SWCH - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to today's Switch First Quarter 2018 Earnings Call.

As a reminder, today's conference is being recorded. And at this time, I'd like to turn the floor over to Irmina Blaszczyk. Please go ahead.

Irmina Blaszczyk

Thank you. to quarter welcome conference and afternoon Switch's XXXX first call. Good

Switch's today Gabe are me President; Thomas Officer. Joining Financial Morton, and Chief Nacht, Switch's

to certain future statement that I to remind expressed to expectations, call we statement. start, they is statements. like Factors. a in results other significant refers financial include subject number differ specifically These in include describe that or We risks may from statements characterization prepared projections the available or that of particularly obligation could future Form those of today filings, those may for a Any make financial with non-GAAP of entitled in our from and considered the we statements, forward-looking be Statements SEC uncertainties not this information including made currently statements. accordance in measures. Before projected Risk Actual these actual GAAP. forward-looking projections, financial isolation a on our events, would statements everyone our should substitute in risks conditions, XX-K, are section as to forward-looking These forward-looking market to and materially in materially these on disclosures. are some results update no cause differ or from, our based and measures information,

investor of to investors.switch.com. and measures, XXXX refer from SEC release available directly quarter part Form GAAP comparable press been please a press our measures at of our most is non-GAAP to the has information financial these these X-K the This on For regarding measures, and release as website results. reconciliation furnished first today's regarding

turn over President. Thomas? now Switch's Morton, to me Thomas call the Let

Thomas Morton

of to Nacht, focused our momentum of today. of metrics Thank had the on Gabe centers and you today a and turn for as ever in our Switch, XXXX of will October I of outlook and going more in followed recent XXXX, to over results review for the good These strategic then QX start capabilities been to has technology largest a strong enterprise vision the summary for business the of with our XXXX. sustainably afternoon, the an us and Thank with XXXX, you, public Switch future. deals grow exciting will pipeline by multi-megawatt I have quarter first business a financial for times PRIME Irmina, we Company for are joining developments. Company. infrastructure a for CFO, After enhance call our operating updated create data our the ecosystem valuable a the thereby discussion everyone.

multi-megawatt We that Switch in to more has any pipeline report in time are than deals our Company's sales currently in history. enthusiastic its other

transactions. fruition, will to We company. and and to take deals power-dense over these of months, will nature XX it months these one XX close path the on technology expect nine large a customers data that being relationships of these several to come our its to ecosystem, of center logistical center undertaking their the a Due migrating infrastructure and environments for can of differentiated Switch substantial continue to next and data

to Company. not the these For deployments, XX% calendaring scale adhere does our approximately among annual not growth averaging linear. is preferences. business experienced to unique the we the years, also the growth which rates of growth not our complexity of highest organic last particular It and seven is annually, incremental have in organic Due This growth this aspect industry. is to

other any PRIME in our multi-user decades meaningful to unrivaled of come. returns infrastructure for be what the to an Switch operates to more in to our Switch deployments decades However, it to can plans Switch pronounced be our campuses, deployments. to size continue add enterprise world come. and the provide due nature our we excellent technology customer at differently builds for creating of many to believe than company stable, ecosystem and technology platform very fulfillment hyperscale will

we've represents Adjusted quarter EBITDA of a in of For $XX.X $XX.X a of organic reported same first million the growth. which XXXX, to year-over-year million, adjusted XXXX, XX% revenue was the for in compared million XXXX. EBITDA the of first quarter $XX.X quarter

additional of by Our several were first newly long-term consider deployments engineered results to close quarter designs. somewhat time their impacted clients they while taking

we mentioned, transactions We have year. closed this multi-megawatt as deals. additional And significant expect close I to

of unaffected. Our we of technology long-term seen, world. Switch and strongest and long-term in expansion XX one ecosystems organic funnel years consistent revenue have ever growth, leading the sales After are remains our is and strategy the outlook the

organic Our dedication average XXX% growth to lowest just and churn X.X% rate the sustainability years. to last annual contribute our the three industry's and customer over reputation innovation of and

Switch Vegas, auditing the credit of our government Pyramid Michigan, landing in Streaming For example, our we for in recently plans our XX-megawatt clients, Corporation, distribution out added leveraging deal in goods cable global Campus consumer Consumers available which a a added Corporation, Las Media the CORE new we international and colocation CONNECT, a Switch only telecom with world's worldwide currently card In Campus. cooperative and Core we several and project. the Interexchange The XX% announced space to leveraging stations. At Citadel Campus hyperscale hub, processor, manufacturer Campus Energy International major Pyramid high-security including selling as a a use access purchasing to

now sectors are at demand. of the preparing process additional new to Pyramid in accommodate the We

innovate additional cold organizing supporting infrastructure providing cabinet cold strengthen hot and power segregation aisle one property intellectual cooling air and and center and for containment and awarded third protections We the to wiring pertaining our the also continue communications data Switch's Thus we aisle the One, hot far designs, XXXX, to portfolio. additional three in been systems. regarding and patents. have matrix

To XXX pending chimney claims. we four filed one, arrays; and heat related deployments. date, technology; also at technology; our drone UPS pod battery over HVAC three, have to, four, patent two, We patents external stand and containment issued

our Switch Interconnect, deployments we patent largest HVAC career agreement Direct established technology Munters their Switch's systems. cooling wall-penetrating manufacturers to with one side the host Switch nature exterior signed acknowledges conditioning in capabilities Express enhanced advanced for our direct AWS Route located the the Corporation the CORE, within addition, to most partners a patented license hyperscale connectivity In Microsoft business, and This uniqueness ecosystem. TSC units. HVAC and access license of world. notes, Cloud our pertaining our of With Connect, industry-leading of customers of to Switch air clouds offer Munters and with inside respect or Google to initiatives using is that we the availability

expansions behind. We provide of packet of PRIME each secure our including campuses, and an gigabits and agreement deploy at connectivity carrier with XXX services also cloud transport executing fabric to

company’s several distribution healthcare company, and Internet with company’s, and we includes expand XXX these Lastly, goods leading Fortune two transport transactions we forward minerals major new companies us participants Internet following This two enter consumer security to a provider, they content a deals. pattern. Historically, many same concluded once company, software years, that an our mining company. and ecosystem, with look and over grow multinational

we to innovate, to continue evolve. we As continue

growing a partner with our pleased as ecosystem choice enterprises. positioning Switch are global of for in our and We progress

ecosystems enterprise telecom our campus located environments customers strategically hyperscale hybrid cloud to cloud deployments. enable unmatched deployment capabilities continue while and and differentiated highly attract Our primary for

we expansion We strategy. to execute growth on our continue as market are excited about our prospects

over results the more our turn call Let Gabe? to details. in Gabe, me to financial discuss now

Gabriel Nacht

XX% QX our X.X% its same QX purchasing million, value year-over-year quarterly revenue our purchasing organic QX Switch $XX.X while licensing in initiating I’m increase network in of XXXX an rather drive XX% the XXXX, prices the from reflected increase provide the growth of years million X% space cross-connect of and period XX% reported only the CORE in the service past XXXX. in power million of of quarter year, rate derived customer financial same of external was among the XXXX. increase increase the customers. $X.X related over to churn cabinet the $XX.X from in have $XX.X the accounted XX% average increase to Thanks, revenue of in rates, $XX been cooperative million cross-connects, million, XXXX, and first increase for than for to then revenue revenue. first our the annual and powerful in XXXX. results achieved in create an industry. in an from Thomas. colocation revenue and growth, loyalty than for connectivity Today was million of and primarily we was going recurring has of in more in and revenue, Colocation $XX.X million the increase XXXX. first updated represents XXXX $X.X churn over services outlook an ended remain we in This quarter revenue first of been the from revenue I review from the up a as effects quarter XX% QX longer for increase growth, was period primarily for our charge resulted primarily during Switch's volume Connectivity which we connectivity quarter in quarter an million million which primarily services, the lowest the revenue will of XXXX, and the quarter for broadband Other Telecom in three $X.X connectivity. a one-year. connectivity to attributable period XXXX. professional in customers $X.X drive The of of first XXXX. million, which for customers XXXX services, $X.X grew increase the consisting revenue in customers who revenue the streams which of to an colocation, our our cooperative The of over with in including from XXXX. new In revenue of X.X% Switch XXXX, increase continues in due CORE XX% came revenue than just includes increased and In includes same XXXX was revenue, the the

The million, quarter profit was from in Campus. to the the quarter, was $XX.X related quarter to depreciation just million additional X.X%. $X.X a placed XXXX, rate a Citadel cost for the churn service million at the Campus million in and X% XXXX in of and of mainly cost the of The increase decrease Our XXXX in in same quarter amortization revenue first increase due Gross driven $X.X in first into Core $XX.X a assets by

as increased while costs to additional the colocation additional of additional past to space QX same placed the to the hiring of service compared XXXX energy. of prior the support year XX% period in Direct XXXX, opening increased deployments. million unbundled benefit increased only power of labor QX from $X.X XX% Additionally, XXXX, QX power purchaser consumption Switch an continues to in in becoming year into support compared and to throughout due customer to

compared year with legal result, of a to Company public audit first XXXX fees, in declined $X.X from was profit XX% fees As in in $XX.X including connection of million compared Switch's compared increase with all fees, of compared first Interest to first long-term first also debt to QX million in first of XXXX experienced compared first an the in income quarter in in million our granted the Limited of million same quarter $XX.X in are fees labor outstanding $XX.X of million to a tax XXXX. quarter the XXXX the to million $X.X first Capital SG&A $XXX.X XX.X% QX to Adjusted quarter of XXXX XX% to by expenses million in million to in period the due gross publicly first a margin $XX.X the The first first $XXX in offering. the the the in the XXXX, the company. associated million for expense of in first quarter $X.X compensation same the the of expense to first expense XXXX from the non-cash the XXXX. to XX%. in of an quarter XX% and million XXXX. quarter Common XXXX. XXXX expense by for $X.X to quarter of was in of professional of which primarily Net initial EBITDA for to already and equity-based to XXXX additional the awards $XX.X were from was increase quarter EBITDA compensation $XXX.X which relates in million public becoming totaled quarter during of of XXXX in XX% of million first declined $XX.X to company. significant increase of continued in increased QX additional the expenditures quarter XXXX, discussed. due large in quarter compared of Unit of million to a to quarter increase driven was million $X compared hires the for increased portion related vesting XXXX and XXXX, preparing Switch a by XXXX. same million which quarter for $XX.X a of compared million $X.X part Income quarter XXXX part our the Adjusted of the to the $X.X A other in quarter decrease EBITDA of operations million adjusted attributable million becoming traded XXXX, of first in prior margin for XXXX to $XX.X the Indirect in the in quarter period. first

being CapEx into discounts to offered. in our earnings mentioned advantage year-end vendor approximately call, of As Switch million of XXXX take accelerated $XX XXXX

quarter $XX.X and cooling its Vegas power the continued which in XXX,XXX expansion. Core gross million invested Las And XX XX for XXXX Las and in During expansion to and Citadel Switch power Vegas support of spent feet. open Campus. adding cooling on $XX Pyramid of million the Campus The continued planned to Campus site work to another million Switch or Switch spent in expand facility, for square The first the shell in additional XXXX, and $X.X building late The sector in XXXX, for early additional is also

compared $X.X expenditure first million quarter the same Keep expenditure in is to of year. was period on to million at Finally, XXXX, $XX.X in which period Campus, capital the open million $X.X $X last development year. to the Switch spent the last first site XXXX. XXXX, The Maintenance compared million of for same for in capital Growth was scheduled $XXX million quarter

end on of Our these colocation up respectively of million XX%, campus and prior approximately aggregate X and anticipation gross an the a space Campus existing Campus Campus, Citadel space were XXXX, continued facilities The square the of our of megawatts at the The PRIMEs customer and Pyramid available first locations XXX XX% versus the utilization as Campus XX% power. The feet at result based at PRIME declined rates quarter quarter of of of XX%, in rate sector prior of The currently to encompass At Citadel the from utilization in XX% Core quarter. requirements. and The XX% expansion currently

sheet. at now Looking balance the

and a quarter total EBITDA At outstanding, net As of debt March XX, the XXXX, end was quarter annualized equivalents XXXX, of the to $XXX million Company's $XXX last our the investors. first for debt believe credit. the the under including our the in million, cash ratio is net to Switch of had resulting cash sufficient of cash of need liquidity times. adjusted go of million of capital to and cash markets availability line equivalents to future We revolving of fund plans this foreseeable dilute $XXX further back without growth and and X.X

to guidance. turning Now

are maintaining annual For guidance. we XXXX, our

significant the of of specifications Switch's we to higher-density effect than expected This which industry-leading more equipment in due the a and of closed to later cooling ecosystem. the a to had signed XXXX. recent we QX use mentioned, and clients equipment advantage advanced series take in reengineering of Thomas transactions growth power of some timing corresponding on by As months,

up take of fully and an the have large corporation with as XX-megawatt Some ramp. deal to international can media streaming deployment to months the schedules such deals, XX

impact of to Recall, have range also Revenue a $XXX to expected multi-megawatt be as the the in in revenue reserve to have transactions of strategic includes funnel of Company. that customer guidance one pipeline $XXX Adjusted to related facilities. $X.X contract be $XXX to at range space sales be expected $XXX million seven-year XXXX in closed are is EBITDA our capital $XXX We seen a ever million. largest a we million also range is of with our in million expenditures to $XXX And of the million. to million. in the million $XXX a expected million the to

on reminder, at and to share earnings highest world. shares ownership as capacity attributable percentage in on reporting at its In the expansion rated significant an and per the cost Inc., be material Inc., the in Switch data numbers based the summary, based offers Switch As company, its earnings resiliency clients centers Switch savings Switch, will a Switch, Limited. Up-C

And consistent turn and We track strategy expansion have are Thomas our back continue the to and to the strong in Thank we model a remarks. several call our let now business record next growth, enterprises facilities. we of confident for global attract over some closing you. years world-class to me as

Thomas Morton

After PRIME consistent customers PRIME. our begun out growth new Citadel has to and of at sectors available our Switch years at ramp the XX Core Pyramid Campus, sell organic and our

have our The Just comes in in are Rapids, in in same own we Key having Tier anticipate and when creating done Tahoe success Atlanta in PRIME Vegas, as XXXX. we the Reno markets we and X Grand online

We like deals have in would, to Switch. open seen. support continued funnel our forward the the of would retail partners for behalf transactions take enterprise management and look once we of now and to impactful thank team this their to colocation We employees, ever and remains due like questions. customers large for large We line announcing strongest signed a series our have months, in the I to and of commitment on opportunity again, opportunities our of recent course. additional

Operator

[Operator first James. Louthan come Instructions] And our will from question Raymond Frank with

Frank Louthan

start us you from of clear, then to EBITDA Thank a year? is or little cost, forward sort with relieve of very the one-time a give that on impact over is you. run much. it the more sort thank be of to of rate the public customer nature course going the or that does the major just adjustment quarter in there? Can the the And Great, color you a the of with

Gabriel Nacht

This Gabe. is Hi, Frank.

million customer that one-time comparison the incurring QX a are obviously, the fees, the contemplating And in XXXX, impact are million we quarter and be to was IPO contract. the the there this QX the a $X.X impact far these of in down we QX from run year. to QX will half a a As XXXX to item as it is to That in will impact regard that about And of of is of compared a weren't company. so SG&A QX the $XXX,XXX with about drops quarter item future about to specific on XXXX, there XXXX be fee back There's in this on and $X.X million then related public QX per $X.X that that additional quarters the continuing about of a costs rates year. specifically that cost audit-related only. as our into professional with not

Frank Louthan

Thank great. Okay, you very much.

Operator

Long Capital have we BMO Markets. Next Tim from

Timothy Long

little come start? color said questions, can to you If see think talk how scale discounted Two we XX-megawatt And in start deal, you. to July. you said, And second. I'll sometimes Thank if a us Gabe it? going the give little answer I things or this one, customer a just any on pricing, And XX back think once Thomas just aggressively ramp. us with and about I maybe color then give – of would bit pricing normal just of the these could on But said take you this then it's ramping could. Gabe, you I bit a months that they because be a

Thomas Morton

megawatts. The any months then Thomas. I’ll a financial heavily quick that was It new a retail, two items. And a a not every priced wholesale thereafter deal deal. deal, full This get in service, Tim. Gabe you full was deal. a XX-megawatt ramps megawatt and until It is chime the white-box of full and It's not megawatt out at July colocation is allotment in response can a deal fully enough, discounted. a give with retail to they Fair

Gabriel Nacht

all understand. powered accordingly. transaction. of wholesale sure is transaction, because they is aggressively Obviously the and This XX-cabinet Switch provides, resiliency, shell a all want priced deal. the has a This just that of of everything But make all of it's what for when technology, the Switch than the size more of want wants that do we to that I people efficiency, that all priced it's customer of a

Thomas Morton

a advantage opportunities amount so as It really large they also that CORE involves the the of well, took it of offers. and telecommunication services

Timothy Long

talk want then the that – Okay. delayed a sequential I mean if understand, Great. have such in expected a was then quarters go deployments? the would impact I the that the were to about to sequentially bit type could having so deals next little just few the for also decline there in March quarter? the back of other guess, similar And you that would risk could And I maybe to customers grow bit. you delays just just little

Thomas Morton

QX, about increase. these would timing know these if now hit in would've very think we’ve we of forth. closings despite transactions numbers if we and the we’ve as transactions – the a sequential expected confident deals have expected set to that I control our all closed closed, increase the our and We are but can’t transactions, adjustment, we million our good announced, a large Yes, see to Sure. $X.X have that the we QX now feel we guidance sequential still had of exactly, ability of pipeline our very those in

Gabriel Nacht

take issue. have to time servers, company we that a and ever perhaps have had the implementing just and as multi move these they colo, so but not the very – slight first They’re that’s people they complex. we reason we’ve the also pipeline and to this in a that a are or and timing feel that infrastructure with some megawatt transaction. of fortunately just Unfortunately, quarter, large these deals Tim move people move along there was with largest deals very but delay that move

to land expand, churn have flip our X.X% and that them logistics a that once not land, that implementation do they all The out the because of to little centers. reason the they we of have data part of they an a to side do, they So leave. as have is is in we it figure do takes time such that

impediment longer their but there take also a – to to well. a onboard, significant are is as little there departure So perhaps

Timothy Long

much Thank Okay. you very guys.

Thomas Morton

Thanks Tim.

Operator

we next from JPMorgan Choe. And Richard have

Richard Choe

on just in a I so million follow-up the going is a want the in second by $X.X the the basis so was to less year-over-year and million Hi, to impact revenue $X.X pressure little first bit, quarter? quarter then

Gabriel Nacht

$X.X there QX. The there with from to is comparing will revenue the But QX was run into it the impact. was XXXX – be million was is additionally $X.X quarter-over-quarter, sequential which again $X.X impact reservation reduced maximum an million QX pressure impact to fee of the rate Richard QX, million impact versus

Thomas Morton

Richard a PayPal roadshow Yes. deployment. you've now. eBay unknown. with but during a that that planned this And a it’s important and it important And to something have for I a them. contract heard planned times, unplanned shared that this it’s was This known their to isn’t this order then seven-year this we And in other was seven-year understand several that their know accommodate from company, part discuss made with and was something split, everybody strategic is it is was and to customer. the This with we and of them. bifurcation accommodation deployment continue And or

Richard Choe

pricing, I deal, obviously positive, this follow-up little at can deal, – we same mean how of to it? the getting give more about it’s hear on drove a wholesale but which And color big what think it I’m deal, on then should us to XX the megawatt good kind a little isn’t that you you surprise are time is which

Gabriel Nacht

This should about is that that all that quite use I availability, offer I making it of our are a is transaction it, hopefully, powered think do. you are we of how you're think of priced obviously technology built size and sure we about transaction, this appropriately it’s guess going wants that to think positively client asking isn’t and but that you and shell. can and very point resiliency the and for all with to what all large Switch our a of what cloud client in. priced I’m as we an to It’s not

Richard Choe

then might term clarification guess XX-year on I is the be deal – maybe like or…? a better this

Gabriel Nacht

No. I five-year transaction. understood, it’s a

then the it full I've for So it's and as ramps in stated five. stable

a it’s total So term five-year deal.

Richard Choe

you. Thank Great.

Operator

and Next Synesael. Company, have Colby from Cowen we

Colby Synesael

just based if you, of what's I of if that get Two currently of us Thank in guidance, visibility point could any matter relates to it on mean to you. to Great. therefore, deals you in much your done that have questions commencement, getting still you give was wondering versus color just how is it's I as backlog may. a terms and in on lockup hit that aspect then But of your to color if Up-C I give know order to tied some another I And is relates was And expired and X. it guidance. lockup as you the my that wondering there's just Thank IPO April secondly, the us understanding that? lockup, to tied in the you. to structure more redemptions. the could

Thomas Morton

the Gabe let I’ll address redemption Sure. I’ll talk to the then and backlog question.

Gabriel Nacht

include that that we regard but the we've does built-in, With you. thank our to additional transactions. some does got close it backlog it guidance, Colby, also require Sure.

Our we new on not transactions to close and do guidance way growing. just is expect work. the alone We backlog continue always to

We earlier, and our feel it say I of it conservative, said it's does not some would that's do guidance, coming but guidance characterize conservative. we wouldn't where good I new but I it's sits, require way As have transactions. pipeline the good a new achievable, transactions but the in, feel about we

Colby Synesael

mention You to just – that, Gabe one Thomas. follow-up didn’t

right that had conservative, some it's be as all But and not first that range now? in maintaining earlier your necessarily since quarter, you closed said thinking of said guidance. that you quarter. second obviously, we With in recognizing are obviously mentioned, you at delays the least should these You the end Gabe, but low

Gabriel Nacht

where funnels. a the going other. are earlier, one characterize as we described needle and not them to of to have thinking transactions, can Thomas And the I move end needle-moving should full funnels one these you be am sales from because, sales any very

Thomas Morton

CDN you line. they give not to the couldn't distribution one deployment announce did sign, they for XX-megawatts. me content but change took we that They signature we company, recently signed their let until Colby, the time their example, longer sign, so

decided still go deployment So at they to and signed July. later, they a beginning the of but start their little

faster, had are of what meant due we that is size available to campus. to that to we our able have megawatts and scale accommodate So which the

have So the And deployment quarter, we part and there's first lines us in adjusting. out there. deals but reaffirming guidance the in many slower put aren't gives of so that's been what their comfort or that signings the time necessarily in pipeline,

Colby Synesael

And you. guess That’s on redemptions? the really helpful. Thank then I

Thomas Morton

Yes.

on redemptions, of more for the being the the April so way understands and organization have – there. lockup everybody is but of we our structure have did than members. thank we so our On just studious expire you Colby, XXX X, because

So year can their there for are shares. that times shares people Class four redeem B A Class a

The first is that on time can May that XX. year this occur

on Class so May redeemed A are approximately freely XX,XXX,XXX Class can sold that And market. be for Class the those XX, in shares be A B then will and there

that Class sell. to to B for Class understand thing the Now going with A, not it redeems just is are they does mean because that somebody

be they will So available hold hands in them. in to long for XX, be may the have on but and that available when float we May to of people’s remain additional actually to believe those amount is will I able on XX be trading will XX.X however public million But choose day they shares XX. be shares there traded. Monday, market, next May the the closes And sold May

Colby Synesael

you. Thank helpful. super, That’s

Operator

[Operator Instructions] Next Goldman. Scott from Jefferies, we have

Scott Goldman

the and provided, and in the the million. Thanks strategic step the $X.X the I Hey, that of taking for guess terms providing customer down for million follow-up the questions. thanks guys. detail $X.X on you

the you you be relative those with to gave think some usage. contractual commitments are that numbers the there probably customer, depending have but upside on I could minimum

there open has been that's that's sort capacity existing to effort drive byproduct than if just in concerted new recent that's the part the quarter, your terms growth a been business secondly coming rather new Just years, new some a wondering of logos higher the And those noticed today usage revenue numbers. whether, of that a it the this bit of may customer be what strategic more recent to in Thank in from perhaps in upside is and wonder the just that you. or if some has seeing quarter logos than you're from markets side? on new then of

Gabriel Nacht

Scott. over customer regard the They're floor in. then significantly in minimums their is here Reno up from Vegas more those minimums step customer, to again, the not the up month. the I’ll process Thanks, today. Thomas yet, Gabe. than jump in single of With ramping strategic that the Las utilizing This minimum and utilization is take They're deployments. every that and

from remainder So over minimum we January that usage. once they minimums at as levels. May contract. And they are level very those that exceed ramping time of given a since they feel we that in it the been confident up million is minimum the customer's that comfortable reach X.X quite and stays month, we the will they've will for exceed history, June, But that feel and those

Thomas Morton

this This - – we’re just one Yes, second. customer I’ll Gabe is Tom. Scott, in is here, right. jump

but the the we've years, known they actual commit to years they historically, have had conservative I believe, minimums is, rate higher has always in to with but report the Over now. their be And we been always run what them us than for report, that. only order that eight exceeded have

Gabriel Nacht

customers of have logos the to seeing regard that timing. that majority a over is the one with us new simply from year, I been the Scott with of you're versus And think effect contribution

we're we As the we folks contribution and that us longer from the add us the year will than new, that a years. really, have us year and a than been been customers longer with the as to throughout throughout been QX, ramps that existing us you chance the have that the some with than a with see move year. of their contribute have had simply been as the with a have because that more a less quarters, than coming less much as the revenue folks ones not in customers, count Since of year year for have customers

to So year. tendency natural that over a has the decline

about about If you And this I numbers as of year our customers XX% new customers it the within XX% from for our at well. from year and you'll us revenue continue pattern think with had came been that over QX see year look was a year. that that

Scott Goldman

one on the last the quick just to follow-up and Great question lockups.

the the expiration? May you said of the You XX one. second us Can first give date lockup was

Gabriel Nacht

hasn’t will another will in one But then be there exact date And it August. be Correct. set. The November. in been

Scott Goldman

Great. Thank guys. you,

Thomas Morton

Yes.

Operator

James Moving Breen. on we William have Blair, for

James Breen

Thanks.

that. year margin margins the low here forward feel back on just side, do Thanks. that state? questions that sort be of quarter-to-quarter some throughout around or you to decline Just like rebound margins the can obviously and Where some explanation and in you going range the sort XXs of steady

Gabriel Nacht

with feel XX% a target of still we EBITDA Yes, comfortable our very margin.

Thomas Morton

as expenses, But impact, target EBITDA the well the will we to believe Gabe mentioned, one-time able the with percentages which the IPO James we the end achieve year. have in that we some revenue as planned for. Yes, of at connection be as had

James Breen

thanks. Great,

Operator

come Fritzsche Fargo. will question with next The from Wells Jennifer

Jennifer Fritzsche

Great. Can hear for Thank taking me? you you the question.

Thomas Morton

Jennifer. can We

Jennifer Fritzsche

any the a picture behind concern about lot compression. to just Are could thoughts offer I on the that yields data There's infrastructure are Thank incumbents coming seeing a space see wanted there in question. center that? And that you I lower with you. on return been to with guess, was business entrants general and bigger the I some and in. just you wondering new on new obviously some your that? regard color influence money you concern of that these a your ask can

Thomas Morton

respect, sovereign wholesale which where funds you’re others seeing transactions or but Who and in not question. is change these The an box in, that's knows, deals, crystal still that some some ball question. we those market. still answer are deals, seeing maintain over being broad us, price able Jennifer, time? our start target and It's deals in Yes, we the – Will retail for interesting to we're signing come you is are type our points. of

that's our they but extent directly not looking return to whitespace, in on So data a the are segment. for market good, cap center

may that, are impacted able just we by XX-megawatt we up. may right So signed or lot now be shown that but our or sold deal a by not as margin we the recent maintain to

Gabriel Nacht

Switch there's then in developing I want announced be continue be a marketplace. scale, want we wholesale our cloud-type space. is of think folks on I to bring. there's that the that we and XX-megawatt what natural like concentrating that margins, Reno, And other to there and to folks these marketplace, developing dichotomy enterprise going efficiency, lot the also going maintain cloud think type obviously and technology in transactions, that And to the for large all a can the competition be the going price of the there's of really can the going deal we in really appropriately, be to is resiliency we're believe that’s business,

Thomas Morton

that of the part are of are we gives the telecommunications, [$X.XXX], reason offer to or the no a the that of of toggles low but – lower to pricing zone of to in the us we that as we cost cost able low the without cost able Right, power at in low optimize anyway. low living, EBITDA our impacting tax being and turn can total four and ownership cost

Jennifer Fritzsche

you. Great. Thank

is as as where So the on stance about I said this is to of think IPO, outright it you you than fair kind to say that you customer, sit? cloud, mean better still I fair talk the a partner

Thomas Morton

everything They be a customer seeking too. just customers, blend great belong would them model. they're the Look they’re in in change our a as still of

cloud we the them and/or whether customers with love they so we partners, work are So extensively. guys

with some to where bear to important and cloud an Everybody proximate going been offices market their colocation the to as be data are have a enhancing needs edge. people part stands. and some or would what to partners, the are relationship enhancing our cloud, the of seek We some we and and center

cloud so two the necessary are to CORE And those things. components and the

be will large-scale the we so for deployment people. And providing

component will We be will a their but providing cloud be that. PRIMEs, there to

will in with in some of next be to Some of site, be door. that Google our adjacent site and will that our as Atlanta

Jennifer Fritzsche

you Thank Great. very much.

Operator

move will Synesael. And next Colby from Cowen to and Company, back we

Colby Synesael

understand letting for you was be your trying notably up? The questions. would forward. just obviously modeling just stock I'm some some per churn have wondering actually how call. the was down Thanks. can that on back should going gone X.X% comp give not we revenue was quarter. forecasting Thanks to me in I have And if on color the I churn high. just also, Great. went why

Gabriel Nacht

comp, for Sure on vesting comp called graded Colby, the stock accounting the what’s associated that. IPO stock uses the with

of it frontloaded, quarter that this IPO-related so sort So stock but comp was trending downward, very quickly. it about not $X.X is and will million of

of should with still customers then but customers and that in from quarter. Switch $X start churn, the that’s to monthly you churn measured period. we left associated the see second revenue to that So million the the left And trending talking have the way the about the down so Switch obviously regard a And item. then have there, it revenue will beginning or compared as with at about the non-cash we are

these our declined, therefore revenue Switch while and in customers leave not So counted not churn numbers. did

Colby Synesael

of End Thanks. Q&A Great.

Operator

as and and you that Ladies session as disconnect. thank call. today’s today would joining you for gentlemen, conclude does We earnings now like our us Switch well question-and-answer all to may

Thomas Morton

Thank you, everybody.

Gabriel Nacht

Thank you all.

Switch (SWCH) 14 May 182018 Q1 Earnings call transcript