure, consolidation what causing that of and some of XX% the rest in year took full the term churn reported excluding bit the the businesses of core implies and ex-M&A is in year guidance the the core midpoint at the be little for higher we that business Sami. in X% So business will core if reported churn?

the So churn quarter that take in have. to us X% any X% don’t we year. guidance guidance implication we to put the X% the think for except we that think first I there’s middle of in where the where our demonstrate got phenomenal again last down come to statistics. year was in we’ve from rates strength, churn predictability of This continue and the have business visibility materially just it our business. based on narrowing and

so X% every at in the it that X% second context of if a in could or So guidance been historic in X% X% the to X% the thrilled not now you business. I’m a with I to about at thanks growth question inherent, strength it. that by, X% churn we’ve think would incremental just your support to X% the and And talking for call if and can is, provide reduced for the acceleration we down to to it relates bring X% X% calling we’re growth sure continue target it put churn there. target, How in you with business

Sami Badri

looks capital Virginia, so a then it. Got profile the on regarding is color the then hope can kind of specific and in with dynamics one, year on what and potentially of something us that. the SAS so your Thank customer three, it idea return just And you. in I the better invested overtime, two to year year you give lease some want a in follow-up the understand deal I just get like can on

Jeff Berson

continue our which power slightly drive look way rented, on Sure remember the is it, Chad we that below the but drive overall lease that, return capital X% different. on on is we raised capital that the not floor. behind at than churn easy you Manassas the on the return turnkey to the the efficiency, about structure What on deal capital that that and if of as fairly return the power unique, turnkey slightly materially higher we is lease there’s two said there’s shows then drive lease pieces that, efficiency. The about there love and to the which put

the to we scale customer first over five. put also top over to getting that have the So didn’t we significant of we’re the return that in return couple are build didn’t those next visibility years, to about increasing over able our megawatts quickly, a talking a and with provides talking is rapid, again of megawatts going actually those a on capital we not structures, deal we’re not pretty megawatt X% But it’s it you’re then to ramp the happen typically years first would return could will were tend over of that take quickly. situations XX trap turnkey the very types three, so next couple to we shell capital we’re very XX It full The powered quarters. to that not they one take years, and return return, get out megawatts, since going going a that that every in five that X% about ramp of to there. XX just of megawatts see return ramp as to additional a four so couple where

Sami Badri

you other color it. to on existing Got this another is all of portfolio is – for going part Thank them happens equipment of customer deployment the move have for irrespective to their in this to be to your a to any And is to out specifically then an your going be new or Manassas that. that’s this customer churning net portfolio? of deployments

Chad Williams

for marketplace. a on confusion lot thanks Sami, question of there’s the been this the in

QTS, in incremental answers of So capacity but all megawatts is megawatts This we question existing once net hope and power this space keep shell customer, is that Yes, of new answer to yes, within new for QTS. the of this. this in I XX powered in industry. five XX for to an and this QTS megawatts question love it’s

that. to answer excited we’re So

Sami Badri

I Thank you. today. you guys That’s for have all

Operator

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

Vincent Chao

Hey, everyone. morning good

XX% or for understand about you is to the to this or that, million that economics for component, Just come know top-line $XX.X you that revenues lease and coming those off little what the for the the sort guess, more XX% contracts GDTs real they business? from on the wanted to the order on business would use that to I right space out revenue for maybe of then is think a going bit of XX% yeah, opportunity restructuring, in QX as to GDT, I I what as provide but base guys grow growth no within maybe year as need of some outlined XX% of can and XXX historically growth to far the part you so that color

Chad Williams

some as terms we continue right, bucket, we with make fee to but to revenue customers, general of it, behind what revenue Sure, that to one so assuming and and transition to you’ll that What transitions GDT. XX% financials and to move what’s there, is actual channel actually the non-core investors us in you transition Vince, we’re XXX% GDT don’t will so the that. in over unclear clear see XX% see of you’ll revenue coming see refine from terms you’re around over that

to the were I quarter about over of know build transitioning, we which always make talked going see net on upside all to to as is some that into our loss want an also to we’re the of the you transition. a You’re it’s When be everything some of any doesn’t the not that out, to last into customers business that of you planned, see conservatism in building offset expectation colo unclear from potential these numbers. sort of relative sure situations, side reality our and happens going what that revenue the because again

of coming that be it margin, expect should high I’d that get we to until be from hard payment, but have more We it lot behind. to really revenue because support from of customers granular. a again XXXX leads that channel add that’s transition could incremental and revenue that not extremely There cost to we it’s that, continue for upside customers million it’s $X to

Vincent Chao

from Okay, GDT, other exclusivity in just thanks. you is curious sort just flowing bringing that I you question of managed And provided then to within on any deals GDT about to there, and there things really. additional a terms was there some services just the maybe of

Chad Williams

is with Chad, we’ve been GDT relationship channel, any in that encourage people we’re behavior competitive the but and this channel years, no exclusive a in to street encouraged selling continue our that over had two not great want amount partner QTS of and partner on their landscape, products colo Vince, certain services, they’ve but for are with to providing great forward. move as are and we very they’re we a we

that the are in their need customers, coming the to cloud is on in example GDT delivery find I hybrid their power platform which service is that another space announcement and places many ramp colo. think their

topics our QTS peel on part margin place feel high that couple reoccurring a exclusive ability gives another it customers are solve it with land, like of So a They a great back, just to opportunity, is basis. for great to infrastructure to gives the it using it’s revenue an us, channel migrate. committed customers a stream we it us that

overtime, that but we’ll channel And so and any also other or our or channel have not the business we’ll restrictions out the the unusual opportunity, like does partnership just around relationships. see growth anything general of see the

Vincent Chao

a and times right about to Jeff, target obviously look support backlog and five trending just big mean but curious half little the think you thanks. debt the debt-to-EBITDA about which over the if do have little now time on one plus I into I over now. Okay, EBITDA a target, that you and last is one there, a a the sheet preferred you balance higher that think to six way. in preferred times how you bit talked

Jeff Berson

after have been been leverage fund we clear with although on there, it higher. that that capital, is we that confident sheet; as is permanent business it business. year, there is and can love if are continue preferred the that million go itself last perpetual, another the maturity We way the add understand little the we other of the grow. fits also continue gives comfort traditional also is beyond preferred to back it to flow just there’s approximately a the continue but and cash that equity without I’d equity that it source us look in-between mean you business great balance remember the and we to so dividend in I fund just debt. Vin. provides $XXX debt. Sure, funding dilution. a it’s free source fact as that a multiple it’s it capital, to for bit no business has generated aspect we’re the into that beyond ways of additional somewhere can

a to ourselves people cash business remind generating multiple and of going the I to grow math, as into So sources we’ve do got the on we’re lot that top back funding are of ability just their it. want them,

Vincent Chao

you. Thank Okay.

Chad Williams

Thank you.

Operator

of next Jon Peterson comes Please ahead. question go Our Jefferies. from

Jon Peterson

Great, thanks.

maybe, terms on the customers fee, transition So over of GDT, now XX%, question out in that channel that guys going are on to only GDT. I one just to you found the XX% to

XXXX that but think billion not you’re maybe longer-term, at guess he going over sounds trying have just some revenue come point. GDT to this get I’m fees going I’m is $X said they it in time sign a like of and out. thinking new good on those. might is to as So churn to channel customers,

best over time isn’t worst stream very goes of away. So and kind at growing at much declines maybe this probably revenue maybe and

acquisition why sell correct. structure there be question one my large promise guess the I and with fixed just get is versus price done it? we’ll the and assuming So is way of just this whole business

Chad Williams

take this because came it, you asking said channel way for I’ll ongoing question, to want an that. this you clarify. thank Chad. Jon, off certainly first is we they part fee. that the of if is the this

product, colocation business this is business is We an on available this selling moves integrated existing have new income expect our folks to of to be GDT once forward stream that business. deliver and it. keep hybrid to just SDP type sales not to to our

reoccurring So is the this the is a partnership access sales a part will forward to going of this continued be force. business and our something us for key element. that and

to We’re be just the services business. that end to able not to have going deliver drive to

So Jeff, do or you add want Jon? anything to

Jeff Berson

customers that that’s point customers it the and will in Chad’s to other new grow as channel for to are just sales customers, integrated with there this and we’ll be the what to these they to enterprise looking there for that point, our continuing customer, hybrid colo fee one long addition customers there, integrated and team our these that’s we will solution are guess our is have I as it Jon is differentiate sell future solution, business. continue to because is

send on direct QTS, fee. are customers, grow the that, of for these customer And also as continue so business also to of with GDT. at all growing a to expect in QTS XX% colo anticipate we’ve that But top GDT to on of committing got so GDT based customers GDT multiple channel we that continuing future growth to remember and these hosting got on support to you’ve we pairs facilities. so will XX%

Jon Peterson

the for guess core kind than that that guess I the you’re is is that to to going why will be today. I anyway, you slower conclude thank – right? But core that I the business conclude growth – fair there by what color that’s of your that you now growth this mean your fair but through guys way, call

Jeff Berson

towards doing a I remember much scale channel the a not much good the mean business system of to your larger customer we’re why overall that’s partner drive their business To GDT a a GDT and this not continuing our CX historically that of underlying as in sales they’re expand, as – kind services. services. CX our point, that significant geared stack is integrator core is these to put a quickly of reason you’ve this. a business leveraging larger has force going base grow could. got but and has that much as part to is built our also behind business is in that to broader part sorry as to up with these grown move as A here it business core and grown a at resources because quickly

So be we successful with think very they will this.

of it upside our of we or they slightly high or are very lower, slightly regardless margin at We with it’s if QTS. whether same at if higher – incredibly the core all enthusiastic rate grows are will business the be and

Jon Peterson

Got it.

Appreciate you. thank Okay, it.

Jeff Berson

thank you.

Operator

back This I closing Chad remarks. Williams for concludes our over would any like conference to question-and-answer to the turn session.

Chad Williams

for Well, our we do you short input being thank business. on the of our their all appreciate notice the morning. their and impact shareholders, appreciate interest. this I and call on

continue at to to acceleration growth, plan. our work hard We strategic QTS execute

We’re concluded. presentation. and look now XXXX, encouraged first the forward and in may in attending our thank today’s again our your now support. any you for speak year confidence the you of to conference your in and excited has meeting QTS we The and to discussing businesses shareholders analyst, about you trust and result but disconnect. you that. thank quarter with for Thank for the

Qts Realty Trust (QTS) 25 Apr 182018 Q1 Earnings call transcript