SWCH - Earnings call transcript Q2 2021

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Operator

Good afternoon, ladies and gentleman, thank you for attending the Switch Inc.s' Second Quarter 2021 Earnings Conference Call. [Operator Instructions] I will now pass the call over to your host, Matthew Heinz with Switch.

You may proceed.

Matthew Heinz

Thank you, operator. Good afternoon and welcome to Switch Inc.'s second quarter 2021 earnings conference call.

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

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

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

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

Thomas Morton

Matt, execute initiatives you, driven exceptional today Thank earnings strong you XXXX quarter pleased afternoon, and strategic our continue Switch everyone. opportunities, us is second our we to as report call. yet for quarter, to and for another demand. sales on growth joining good by Thank customer

excited quarter. also value initiatives reviewing the of that several are to We shareholder after announce details I will the describe

continued business campus improved results financial Prime XXXX and detailed on deck Slide momentum QX reflect our efficiency Our of of across X operating locations. our all investor

million, year-over-year. XX% increasing Second was $XXX.X quarter revenue

also representing including Foundry. XX% a the Data $XX representing Data adjusted $X.X our revenue million $XXX.X Switch from million year-ago remained X% a a million, million, second with compared a contribution of contribution quarter increase, growth, from to EBITDA strong year-over-year $X.X Foundry, Excluding revenue quarter. Profitability was

Switch's expansion. and basis year-over-year Foundry, XX.X%, million year-over-year second points of margin a margin of $XX.X a EBITDA XXX quarter growth reflects Data adjusted of Excluding XX% representing

and our are revenue our the internal on EBITDA incorporating adjusted Gabe contribution we discuss outlook. outperformance guidance and also financial result expected a in the greater increasing forecast our XXXX compared call. to in today's Foundry, As later detail our of changes will to Data from

teams sales $XX $XX of bookings, Slide as revenue XX detailed and million value recurring incremental second solid contract signing delivered quarter total once million, deck. investor of Our again of in our

XX% For the $XX increased million first half increased annualized total to bookings year-over-year contract and XXXX, incremental $XXX million. revenue of our XX% value to

backlog these million contract and demonstrates set contract million, million total previous involved this and rose of In largest campus Half deployments. were signed new total strategic footprint increasing to our quarter sales $XX initial XX December the than placed addition, inherent the orders by XXXX greater with in Two more just eclipsing last than transactions customers by value revenue of believe expansion million levels. new exceeding years. in customer by multi-campus $XX $X transactions in of recent of We Switch's recurring to $XX value. record value a QX record of compared Prime force our

deployments and campus to purchase and megawatts activity provide second land continue our in demand, of commenced X of build-out upon facilities. metrics multi-campus the I Switch acquired assets Round we The strategically power XXX more that locations key the Austin for with will center which This accelerate in new construction City Houston, Data the Texas the key The has located million Foundry, beginning X architected Rock, Prime location for received the customer trend Foundry, the data be center to acquire Combined Data data expect of its fifth We existing Dell Switch encompassing Including has ready to agreement Dell July, Dell's data across Austin headquarters have notable of Rock completion. will than a Campus construction. In within quarter as be from been discuss from operation property space was Council Rock, repurpose work step preliminary site Round and Houston underground Switch in Rock officially areas. a the assets Leveraging Austin customer headquarters. and the square megawatt Technologies with the of metropolitan ecosystem campus, required the now this approval positive to deployments feet Switch's of named launched will In parcels Prime pre-existing on our XXXX. towards of announced zoning for hall June, we and some QX Texas. grow locations. to

specialty X.X ATLANTA just technology deployments customer's initial transaction Additionally, megawatt firm annualized Rock including revenue closed Campus more Campus a our ecosystem. $X The revenue. months The bring in deployments deployment Campus, The committed and $X materials glass in Keep XX both revenue of an Core contract used Switch value. colocation Core XX% data annualized $X.X total million approximately opening. quarter if hyperconverged Keep The In customer Platinum XXXX. upsize of producer commencing $XX be at solutions, logos, $X global signed on We existing utilization firm and Campus order initial An Fortune of of to with in Campus. initial in services telecommunication Switch Switch infrastructure in value. construction over first accelerate than million recurring with in executed over a accounting global semiconductor Fortune for recurring a and X specializing million and approximately X totaling XXXX, multinational We customer's and center added approximately locations, resulting our value. with million multi-year applications. second On The in contract we an $X.X of This ramp annualized total value in anticipate The ceramics a their and with to Keep Citadel million of industrial Campus facility an The million incremental new XXX for the total million Campus, additional logistics Campus in basis, and will to XX combined the order in contract scientific The for of in Core QX agreed and will and within a Tier Keep represents incremental committed XXX Campus the deployments in $XX existing in expansion totaling order contract

revenue annualized value. committed XX by Our million these contract run represented signings recurring in total their largest spend $XX of renewal million $X.X collectively QX customers increased And rate of XX%. and

project Now, turning milestones pipeline. to our robust and construction

of X million Slide center investor than that square our seen future or on of a of is data deck, for feet can be As X total in capacity development. progress Switch either has more planned

our quarter, During into anchor the placing we and X XXX X cabinets facility customer, ATLANTA in the second to XX service. megawatts delivered Sector

We from power into a power additional two been we end, in Citadel Campus, also delivered service clients. by The sector XX-megawatt customers. has demand Subsequent quarter to placed to accommodate at system fully The committed strategic incremental Campus one which Citadel

prioritize gross power to and continue data at in new Campus, to full the million The The and XXX Citadel three feet totaling construction acceleration of X.X up megawatts Campus, Campus, of square of We centers Keep build-out. Core The

table Upon ranging Campus, from we Keep will future we of our spend XXXX, on in much complete on expect milestones we and maximize to QX also provide Campus, incremental underground expect in in these the in XXXX, customer of preparation thus more spanning and that efficiency XXXX. ATLANTA cost X.X than XX demand. accelerate currently square capacity, and XXX Rock dates will in our XX delivery through feet Campus real-time TAHOE of RENO completion VEGAS XXXX and completion, five XXXX construction approximately QX the In centers five are in work completing facilities and these closer additional the site Core majority Campus, order on anticipated evaluation Citadel incur X investor facilities, of of LAS their QX Slide in-service megawatts the to illustrated and million of planned accordance locations. our As with of development data Keep our power. dates, to presentation, of X mind have capital utilities

Investor directive our advantages geographic and provides invest REIT ongoing its strategic Board's leveraging are last technology long-term of footprint Switch challenges and a a accelerates efforts the have value on shareholder initiatives construction new Switch to in our of announced provide growth. a also Switch's value afternoon, initiatives depicting target profile This industry-leading today. REIT The discuss and real-time financial the prospective Primes. introduced updated update, making excited financial quarter, to solutions. in website our committee development that we As photographs to several across to flexibility the the necessary includes creation our of the build expansion Relations our we library is progress mandate These in evaluating election. The that inherent Committee

we when that with and change preserve and a its can we months in the tax evaluation became of As convert you if anticipate and that in several in previously the no take shareholders. there community, to flexibility a Switch's to have company many discussed the REIT period investment status. to structure result be We to advantageous complete evaluation filing will the will this assurance structure

November will addition, Investor In Day Las Conference REITworld announce coinciding host with that pleased an X, Switch in to NAREIT on the am I Vegas. XXXX,

of I for CEO, our key of Rob will and and Gabe, Founder strategy and company. vision and team, will other the his present members Our elements operations. Roy, strategy our present

Vegas providing unable in multi-year financial sharing weeks updates webcast to to and save guide to over our guidelines, the targets from headquarters, look in years. the plan live event regarding Las we investors further attend. addition, including evolution information. those COVID-XX Pending intend date for help the In live details on We the change next any logistical we our through forward a to coming several hold

in excited that believe and a become value also vote public large in long-term largest am We for to their shareholders. the Investment I strategy Elliott of Finally, share our Switch. Management confidence generate investor investment ability to has is

will As shareholder announced today, Elliott also value part a the initiatives Committee. representative join join of Board our and REIT will our of

Elliott I our on are Gabe turn our call will financial Gabe? over results. now team. the We to enthusiastic to to discuss have

Gabe Nacht

to our I'm review XX.X% the reported the XXXX our of presentation, to our XXXX. results compared of the Slide financial discuss of an or quarter X investor quarter revenue XXXX. $XX.X second quarter second Thanks $XXX.X remainder Switch for of of total for going Starting million, XXXX of Thomas. increase and outlook million second Today, with

Excluding Data million to an compared post increase $X.X $XX.X totaled Switch the quarter or second revenue million, XX-day Foundry deal second million quarter closing, the $XXX.X revenue of of period X% for year-over-year Staying of to of XXXX. totaled XX.X% XX.X%. reflecting margin million on adjusted EBITDA a $XX of of compared and XXXX, XXXX $XX.X in million for QX growth Slide X, QX

million, million, EBITDA $X.X adjusted XX.X% XX.X%. was Data EBITDA of of of Switch Excluding and margin adjusted contribution growth Foundry's a $XX.X year-over-year reflecting

to compared million in related in income interest expenses. in million income was $X.X Second acquisition increase net quarter $X.X million of a million was net attributable net The of expense reduction income primarily and QX to XXXX. $XX.X $X.X

on in Slide to quarter. X, was XXXX, X.X% QX unchanged customer the Lastly year-ago churn compared

portfolio had cabinet equivalents, approximately June excluding now exascale quarter. our total bringing additions X, billed Foundry Looking entire cabinets on cabinet XX,XXX billing to for net to reflecting at as Data Switch XX,XXX had over Data XXX company. XX, approximately the organic growing XXXX, assets, compared equivalents, prior billing of Foundry the Slide cabinet X,XXX

equivalents for within of our Switch capacity basis, XX% cabinet QX Staying On including monthly XXXX, of over a open consistent legacy as equivalents of XX%. the Excluding under a prior of cabinet had four cabinet in Foundry, Data in were Switch per X, average the capacity consolidated approximately XX, we over to recurring quarter. rate Slide with contracts which year-ago with XX,XXX sector Data Foundry, revenue $X,XXX sectors, the of June primes was XX,XXX quarter. on had committed utilization XX% committed open XXXX, compared

bookings to turning Slide on Now, XX.

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

in include Data of bookings Foundry. quarter million revenue Second contract value total $XXX,XXX annualized from $X.X and over

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

quarter. colocation second the for XXXX looking Slide attribution Now, million, $XXX.X XX, of XX.X% compared at to year-ago total was $XXX.X up the revenue the million revenue on quarter in

million quarter. the $X.X revenue colocation colocation revenue Data to grew from $XXX to compared Excluding Switch Foundry, million year-ago in X.X%

$XX.X connectivity Switch million, $XX.X connectivity year-over-year. of increasing the up sequentially $XXX,XXX X% connectivity million. Data Foundry's revenue Data total made Excluding remaining of revenue revenue and XX.X% Foundry, was

year-ago compared Finally, to XXXX Data quarter for quarter last $X.X $XX.X in services, $XXX,XXX million revenue other of of capital of XX capital for of which refer includes excluding second a million in purchases, of compared quarter accounted our for revenue second $XX.X the QX campus. breakdown $X.X Please professional by revenue, X.X% or CapEx, was in the same XXXX, the detailed Foundry. contribution a million including for the year. XXXX X.X% million Growth $X.X expenditures of Maintenance Slide million to land to from were quarter. and expenditures

Data XXXX, cross-connects XX, Excluding in revenue. billing reflecting X,XXX as Foundry, growth QX had of Switch of cross-connect accounted more for and than cross-connects in total year-over-year revenue X.X% XX% June

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

amortization depreciation, by higher adjusted X%, XXXX by QX driven of equity-based increased and Excluding power compensation, our primarily costs. revenue cost

fees. the was quarter. professional attributable Foundry in expenses primarily $XX.X to SG&A from $XX.X quarter acquisition related and in in to Second purchase SG&A XX% the year-ago million higher million were increase million, $X.X up Data This year-over-year costs

in in $XX.X million increase year-over-year AFFO to quarter. cost compared related QX of income XXXX, increase of QX protocols operations business non-recurring decreased costs, as senior in driven The debt $XX.X to Adjusted acquisition in normalcy. second our to driven expense X% reduction diluted by balances SG&A to to $XX.X back We funds expect largely compared SG&A in from get to issuance year-over-year $X.XX expenses. XX% unsecured an was million less $X.X $XX.X notes. in XXXX. operating to primarily depreciation year-over-year was increased per will the billion XXXX. $X.X to and Interest operations of or in million million half was XXXX modest $X.XX QX attributable $XX.X in be by allow QX XXXX, income the favorable the comparisons higher million COVID the $X.X from to by share million related XXXX, million year-ago AFFO compared QX in

cash the million the outstanding, Looking quarter by was XXXX, issuance resulting X.X EBITDA in in on $X.XX $XXX the as balance of company's equivalents, sheet increase net June senior to XX, total last of in driven Page a annualized quarter. was notes debt The times. second XX, adjusted of now and at debt unsecured leverage billion, of cash ratio our net

XX, Switch equivalents our and June on cash of and of million, borrowings liquidity XXXX, had cash available including $XXX.X As revolver.

$XX of the can our up recurring June million a be last prior record XX As seen on at investor set our XX, at record presentation, backlog quarter. revenue from Page stood XXXX, million, $XX.X of

the in $XX.X beyond. of XXXX We expect million our backlog to XXXX, in XXXX of contribute with approximately million and contributing $XX.X for incremental $XX.X million revenue remainder and

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

the total public our As disclosed of members redeemed equivalent an shares. represents Class million our filings, an issuance in member of Including resulting XXXX, recent July common A of number units, outstanding. redemptions in common XX.X% X.X X-K of million, Class float during second now of X.X quarter A shares

XX Page our XXXX Now, guidance presentation. for turning on to of investor

expected contribution second allow both basis half Switch's Guidance first Switch, Foundry, growth Foundry. Data investors and the include again XXXX. track than stronger expected to increasing our organic are from and throughout results, presented with adjusted is Data reflect consolidated outlook, half CapEx We on once a guidance revenue, EBITDA, to excluding and to to increased

This including range $XXX Foundry million Data revenue million to midpoint. the the million of Excluding million Data in revenue $XX.X XXXX an compared $XXX reflecting represents XX% XX.X% organic in midpoint. range the of adjusted of consolidated of $XX compared at $XX guidance an our including midpoint. X% million, $XX.X a growth $XXX of Foundry, Foundry, Data million. increase reflecting in to to an and adjusted margin a million, increase million X% increase million excluding a $XX from to million to million, to Foundry, EBITDA, $XXX.X of adjusted Switch to EBITDA midpoint. $XX.X Consolidated EBITDA Consolidated $XXX.X the of to midpoint. XX.X% revenue $XXX to guidance prior or million million represents Switch at prior of adjusted This $XXX compared range our at year-over-year million, or reflecting the Data $XXX XX% margin the EBITDA

$XXX Lastly, $XXX been Data including Austin shell to land our to for expenditures, $XX pre-existing the has million development acquisitions, Foundry's at $XX to excluding million, guidance increased of million range for capital million campus.

Switch demand the Prime our to The for customer closing spurred million $XX expenditures increase reflects Data Rock initial Excluding across existing locations, preparation will Austin. in an development and Thomas capital back site Campus in Foundry, I by acceleration now, the remarks. some turn it And for to

Thomas Morton

transformation Switch rapid that as continue believe firmly We the they Gabe. digital for enterprises, positioned their multi-cloud to you, Thank favorably migration hybrid among architectures. is

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

Operator

Badri the The of first with Suisse. Credit question Instructions] is from Sami [Operator line

You proceed. may

George Engroff

Sami. over quarters, customers This And is on commitments. today then pace. a their that taking up contractual installation you actually that referenced the George Yes weren't last couple noted customer in space press over Engroff there release for and quote of guys generally the was above

beneficial? color like point you could you if that some provide - if could guess, be on I So that very would

Thomas Morton

additional services into deploy seen space. deployment then What orders have as sign then willing George take that for and that for happens what they up previous accelerate sign very at they to that that call. space have our go. a will ramp they we state thanks for commitment customers Sure, their and minimum will the are for how traditionally much In is that they is joining they service usually the calls, they that inevitably

minimum the pull this to in guidance, of deployments, second seen have necessarily Gabe part anything maintain ramps not accelerate. half is into add accelerations the that we've increase the requested that's COVID that? times, What back our customers their XXXX, half their in of we the to revenue During and year is but saw reason people forward for helping of of and

Gabe Nacht

raised George, and of we And why did that's revenue compounding this that again we - customer which seeing quarter. model, We're benefit Yes, monthly you're quarter. our recurring because seeing the second that is of we're mention this actually the quarter that a of ramps, guidance. In acceleration in why the get first we saw is some of Gabe. increase call, us year, more we guidance course, throughout our

George Engroff

Great. guess, And follow-up. a quick just I

So that getting - into you say or better even that's continuing XQ?

Gabe Nacht

I - our would I guidance. continuing incorporated say Well, say and it's it's into

deploy we little course, as world we is staffs bit, to and is able optimistic a know. shutting deploy, customers Of are running. equipment will our the in be The change back to up and to that world do down QX their up contracts opened and their send continue all subject get now here their to but

George Engroff

you've can the Great. And to of to-date Campus rest then, and with the speak the campuses? you with The cross-selling Rock seen demand

Thomas Morton

numbers is of there customers terms Sure, we some numbers cross-selling to fact and more the that as multi-homing. and some script talked all in more actually provide it’s Gabe in regarding my

Las been The Campus brought have Rock have people the The actually prospects We sales for Rock and in selling into and Atlanta. Vegas up

the deployed? is cross-selling cross percentage there that teams, customer’s by people multi-homing. Gabe, do as of you have well as the So

Gabe Nacht

June we Foundry possession on of that X. Data given Actually, took

yet. selling locations, We are those closed report we're but to not cross contracts actively ready

Operator

line is from Ari BMO question Markets. Capital of the with Klein next The

may You proceed.

Ari Klein

It's today. to Can curious the for an many that update do Analyst before, status little - hit then, now? look by just bit REIT the probably at in you about you'll times you've will so us And asked you the think have a of about you decision talk more November? input Day been what's obviously kind

Thomas Morton

in Well, and changes we REIT been regarding Ari at you're the in have formal This codes. on Board the tax asked an and foresee has There thank a right. the been it. the other has to codes you, some and take - potential tax ongoing discussion of changes us the look

and we've preserve And a our a REIT we we it do our having a stakeholders, to to become to tax-paying said and as IPO. advantageous entity. to grow, ability continue that We able [indiscernible] company always that REIT so, made if if Then signed, we will election. becomes would or be at

I the this and company an to our REIT have that decision, don't Investor involved we decision is an for November definitive incredibly we’ll as of have update know As reevaluation a will the on accounting-driven status Day, metric X, make. the and during meeting. to

on promise update an meeting, have the at will decision a we time. but so, that X November And cannot

Ari Klein

already pretty the XX% - committed near term? capacity to then leasing, you for, quarter, development Foundry. can do I the your you you How And is much I another way to said standpoint? spoken restricted it term, online, kind lease the a feel but Data the like on any near of healthy the come year within you of going in in talk in to from in excluding and are seems the guess next think has leasing

Thomas Morton

we of sell half back to want and XXXX open which first XXXX. into end able the into we are cabinets and of to have be in Vegas customers we XXXX. No, we going the ramps in then have from And half of sell are to larger that deploying Las still the XX, will that first

Gabe Nacht

that say committed space our the demand. but construction deck would continuing clearly We and have I investor customer we're photos. building. And we're in and I to utilized go jump everybody look see to good to lot Yes, at encourage of space, would a and

the you'll early TI the XXXX, the that Vegas photos, million is up. roof construction And which square work our online is expansion is feet that at inside. standing, see part is part space. a XX% between If continuing have to look The coming the is of X.X existing Las of XXXX XX on, building we early you and is

when is they planning deploying to really space, walls the going open particularly, customers and feel So when on pre-leasing and begin confident see is up. much in that once into can building more engage When the that we're the already beginning building space. that up. the are They knowing customers and to roof

So us. excellent advantage that's an for

aggressively, into space have. we're do selling we're we're so, existing selling And and we to finding ways fit the that and customers

Ari Klein

Okay, thanks for the color.

Thomas Morton

quick We Yes, not does final item an it. also Ari, constraint have XX% telecommunications, our of and other revenue note. obviously about here, - we that on inventory one is is just telecommunications also quick

that market into division has it selling base about opened we the is and acquisition grow, So that up is the and go up to Data with new Foundry picked XXX customers. continuing where

Operator

you, with Thank Mr. is Erik The line question next the Stifel. from Klein. of Rasmussen

may You proceed.

Erik Rasmussen

and congrats and on longer Yes, strategic you review - the the a the be returning strong year. and currently today? results thinking thanks, regards would you low above my targets Maybe financial sort to what announcement double-digit are of in tracking that then targeting growth this framework question for kind about term, where of so

Thomas Morton

want you to… Gabe,

Gabe Nacht

of Well, are not Erik, on discuss that the - can specific in be we're our I sure metrics these in I'm we'll what of to Analyst I'll ready that. talking types types think metrics, long-term ought But believe this normal talk about We'll the jump profile Gabe. normal be. hear is you that discussed but events. the we leverage to to expect on Day. about

pipeline by Of targets. course, potential our undergoing. We'll targets several we margin review about the that years our that and and will over see we're strategic the next where be growth talk influenced development

Erik Rasmussen

with the outlook in XXXX there, as as seems But tracking the Data for business contribution we'll for the follow-up gave then Great, in line business is and okay what it they to Foundry maybe question relates like then, numbers the that. wait year. last did it you my

at year-over-year the of drive of half look sort this what opportunity accelerate year, any assets would is that? you basis, second sort and As of sort those growth to on of from a there

Thomas Morton

that the and available in If sell the is actively revenue incremental that great that then over is increase and assets. some will Foundry Data year, with little - a second respect sell this of it's space to get existing facilities, the XXXX three Yes, inside space the for data installation we question. a there working There - half to the we space. are that with incremental center megawatts can are

are actively goal. deals to working that We accomplish on closing

Operator

question Thank you, Cowen. line Mr. is next Rasmussen. the Colby with The Synesael of from

You may proceed.

Colby Synesael

company have they they're just a potentially then there in looking the I getting stock? I Switch is changes. I'm Thank focusing, maybe can't and up it Is And on for expanding things or It is what explain over thing, I'm you there I secondly, just without as too? there market internationally? an just known Elliott, the the to guys year potentially focus a to to terms there really the what offering the you are it reflection table sizes. could are why of they're just being are the you. transitioning selling you with is starting there investor. in can that wondering you're something on activist bigger if Are - to looking and behind Just curious guess, well? color therefore of a on other guys of first debated, do. mean, as deal seeing the are that that function imagine impetus more make type potentially seems more you really like they're some bit talk provide or it's any where they're perhaps a the deal is just you anything so. that sizes last to point Is that. now

Thomas Morton

No, it's great.

with. to tone work and been tenor, Elliott productive very, on they very have First,

customers them. We value we the and have there. that have that and the we the approach stock to way relationship They've enjoyed with market market look the at we added already

Elliott. a productive had and we with have positive relationship so, And very

believe, the a for a time, - very As the REIT that, conversion analysis consideration and at supportive and long and potential have I IPO. talked of of is Elliott, a about the we very least, actually REIT since

of analysis. analysis that they the But be of had review we engaged and the already So thorough appropriate Board conduct conversion been would to stakeholders. of a and been benefit have when are that asked by for whether that supportive in all

Your question regarding deal sizes is a great one.

we As and those customers. and company, deployments we attract increasingly larger customers larger from a sized as larger grow

energy data legacy and many that into advantage a of the enterprise their migrate offer centers data have helping data available and data advantage resilient time, legacy that long in scale, very For and them. not customers environment. centers rather at one received taking their into have that those of and advantage economies the that if enterprise also least they decommissioning more message advantage than as telecom a of to is garner existing And and well taking cooperative corporate green and move on take is structure, to more of taking more center are to customers our the out ageing metrics their a we're centers that we ARC resilient, focused of colocation of corporate started able

the are and by we that and bearing roll was as are we're started it to deployments is initiative. deals It indicative that beginning these of - are see So fruit Roy we're we larger pleased it that seeing in Rob holding

Colby Synesael

I So just one. one last

the component, to As the Elliott relates it being company of sale considered? is

Thomas Morton

Not at this time.

Gabe Nacht

things this Elliott's is involvement, why A Colby, of in couple on they stock. Gabe. are the

undervalued, for are time we I a trading stock think the top they quite that discount that. of believe with the despite at industry. and at showing agree frankly, been We've some our is numbers end

between million of data put X.X being space less of X.X any believe more another and million then coming in feet center have ground that. We with - square the coming the part into other and behind online than we service than and out company, early XXXX, now

deal space expected. has have filling that The space more we size. driving them we deal that colocation buildings the driven think available and and having fact come industry also that's than we're we the up faster is more size, I online, needing have

great that's So a thing.

the impetus the is initial analysis, on Your question behind they no. REIT where answer the

doing supportive remind was clearly a particularly of trade is of part us the why that. that the discount. analysis, I reason But cash we're not Board at we that if at are that a Our moment. they the behind really impetus everybody will taxpayer

with do to very We there street. So to it tax are and now, have are work you aggressive certain and number CapEx being have years, REIT engagements with, a There right by growth, next becoming able REIT, very very get as Elliott's is those have happy on into to working back over that of advantage our we not no couple we that plans a with to a know. happy deploy adjust the we and But are think and reputation involved I they put of to are their productively capital management. involvement. guys are we we be working They But hard of they very believe them. been that reputation. the one also a

Operator

Thank question of Barclays. you, line with The the from Brendan Synesael. is Mr. Lynch next

proceed. may You

Brendan Lynch

Maybe REIT for thanks a status. Great, question. on my taking just follow-up the

the in REIT don't not If what this cash near do of a be one to you now as you're a benefits converting to future, taxpayer see at and the anticipate point?

Gabe Nacht

number know of and all, that's there to look of is into our whether it that back, is make goal us is you want point. point, even say and the holding this not Switch. our first group exception at, we and maximize the is are Well, something or to taxpayer, timing of that value a at some we at are in a evaluating REIT with invest ultimately, REIT, cash something And all looking if we when a REIT that peers peer that boxed at funds we not because are sense status stakeholder we're do though will

that's if we want our valuation, a to on look So that's something that drag obviously creating at.

Right diminish able XXXX. a because depreciation, bonus of rules cognizant tax to of XXXX but drop we're after begin off REIT, the and take are depreciation then also by now, We bonus we're advantage where those rules not are. to

will think we our for tax where our to stakeholders. we and going at future think position is be looking beneficial most we're So be what

Brendan Lynch

Okay, that's helpful.

related ability that on else all what impact it's to a to have invest a REIT over your fairly equal, changing XX that's R&D But might say, would the somewhat that, difficult change things. past to in number to your status years? platform of been And robust

Gabe Nacht

That's thing… one the of

Thomas Morton

question. great a It's

Gabe Nacht

what looking it do we numbers numbers required will a We're we're to make those we the of see running all income to of long-range be now our are REIT, distributions pre-tax as at to strategy. - would and our running

to shareholder that strategy executing most plan. long-range to are value, Our and our we CapEx make enhance goal structured way is appropriate sure while the

Operator

question Thank Frank line James. Lynch. you, Mr. is Raymond Louthan from with the The of next

proceed. may You

Frank Louthan

Great, thank you.

the REIT so REITs is it So you have announcing happen January X the of this at might to that December conversions safe know is but - do, you're say on I what not fiscal on is a sort status, year on conversion it since X, a be to the always January earliest?

Thomas Morton

a There that considerations And this going find a Frank, is for the Doing other January on. year to important it's and going go depreciation stiff and conversion. the also If timing. sure make generally and would it that that time, shareholder make needs - value, place, with to a do be we goes that bit and question great detailed shareholder to it. drive a find analysis thing optimal announcement. a is it's X it's to us, to value X at the January a should very the recapture that to is location drive done. be have may we'll and be There but real the time

Frank Louthan

right, All great.

been You business adding as status Just in new there you What's of customers are out incremental Thanks. as any Texas business the some customers locations, far a in follow-up from the new the got with customers? getting Texas. acquisition? of some traction the the other

Gabe Nacht

in have customers customer our in from had we and we've a have existing facilities, up from about other our that Texas traction taking deploy had base deployment to the asset. started Yes,

cross-selling Data network. are actively we So this this integrating into new and into facility our Foundry

opportunity purchase to are and that introducing the We through customers Core services our and telecommunications to cooperative cross-selling our our cooperative. also on telecommunication those

Operator

Petersen question next Jon The Jefferies. with the Louthan. Mr. is from you, of Thank line

proceed. may You

Jon Petersen

captured the you tell much down Can this customers from space, how bucket? the churn revenue in in off but not us quarter came

Gabe Nacht

bit a there. I'm sorry you little up Can repeat? broke you

Jon Petersen

better, came - customers like How on? sorry, much how any from answer that revenue have much revenue you off came off - okay I move from to

Thomas Morton

ahead, Gabe. Go

Gabe Nacht

have circuits, in that adding This years was - is power, do that adjusting of for their cabinets. business think circuits, I that's adjusting because difficult to report, we've that about how had. question XX adding number the the moving are and part continues for us constantly and measure again, And last the adjusting Customers customers the much our to we revenue talked so. reduction a past. deployments, has constantly ongoing and been we an

reported at financials. what So we we've our in net the and that's increases look incremental

Thomas Morton

question? Next

Operator

Thank you, Peterson. Mr.

Thomas Morton

We may have lost Jon.

Operator

of The the next Luebchow line Eric question from with is Fargo. Wells

You may proceed.

Eric Luebchow

question. the taking for thanks Great,

beating keep you impact that mentioned decision. reconversion you other tax but that that foresaw in question, to maybe the code Sorry some changes Thomas, the in future could the

So foresee maybe us you what step-down walk outside of the decision? bonus the could impact depreciation might you that through

Thomas Morton

a prepared and just is then and want that other the to obviously there, Well, which Congress ahead then be tax us to be of depreciation and bonus an we - and I we changes those. have one, speaking in and is was for actually see Democratic step-down, opportunity there to code,

Eric Luebchow

pre-leases engage delivered? wait to open? kind those how more some likely as deals then to capacity of type till Okay, like soon to do one how that larger pre-lease? to constraints materially are inventory just of bring start words, of can the are typically it actually And what In got relates window supply see you. seeing, capacity you about, you early the versus that me some And in is you the customers, other from pre-leasing before start like more you talked you would with online, the others of

Thomas Morton

comes XX% simply existing well year, from of question, each our growth customers XX% XX% to Good expanding.

and marketing sold sector in near sales So our Las all by that you in And of of into existing with the we we center The space, customers. middle in likely that portion that close future. And space. then to actively hope into up some customers facility the are are first in Campus XX that is data when in customers the on Vegas. expand Core not the opens, XX, that new most say to considerable and the have time to then space,

Eric Luebchow

up have has for a necessarily, pre-leasing I pre-leasing, you're all? Got targets necessarily you wondering much you just when So more it the it do than open sector a but changed in that highlighting sometimes you pre-leasing at like don't you. didn't new bit historically, think if past? as But equation like seems maybe

Thomas Morton

one. Gabe take that

Gabe Nacht

is buildings never Las specific Vegas and up XX to the Yes them, we and still targets, Eric, because yes the build being pre-leasing we done. Vegas, don't. want building is we roof But is we've had work our on, standing, Las obviously, in fill

our will are good certainty. that XXX customers, be and in timeframe Vegas So expand know they the it customers on which where that Las delivered into we with the know currently that can building campus, have very

discussions. those in us helps that So

going next be we bringing still online. activity to we're the that and new seeing block that of Additionally, from customers space are large that's want know we space

of online many, have see a and we for that build where expand. many it go our have, specific has next and bring don't we really as fill we we we're cadence able the So target, as sector business sector years sector and never the to customers a bring it

here. a location. is because We're obviously Tahoe that cadence So newer we're a in Las Vegas of customers our there to seeing XXX cadence are same location, that Atlanta that is Reno

fewer already there. building customers committed XX% have as of as that we So need we can to there, we we have and fast build but

prospects. our about So, we're excited

Operator

Thank JPMorgan. Mr. with Richard the you, The of Luebchow. next question is Choe from line

proceed. may You

Richard Choe

is standalone wins more raised little faster, that to moving is how how wanted customers yet it to from and guidance what on get you coming can that in And backlog. a then bit higher is business left end much incremental the Switch, half to and a just lower what’s drive it's on then the of guidance color kind guidance? the much year might for or of you only go back little I there end now power since we in of

Gabe Nacht

is million Switch have fact of breakdown, around this on of of sort Hi, we that above you expansion moved Gabe I'll take that. and I'll bit or little faster. give that Richard, a customers of is that a the standalone $X due million to guidance in the It's now $X all have

that QX next and of revenue QX You're to months customers the in compounding as six monthly run recurring the generate effect both and ahead over of revenue. continue get seeing us we'll those

of We Additionally, those. the some talked in about deals. call we've half those the second Thomas in highlighted and of of the year. will large those be moving signed Many some

then talk. I'll mentioned coming increase So we're and going revenue the from to there power see you

a dynamic. has little because highlight an that that's important thing of think a bit to I different

power We year, course of power half million rates add go of customers about particularly Western our typical and states pass-through. a and here a, have pass-throughs back that in really some will $X come is that the will the that but have up, - seen not of margin in do the at

Richard Choe

services MRC - the it's company can that MRC with lower MRC Foundry then that And is the something be the it Data of the is to the assuming a can so done Great. going lower, in combined market. just be to lower. lower there campus Is additional increase that that or or just is

Thomas Morton

building are Rock, head. we Well at go The

Gabe Nacht

this Switch bit terms than in running to building design looking that's are enhance between are because that we its Foundry’s today typically and into hybrid a lower in they last and be what X their in I something think Tier to data Data sector a MRC we're It Switch of Austin. is puts centers. existing going that

the Rock of we in cabinet and to level been that a at think XXX and per customers per enhance so to handlers, building. And also the at We because be important super looking are cabinet. that other our over increase because that to design we telecom all tool actively can overall about same be building know all per get cabinet that revenue cooperative to that telecom T-Skip the our we've efficiencies on cooperative per same, participate of cabinet. of Campus the offer our going get we're cooperative. The customers incorporating Switch expect to our But same our Tier-X XX% air MRC we're we to facility network is to here be then our We're that an our going of it's engaging Foundry I in revenue strong markets, increase the do extremely solution. understand revenue Data we going and

Richard Choe

seems real you. hear, along incremental opportunity that a like Thank for to campus extension. with Great the revenue

Operator

Thank concludes That Choe. call. Mr. day. and a have you the conference you, Thank great

Gabe Nacht

Thank you, all.

Thomas Morton

Thank you.

Switch (SWCH) 6 Aug 212021 Q2 Earnings call transcript