SWCH - Earnings call transcript Q1 2021

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Operator

Good day and welcome to the Switch Inc.

First Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to of conference Investor like Heinz, to now President Vice Relations. would turn over the Matthew I Please go ahead.

Matthew Heinz

Thank you, quarter first to Switch operator. Good afternoon, XXXX and conference welcome Inc. call.

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

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

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

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

Thomas Morton

continue demand. and strong afternoon, execute Switch by Matt, we quarter XXXX strong on Thank is another driven joining you earnings key initiatives customer pleased for to today you, Thank good as quarter call. for everyone. business us our first to report

Our continued prime campus locations. operating first momentum our quarter of financial all efficiency XXXX results reflect across improved business and

$XX.X XX.X%. compared quarter, margin transactions X.X% an were year-over-year adjusted revenues non-recurring when adjusted million, to fiber of growth XX% year quarter EBITDA million with the increasing ago adjusted representing year-over-year First $XXX.X EBITDA was for

representing $X.X the basis income non-recurring XXX margin million points XX%, was the first Excluding fee year-over-year of quarter expansion. adjusted EBITDA margin from licensed benefit of

million coming across team to off once value a strong of and again an quarter more to with and our incremental level board in hires our bolster this first bookings at these the deliver This execution strategic revenue quarter value. total our In further million in bookings to quarter contract incremental total since record million. consistency demand made continue consecutive and least contribution our quarter $XX XXXX. value We up signed recurring believe XXXX. $XXX to of stepped see contract marks the business third of $XX of We as and annualized $XXX elevated a made our sales of than significant a coming revenue that of sales million salesforce on individuals have highlights were organization the Switch

to our eclipsing We recurring their set the footprint quarter. with Switch first are previous more record revenue also a of came all who across to primarily from demand The quarter Switch. primes $XX than pleased existing customers backlog last record with ended $XX of report that continue million million expand

discussed amount As volume of reservations inventory. and transactions limited of power elevated in months space contiguous immediately several have that and past resulted multi-megawatt has over the last the large sellable quarter an

technology to monetize QX our of inventory. or core power the and cabinet maintain continue we resulted two upgrade optimize about One space physical we be enabling cabinet without in approach near allocate to the constraints these instance campus, that Given strategic such utilization capacity power reserved space power requirements. by dialogue inventory proactive and customer in infrastructure. to customer a in with megawatt customers reducing term how a us with a We

and closed contract $X $X $X year I the strategic across million notable megawatt core million $X.X worth In firm central our Citadel prime underlying a campus. Campus, Campus, SUPERNAP Italia contract footprint will incremental in more enterprise regional customer into value existing We five of our resulting expansion in accounting and Switch partners, annualized company's million the venture phase $X revenue now IPI incremental at and hyperscale definitive million million first to a completed acquire the for we provides value. and $X gain on like a customer three renewal first in diversification, quarter a contract in a Texas recurring executed agreement launch growth QX. XXXX, provide expansion executed and bank contract a million for deployments totaling with locations. with of customer company Switch initial migration of in to their strategic multi expansion signed relationships also of importantly the revenue, over in leading over the In added semiconductor sale for history. new acquisition campus and XX of value million but Austin an in prime the of of recently $XX market campus, totaling and In to our Switch markets believe corridor. data a in $X Fortune would disclosed, capacity its approximately XXX new in transaction cloud and foundry foundation Fortune runway to and major megawatt biotech completed value. value. strong February a dynamics a totaling activity shareholders total some $XXX annualized contract key long the returns with partners both XXX ecosystem. multiyear joint to to quarter million all existing Texas in our an expansion technology discuss with the million our due the the cash two the first of expansion Pyramid positive of benefit addition immediate the immediate metrics previously the logos, As Houston Switch's the creates In fifth geographic a transaction, sell in this This to and We

the intellectual license. interest asset also the its over international XX% interest As equity maintaining of Switch while in in part Thailand transaction resulting Thailand, property control SUPERNAP a same increased in our

issued in ESG is TCFD prepared annual Lastly, and which report, Switch with in its April GRI the accordance SASB reporting frameworks. late

XXX% leadership all XXXX. ratio, power nearly data workforce, board pay diverse with XX% independent the include of with to XXX% scope committees male/female from Some female A ethnically since across zero environmental renewable one highlights key three operations center one board a emissions and our directors parity employee of continued and report directors. two in the of comprised out eight

project Now turning construction and our milestones to pipeline.

continued XXXX necessary of data the three At to full build of We Campus centers total will seat to three construction late Citadel currently we XXXX. of out, new projects megawatts. and Following QX construction construction between expect the their these X.X campus, our feet million accelerate QX core development on have Campus, square the within complete in in several on to permits and up Keep XXX all and pipeline. QX facilities gross

campus. four planned As work two out. campus completion will core these an build facilities are full facilities in XXXX through site completing comprise we from up square the on additional and XXXX each million the additional constructed megawatts upon including assets Keep Citadel to preparation are XXX dates and in ranging and One also have feet These locations. X.X

and disclosures presentation planned that years. on We investor page active our our of of five pipeline details have next over X the data provided center construction new

progression construction to current development the not library website the and site that photographs showing Gabe? will we our to discuss in the our I visits Keep financial in core efforts investor of our call added times, Additionally, the to feasible primes. are now as realizing over ongoing of turn Citadel have results. a Gabe

Gabe Nacht

reported quarter quarter the review I'm going an of financial to Thomas. the first X.X%, quarter first of for outlook increase our for first XXXX. revenue or our XXXX. Thanks, Switch $XXX.X of $X.X of results the of million, XXXX to and discuss Today XXXX compared million, remainder

$XXX.X was X% QX for last revenue. transactions $X.X professional ago same in when up year-over-year. sequentially X% year-over-year revenue the of million revenue recurring to essentially Connectivity including Co-location unchanged impact fiber services Other growth year. for first the $XXX.X revenue $XX.X million revenue XXXX, first compared for X.X% of million was quarter in accounted non-recurring adjusted the fiber quarter year X% million, increasing of quarter quarter. non Excluding the compared XXXX and was to

QX initiated not were do in XXXX. type events Importantly, this of in the in we the and rate material revenue reductions further customer QX run anticipate absorbed fully

reflecting XX, approximately had billing March Switch of additions XX,XXX cabinet equivalents net compared XXXX, XXX cabinet As prior quarter. the to

also influenced per Our on timing period. within sequential installations large exceeding in cabinet XXXX recurring the QX based quarter-to-quarter of increased be revenue monthly a the can average basis This metric of on XXXX.

increased density continues toward customers strong by unit power demanded However, underlying our in our business. trend economics to the support

in growth XXXX year connect X.X% XXXX. more as than cross cross of ago This total billing and accounted X.X% to We XX, connects of the March revenue. in connects reflecting revenue period, in XX% QX, for compares have cross

bookings. Now turning to

full representing of During annualized of sales QX services. renewals inclusive XX $XXX million comprising of we million and contracts, value approximately executed megawatts, at of incremental contract deployment, and both XXX revenue total $XX

renewals $XX $XX of approximately signings $X million from customers, bookings annualized in incremental recurring logos. the including and new revenue, million Excluding million represent from existing incremental

As stood recurring over of March quarter. $XX XX, at the million from up just last backlogs of prior our XXXX set revenue million $XX record

backlog to revenue and year XXXX was quarter. to X.X% Customer X.X% contribute our with QX, the beyond. XXXX during the $XX in million incremental of compared approximately in remainder We in contributing expect churn ago XXXX

contracts, attributable resulting the to in customer define a in period. full by we from at reminder, Switch customer reduction expired beginning the terminations a or the As churn of platform revenue of revenue the as divided exit non-renewal the recurring

due revenue First to by ago compared primarily increase quarter an quarter cost of depreciation. the in $X.X million increased year to

and revenue XXXX profit to X% adjusted improvement XXX in in amortization gross driving QX, million. growth and margin point Excluding equity our by compensation of adjusted a basis increased X% which depreciation, $XX.X adjusted gross based cost decreased

First to lap as note to in one in SG&A. rates quarter the XXXX reduction protocols. driven increased QX, COVID lower This in to $XX.X million year-over-year million of million higher to fees be increased compared attributable year $X.X SG&A cost beginning Growth QX, I quarter. XXXX XX% million income balances and operating in the LIBOR $XX.X less SG&A quarter expenses in administrative costs. was the operations XXXX. was year. anniversary QX down favorable by same income debt SG&A primarily million $X.X the million of year-over-year XX ago attributable $X.X year last offset general from by QX, will professional and in XX% comparisons we would million primarily by were to from partially in XXXX expense to decrease lower $XX the compared Interest

$XXX XX, As inclusive swaps XXXX, weighted on of loan rate $X in interest rate March interest term of we a our total at average billion debt balance. outstanding approximately million of had X.X%

gain the gain in million interest and First impacting quarter EBITDA income for QX, swaps property million income of the XXXX. $X.X $X.X significant sale net in was year in license million in year-over-year XXXX totaled $XX.X the on to use to a QX, in for a to of attributable include in rate ago growth of Adjusted net XXXX of a income loss centers $X.X to from loss interest intellectual net quarter. Italia net XXXX in our Saudi compared an construction compared QX, of income swaps growth on million was agreement $XX.X data compared Arabia. Other to to fee items primarily $X.X QX, million million Switch's million million XX.X%. related The a reflecting $XX.X SUPERNAP the $XX.X

from margin XXX basis adjusted increasing XX.X% points quarter. QX, EBITDA for XXXX the was year ago Our

per XX%. fee income million Adjusted for quarter. presentation our compared in was to license million EBITDA share XXXX of increase diluted XXXX. was adjusted Excluding income in was Please a QX, section funds compared to from $X.XX XX% QX, in a Maintenance ago to AFFO $XX.X $X.XX the refer capital operations million margin appendix reconciliation XX.X year expenditures for press the net of the in or investor the to million AFFO $X.X revenue construction AFFO. quarter expenditures release revenue quarter the to or quarter capital million last ago for of center first improvements and X.X% first XXXX by Please $XX.X and to investor the $X.X refer million were in presentation of detailed year. X% of to was for CapEx campus. same data $X.X compared $XX.X breakdown of a and XXXX the our quarter. in for million compared year Growth

page were of which sectors X in the Prime's QX March both capacity the XXXX compared to open year and XX% rates XX% presentation for contracts utilization in XX quarter. Please under equivalents ago our across investor cabinet had Switch for As prime campus. our of to within committed each XX,XXX of refer

the Looking balance now sheet. at

last billion, prior and was As times annualized resulting quarter to in $X debt of of net the X.X unchanged company's debt quarter. equivalents a March net the XX, compared total to outstanding of ratio adjusted XXXX, cash cash EBITDA

available liquidity equivalents of Switch revolving March and XX, cash credit. including line cash and our XXXX, of of borrowings $XXX.X million, As had on

acquisition, mentioned As are we regards fund we evaluating to to data foundry acquisition. currently in the financing the options

expect debt securities We finalize issuance of coming acquisition. our weeks in to closing to prior new the the

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

the As of resulting common outstanding. shares redeemed our Class an the additional units, disclosed of public of Class A first in the second quarter of X.X in redeemed float X.X XXXX recent have to filings X-K million been of issuance million during our shares. equivalent total Class A bringing common quarter An members in B XX% shares number XXXX,

guidance to turning for Now XXXX.

the an range Adjusted million, to land increase the for at stronger Switch our of X.X% would for to year-over-year in at million I from of Lastly, towards XX% first the accordingly expectation a million. than the $XXX are announced to the half revenue midpoint. to and of range the adjusted unchanged excludes intend data results = after of and increasing margin continued XXXX, $XXX our $XXX million, of midpoint. capital EBITDA guidance organic We guidance closing in in ramp contribution our reflecting to any to reflect installations excluding an million expectations compared XXX acquisition in and XXX acquisitions expenditures EBITDA quarter Revenue second XXXX. customer note foundry. EBITDA range expected that million range and remains update represents the of standalone reflecting adjusted $XXX We acquisition. X.X% of this guidance guidance growth

continue deployments customer power We of significant to have for second reserved and the large half XXXX. space in a of amount

year we the exit to Although remarks. to Thomas contractually optimistic continue of accelerate turn XXXX. to installations level growth And of remain I will now normalized ahead date. the a to closing year committed back it of pay as returning more timelines We some their slightly will revenue throughout for growth

Thomas Morton

is positioned cloud to In continue favorably Switch enterprises migration rapid they for as hybrid conclusion we firmly the multi that believe architectures. among transformation digital their

their to delivery strong to of capacity currently we once data We and to level meet the are center in again of team's are working management our and execute. like ability experiencing take hard opportunity are our additional accelerate would behalf now on Switch. thank for the customers, continued We team employees, of support this our to open would to to like line partners, our we confident of shareholders for questions. demand We

Operator

session. today We answer go will Please [Operator question now first Credit with the And from Instructions] ahead. begin come our will Badri Suisse. and question Sami

Sami Badri

will international just really I I international to here a you, wanted doing just intent around targets? commentary to be just already bit to data noticed opportunity. thank Hi, consider And what going Or potentially forward look a at going check been lot messaging you guys of little foundry least you the similar made more kind just and the revisit strategies going guys to what you international the there's Switch today? and to acquisition. are is I the want double opportunities know

Thomas Morton

Thank Sami you. good afternoon.

right. means just the from data we've which acquisition You're one public. that now We went five foundry campuses did since to we expanded

development. the are before our have that focused It's end in or looking attributes opportunities at being we Prime So three making of and with rate million did problem and we pretty we developing years a currently, successful other the right opportunity arise expansion. primes. the size international square X.X have no But the need aggressive had, should we of fifth the also that arise. the that's success We on feet under international

Sami Badri

or then be is that market? the specifically you. pricing give part idea And connectivity. transit have IP the pricing And connectivity Thank is pressure question under other levels against in regarding on that indirectly more pricing it. providers may competes you Can of just more providers. pressure maybe probably I us the Switch or the that other Got seeing part an

Thomas Morton

customer the can a I them the mean, we're Every model. telecom renew pricing almost time less a now per price. when is I gigabit for remember, buying Well at pricing $XXX lower always $X. renews when and Yes. were decreasing gigabits, they than a

decreasing So and amount Also, the technologies such of as what outpaced those number obviously in of increase increase cooperative. of but new prices. is they people the and amount we in the the in to results a people participating technologies is in continue been happens and the it larger need, deploy decreases bandwidth have they telecom [WAN] increase the margins, bandwidth

growing been customers Switch a a in current So for consistent we've of new item off is as and this to fairly bring as and the revenue those we maintain margin revenue, profit expand revenue, able customers. overall,

Gabe Nacht

Gabe. is this Sami

declining is it As mentioned has been. Thomas price telecom a product, always

it years, look XX% keeping over remained decline fact co-location pace time, when XX% our at that which telecom So growth, revenue growth the it's in our space. of telecom unit to economics the you despite several has for with our means

that unit more So economic circuits. customers buying up and are expanding networks for more decline by and making their buying capacity

the So that remains of - revenue XX% given fantastic, our the is the XX% overall it telecom industry. of fact dynamics

Sami Badri

you. it. Thank Got

Operator

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

Erik Rasmussen

number But would taking expectations be the your there? the you EBITDA run should thank about probably by is your read lid raise and a expect anything Yes, suggest outperformance might the on questions. that and the this this for year, quarter, we for remainder to there guidance what into midpoint just it given million of a higher to rate specifically the the that a or keeping relates a Maybe half. meaningful as you

Gabe Nacht

Sure.

Thomas Morton

Gabe. Yes. Two things. Go ahead

remote. being about things the of one is this Now

supplement. and two things Gabe then to So I'll to turn

potential then And that do there The and T&E. regarding COVID uptick an there our for slightly ease more continue will first if team that to happens, restrictions be to the as is is expenses travel.

thing that's to with second there be that in that we and in cautious costs. much coming increase want is power to out And tend an always that The QX, too see know we increasing about out.

before ISO we in seen year California. and you've had issues winter in fires storms we the Texas, Cal the the last the As year, had that pipelines with the

QX, there in power is respect costs. some with to uncertainty So QX,

of about to back in Gabe? in of raise how want for an opportunity end be cautious power or knowing just we we year, the end dynamics changes year. cost the So much that there is the front the

Erik Rasmussen

them hit we're You both Thomas, good.

Thomas Morton

Thank you, sir.

Erik Rasmussen

the And limitations of having constraints you of talked space. Great. near coming ease that, a suggestive foundry contiguous But lack a prepared guess lot and do due and could development term sort alleviate the remarks, through of the a pipeline to in that lot in about pipeline. year. of larger do kind to the of the can that, also you to some there's your robust your of part will online supply help of coming like deals some then I that's data towards obviously, seems be team of latter what there's acquisition but

Thomas Morton

to That's the of take as develop. right. we as can remember much mortar It does time accelerate to We're has is steel. everything but end the day, bricks, we everybody this to development at some can doing and concrete

moving we as on are three we fronts. can So all quickly as

some have a we more prime have the the space and also and data which to out foundry. We online remaining purchased opportunity the fifth acquisition build close as to will begin bring ability

space, and can. power as are as online expand fast we to bring our cooling more working fast And we as as humanly footprint we the feel So possibly need possible. to

Gabe Nacht

XXXX of the for things at with building two of and beginning just Eric bills the at large another coming online large to XXXX. And next clarify be beginning QX XXXX will the slated online coming that

coming Data But as have online capacity, will million building ‘XX expansion fast in the X.X will between as we but So ‘XX. we're can. foundry large and some we feet add hit about square XXXX.

Thomas Morton

the what's we on that website, and think on mentioned, IR begins on investors in as I in going I we see also my that campuses can deploying that comments three our added expansion are we the to currently evolve. progress slides so mentioned We've see that have to

Erik Rasmussen

you. Thank helpful. Great,

Operator

Aryeh from Please with And Capital question will come our Markets. ahead. BMO Klein next go

Aryeh Klein

following on till just an of a air up have there a slows lot little the bit a don't following isn't capacity of of the capacity enough coming is Thank maybe given next on pocket. that that you. year? year Maybe leasing risk and and We available

Thomas Morton

We available believe growth capacity. year, our we've for we the given haven't, rate well, this given

foundry coming data year. capacity grow on bought will capacity some us have provide next for to into. also We've incremental We which

and So have we into growth we opportunity then, believe and we'll year growth, with trajectory enhance come online buildings will year the inventory. be to continue able because be that additional our as do additional in that through we'll this next

Aryeh Klein

it's just any then since heard and you guess, early acquisition. week customer response talk been data from you foundry What can Okay, them I you have talk the Can that since a the to? to and leads announced then? you

Thomas Morton

Yes.

had some be calls about and of couple to from existing new able we might Texas that inbound customers customers. and We have availability us asking there's our if customer a come in space those sell

So that is encouraging.

foundries We largest proactively a well. of have part very data process had number the calls were all as very received calls those diligence customers, of with

do And to a transition. amount in expect of client so not we course of flux be the significant this there

Aryeh Klein

the Okay, outlook? Were non a EBITDA we and in quick just recurring licenses included previously clarification.

Gabe Nacht

They were not.

Aryeh Klein

now the And guidance are they

Gabe Nacht

Correct. Yes, they are.

Aryeh Klein

Thanks. right. All

Operator

JPMorgan. go question Please from Choe with come next our ahead. Richard will And

Richard Choe

was the always ‘XX for away. next ‘XX of but change this and addressing planned? Or little kind the the plan faster need for in term you're is CapEx and the of should long the a I kind bit disclosures or relatively high a this and in near strength, development which earlier of stronger not few years? you're seeing of you also for to business? development, far than is Hi, questions build beyond kind just maybe little the term to Or a and that, is the run guess you way What some expected

Thomas Morton

had actually, But let space. Gabe had CapEx. we sales. XXXX, some in the sales is the end committed XXXX, of last we two in Those very I'll what the Yes, address quarters large

we therefore chew inventory through committed that also new was that available to the sold. online That amount relieved this is spoken which has as of year, available a to space There be slightly. that the the not have about slowdown rolls coming in in and reduce we've of buildings sell delayed issuance permits we which While revenue been XXXX. in backlog, as

to been more as as have construction that the there are can, working and can fast to And online We being well. product as bring fast that we at market can to day customers also asked properties Prime will we begin so as and night we the as we serve. serve we've expanded and to expand those

been our So customer a really And be temporary robust issue it's to a we receive lot the respects, inside good have. people fact because like have and located bottleneck and services. our a to it's of of due data to that centers demand would

As you comment the to that? CapEx on trending want to Gabe do

Gabe Nacht

It's was bookings when could our when as as say a you about we asked, the fast were since committed build is last Richard, to certainly you not the a need because our And change. on we that space Yes. being when change, it we quarterly call based talked signing.

So last this quarter. the we and another million, quarter a QX if incremental look and QX, in million in of and XXXX, XX XX bookings for three huge bookings, had which us you was XX million at

we've large had of contracts have lot So a ramps. that

is back committed. ramp revenue over in alluded And in to, gone, that this it's the Thomas as XXXX. So The of will the into year space and has some committed. cases beyond half but space

to can. quickly have as build as we we so And

we in build. were fact it's call Vegas, as in building So we about from Las the that power in XX% last as which when we means again, the a Atlanta committed talked and Reno we from Atlanta. to is have change could a not perspective already, fast

guidance fast year. we as given can. we've So we're going this CapEx as for

look guidance given year. based we demand, facilities on can customer as next haven't continue for on any we'll that those our seeing slide for come demand. on online. those quickly course, customer We'll range under Reno then, at based of as we'll X And of plan and you're build scale and beyond. XXXX deck, But to We the the Atlanta until our planned longer investor development the things

Richard Choe

quick space campuses I that customers or follow existing that how is at that Got approaching whatever point? do customers? committed, you almost for new leaving with with balance highly those it and the a this with are you up guess, fully just Or that are available

Gabe Nacht

Well, more demand than from comes XX% each incremental year existing of our customers expanding.

we this for that have they XX logos the will but quarter. new we of assume portion are of that new And they looking the continue ecosystem. enhance we to robustness a added take and logos space always So increase the to

So those cabinets. particular. for service we're the not to receive reserving will anybody any in person the It's first place order just cabinets

Thomas Morton

correct. That's

as an for cabinets, it We ramp asking have a let committed or that as either a that have some customers there and unless order rights of locked decision have they on expand we're up customers first will sell once they people we make is if And it's sign and that go. customers a it do includes then And to space we order filling new refusal. spaces but customers as they is and move sellable. service specific that space existing in both to

Richard Choe

you. Thank Great.

Operator

question Please ahead. Synesael come our next from And Colby go with Cowen. will

Colby Synesael

what on Is a talking does part guess thing we're like XXXX. look guess ramp-in we're about said I year-over-year. XX% you ramp-in. think a driving the And talk you ramp-ins what that up if wondering up was about AFFO that I seeing you. of these magnitude first typical as what's I for color such is I look thank there as and Great, growth might could any typical that that of like?

could installed customers? there's to typically that. a every just thumb incremental should but Just of how behalf your think including space you much XX% to on of an do necessarily rule for to you're deal, say sense mean utilized, start holding we you. extra Thank that's of of get that how give? not inventory trying about space Another commitments a I we Is there

Thomas Morton

space. Colby, the I'll Yes incremental answer cabinet on

do mentioned committed have have take we less hold not have that because we've that built In our we are signed they the into customers committed As signed reserved backlog. into to cabinets have Gabe that space, that they to do and load like else into is space release that – [doctors] for they somebody them their there inventory. notice take we can can back but we people. There But have it that give what space, it like or people ramps and would are is either

Colby Synesael

six is ramp? any paid you for or have to actually would Do Is There and ramp get you your you you're that first space? helpful? waiting year, like get while just typically ramp, that do before dollar a be typically for install color other that the months

Thomas Morton

can do is There two it. great. it's that people ways No,

want pay Some ways people either over the architected per they pay it's it's kw, margin and based that on price that what target ramp for And we sort figure and space, charge is holding want The pricing it's customer. the the space. to on built term, we the deal. the price amortized we is into ultimately we're that make currently we in know to and of a to way the have will that EBITDA the full

to reserved comments into choose are two to that at the they it a to either back can any they're space. of AFFO? it other that or reservation at the you it's with they that designated released that do reservation exercise The or is that people fee period, or a people way while And respect can Gabe the inventory. decide period for will going And have most of end pay end structures into they've pay the they Those not have space. ramp whether on fee time. exercised

Gabe Nacht

chime me on let ramp, first, But in the Colby. Yes.

were quarter’s would over I if historically, in customers talked on that based as last ramp reluctant XX month was a a commitment that they'd would COVID or for there three, that month a fast. firm think start a saw bit need. we've large call, in in sign customers period to is their and ramp they was we deal installing say But and I about, a with what XX ramp

So we months We're deals were ask would of in with starting a seeing months say in in of instead for XX some ramp six of ramp. come they six ramp months, XX months.

ramp, they're seen agreement, because we've go customers when minimum faster historically, Now a remember, than commitment. that's an signing firm their

is went bookings, customers a increase. that driving and the an is commitments. but such customers asked what's whether driving for go bit guidance don't exceed will than as typical we've conjunction ramp obviously it's see But periods in and longer is they exact But what's period transaction, because there's seen did be upward, we're seen faster typical seeing AFFO would we COVID base effect to we quarter our frankly, which on this no ramp we're XX%. customers signed a in adjusting have see so first shorter thing our you historically faster. yet We we the what EBITDA determined. with bookings but why went up what ask that COVID EBITDA the of ramp that today And we

what's So that's as change AFFO clearly the well. driving in

Colby Synesael

any and year? color full Okay, for AFFO on

Gabe Nacht

to this I and EBITDA can give do AFFO not point, to on a AFFO intending indication we're Yes. you think and guide don't a guidance We as get think we at go. So good based to guide we where our pretty will EBITDA

Colby Synesael

Got it. you. Thank

Thomas Morton

Thanks, Colby.

Operator

Please with Berenberg. will our from ahead. And question Nate go next Crossett come

Nate Crossett

been it see the to quarter. good update that is space was tracking far was in of It in Has first. any I the us update And Has there wondering I how down ? churn last on could that on quarter. there? again then Question any XQ you so in back come back churn guess went evening. an give if good vacant Hey, so?

Thomas Morton

to back And question to facility. with storage. that replaced need megawatts of reduced worth some churn. we into went customer we that it our you offerings moved those great I'm megawatts down so cloud respect a that for their us was go reduction two that cloud a that that of cloud that to the is they It's good a customers two the pleased It advantage two of could see had refresher, service on with levels with take those a QX. cold report on about to

So exact ecosystem. kind ironic the it's It an cloud happened that that in quarter. the replaced is we they with But cloud. It's happening. for left them of and following

that. by pleased So

expanding of And that don't any for the to which see. course appear growing We customers growth we stable have quarter events to is you this and from and with us this we this The be know vast customers that existing there of no the major are that year. majority indication are churn see came actually expect can year. great any of upcoming exiting

Nate Crossett

churn what delta guess willing? helpful. I the re-lease, if that's would on versus that the you're Okay, I between to follow question rate, be my up the rate guess

Gabe Nacht

on our I in you that see per the space, $XXXX. revenue is Well, cabinet to rates speak can average Yes. There disclosures won't specific specific but over our now is

So to it continues increase.

So we're seeing are additional yield from the selling. cabinets that we

significant which continue seeing dense to cabinets we're and their gives not revenue. more us seeing we're So customers rate up reduction

Nate Crossett

ask you've with you I needs I'm takes think foundry term about one If to business the guess should going of puts helpful. how the for of going in companies Historically could I obviously, just, kind the the the tolerance What for just we longer about that funding thinking should up deal. that's about space? go leverage. we for leverage low how kind term be been is of on longer guys Okay, is end that? forward?

Gabe Nacht

range It's the the deploy historically we the low modular. three very end. have years, Nate, been at for way We've of Sure. times capital. we in been because

power as open more enough for we moved deploy just sector that as have power deploy a those we'll and EBITDA So And that cooling. more move customers cooling we in, and and in follows. more up

of needed our and low. stable. it we've very-very said we're you profile that never be not XX% So is recurring we've look our to But of leverage afraid particularly But also we're certainly it, that levered. when is keeps revenue

this an in We strategically profile but an asked, often more an using opportunity see get opportunity grow haven't balance found our our sheet. been quality where of able sheet facilities, assets. market. the a really given located moving It's the be where are wanted assets, of that really Texas particularly fit We with good to and think of customers have the Austin the many into relationships in bill. in we quality future. balance within fit that fantastic to we And we is find terms which our we opportunity use the to Historically we so It's the location was aren't to our of that why we one. this strategic

still the in certainly need times well the comfortable. to be we'll the And So we bill. growth comfortable We're acquisition. position and beyond a should low we to five this with continue the about expect in after leverage our upper the lever fours, temporarily as closing, our fours we're in even We're even going don't above this see end leverage we and being But we're X.X fund CapEx group at to fit profile. comfortable be of where EBITDA, to need going to. the peer

Nate Crossett

you. thank Okay,

Operator

next go Fargo. Wells our with Luebchow question will Eric Please from And ahead. come

Eric Luebchow

talk like whether density was metric like, the the peers trended on just pre-selling historically contract wondering more question like you you over your you XXXX. pipeline, was your any advance come in more of development base? rants or time? there's Just Thanks. or connects? have of the ability opening in growth like that's other to the some wondering seen Vegas activity at opportunity I per do also an instance, you connectivity to some XX, a in much see thanks. customer -- do? you And Great, it's little given or as or seen the then on can adding bit And equivalent that that of have over don't you services is power typically Las increase if Maybe of enterprise MRC of or sell have almost capacity primarily I cross for of that have much in from how have like facility growth terms pre-leasing cabinet that the if

Thomas Morton

All you, right, Eric. thank

model And that wholesaler usually and people of or see historically. so you in our portion much a as see the we it's doing One the don't is pre-leasing, just things. pre-selling of market, where couple

that online deals, people going they but to can that their and people that's that facility. plan go generally we tour facilities into see have know coming the facility, larger so to We the like taking infrastructure the facilities are

quick So in let portion MRC an to then includes of MRC talk to the Cross I as cross will see continued revenue in amount revenue that's picked acquisition. connectivity, quick an per we cabinet we overall. a in of that another increase using. Gabe? do a part to of that from have pervasive customers seen per notes. one. but Gabe connects plus cross connects And XXXX and connects. increase are as connectivity a in that our increase also We've course, that up On increase We density. And come foundry that density answer increases which cabinet portion of data have with of the have the

Gabe Nacht

Yes.

years, last over just per and the on now from XX gone to As far as about several the trend we've revenue cabinet per over $XXXX cabinet XX.

majority risk yield come and and is But trend it the utilization. density the the telecom cabinets it seeing for you connectivity but it. see despite But, others. density and repricing from So industry increases that additional more primarily is does of we network expanding certain is see expands increasing our driving density additional with than customers, in rapidly really what from we're also both from increases the and

Eric Luebchow

you. Thank Great.

Operator

Barclays. ahead. will go Tim question Please next Long from come Our with

Tim Long

and Thank could. bit Switch second, going? can a the with you seeing mentioned the a maybe you're talk developments of across selling little new then think I kind Could talk you how you. as the for FedEx bit and primes deal talk lately some if could broadly update you that's questions, how edge One, Two the kind little give you on about more us other bit I And little prime. customers a cross Thank you. interest from about, Texas for about just well? four of an

Thomas Morton

Perfect.

edge edge. So revenue is to continue towards but edge, edge for development any the huge in not as we contributor We to forecast for is it the something Remember, but work revenue. to strategic XXXX of a have us, don't facilities.

be this going to year. it's So financial a contributor not in fiscal

selling. customers proper in Switch that the megawatts to have we in express cross available sell. and yes, existing And interest XX% that that are wanting XX% cross in Atlanta, logos Texas, new customers see have people to Atlanta fact interested seen expanded Remember power is us that in that are to Texas it customers existing Texas shows about of As of we are in into continue other customers the the that and that location. the are the of

the is as very of ecosystem. selling So something prime Gabe? see valuable we cross attributes a that

Gabe Nacht

Vegas renewals contracts incremental the of Reno, and multi quarter some involve signed that last moving Yes. were from Vegas we to increases this expansions Las that additionally And example. campus for with Las actually

the the to locations So happy customer very base see with and is way having of continue expanding. the benefit are we that multiple

Tim Long

thank Okay, guys. you

Speaker

you. Thank

Operator

question our next go ahead. Brett And Feldman will Sachs. with Please come from Goldman

Brett Feldman

facility the have you the just the in of for and the would past, in anticipated else bringing proprietary M&A back because lot In would the it mainly maybe you build, sort really that taking question not have of that the the that to past the a also, investors deals, market. facility anything think Thanks is you strategy. pursuing but of are Yes. be I standard unlike

you And so assets buy the own. currently assets obviously that just look like you can't

of with all you. at anything you the deal flexibility the first acquire as out from can time your your to on such obviously XXX% do better terms own topic it Thank stress you showed to global So some just have M&A experience having second you incredibly have infrastructure if to the a opportunity over the with get just field you unique a you we up for fold more a you're would a portfolio have identity, in to be that business of need had in and Has you're any deliver I campuses that lot willing much So else's Because for chain supply handle customers of have build? chain chains. that looking different and need angst to your customers you seem interested when standpoint, because what elements need question comfortable brand guess issues. in like heard in doing. someone And expansive assets one an you do that's your to into that might uptime? question is get comfortable can to with it build aligns what the or portfolio supply their at some around supply the the to then to brand is your identity

Thomas Morton

right. All

there. So you. Brett. in a lot Thank

First all, of M&A absolutely right. you're

data but storms the and not asset. in Texas Houston. in We it's the were data was interested the a when in it's we best a both run found and Austin data very until stay not we asset asset Switch foundry region that well very The it's had solid good ice level now acquiring. have also And were It's pleasantly uninterrupted foundry in a managed center. we in pleased very up and an to asset, a

X.X least catalyst So colors. Our of way primes expansion that as prime was They is a as as asset wonderful they service. that for foundry passed that transaction was a to for large to have square at data data unplanned a stellar foundry is also catalyst the $XXX million it fifth our as use with prime. The be flying for tend But test the reputation at feet. to the idea growth the and rapid million

As transaction very and team. the very amount is quality has good robust their also have was the It They team we stable very as more that as contracts. Their in XX customers for that facilities or team years. interested region. that a enduring, long successful as a are of high what with been long, equally them has also as been in were

the the the asset, contracts with to it's compelling team, us consider. for made very model the location So a together and

and first that a a But asset the of as any lot we is sort in deferrals we've that on our that their ticked slowdown have chains, With a different your on supply us. in of customers that from deployments took one. supply respect There time chain requesting we result so to done for regarding the a any of unique boxes this question not terms future. management. of And seen more was was possibility doing us of

customers up or All is reprieve to expectations. Nobody lived requested from that. any take of their pay have our

As we of to ourselves to to our that we continue is with able our suppliers. the to obtain strong and to steel difficult the very front a our own construction relationships And been and unabated. have construction get we need steel obtain. have But line little the concrete

Brett Feldman

Thank you.

Operator

ahead. with come Please James. next question our go will from Frank And Louthan Raymond

Unidentified Analyst

Hey, guys, and this for is Frank. Rob

related stay of conversations you going that less behind us should more are remarks COVID you are to savings year, they delays cost to savings the prepared your remainder a the referred we G&A some permanently? with ballpark guys? secondly going that percentage calls, of are give sense. the mostly here cost expect that permitting during your the in And you've then forward? comp last could a favorably mentioned of you be Or of factor you now for the you. estimate the those still couple on Thank So related Can to are us which COVID makes

Gabe Nacht

Yes. I'll in savings. the jump on

from if in for we to in we're XXXX First XX%, guiding to talked And look about guidance, you EBITDA increased XXXX. quarter, at under XXXX about XXXX. as our in our XX.X% margins just margins XX% last

cost improvement, We the means expect that make back be XXX half course we and that in were of of do operating So QX to the those about XXX will permanent. of still XXXX some in there SG&A basis the expect additional point we year pre-COVID. that

So the SG&A comparison is quite favorable in QX.

in get those as doing because events shut a will shut comparisons bit year of the XXXX. favorable we weren't we contributions, So less down. And not traveling, we're QX move we throughout the because charitable down

XXX to And that's a majority the pickup year do those So why comparisons of we making expect the there point were of the But we we year. number just basis see that savings we And permanent. set play things last that permanent. out XXX make the the of we'll about experienced throughout guidance stopped. did, that

Unidentified Analyst

the COVID Great, on then delays? permitting and related

Thomas Morton

that's the all the part a COVID reason three relating delays, building out the permits issued that that so of gone development construction. through digital what we of and and put four the see visible to primes been we And been we've from permitting view. of of investors up again, that track we've of the pictures have So that's current the continue we need have, underway can the progress we that point

Unidentified Analyst

guys. Great, thank you

Thomas Morton

Thank you.

Operator

is a go Cowen. Please Colby ahead. follow with The Synesael next up question from

Colby Synesael

in fitting Great. Thanks for me again.

Are guess You that capital boosting stake mentioned actually it understand curious in as you SUPERNAP into how your to going are relates to get going million Thank a you ended be that Thailand, in to end XX% actually for is revenue to Italia up soon then up that what's gain. AFFO? show And how recognizing as it rolled a up $X happening $X trying and guess, took to you I in recognize your include of the Is that EBITDA? and Just revenue your EBITDA you said much million your than you. it going correct actually then there? to I'm gain? going I you I as XX% that that? Thailand think it's you selling getting, total on of is different sense

Gabe Nacht

venture International in work Yes. international a Colby stake we SUPERNAP in did we held Italy, in Italia. and a our with SUPERNAP which joint had stake was International SUPERNAP

as Italia International basically was got sold, a then in held International. there that upstream an SUPERNAP And SUPERNAP So Thailand. gain interest float also SUPERNAP to

gain. We additional So the SUPERNAP we interest the in we accounting. and that method their any Italia essentially recognize SUPERNAP for in financials exchanged consolidate some of of interest our Thailand equity But use don't on books.

other But International, one of the I exists. as ago that to company joined the to continue we was years before before aspects important accounting it will method We use SUPERNAP I equity first transaction when set Thailand the this SUPERNAP company. for up joined was right

overseas. international ago, years So have it license gave partner six, been our an we to must seven exclusive

in for Saudi that the international IP, that's us all of took and what part and recognize our our fee. to that As sale, technology million of Arabia we back license our license $X.X IP allowed all license then of

increased bit more have license we back, which do of the use method flexibility equity a stake. that that will have have as we now for Thailand internationally to and going what we're stake to continue our in we So accounting an to will

Colby Synesael

Thank you.

Operator

today's like and lines today's conclude a will you day. our this this your time, and call. concluding may thank disconnect presentation. answer And you at And great We'd to for session question have also attending

Thomas Morton

you Thank all.

Gabe Nacht

Thank you.

Switch (SWCH) 11 May 212021 Q1 Earnings call transcript