SWCH - Earnings call transcript Q1 2019

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Operator

Good day, everyone and welcome to the Switch to Report First Quarter 2019 Financial Results Conference. Today's conference is being recorded. Ladies and gentlemen as a reminder this conference will be available for replay after 9 PM Eastern Time today through 9 PM Eastern Time on May 15, 2019. At this time, I'd like to turn the call over to Matt Heinz. Please go ahead, sir.

Matt Heinz

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

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

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

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

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

Thomas Morton

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

signed internal periods to our a XXXX sustainable bookings of additions more long-term valuable for and was We first which strong Thereby The a of and campus scale ecosystem Switch. PRIME quarter enterprise company's key profitable the in most that continued for external of make locations. our teams, history. growth deals leverage profitability healthy the one sales Street to which unmatched and estimates. customers unique path capabilities focus continues growth Wall consensus strategic active securing on creating and the of and to technology revenue our achieved We and exceeded all

telecommunication initial powerhouse contract in global As X-megawatt agreement the previously XX years. This expansion $XX revenue FedEx. term more usage than million colocation based and completed logistics a and generate Switch with usage built over figure announced, excludes services will in based This XX-year network of deal power, options.

contract new infrastructure with completed leading cloud a another bookings XX agreement results and transaction existing moving world in $XXX more Reno we enterprise referenced of anticipate previously quarter in the total with totaling added in generating logistics new organization storage million double the Switch, contract converged committed are a the customer's A incremental of Switch logos in ecosystem our largest added also than a first approximately signings and hyper addition the financial spending the and guidance. a the over than colocation exchanges addition, in reinforced $XX that contracts five-year In customer total forward. which healthcare the undertaken strategic breadth in quarter XXXX we with and confidence expansion includes will we're revenue. multi-megawatt Tahoe, to provider From provider financial initiatives a which premier quarter attributable leading we during ongoing executed transportation, solutions. $XX and including more IT providers diversity renewal our to Box. directly quarter XXXX benefits of with the Overall of We pleased customer value. In total, in one to perspective, the healthcare I've first our value. its believe extremely recurring Switch million XXX of million five-year in

Switch Director sales Jocelyn to where she our in a we more of occur Switch Director first the enterprise Sales. key the scale during Data Global At deepen ramps timing Centers, CenturyLink the anticipate new our carrier our helping positions as to experience of joins above with for Jeff's Bryce team deal three Bryce and Switch McCaslin partner. Jeff Given XX Solutions leading Architecture customers. deployment to at efforts announce continue Sales the and including Division. with solutions years year. more to role division. Engineering President mix, class role impact mostly of QX Vice of sales play of bring to telecommunications beyond involves he and Savvis us joins Accounts with Global this industries, and core quarter. significant with our duration strategic a We're Level previously data senior and to was relationships relationships the deepening Wholesale average than X addition us of Telecommunications IO Jocelyn leadership embedded Director brings will as Level strategic hyper Vice for telecom of in and engineering Switch, RagingWire Jeff sales Channel. of President Jocelyn Senior X, center the world connectivity held excited where was group

over professionals deployments. comes five the qualified brings other We add data and with interested have years from in team XX Center to customers optimizing new strategic and also We Jon with added experience members Vice Bell sales sales in Switch expectation Jon to active team Data their Cincinnati between President joining remain assisting Engineering. Caplinger, as of XX us to and team in highly center of XXXX. to our dialog in our reiterate our

towards robust, PRIMES closely major Switch work the we as public availability most world. of the multi-cloud platforms the hybrid, in execute into vision zones evolving secure, We continue our with cloud to most

for low details strategically available is between top customers look data example network but agreement we we're cloud the performance, hybrid, for workloads consummating latency project scale Switch multi-cloud the additional become one a as [ph]. co-build and these we executed of as quarter, destination colocation During services one a positioning high of transport to the release This how will fiber Switch's and network a XX-year with forward vendors, sharing three one efforts facilities top hyper first that they centers. around ensure

power savings green significant and cost on telecommunications. XXX% our low In addition to

zero minimization. to ownership tax is to like unique One enterprise the been would the Gabe opportunity rate over Citadel I I the cost to as Campus provides In via the PRIME to deployments primary at has Switch advantages the The This of Gabe. locations. of Switch's well Campus material Opportunity is financial our their Citadel customers the total available cloud advantages resulting the Atlanta. California. an renaissance available at sales Campus particular, the designated Qualified as rate tax the in from addition call designation at campus economic benefits highlight now clients the zero enhances savings in discuss the for the turn as both which migrating tax use Citadel in core tax its Pyramid abatements Federal Keep Zone. for from to zone bill tax further and will results. enterprise at available to and and designation This deploying The a

Gabe Nacht

of include of to XXXX services, The primarily one-year. first XXXX same Thomas. logos of QX, $XX.X quarter which outlook remainder in $XX.X Today revenue going review new XXXX. in of have financial period the been with months same the XXXX. colocation colocation compared first of has discuss nature. quarter of XXXX, in million increase $X.X services XXX in cross million we in connects, $X.X collocation the revenue XX year-over-year $XX.X for an the $X.X QX, revenue a More million for in of resulted customers In customers service new XX% connectivity. QX, or over growth million Thanks was the This primarily partner than of to XX an Other quarter than XXXX from Switch I'm million XX%. revenue revenue external in compared quarter was million came XXXX. activity who increase accounted to XXXX while the the first to longer past XXXX, million Consisting million a $X.X for added approximately quarter million strategic our the and compared of revenue. increase of of revenue $XXX initiated during Which to connectivity XX% XXXX. $XX.X customers and is the revenue quarterly XX% $X.X of and who we of and in for reported our the revenue connectivity was period to including broadband in our first become in and XXXX. increase of results XX% attributable growth recurring achieved professional QX the an to from million compared for

as As revenue in had XXXX the We ago of per cross-connects of recurring cross-connects Switch $X,XXX XX March over period. than of up approximately generating QX, March XX, XXXX XX,XXX from cabinet X.X% over year X.X% in and monthly for billing total accounted cabinet billing had X,XXX more in equipments revenue. equivalent

million $XX incremental total with comprising of $XXX During revenue than of renewals services. QX, of contracts annualized of megawatts the full over we and more both million signed XXX value deployment inclusive and contract XX of sale

$XX New revenue. XXXX customer over million were $XX QX, million with bookings in in value total annualized in contract

As our contractual currently of half million yet our current of March at ago revenue booked and XX, not expected contributing billed is compared commence. including with backlog the and to contribute XXXX, X.X% in period. over to ramps in to customer Revenue stands Approximately aggregate in $XX from contracts reductions unchanged XXXX at year remainder low churn revenue XXXX to XXXX the QX, beyond. remained backlog

increase as in website. and the primarily $X.X the by million result revenue contracts on attributable we investor beginning revenue expense increased Cost the our million service. defined QX, divided the today's call are a in placed in reminder, investor terminations presentation a compared of revenue Metrics QX, into expired of customer relation $X.X discussed in recurring section and of additional as being depreciation the amortization to reduction the over due As property at of XXXX equipment to in period. churn of to non-renewal by our posted all XXXX

million adjusted an primarily QX, QX, is from in were to of in and headcount million SG&A in in in decline attributable to to to growth Investor adjusted million. and increased depreciation, XXXX. $X.X increase gross compared growth. revenue $XX.X higher operating operations of Interest million XXXX presentation. gross in XXXX expenses in section appendix was of The in driven profit increase by QX, SG&A our a million equity to rates. million profit the attributable QX, based an professional $XX.X XX% The our increased in year-over-year Excluding primarily amortization by profit million compensation XXXX higher $X.X and $XX.X X%. gross XX% to to compensation. QX, increased In equity to increase QX, expense was XXXX primarily $XX XXXX LIBOR expenses $X.X in compared reconciliation income Income based provided

The income QX, Going rate million of for floating compared by of the million of QX, our XXXX. million to million the expenditures core QX, rate in of lower of infrastructure growth was the primarily in increased fluctuations million $XX.X expenditures the effective Net XX% reflecting of quarter spending of first anticipate in X% compared first cost on XXXX. the compared income entered This margin QX, same East as rate revenue quarter Campus. year. upgrade for power quarter in in XXXX million the for first to rate period Citadel $XX.X QX, down interest of were Net fixed last quarter into compared offset million of during our same to is compared compared in Campus. of for the Capital sensitivity $X.X revenue in XX%. EBITDA the $X.X million CapEx additional Growth Las X% interest fixed to $XX.X year-over-year entered XXXX $XX.X a XXXX the XXXX QX, network was debt includes EBITDA of XXXX to $X.X rate to were interest in first XXXX investment for $XXX million in $XX.X or net in quarter through $XX.X $X.X result million XXXX during swaps increase Maintenance of quarter. due forward, million for primarily to totaled capital equipment Adjusted into unrealized Adjusted was swaps quarter less million XXXX Campus of at and quarter XXXX effectively XX% we year. income purchased Keep loss borrowing June, due which the to last X.XX% $X partially and to same XXXX. a impact XX.X% Vegas, the to

Sector in $XX.X Campus Las system the into complete XXXX, first response commission quarter XX to final expedited X Switch to demand. of customer in XX construction power spent million the the Core Las in Vegas, on Vegas, During strong

rapidly. based Sector of Vegas, contracts our XX% X building XX, As XXXX March XX Las Sector was order on pre-committed is executed X backlog and for

Las of in planned and Sector Sector we open such, to for X Campus the XX construction in $XX.X The which X Keep continuing Atlanta. Vegas, XXXX of invested As also both QX, million

The Switch clients to in power spent the at infrastructure which the QX, and the build as X end in $X.X open of first cooling remains cost additional million for Campus track on for well QX, building Sector development on open will XXXX. for upcoming Citadel XXXX. be as

for Finally Campus. million Switch $X.X Pyramid additional the expansion spent in

As of were which were cabinet XX, approximately contracts. XXXX within XXXX available capacity of at based PRIMES these up committed $X.X and XX% XX% the space gross had respectively XXX build of Campus, power equivalents Pyramid XX% QX, At currently out, March XX,XXX the XX% Core the and to for equivalents. and PRIMES sectors rates an XX%, existing committed utilization of space million colocation in comprise nearly open the XX,XXX cabinets over The Switch full cabinet versus our under our nearly and Campus feet facilities of XX%, square XX% XXXX. Citadel of QX, Campus megawatts and aggregate on

now balance times $XXX.X total Looking quarter EBITDA in net X.X the The annualized million of quarter. from March debt resulting of unchanged the an prior XX, as at XXXX. net sheet adjusted to equivalents cash first was cash company's and debt ratio of outstanding

million of believe line is revolving to including Switch foreseeable March XX, credit. $XXX its had of As our XXXX future. the We availability and and equivalents this of growth cash liquidity under for plans fund cash sufficient

an to the of As and X-K equivalent rights. X, of member common issued Switch shares cancelled B on Switch Class members number of shares A redemption stock, with of of Limited XX.X exercise disclosed connection in April concurrently common Class our stock Inc. in million

program. exchanges repurchase Limited the had $XX.X million Subsequent $XX to Switch addition repurchase million on X.X remaining spent at per common In that this we of occurred, transaction, to unit. our common million $XX.XX approximately to units we

$XXX $XXX prior $XXX million. Revenue some it guidance $XXX in to range Now of turning $XXX range the comprised the to range $XXX remarks. our in following. in guidance, reiterating XXXX expenditures for to of the to we're EBITDA back the now to of million closing capital and adjusted Thomas turn And million of I'll million, million million

Thomas Morton

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

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

Operator

Markets. hear [Operator first with BMO Ari Instructions] from Capital Klein today we'll

Ari Klein

not investments there the maybe required to strategic new on or large whether out color quarter. given team? in some and you head just And some you this Whether update And are year. the the also build just announced you Can then provide an provide some sales signed Can large there you you to in incremental additional number still deals the pipeline? the sign expect quarter. of deals,

Thomas Morton

of you fantastic all to of very Thank team. comments [indiscernible]. much on, a add Jocelyn our Couple McCaslin first is

plan expense in those onboarding We continue the we roll advance onboarding our we people that prudent revenues to quarter in and out three as so We to a that those into the build way we add. and quarters additions added have those calls, expenses as people. we've we've to future more forecasts built said, of aligned of team in up said of and earlier we those for ahead for out benefits this

salesforce and to and throughout across it year needed this country. doing a of of we expansion the will and it growth it So do continue do we're this prudently

Gabe Nacht

about to them, some for you'll about time to which pipeline. the existing still on quarter that pipeline, we we've We others of some transactions know closed confident regard the With continue we close feel good quite and our we in have but them. this working are pipe some been

Ari Klein

Thanks.

Operator

Frank We'll next from James. Raymond Louthan hear with

Frank Louthan

bit And to that? was to quarter, pace should there? hit assumption it the back more it range, sort Talk little bit the the in even, a little talk think What higher the then about how weighted, about Thanks. of range. what CapEx end a would installs little the end us we to take about of the us of through was

Thomas Morton

put if move CapEx. toward in do Well we happy see ready in we're good place, our does pretty to our we've what any in even install are in customers developing our do, ready able on that our and beyond equipment quarter support larger and range to thing we've have transactions demand, go. land need and than their as of some we're current in the CapEx but to guidance outside which One far due because the the not in CapEx still revenue for of the beyond primarily EBITDA confidence of and and to into through we're a ramps to impact position some QX, XXXX been they is guidance most XXXX we're and that normal the But happy have would got we of as year, the always us to half signed quickly very, CapEx and sort get end the forecast of moving mind very signings that this higher our that they've to back [indiscernible] of is certainly sector anticipate. degree accelerating got will as purchases keep installs about get and well. and openings out do we customer space CapEx our to include more range which

Frank Louthan

much. very you Okay, great. thank

Operator

Richard with from JPMorgan. Choe next hear We'll

Richard Choe

in terms then of event they relatively of equal mentioned, this be sized, really few turn over seems thinking [indiscernible] the revenue in installs of guidance. kind that they're Just year the should more the quarters about. pipeline, next you. you churn a sense should some event smaller, the there? are there still there's given there and growth the follow-up like a It of nice kind in of but we are pacing the in could midpoint [Indiscernible] any And more and pipeline, come above delays be incremental the you Thank next. on

Thomas Morton

as hear Richard, this and and the to Thomas voice your pipeline. is good through

as build We to we've our out pipeline said continue before.

obviously that we've them in and have have good of close robust a to looking we're many QX others sized we a and We we that with built this pipeline few Q. out deals year and closed those to opportunities more to QX sales with community. continue brokerage deals in and closed as backfill with we continue we've force additional work our in the

see the we're we'll deals the right the we're pipeline. about year, We're about has we're during coming the play and the an excited now that of increase creating. also excited about and think I amount opportunities excited [indiscernible] but that in in, the closing but deals

sales Going forward expansion the with force. of our

Gabe Nacht

And and with the regard installs revenue. about to your comment

previous deals about Some impact be somewhat of talked and back is have not muted. XXXX the these even to ramps end year. we've be until of as going beyond should beginning helpful. so the that and in are the discussion the quite But XXXX

range within range. you're our be that we'll regard and comfortable like with above how sounds see we're the should guidance, asking still we guidance to, of feel it feel still develops. QX So range We we whether with

Operator

with from Berenberg. Crossett we'll Instructions] hear [Operator next Nate

Nate Crossett

like maybe that? are just Atlanta. an How color for leasing, update things can some things on you early on Maybe progressing, indications give

Thomas Morton

appreciate. much. obviously. very in is we you continuing to are build This We and Thomas thank Nate, Atlanta

started doing you'll are the were The teams up, the [ph] we're go have are and done in as and the discussions in of is taking with later we will infrastructure will end of confidence build. year there, out and Switch are there the some We're customers in that on with experienced look as announcements progress this there you have advancing. obviously going over customers, on building, roof we making things and using how potentially tide on to they that this tremendous the of and the we get space that we Switch forward are the coming have QX see you turned variety and way and we on this as with to very rains We so year. of by if familiar walls a crews that about

were we're just expand As longer, enterprise to FedEx. time us and with deal just extended working those customers the take an a they and period that with is of work on land sticky cycle again to like deals tend overtime. clients mature. lot The these for when little deploy, are doing will sales of and time with but to a We

base, takes just bring them good a very upfront So client to little it's very base. a stable in. a bit client more It investment

Nate Crossett

is what multi-year think hiring. your then have and pipeline. Okay, force people a to that's Do this how this the trying to now fees? I'm just on sales event figure and you people sales more view versus the just helpful to many of based hiring as you you maybe amount are on one-year or optimal

Thomas Morton

large We did search We people last year. with expect the deals we sales partners channel and working off channel force. our onboard to into some for with the internal started started by with and we

level expect do of the hiring overtime. work that then at We least top the for at force to sales and the bulk

rate and sales We in grow will as force. needed build out to appropriate the as

the put prudently the to in place various sales place as sales, leaders expand as of in segments in we campus force demanding. them wanted is we we underlying our So sales and appropriate have will once

Gabe Nacht

The key word there is prudent.

and said that will over be our to margins were we As continue last couple also we've careful. them and said see very These to the do on very will between are revenue client talking and year a on sales impact calls and bringing because of we prudent. track that. have during expand we've the and that been additional to heads expecting this XX SG&A we're with But five shouldn't We're we earnings of along facing heads revenue. significant these cognizant we about

Nate Crossett

of now and the increase flow we maybe at then maybe one to quick should just right conversions Can last the you're recent remind year? and how of that their throughout flow kind year and us where you next this and expect one. kind Okay

Thomas Morton

question let there. redeem Gabe Nate, are private B the that's and as a times the But the that on X or know have is and time July that there redeeming the a Class set Class flow the date million shares shares, in redemption that we there I'll financial that's four actual out be A we great and our can that the talk increases shareholders approximately will I shares to X to at and believe disclosures. next year shares

We also disclosed at QX how and that in many were cycle number. converted provide the will Gabe

Gabe Nacht

slick we and and on had about X much currently shares, repurchase Nate outstanding. million in of some redemption been still another that we're to determining, million redemption about that but deck that and slated and shares Class so shares buyback A issue redemption of know coming X are the are issuance us to there shares our outstanding our million A we the required those the did put were will be common in of But will that what notice have days' on Class Class April total be and A QX, XX so another hand we about in we public representing number the give will we C have it million XX% website proforma July shares as B then for of July. up end partners XX, and our authorization in for and shares XX.X up the XX how well we use X as outstanding XX% our million our of about detailed Slide we of shares on as Class

Thomas Morton

are or not it redemption people to July. up a is whether right that not And going shares. redemption. is selling to company they're in up compel the to to doing are be clear, to X individual If doing the determine the that the redemption a is that the sale, the slated be It has to to something million

to the more we're So be those X. they will but we to towards they're cycles were that's redeemed year the those and yet. have do and up cycle, many not numbers be this July whether not we how will entirely on indicated selling then investors will be during not there have And know yet I said, end two redemption more or those which of individual cycles contacting as going and as people the visibility

Nate Crossett

limits there is and redeemed there or on that? period can a maximum that But the be each for year are in

Thomas Morton

in there no be that period. redeemed No given maximum any can is

or changing. months XX People a we've last larger sales, sort the any restrictions As there cadence. long as flood market over that smaller long that been transactions steady But redeemed. are on There larger as that. and in as then or they're I those as seen the to can shares relatively of But what ultimate some happen. is transaction feeling block the so you've to out see number been be redemptions public. can that are no there the anything they're of like flowing hasn't see don't to reason

Ari Klein

Thanks helpful. guys. that's Okay,

Operator

James We'll next Blair's, William from Breen.

James Breen

of geographic on any in movement expansion? some Thanks. terms thought given further there in the of strategy the Just there Europe. Is

Thomas Morton

where to we're and four our It's focused United focus it been campuses a where great on question, thank you will continue be. and Currently is that here States in the has growing James. our

only quality the remind have come years to make of one sure have We now had ago of want pretty we this ourselves four and X.X sizable a we that campus that expansion that's tier and to our will year we that we're customers by the to end and we and those to have in and doing amount campuses that our X those out a expect and can maintain status measures operating from way us. roll through into capacity goals that the

additional our foreseeable keeping three leads and to is those focused and the we're that focus on up we being. campuses growing So going see future,

Gabe Nacht

We have do running do SUPERNAP Thailand risk in interest I our upside the in the and like are it's of provides license As most up and data technology we have Venture exchange those we risk very our to believe venture both have things international do in of averse way that Switch. quite for are Milan you're Jim. a centers Joint aware XX% in joint and prudently, being said a in we that in are We presence of that centers two done very partnership which Switch. low International so done They filling a it's internationally. But to our way in and nicely.

James Breen

Great, thanks.

Operator

to with now Rasmussen go We'll Stifel. Erik

Erik Rasmussen

First on clarification the question, guidance. is a of it's more

you Your and that measuring was guidance then your in annual against strong of $XX about your performance QX pretty million. backlog and talked

$XX you're and the you're probably year. if way when I that that guidance. I is realized of look larger and at but about suggest will little upper at they would backlog what that these bit then deals kind understand and guidance, million timing the to think look towards your I be they're that of from we the But QX that's scale. you've of rate this maintaining tracking end also conversion. the think talked about since the run

Thomas Morton

that Thank going pleased the precipitous right I'll the of first don't it and we be quarter quarter strong, you that the shoot can to we're quarter with answer the don't out on to and be let and so say the first want Erik, there out are that these of but strong to and box. guidance we're results, the very two a it's is - Gabe as first thoughts well. we first raise too had is coming want and

there there's this ramp into much good amount it year as year ramps so the once as not They absolutely bookings. amount is in. is and deals that on all their put subsequent while have impact secondly do you're So were these and larger that it ramps a of so of in and some is of prudent right

Gabe Nacht

bit a variability we're so is which And bounce seasonality and do still depending and particularly in that the on and within little some there usage that adjustments usage we'll discuss actual QX, around revenue aspect other to our we any client weren't. feel our if power comfortable the is numbers, range in

Erik Rasmussen

base was see to Maybe Great, thanks you expansion the platform? growth the first that accelerated The logos last changing? new important to kind should how in within sense we can growing at year. question. and to new do and year bit you this and follow-up us year that balanced then how you potential, How maybe drive But of you kind little customer a about next my pretty your been of a you've of even mix the think just give a this kind look it a XXXX second continue for growth and team good long-term business as is QX. business of them how

Thomas Morton

a the supplemental talk any subject share. I'll let little strategically or bit color Gabe like like to to speak he'd the numbers and

customer base. The is, now, we gives first diverse a in a customer new add always very we've add, it more good The like item base. new we Right to our can logos. that logos us diversity

any of Our so concentration, risk our customers we overall customer revenue and any have represents with don't gives top metric. XX XX% a associated roughly that significant us platform nice diversity that

adding So reason leave, and second tend the is us we to besides expand. we concentration, do logos like they customers like can new come to the adding new instead land logos when that not they in

growth the you the if It's has expand. was grow, that growth over our can be, continue incremental and seedlings to So that base enough our ,the years. greater and more from of customers existing XX% customer customers was that roughly overtime you used customers receive that number up to from the past you look crapped like have [indiscernible]

reaping that we're platform which additional logos benefits we having can So and expanding the of on growth. the leverage

Gabe Nacht

we've number on each start retail collocation also that's in quarter those tend logos does. Erik is, alluded historically environment couple they with a small because to us a with them have, are us healthily as of and new Yes many of overtime. But and to okay grow Thomas Switch what is added that to, things customers which on

and in initial way about base of a do typically still we for calls in talked overtime This in have each deployment. number these transactions in put been in keep couple about time that previous added of the discussing the taking [indiscernible] we've close and working strategic we large in to some point we've aside we've are a initial quite particular quite quarter, consistent that on some new to earnings had of time been those transactions logos and their let's of size But given number the that smaller the and a deployment. the quarter the others of revenue FedEx business. grow of we

will have of growth the that from year that the those customers terms from but year as in we customer logos comes tends been ratio customers growth new and customers that longer most capable ship customers our within So the with adding to growth. us XX% existing came over XX more ramp progresses to the expanding. existing we of new year. But decline with continue of simply that our to fact love the months, because believe quarter will stay last last c XX% throughout us This

pattern water mark always at look customer. is new from our historical growth you QX the If high

Erik Rasmussen

Great, helpful. Thanks. that's

Operator

Petersen Jon onto move We'll with Jefferies.

Jon Petersen

curios if me just help could So Slide XX. understand you on

you annualized $XXX existing me million $XX extensions contract million that into that's value, you think Can and down of signed new leases? of help customers I of revenue. incremental renewals versus what's total what's break of

Gabe Nacht

customers. we of out did and specifically Sure new Couple on break Jon, this that it slide that is Gabe. in but existing things and between

about customers that of So plus million from customer about new value is that you'll see annualized $XX million total $XX new comes base. contract revenue of and from

of addition, existing [indiscernible]. many expanded customers In our them

look So from customers the annualized customers. coming overall if revenue it's growth at the incremental and million $XX about new existing for in you both quarter

Jon Petersen

it's to customers, all that existing that? expansions. way about Is of none think those renewals, So the

Gabe Nacht

Well it's both.

Jon Petersen

represents But expansion. the million $XX

Gabe Nacht

The expanding about addition, represents from quarter existing new. in incremental they're the the total and from million new $XX for million million $XX coming about $X revenue customers

Jon Petersen

helpful. you levels. thinking that's very debt And Thank Okay, right. then about on, your all

campuses. investing years over think moving a are leverage Maybe help to relative levels of couple us you're guys Your over the bit have few just leverage next guys low comfortable has in up is new the peers, as at. about thinking it if you could but very about you last and been how what been you quarters

Gabe Nacht

flat last the Yes stayed pretty it's actually few quarters.

Thomas Morton

It doesn't isn't' campus in did [indiscernible] the were open. Center it so Atlanta initial and in Data open infrastructure revenue associated some past that's required because getting ready year deployed to create have there's because that Atlanta over or the we

expect that, our and over year. would debt to we is climb So so rest see that do staying we an pretty significantly expenses levelled not of this now anticipation the and in have static off that ratio

Gabe Nacht

operating because We strategic revenue pipe certainly it deploy. be that or said, of were the we've needed something really have don't' which target not four it to and we we people way base. talked being were of to specific the given about to haven't If have down a we in leverage our modular in we simply asked would afraid add never that target five past leverage. recurring come our times leverage needed Now because

to thereby debt at deploy capital data our we coming that into tend and and increase is centers. EBITDA rate same So the the

two, stable keeps it leverage level X.X So quite our about been times. it's low and pretty

Thomas Morton

demand were associated we of - level, customer If debt to were right. result if is as increase to be signings of deploy and customer ahead it we being because expansion those we done. Yes, with our a would Gabe customer and demand

So if ramp. significant somebody it signs CapEx. large with with deal, We'll a the a into roll with

lean we that would So contracts were into CapEx against signed.

Jon Petersen

helpful. Great, okay Thank that's you.

Operator

Our next Rollins comes with from Michael Citi. question

Michael Rollins

couple segment in could Curios, a bit if talk a respects. about connectivity the you more

the overlaying overtime from of well core facilities. businesses be thinking cross power top. total then for growth X,XXX switching about you garner slide business connect. that cross how the secondly, in that connect do terms the across as interest Thanks. between opportunity might as fabrics and And should on and fiscal of we your we about connect you think what cross able to talked the other this billing in First, about Maybe how this you're in

Thomas Morton

previous With than in we've full Historically meetings build and our peers sell we're of regard to and Switch did able not quite to connectivity in about because and talked with Mike, for we as you all cross-connects others. differently telecom. cross-connects calls sell the

implementing networks program grow. opportunity with come and and cross customer we to the and so necessarily connect changes the and about that the technological renewals adjusting base, a billing cross we're we grow that part they a So connects. up We've of all we we to as for X,XXX our changes think are think that are billing think to there's a communications way vis-à-vis business. for significant charge people still where cross-connects opportunity Even potentially given up there's plus didn't aggressively about cross-connects been good more

Michael Rollins

of Is pricing there or reactions any types moving to customer size billing model? or your

Thomas Morton

it industry to cross-connects to for respect. No, got that peers charged I quite bill used we think our in very the similarly being and

Gabe Nacht

cost break wasn't out the the need were charge. we as circuit the circuit charge, full it when didn't was selling cross-connect we embedded a There in were we separate

as trend monetize it's charge cross-connects not the expanded consistently so you've expect of we line faster percentage and continue has Now that core percentage of and them and revenue, Switch terms do in and separately inched connect and connect our to seen cross-connect has increasingly well a break top as revenue of we out growth. percentage a really began revenue is growing that though we our and even top - as than of we to line - can our upwards and growth that done continuing are cross that's' can

So of percentage they're the as increasing revenue well. a as overall

to trend charging cross-connects expect we're and continue. we So that for

Michael Rollins

Thanks a lot.

Operator

you And joining with that, for that conference thank all will conclude do we us. today's and

Switch (SWCH) 8 May 192019 Q1 Earnings call transcript