QTS - Earnings call transcript Q1 2020

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

Operator

Good morning, and welcome to the QTS 2020 Q1 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would like to turn the conference over to Stephen Douglas, Head of Investor Relations. Please go ahead.

Stephen Douglas

Thank you, Operator. to quarter welcome call. earnings and everyone, QTS's XXXX first conference Hello Chief Jeff Stephen Relations Chad today and Investor Head Williams, Officer; QTS, Chairman I'm of joined at Douglas, Financial our Berson, Chief and I'm our Executive Officer. and by by joined our of in members will executive additional who participate also We're team Q&A.

supplemental are our release posted Our website. Investor the and earnings in financial information of Relations section

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

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

the in update are statements along today issued we remarks undertake Forward-looking duty our we of release with events unfold. press and as actual no as yesterday made that today, them to

that our include monthly or certain FFO, FFO, issued with FFO, to NOI, operating non-GAAP refer and press including and furnished the EBITDA. measures operating you our release also EBITDA, yesterday We revenue, adjusted adjusted periodic ROIC, recurring reports remarks ROE, SEC. we filed Today's

regarding information non-GAAP financial them results. GAAP measures of further our For these of use our and a to reconciliation

call the to Chad. turn I'll over now And

Chad Williams

call. Steven. QTS's Hello earnings quarter Thanks and to welcome XXXX first

activated financial to results business overview begin COVID-XX key operating in another of and to an have my QTS, the initiatives reviewing Before providing like we response continuity pandemic. quarter by the of strong for comments I'd the

with continue COVID-XX. to to to Turning respect X, closely monitor we developments Slide

obviously we continue in have a will to to are of and and this performance resilient The combined with far the the monitor operate of safety the will situation predict commitment position we partners remain further plan priorities. share QTS's, what global and our customers wellness observed thus While this as ongoing are highest of we and magnitude not our or pandemic. to unfolds, to we data length impact and center how

first economy, personal their dedication, I'd the disruption, not in many a QTS's to resiliency, of and across time center our for and And during data increased. unprecedented in our did of of yet, disruption despite and performance continued our each like world flexibility need lives. customers uninterrupted change, fact it this class for thank

and demonstrating tested I'm is of QTS QTS's to win have such by our that for and our customers delivered communities, this, challenge other, proud people, truly powered like stepped our our our and each the service. culture to times commitment up their

to multiple dynamic response based We have actions remains reduce in pandemic safeguard to on response employees, adjust partners COVID-XX. continue situation our our plan to initiatives and the to related customers. risk to we And taken pre-established a our what

for of These data actions implementation remote restrictions non-essential daily travel data in the coming for personnel, for centers strict U.S. mitigation monitoring employees, operations non-essential include all center guidelines staff our into our Europe. educating employees of acting those policy strategies, for and work all and on visitor symptoms and on-site and customers the

operations, how maintains In business plans of support and supply response resiliency These across chain business pandemic IT, functions. for general response against addition, activated spread construction, provide collectively unpredictable plans illness and emergency we've business the security, pre-established continuity, that and address events. mitigates longstanding continuity QTS our the

service critical to our remain fully and XXxX provide Europe our our As in ability and confident remains personnel North which each to strong operational. a to data locally fully staffed business our of and has infrastructure, customers. of execution central of the place, result a jurisdictions QTS each Across in we we been America continue operate continuity to operate, in in us with plans, support comprehensive deemed centers for allows which remain of

From chain secured XXXX long in the a of larger time equipment needed vast lead development complete generators, majority given data components already with center to and the associated generally UPS activity. perspective, the our we've systems a chillers, supply such as

continued In to accelerated response our related around to our to expected customers impact we've continued expectations. XXXX growth early the uncertainty additional of COVID-XX, infrastructure acquisition of activity the equipment also support development

permitting. delays a We and activity of result markets and as have seen our construction primarily in contractors of of a availability few modest slower

to are delays anticipated these weeks our and delivery expected these of create infrastructure measured and customers. impact this none or are However, in time in delays at material days to a

Platform Slide our end-to-end. systems sales on integration digitizing our including leading in of environment. platforms or capability force, remote the software I been expanded have critical, into service XXXX enhanced accomplished our internal current effectively to X, internal work QTS SDP enable enabling and QTS have Delivery work successfully for These business industry our This included the initiatives external operating continue to of day to now, and efficiency operate employees. Service goal accelerated QTS's in believe Next during and an

well, software not in platform the powerful the customers data to our empowers capability investments data us before. we've marketplace. interact remotely defined with center services existed industry digitized orchestration The that as centers SDP largely our QTS made center as a for remains and with differentiator in has data to enable

assets viewing and site-to-site provisioning Examples of of time capability remote executing and data ordering. visibility time inventory full center, multi-cloud customer's bandwidth management, connectivity and managing real real within utilization, and the and online of include access power

the only workplace. Today, key customers a over the accelerated market value been has growth in SDP unique plus last share its March, and remote of XX%. QTS's to expanding years, the Since XX,XXX on XXXX to of logins several number new of current the contributor has has base SDP across the of we increased and customers. beginning have approximately SDP users differentiation of over

all SDP addition, now approximately users beginning across XX approximately which is the In XX% averaging is March. minutes, times session since of

averaging nearly platform twice amount the approximately hour. time are time on an the users now spending the session same period, SDP Over times the of top with

center has tool essential role customers, performance managers and to their whose daily primary performing ensure the their data of an For infrastructure, and critical become to IT jobs. applications business is our SDP

With a to access of the infrastructure data customers limiting as result center onsite their

COVID-XX, SDP they with deployments. our provide customers their manage data to data the to center them need are relying on effectively

unique tool sales facilities. in to represents physical for sales proved to tours be demos, more also of a conducted March, of provide our the team SDP nearly given almost person force XXX% powerful in center beginning which activity. to our limited our ability data has increase XXX SDP currently Since

footprints, able to access individual resolution provides existing Through prospective data and to new functionality centers virtually have which tool, map to each data customers. proposed of we Mapper our been provide customer our high including our a of centers XD both and

personnel In our center remains remotely personnel. in Through addition are facilitated onsite as able staffed to operations with Hands place. fully center additional mentioned, critical SDP, customers data Eyes services by including provision our data and Remote

of year services beginning associated has over XX% March, period ago. the the signed incremental same Since QTS increase revenue Hands and a in a realized Eyes with Remote

strengthens and Remote relatively terms, of our long-term to Eyes and effectively retention. small absolute customers as need relationships time customers services While stand ability such dollars our critical our and in during with further Hands for their

SDP of data increasing that We is platform QTS expect critical providing usage infrastructure. our to the accelerate customers value for to increased our to With and well capitalized approach invest management the continue customer our peace from software on to in to our differentiation customers, SDP several as drive in managing continue past weeks, infrastructure. mind and our over team ability center as the defined

and performance another on to financial X. performance moving of strong results. operating trend a continuing delivered in Slide Now financial during growth QTS first quarter, on the consistent

During of total quarter, generated approximately the revenue and adjusted QTS first EBITDA

$XXX million approximately XX% of respectively, million growth and year-over-year representing $XX XX.X% and respectively. a

our representing year-over-year basis during margin points, operating XXXX expansion from was our various quarter business reflects efficiencies seeing digitization ongoing as we're XX.X%, leverage it margin in EBITDA a which XX of adjusted first combined initiatives. Our scales our continued of the approximately with

one perform in to our variety believe we business as Importantly, enables customer the diversity performance during each of federal. our been a of by present been different of contributions periods economic growth last quarters, colocation, case cycles, hyperscale we've from demand the consistent related sources to of hybrid The driven including verticals, over like of has our several the disruption COVID-XX. in our and

Slide Next on X. to

the the quarter. quarter approximately market includes a first new modified the when quarterly approximately representing the which million the We revenue, in signed annualized during the leases course reported COVID-XX ago. quarter leasing incremental This During the of midst of in consistently the is ramping in we of of and concerns volume. first related approximately our year leasing $XX March leasing QTS over third experienced double our a first of month performance

our hyperscale steady leasing quarter with first reflected performance Our enterprise business strength in demand. combined continued

were of XX% hyperscale of two-thirds of approximately that our the higher performance, at signed hyperscale we're end the majority target on overall During contributed range. leases pleased to X% the and vertical capital quarter, QTS's invested leasing those return our

leasing megawatt in quarter logo last lease the for who and a customer X QTS of was QX a megawatt XXXX. the expansion including included megawatt new Ashburn signed X initial in in with year their XX XXXX, expansion subsequent first

data of have capacity XX% center. We now in sold our than our Ashburn more available

continue, over to our which year, a by entire tremendous is Virginia megawatt competitive now team. end this facility a accomplishment We fully our facility of a the of and potential year in little the leasing opened the market current path a midst Ashburn see ago Northern trends assuming officially for XX in the

announced Our across new Hillsboro, with with call, a The QX was quarter by we sites. significant signed leasing customer. hyperscale megawatt which an expansion approximate commenced XXXX Oregon, during this In existing in of with anchored performance two customer majority QX. lease our fourth a QTS included an development X.X incremental conjunction earnings facility on also the

together signing in lease previously facility X.X signing customer. existing lease currently also new In lease addition first during with XX to our a an this approximate the megawatt under the hyperscale with quarter the Hillsborough, construction, megawatt separate customer downtown announced in signed Atlanta

megawatts now of is have XX set more development, XXXX. the mid in We which open than new downtown to preleased Atlanta

ongoing the by continue cost dense built customer advantage interconnectivity to to market momentum pleased XXX and strong and Atlanta ecosystem. are power demonstrate our We out embedded plus driven in base, operating

the deliver our first performance as consistent During to COVID-XX of vertical pandemic. quarter, continued colocation result hybrid the ongoing a

existing support workplace to seen their broader a environment. accelerate have infrastructure customers investments of enterprise the number We remote

the over period a increase assigned Since IP the ago. beginning has of representing year QTS a same upgrades bandwidth XXX% March

for financial small, demonstrates revenue. their overall from QTS is the serving the role relatively of million time While critical at that increased during increased bandwidth need. $X the less impact than customers annualized of our It is

addition, a revenue in XX% cross signed reoccurring associated the first increase with we incremental In connects. quarter saw

we hands customers further remote as key accelerate higher time QTS’ continue renewal their strategic eyes to drive our and reoccurring infrastructure connects QTS contributor X% and deployments. over monetize Today our expect remains ability to a for and percentage that quarter. with to And core datacenter interconnection the infrastructure represents services to for of revenue. the overall The incremental through like cross focus positive pricing that

federal while sign during quarters. look we our quarter in we strong the forward to continues Turning did future executing our to around vertical, And leases any not funnel this to business on in first federal, build. our confidence large

needs well is very an the accelerate With government from to with on vertical combined increased continuing with grow QTS opportunities. return this federal positioned on focused capital to attractive the outsourcing

off net plus We leasing of for million well to XX XXXX started our ahead with are pleased year. quarterly performance strong of the have leasing target

second fact, quarter on our leasing performance strong based QX, and a off to already visibility. the far start so In signed pipeline in in we're

expect we QX net achieving outperform targets continue, objectives. in and which again trends current our financial performance Assuming incremental in growth confidence our provides to leasing quarterly

obviously resulted with end strength $XXX yet Continued in million not approximately but the annualized signed, it volume overall the visibility first backlog of tremendous a XXXX, in that backlog in commenced pleased our our And has $XXX reoccurring the we're our million. in QX. history company's leasing and our is in This revenue growth exceeded XXXX. provides at of of time very

strong performance on strategic and The of the very model executing believe we're our pleased performance we we diversified strength our sets objectives. leasing in the this quarter. funnel to forward for year, first financial look and with Overall, stage, business our and continued operating

turn With Financial Chief I'll that, over to Officer. Jeff? Jeff it our Burson,

Jeff Berson

Thanks Chad, morning. and good

of is recurring our base content and from industry Turning across and to cloud supports variety a XX% revenue digital services the More X,XXX than industries. of Slide QTS X of customers and a diversified business customers generated IT in-place model within media verticals. over

disruption for reaching technology Although within the our COVID-XX many industries, vertical, pandemic far created customers in has instances across datacenter seeing are accelerating many infrastructure. the demand

needs part including to In fact, COVID-XX. recurring of industry's datacenter to and deployments and we've XX% retail, transportation, more hyperscale in created oil accelerate in-place derisking of by impacted QTS’ larger directly infrastructure of represents in the future their several by less some today customers COVID-XX of gas exposure light seen related than uncertainty our looking hospitality to potentially continued revenue.

from disruption concentrated COVID-XX, form of the for associated revenue a in of modest economic verticals. customers industry the customer these relief of experienced amount with requests than payment payment Given revenue. represent total, less some overall requesting we've In X% relief

customers majority rental current number payments. relief, are requesting small some on of the of the payment their large of Importantly, today form

remain And need. while their environment, trends economic time terms. additional form flexibility healthy. spite reduced to support have our certain continuing we within the QTS of has the in QTS during committed this payments, provided embedded remains base our not future evolving payment to of of customers in extended In customer circumstances

which quarter expectation single-digit percentage low with the during range. rates increasing is X% renewal renewal mid space of consistent in rates of represented the an general increase our to Same first

addition, the was trends. base are our and has customer we historical X%. year X% Churn quarter remained full reiterating guidance with first of to within our consistent In churn X.X% during churn

our funding on Slide moving equity Now X. activity to

As through to $XXX stock net access QX approximately of had forward proceeds of earnings issuances. XX, QTS on February our release million

quarter on net represents fourth of ongoing to first have development XXXX gross shares QTS forward at million XXXX net our ATM Subsequent share, common our basis. million quarter X.X of of $XX program call to sold of approximately been for approximately incremental average above equity equity approximately XXX of proceeds settled of the through During activity. million a earnings our forward support $XX X.X per million shares which price an stock proceeds

capital release. current and flow. to forward proceeds equity XXXX on sufficient for available $XXX net XXXX. growth EBITDA QTS proceeds stock cash guidance, year earnings support through Based the and of million retained to CapEx in results plan This funding available XXXX development into issuance adjusted QTS’ of represent QTS’ forecasted approximately full as These and yesterday's

accepting capital our approach development two need. funding activity the typical on of to is capital in QTS’ three quarters focused to support advance

a we our However, in to to or result of as four believe light strategy of continued secure advance funding more volatility our of to shift for prudent business, in quarters capital the need. market it three is COVID-XX, capital

like I'd position. sheet XX, our review liquidity Slide current on Next to balance and

As equity available rate until of currently and quarter, the have debt subject approximately of proceeds, we a of forma the approximately XX% had including $XXX significant total available to the maturities forward beyond XXXX pro our of of indebtedness for We swap end rate, of interest first liquidity $XXX million agreements. and million. is no a fixed series

with first time. our typically to in million is hold cash the ended of We excess any $XXX million $XX given quarter of well we approximately $XX million sheet, balance which sitting the on at

and the result of bolster reserve. a decision of beginning in debt As cash we capital the volatility made in the March heightened markets, to position our our bad increase

closely to position cash continue our normalize, to more the to monitor reduced capital begun since we'll have have but a markets level typical We as situation.

pro adjusted leverage $XXX including times of annualized available proceeds. EBITDA of approximately quarter We with forward the net debt ended X.X to equity the million forma

the equity with is first quarter Excluding proceeds at our supported significant backlog, We funding. our end was times. remain forward are approximately booked-not-billed leverage of which leveraged and profile, X.X equity derisked comfortable current the by

consistent level We while our coming to forward fund plan equity leverage have historically maintaining proceeds at development we quarters with drawdown to our future a operated. currently the over expect where

guidance on XX, full Slide for our Turning the now to financial our reiterating year are we guidance XXXX.

reported million. of million adjusted of $XXX and EBITDA revenue million between $XXX million expect to and continue We between $XXX $XXX total and

our million And acquisitions. $XXX excluding is million of CapEx OFFO and range guidance unchanged range $XXX we $X.XX between share, per to For lastly, at expect $X.XX. a

are pleased and economic delivering model the and we for consistency plan strength we the the focused activity by of supported in are continued Against our full-year results. healthy With with diversification XXXX of performance fully financial our funded XXXX, is dynamic into on and that base. business a the predictable backdrop, and leasing development operating customer our

continue capital forward. further going our we monitor our and drive to will de-risk market initiatives balance for addition, to incremental efficiencies activity sheet growth In in opportunities

Chad. call the turn back over now I'll to

Chad Williams

Thanks Jeff.

We're for QX. pleased off execution in strong to leasing continued visibility quarter in XXXX with performance with first the kick

growth business, have operational drive advantage and the through our mega-scale share continued center digitize We strong continued defined market and differentiators in sustainability leveraged to capability including and cost to experience fully track record our infrastructure, core customer initiatives, leadership federal QTS’s software platform. commitment premium data

a focused remains we're consistent in maintaining of We robust are growth QTS opportunity through level on performance the And the convinced for year. XXXX.

infrastructure diligent critical of while the Over we continuing next several related best to monitor months, our the COVID-XX. safeguarding and weeks the developments customers, in course and to remain to of employees, our will ability, the

to resiliency and commitment thanking customers our close time communities during like QTSers by I'd critical need. of our for and their

to express the their addition, like service dedication deep appreciation recognize police, enabling and National In doctors, nurses, Guard safety. for our I'd that's for and fire, our to public organizations

I'd always, thank continued QTS. confidence customers, trust in like shareholders As their and for our to

be I'd to questions. Operator? your take glad that, With

Operator

come Jon go [Operator Instructions] question ahead. Our from first RBC. with will Please Atkin

Jon Atkin

and and little seems then forward bit I guess backlog if look that XQ there 'XX of shifted this differential, wonder from I questions. compared I'm at the a about balance push one the One out a whether can XQ I commercial then maybe into and trends. is of XQ sort about performance just that. into there you or in going comment your got the a then backlog the two to interested of and - any your in of like terms backlog, from any of year, got And leasing is on quarter

in and quite or in $XX today dollars, million way hitting sounded you prospects positive on you going Any for you thinking the that seen trends quarter-to-date what Thanks. the JEDI, in about quantify role the any plus. kind then what the pulled confidence megawatts commercial to around Ashburn forward. and either had been you've plays and of maybe about trends, sort that And that the commentary of the quarter your

Chad Williams

I'll very confident gotten - we've part. get net our But going to into we about in And feel in that. we've across about specifics some about for federal, not this in I'm leasing us take seen ahead opportunity XX just feel Jonathan, plus We great the done XQ. commercial it's see that's, Chad. we've already that. to work confident good XXXX. trends continue like just And hybrid And seen trends feel us for seen in good we is target there enterprise. that April. hyperscale, things we've make trends, good

in specifically, it's a great just of concentrated obviously Ashburn centers, great of So it's markets, and a open our and accomplishment one like to continues we to short great team, path a we've a we just the that's accomplishment in the facility booked Ashburn that been great data team. data have center that is the the be but been it data for of a leased accomplishment the end think of strongest the the and ours the I differentiated, world have in center XX% place markets feel most one that by year, for completely time should

Jeff, booked-not-billed backlog? the about to do want talk you

Jeff Berson

Sure John.

into there between deals deals terms year, circumstances QX accelerate. of you, So where may we your into nothing and we QX was if of and unusual that QX sure some to QX. QX unusual deals and 'XX but tell and year nothing deal that or terms is into any last wasn't QX always some of different shift of deals shift this movement 'XX I'll was and slipping in whether regardless may in had I question have as answer QX, QX the 'XX, from

do visibility in still That it ending of good pipeline being month Chad's QX, relates the gotten so current and the market just of any point, about we feel again, even the we've unusual QX, leasing to to that. around nothing first environment we're the said as as

way ended million in be towards to well. track could XXXX booked-not-billed we've quarterly got quarter. we for backlog assuming that, we our is a We the continue above that QX target XX and per see things point, it fact QX plus above to From a average target love as leasing that the that well Chad's

to All that increased more of also typical signed, on that to see that larger should and at deals wouldn't some be backlog, service, the these drive come time, a but normalized we've that into booked-not-billed a backlog of we're level. delivering it back same as bringing down

Chad Williams

JEDI on just for a than to back gets Jonathan question, know data press, federal, the And coming opportunities market in center lot the I a there's JEDI of but broader JEDI. specifically attention much federal

I continues and to think more good continue of we're outsourcing. to read just feel federal open to they that in developing government, trends our working the think standpoint, wouldn't feel the from I continue be into to more part data about. anything around just lot So of but about hard that kind the have. and create business, very news, those business we of and that And our are We a good be and good I JEDI

Jon Atkin

kind up might cross you fair and on on that of were And customer-to-customer? Ashburn of a your versus coming SDN through pre-pandemic? any assume then business, on recurring partnerships, the many the quarter early the how to then follow AWS cross of conductivity revenues, Chicago connect. direct in side Connect partnerships part and in that you Direct the connects just of lot those just Quick then color is X ramp been mentioned megawatts, Ashburn of on cloud got have X% On it sorts of

Chad Williams

the ended strong. On the question, first quarter

activity beginning, I all consistent about, of remained into weighted talked sign which strong quarter. through as through it we was good So lot was a us. March got it the read It a the wouldn't that for so at

Jeff Berson

seen we've network? the jump Jon, cross and you do SDN Greaves to Jon on connects on in what want in

Jon Greaves

Connect new And they've And increase cover capacity as ways and again what been change been both work to increased as or through of product absolutely, own we seeing businesses through imagine either Direct great frankly, terms Jeff. their our use directly the for with looking and then mode been well. you dynamically trying seeing is, partners cloud customers have modify that on working. remote those business might the to bringing we've world them. supporting SDN in of We've our been Jon, as own service to Yes, ramps to

I right your in think So you're commentary exactly there.

Operator

from will with next go [Operator question Our Please Sadler Instructions] Jordan come ahead. KeyBanc.

Jordan Sadler

for So is true, customer difficulty] the three then relative the one execution, difficulty] [technical [technical difficulty] it the exceed or hyperscale curious I'm [technical like to and year and the to this of a sort towards are [technical believe [technical And these pull do is demand you that what from seeing this of difficulty] future you forward customers difficulty] to space. business? that we're starting

Chad Williams

think in confidence we're and continued good quarter. opportunities - is hyperscale within year with just I additions a strong from couple strong couple not it deals, one hyperscale. with in of to know us I a a of start Yes, the we’re three does but what seeing that change off start to you don't our give deals having hyperscale. first to

results. strong is from think, perspective have, business enterprise on to QTS I that strength consistently continues think, provides a lumpy right. we be business, The I my hybrid that a

to We have our continues federal business. and hyperscale opportunities to an accelerant accelerate, to be

So, active particular have going and type to right about our think we're we fairly lumpy see the have to do, to work growing, have going tech in think going going year, I but they're a this value it's you're still business. the business. overall companies of I be facilities to we're But, where are to and we that they're deals the returns the that to

Jordan Sadler

- regular or the call characterization future of you'd transformation, an And your this of a in demand some of more or way you this of would sort everybody it, acceleration is… call more forward think pull digital of in terms of

Chad Williams

I just making glad about are that normal And now. active I'm to I of we it. for be customers hyperscalers companies that accelerated. pretty the digitization the feel I think they're And sure has that. anything talk demand. to ready right going it's their hard like take in to positioned obviously on are experiencing were think lots

continue they've and So focused locations. the I on going space be right power in think making got they're to to sure

Jordan Sadler

the bad rent up the us is you on - debt, and Okay. in And date? quantify for relative follow- context reserve give affected asking look that my update could and any relief, some customers to quarter, then maybe for collection

Jeff Berson

Jordan. sure, Yes

we we look we the customers, about our So as good very of feel where - in still our at customer general, stand base. strength we with

only not sorry towards rest the less total but by, - revenue a is given also gas an oil evidenced that of XXXX. As our performance, the for than the Again, within towards retail. base XX% end of from guidance QX the hospitality, and aggregate transportation, end of QX, from of standpoint and customer

good great again, strong we've our total some got less us extensions standing than of far today. it's And count, There's all are diversification in-place. for less some X% some its of got our there's total And great than in of revenue verticals X% those verticals. customer the volatility, where we've just majority with but those customers are in Those asked that that customers. and customers customers The have good within list.

extreme. offered cash collections generally of we've of that we seen in still payment The past. And months all offering to April have two Jordan first but very extensions with extensions. so, are extensions those those point not from one all, that, are To your to where customers in we're that the consistent we've through relief been nothing

So and haven't half seen there. first we last changes receivables We've consistent were drastic the year we receivable of in the seen through pre-COVID. with week, where

we bad of COVID. uncertainties the what know, world. want around that be mindful there as goes we at of we uncertainty that in know don't fact debt there's the don't looked to So, the say We all to is expense, that

look aggregate less represents X% in at revenue. expense it debt total If that you than of still have our our the we reserve, total in bad business and today in-place

Operator

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

Colby Synesael

think expectation. your second $XX I'm quarter, the north as just your about for you're curious leasing million when noting you of expectations

maybe on effectively made the dip, that's And guess Just the modestly are expectation is demand remain first thoughts up enterprise. whether with what your be but cloud that I not you or expected what for at to curious if in - or to your quarter that hybrid and levels saw hyperscale?

years. pricing low relative to seen relates did two-thirds that mentioned know of what the also the are little we last higher leasing on seemed the secondly the give leasing as the hyperscale. came then few the you you us from pricing, a quarter to your But guys threshold. I towards it - end number current in that you And in of you the that mentioned you

you how Just of give if dependent there? sort see got what you. color can - Thank wondering you

Jeff Berson

Sure Colby.

leasing on be very expectations let let me hit the so terms the a misunderstanding first not Let in me leasing, clear of me there's for quarter.

our we in worked at that, had over far actually million $XX of our the about model had put leasing course the was looked million quarter. we So average quarter. if and and XXXX that up than We average XXXX, leasing very closer to were did that business at per $XX of the better way pleased model per quarterly we

for of at of grow work expectation double-digits, more average leasing an quarterly million at $XX The model leasing average leasing to as our we we of XX XXXX. year business want $XX this the - be We plus clearly to modeled of XXXX. our needs in business is if less quarterly at million for

which the put of XX the is we've basis growth we plus market. And as And leading model that to sort still works. so, think up we under used the continue the

the means, that business. gives the fact And the into XX great visibility so of QX us XX we started at confidence that what going XX that's we higher than really that fact in have almost that

evidence imply trying half if in average just in second to above that that well and in reaffirming But at a good of model of some our half. not position again, to year million our as expect drop So is why terms we're what the works first guidance. we to we're start leasing the the a XX we we're that, materially

pricing. side, bit the the On color little around of a pricing

there pricing a So is the that square we're per foot showing on basis.

And customers. the a you of more that seen it's of but shift saw so, you density the little QX, the of about year, terms some of in bit those higher pricing during QX of and really pricing last of

hyperscale a they a So infrastructure there. that we much customer did was big that in develop QX denser deal

hyperscale higher their what still the than relative power in QX, and foot that footage you And we so they returns around want majority the a bit per to the a are could QX. It's returns XX. that's significantly foot Chad, per of saw end in that of to so did and why square the at pricing just? In jump the square in lower. you the square density high the taking are were because just you was QX lower more to looks X pricing

Colby Synesael

hybrid the on side? And

Jeff Berson

please. go was ahead, so Sorry, - No, Colby. it go ahead that

Sorry.

Chad Williams

perform. the We it reliable see continues that to continues the is consistent engine team discipline hybrid continue of to enterprise to just be good QTS and it

might are you enterprise point of parts the where time having, of the whole - industries more some the some that on of tough Jeff's with more pandemic. see to a So a of

and parts healthcare, other financial, business. are many that accelerating in others enterprise got You've just their

consistent it balance to for a that So, continues us. there's we think reliable and be great engine a performance

Colby Synesael

to sounds Chad, last from be about mean, guess it been few of demand seeing modeling of the in made, speaking, with leasing relatively when takes, that quarters.? should generally associated promises like aggregate expectation So be lots and we’ve puts consistent your I our terms what but it dollars hybrid thinking with for no being perspective, we're

Chad Williams

Yes, we feel good it. about

Operator

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

Nate Crossett

a there And going acceleration that wait verticals are give in are you How investment, can us any gauge has accelerating see enterprise that customers of are On versus percentages kind you? say, of kind many accelerating and surprised there. the but of mode?

Chad Williams

of, infrastructure, seeing their said cloud type a and Yes I I SaaS-based mean, focused the as IT those services, previous number on They’re certain on financial industries, and all, opportunity. healthcare, accelerating you're question, companies. of

a, there's like the XXXX it's hundreds companies, the companies work had. are, of that midst experience biggest XX with hybrid, hyperscale things it's It's enterprise feel one ever remote of or about in we not the enterprise Fortune great right? XX of So, they've

So digitized us, - even it differentiator. to absolutely at SDP and world, still in the opportunity you ability service take the tours, that ability platform just able a mean to point digitized for powerful a sale software gives and have delivery is conversations. I be to platform of to them and show operate the the

enterprises to feel seeing is with like our the good hybrid be opportunity trends about we feel continue So demand to team business. the we consistent good and

Nate Crossett

been one have chains color on Okay. you at development. source give gone I'm harder prices sourcing some the us materials up? materials And Could for facing and raw then as on material supply as then moment, the just to and

Chad Williams

things cases, obviously things oil going mean I different down. source seen material the in some No, you've and like

actually So materials have some down. of your gone raw

it. chain the stable. Our we our of you people We've or on disruption like is they've I've chain feel on supply the lean that pieces disruptive handle level haven't XXXX, huge supply majority to chain is secured and We've even substantial, monitor weeks got or about the to-date. been keep with we a forward parts market but and the days inventory and at like should on in and but phones CEO think no nothing that the and posted, to some We'll we interruptions continue need XXXX. it, we'll our of supply - deliver feel that

Operator

come Michael from Bank Please Our next with go question Funk of America. will ahead.

Michael Funk

question thank if I Yes, you the Couple this taking morning. for could.

about full I of and getting you increasing to that So year-end. getting occupancy meaning first on seeing related price ranges the Ashburn, balancing appreciate thing holding XX% And full kind by mean, kind and what versus in the invested return in about of on of how occupancy the terms that occupancy are thinking comments potentially higher for Ashburn? question, you in out market pricing? are capital,

Chad Williams

got hybrid different choices. said good is making so we've pricing, first quarter. federal consistent point think On we little mean, that federal the different is And than I a We than I in a to enterprise little Michael and some balance. are no deals hyperscale, is a

We're being we're every the range And our end in the huge on about disciplined not is we the that business. some range the seeing deal We're doing return deal. high in we're of at seeing our any you're that confident cases of pace fit. feel the the not deals comfortable we're talking in on hyperscale. about Not disruptions and and being that's invested right capital. every why So for

Michael Funk

enterprise could. out do move the anticipate Or of or back might comments some durable? follow-up back Appreciate home we then or connect's that's you you believe working the cross on to going I expect if pull one dial current And growth customers environment? as be that this quarter. Do

Chad Williams

just when opposite. pull future think we and people this event, personal the that of back remote I and opinion that on people take I is think my the be will that get to I conversation, the the going don't work through chances think it's

I for to think going to in people what obviously could happen fashion. are or again form prepare some try

in going to try learn better think they're future. to this, going from to be prepared people So I are the and

us next lessons this time. of try have to you're the from all Fortune see XXXXs think unique got learned better many going time. not too don't prepared I I And if be to

Operator

question next [Operator Flannery ahead. Instructions] Morgan Simon will from Please Stanley. with Our go come

Simon Flannery

doing great. much. hybrid on you seeing rather be maybe What to I'm you a players established in people people color the maybe newer a the conversation, type you Any that to characterizes maybe you Thanks. now look just the having very are interest more entrants broader more some space? vein. deployments? come would Are new Thanks logos, continuing than just seeing that of are in new with new in a you

Chad Williams

our we a we're And across just them the hundred a lead Yes, demos. about all. one as on visibility demos like is for verticals. we're us got indicator demos good I for doing think for of SDP just demos of call, feels the business, And part not we the talked couple SDP, doing our SDP our

reliability. and is there consistency So a good

think hear just the we it those. all for As operational far customers. have is your go, quite our of and sheet operational more as always be and our established balance very I in three your and we're the that focused time established, maturity, maturity, from on a where helps differentiation, It customers your often of are to strength importantly standpoint, players strong

all demand to areas. that we our continue see in So of broader

Simon Flannery

on Ashburn. follow-up just And

is do you demand the couple competitive think like comments, the last that rationalizing your quarters? from course environment of sense over a it is supply, the So there here the seems of

Chad Williams

Yes, I do.

I for and think us Ashburn has others. good been

Operator

next go ahead. [Operator Raymond Frank from will question with Instructions] Louthan Our come Please James.

Frank Louthan

Great.

one the question. Just

as - a lease XX% back So think here? slows down enterprise. about that far I make impacting we have is does from that have how ability non-existent appreciate differently range the to highly impacted hit a environment your decisions your that better the or commentary guess of you wider businesses growth XX% or happens than that recessionary they as my or the question guidance you less but base And affect past? and I midpoint growth, can that of in on in or that consider other should more the when around do what as sector, is how is the not

Chad Williams

of in seeing seeing target part, don't big we've others. XX I - per base quarter, are obviously, on and plus think the are and the growing. Frank, chunk percent harder IT pretty hit why, some comes tried first than are cloud that's industries XX good other business I expanding million Well, of SaaS we and we're the is be mean, business, that that's that plus from in and which areas about companies existing a clients But there why clear about I to far dollar feeling - of our

harder we for performance the leasing growth feel I areas the to the economically, the of area that side maybe within want areas numbers concentration year. small still Jeff, impact the think a the take in it, good this So of about rest of you the have the of guidance?

Jeff Berson

I that terms we across COVID given still feel I'm lot feel the confidence costs, the monitoring guidance with good debt customer of but Even business a growth, to the whether maintaining and cleaning related maintenance and and within not accruals, mean, comfortable that's some particularly of light guidance just the of that with Yes, very across that comfortable costs. we're industry, to obviously in that, we just still - level. have we're with some range. of bad narrow costs to in having the Frank. I very incremental think looking and that,

Operator

from Our next come will go ahead. with Brett Goldman Feldman question Sachs. Please

Brett Feldman

addressed quarter. took commentary Does capital steps you on the also to lot? other. those based follow-up you is has a Can verticals doing there through then any us mix separately? year your quick might this you with colors sanity exposed include And to and or of just your is you. your plan backlog JV check one next Thank funded that win what give portion be partner booked-not-billed your whether to same anything just the want just changed Yes, around a being

Chad Williams

in there Sure, customers is backlog, verticals. those always we at very large, lag. that backlog, Brett. haven't as mean, are the look because established, look towards terms very we is of a backlog the backlogs. the hyperscale, by more those the at They backlog be we going a weighted breakout to But the specifics I of representing book-to-bill are done longer

backlog small growth, confident those hyperscale And customers. very is and got of We've that the by very the of driven technology and of of coming in are majority so we down customers there, cloud a around visibility industries. feel good and can a handful that nature to related look vast at a lot those

And so, this concern relates any backlog. we to see as it don't

a fact, accelerate times. delivery reaching that In of customers backlog can actually are in out number if seeing we

them We down. had from customers those slow haven't to any requests

do partner our we the plan. into not a of JV JV plans with terms funding funding In built a partner, have

we're more any So We're doing on conversation Alinda, JVs. the for open $XXX a without million to That gets this happen there's doesn't with need funded out that well. not we the basis love partnership. and in that there will next mean regular And year additional JVs. through as into us capital

in like got more for the still circumstances, JV lot growth of to growth, a facility and managing the shareholders look we returns. a taking for utilized partially that that maintain existing is what right those But we'd

So in the the just upside. shift ultimately our enable that to provide would us capital we CapEx towards do or extent more partner equity engage of some this and accelerate JV JVs, either that to

Operator

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

Erik Rasmussen

several execution like starting of also challenging circle nice sounds To environment. a starting it or pickup there. more to out one and again, a to have some hearing out providers seen back to power nice little question, I'll question the get you a Ashburn we're my challenging? are a taking for is What available of that, Thanks in be

market of well, the in you who seen more there the of favorable we've capacity public to that what have relation opportunity there's even as some an quarters. and in sort six for where do dynamic come past operators Are seeing in plus to

Ashburn market? the some Just thoughts on

Chad Williams

it’s Chad. Yes, Erik thanks,

global demand Ashburn. And healthy but Ashburn of year lot has be in a it's demand. defining to capacity, And those got a certainly look for this of also been it's datacenter one I a it market.

and So lumpy companies active think XX-XX it I we to as a are a IT do trend it's services, to think, business to in XX months. next the going continues be cloud all know hyperscale. and But the I over be

Operator

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

Richard Choe

I how had revenue? one. two then customers existing color give questions, terms new but on more I’ll are to actual customers? Chad, SDP in new feedback the of little as from you ask of what's going And users a us it the using can velocity Jeff, SDP logins, from and new

Chad Williams

suited you. the think do well that's that take I good part talk Greaves, to to want you you. to Richard, of question, to going I’m for first Jon

Jon Greaves

but we've and to on options hand both folks Absolutely inside Richard services, also workloads seen heavily includes with kind SDP new that of and connectivity within remote then that leaning physical QTS is manage I And of virtual portfolio. where more portion that the on what lot their so, leaning to more the good think workloads datacenter. connectivity the a providing of balance you of the to to provide the they're speak and portion moving datacenter

utilization bandwidth, the heaviest both lot tools their SDP their of spending and the in customers one connects. in connects that terms applications connectivity also and cross how a maximize environment cross they use analyzing of workloads You definitely time where also now actually in can them at power but to of distribute is IP the are look are getting within virtual

SDP Internally, is operational as ways new pretty us of from using an into view. helping point well, a which interesting efficiency we're

things we which so used. time real visibility which movement being the inside critical, most are very the can alive entire that the personnel zones understanding, device to have datacenter. biometric So inside across understanding become within And small separate things platform. like we the is datacenter to - help maintain Even

Chad Williams

the service being premium and demand day point it's offering service, that equation. that the have that we every standard of sheer a feel comfortable versus say, datacenter, from - Jon of my be some of team now, to being XX software seeing as about substantial just the very XX upgraded. is we're form upgrade we right value of of we as right And acceleration driver constantly possible and now but our openness the Richard, days have Could business, right we differentiation just our a there view on the we this,

powerful value that for we only us ability Jon point And the a to to our customers ability makes think drive the the to continue about outgrow. be be because focused we really the equation continue not efficiencies I is differentiating internally margin externally costs to So it, and maybe where but expansion us, but it's focused, that's a And And focused. of we're giving someday. combination. just see to and that platforms on as

connectivity, it's it. driving continuing of see we and that's Jon And that still as though are the business been seeing in because some parts Remote selling to said, not Hands revenue, of even acceleration material, it's

Operator

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

Eric Luebchow

hyperscale know Ashburn seeing I from and squeezing outside funnel customers looks activity in. on wondering lot those some increased of of what focus there's markets where your in for but Thanks me other you're of like your Ashburn, hyperscale a markets.

Europe, the facility a and well, you're in you pretty what level industry start Phoenix, Thanks. an at of be we kind helpful? So year Netherlands seen new, instance, that had activity as would understand strong for to or relatively

Chad Williams

it a because pipeline are Thanks we opportunity. glad Eric. seeing broad of asked I'm you

not it's just Ashburn. So

people it. really Atlanta megawatts open on into to Ashburn’s start success booked that people and before know it we've not been Metro is the case it's why talk opens building this and Maybe about are already I opened. Downtown XX success summer will focused case a clients strong yet, of that to

So hyperscale of price on grow. market. end the and to opportunities that because of that continue partly deals and announced those XX% relationships, range, We've our continued high to our scale X% in those are advantage existing at just cost

we're So, we opportunity seeing continue get with to such a open, about diversification. good strong opening, be enthusiastic and the Atlanta

the growth Eemshaven. exciting. that's the last The we're client, pipeline just facility. summer, Netherlands anchor open hybrid late this the building probably seeing consistent will about, in in that And facility we're reliable Hillsboro from with talked for quarter hyperscale standpoint We colocation

having good see and the portfolio. we It's conversations the portfolio. balance in we see a to So, where people that nice across interested datacenters have are across

Operator

Our next Peterson from Jeffries. go with question Jon ahead. Please will come

Jon Peterson

significant mentioned can year ago. upgrade I think on if you demand give bandwidth Curious context Chad, about bandwidth IP more So Are demand? that us And a where you're seeing curious up dispersed. different specifically, regions from Richmond, is XXX%, some facilities were is given you requests I'm subsea the that cable the of lands the - that you one where there. seeing

Chad Williams

I you some I'll close on Jon, have there may take out. Jon. connectivity conversation and Thanks,

Jon Greaves

Yes, absolutely.

really So portfolio, across it's yes Jon. the

now. this see to all market workplace been view. right from we digital months, connectivity point connectivity more over logos kind increasing the Richmond in all of they very as in a and the a So interesting of usual do new has of are definitely last in and new XX kind certainly lot suspect of with transfer markets a that they market the both market We well. bed as increase see logos

Operator

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

Sami Badri

two a question. part have I

the hybrid most always seen the really model? you the precedence given you've COVID-XX - you’re bucket The see have there's to likelihood customers. first already about question for customers of given hyperscale, off really what dynamics sourcing? both to for But started seems think hyperscale and to enterprise just XX/XX a the over dynamic, predominantly traction? outsourcing of But to or customers, know these outsourcing in is, I be and take given full things enterprise move with take split. outsourcing seeing, the Do do gaining you customers

Chad Williams

to point, going I And I get traction. to Sami think it's to traction. continue more has think, your it

be in both as being space yesterday. power the versus and in I and a think focus are that think in-source the enterprises primary unlock right continuing I trend going maybe a hyperscale the continuing of So hybrid for need is to locations outsourcing just to mindset the and

it. accelerates just event this think I So

Sami Badri

that then all are line even versus move industries there back up And this expectations now to enterprise point capacity your have started to adopt today? the have quick any been outsource in Or way XXXX things to faster it. in XQ with really one in from the before? follow-up, side Got

Chad Williams

in services not financial further two think I even areas. healthcare would been, have be that two, surprised those One, acceleration and I see in outsourcing to

Operator

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

Nick Del Deo

fitting me for in. Thanks

we sale You datacenter in guys increase leasebacks on operators in it's of you should history have whether there, conversions, to number that engaging out out of Are front? unconventional seeing opportunities acquisitions. looking or a of over a anything corporate levered expect facility an get variety the

Chad Williams

Nick, we been opportunity you the really about - some we U.S. invested our had we also in low that's in have the the for that start foundational, have the in see We good footprint. now the Netherlands. returns to is opportunities? focus business. feel infrastructure derisk have return that to we assets about higher great initiatives it's good Could great Right feel Europe, great stewards sustainability rich basis both for a which on profile but return capital, and be

adjacent in have ground most our to all And powered than I of our we mega double think we some footage just square right can now we more unique own of the country. datacenters today. the with shell the

years. lot of that over made locations footprint feel a investments can there's we we've don't I big We've So that and gap. have the think the are, we And a expand. we opportunities got like the

kind at always of and looking creating stay you So, value. of fabric the consistent

We haven't with and value We've of team company our built this our companies. by company built capital. on this creating the going other and acquisitions

the we So us. expand front right always will now and about company. in it's D&A but feel take the of we have inherent of But opportunity footprint we calls, that's good going an this to be to very

Operator

Williams Well any session. would turn conference Chad closing I’m back going to to close for I like question-and-answer over remarks. to the our

Chad Williams

you you. We work hard forward that is QTS environment. to everyone's And are want safe. our to class all that serving thank we work that our culture healthy today. customers, is. And of of thank and safe, appreciate continue service your this Look you you and QTSers in to world next stay service thank doing quarter. stay want to remote I to you thank talking a especially Well, the and for time hope who that others to for provide I that safe.

Operator

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

disconnect. now may You

Qts Realty Trust (QTS) 28 Apr 202020 Q1 Earnings call transcript