SWCH - Earnings call transcript Q3 2019

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Operator

Good day, and welcome to the Switch Inc., Third Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Matthew Heinz, VP of Investor Relations. ahead. go Please

Matthew Heinz

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

On are call Switch's the today CFO. Gabe President Nacht, and Thomas Morton, Switch's

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

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

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

quarter of investors.Switch.com. the has XXXX website at been Our X-K release on Investor to available Form is our furnished press our third part as SEC and

will Switch's Morton. over President, turn now the Thomas I call

Thomas Morton

good of everyone. our growth Thank quarter and in rates XXXX, QX third us revenue solid business afternoon continued XX%, Matt, Thank momentum the joining you of year-over-year of XXXX. achieving today. more you, than Switch growth for its since highest

customers not revenue by year ago growth in improving grew booked, co-location to favorable backlog, the billed the revenue, and and our growth telecom strong of increased existing Our from third compared by quarter driven quarter. trends conversion was XX% which demand in new

guidance strength will the pipeline, our later press are in call. in in forecasted investor guidance our and our than third earnings increase today's sales drivers specific once stronger presentation. as revenue we XXXX quarter and the Gabe of and to to continued detailed performance changes speak Due again release increasing our

QX, XXXX, ongoing consolidated Moreover, now up quarter. which year Citadel of at the in XX% revenue combined Pyramid of represent we X% with been our development prior pleased Campus as have ecosystem the and locations, from

accounted For ending almost half new the EBITDA months of our our existing a nine XXXX, September of two and have logo period revenue growth from our compared and strong signings same these incremental thirds incremental by of combination driven incremental two customers. for nearly PRIMES the to in demand XX, growth

pleased are over When now We ecosystem. in Vegas customers newer speaking Citadel are success inform Las our you our to occasionally the we investors to Switch’s that about have we Campus our asked to at location. XXX replicate of PRIME ability participating

of can in the of which our its to achieved Pyramid operation, now and in launch. the fully progress year Given Campus, their the Core is just three we've scale years Citadel of within XXth it sheer be locations, difficult appreciate

reputation new have leading our and the the customer locations. We core and designs ecosystem accelerate in of industry PRIME adoption been thriving successful leveraging to

We of energy, building low in massive low doing and locations same risk using green connectivity, that costs, robust XXX% scale are so at lower zero taxes, natural the Core to principles disaster. offer of

in success new multi evidenced of ability the has its nationally. by customer favorable our trends base success we Indeed, PRIMES, these be customer in we to confident to Vegas growth of Las the have Switch’s on revenue. are replicate seen as vision, supportive as in we our Based expand proven Campus

increase. a XX% XXXX, multi-Campus year-over-year compared of QX, total represents customers XX% revenue XX% year-ago, reflecting from a of As revenue, our to

and Tier enterprises customers their east-to-west ecosystem. or in to endure redundancy, this and as technology expect operated trend secure deliver IT world's hybrid most enabling solutions diversify value X to time see We continue north-to-south operations, over replicate compelling ability will critical Switch’s only within to designed and the

average value of and term continue We executed of than a logos based a weighted based oil and more we robust accessories XXX total as gas the years. including million, to retailer, leading specialty producer clothing contracts, quarter, third chemicals Overall, global representing and four a California be XX customer Texas approximately QX added a contract activity new in with a manufacturer. levels in $XXX

negotiated the revenue quarter, customer in increase key the million signing our six $XX contract a more for in in value customers, with Switch rate these aggregate successfully totaling multi-year XX Importantly, resulting contract renewals and than several of extension customers. to top recurring X% run

five in existing with million annualized in renewals Core a the representing semiconductor $XX and a these extension a four leading year of recurring Switch was Included revenue global manufacturer customer, Campus. top

and its agreement, In three commitment representing in addition Citadel million revenue. expanded incremental customer The Campus to power to the with of extension, also $X.X increased footprint Las a colocation its the Vegas annualized year

our executed multiyear Campus, of $XX the two long-time renewals Core also in than and in customers contract of with representing more hospitality a gaming million total value. We

prior quarter associated greater compared In a run these recurring for resulted increase in than monthly total, expansion our activity third the revenues when renewals and rate customer customers. in to X%

cloud further the efforts our our already key accelerate continue a hybrid to momentum hyper we to truly strong as platforms offering. cloud differentiated scale with build We continue

a seven sales what XXXX class a hiring as juncture the technology Year-to-date this world success. added to view have enterprise sales professionals senior organization. our sales we we assembling initiative has Switch At team, been

will and headcount we to manner. prudent team's in a strategic forward, continue Going the expand

highly telecommunications Switch from sales ranging the specialties diverse group Our real-estate. veterans, hybrid and commercial team of to a hyperscale industry with cloud recent accomplished additions strategic represent to to

set is founding are our at hired in factor by pre-existing Most with technologists Switch sales believe forward of carries that motion newly each ensuring entrepreneurial importantly, Core, and that principle. which their we a Switch’s critical professionals culture in the

augment the also providers work services internal and managed community our sales force. with to to closely broker We continue

XXXX of XX slated are power QX, in expect to LAS two pipeline, XXXX. new over Citadel track to with we online The With sectors in XXXX, X additional VEGAS come and for our of respect additional Sector open on megawatts next to scheduled to a the year. of construction the Campus with course XX QX, In open sector megawatt we XX

forward the Pyramid continue to QX. in available with Sector expansion for scheduled Campus move in be The clients X We to also with

during Keep first during XXXX, contracts and to Campus end. Lastly, on in anticipate QX occurred of commence quarter customer the we have subsequent signed that to customer The half billings based

remain also dialogue active customers XXXX Atlanta. with additional in regarding in deployments We

with we Core announced, the to approximately total, Las previously right secured Vegas. our parcels XX in have As at Campus comprising continue acres in located

advance out square ecosystem are As forward discussed as for full the look than megawatt in million technology feet XXX more to of planning the The X.X to development estimate quarter's world. XXXX. the will is in We additional add expansion under the we Upon Core updates phases we on largest and next way. already last well what call, build our providing expansion major Campus

Gabe I call now turn discuss the will to our financial Gabe to over results.

Gabe Nacht

review $XXX.X going our In the third quarter the I'm XXXX results discuss financial million, Today increase to quarter achieved in the million XXXX Thomas. third and or of we XXXX. XX.X% third revenue for colocation is the of our outlook million of Thanks quarterly revenue. primarily an a $XX.X increase attributable of XXXX. compared to of $XX.X to remainder of for This quarter

came broadband colocation one our resulted revenue connectivity. XX% include than in during while new and cross in recurring of who QX, revenue services, months, external connects, have from More quarter XX% growth customers past initiated the which and year. XXXX the in customers primarily with of growth telecom revenue XX% who been nature was XX of service the than point-to-point the Switch of year-over-year longer consisting from

services QX million revenue the revenue XXXX. of strategic Switch in was to XXXX. XXXX, customers to same Other XX logo's of has of Co-location the in become period a $X.X $XX.X million XX%. increasing for reported QX increase Telecom XXXX partner $XX.X over revenue for the for third in million XXX period compared in to same compared $XX.X including we quarter of in accounted $X.X million, in XX% was of to an million $XX.X XXXX professional and QX, added QX compared in XXXX. new XXXX million

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

bookings. to turning Now

XX In $XX more we third in incremental from customers. services. signed During million of recurring million, revenue, and full customers with quarter QX new sales incremental and the X annualized incremental contracts X at of of comprising both we of million total existing million and $XXX annualized approximately value revenue X of megawatts, bookings million contract than inclusive from executed deployment, renewals XXX inclusive of

ramps increase of billing. revenue are over $X including accelerated As and ramps helped stood backlog commenced during from Approximately in from recurring during with of contracts large a revenue, aggregate third increases contractual the September QX, sequential certain booked-not-billed million in total and drive quarter. customers combined $XX which annualized million XXXX revenue annualized contractual to commence commit backlog yet XX, $XX at power million

expect fourth We revenue XXXX contributing beyond. and contribution with from of backlog million the $X.X in quarter during of approximately the remainder XXXX

low to X.X% from XXXX compared remained reductions in churn Revenue X.X% customer of QX in QX. at

the Investor website. of churn attributable contracts we by revenue all reminder, revenue of as metrics our a the at beginning As discussed terminations period. today's posted The in the Investor or divided on our section customer the are the define expired on of Presentation available to non-renewal call recurring reduction in Relations

compared XXXX in the of $X quarter, by increases to to labor primarily in of year-ago connectivity. QX depreciation, Cost increased and due revenue million

adjusted the increased compensation Presentation. reconciliation profit Excluding adjusted to section QX, in XXXX expenses, profit million, appendix gross depreciation, to of XX% equity amortization gross and is our profit provided of Investor our a gross $XX.X based year-over-year

SG&A of million higher an QX XX%. attributable SG&A compared XXXX, expenses. The fees primarily in labor of and XXXX to was to in million increase expenses were $XX.X in professional of increase QX $XX.X

expense compared in $X.X in million of $XX.X by by to the by in of QX growth increased million a Interest in XX% decreased driven million million increase from year. rates same primarily profit, The XXXX, compared income QX LIBOR million primarily $X.X million of SG&A $XX.X to quarter operating gross to $X.X costs. lower operations QX offset XXXX. attributable in last to XXXX to increase $XX.X in Income was

center We on expect costs from facilitate increase drawn repurchases. our interest share data to September $XX to purchases, QX, and construction million the land in resulting revolver in

in year-over-year the of million QX million $X.X $XX.X in EBITDA non-cash to $X.X XXXX. for net on Adjusted reflecting growth third XXXX quarter impact totaled income Net includes of XX%. rate of million income $XX.X income of to Net XXXX, a $X.X QX of interest of million for QX of in adjustment was compared of swaps. the XXXX, QX compared XXXX million

the period, to related SG&A, due professional Our of services XX.X% in QX year adjusted labor. EBITDA decreasing increases to XXXX was in from and aforementioned margin for ago XX.X% the

XX approximately in Capital third quarter Las for were $XXX.X Campus expenditures XXXX future Core of and acquire development included in in $XX.X Vegas. to acres million the million The

Excluding compared $XX.X same quarter acquisitions, of capital in the were million the land expenditures million to $XX.X XXXX.

the the period. year-to-date Keep and total driven Campus. to excluding investment Citadel, was excluding On QX Compared in million Pyramid compared quarter for capital with locations, a ago slightly spending expenditures expenditures acquisitions were Core XX% capital in to $XXX.X in lower increase land and $XXX.X the the by year ago The higher land, Campus basis million year

million data Core in $XX.X construction VEGAS XX at center our demand invested customer equipment, Switch to and facility. for primarily Campus LAS support the

Atlanta, The first As LAS were billings million Sector invested Keep of for QX with half at X we open the of in in committed, X ongoing construction expected XXXX X Sectors also XXXX. commence and contractually to to Campus $XX.X XX XX, anticipate Switch customer September of XXXX. in where VEGAS XX%

respectively. spent of to QX in and million in expected The QX XXXX Campus Citadel for additional Switch two sectors on XXXX open $XX.X of construction

expansion of $X.X a The where additional Switch million in in XXXX. Pyramid we to sector invested Finally QX expect for open Campus new

to to expenditures of X.X% Maintenance construction data and XXXX quarter million last or revenue same quarter the for center of year. XXXX, third improvements was third compared of $X.X revenue, last million year. $XX.X in the compared in period Growth quarter the capital and for $X.X of million for the X.X% CapEx million same were $XX.X

ago Switch the committed which contracts cabinet XXXX had quarter. XX% the As quarter equivalents within for our XX% in were XX,XXX of XX, and prior of open XX% to sectors, capacity year PRIMES September the in compared under

our to and build-out, nearly QX, XX% XX%, aggregate comprise cabinet At as gross XX%, were facilities $X.X Citadel of PRIMES XX% and and XXXX of Campus equivalence. an million on full power, Campus rates Core QX. square XXX of of and feet existing space, constructed space, respectively, megawatts XX,XXX The nearly XX% The committed of The Pyramid utilization to at currently compared colocation up and based these The approximately Campus, available XX% cabinets

cash now in the net of and debt EBITDA to September X.Xx, X.Xx outstanding, of resulting equivalents ratio $XXX.X compared annualized debt at quarter balance a the adjusted last as Looking quarter. cash total prior the net to million, XXXX of sheet, was XX, company's in

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

October Class of common X-K B Switch million of with Rights. A of X, concurrently Redemption exercise connection disclosed number Switch, an equivalent Member to issued shares As shares our X.X members of on the Limited in in Class stock and canceled of common stock Inc.

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

Now, turning to guidance.

outperformance a as third follows. our of As quarter our we to XXXX the guidance prior relative increasing forecast, result are

We a of $XXX million $XXX the range of to to million range million million. prior in revenue $XXX expect XXXX $XXX from

XXXX in of EBITDA expect $XXX expenditures, acquisitions $XXX We range to excluding the million the million to of prior million $XXX In $XXX adjusted prior $XXX $XXX range $XXX million. from from a land of million $XXX million. capital million to a of in to million range range

back remarks. And now, Thomas some it to closing turn I will for

Thomas Morton

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

transactions which in retail execute look remain course. of to to due these on colocation pipeline forward continue announcing large, We We robust. our opportunities enterprise,

We once our Switch. our to support of for take thank team like this on opportunity to employees, shareholders continued customers, our behalf partners again would and management their of

like now questions. would We to the for open line

Operator

first the BMO will Ari And Instructions] Markets. Please go Klein question with from [Operator you. come Thank ahead. Capital

Ari Klein

then How little it the with see performance? new expand all Maybe step-up you. bookings maybe broad contribution net across new on from start Thank to and base sales additions, here. from your you was bit new could we the customers a campuses should

Gabe Nacht

Sure. actually our bookings seen you Gabe. renewals of you XX as in business the as as Ari, typically some quite past. our number, awful not third it we existing larger is net one strong runs our day on this customers, and lot we’ve the is Thanks was see know, that this existing if new not And cycles. In quarter last an signed customers and of with

signing, or specific Since customer of revenue. we've post a additional relative contracts, ended, the managed So whether date the total quarter ends something quarter so already nearly of happens number $XX are most not incremental represents on that over a just to. revenue. track value, we customer quarter to million It which third really a it’s $XX signed that end which signed annualized contract of of incremental million we've

that's see the timing. you new just bookings where of a number, So net factor

campus and that We’re and the our very direction are our comfortable with pipeline going. sales sales the locations velocity,

number and expansion the customers two growth what on customers in for expected faster And in revenue The was QX campuses. Citadel we'll the us, drove be more our the call. an in in fact, in Vegas faster the in post for signed first ask Campus. ramps QX talking ramps which than of Las exciting larger in expanded revenue about is we’ve QX adoption And in that of to Atlanta than and our our across you about Part QX,

Thomas Morton

great Thomas. question. a was that you, thank Ari, This is

regarding in to some sales the part the team also sales answer that team, the pipeline contribution post give of We from you sales came Atlanta. of your and new wanted an QX bookings question of including

are the So running they business. ground, closing hit are they they have and

Ari Klein

in contracts were the that can expire maybe bit. to to Were then it’s then most the quite to renewal and XXXX those quarter, obviously And scheduled you in on of expirations a Great! lease talk activity just XXXX? compared

Thomas Morton

in in contracts several far for be our expire, of later extended, as And of and can were we typical in that renewed in those are stages renewals. scheduled the typical were years those Some a four length, to expansion contracts XXXX, given were for those others quarter so will expect with one along the renewal in and an of any about renewals, the of year. our advanced up contracts contracts as pipeline and

Ari Klein

for you the thank Great, color.

Operator

John go on The John, with line please Petersen your next end. ahead. is muted your question comes Go Jefferies; perhaps from ahead

John Petersen

you it delay There Sorry in pushed like back quarter. The about that. a Keep got looks by Campus, a

you think I in your about remarks. mentioned a it little bit prepared

think their So maybe, that? is customers commence. the guess want we or just How leases when should is I it construction delays it about to

Thomas Morton

Yeah, this you the The open in and move much some for is Thank once takes commence. to billing building It The Thomas. that Campus Keep is on John; it’s time customers answer continuing question. great schedule. is to is very a

So we and is progressing the customers talk opening very The from revenue about our factor campus and we Campus, of to campus. in extension to in, when begin well we on-time their look the facilities Keep their but of forward over letting realities, move itself their those timing an and

John Petersen

margins just the mean Haven't here extra near are to than online in seen this look time sales is impacting the margin here, Okay to one and what EBITDA little that we've lower a I into new the there of people the some then term. model brought but dive more, there the recent had enough quarters. of in other and some or the factors G&A related you quarter

Gabe Nacht

John, this is Sure Gabe.

have SG&A, some and their Some are the fruition G&A to it post you up full expense. are pipelines the team added know new we of quarter, a to carrying they year as sales related this on getting we seeing of those sales we're because is indeed and pipelines closing

margin quarter lowest due But power and if cost. is you third go quarter the it's back to our typically primarily historically,

power usage and addition summertime, increasing simply hotter costs cool to increase because summer, power air. float about we're of does our during in hedge XX% load, to we the do XX% in While the having up

some So made SG&A $X.X contribution in a we Switch drives of million contribution that’s QX, margin QX also you but effect the we for that. has factor expense primary hit variance years. EBITDA program was have a all a the There in did and that are that that the been higher supporting to and seeing

Thomas Morton

important Yeah, that. making and community we plan been education very sure up come continue children, part contribution did, a we that made particular our that a in and have very to donations do that we support supporting in one this it's in and and so good believe our exist that our but we Occasionally hit those it, we quarter as we regard. so support communities we to

John Petersen

Okay, alright that things background. for great,

Operator

The comes Breen next William question ahead. with James Please from Blair. go

James Breen

Thanks for taking the questions.

terms in one a – there questions. are couple of Just

you of the great. from, just buying are in the your base soft your in coming in facilities. In Atlanta, on feeling Thanks. signings about like customer terms single growing growth seeing all the and of you would update all how any of any sort then around facilities, customers there that you And opening, know terms secondly, growing customers be

Gabe Nacht

this Jim, is Yeah Gabe.

campus, we As one than XXX that of with a more come one expansion entire than us across now board. in are coming that and gear more one more customers have the locate continued their campus, is in our far across XX% revenue our customers, customers from our base, seeing as house campus. you from We revenue multi-campus that than look if

our out, primary their customers Reno that Westward deploy that, in their we in very Eastward or Atlanta. excited want expand expected deployment the Grand to multiple either we prove are it's deployment in have and excited Vegas, Campus proving deployment, we to want to with Las a So they locations, that model are into Rapids and because tremendously about they redundant about

in signed that it Well, customers signings. ongoing next part soft discussions signing deploy additional of about it pipeline an market. year, early have we had talked actually the we've with will hard for we in and and of You and customers

are very bullish we on it. So

Thomas Morton

believe to to Atlanta revenue have and James, to Yeah that our facility building start Yeah, begin in will in will on we sign and we customers. this is believe the they to ready first have is scheduled We’ll load customers that Thomas. time. that quarter we commencing load more in continue the for from and on

signed to is customers that success. initial we a and have facility the We know going be

are facility general. we strong a we So for signing that that customers in and additional pipeline have market currently and

James Breen

thank Great, you.

Operator

The next Stifel. from Rasmussen with question Please ahead. go comes Erik

Erik Rasmussen

to of it that some signing quarter. back of guys, been Yeah you've of talk consider or again, the one sort you mentioned is anchor maybe these maybe the sorry, maybe, types subsequent just would an sort customer types signing? Atlantic tenant for you on Can so coming customers of about but of color customers you the contracts to or

Gabe Nacht

about and in customers additional color we’ve signing our and call. Well two provide are that, know enterprise they Atlanta first following on you enterprise talked the customers, colocation we’ll

Thomas Morton

that when can you they we Erik, know there customers deployment, we signings to aware announcements site we that to are as they our knew it, they But of the us sure contracts gaining do that quarter, we that the as in we an so. soon their and as market from announce you, actually what area. of authorized is in you and some post so make restriction was – wanted of even announce momentum about locking can customers for and signed were the particular will make so though

Erik Rasmussen

you you Pyramid I just know that revenue Citadel guess dynamics can growth maybe you pace, sort and know driving about of the the accelerated in And you're the seeing campus? Great! talk that

Gabe Nacht

revenue growth, numbers been customers, driving eBay, ramp and the others and year driver acceleration found been also of expansion faster primary had of with growth some the CapEx. the sequential those and hitting Yeah, and of We expected that those lines particularly additional so revenue it's deals have customers. them, ramps been our including number built larger that just demand initially than they earlier some in our from enterprise into faster of a time we like customers driving expected, of that's has the signed FedEx

higher is If you number CapEx reasons. our expected, notice the and than right all for

lot we've building that demand, cooling we've build peace got demand, adding customer based been so gifts Switch in the and about talk customer we time to our of and and strong a increased and we've that to been We on fact facilities infrastructure accommodate just [ph] always customer builds demand.

Thomas Morton

that hear existing often growth revenue customers. the us from only talk XX% customers came XX% QX, existing customers from XX% and you comes our maybe So revenue XX%, and new our of from in fact of growth came about

logos to upon the expand continuing of we're So for and platform growth campuses. expand our

Erik Rasmussen

you. Thank

Operator

The next question Louthan Raymond comes ahead. with from go Frank Please James.

Frank Louthan

Great, thanks.

earlier, customers if I this the from sort mix from new what or and in of of new of in commission all And the ‘XX existing sales in sorry Just will then Atlanta, pipeline are the versus missed people. installed but being or sales start Thanks. that is the coming the anything campus primarily some ’XX starts that be it moving would billing? in when from

Thomas Morton

So, I’ll is of the question. third Great This part that Thomas. first. part three question, answer

the this that at year, will beginning people – first campus end opened year. of The of be is next the

start So to the people they loading start will in into. XXXX campus loading when ready or for is

into that that Secondly, they logos going are campus. new are

are in the talking are with in but new by by existing teams new part existing generated new customers, team. and they sales And customers are part We logos. thirdly, the sales

Atlanta people have team, are going sales new the into So new logos. that closed as

Frank Louthan

Thank great. much. very Okay, you

Operator

question go ahead. with Richard next Morgan. Please from The JP Choe comes

Richard Choe

in that revenue was a by you what and of faster? of us Maybe we actual a $X.X to bit. backlog in I versus variability we remarks moving kind quick I little of had just tell could that add faster saw move But people upside the quarter, guess is is level a in I follow-up in million the the third terms third have your wanted you as Atlanta. Great! going then in mentioned could growth, prepared to follow-up sequential on in sequentially. there the What mention. quarter you’ve see expectation

Gabe Nacht

in-line I somewhere Well, we growth quite third sequentially. expect that and were guidance, our $XX range, that nicely upping and previous with because quarter our exceeded to expectations think in the we've million continue our we're so guidance,

does question So that Richard? your answer

Richard Choe

there just time good. then there mentioned in terms CapEx you quarter in kind should How of of ramp Also any to how fourth quarter? that or going that's be And will the kind more that Atlanta, should with left is No, in OpEx? as people we the in baked and moving is about the think we be of about forward to will and going is think – that much Yeah. CapEx in first in. in ramp

Thomas Morton

we we're good is of always and available expenditures for if thing. that thing, we are that's infrastructure amount and spending are increasing Prime the those of CapEx, customers be it’s to going it are there a Richard, our our the means amount a infrastructure CapEx customers so increasing our growing, that's customers, because that's good because in if for

in supplemental XXXX, and Gabe to we've down growth that. is put and etcetera, in the required infrastructure telecom loaded tail some fiber, is this As of tail-down seen doing to that infrastructures some amount particular incrementally will or CapEx smaller is loaded when the once or you that's for bring we to on – is facility numbers initial I'll see accommodate when front to the campus, to place, CapEx. a in front power Prime, the initial first there in start a and set Atlanta and That CapEx water initial specific customer initial for turn on the

Gabe Nacht

we've as and $XX our the CapEx Yeah, be at guidance guidance that's but that that and increase what's and quarter, expected. raised primarily guidance you there in the not in continues related the really will is Core number. can to million fourth on and is the Atlanta Campus, driving was by look midpoint CapEx in the Atlanta. The about related expansion to and really number, Citadel that pace faster of Atlanta CapEx

are of XXXX guidance. any operating yet, but about phase as for lot as As service, a we guidance we the haven't we to XXXX construction into campus do move course ship and expenses put the present we'll during into more talk of capitalized provided XXXX, we expenses our that that

Richard Choe

you. Thank Great!

Operator

Rollins The come Citi next Instructions]. from with [Operator question go ahead. Investment Michael Research. Please will

Michael Rollins

the enable good to that Hi, of be first, is with questions; and thanks opportunity the talked hybrid evening. you within of what and in evolving adoption and A how base you're as couple data Can your from this maybe is connectivity. the architecture customers that some the your continuing cloud share the you points about some of see selling marketplace, clouds seeing examples you one centers? to customer before cloud close of hybrid

that current markets demand And not expand evaluating internationally whether maybe whether looking there to thinking in you're from you're going the is from or four the then about customer go markets possibly and you're question it's where customers U.S. second Thanks. into; the is country how and around the currently new to or serving.

Thomas Morton

hear and you, thank to voice. your good Mike,

the right close clouds in Reno, a being in building facility next located Google facility Las to to then up as is recall, us also Vegas, has and Nevada Nevada. you us Google are a near As they to may Atlanta. in

and connection So with some fiber have to on we campuses, interconnects we've proximity with have with those respect a so there. announced good relationships we Google those

We then to also our have campuses our of and those Amazon expect on deployments Amazon to see as ramp deployment Outpost, we starts launch each Amazon in as well. on campuses

to various we affiliations that So have we with the continue. clouds, and good expect

those cloud customers, telecommunications all they increasing focused digital and markets, those new are to number in really with on cities providers, in other of digital collaborate increasing and building bringing increasing number each number of ecosystems. cities digital an providers our an as of we gravitas work and of As the an

we that successful. we're becoming four think PRIMES and self-proliferating and So out those focused making building them on those are really

Gabe Nacht

things of to a add that. couple And to

zone major are a of one our major Las did availability one one didn't that time an a availability in recall about providers the with first location. the is the last putting entire about means signing interesting in provider zone, cloud you the it’s and which name they campus, Vegas cloud is customer, we tri-redundant signing that thing we announce here If talk quarter,

they they sectors different three view The able that because locating a our center. that do and each in Tier reason were data they is of are to standalone one within sectors platinum campus, our X as

is for And locate an entire they and zone redundancy the if one to so believe them the location. resiliency availability in sufficient

model the exciting for tremendously is and of different really that’s Now any a clouds. very

looking of half venture Italy also At four that does in With joint We're this we up expand has have the facility we're Amazon focused have regard international you Mike that in Milan, do an on know and not point we a and and have Thailand. international, to taken internationally. running facility a facility to PRIMES.

we our needing each between some Prime runway the acquire and in our that if industry to years enough locations, land. last to without have PRIME other Campuses on four differentiator five that have additional more one we at is land the these of you of XX peers Campus Switch look any at The to

we want campus constrained pursue. we form a switch in shape model differentiator not ecosystem the and for key strategy any believe So to or is and are that that is way,

Michael Rollins

Thanks.

Thomas Morton

you. Thank

Operator

Ladies disconnect care. and quarter you for session may concludes you today's now At Take attending We concludes earnings your and question-and-answer this call. thus Switch, call. lines. this time gentlemen, our thank conference XXXX Inc. third

Switch (SWCH) 7 Nov 192019 Q3 Earnings call transcript