QTS - Earnings call transcript Q1 2021

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Operator

Good morning, and welcome to the QTS Realty Trust First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Stephen Douglas, Head of Investor Relations at QTS. Please go ahead, sir.

Stephen Douglas

Thank you, operator. to quarter welcome call. earnings and everyone, QTS' 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

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

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

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

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

issued turn our now for filed refer reconciliation And them yesterday, We over that financial and our the in non-GAAP NOI, update furnished measures results. information Today's recurring are include and statements FFO, along today, adjusted EBITDA. issued we remarks to non-GAAP call GAAP I'll and remarks undertake Forward-looking a duty use our of FFO, operating ROIC, we adjusted reports of operating press regarding to with revenue, release with release including periodic EBITDAre events measures you unfold. press further and certain as actual no to as our yesterday, our made SEC we or FFO, the the also Chad. that monthly today, of them these to

Chad Williams

Call. to welcome Hello, Earnings Stephen. and First QTS' Quarter Thanks, XXXX

expect first consistent strong a Turning kick what to in year of the QTS another off be during Slide quarter will XXXX. X. to robust growth performance delivered we

the into execution environment. continued Jeff strong and coming financial for demand discuss, outlook increasing And has as momentum out of to will year reflect we XXXX are XXXX. our Our continued

year-over-year approximately growth level the total of margin platform, $XXX net digitizing of million, more EBITDA delivered XX% and than verticals. reflects EBITDA growth the of this rates XXX power revenue In our and pandemic. representing initiatives quarter delivered travel million was industry-leading utility an platform SDP. expansion operating XX% QTS and recognized reflecting of our the scales margin cost and leverage representing a with of for leveraging $XX associated continued XX%, ongoing approximately result points, benefit reduced respectively, is adjusted Adjusted customer of as of benefit differentiated basis across XXXX, million target believe quarter, a business diversified reflecting set of $X first the we our as During the and We year-over-year. in

During the XXXX, outlook. into up we financial the ramp built normalized first utility levels, of more expectations to travel approaching XXXX expenses rates consistent and saw with initial our quarter begin

we into continue our to existing As adjusted infrastructure we sell scale our expand and to built-out expect over platform, of time. our margin

For performance reflecting the generated approximately quarter. share adjusted $X.XX, EBITDA quarter, growth, represents of year-over-year XX% the first per our in OFFO which we strong

to deliver level through our OFFO per consistent we and to our strong growth, and in While support on near future robust creation investing continued share value book business our deliver back medium-term significant a growth. at backlog have

our the while providing with this potential QTS return X-plus range of opportunity dividend a We to we've X% X% provides to of goal percent view as to believe between growth, consistent of to our per discussed prior opportunities. we invest with in continue achieving quarters, future in continue OFFO directly allocation to annually. As in tied opportunity to a long-term investors yield, our capital share growth approach consistent growth combined

X. Slide to Moving

quarter, $XX million, associated the but rent. result our is average more million new incremental end to than the compares which began quarter very XX% of During between annualized revenue, quarter-over-quarter commenced which of approximately represent our performance of cash This start last leasing results $XX a signed following strong that a $XXX signed commencements recognizing favorably year-over-year, annualized XX% we more leasing to quarter, via quarter nearly leasing $XXX materially for further quarter signed but capital. On than a and million modified as million basis, XX% at GAAP directly which year million, de-risk of approximately yet our commenced we year-over-year. $XX.X backlog of backlog activity the million year, the of of of derisked record strong of approximately backlog annualized quarter. financial stood rent and $XX X% which approximately not growth XXXX. and our straight-line yet first signed we to is discussed in-servicing down adjusting with approximately of the effects QTS revenue, of expectation representing last to The of of for development up informs leases quarterly leases. We expectations tied at ended rent are up which the not in the development level This our

the consistent single-digit quarter, price during relative same rates, at to low the renewal reported with average historical the underlying X%. up to to space X% guidance Churn in with healthy. trends remained our mid During remained X.X% price rates base also X.X% increases our consistent full of expectations in range. versus of prerenewal first within year our installed quarter QX We the

Hyperscale our intentionally X. we've our during implementing strategic XX% Since the signed and be years deal our contributed signed activity. growth growth quarter experienced leases ago in Hyperscale slide funnel by a performance plan leasing opportunities, on approximately X was Approximately of significant Hyperscale more vertical. targeting Next to

performance Hyperscale incumbent drive in the past our vertical, and customer strategic our growth to companies in strategic relationships and progress technology differentiator We of establishing as target of vertical fastest-growing our new pleased opportunities. world. have differentiation our within developing to is and largest been continue in a many with Incumbency the an the and QTS powerful we leverage with Hyperscale platform

to we leasing last X-plus to quarter, annual our X Hyperscale noted X from leases, X larger previously. we target increased have XXXX volume up from to As megawatt X

this objective are and opportunities pipeline. tracking well our We encouraged by in the remain against

number XX-megawatt the addition Hyperscale Ashburn momentum customers first provider DC-X DC-X ago expansions platform out a opened with X-megawatt a we years XX-megawatt new smaller existing an announce pleased across extend In which lease verticals. our that the to currently existing Including last quarter our with of online Ashburn we nearly site we support development. signed the Ashburn the will anchor megawatts facility. quarter, XX come during We X-megawatt to that of little capacity cloud the expected the The Hyperscale is sold in signed during lease of this have XX% our middle stabilized officially market X of anchor representing entire the of development, largely breadth of over and a and new approximately are our the capacity tenant in target Ashburn customer to strong in XX-megawatt our of the development, year, new will QX, site. preleased

Now moving X. Slide to

solve as to enterprise requirements. contributed of a look Hybrid leasing vertical core to models remaining quarter. to customers performance continue Colocation infrastructure our Colocation for first Our the source their during platform enterprise Hybrid approximately growth of the outsourced remains IT growing XX%

a of enabled and orchestration in stalled discussed pandemic slower in funnel. verticals. from QTS' services, visibility sourced activity new enhanced XXXX in of software-defined activity logo as growth of recent platform, we and Typically, financial opportunities last out our as result new temporarily growth the includes of center data by incremental enterprise enterprise coming requirements is quarter, capability remote technology in logos. in concentrated a the the leveraging well care health resurgence year While a This that XX% in as XX% approximately to new XXXX largely increase our

percentage in And discussed as came expect we new more XX%. approximately in normalized this to at we've activity last XXXX. logo levels XXXX, during quarter, to return the However,

total new logos during Colocation approximately leasing. In contributed Hybrid our fact, quarter, the XX% of first

XX. experienced first in quarter, height also the the This we signed enterprise the approximately of of successful We've size quarterly in enterprise new deployments. logos. in of During pandemic is logos higher the the during signing of XXXX XX increase XX% QX new our and average QX than nearly average were

year-to-date of annualized respectively, in the X-megawatt XXXX. performance approximately a X-megawatt driving greater, signed a of of the KW Fortune to and deployments country, strong data leases of signed Colocation enterprise size been which rent megawatt, XX financial quarter, large X already end subsequent or largest During of X and of Year-to-date, and have to of support with Chicago. enterprise year-over-year an leasing The X enterprise have Hybrid growth Piscataway X-megawatt quarter. sites of we year KW signed enterprise the diversified commercial our lease end advertising a from of of The a including X continues services while as mega return or in signed requirement deal leases average and continued Colocation leases a KW. XXX second firm. leased independent capital. are deployment an XXXX, the Hybrid includes center through XXX the in first larger sites diversification for greater, XXX leases with we banks the nearly for average invested with our quarterly size grown These us full approximately largely on enterprise business the well first consistency company enhanced list of one in generated positions of X.X-megawatt XXX XX% XX%, and the quarter deal

Overall, sites leasing of have and in As operating scale and in in with signed infrastructure. respectively, pipeline we in to these ramp, grown growth quarter continue our activity Colocation demonstrating our opportunities approximately acceleration has a XX% seen the acceleration XX% the vertical, leverage the mix pleased strong embedded and within as Hybrid year-over-year, of Federal. first with our combined Hyperscale funnel the attractive mega are we enterprise NOI

while verticals that, consistent to a on across Officer. return our Chief to believe opportunity provides Jeff continue Financial our risk-adjusted approach business and target operating invested I'll With to the turn Jeff? results. Berson, capital customer We that financial delivering our over maximize it balanced

Jeff Berson

morning. Chad, and Thanks, good

begin reviewing sheet Slide position. to like X. I'd liquidity to current Turning balance by our and

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

quarter million to support of the our forward development million representing proceeds approximately XXXX, of X.X first During $XXX QTS net shares equity, settled activity. ongoing of

the representing QTS This was as capital approximately program, equity net X net of available million in call, addition, advance. proceeds plan proceeds. needs while of mid subsequent development stock XXXX prefunding X annualized to with We on future forward $XXX strategy of quarter million adjusted range. approximately $XXX at fund in development where leverage our draw our to proceeds to continuing the approximately yesterday's release. level debt basis, have EBITDA, forward expect our to quarters down proceeds over with X.Xx currently our Xx maintaining including In fourth forward earnings the ended sold consistent high equity issuances to in a historically quarters our ATM to of our available equity leverage resulted of We forward to earnings we coming quarter operated additional through a net through

recognition at first the rate, Including is cost proceeds, X end upgrade our notch we the below a fix with XXXX will significant we're had by of no beyond, series available This a XX% of business as swap balance performance, of indebtedness equity leverage billion forward forward of currently credit debt QTS conservative sheet and maturities strength remain of our approximately In industry, of a model. Excluding to our to of rate of our In the We capital-intensive and S&P level proceeds, $X.X approximately initiative. and until subject investment-grade S&P. to available over was pleased now positions of end see X.Xx. first including liquidity interest QTS' quarter. capital our have agreements. equity in quarter as core rating notch April, a BB+ the total reducing issue one consistent

But that extend expect pleased investment-grade preferred debt the and remain of to of scale and with sheet. our continue cost our through always, consistent of to We capital. an we our balance flexibility eventual our increasing rating. and equity, evaluate opportunities positioned and current health continued to performance, we'll Overall, as outstanding achieve reduce the we refinancing profitability well overall are maturities

Now on outlook to our X. financial on Slide

financial XXXX. balance for guidance outperformance, XXXX We capital updated outlook of performance our are and our of year-to-date our reflect expenditure expectation the to revising

XX% at For $XXX million XXXX, our to range at guidance representing the we're $XXX midpoint the a the million a year of $X full increasing to by year-over-year revenue million, growth midpoint.

balance is for revenue in the in a an of outperformance leasing of function commencement Colocation of performance Our higher timing associated QX, updated the expectation outlook year. strength the Hybrid and and

outlook $XXX revenue million our margin by implying and midpoint. to the of $X.X EBITDA at result million to the effective a adjusted midpoint of the continued cost of $XXX raising at higher of adjusted an midpoint As our EBITDA a range controls, guidance we're XX.X% million, XXXX

expect OFFO between to $X.XX Moving share operating XXXX and be year-over-year growth to per share. representing the We midpoint. $X.XX, per X.X% now FFO at in

capital cash range, as relative total chain $XXX million and accelerating up at guidance incorporates to leasing well outlook the as reflecting deliveries. excluding expenditures, $XX of Our in strength supply M&A, infrastructure $XXX million initial to our derisk future continued midpoint inventory planning million, between

long-term Our updated directly preleased XX% with our we're than the largely QX while call back to in now Overall, remains and look accelerate more strong market pleased year. momentum development growth leases. capital financial materially objectives. our the a and largely to plan to start performance performance and over Chad. tied to prefunded that share of the balance outlook near the with CapEx continuing preleased, forward with financial I'll customer to development balancing turn We of year derisks leasing for

Chad Williams

employees Thanks, The already Jeff. second differentiators well continuing against in initiatives. for the We're to strategic centers customer environment work remained our our we're our healthy, to our the core forward expand demand pleased target our data communities leveraging who our service also thank the In supporting their recognize in across during and look critical each share, remains with I'd verticals. and our have very for execute first our we to like sites like footprint to throughout pandemic. quarter, momentum quarter performance customers our operation to positioned our our market and our QTSers and to closing, working I'd to customers, other. continue across and hard

retention. People to their and our continues be thank differentiate for by By we'd Operator? and industry-leading our to like our glad Powered QTS. take to shareholders I'd satisfaction Our scores continued customer customers, also backed QTS with that, up confidence is in customers, questions. culture With trust which

Operator

Capital We begin from will Instructions] And KeyBanc first comes Jordan the Markets. session. question-and-answer question [Operator now with today's Sadler

Jordan Sadler

first we've touch wanted any logo? you I Ashburn. quarter Could side Hyperscale this certainly the incremental to new insight market biggest there? country. this It's with sort X-megawatt a in base just the in provide CSP of Was lease lease seen in on the the large

itself. just Just the nature any the characterization sort and of around of pricing lease

Chad Williams

an down just This customer. fairway. Jordan. the I Thanks, mean, Chad. Yes. is I'd call it was It existing

strong a and trust, based was fairway. on it relationship down and have the operational maturity just We

to So market a great to one. the see get done in next competitive and ready to move

Jordan Sadler

the Okay. And in then quarter, maybe Jeff, a great on guidance, quarter. $X.XX

it step-back And $X.XX, Just quarter, up. FFO? lower insight know quarter. XQ sort sort back and re-ramping spoken regarding lower any you add is the high a range, about trajectory obviously, to typically last sort could I you've of of margin of your annualizes which end we -- of see a being of historically, before

So XQ? headwinds and insight in any XQ what into XQ, will the be

Jeff Berson

that strength. And what expecting we're not Yes, is business drive you sure, is grow headwinds. continuing should the to I and mean, that Jordan. read into

given were part was FFO very maintaining business. and in strong think a without the of to QX go we our that I able quarter funding equity through leverage, additional had In QX. EBITDA the we sequencing

so And saw QX. to flow some benefit through that you into

this the to in Over the remainder proceeds, continue we've be funding of year, we'll business. course the got forward place, through already of the

for a and healthy FFO continuing in increasing moderates little put while continue we're increase future But growth which out, very shareholders growth. and excited over value the very overall, that come equity more to to up some a investing see way, you'll time. So bit near-term in it that capital,

Operator

with from question Cowen. Colby next comes Our Synesael today

Colby Synesael

could if of pacing just the ramp. I'm Great. wondering talk about you

gap AFFO then to ramp you're and there's be San win land see GAAP year made and But you benefit a in lease this able if the straight-line might curious you XXXX. a to as just OFFO a a And late we happening and close secondly, remainder so interest And AFFO. expecting from in when obviously, the things in we guys it what's and you what result? like about the over purchase talk some side commences, could on results. in how cash of Antonio I'm obviously, the between

if you to anchor just opportunity actually start about and curious you're what market talk get on build deal to seeing the could an, an I Just that that guess, in to land?

Chad Williams

Jeff take talk the and Colby, San OFFO. a Antonio, can I'll bit little about

about dot we wouldn't San the couple On a strategic great is for think reside another type feel San to Texas of strategic. great. and for We like Antonio, momentum we like is can time, us just get areas tenant an certain But a better builds. we But Texas, in think a I active and left we was There's ton Antonio currently and it's we'll Antonio a San land felt market. it see little look how spots of not of until real in deal. San in in of Antonio, anchor

Jeff Berson

the between in the what last of and in Colby, that deals, Federal, gap much years AFFO, Hyperscale particular, which time business deals Yes. OFFO X are really also with obviously, acceleration escalators. drove the our over terms significant longer was but in the larger and frame of

And associated. line lot as straight with well of as associated ramps there's so that a

that So a between into start over balance. to more I and gap of come think see AFFO back OFFO time, you'll

accelerate years to kind those that of see of because going we a I'm frankly, larger saw base, lower the there do, X likely much last forward. And the off is expect long we over continue I acceleration be continues forward. moderate more to some line. Now still hoping deals gap we'll straight to you'll a much as of, as But going

And so closer you gap come that will together. see

Operator

from comes Erik today question Rasmussen And with our next Stifel.

Erik Rasmussen

with there for the remainder that you highlight? can deals are to of what slow is your quarter. maybe expectations Federal address the year Yes. But the any the business events the is you can based on And in that, The tracking? that team notable appeared

Chad Williams

going Erik, wouldn't Hyperscale. it characterize Yes, I be slowing. Federal is like as to

the have not And But quarters do, hybrid a long others. game. going you this will and positioned X built think is does, probably meaningful, quarter, and up It's customers come complex the it diversification and because is And time. pickup in we're well in see time when to going When some special. that beyond. to could This I deployments. You're be each I you have of from don't and of process. It's you'll a all you're to 'XX complexity, in Hyperscale, to up show business show just expect see we and timing Federal. when Federal on be but numbers. price don't enterprise it and the it something

Erik Rasmussen

to and Great. No switching and some maybe pipeline desire you on further Europe. any into expand there. And Europe? But can the maybe just to give deal updates us then just insights Eemshaven

Chad Williams

ability grew. right financials over significant for with a think been retained it's we about always excited going Hyperscale way. We're I very have financials. to in to be wins XX bottom great a our positive Eemshaven is more 'XX on megawatts Hyperscale. expect and our there And has open, and that outperformed Groningen on team to impact performance. and impact it are fun And line repositioned now to excited. Eemshaven I without some 'XX be even having a which see to positive for open is paper, the of Amsterdam, we everything piece in couldn't customers more the in had

scale the we on Eemshaven Amsterdam Groningen right on couldn't a be and excited go or be capital in But to now impact couldn't customers. always about go excited I that in the have patient deploy our around to business trying Europe. thoughtful where there about and about it. have to big and home the and wrapped more So wheel we're more and Not positive

Operator

comes question of with from next Bank Our Mike America. today Funk

Mike Funk

couple I if A could.

back Just Ashburn. underwritten the this discuss you deal Ashburn returns Can to on quarter? the

Chad Williams

XX%. lower but I we were range, I'd strike our mean, the of to that talk within price. that right they Yes. about well Hyperscale part in X% returns of say

Mike Funk

what of you've that? Great. And you mentioned deals of on the enterprise is winning size is larger acceleration you're deals share and then that as Maybe seen then driving there the well. And on the side deals? some as well, there larger the commentary to durability in

Chad Williams

Yes. I'm going to have Clint take that.

Clint Heiden

Yes.

So seeing pickup. a good we're

get years of innovation. think really winning, A some we the that or relates really SDP investments think pandemic that on into of an made control the I customers benefiting we're comfortable and pause they But the big is That's and we're feeling data into and to it's out the interest I seeing impacting going and prospects we've probably visibility back very everybody. the from trend we're center. coming had. and our how percentage do

spread position So deals that the that's to have. they're frankly, they're are entire we're footprint. said, bigger, us for like been And accelerating. a seeing, nice And getting our you across

Operator

today Fargo. Luebchow Our comes question Wells next from Eric with

Eric Luebchow

related of kind that So enterprise hybrid to question. colo

I -- these more X% think have yields deals particularly do deals, share wondering market? they Hyperscale. platform? are because market for SDP -- compare know in how you and target a you're of colo Wondering winning fair hybrid your Or these of than you XX% Just competitive your for enterprise to obviously how some larger the the

Chad Williams

-- matter, in, the differentiation have Clint I'll but have Clint I'll weigh Clint. does

Clint Heiden

we're X% to mid-teens, the like going the Yes, We would think the mean to in of competitive is to we're hybrid to situation, things to upper up going absolutely. from market what get the the on end to due bring be just see like to you're I we innovation. what XX% some deal. a the of the

that positioned bit counts the something gets that we're of do little seeing So a of we're think the premium win we out we the positioned, to infrastructure that And think think then of way us there. We most because where a in have deal. we're right the competition. deals right the we market for to

Eric Luebchow

that. about It follow-up colo that of million you've bookings $X quarter, seems then $X I think you million And a targeted like quarter. just per hybrid Obviously, this Great. million. to $XX to overachieved

is year? larger terms enterprise range should there about we going Given you what quarterly you've of think deals, the do seen this performance? that of And in your a think some in forward can pipeline, overachieve the new you

Jeff Berson

on on a to We with We excited. in Yes, mean, jump of kicking QX continue I I'll Eric, into pretty a absolutely larger have deals off. start strong couple enterprise, be good that. a pipeline already mentioned

So have but of do, hurdle the still we've confidence. the At looking and enthusiasm. not work where a beyond come got some we been, we into it same raise we've to with good lot we're time, to good

Operator

our next from Capital with And Markets. question Jonathan today Atkin comes RBC

Jonathan Atkin

So I Slide in was interested X.

-- or think you And of Then NOI presence thoughts that. place Northern those your sorts maybe than growth I new in what reason I wondering a showed slower land, growth. investments? was take the what Chicago a your just I upsizing growing got presence it for you've revenue as California and say, it to pertains like to Phoenix underwrite establishing where wondered are would in,

Chad Williams

Thanks, Jon.

couldn't site, more I that's was excited be connectivity team us Clint the into rolled there. week and and advantage in new excited a Hyperscale On the taking excited. we and and I market Hillsboro couldn't that options We're the new mean, that the some be expansion, of new for opportunity about location. that we're have more just Hillsboro last enterprise, our for momentum having seeing about

with anything, to kind pipeline kind that you facility. will to tell see opportunities be jump-start will a build-to-suit I need of I Phoenix. we in someday, good of or think we

But And deal to match everywhere it's just power companies the go the and in we struck the favorable most customer We've to one We power and Phoenix. the prepositioned, to a again, be time. more we couldn't going prepermitted acres. of have excited. right area. all right be can't capital allocate renewable XX with And

to to We disciplined continue around that. have be

but about Hillsboro future excited in we see pipeline, and So right have right to the we'll entry wait and until the great the Jeff? open Phoenix. go, point

Jeff Berson

terms we love for both, us what in in in enterprise you predominantly Chicago, then facilities. And Jon. which Piscataway I slide, that growth Yes, great really is mean, is the see of and

seeing strength you're top the our so both at driving hybrid team of And end. the

saw the event. leverage great leverage see Piscataway the business when pipeline in the quarter. XX in X.X% What the on we've the and Chicago from was quarter, that down We you'll we did continue you and already Chicago, operating side. the you But on side. isolate quarter certainly got a the then in within have is the customer not seen of churn And you have that churn customer. impact great see top refilling operating it really need we that And scope it. You've at frankly, did material. seen good to the a It's NOI just not space, an frankly, in to

So no there. concerns

Operator

Our next question today comes with from Nate Berenberg. Crossett

Nate Crossett

wanted thoughts are right inflation these your higher of to terms sourcing I it labor? curious to costs, higher you'll your seeing to issues there materials any relates Are do pass think able as on tenants now to costs? in in costs on guys lot get increased in you be what the build or And a you of form of pricing?

Chad Williams

expect to Nate, this we see is Chad. do it. mean, I

build dramatic the coming, people. costs, is of inflation date inflation like most but in we of to on think rest seen increases haven't the We

of our team our we've Robey entire think product standardized the and the that things I have almost done one team, is now. Dave development offering

both to changed supply for risk ahead us kind really on production out. has on the to pricing, of the risk, of ability So and our some chain the for of ability that and take game prebuy get

through a So you of that, flow think and we'll kind 'XX prop I think value our from are derisking materially that have costs we're supply understand standpoint. customers, about yes, sell you see When numbers. be to think cost to going I 'XX, able customers And And customers be will already into both reasonable. chain up. a and

Nate Crossett

then customers could that deployments just just about and hearing we Okay. chip And affect this how I'm wondering year? one, shortages. from your keep what hearing you're

Chad Williams

expert. he's Nate, chip because take to I'm going a have that Brent

Brent Bensten

we're obviously, of -- markets, is impacted dependent, reality absolutely has that's a The is the to chip us. we it no own but have And seen infrastructure not our deploy it we pipeline point. this the at certainly hearing impact from reality our and lot

So it watching as date. anyone would do, we're no to impact closely, but

Operator

And our next Raymond with Frank comes Louthan James. today from question

Frank Louthan

now? that seeing that a can Great. product the the type to us workloads And new What of bit attracting? now? about your little logos talk seeking now you Can are right are you're characterize you you industries

Chad Williams

to Thanks, Frank. Clint answer going have I'm that.

Clint Heiden

in financial technology We're strong the Yes. in and care vertical and health general.

looking SLED data also, think, accounts are you that infrastructure. activity compliant I for in get into centers and

In what Brent of little bit a to shift thinks. workloads, question that terms he the over on might I

Brent Bensten

I to are what across pretty we've past workloads seen enterprise. the the Sure. in typical mean the

programs, stall this dramatic corporate-owned colocation some facilities is mostly any digitization of like moving that about up. QTS. scale, that shift earlier, I wouldn't talked picking Clint out large into some transformative say facilities there scale, So Again, kind there's of than larger other small

seeing just of that kind we're accelerate. period now So

Clint Heiden

And to real that. when when which I'm to clarify just I state, market wanted for a come I'm SLED, back I talking is strong education, -- quick, say about and local I us. going

Frank Louthan

it. of end helpful. up Northern the the then, to for deal And that range, trending? mentioned Chad, X% upper sort XX%. Where the That's X% the is in of range, of lower Virginia, Got realistic? you end Is that that that still

Clint Heiden

existing of continues think XX-plus mean with to business I Yes, have it customers is. expand that customers. expand, percent when we I our

a conversation think see customers. I with we different

be that this I last than of that. said When more operational more stay and more environment. and be experience the had And to see no team of going I've we tell So yes, it's here's and competitive think value the even bottom of scale, range. year acquire probably fact. customers We're you're year. deals are a -- a part more all the trying will the towards to willing new you logos, to can you change Tag and

going win not every try that's we're fine. to deal, to So and

Operator

today from question next Choe our with comes Morgan. JP Richard And

Richard Choe

clarify just I to with something the enterprise part. wanted colo

the pullback Or coming kind think do maybe little grow year? customer of forward of maybe existing that kind given was bit kind from well of logo you out stuff on, a pulled logos base, seeing will last some new of balancing that the With this both year? a you are

Chad Williams

Thanks Yes. growing. No, question. the seeing actually are for that we're both

client is very We a at very funnel. And our have growing a new strong rate. also attractive logo existing base

Richard Choe

year? pretty different impact pretty Chicago started what different churn, it off everything far? And typical I is Maybe Are similar it's that's churn last but anything so from then or the year, this of might outside coming trending well kind like with sources, last in issue, terms from guess, to seems low. you of seeing churn maybe Is year? of

Chad Williams

right track. change. say or indication it's on I'd big No

Operator

question next from at Tim Barclays. today Long comes Our

Tim Long

I well. if as Two, could

and First leases for the it pricing down front. for on like renewals. was new It up seems

because us Just pretty look assumptions of second, benefit margins update through then there Any maybe on good the your it How kind far And the is pricing on sounds benefits? it room wins there? what year? as a more changes and we just for hearing through had STP. as in you're like deal as much expected walk pricing of us internal And to then quarter. STP,

Chad Williams

On pricing, don't it's a competitive market, but any changes. see we big

in numbers I just you quarter quarter. Federal this is think a have didn't reflection the that this

don't we're wins about But think So change, about but I question a -- it. competitive. big we there's little might any or take of feel talk the and direction there. trending the have Brent good and indication bit I on the SDP

Brent Bensten

Yes.

absolutely. So

the sales SDP. now we're that wanting and The front the seeing customers a sales premium is a cycle. cycle. for in reality tail of kind coming on we We are the see coming we and in And with side customers to still requesting of the deploy technology of it side on used that seeing

nice to us. a in funnel folks it's So that efficiently motivator for through get

deploy As which on additional that we platform. it X features, we that kind to to we're continue value in expansion, the weeks every do of additional will the incremental relates drive platform hopeful as margin continue to

the -- see yes, new additional seeing is, months. our are of other we're coming drive I reality the that in of across help margins. definitely things think next some you'll that about and couple the that crossConnect But

Operator

next Simon of question Flannery today comes Our Stanley. Morgan from

Simon Flannery

or seeing what their terms And you of then in versus any hyperscalers that your been about in-source at talk around great. companies group pipeline, small color world? appetite talking you how moment? a we are expanded beyond we to Have the When Has and outsource? would about group there XX, post-COVID changes in around the many any be are XX larger Great. to a in a

Chad Williams

might question. Simon. Thanks, answer I that have Tag

Tag Greason

we are names of from Simon, those about names eyes of well-defined Hyperscale anywhere lot. any We market. our Appreciate in the given When the X think Hyperscale universe, the working to on actively deals time. have thanks at on about a we XX question. XX targets kind of

that of And a what so that of flavor gives universe you kind like. looks

lean market their what pipeline. relates the continuing us we see Hyperscale to our your means it to and ultimately, we As and by second for encouraged in question, planning, part forward the are capacity of that

Simon Flannery

Okay. And what are do it it build with the to decisions themselves? that make than them decide you rather to

Tag Greason

threshold they're how the It to their percent partners like ability and and on their Yes. one many have build compute own internally. build of the They needs their of It fluctuates of their region each differs going based with on hyperscalers. of QTS. each by to comfort a kind

of as have, our towards leasing lease. we see grows past in couple years our wide of build and shift so our seen team range start a direction equation. that the in and is to partnership the of those What working in incumbency side we trust And the of percentages I generally have with the that percentages versus

Chad Williams

ground those that people I I thing XXX a is power that to And acres differentiated to because of gets to has infrastructure the which Simon, type access, of something being and country things. might partner value sometimes down strategic power that's is infrastructure, because underestimate he one maybe renewable add across Tag do it tied needs, the of think

land conversations. it's the last I that when have over we and the years, So lot think kind strategic X starts of a of very or advantage you X bank have a

Operator

with Our Green Street. today Guarino David next from comes question

David Guarino

you're market favoring know I feels right guy really sellers data Chad, at centers estate transaction real like now. for is It the heart. a

of monetizing So any development are pipeline? be noncore might the as that there funding keep to funds worth the in a source data portfolio centers

Chad Williams

that our as our disciplined think differentiation every us. remain very been But constantly say us of those engagement has Jeff operation key we table on would about still about and for customer capital. around is aspect everything challenging I facilities the things. David, a of

of a business, but engagement So operation and of relationship too. customer driver capital also is our continuity is

us was optimize But there somebody. off those if So hand customers or to facility type capitalize for or I to looking is ways creative of market always capital. don't you'll and a exit think see some strategic Jeff JV,

David Guarino

about And center color at would data able and quarter? the you some to this decline rent Richmond Okay. then the occupancy provide be also

Chad Williams

Yes.

institution customer that new and in another ahead moving up that data We and of had, had another up to fact, of gobbled but came the financial seen customer out space, ramping they I a time, kind it's the a center. knew re-purposed and already space, customer. and of been to their we you've just that up had think Clint in that that consolidated time contract internal Richmond, some we

Operator

question Ari Markets. BMO today comes with Our from Capital Klein next

Ari Klein

Just about like on It that? the leasing materially necessarily talk was specifically CapEx increase, drove can you seem expected. what doesn't than higher

pipeline? you're reflective So is of what it in the seeing just

Jeff Berson

perform sure past we're little aspect I'd to Chad say enthusiasm CapEx putting it make orders sure to making grow Yes. increasing any supply getting second and disruption X all the things, and on is and leaning we on of But near but that. by that in those that still terms to is have don't have had a than mentioned results increase needs that meet guidance some of is into going the near-term the to bit just opportunity pipeline that frankly, customers absolutely in in continue earlier, the that while in we driven our and what term. chain up of we're it's and of

Ari Klein

to large churn any there releasing of And risk or to Is then significant anticipate? some do just it. those looking risk Got that you XXXX, you maybe customers. some out have from from renewals spreads

Chad Williams

is Ari, 'XX looking tremendous I continuing we long-term all confidence we're established be at in what relationships, the think QTS and benefit they'll got customers. they're with

Operator

Omotayo Our today Okusanya, comes question from Mizuho. next

Omotayo Okusanya

there cycles and the year, I Congrats was of on general beginning a of kind that. was everyone just concerns At about the solid mean quarter. sales elongating talking about

under little a still feels about it what bullish of kind how sound But that in is about, your the on particular. thoughts the today? mean, quarter bit just world of environment your had versus business a you've curious, like that given talk way, you would ago I belt, that quarter what sound kind you Now like? a doesn't enterprise felt

Chad Williams

take Tayo, to I'm have Clint that. going

Clint Heiden

as are Yes. Chad much the in, already faster. struck And through What Thanks, we're is noted, Customers X have accelerating feel are the Tayo. proposal we've decisions QX like or getting in the very quickly. RFP seeing deals deals through that come got process. that we

they're feeling they're we're good So momentum. our pipeline accelerating, and getting and feel we larger, about like

Omotayo Okusanya

little how Great. kind possible, it that's like? us that? going about, that's about margin bit very talked it scale if kind look early you And just And of FTT is could of you over -- kind that's Just time. you a to going Is of quick potential you through then Could second. what that? of think expansion economies quantifying create kind Chad, helping a on, if kind potentially of of to could do help happen? it talk

Chad Williams

Tayo, it's a great question.

a out combination see last operational or of all of pricing, differentiation over also that. year some level want of but travel the had mean, impact working being you around we It's that the we're which the years. And profitable you normalized some way do facilities X want things. edges because And that transitioned way the them I we to optimizing. we're to It's think expansion can seen deploy. the we're continue. really of it's scale pricing, our around mean, it have going that's we we take transform It's we've last And expansion the It's on and that. them. to COVID we once think not and of already we're part to as to about we're a And a seeing I side going chop, it's things, X on. to still the platform and done, at going think business of pace competitive a and the be things. those we And SDP. to optimize the start combination I to what lot continue the has we'll get wood of as to I going of have side scale people on be. and it. certainly, digitizing facility operations, and still to optimize continue But keep work

Operator

Badri Our next Suisse. question today Sami with comes Credit from

Sami Badri

it the how the take it's framework long gets lead the get, that are some center wherever have and hit U.S. heard around lead industrial how of elongated you for quantitative on data a coming in and the those times be components. seeing world bit. want idea ship we components chain an just just something to even times from? like in from what quite helpful. Just takes say, long And I -- an get industrial have for wanted guys I to kind area would on supply the in a quick generator One to maybe actually the of it to was

Chad Williams

want do Mr. Yes. to that? take you Robey,

David Robey

Sure, generators, some significant fluctuate components such are components shift certainly given We've with. we have seen to Large not be seen continue obviously, are components. a in. But folks to monitor, there as that honest, absolutely. variability. the dealing supply We all do different chain challenges that

time. make As we very are sure continue availability and of we those stated and deliveries being that that ahead earlier, time ahead our our trends making proactive, of to securing stay those of components we're are to recognizing on sure

Chad Williams

freedom might the supply of X, it's of around our helped and product, Dave's and I with the ability control think years it. standardization Dave's redesign, but Sami, last our the work QTS, at design to been watch chain which And really not add, X case standardization product, a I has always

Sami Badri

a X-year is where enterprise mix to be X, increase a overtaking plan? next that couple of Hyperscale? Got that of objective in it. the the of of over or to leasing percentage is to Is the leasing be of really to other be and to plan start and -- is kind time? more number Or thinking then there is starts And begins as one over that going situation a come years. XX% this QTS here of question, kind But deals the about

Chad Williams

I get but I don't. Sami, that day, to every that like and up think I'd control

beauty Federal it do is, and a opportunities an on we're and in what both little of that right to So the The We're and deals, as what be losing a Hyperscale and lets can up work selective a of doing QTS, work hard find a the more exactly get out do. deals going get and not But on we're sleep it lot we perspective. we us percentage. there of different I'm places, for enterprise, lot a finding them. from

Operator

Del MoffettNathanson. question And Nick comes next today Deo our from with

Nick Del Deo

I've the colo sheet. got on one and on balance one hybrid

something been So hybrid it that Why Is colo first come first, the Or case? think of you enterprises the then that more just goal cloud getting it because size increased. is pandemic? you back And larger mix smaller long-term towards the to that's on grade. the else? balance investment the moving about or maybe enterprises sheet, do Jeff, post noted talked deal natural to average you has are

your have XXXX. the preferreds I in calling of option you think

getting are So looking be would for as frame think it time appropriate an for? the to to reasonable you And XXXX ratings do think IG? agencies of what maybe

Chad Williams

I'll have and Clint take balance sheet. the hybrid, can then Jeff finish on

Clint Heiden

Yes.

more industry I position, we we've to to general, the digitization get and and innovation. reaction on are they with a that in part that to we positioned -- in share believe, just why is larger our where are that in And I'll a frankly, jump the of in infrastructure are enterprises growing? way and So of a converting we shift in the over then, more infrastructure. think

we're trending where just it's with of digitization. lot a think I So

bigger you'll see getting to I that moving forward, deals think increasing. continue momentum trend and

Chad Williams

tendency And not dynamic with the of cloud XXX with a them cabinets. -- of coming bringing of is many cabinets, a are not And we cabinet the balance one might hybrid real as sheet ago, little other X, X, single X They're is they're a or cloud thing years on seeing megawatt. where Jeff is for I'll what enterprises of cloud. bit X bring the back X quick of out to bringing caging the KW, that before the add we back takes deals this the to out some is larger some out see of the little stuff

enterprises but negative, adoption There's So I play cloud, seeing choices out see dramatic still that make in in think you're which on comes comes back great and a that's what not the we're industry, in to what growth cloud. to some is seeing also going a you're dynamic out.

Jeff Berson

to the patience absolutely to And Nick, on XXXX. I wait the a And have investment balance don't plan sheet, till have grade. we getting to

about BB+ at big Moody's an upgrade BB the callable recently, execution, early But got scale continued And is all frankly, us. They've looking X level, got ago, a XXXX. So we prefs continued the S&P. then very point, And at and the that your we're happy from at months upgraded S&P. to already is trigger, are bond for they're us in that we're level. most then issuer

deleveraging. a from alone, agency turn would at as be full standpoint, that of looked rating a So

do that. early only I executing then keep got away we're from call and to XXXX and is one think that's really in notch getting all those effectively we

Operator

Our Deutsche from from Matt Niknam next is Bank. question

Matt Niknam

First on enterprise.

if verticals new the track? taking about weaker Tag you've sort digestion place any You seen among on wondering a demand talked little you've in more impacted backdrop year? broadly, Hyperscale. from or that And I'm I heavily seen and hyperscalers whether just improvement more team COVID if momentum. a little of capacity bit of guys bit last then the some color on by you in some the were guess anyone some can any demand just little of the a and a the XQ give of logo more around larger follow-up

Chad Williams

I'll Hyperscale, you then Tag, the the why have good. don't take enterprise. Clint do Sounds

Tag Greason

and We're There's planning to a pullback. incumbents back a seeing looking now. digestion seeing at you're not the same of Okay, when great. good We're or Yes, still planning. cycles saw that not involved it's capacity 'XX. -- period we great talking in trend that their that digestion

feel and into year. about we going is pretty so the like us our good what looks showing the what pipeline And market

about that. good feel So

Clint Heiden

from, verticals. demand it all from Matt, where on and we're seeing really we're it seeing

by So and have pipeline it's not not. seeing. in or had We've funnel impacted enterprises particularly might slanted that hospitality towards and we're been part be that those of the pandemic travel the

in in it's particular seeing. all it seeing really what across particular region, or a we're of not a been we're vertical So aspects

Operator

concludes Williams session. to would I to gentlemen, like Chad turn for And ladies any the conference and the over closing question-and-answer this back remarks.

Chad Williams

people, make QTSers our want we communities. serve are country and the Well, again, I morning. to that our our continue and participating for everybody to thank just customers across this who And QTS thank our

you you, thank talk quarter. and next So to

Operator

thank conference presentation. for This attending We today's you concludes all today's call.

your disconnect lines, wonderful have day. You may now and a

Qts Realty Trust (QTS) 28 Apr 212021 Q1 Earnings call transcript