CYXT - Earnings call transcript Q2 2022 | Cyxtera Technologies, Inc.

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Operator

Hello and welcome to today's Cyxtera Second Quarter 2022 Earnings Call. My name is Bailey, and I will be the operator for today's call. Later on, you will have the opportunity to ask a question. [Operator Instructions] I will now hand over to our host, Kwang Edeker, Senior Director of Finance. Please go ahead.

Kwang Edeker

Bailey. you, Thank welcome call. and second XXXX quarter Good to conference earnings morning our On materials refer Investor will today's we call, to site ir.cyxtera.com. Relations at available Web our on

CEO; by We here open up Q&A. After Nelson and for we'll Carlos lines Fonseca, prepared are remarks, Sagasta, today President joined the CFO. our and

and statements, to the like statements our Safe Slide regarding future earnings All forward-looking I Before you our today's that statements we in to on major discussion language and would results our begin, refer two those factors earnings including presentation, that Harbor of forward-looking subject uncertainties. of statements. to SEC could risk materials, risks a actual from are remind our today's to cause our filings for materials differ Please the contain forward-looking expectations.

when use In addition, we non-GAAP several our results. financial presenting measures

these reconciliations over the our included to financial have Nelson. turn to measures We I'll With call information. in that, the supplemental

Nelson Fonseca

for for Kwang. Good you, Thank us morning, quarter thank you earnings call. joining our and second

are in full we the momentum and with second for of the strong our solutions. pleased suite Cyxtera demand finished year infrastructure as solid results for delivered continued quarter to We first-half the of report

than anniversary company. less ago, addition, the a weeks one-year In celebrated of we two public becoming

and to team we for complex ability all their members thank milestones served execute Russell Cyxtera during I significant our as strong our As work approach is These that was and globe which are team's anniversary, plan across the XXXX for want yet point of period. Index, this the added to hard our another growth. Cyxtera, proof the to focus delivering

bookings basis leading and churn our over and down $XX best of which previous net over second strategy quarter, basis increase validates infrastructure Global quarter-over-quarter, X.X%, platform. points from history, The XX company's an year-over-year. XX% our delivering solutions focused Core Center further the on Data dropping represented bookings an quarter points to at with or XX $X.X came our million, of the in million core improvement in developing edge quarter

We year, key environment the our the is demand the pipeline of service a across expectations momentum a and are from pricing favorable the result other at enter with business. indicators in the we strong of provider of year This the ahead robust a second-half as sales of enterprise strong also of midpoint customers. and reflected opportunities and go-to-market

in occupancy pricing occupancy is center stable deployments to over XX% markets. we and drive with Our up footprint, key as our in now is per our coming continue revenue cabinet data increased most This is strategy. to a to component that existing customer growth stable

strategy All the strength provide metrics differentiated our the on consumer reinforce scale modern global of digital of cloud-like to enterprise. to meet to of colocation needs the these easy a

this from area. point and also produced in increased $X.X program. we've second from made XX% highlights quarter our positive channel continued a results The million the progress the the momentum in quarter channel of Annualized channel significant Our year-over-year, investments by the $X.X quarter to million. to bookings total the about bookings, or in

in Total $X.X negative by by by efforts a revenue million or strong increased $X.X or quarter-over-quarter. or core Our X.X% company. second million transaction-adjusted $X.X million successful the X.X% increased EBITDA sales for revenue or are year-over-year, in the year-over-year year-over-year, delivering X.X% performance increased X.X% by $X.X million quarter quarter, the decreased revenue but

successfully keep cost. quarter public so absorbed mind we Cyxtera's at in that have private company As XXXX quarter we EBITDA look was a significant as last performance, company, second

is the the macroeconomic While accelerate industry affecting in The our expected of impacts of the during increase the have during utilities to providers strength, remainder some show continue to the the we are costs year trends across the the experienced fundamentals we for business XXXX. of expect year. to experience do that second-half first-half from of

negatively cost recovery our been in data scheduled customers, be Although current XX% challenges. rates. increases cost will established if of pass XXXX, impact process XX-day in second-half is through XXXX The it increased XXXX has delay the and the in data center of have of over recovered therefore remains this the of a fiscal but impact center utilities there local The successfully be our costs supply completely lag in is cannot second-half continued for a performance. to to performance this FX delayed that XXXX process, Northern completed regulatory California And due still completion combination we chain at will second-half an approximate year. to

the Although we will that at our of low performance XXXX the EBITDA our items guidance. now in be full-year moment, impact can't believe EBITDA of exact these quantify the range fully we initial

our a to the modifying unchanged of by lowering continued million, momentum. result, As EBITDA are XXXX we midpoint to Revenue $XXX guidance to a representing million and CapEx go-to-market remain $XXX guidance due X.X%.

is timing nature. EBITDA strong base range by we lowering disappointing, challenges of in the recognize mostly the guidance the are and energized of these Although the that performance business, are

are confident Second-half to a committed in long-term XXXX. are Cyxtera, achieve attainment the at fiscal data us positions recovered XXXX to is deliver XXXX. full our impact revenue plus-XX% and our expected trajectory remain Northern long-term of EBITDA center and The that in that this recovered increases not in to be utilities to current costs California objectives. expected year are well We success

results. Carlos some detail Now, on on to for let pass additional me it the

Carlos Sagasta

driven the solid of joining The for Good success enterprise history. quarter customers a year-to-date our of this higher ever, of metrics you, We're XXXX the thank to year. churn. in as we as bookings, testament Moreover, pricing, Cyxtera. stable occupancy momentum net and financial and reflected the report will quarter for best morning, call. our growth this rates in our next trust are to second pipeline, the into by strategy and demand, for earnings revenue with remainder our in healthy go-to-market year, and Nelson. fundamentals and Thank strong closed operating confident financial and quarter and strong We're business a as pleased quarter remain you that our second low the our performance, everyone, us have another of record drive

Before headwinds wanted challenging that, moment the dialing take our into broader not we're impacting macroeconomic note to immune to our to a like sector our financials, I peers, and economy. the

or guidance persist. prudent these of I of FX Although outlook as of to impact supply we these extremely and this on we're energy our volatile have shortly. one in constraints and our able speak challenges to and remain prices impacts year each the chain first-half business unaffected, compensate will variable the for the been we're is underlying the that being of confident with the health

increase costs, easy-to-consume or increased expense. Lumen year-over-year less momentum X.X% X.X% to modern more digital to Going slide meet $XXX.X financials shown by to strong XX, XX.X%. continues our by revenue for year-over-year, timing enterprise. increased while to provide demand. lower nine, slide deeper A installation to the recurring increased points This validate $XXX.X million, X.X% year-over-year by differences expense by was now, collocation revenue, some $X.X a strong our margin to rate a To XX to primarily of little into to increased increased of global Core strategy million Lumen driven excluding turning scale or efficient that quarter excludes on or cloud-like $X.X overall the $XXX.X million, year-over-year revenue million. end, which Gross needs basis related the on million to QX $X.X attributable and revenue. million, by revenue, interconnection X.X% as revenue, revenue year-over-year total

the costs of FX. by partly were indicates year-over-year utility offset which Cyxtera Energy power players other industry. for focus the key and cost are our in higher year. of for Slide continue percentage they costs each this increases in for be a All to cost XX as

at moderate. cost power peak QX the expect of then to end We and

coming full-year, anticipate power or the majority previous For in of with increase year. to the this cost to being XX% back-loaded year the we compared the cost

have previous that discussed real increases we because understand is quarters, approach have very in the to in we our carefully But consider we passthrough to customers. this contractual costs. impact flexibility this we power a As

we communicate been While rate these intend increases, to we exercise in we option. this have thoughtful how

As timing XX is the Nelson which a was roughly noted, temporary between revenue lag materialization cost and there days.

power cost run basis. the XX% rate the to on We of of recover a expect approximately -- cost

power half due X.X% of first the be however, recover half; second will Transaction to be we until we in year. QX year-over-year to expect principally able not SG&A EBITDA in the cost million in next $XX keep decreased or rising to increases cost. million, this As $X.X adjusted incremental cost by to

XX.X% million onetime margin to by approximately based X.X% cost incur margin our cost non-recurring that by have or public related approximately for $X.X SG&A compensation. public a have company company equates will adjusted The public to did Transaction company XXXX. and margin not $XX Transaction is EBITDA the XX.X. comparisons basis the million this which expenses EBITDA adjusted company would include of periods. the our of quarter, includes adjusted equity we this declined first public QX XXXX Adjusted for majority second points Adjusted aware, transaction of been with EBITDA would for year-over-year decreased in adjusted increase transacted been costs, quarter in of year-over-year. our both cost, XXX EBITDA Starting to year-over-year are time million. $XX.X you As XX.X%.

for asset same Average core metric adjusts expected EBITDA our reminder, monthly comparing within the to structure. XX was second quarter period the and a our year it X.X% compared performance churn because transaction adjusted to As last view as for improved basis best peers the approximately our by range. of we our for well ownership points

to date increased to demand $X.X primarily MRR, points basis Year-to-date rate MRR XXX XX.X% differentiated our up we per activity the Our ramps to due Overall the Core calculation. occupancy net strong which in $XX.X investments. the number our increased million versus offer. as breakdown a contracted have by maintenance capital best Cyxtera's QX levels represented by the company's as year-over-year increased and through of million stabilized history by our FX, installations. execution. XX, driven to bookings around including cabinet lower expansion normalized quarter CapEx to is X% key net XXXX, CapEx higher in project industry of was provided slide started back on On and timing of markets flow driven

activity, update journey. and good capital Now progress turning we continue to the slide make to the XX balance for an on markets on sheet deleveraging

end basis, in times, of times a same is XXXX. the During the X.X QX, X.X last financial QX which On lower our a X.X was year. lease-adjusted times from X.X our net times net quarter at leverage financial decrease was leverage

structure we to growth and support plans. relates financial capital maturing our continue to it runway with loan term sufficient all ahead alternatives evaluate we in us opportunities, our our said, we and believe XXXX. model As That future to financing have business of still

ahead get of provide are it not items hence thoughtful an has address we manner; any been to address like to in full-year philosophy on in guidance under a While these near-term, timely intend I pressure would we near-term the update we in our be always our to to adjusted and EBITDA. transaction strategy for needs how our liabilities. financial

in expecting than indicative $XXX to As million $XXX which Nelson the on macro now underlying view EBITDA health said, the million. This of due I is full-year transaction we for business. as the the primarily we're mostly highlighted to range of the issues guidance earlier, rather to adjusted be revised timing-related

cost I As albeit, approach. the increase power lag pass the there intend associated to timing with is we a on our mentioned, customers, to in

there impact, revenue FX U.S. still into denominated. is as those provide context, our in impact some by our approximately of non-dollar British for hedged the To translation and naturally XX% Canadian pound dollars dollars. the report we As markets, and is reinvesting although we're

on We X%; estimate EBITDA XX%; We full-year to adjusted euro-denominated. Singapore be transaction remainder $X about impact the dollar, the and Canadian dollar, have million. being British pound FX the representing of approximately X%;

with adjusted implementation transaction center our we experiencing data delays EBITDA. impact impact, are pressures, the California chain biggest will to Finally, which being our supply also Northern some due full-year

While these do contractual the revenue reduce not recognition. received, of total impact do they timing revenue the delays

fundamentals. strong guidance, momentum continue underlying revenue earnings second find slide this were summary, release. to full-year, execution. reiterating results our on for in our as we're on deterioration in you As slowdown we demand business CapEx In or we expect driven demand and our and seen Moreover, in crisp which quarter can XX the previous have by for guidance

While our for our all trajectory. without navigate results. headwinds macro today the we you we are thank the impacting open for line to quarter that, believe some taken support and have for Operator, joining continued measures in near-term, questions. facing discuss adequate long-term to us your them challenging With please we second

Operator

[Operator go you. comes first Thank today of Our from line from Instructions] Michael question the Citi. ahead. Rollins Please

now Your open. line is

Michael Rollins

questions, on Couple itself. morning. guidance good and Thanks the first

guidance, that revenue as originally if less the where you relative in revenue be should you that progression to consider outlined then, FX or notable observations And organic improving would for And it the other factors the are were trending? business to thinking plan utilization, and for there wasn't revenue you secondly, relative If utilization some over unpack of update? how the thinking how be the impacts to similar? you could through or are are the about any guidance the current we that or is that more you get time and is Thanks. Cyxtera anticipating there FX,

Nelson Fonseca

Hey, Mike, questions. the joining for us, for thanks and thanks

then Let Carlos it for pass I'll me to take the first on the second one FX.

is by we bookings, to pleased from net we're pricing think occupancy, revenue a up, per all to cabinet perspective, up. driven right. on where very stable I that's that is the stable are, And revenue

the growth. with will along revenue so, drive growth what's And driving occupancy that's the and

with From perspective, an pleased FX to you -- trajectory. So, Carlos, we're want that may

Carlos Sagasta

think Yes, the I FX on impact. just there's so, than more revenue Mike,

Nelson I reiterated, and that won't online online significant of mentioned delay this will in California think come this As next year. also digital come I means a year, piece Northern capacity

And also so, an on revenue. that's impact

guidance quarter until drag why we've a perspective, that's can't you just was keeping originally. this blame FX But revenue it from the number. where Now, up for overperformed that on and

Nelson Fonseca

this that, other particular add a question get later, may some where so to chain supply center competitors, in compared with I'll and the much experiencing color, instance the so we the thing nature. Mike, of in this we're because something it, again, we data this we just do lot from builds it's don't are new muted of to is timing And mention,

Michael Rollins

Thanks very much.

Operator

Thank go you. Sami today The Please comes line from ahead. next question Suisse. of the from Badri Credit

Your line is open. now

Sami Badri

you. Thank

a us in guys is or how kind Could compared specific to as numbers the to your idea what's at showed thing, to the a way have full-year bit have are it itself give and of I it your of saw you this standard one So, of interpret guys idea your kind is industry guidance, cost-type explained your explaining going peers. way a little in you guys than Cyxtera's impact just we this power look different this impact underlying manifesting of that's if on we better impacting numbers, an way that's so on into you business?

Nelson Fonseca

will peers it our of power From our tough of passing the and Sami, customers. all-in how majority cost as model to power power maybe as the our to say all-in, in talk go rest is through of we the retail the that about power cost and Look, model versus an industry so it. the metered we our process increases -- view power takes, our our perspective, -- I model, on

a why what I impact those business. so, fundamental Metered just level customers, to and it's go rates. really we're think -- power power it's and good and we're it And in visibility rates their -- the that not metered giving up, a what and in we're timing of describing pay it detail concerned as on doing give nature, with we're to

are anything We add? customers. want power approach with an our all-in Hopefully you Carlos, primarily to that in helps.

Carlos Sagasta

points The for only we think thing addressing for we this us want reason were is to to when I wanted presented because that the our the things that problem we is way have highlight shareholders. I we salient add two presented it been it and why

XX% talking to contrary and it, first we in we more I about we that's being to all quarterly quarter. at think one unprecedented but of the that given cost historical we're or we're in looking any reemphasize The think something I that, that X%-X%, base, wanted averages -- movements know

difference. salient so And one that's

that it one we've of it's I said other as can related, is is costs, those we timing but there because plus-XX% think a recovery lag. The time

are we And we not is it a emphasize so, business that it's did. wanted fundamentals timing that's way the why difference, what to affected, presented and the of the we

Nelson Fonseca

because seeing is not a seeing we're it we the this with them, still customers, this number, effectively, provide we churn so what not churn customers to that is, value but price number. impacting increase in And and we're also pleased right, -- why see the we're

our So, Sami. that's it's from purely why timing, perspective,

Sami Badri

or you for XXX other backlog the characteristics the has way occupancy specific by to that. it, and And backlog on your one coming or basis is. coming it increase? being or Got us give a in my two increase, a driven question cohort some customer occupancy or the type the points Could are customers into year-on-year business these just thank with actual existing the Is footprint? both and do you that this expanding

Nelson Fonseca

new entire So, logos the Sami, customers. and footprint, both honestly, across strong seeing right, demand look, we're existing

point really was you which healthy repeat type, if want customer we business. second the question think can't Could I of the don't And specific see. occupancy. second-half to I the So, you we or question, about vertical for more what a think to is mind? That's the Sami,

Sami Badri

Yes.

about occupancy XXX-plus portfolio? points there XXX it the I if that across your get within So, understand occupancy XXX was seeing you're signed, across is whole think increase, to deployed, one customer contracts portfolio, to trying just that just customer say, or drove, just characteristics of increases basis several portfolio, very broad-based right, the your

Nelson Fonseca

deals customers, in And multiple we we Yes, In deals that which seeing seeing occupancy. have last every some well, that's to ultimately what quarters. or but driving any market I trajectory particular that what's we or particular quarter, point big drives this so signed we over we're wouldn't quarter revenue. some occupancy that's big customer few as are bookings had the driving

net quarter, in all half perspective. we bookings history becomes why a year, to company's We are good of guidance, have the a the won't which in backlog we number feel point quarter talk when But second backlog. any revenue that give here also lot that second strongest terms right? for have where it about from the hits I had -- that you don't backlog, points the In you an with over really we demand unchanged of obviously a of

Sami Badri

Got you. it. Thank

Operator

Thank of go ahead. from from Frank question you. Please line next the today Louthan comes James. Raymond The

now is open. line Your

Frank Louthan

thank Great, you.

Just to about bit break down million. is like guide EBITDA little midpoint the the a down looks $X It of more.

cost cost Can that the how how of the sort much you Just riding costs are between of FX. on then datacenter maybe us is us you California the think you it power possibly in in And And that? Northern expect half give what -- power as dollars of can be that you the are extra recover will there? give breakdown a much re-recovering well, that you 'XX, will additive that Thank you. range 'XX you can there said to in be great?

Carlos Sagasta

Yes, Frank.

seeing look me is we last and on that you that energy, let creates facing that maturely or at look that with Frank. this because start our is all curve our advisors that metrics, that think continues we performance, timing that June move at is at talked we So, challenge when we The sorry. are are I at gap and are up, piece to year-to-date the we're the that vendors what a forward our look challenge we on forward we And track the look for we curve seeing before. if

that we we months ago, would a we would day. Today, [Ph], years literally the would are problem the advisors revise tell the tell cure quarterly. revise speculating this on is they the almost us some [frontier] today curve when two daily. our talked curve of curve changes they Six to every revise ago, I we weekly. Now that that with

on XXXX basis. that's quarter, whatever segments. to recover cost the we the is, the means end is on the we going that a be hard rate of give we So, comfortable challenge to to the actual only And to to predicated it's whatever that that right? the to incur, recovery up is be a in happens you so, what are with And because what part it's a run XX% that are XX% fourth going gap going number cost financial

put I if what as number gap will is would for a We on And that's them question. a that say the but guidance, I hard this the recover would part if delays, think to different of the FX, in for to QX, on we or about speaking forecasted. roughly then quite third well. as curve timing a third third that performs But Northern for different, about as gap of the California energy a and curve the the QX balance be is delays will have

Frank Louthan

for seeing All And for any new you as other what in may next sort what any then underlying some have, of And as leasing pricing, you that operating you the side Thanks. of the pricing are changes cost your you see are right, step any of great. your price concern and you escalators that what's increases an base doing far would increases that -- maybe on on on contracts? that your as raising increase for the maybe cost on or landlords that? face

Nelson Fonseca

the Frank, me actually price let the a pass a cost on to it so cover happening. the power I'll pricing for So, is leasing. effectively From increase And pass for pricing. that's customers, of through the Carlos perspective, look,

cover general, in that. in priced market that we of to markets want always the our we response Obviously consistent increased, pricing prices so been multiple have do multiple level. markets. We've increased Carlos, adopted, market in lease? prices increased cost the you have as terms across we to our at In

Carlos Sagasta

long-term is much which, lease with in. locked X-year our are We're Yes, pricing leases. leases that about and remember options. always XX-year talking pretty In

so, we're our seeing don't fear we [of pricing every and And no, movement not [Ph]. landowners]

Frank Louthan

All right, you. great, thank

Operator

the line James go Breen of The Instructions] Blair. from William [Operator today comes next from you. Please question Thank ahead.

Your now open. is line

James Breen

much in taking delays Great, about given sort what initial thanks Can there size year, little update revenue facility? bit Thanks. it timing your it of to when question. the project, on can of the are and a projections any and California open how start of talk the Northern terms revenue the next the for you

Nelson Fonseca

delayed the year, we going timing, Let Carlos still center until we year. the coming this and of the timings, that on this data there we address it's projections. the impact The to expect data me which the be into center expect center to the but data to can the still see full XXXX, address won't online complete just so complete second-half year, of

Carlos Sagasta

And perspective, be speaking, facility-by-facility on what to a on the we a from sure of about the from a I do basis, fully a EBITDA disclosure that delay. related it's But a quarterly roughly changing perspective not you is to a hint quarter provide delay third like not might guidance projections giving an be but, basis. of going

think I you extrapolate that. from can

James Breen

thanks. Great, first then a around one in generally terms result of more, grow of just historical a over chain has And your Thanks. into chain as seeing uptakes? customers, at then of time, issues some supply that and just customers slowed issues you're the uptake, get all has supply as or facility

Nelson Fonseca

the through, Yes, able would we point. we've logs to because implementation not It's I manage that of say lot our is, that, for first-half not that that revenue, at a new in demand, the we make to us, say see there's slight being implement real bit existing don't are chain is nothing been can't significant, litigate this manage a delays growing, slowing new translate to of of for down customers. clear, slower the chain, the there that are you both year. Not supply to and manageable have because look, very But I most what that's of would ability and contracts. into again, we nothing I supply through construction, constraints that of able but customers want

Carlos Sagasta

that their the for I impact timing starting fact is seeing And chain may a implementation we're as getting in customers. positive that for deployments. those of style challenge if more using to we're that supply Bare even interest And affect Metal add, a steppingstone it's

Nelson Fonseca

Good point.

James Breen

Great, thanks.

Operator

to at back no Nelson pass moment, questions There so this remarks. for over you. to further conference Fonseca closing Thank I'd registered the like are

Nelson Fonseca

Thank the We right. to well. guys very forward joining call look you. much this the quarter next for updating you Thank All for as on you us quarter.

Operator

today's This call. Thank for you all your conference concludes participation.

now may your You disconnect line.

Cyxtera (CYXTQ) 11 Aug 222022 Q2 Earnings call transcript