SWCH - Earnings call transcript Q4 2018

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Operator

Good day, and welcome to the Switch Fourth Quarter and Full Year 2018 Earnings Call. Today's call is being recorded. At this time, I'd like to turn the call over to Matt Heinz. Please go ahead.

Matthew Heinz

Thank you, Operator. to Quarter welcome XXXX Full and Call. Conference afternoon, Switch's and Fourth Year Good

today and Morton, may statements, forward-looking to are Gabe call market our other the On Thomas forward-looking events future from assumptions. CFO. to projections risks, or call certain those characterizations references in of Nacht, Actual Switch's subject Today's may materially including which include results are statements, conditions. expectations, uncertainties or differ Switch's and President; expressed

of today, update the as our we assume describe Our of to made statements particularly in section on and no obligation Factors. filings, our some in are Risk Form XX-K, specifically We disclosures. entitled our these risks SEC

considered financial today's a a non-GAAP In call package in measures. press prepared financial information a discussion from includes information, measures, supplemental and of or today's accordance for refer substitute to non-GAAP further Please as including with not release GAAP. for addition, of isolation in be which should reconciliation

quarter fourth website at part is turn investor Switch's been our XXXX President. Thomas the X-K on to I available to Our will over our has Form the of now investors.switch.com. SEC Morton, and as press release call furnished

Erin Morton

us everyone. and today. Matt, for Thank you, Thank you good afternoon, joining

our During Citadel two Campus. we Core one XXXX, sector sectors opened at and Campus at our

opened land. also customer expanded additional late also The XXXX. are of and schedule in Most up, An XXXX. to of acquisition sector opened we on advanced The in footprint was deployments the QX first the it XXX construction of on in center data land Campus of The Pyramid for walls Keep importantly, We acres significantly in the Citadel Campus with The Campus is Atlanta. be

colocation relationships Keep strategy the PRIMEs which while customers in property establishing In and ever full focusing sales zero Switch truly Bill upon on towards the our workloads. mission-critical to the Campus. Switch strategy and relationship our all, that with of can expanding Switch customers. as leading this who customers provides enterprise and time choice We have ecosystems Executing before provider that we hyperscale business for personal for deploy involves to made we progress becoming than more Atlanta, larger at secured significant which also to taxes to sales in capabilities customer meaningful in ensure offer, order understand the a those invested our of range more our long-term approach technology effort

world. XXXX we service We zero bookings both the this a cloud lines, Hybrid with we public of and As sales supporting discussed the zones a enterprise into position Fortune firmly continued led Elite including cloud provider to growth. remain Ecosystems, cycles continue transforming Switch's cloud growth be that designed effort In transformation. time have and we to On in to leader that the in and Cloud calls, deployment revenue latency this as leading believe XXXX Switch cloud Switch focused on PRIMEs of hybrid optimally earnings towards work the our our note, closely impacted major execute hybrid in lengthening investment vision platforms was we four deployment. largest prior availability Enterprise enterprise to has XXXX, which prudent

proposition tax for an on unmatched connectivity jurisdictions to Our enterprises our pricing the for and scalable green ability significant and unmatched of and environment value banks infrastructure, hundreds And their natural XXX% believe to workloads. highly cloud land a Switch. single low establish power low disasters with ecosystem campus to we environment enterprises in providers, tap offer represents colocation of risk unique the of primary into ideal

sales an to before to provide over our financial of our Gabe provide Now and I XXXX initiatives recent would outlook. call marketing turning overview to like the

team, local and sales a of consists channel our sales. three structure, sales strategy sales team Our tiered national including

established launched a business. is center sales team professionals have of across seasoned our national We with on These senior recently data professionals this sales footprint. team, or and specialists, of growth large enterprises books campus national sales driving focused with a are

sales the PRIME who in prospective members with campus their knowledge charged are current are delivering to unmatched markets in-depth our local and cities local Second, experience an based concierge primarily team of have customers. respective and

sales channel to self-generated their addition provide partners national inquiries. generated sales, and own deal support also online In local by leads, reps leads from direct will

relationships, tours customer-facing with local sales total, tasked adjust and channel XXXX the and In and Third, opportunities. our based in need that professionals channel we channel add RFPs, on and our team success, closure. managing expect channel to X between deal and facility new onboarding vetting sales will team supporting is existing sales partners XX with to

customer new quarter, On added to the the new our to year. bringing XXXX XXX XX logos total logos the logos Switch new just XXX in front, in compared over in prior

two administrator, XXXX, systems. in Some authority our States additional portfolio. insurance Vertiv and include Corporation. park patent and additional our expanded largest college licensees of BLACK property new for organizations claims key-skip to external continued IRON wall in leading mortgage achieved XXX issuance XX Munters the an of to and an Switch one of additional regional a handling our patent operators and patent air We our successfully XX and filed the and retirement We United intellectual In claims, protections include plan California, FOREST penetrating its We provider. and applications. the customers configuration including expand theme traded design transportation the savings publicly a monetize

partnership XXXX, United eight USPTO. XXXX XXXX, to have Switched XX saw with Additionally, utilize portion to On we and letters XXX Switched of On. end also Power pathways who the energy Switched Western States. the partner into of sell for registered filed electricity currently March in with a On In further which as intent Switched of Federal opened Energy received from Commission, has are power applications trademark Switched successfully FERC, with to to the data states signed license Systems development the Pool, In trademarks in joined also their of users. advancement saw On the their sell XX innovations Regulatory western On the services. we center design Vertiv. our customers

cost to would incumbent continues the a to being All grow August constitute the advantage savings million This access current a the further fees this of paid to as direct a end impact enterprise amount repayment to consumption, dollars pace load total by load application energy on the coming With constituting offer Nevada direct believe Switch have in are Switched On a of our of years Utilities anticipate different utility. in is growth fully versus can XXXX. being will we that electrical solution. considered, Switched the from to customers another to entire our with XXXX Switch service through and Commission approvals customer. by from will energy paid end Nevada first increase, that customers in a yet access XXXX We as as our On. of receiving its strategic of receive otherwise project direct begin part likely the our for in the customer energy XXXX. delta by what is holistic anticipate process and Public Switch We direct period. by Energy receive stages of in XX-month paid the recapturing touchstone bundled three respect savings customer the With $XX to recapture a access We the

total than XXXX. turn increased XX.X% are Gabe with about Combined the call revenue financial more or year I portion Gabe? growth of grew Ecosystem, Switch customers CORE, will now in maintaining solid our the year-over-year adoption over Connectivity while of the revenues XX.X% in Our saw well. to Ordering X.X% of to overall margins. continued excited from Switch's CORE. discuss consistent participating prospective Retail of CORE XX% grew as telecommunications growth With a to momentum, CONNECT, our and CORE results. growth of we

Gabriel Nacht

Today, I'm revenue for of increase fourth primarily then we and to provide of from XXXX. in outlook to $X.X connectivity This Thomas. of our XXXX. million increase colocation for revenue. revenue year the achieved $X.X a of million million, the fourth a I quarterly full of in fourth our and quarter $XXX.X In attributable increase Thanks, million an XXXX, is $X.X review XXXX. will the quarter financial results going quarter

For of of the revenue past than an full the revenue $XX.X and while year, more the than the the have full of recurring, who came our year. million, to XX% Switch service attributable colocation was primarily longer increase increase been is from for year resulted This in customers XXXX. XXXX, quarter XX% XXXX, fourth of with revenue In customers increase $XXX.X from growth revenue new of one we a $X.X in unchanged in achieved year initiating XXXX revenue. in colocation, which include of the includes from fourth XXXX. million of the services, Other in revenue the which increase XX% a of $XX.X million QX million and QX connectivity services essentially of revenue million cabinet cross-connects, and XXXX, Colocation compared compared was services million licensing leasing Connectivity XXXX. $XX.X external accounted connectivity. of $XX.X of XXXX connectivity same quarter in broadband in of space $X.X QX million consisting the $XX.X XXXX. revenue million power; for period the $XX.X was of to compared million period and reported same and to for revenue to professional primarily and including during

colocation year, in $XXX.X XXXX. was was to $XX.X revenue compared reported in partner XXX new customers, including our professional XXXX. in million all million full $X.X from for compared services, up to XXXX. $XX million million $X.X revenue For of accounted during Connectivity PRIMEs. strategic revenue, million the continue approximately become million and XXXX to for $XXX.X Switch logos has at we a XXXX, adding Other

of Switch revenue. XXXX, XXXX, X,XXX $X,XXX approximately in total cabinet XXXX. billable cabinet had December for had monthly equivalent X.X% cross-connects of We of generating XX,XXX over XX, per cross-connects in revenue December recurring As over as accounted our billable more and XX, equivalents than

contracts sales of incremental renewals million XXX QX, over $XX total million, services. signed contract to over megawatts and and of $XX MRC than annualized During more with both of more than equating value inclusive we of X

the our XXXX was total churn annual Investor transactions of in accounted posted of annualized call full customer for Churn our than on on for for XX% X.X% more All of the three largest discussed was metrics year of relative today's the in presentation and investor value are X.X% contract average and our XX $X XXXX trailing year section MRC incremental in Our fourth X.X%. to of resulted Relations QX quarter million. website.

Las part expenses of revenue million Cost primarily equity-based compensation XXXX, offering SG&A As increased Interest public in to large $XX.X discussed. compensation XXXX, in an to to close reduction to million previously of revenue attributable in X.XX%. floating net divided XXXX. $XXX.X million due of Capital Campus. property and in million we equity-based to was at XX% were EBITDA in $X.X period. XXXX, XXXX. million the $XXX.X million in The $XXX.X in adjusted a compared LIBOR XX.X% down totaled the by Keep XXXX with to and the in of in connection in offset a for of our XX was primarily executed $XXX.X Citadel and beginning our million million in decrease nonrenewals a Vegas higher million being to of attributable Vegas to in of to XX million XXXX EBITDA decrease lower one demand increased due in LIBOR capital and swaps reminder, cooling by Income Campus customer operations XXXX. the PRIMEs, primarily expense, churn XX.X% totaled by Vegas debt $XXX.X XXXX EBITDA $XX.X terminations million into $XX.X primarily Adjusted million $XX.X or $X.X Net million the rate which rate increase XX. across need, million increased in depreciation compared the partially average higher in contracts in expense in initial XXXX of opening response margin compared power for Las at noncash to in due compared $XXX.X to expired awards opening to Adjusted XXXX driven of equity-based rates $XX.X the additional was to the million to driven million $XXX.X in a a investment XXXX due compared XXXX, June we in XXXX $XX.X by Las density accelerated Core, $XXX megawatts Core revenue Pyramid XXXX, higher XXXX. for part to $XX.X through income additional in compared XXXX, XXXX, million due of XX, fix equipment deployed define service. We customer expenditures to XX%, XXXX. compared as for XXXX expense compensation was loss million adding from of of in in by to spending Subsequent and sector in recurring in vesting XXXX placed and in Switch's of $XX.X XX amortization capacity to in in

square XXXX. revenue $X.X infrastructure compared in or of and in in Atlanta, site also open This We and opened remains we the additional power wetland of fourth for at two megawatts additional sector $XXX.X The gross expansions in XXXX Pyramid development East to Campus, X.X% our power million to Vegas new Las continued XX, Citadel opening upgrade XX spent support of sectors, acquiring one Vegas of Campus, cooling increase to to additional The Campus track the In XXX acres at feet in was also X% of on to million XX adding invested completed $XX.X $XX.X $XX approximately mitigation. $X capacity Switch XXXX. Las in CapEx and land due revenue XXXX. XXXX of the to million XXXX, megawatts XXXX, acquiring compared million At CapEx million construction and The opening quarter up cooling. and in Growth was on XXX Maintenance and on a of power building acres adding campus. which invested is million end $XXX million and XXX,XXX land. we primarily Keep of

space Our encompass million of XXX XX centers up X.X data locations existing and at megawatts our facilities PRIME campus of to of power. aggregate square an currently over with feet gross

were As The PRIMEs and of XX% colocation XX% Campus, of the XX%, prior currently end and XX% at and rates Campus, in XX% Core approximately based of Citadel on space quarter. XX%, the XXXX, the versus The these Pyramid The available the respectively, Campus utilization

Looking the sheet. now balance at

equivalents XX, As resulting December of net debt was last $XXX.X of of XXXX, quarter company's outstanding EBITDA adjusted cash X.Xx. and annualized debt ratio total the million, a net cash to in

XX, cash revolving of fund including the shares. equivalents credit. common units $XXX future. foreseeable As program units. to for its $XXX.X the and In Directors of availability XXXX, of completed Switch liquidity Switch of the this million, sufficient Class Board of Capital our to from million cash and units a August, We million, Switch up approximately had authorized line X to plans repurchase In is and August, December believe million of under Intel repurchase B $XX a outstanding for the retiring growth corresponding

remaining approved have We the million approximately $XX program. repurchase under

to XX.X A next Class unitholders expected will existing There exchange units their million units shares to have April on for opportunity Our are currently common be X. exchanged.

determining still exchanged. program units any are utilize will repurchase being We if the of the we to repurchase

Adjusted to of Now is the the XXXX turning be range million. $XXX to of in Thomas EBITDA capital million and to expected to to turn to is $XXX Revenue million range the be to are expenditures of some be in million closing in now it $XXX guidance. expected will range $XXX expected for remarks. our back I And million, $XXX million. to $XXX

Erin Morton

In and conclusion, migration environment. competitively industry believe Switch positioned a we enterprise into dynamics jump-start well to firmly aligned is cloud hybrid that with

which open opportunities, and for fellow forward their We remain opportunity enterprise We Switch. to in to for thank the like to would to questions. colocation support of we continued now our management line like the our execute our partners take have again on team course. employees, retail continue customers behalf our transactions this would to seen. of on due We ever once look that large these We strongest announcing

Operator

Instructions]. [Operator

Blair. Breen will first from William come Our question James with

James Breen

Can around versus the you the about the there in campuses looking see spent some just talk of and getting color each Tahoe? levels individual and what then Vegas campus the of then Core the penetration like builds you at are The CapEx how

Gabriel Nacht

as the have part years. your not may campuses? question, Las Vegas But I business about has on years been asking we've are age of old, Pyramid started, side some the Atlanta, in Tahoe seen side East years been the Citadel since. I we are Las side larger of XX didn't Las the campus, construction the as we where to The Las part. know. on west Vegas campus. is XX in East we you're Vegas Vegas ever we the Reno still Michigan. catch of CapEx the Did power of buildings the building about maintenance of on And The Jim. remarks, my was is about for the has our for caught in X, And of that Vegas. Las last you've upgrade -- did, I on you spend been which East open I the West But did as two buildings, mentioned has first infrastructure Campus under and those and in the last

James Breen

was I where campuses. about targeted from that but and across this got year spending growth you're Atlanta into seeing of asking the coming -- you're not those campuses. there, the individual Obviously, for how seeing the translates levels penetration Yes. you've open, each then

Gabriel Nacht

X feet XXs have always high million X and Vegas Sure. we're in X customer to Las usually penetration the that ahead The square sectors essentially XXs, is we is low of demand, in because built.

the for the So part, denominator built. most already, is

So that penetration doesn't much. jump around too level

went sectors from doubled sector, and we is As dropped and that available been couple XX X sectors will mid-XXs, course, but, space. have quarters currently the last of we open out sectors the the it The it we the of rises. because penetration X couple points. percentage It's to of rising in when our we it of move Campus Reno, Citadel four for around are first building, In up that a a in open slated

Erin Morton

Thomas. they built out -- is one this We a Gabe Jim, and full build completely as out built opened. they're built to -- building. sectors, you though give these We when thought or they're buildings out, first we completely within said, necessarily

for to sector sectors fill And up example, more XX Tahoe we building. a we So inside -- in the that building. build than have start Reno, we inside same as we another sector, have out

we example X well building building is inside And building. can buildings once but several and to It unlike that provide existing then give additional full, additional that campuses of to is providers, power. been that we most so that as equipped years, on build megawatts running power cooling back still it's go and fill And add continue and is as is often has the a of even full to XX can So cooling -- out power currently power, that we more for we megawatts NAP put XX XXX facility. of buildings. megawatts around

So as up their refresh terms dense can continue those we our monetize cooling customers well power telecommunications in customers as gear, of and as and revenue. both to

Gabriel Nacht

then than of spending. seen guidance a million goes up over does million of the here, for in under will this to campuses that has And CapEx the in even where next infrastructure at last And in construction, well at we're XX% next year. end done We've is translate several and XXXX because how lower interesting into space, other the gone build building been years. opening that all XXXX. PRIME committed asked over in of $XXX that currently our the campus down Pyramid from campus you will Atlanta open But CapEx $XXX bring our And and PRIME year which The another that four essentially year. as we'll down you've available thing Campus, about one we're opening sector to be that expanding the

based done, peers to space past And All of healthy entering and unlike demand. years. because very been of the the with our the of some XXXX is infrastructure building be customer a in we're will now space, we've backlog on other sell investing for several available

our very into comfortable we're going So with 'XX. position

Operator

Frank with from Raymond question next come Louthan James. Our will

Frank Louthan

extent the us Nevada? new is little the give ramp then an to campuses deals of And margin larger coming getting out? energy go deal what Can a potentially of will backwards little of bit Michigan as also, pushed a up? that the in status the update improvement some bit from you on and are that And Georgia

Erin Morton

Always thank Frank, hear your much. you All very good to right. voice.

the deals working quarter, in The first in not thing close to near are the that on didn't closure, do talking been close well, and to we've there term. are close end sorry. themselves that them the we'll announcements -- first They inexorably is quarter, They the may close, hope by year. about very are we the they larger of and first did the so close the in several

looking have of none continue to So them off. we'll and fallen to closed, them but be hopefully, they have progress,

positively So that growing. that something like towards at look be we continues look to and it's

significant of on that an procurer, I change to independent terms on power power, some specific saved And In power in continue, Gabe margins. power we has saving a being we've the margins, expect amount and stats our our that are don't lot but to expect provide you. by we

Gabriel Nacht

power independent power historically, purchaser impacted pricing XXXX. were Well, we've peak about And became in terms since happened saved the We an million to quarter quarter of that in independent and because by most XXXX. of was of purchaser third that weakest Vegas. particularly margin in XXXX, in Las our always an quarter pickup power, became third June we EBITDA in date, we of of of $XX

competitive in I provide very in good quite at very Consumers what at And favorably power actually to a by continue with great. getting we change Michigan entire an significant for sure improvement moved been as third a a you margins we independent 'XX, to quarter, in saw be contract in there Michigan, wasn't 'XX, were a really into the in expect moved so Michigan because buyer or impacted we as to -- year we hasn't margin. to our margins Energy favorably impacted It's that we've throughout being power And purchasing been purchaser. so the into 'XX be really very but rates. we have XXX% But significant

Frank Louthan

to a if at -- just you're wondered, order little the just Georgia the be than not the of Nevada margin ramp I contraction or see But wanted might we bit Michigan in curious better rates up, those sounds forecasting but probably as or case. just and a I

Erin Morton

won't they to Nevada, we've or ones but not be will achieve been than the Yes, in margin. at able they better impact

Frank Louthan

as first to sounds -- my maybe like guidance a your follow-up question, a And it your little is conservative. it. Got

some an As can come guidance? how we of the these at much baking deals the you see these you're larger update already are in, to in through, of looking Or deals close? guidance to

Gabriel Nacht

look -- means We at guidance we've we forth year, billed, the the is adjust booked make at from We that in our The backlog when we out million coming are total the there sell importantly, growth; still more we got that about about time. point of want work. X.X% not numbers in requires Well, $XX guidance at of cabinets. next put the that midpoint, so growth. but our current XX million sell close guidance larger sure and is got rest if about these We midpoint, to deploy. we've our realistic. of can is it that achieving always at put deals to $XX that and, to About some circuits

Erin Morton

what providing as out to lot accurate still with we as felt achieve Frank, to we what we the our that we reasonable wanted numbers, we could thought wasn't there the growth company felt this had into XXXX. have where a do next later we what we will we at the so that overreaching have felt that produce and market of at we -- we be Certainly, in picture and exceed we were it to state, very a put guidance our current that and the into be put is was guidance, on. year. we looking will we can But at those available, of on looking expected that adjust if a picture wanted plate

Operator

Our with next come from JPMorgan. will question Richard Choe

Richard Choe

the reaccelerate is revenue campuses ask to high we X.X%, that past to is the what accelerate Or we million the see to other see and flat can $XX.X the ask, for Or that should kind kind wanted range, revenue -- connectivity pretty And start of of point? of for ramp about growth the then two as wanted new a normal I has growth? I higher single-digit the rate? also, about the think quarters. some Should been how that? at kind up

Gabriel Nacht

question. the for Thanks

normal as know the in that The accelerate we recurring idea We revenue it four four locations all certainly far the they're and new should the is. As of PRIMEs time, normal, stay single should don't help adding new believe don't is what once digits. over having close over then and deploy order we lengthening And campus need do not only time. to of in these about on accelerate, to see larger growth talked growth But cycles to transactions, some sales need but we've after deploy. the only the they they deals, they are and billable.

And we into forward of that will and sure of and expect, want look with, to So deals growth. we as part going are we question? see faster accelerated deployed certainly second to then your 'XX the 'XX. If comfortable putting But are we certainly some would guidance particularly we we these wanted that to forth signed we make beyond, XXXX, adjust. than

Richard Choe

Telecom.

Gabriel Nacht

Oh, telecom. on the

that side, from continue XXXX, was given X have seeing they couple happens revenue X the X been want telecom -- large we to It On margins impacted talked that telecom and quarterly call decrease a to large has number colocation, growing that we higher. that the in or flat you're point QX, deals, X there about did from telecom, we're balancing just that that into a in renewals that because impacting saw the last of But on so we renewals not telecom telecom what see renews, is pay same years or they're Typically, three the price upgrade than that do renews it we -- as telecom but tremendously XX-gigawatt either they make sure their today, because circuit dollars a three the certainly faster capacity to hit, ago. expect for colocation did what's faster declining we year the had inevitably you'll we from were less pricing. somebody clients typically that's and is they margins than and going to If point. a see that we and a flatness. slight price two declines the

Operator

Erik next Rasmussen from Stifel has question. our

Erik Rasmussen

First, PowerPoint chart in decelerated. have presentation, bookings in bookings looking you provided that that at your

can you think And walk drove then a that? remarks million. can timing? maybe -- then about $XX your can there what we so a then look prepared I I at we what start Is expect 'XX, than guidance in to can -- range greater this we that that as we And just through you related mentioned provide target is more that? have us for you And that follow-up. the can marking

Gabriel Nacht

Sure.

As bookings fourth of go, simply Erik, quarter deployment quarter as slower because bookings the is holidays. a far the and typically

clients, don't for experience staff deals, quarter. our to they're period in contractual companies slower if holidays, that's the they pressure And to because cabinets be think not we tends just a their where there's that. necessarily moving I software So Switch. quarterly holiday holiday. is true during necessarily even the it -- just signed don't sign deals, on Unlike it given

see I think that you industry. across the entire

did where the as I'm that you're guidance. too then far range, I our a read going, number. into we wouldn't provide not range I So much in but as guess, following maybe And

Erik Rasmussen

could in I my follow-up, your maybe into now. capacity, then new seems it No, around it's Can that's of it that's on there, on including XXXX. of QX, that you about been from and And plans bringing number, No, and market. into a seemed development of a there've that seems lot a it fine. but back a coming that just of at variability on guess, looking then explanation you players talk No, in like there? quarter-to-quarter as there's pushouts reiterated your Atlanta like I new from helpful. already just because what's into space, going the And lot opening for market the established players some obviously lot -- elaborate maybe lot there's the

market. on Just the some thoughts Atlanta

Erin Morton

of coming seen series haven't of we a but as and until Atlanta terms Atlanta have is. our Erik, announcements market, certainly of can construction I size XXXX. are the market, into breadth to that if in Atlanta elaborate the the quick, don't much anything I and in don't seeing. in pushout way and we players of But know there real So constructions of, haven't new We what seen our of Gabe that in we've new seen the any know that any market, but new he's any

And announced that doing have in there that the those there's smaller construction so people built, are always area. haven't are some -- but much

forward coming looking we're So to online.

line the do there only nature. are we would on time looks If thing the forecast in that in weather down amounts The over time mother have that on Atlanta, -- from are the deployment to us they And rain, slow get at you're down getting impactful. received is anybody QX. rain buildings, you're online the We to they line. be then epic foundation, ready time that. to and when certainly, significant But once less pour impact we pouring of roof rain your continue has receive the will a foundation,

it ability will to customers with but on continue, our that new open rain have our there. can in a time diminishing So impact

So the out buildings to data we're and sector and to we're Pyramid. looking in the building the there, in build looking growth Reno continuing opening also center well. as forward The latest in then And to Las forward Vegas we're out

the all growth much campuses, and bringing we forward four online. is to in look very So continuing Atlanta

Gabriel Nacht

sectors building ready our is facility, Vegas the of pushed first XX to And committed Citadel system's four building Campus means three XX which two very, feet, is to opened our last waiting sellable up. XXX,XXX The of open. today some of the Vegas essentially that anything And We've -- just up that design. sector power sold. to sectors, Core Las entered we we plans. sector filling square The Yes, Campus, be actually haven't we two of the are actually on space. which We're accelerated building sectors that XXXX. sellable with very have The healthy is is year the that essentially on. sector full. At At XX% for sector The are have we be are inventory Las

a we're will the Pyramid Pyramid At XX% the of QX then this with QX in very in 'XX of of open Vegas. last year. that entered we'll The next piece sector XXXX. And open inventory we committed, So healthy in up Campus, but

sellable and So and really our our capacity, pushed very good inventory any CapEx. we haven't about feel we out

demand to there. is We the accelerate customer if have the ability

Operator

a take question we'll with Feldman from Brett Goldman Sachs. Next,

Brett Feldman

the if there's If up to XXXX some sure little but in I framed of expecting wondering make interpreting that I and you they that that degree the noted business financing And I'm color ahead just guidance on outlook. some business follow you'd on any if based if update in you revenue, of past, you're to through on just that for a is customer commenced. went that had Thanks as acceleration revenue your captured and who before of a earlier, the this you the on move probably the with regards provided for you I missed was the could bit, any seem looking also, year. specifically your it correctly. guidance. large way would want I'm I in apologize then like

Erin Morton

very much, Brett. So you thank

question not not year, as the first, Their for took guidance. me advancement out the for looking halfway part. at They we in no reason all second who's through the all guidance financing. that which in XXXX part Let answer about been have year, of adjustment in here. the moment last numbers, is There's our is to our forecasts so which financially we a are their that is on of customer

it this continue that grow. already And year. a we to guidance to bring online our trajectory And that, believe in the and believe are continue to that to and gave we going the accelerating, as this also thing second yes, have we for but this grow growth Gabe the next will numbers company. expand we company's billed continue not when Atlanta The in to accelerate we to of company. that year, believe we booked

are money building to to inventory for so as and opportunities are to for ability looking inventory, future have sell from our have on to space and we that we the sell. do them, they Gabe our and and available time So up And spent bullish us. said, we customers. It's readily

Brett Feldman

don't to one something value the going Should that the by you'll we're we that actually sales you contract reporting in sounds year. into next not would we online follow-up, get like Atlanta? be total you're Atlanta mind, expect until If late fourth see it quick this quarter, very as that Or probably bringing is include year?

Gabriel Nacht

It contract really simply depends total it signs, on we'll report When value. signs, contract when it Brett. that as

Erin Morton

working Yes, we like be doing much that we'll that. you give and very news, would towards to

Brett Feldman

too Have just that early now? is try Or the market? you trying to sell that in started right way to

Erin Morton

area. We in and this a have and absolutely that to starting we sell local are -- on there that market, in week around actually working have group customers

Atlanta market So we and market. the actively are that in sales targeting

Operator

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

Ahmed Badri

X.X% the of rate your is So And hear and rate I'm growth growth guidance for overall mean, these your saying I et at you great. for looking the actually the rate are at all confidence build the midpoint line directly I about growth X.X% market your guys in cetera. sector, XXXX. in the plans, with and sound

gone we've of at of XXXX look in Are looking like about want about things we we be your the think to be into segue keep through couple us events? anything cognizant to prepared transitory XXXX. and some there fluctuations that there really check be there as should just we really over we performance really through should are XXXX? Now Are We last a we as at quarters? on couple churn how because

Gabriel Nacht

I Sami, sell we Yes. we the to there that. churn not regard that a are dunk. it's With don't does midpoint But It control of be cabinets to circuits. know you. to have unusual. events, the slam course, that With that With as thank we regard about of regard guidance, to mentioned, would require none -- and

a $XX not of billed out out increased coming is our that million that, forecast, and about there's there's booked of million $XX So backlog. about

So to deploy revenue. existing that bill customers, new customers, we our on line to record have importantly, sell and continue customers and time have to more a bring do to to allows on us

look mentioned, have So that's the it revisit Otherwise, with best that we number. think number. on these forward. timing of or we of going have for But that Thomas comfortable may put that deals some we And may other forward. depending not that the now, we're wouldn't we

Erin Morton

about When talk we a considerations. that we sale, a as three have customer there's things to start to us have

The they the the is when what's of and close are size closing. to going first

start is And is as to when they their deploy. the to second third, what start ramp are The installation. that going they have they

largest is that load deployment the the deploy, because for quickly a ramp very that's the us. into so how expense we is as though obviously, we fully contract And revenue the value even question sell may total with customer largest high they load as TCV, and realized there

So is and is know but the just we the us faster deal we don't they deploy for can deployment, close. and until the get and Phase come them what full us, to X to X, do better that sign to

Ahmed Badri

specifically do we can talking Could company years? a the And on referring in hopefully us Vertiv going other agreements some regarding views Or an of it. us like follow are to I this or Got the you just give business then the the guiding revenues probably IP next of the are volume And a guys you just so licensing? on. to, this you of X guys on of that X number licensable? have about. idea Is and this revenue essentially some licensing maybe of where see you kind going over what's entire and understand give kind

Erin Morton

Yes.

capacity it's the be we're couple the significant. So doing but in that these reason they us. that that have products main IP facilities revenue be this that of not our reason doing to of -- isn't compete The manufacturers are for agreed million will It the that Each not main the is a dollars, will we're reason not a with measure. that's use have deployed -- going to this. protective

than companies a more unique source. with So as strategically is it us much protect advantage is for is to it it or a as our revenue way

to supply So are by we access that competitors will technology that competition they in having the deploy ability our with and the Munters, product agree Vertiv, to not limiting would us. technology market, our others Schneider would-be the have into and

said, is will I to as to licenses mover the strategic of The actual protective. revenue. us, at than strategic these dollars for but a reason needle be that not a revenue, it for is So couple million going there's more a a us doing be important

make us the to designs allows innovative like also are offer look we do and market. with working to Vertiv Vertiv products advancements we into to it work some with to that new Now people on that

the our licensing by them and our and toward forefront of with us collaborating technology on are them we to them, data technology centers So with the at industry. advancing working data it center play keeping for allowing to enhancements,

Operator

[Operator Instructions].

Citi. Rollins Michael Our will come from question from next

Michael Rollins

A questions if couple of I could.

was renewals year-on-year First, you able you if us quarter? other that at the I quarter, can you Core implications from revenue the does is Vegas I in about that? just of what The to share average thing take look the aggregate the like growth on achieve the were the which in we campus how should think The longer-term curious Vegas in on that And in of was changes X.X%, with compare Las footprint? Las pricing growth to terms

Gabriel Nacht

Sure.

up I their know, adjusting They're they're and changing circuits, their customer footprint densities, cabinets again. as renewals simply they're straightforward they're In their one way, terms shape of renewals. We rarely of are our renew Mike, sign say the adding, either in their typically, pricing changing XX don't renewals, you a renews, or they when -- think us form.

at if MRC, growth. look our of of to our probably renewals, of X% So this our is But $X of in was were renewals, it's terms one things on about million the terms encouraging in quarter at the about you about incremental. of, if million we -- it's straight pricing look $XX that

deals a you if add relatively that they XX were you'll contract value. majority -- small, that they didn't lot our And with changes. we at those see were The new But total signed logos. new chart, signed, the renewals so we of look vast

million of most incremental of revenue renewal there. value we quarter was we that this $X So signed that renewals, within and have contract done adjustments and

encouraging an sign. that's So

Erin Morton

said, to Mike, about thing, up bring is, as X% increase. important we One Gabe got that

that lift do a in year. each have We we March of

a we have that for the lift We billing. do

power a not power cost. unless However, in corresponding lift there's we do increase

annual actually on. net the closer mean certain doesn't that don't X% go X%. revenue are going raises is that all-in The entire it So to lift of to aspects business up that impact is there our we of do because

Michael Rollins

The performance That's aggregate can about growth. you revenue to if helpful. Core And talk relative Campus

Gabriel Nacht

Campus the faster campuses growth. Core you quarter-over-quarter, look year-over-year than The other when actually grew Yes. at

Reno peak new QX Mike, eBay's quarter with the was year their recall, to prior really us of their year. expansion this to contribution last signing you If

comp so Pyramid than had much And terms Campus in tougher of year-over-year actually or The a Core The Reno comparisons, Campus.

So X.X%. overall, bit Reno that. we higher had a grew than grew Core tougher a comp. Campus

Michael Rollins

what right of the what's going achieving rate of the Campus? in Is And forward, ballpark same now? you're kind to of Core growth think it about The

Gabriel Nacht

XXXX XXXX As and I said for certainly over midpoint look X.X% that when earlier out beyond. is of in the guidance our to the longer we XXXX, accelerate. the call, would that, term would We hope

Operator

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

Jennifer Fritzsche

ask could I picture If bigger if one, just I a may.

secondly, and on, opinion the length one, environment competitive sales then out there; seeing you're cycle. your of the the Just

cycle or of length customer you don't fits ask, has gotten, customer sales the cycle think the -- sales plan? in in I would had in change know, be to customer more like business grapples hybrid and I the the seeing the -- the But are might sophisticated X as you cloud, the hyper If the change don't cetera? right which their into back, I et to X know, a with years, of think questions your word

Erin Morton

they to a seen whether of by, have the or And questions. the is and amount funded into the very we've those environment. great Jennifer, that's large of is are thing Yes, competitive that newbies you one some all new first entrants interesting sort industry, return. accept The fund thing product some a amount significant you're of could to ability take with or smaller to return, willingness they lower starting available to a so or operators of longer-term be a that funds the sovereign the and have see a

data What that data the to X/X moving beginning XXX,XXX especially so spaces. given we of of are but had as center. type of seeing of sophistication Tier customer some X we the And deal in number centers, people, type we on the have a the we feet you So second with to or competitive cloud-type seeing that are of the Not by customers the at data enterprise they're efficient with wasn't equipment some center. environment to compression see center, their much that the level say, customers. square the up that is affecting go thing incredibly them do, is to that center when that data X for They've that data Tier as shift in a cloud.

begin Those customers or environment. longer out are that of protocol into what before from center even colocation have their and less procedure nature now are environment, moving have So lifting getting a and gear now efficient also so don't they've but wasn't them economics a have colocation done sensitive driving it procedures the it's for into be center gear that to from their as towards and quality X/X they have environment. and their a a a colo the so much and figuring their full, to going they they are the all of mechanisms data data colocation curve enterprise environment. to They never more don't with,

They're going minus to going move Tier more facility not their move X facility. they that's a So or into are into Tier X Tier from to something X want sophisticated. to

and They They they that. they doing really the happen. that to more of shifts, just how in they lift the types those comfortable or to but talking can do need out of their advantage it. see make it. want figure used enterprise of not doing to time are They doing with a are in of slower we lot those process So customers, to because as are

Gabriel Nacht

are to because sale. the they're more interesting exactly tech consultative Jennifer, is And And run I It it to stack a thinking of They next kind is over more is transaction a ask the thing, in their more sophisticated more. real how really going of the going right. or over with structure, their isn't their your strategically they're decade to and of premise their and think how getting estate they're right to the with where they're their deal where square servers it's feet customers their chipsets load cabinets. trying deal forward, amount understand buy to going can how densities run in just really x they their the connectivity going computer to We're they're going stack. help

cycle. a very So type significant more customer to providing are therefore, to that time. amount sale lengthened approach, you get it comfortable type with we that And consultative of to consultation. customer much the and approach. very married it's But move, really We're once you of the a of really are for used that has

Operator

rest And of for that your this enjoy our does conclude for question-and-answer concludes day. Thank conference time. session attending. you at It also our Please call today. all the

You disconnect. may now

Gabriel Nacht

Thank you all.

Switch (SWCH) 12 Mar 192018 Q4 Earnings call transcript