DigitalBridge (US:DBRG)2022-08-04 17:54Financial Data and Key Metrics Changes - Total consolidated revenues for Q2 2022 were $289 million, a 22% increase from the same period last year, driven by expansion in AUM and FEEUM [38] - GAAP net income attributable to common stockholders was a loss of $37 million, representing a $104 million increase compared to the same quarter of last year [38] - Total company adjusted EBITDA was $31 million, up from $15 million in the same period last year [38] - Digital AUM reached $48 billion, growing by 37% from $35 billion in the same period last year [39] Business Line Data and Key Metrics Changes - The Investment Management (IM) segment saw revenue and earnings growth driven by higher levels of fee-earning equity under management, with annualized fee revenues increasing from $94 million to $240 million [43] - The Digital Operating segment's consolidated adjusted EBITDA was $101 million, a 24% increase from the same period last year [41] - The IM revenue growth was impacted by one-time catch-up fees from last year, but excluding those, consolidated revenues increased by approximately 18% [40] Market Data and Key Metrics Changes - Bookings across global tower portfolios increased by 5% year-over-year, with fiber businesses seeing over a 28% increase [27] - Data center bookings experienced a 6x growth factor, indicating strong demand in that vertical [27] - The company reported a 128% year-over-year increase in the pipeline for data center leases that are in diligence or discussions [69] Company Strategy and Development Direction - The company aims to double its FEEUM from just under $25 billion to over $50 billion in the next three years, focusing on high-quality investments [9][10] - The strategic roadmap includes capital deployment in three areas: strategic digital M&A, capital structure optimization, and share purchases/dividends [13][16] - The company is transitioning to an asset-light model, which is expected to enhance earnings growth and scalability [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in executing their strategy despite macroeconomic challenges, highlighting the resilience of digital infrastructure demand [25] - The company anticipates continued strong performance in its portfolio companies, with positive growth across all core verticals [26] - Management noted that periods of economic downturn often present opportunities for growth and deeper customer relationships [21] Other Important Information - The company has achieved 2/3 of its fundraising goals for 2022 at the halfway point, indicating strong investor interest [32] - The recent recapitalization of DataBank is expected to create a permanent capital vehicle, enhancing growth prospects [29] - The company plans to reinitiate dividends in Q3, reflecting a commitment to returning value to shareholders [16] Q&A Session Summary Question: What is the outlook for the pipeline across digital infrastructure verticals given the macro environment? - Management reported a tremendous second quarter in terms of new bookings, with data center backlogs up over 128% year-over-year, indicating strong demand across verticals [69] Question: What is the update on M&A opportunities and private market valuations? - Management noted that valuations are coming down, with fiber deals moving from expected 22-24x to low to mid-teens, presenting opportunities for strategic acquisitions [72] Question: Which segments of digital infrastructure have the most pricing power going forward? - Management indicated that the data center sector has experienced the highest price increases, with prices per megawatt and rack rising by 10% to 20% [75] Question: What is the current carried interest split between shareholders and employees? - Management stated that the carried interest split is typically in the range of 60-40 to 70-30, and they are comfortable with this structure [82]