SWCH - Earnings call transcript Q4 2019

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Operator

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

I would now like to turn the conference over to Mr. Matthew Heinz, Vice President of Investor Relations. sir. ahead, go Please

Matthew Heinz

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

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

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

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

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

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

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

Thomas Morton

good and Matt, on highly number for Switch Thank year everyone. XXXX was you, Thank a joining us productive fronts. of a for you today. afternoon

momentum underlying XXXX year results fourth and quarter Our full demand reflect and sustained financial business positive trends.

increased year year over growth. Full to $XXX.X over represents XX% of revenue year year million XXXX EBITDA year XX% million and our $XXX.X adjusted

and ASC million year Our XXX related revenue reported of $X.X respectively. EBITDA the standards, XXX adjusted by million, and ASC XXXX which results adjustments our and include accounting adoption $X.X impacted full to

XXX point year the high end compared growth $XXX.X to increased acceleration and the in adjustments, prior of representing above Excluding revenue range, revenue these Switch's rate. slightly XX.X% XXXX our growth basis guidance a to million

will solid our in believe delivering for Switch objectives our of several execution growth metrics long improvements year that growth. the key trajectory, we strategic sustain term was upon financial a XXXX and Beyond

relationships our and we adoption. am goals existing has enterprise Keep never that I Switch at the leading to better with clients Campus pleased upon strategic in positioned industry these these And lie capitalize by cloud deepening notably, our report include completing hybrid construction XXXX. offering believe critical new during to Most opportunities Atlanta, and ahead. or been attained were capabilities

include achievements for during Environmental received Green Switch's following. our Switch centers notable increasing Other as Leadership AI XXXX the Protection recognized year intelligence. prevalence energy. United renewable Award the Excellence rapidly States of the class ready for deploying Power in Nvidia infrastructure Platinum five pre-qualified data Agency artificial

at Center XX the at XXXX on Young Energy Smart received the Empowering Female Innovation Switch's Core Switch's Energy Center Innovation Summit. Award Google Efficiency Smart Switch hosted the event decisions Energy Leaders Missy Data the Cloud Campus. CIO

leaders, Switch completion industry building a Vertiv technology aisle diversity agreement the Roy. and containment proprietary and with Switch's for experiences highlights licensing event inclusive announced champions center discuss This their invented by around workplace. HVAC hot systems an Rob who revolutionary of cold data and

help testing. for management them Switch rules, collaborated these safely and drone during its to the on flights over The areas. operating historic was management data to inform TCL traffic traffic with NASA X test drones populated procedures FAA presented collected future policies

digital and the around Elite technology security cost OpenText combining was mitigate investigation, by risk process Switch to compliance. and Award awarded for and litigation, Fortress data

in the discussed customer scheduled QX facility. Keep our Campus installations in As last X quarter's on begin Atlanta are at call to

of during XX including an balanced attractive And Atlanta active customers deploy committed XXXX. funnel and a continue teams have half to the currently to in mix opportunities, of of sales new existing We our pursue customers. first

hybrid Prime Switch's for invented tremendous serves location We Eastern cloud designs the and upside. from long by highly Rob surrounding optimism Roy. our centers as and regional delivered Switch's With data market hub co-location through see This general, term enterprise United in efficient stems now respect to South Atlanta the patented fourth which unique States. advantages

the cooperative access XXX% Our offering telecom Switch, cost purchasing energy and attractive incentives. green low to sales tax

We ecosystems XX% the of progress Citadel Prime, locations of continue our Pyramid in from now as X% revenue prior represent year growing of to the outside XXXX, and towards Core our the make as customer meaningful consolidated up quarter. QX

the XXXX operating two compared of the and scale. incremental over continue in leverage accounted During EBITDA two Switch demonstrating inherent these for growth our Primes XX% to model powerful XXXX, thirds incremental our approximately to growth of as Primes our

continue multi customer revenue. we favorable to Moreover, campus in experience trends

Primes This a more of XX% in As XX% in or than to increase more of quarter, year revenue. the multi XX% of over deployed Switch representing two ago to in customers year revenue just revenue. over the campus of compares in QX XXXX equating total have year XXX customers XXX

new $XX in gain for during XX% value over added momentum in annualized XXXX. velocity in million revenue from as Switch the contract customer representing million a $XX bookings, increase increase Sales $XXX logos which volume bookings XXXX, total in million XXX year, a over XXXX, new signed during significant accounted compared to We in over of XXXX. just sales

our executed activity total trend deal a larger notwithstanding million weighted targeting value traditional and representing believe quarter Fourth XXX with initial partnerships years. approximately as also $XXX focus We this contract contracts corporations. year-end with sizes, quality is largely was class average strategic term four attributable we increasing seasonal of sales headwinds, holistic of enterprise high to on service robust,

of broadband quarter health and in customer Campus, radiation provider XXXX bookings, was annualized based including signings, in provider fourth and of XX a leading We in Campus. our terms Michigan from existing Core in with revenue new added including oncology million insurance from a cable customers Campus, the television the quarter new nationwide in and logos $X million incremental $XX productive most Keep Pyramid in the provider the alone, million logos. $XX QX a

with leading We ecommerce contract in megawatt six expansion A a with existing expansion $XX from platform a customers, the totaling Switch expansion, in deployments contract Campus; top from totaling multiyear a megawatt storage streaming million provider a cloud totaling leading Campus; with contract domestic the the notable several kilowatt customer, wins Citadel in million renewal a Citadel in Core also million XXX had $XX value including $XX in And QX four video Campus X value. in platform both value and plus

scheduled construction X,XXX Vegas totaling turning project XX, an in Now our XX additional at XXXX, the the the milestones pipeline, additional opened cabinet mid-February, sector XX Vegas Core with opening is equivalents, Coinciding delivery Las in third equivalents Las three we of during mid-XXXX. power system XXX XX to megawatt for in and power with and cabinet new sectors capacity we of of two delivered Campus. megawatts

Pyramid of Citadel in cabinet sector we with construction following signing in of opened and XXX new QX In XXXX. we new QX Campus, a for megawatts the a the on XXXX in sector space. completed will In the XXX XXXX, customer the XX sector slated have open cabinet an with which one Campus, power anchor equivalents, additional

cabinet The Keep Campus has an and initial equivalents. inventory megawatts of XXX XX

two As X customer of Atlanta design X,XXX. facility capacity cabinet is Atlanta equivalent total subsequent on a delivery on be a a the with the sector reminder, construction and will timing Sector dependent X of absorption. X The

Vegas. of phase in the continue move permitting Las Switch's We at process planning with and Core expansion the next forward for to Campus

of XX this Las infrastructure Vegas development to Vegas later work facilities. begin have we construction next Las begun data XX, the expect our to Las site And XX center support We Las and Vegas year. Vegas and

additional build look megawatts over full adding five the the project updates forward capacity. out, XXX feet expansion providing Upon Core centers, comprise new X.X million to more will We square Campus data of than incremental course XXXX. and of

and EBITDA of today's Finally, speak to for of XX% XXXX our growth in at margins Gabe the call. adjusted drivers of and of the guidance details later range. approximately XX% initial our guidance represents the over specific midpoint revenue will

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

Gabe Nacht

year outlook XXXX. ASC the which results. and of financial going our call Thomas. Thanks, and our this of results XXX reflect discussed of quarter metrics for and ASC applied XXXX Unless financial to during accounting our Today adoption I'm been review retroactively XXX fourth XXXX noted, have the for otherwise discuss the portion to standards, full

ASC website. or our quarterly the quarter can increase XXXX. an of found on million, of compared ASC to of presentation revenue achieved reconciliation quarter XXX to the We XXXX. and full the XX.X% in XXX our In million $XX.X A investor $XXX.X the fourth pre Relations Investor of appendix of be financials Switch fourth

$XX.X fourth $XXX our a quarter XXXX to primarily a a growth, revenue, attributable from and increase XXX adjustment XX.X% XXX year-over-year growth and million adoption QX million in from includes rate and XXX. $X.X This XX.X%. of ASC of of the is basis, pre ASC revenue colocation up million positive reflects XXX On

connectivity which in revenue, grew revenue the was growth driven in year continued colocation growth trends increased improving quarter. acceleration and addition quarter compared to our XX.X% in to ago XX.X% business, to The fourth which strength by

the revenue year-over-year XX months from Switch in than from growth new customers XXXX service customers XX% with came year. XX% QX who longer during been resulted past the growth of revenue have of one the who while initiated

year attributable XX% full and January connects in X, with the XX% in after point services, recurring cross consisting which For existing total was initiating and the XXXX, nature, to revenue growth than point customers quarter telecom of to of service was More external year customers and broadband from connectivity. revenue the XX% of XXXX. primarily colocation our include

XX%. in in was $XX.X quarter in revenue million Telecom period $XX.X reported QX XX.X% XXXX, XXXX $XX.X revenue to XXXX. of XXXX Colocation same for QX was the of million the fourth $XX.X increase to of compared million, increasing in an compared of million

for to QX revenue in professional period accounted Other for million services compared XXXX, $X.X same the in XXXX. including million $X.X

Switch cabinet recurring XXXX, monthly cabinet $X,XXX billion in XX, approximately December generating of per As equivalent over had XX,XXX revenue. equivalents,

X.X% than in accounted as consistent of with revenue XX year ago period. XXXX billion connects for approximately December and the cross We had of connects XXXX total cross QX more

representing we renewals at comprising megawatts, to revenue contract XX annualized XXX bookings, of million QX, value $XX turning deployment, inclusive $XXX and more services. both and sales of Now total million during full executed than incremental contracts of of

recurring approximately million of in million from the of customers. fourth we $XX $X from and million signed existing In incremental bookings quarter, new revenue inclusive incremental annualized $XX customers,

at XX, contractual not revenue, XXXX and billed backlog ramps to stood December billing. commence aggregate $XX over million of contracts including annualized are As in booked yet

of of XXXX with the remainder low beyond. in quarter. contributing our approximately contribute at ago during to X.X% remained million XXXX, year X.X% revenue churn QX customer XXXX $XX in in expect from reductions compared Revenue the We incremental to and backlog

revenue terminations reminder, or costs. increases of ago due by and Cost with primarily the divided quarter, beginning contracts a of QX million in reduction customer power to define we the labor at the revenue the in to increased year expired churn by the of $X.X in as As revenue recurring non-renewal attributable XXXX compared period. depreciation,

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

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

The lower gross operating on attributable by profit quarter debt in in expense the primarily $X a offset offset by balances $X.X to SG&A by in primarily was higher increase XXXX, year. income to revolver last by rates growth to in QX increased increase our million same $X.X a million compared of costs. million million LIBOR Interest driven $X.X

net million our revolver. on $XXX As for compared than rate includes $XXX had of outstanding interest XXXX December $XX.X QX $X.X swaps million XXXX, fourth income in of XXXX million the million a on term less was loan, income on million $X.XX of QX in million Net and XXXX. XX, to $XX.X income per share. diluted of we Net drawn $XXX quarter were of our gain

million totaled Adjusted year reflecting in compared for XXXX $XX.X XXXX of million year of growth QX X.X%. over $XX.X to EBITDA QX

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

I toward XXXX, the the normalization growth We margins greater XX% the SG&A adjusted range. call. a to portion expectations will detail moderate margin historical in discuss in of our XXXX in guidance expect resulting during EBITDA of

the million the driven locations $XX.X was in Capital same expenditures investment in to the excluding land Core, XXXX quarter expenditures acquisitions quarter capital Campus. lower in XX% and in Campus fourth compared to increase of year quarter higher by Keep XXXX. and QX were the of the Citadel by the Pyramid $XX.X ago in Compared offset million, spending

million quarter XX Excluding in the land to the invested fourth $XXX.X XXXX construction demand an purchases, expenditures of support compared our million $XXX.X In XX%. at in facility. for year full customer capital increase Las data of were Vegas Switch to equipment, Core XXXX $XX center XXXX, million primarily and Campus

Las Sectors were contractually for finalizing committed X mid-February the customer deployments. X preparation As XX, of Vegas improvements Switch additional cabinets XX% in invested about at Sector XXX were in XXXX of inventory X December Campus for and XXXX tenant and of million XX X Sector facility also of on with XXXX. X construction an opening added Atlanta the Keep $XX.X QX

is million in equivalents. on two $XX.X having XXX one Citadel for QX in open of to And the spent Campus expected XXXX. in which QX ongoing construction the XXXX additional opened Switch second sectors, cabinet of of

compared of of open revenue, or last we $X.X Maintenance Switch X.X% $X of year. capital in as Finally invested to same a in were fourth XXXX sector million quarter Campus XXXX. the prepare expenditures revenue Pyramid X.X% $X.X and to just new QX the of in million million in the quarter

data construction improvements to million million last compared same Growth the and was quarter $XX.X fourth year. of center for in CapEx period XXXX the $XX.X for

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

on utilization Campus, available XX%, and compared XX% committed Campus were of QX XX% and at Core The and as QX. the the Pyramid Campus space, of based XXXX the Citadel rates and XX%, crimes these XX% approximately cabinets respectively, XX% colocation to currently

feet X.X up megawatts comprise our XXX XX will to of The of to have power. gross equivalents. At and nearly existing facilities of nearly megawatts space out, of full power space, square Atlanta of excluding aggregate square build XX,XXX cabinets million gross Atlanta X X, and constructed facility up in feet XXX,XXX

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

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

filings million for of we the common of unit. As Limited $X.X of fourth of disclosed in recent reflecting X-K average total quarter $XX.XX price repurchased units $XX.X XXXX, a common weighted during million Switch per

shares XX.X shares. A outstanding, XX, XXX million were XXX.X XXXX, million there and December million As of total B Class including shares Class

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

XX% Notices Class brings to for X, or an transaction a on as common class exchanged on be of shares outstanding a our we total stock February date, XX to float XXXX. Redemption Class shares X, XXXX. Member over to This public approximately April received million million A X.X Based shares additional expect B

$XXX the XXXX revenue we XXXX for reflecting midpoint. guidance million at in million expect year-over-year the XX% $XXX organic to growth turning to Now range of

adjusted adjusted million, increase compared range XXXX of $XXX XXXX expect the $XXX and margin at of to XX% reflecting of EBITDA in XX.X% the midpoint. an to an We million EBITDA

We remain leveling in off the remainder expect to elevated before SG&A of throughout XXXX. QX

Lastly, $XXX range of we in to expect million. the excluding capital $XXX land expenditures acquisitions, million

Citadel and for the our XXXX thirds of two budget slated Core Campus construction at new capital is Approximately locations.

datacenter Vegas expect infrastructure XX, site Las Vegas year. begin XX We support next of have and work Las this begun construction and the facilities, development Vegas our later and to to XX Las Vegas Las we

demand, facility, build strong We're Nevada to X out continues customer in our which increased our Tahoe the offsetting ongoing Primes. investment experience also of continuing the Reno

and with during in to intensity progresses. the XXXX, capital the sales incremental moderate dictated being located keep investments We Pyramid largely velocity Campus as by expect year

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

Thomas Morton

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

remain retail opportunities, robust. continue colocation We large enterprise of on to our which pipeline execute

our We support team employees, in behalf We of our continued look to again like this take to management once for partners these opportunity due forward and transactions announcing shareholders course. their thank customers, Switch. on of would our to

would for now open line the to We questions. like

Operator

you. Thank

the We Frank session. go from Instructions] will And will begin and question Louthan ahead. question answer come [Operator Please of Raymond now first James. the

Frank Louthan

very Great, much. you thank

to slowing guide So the bit. on the growth be a appears

better and Are rate little conservative would what you what decline You're little to growing to of your over But get range XX%, you're seeing bit just guidance? QX growth full than end being take a on it of to here? a for the some the why guiding space Maybe would bookings. taking the higher and say and year. the

Thomas Morton

a is for we Actually, full XXX let if that this year Gabe because Thomas noticed much is because revenue. very million added question. full at you we're something Thank will obviously, that growing and Hey, year, $X.X on slightly answer Morton. Frank, off as adjustments Yeah, well. base the I basis, this a the of look you million one elevated of your of that about $X XXX

we if the into more roughly obviously So that we're a little a XXXX difficult year. sure And we go forth to It's beginning of make we the really the comps that than basis, become look the on grow rate. as bit range the is year. past preadjusted are achievable. to We they a at in same at were expecting putting want

forth achievable we that point. believe a growth this to proof and So put is consistent rate at is

Frank Louthan

you new I new customers? deployments the then mentioned so there's think Campus. existing and for Atlanta XX up got characterize between Can and you or Great, set you those

Thomas Morton

first the At XX point, think and will existing. Yeah, are year. new are be got six customers. they half new of I in four we've this the deploying And

Gabe Nacht

different of company, new that it's They're their are that are a division there six the enterprise. that company. a but the divisions are of of in couple new deploying Yeah, same

Frank Louthan

Great.

you very Okay, much. thank

Frank Louthan

Thank you.

Operator

from next Please Rollins our question Citi. And go will ahead. come of Michael

Michael Rollins

Thanks. Couple questions.

returns XX new a you're First, as versus competitive over you last yields couple maybe the and conditions the been that can years future talk months deploying prospects just capital And return about seeing on how the the are you've capital? influencing ago?

just on And the indirect you're between update and an from coming then separately, sources? direct and bookings just maybe distribution Thanks. front the where seeing

Gabe Nacht

two capital Grand has our launch years capital began they spent of and the just far because - return included was campus Campus better, just as included a of the we Reno and couple that gotten on year ago, were all denominator, had capital a space. as that we begun over invested on were the Rapids return Okay, to in period, the filling

seen we've on the capital return our over last increase So, of couple years.

will We be obviously in service facility Atlanta into putting the QX.

chunk CapEx that the you'll a for move return capital of calculation. So see denominator into on

mousetrap. it But our to we've far plus pricing. able So, our revenue. consistent per We've XXXX lumpy. been all as as we a And time, over different is seen a build maintain bit yields we cabinet in

are possibly that at while So shell there looking power price they space, folks the there for get. essentially out are lowest it's wholesale can

find Those about, and is our a differentiated the platform, that people value We you understand aren't of Switch efficiencies, able our that in they technology, that understand customers terms we're understand understand co-location that just when look ownership, the deliver to what beyond we're want cost formula chasing. price, our compelling. that of total

Thomas Morton

is advantages, obviously offerings significant Gabe power areas tax is Yes, have are Thomas. telecommunications you where to there we Mike, thank advantages, in and that advantages. right absolutely we core are able And be this

offer are we So space offering those at. three impacting without items we look TCO to are a able what at when they the basis,

at so with we price it point TCO our a able on basis. maintain And for space customer have because the look we our to been

we as against basis, well industry as is favorably peers our that product on And compare any leading.

to maintain and enabled we've sustain. So

entities and us. want also either or that a We core with their infrastructure with regulated entities most to critical lot deploy work

to in are per that more they resiliency uptime to sensitive And and saving or or case, $X are $X money than amount of they some KW.

also you think distributions. about asked I

distributions. of had We have increasing or history our a changing

it's not revenues as possibly to at that speaking not look that are in time. But something that towards will doing doing the or future. go We this we forward

Gabe Nacht

and Mike, you from. where Matt, think, I of the are about sorry, were I'm distribution I contracts think talking our So, coming sales

contract to continue We our see growth channels. from

course, transactions our contract We see continues place bring traditional last continue to force sales in growth that based force year. And as from put sales commission well. we our of in to

sales the So we're on very all happy pipelines with fronts.

Michael Rollins

you. Thank

Operator

come ahead. Our next Richard Choe Morgan. from go question will JP of Please

Richard Choe

a focusing customers you. your you're you wanted new to Thank what's said coming about larger a a talking about existing And of deals. I bigger lot from changed where or ask year actually you're signings your from talk ago bit two Can little customers. you about maybe still deals? Great. with are on you

or larger And deployments? signed it - years just want bigger customers, is past few you've customers just they or the the that and over

Thomas Morton

Well, customer a normal co-location existing retail we continue from to are company. And growth have our our base. we

while customers So, other our of XX%. other means, we - customers about XXX XX% XX revenue, plus the have represent that XX% that our top represent

still a are retail we So co-location company.

strategic But had as we've having a some talked and past the growth forward large were about decade a next so. particularly of our bit their or XXXX, strategy more about because in with year, we slowdown customers going the for technology over we revenue discussions in

with deal FedEx, we And that been what turn a a continue strategic able eBay typical we've customers cabinet talked like us, Box would like to expand customers customers into with relationship co-location like were more about. much have to

has the to those level base. you $XXX focusing our moves kind to that And So, that some new etcetera and deployments. number normal we're to been certain you And need million larger cabinets five to cabinets, a and saying, larger of see four sales we a But customers get these And new deployments. do us I that's team our time new on. they circuits, but much growth growth, that every a month continues. needle of coming are take what two at things need get

Richard Choe

a doing per up XXXX. that cabinet is to customers little Seems something went from And being about like better, that Can talk else? bit? then pricing XXXX the MRC you

Thomas Morton

dense there's and per pricing, increasing more cabinet that as power is It's yield really cabinet. they being people not And not contraction because any also up, we're from but more it's the - consumed. power that consume seeing a,

Richard Choe

Great, thank you.

Operator

of comes question Sami ahead. Credit Badri Please go next Suisse. Our from

Sami Badri

Hi, you. it same year the of rates. like backup? thank of actually I front cuts to want to Is of the end expect how is one acceleration the general just seasonality or should I first of kind here understand just regarding if growth is And it guidance. flow? just XXXX Is we kind question two seasonality one the the loaded? had there

And cut revenue different that way, give case? do us that's then to And to in you why some XXXX? start in connectivity not index over you expect to if a maybe compared to can revenue colocation like the rationale not,

Gabe Nacht

the start Historically, unless a telecommunications half I’ll because connected with data along first. the colocation grown just has second to data. with it's center Historically, is obviously revenue center

So provide uniquely is our that customers of needs and purchasing form the to at connectivity, prices power to Switch positioned that through are every some cooperative of compelling advantage and to of environment. connectivity cooperative cabinet the take

with colocation. along has grown traditionally it So

touch needs. expire of Switch that However, they're own deliver compelling advantage that customers And data their there the their price. centers any have the telecommunications understanding contracts same to of taking corporate cooperative the to lower are connectivity of with are carriers, power our can doesn't that if at

that large well forecasting of dollars an in over not particularly spend it these hundreds of the on literally of very XXXX. millions connectivity. year a be we're some So enterprise organizations case, could But with index

forecast. our That's or however, in not our guidance in

goes, start year. contracts. we've of the will seasonality that fact certain talked signed throughout deploying we've They the Atlanta a about number as far As

ramp received So The those year. and XXXX that as on we'll the the contracts. more announced from throughout expansion will our eBay we will last Box from We previously progresses, an that year quarter call ramp the into going year. see revenue contract throughout order

the into move revenue we year, we'll see to grow. as So continue

However, in we that adjustments this an QX. impact, have in took the XXX will quarter particularly

guidelines get new numbers a the we we sale, half to fiber under IRU because provider QX in into growth are that back type contract as cloud that the the contract year has elevated because a entered classified into year, a this a of major leasing with now sales the lease. be As of

over than QX. we take IRU, rather in it to that revenue year So taking XX a all had

impact a And to million that QX so due in the plus you'll about that numbers previously compared $X reported. see to we

So we decline back QX because half you'll see into probably that growth get bit year the against in of rate are and of the that. as comping a of number, the a in

Thomas Morton

Thomas. is this Sami,

- of Your we terms evolving Telco technology. his in Telco is also question also as is great because

the in are you MPLS see the marketplace. some product So disruption and will we it to in in a and types. products we creates change the are way this a in there's that transition that industry, purchases products creates selling That the change new And selling.

initially that with So be change there the absorb to throwing this adoption. numbers a time want were transition the for we on to team, year, we customers also of that had out happening our conservative for with little that what telecommunications so they

Sami Badri

it remarks then just in quarter fourth far the is productive your signings. mentioned you, But was. your or that. not one Thank follow-up. it. XQ prepared least as And seasonally you In 'XX that guys, Got at XXXX year as for typically XQ

that And your sales element to a being just of coming organization motivated commissioned is everyone in. and And my question new motivated, not little being an there but Not coming in attributable I'm in bit is else and that in. of based here maybe that productive way. that, more just force is is the saying that

things is could it be color maybe these a it both? Like, that that Atlanta which But which new and ramp is could on one you not coming is it's give of and possible if online, there's us started therefore more you through. signing to And campus that?

Gabe Nacht

I think above. it's of the sort of all

the after reported third deals. last right call, then three large our quarterly bookings recall, the we mentioned we that number. our quarter we you If quarter, in signed end But of

Now those are the bookings. queue in for

as we get things year booking you after the holiday September, period standpoint, tend the signed of from right This towards end to the three period. September slow a contracts down. large Historically, just

So, numbers. those QX are in our

Our commission a Rapids deals, in transaction sales including team is producing for a XXXX. number new Grand of

sign. ones actually it's the just it's three all of So of large And timing the think bit about quarter. a above. of in a And customers when just signed happened I so of

Thomas Morton

were mentioned Pyramid or GR to And by sales a as commission hit signings in just customer by QX. there team. QX the the Rapids entirely also the [indiscernible] going brought we to there a we're that is be decided And in sure QX commission also Gabe And or signing new to over we've the signing then that had sales their was it to in team. Campus that Atlanta was done new make roll in had potentially couple that books a Grand

definitely are the on they producing. ground So, and

Sami Badri

it. you, Thank guys. Got

Operator

next question of come Please will our Erik ahead. go Rasmussen And from Stifel.

Erik Rasmussen

you. thank Yes,

First, It about maybe time of like you got this And Campus. sort have or maybe sounds announcements an customers opening given up? of on it you would on? what the you makeup customers any of of is signed sort sort Would anchor consider the Keep expected that of that? XX customer your those at

Thomas Morton

Yes, thank that major tenants. the Erik. tenants it It consider of no, you resiliency. gives But answer anchor to a be these The, us plurality was is great. very is much, don't I of any

So one diversity the actually us that fact massive they're gives one not of revenue.

us. strength for So that's a

that deal. to a alluding that online. That we There came what correction and had reporter signed that corrected out statement X issued you're if has a was report megawatt a that's

news of they and So that report. now them, changed have spoken that bit a false was we their with have

large announcements make in said robust as looked remarks, pipeline to So, And opening allow Atlanta. we tenants forward we doing as look customers for during course, to due those we I my soon as the announcements. do have what to in forward us a

Erik Rasmussen

midpoint $XX $XX second Got then there's what mentioned least so $XX this have year million it. did maybe And the guidance that you'd for I about year? million backlog, million. the question, about you think from past just my above at at the

of And in be level, How fill sort this achievable see into momentum do a opportunities of sort seems sort the you're revenue you to heading gap? year. and the that pretty that of considering

guidance? how think So we about should the

Gabe Nacht

plenty ended will guidance, from we that this about our think and million $XX I is from up increase backlog. where a For of come year

a what at not year. And what our got closing to we we and filled every pipeline up as our When our do we look is. We look set sell we've with come So, at, is what we is. just forecast. at books probability of guidance,

about $XX backlog. expecting we're of million But which $XX to from billion next come year, grow will

team the to that up gap. $XX hard in as order is always selling make So million

Thomas Morton

it is And out, not this install it year. as just sell, sell; sales fill to point likes team and our is

Erik Rasmussen

you. Thank

Operator

Berenberg. Our will from Crossett of come next Nathan question ahead. Please go

Nathan Crossett

Hey, guys. good evening,

you power. think of phase of I said megawatts that the was Atlanta XX one

of much is now these how that XX tenants? leased with So

Gabe Nacht

up XX It's megawatts. to

know everything modular. do As we you is

handle are and install So in. customers to we power only cooling enough moving the that

cooling. will we contracts so sign more more power, And more as for megawatts install

all do that's centers. we to deploy capital data how able our that's efficiently. we're And of how And

So it's up megawatts. to XX

installed not been first megawatts have kind XX system that We And megawatts. installed. of that's what's the power megawatts is

Thomas Morton

happened you, is me interesting power. Nap X, this to of because ability since and let what sold kind Yeah. have we of point Nate, in for is And an example, X Nap tell XXX to been out an is megawatts and in XXXX-XXXX. that's produce There

even been center, data out sold of for power megawatts are out eight that producing currently of floor has We space the years. though XX

So the facility. desire megawatts never customer and that the depending put in we on is, may XX customer load what

much the We as more as customers as customer add need with will the put to rises. demand incrementally ability

Nathan Crossett

helpful. unrelated ask potential This I that's question. about REIT to But is Okay, conversion. wanted an

that? Now Class you think is that about could hindrances gone, possible How REIT eventually to should REIT? are converting for the is a it because What everybody to shares you C convert are it now? almost doing we the

Thomas Morton

always a converted Up always couldn't question. as if C a [ph]. as to is, Because Up went of we converting it advantageous REIT an and we so. We to happens that and will do be to out C tax REIT. have out public, find if we do a open then what And that's leaves we option when No great gone we otherwise had to the went an that

We look And converting currently do convert to a to We in a have do ourselves REIT. forecast our a ecosystem significant advantage technology to don't REIT. a see solutions at as not to company. it we

are income that streams. services we so not are providing readable And

And to continue do we will that.

we So there were is would enjoy being an if us C not Up REIT. that by flexibility we

C. have as our to with the our of and revenue move nimbleness gaining of offerings stability So Up evolve we keep an the to the are growth advantage to as market, continuing we sources will take to by going increase order afforded being and that's us and long number thereby we diverge continue in to

Gabe Nacht

financially provision, they've C. entities gone the and because while our taxpayer, is able which That's Up them a much don't life tax have estate then passed continuing what Switch do assets. accelerated on as to And depreciation tax real of non-REIT, a to our are viewed estate advantage on they're classify certain equipment we're top that through book that we them We are as REITs their and entity tax IRS and we REITs equipment because of enjoy depreciate an a as the have correct. because is real specifically rulings taxable a as as to of assets that take partnership pass to Inc. parts corporation a through received not allow

on handlers, depreciate five we of a et most Whereas year power air life. our cetera seven systems, to

a so not And we're cash taxpayer.

a it's a alluded first technology to foremost, be a perceived Thomas advantage to, a think advantage. I and we're REIT So not as And culturally, company. real

things do estate than changers. all. quite more them that respect game the are in real differently We're business We We others.

differently peers. about relationships thinking just our about always the markets lies. have We They the great think with technology where we're

Nathan Crossett

Thanks. Okay.

Operator

This presentation. our as today. concludes answer session, and you today's Thank our well call as conference for for attending question

may You disconnect. now

Switch (SWCH) 27 Feb 202019 Q4 Earnings call transcript