DigitalBridge (US:DBRG)2021-11-05 17:59Financial Data and Key Metrics Changes - Third quarter revenue was $158.1 million, increasing 23% year-over-year, with organic growth of 13.5% when excluding Data Foundry's $12 million contribution [9][30] - Adjusted EBITDA for Q3 increased 14.5% year-over-year to $76.9 million, with a margin of 48.6% affected by seasonal power costs and Data Foundry's full quarter contribution [10][30] - Net loss for Q3 was $0.9 million compared to net income of $13.2 million in Q3 2020, primarily due to a reduction in income from operations and an increase in interest expense [32][45] - Customer churn remained at 0.2%, unchanged from the previous year [32] Business Line Data and Key Metrics Changes - Total colocation revenue for Q3 was $125.9 million, up 20% year-over-year, while excluding Data Foundry, it grew 12% to $117.7 million [37] - Connectivity revenue increased 31% year-over-year to $29.3 million, with organic growth of 18% when excluding Data Foundry [38] - Incremental annualized revenue bookings increased 25% year-over-year to $50 million, with total annualized revenue signings up 28% to $88 million [11] Market Data and Key Metrics Changes - As of Q3 2021, multicampus customers accounted for over 38% of legacy switch revenue, up from 33% in the prior year, representing a 26% growth rate [12] - Texas customers contributed approximately $5 million of incremental annualized revenue signings in Q3 [13] Company Strategy and Development Direction - The company is pursuing a REIT conversion targeted for January 1, 2023, to maximize shareholder value [8][58] - Expansion of PRIME footprint across the U.S. is a strategic focus, with significant growth in Texas and multi-campus customer revenue [12][15] - The company is committed to sustainable technology infrastructure, as evidenced by the regional water improvement pipeline project and recognition from the EPA for green power usage [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning for digital transformation and hybrid multi-cloud architectures, with strong demand for data center capacity [56] - The company anticipates continued growth, projecting 17% organic growth for Q4 2021 [51][96] Other Important Information - The company has a robust project pipeline with over 3 million square feet of data center capacity planned through 2026 [24] - Adjusted funds from operations (AFFO) decreased 9% year-over-year to $51.1 million [46] - Total debt outstanding as of September 30, 2021, was $1.5 billion, with a net debt to last quarter annualized adjusted EBITDA ratio of 5.0x [47] Q&A Session Summary Question: REIT conversion strategy - Management believes that converting to a REIT will maximize shareholder value and has consulted with external advisers to ensure it will not negatively impact operations [58] Question: Supply position and leasing capabilities - Existing inventory is available for leasing, and Las Vegas 15 is expected to come online in the first half of 2022, providing additional capacity [60][61] Question: Data Foundry acquisition update - The acquisition is performing well, with synergies exceeding expectations and a significant sale completed post-acquisition [63][65] Question: Go-to-market strategy with new Chief Revenue Officer - The new Chief Revenue Officer is expected to enhance the sales force and expand the national footprint, contributing to continued growth [67][68] Question: Power cost management - The company has historically managed power costs effectively, with recent increases being addressed through customer adjustments and long-term power purchase agreements [75] Question: Customer renewals and pricing - Renewals at Data Foundry are progressing well, with no rate reductions, indicating strong customer retention [77] Question: Supply chain impacts - The company has not experienced significant supply chain delays, maintaining timely delivery of equipment and customer deployments [81][82] Question: Customer interest across multiple data centers - 38% of revenue comes from multicampus customers, indicating a growing trend in customer engagement across multiple locations [85]