Switch — Q2 2018 Earnings Presentation
26 slides from Switch's earnings presentation, Aug 13, 2018
Slide 1: Investor Presentation Q2 2018
INVESTOR PRESENTATION | Q21 2018
Slide 2: Safe Harbor
SAFE HARBOR | 2018 This presentation includes forward-looking statements. All statements contained in this presentation other than statements of historical facts, including statements regarding future results of operations and financial position of Switch, Inc. and Switch, Ltd. (“Switch,” “we,” “us”
Slide 3: Switch is a technology infrastructure company
Switch IS A TECHNOLOGY INFRASTRUCTURE COMPANY POWERING THE SUSTAINABLE GROWTH OF THE CONNECTED WORLD
Slide 4: Financial Highlights Q2 2018
FINANCIAL HIGHLIGHTS Q2 2018 • Total revenue of $102.2 million, compared to $92.1 million for the same quarter in 2017, an increase of 11%. Year-to-date, total revenue of $199.9 million, compared to $181.3 million for the same period in 2017, an increase of 10%. • Net income of $9.5 million, compare
Slide 5: The Four Switch PRIMES
The Four Switch PRIMES™ Up to 12 million Up to 1,185 3 Campus Locations Operational and Gross square feet (GSF) Megawatts of power (MW) 1 Under Development Current U.S. facilities: 4M GSF Current U.S. facilities: 415 MW Future U.S. facilities: 8M GSF Future U.S. facilities: 770 MW 850+ 36.6% <0.1% C
Slide 6: Strategically Located Prime Campus Locations
STRATEGICALLY LOCATED PRIME CAMPUS LOCATIONS The Citadel Campus | Reno The Pyramid Campus | Grand Rapids Designed to be, upon Designed to be the largest completion, world’s largest data datacenter campus center environment in the Eastern U.S. TAHOE RENO 1 - Up to a 1.3mm Over 1,100,000 sq. f
Slide 7: Growing Portfolio of Hyperscale Facilities
GROWING PORTFOLIO OF HYPERSCALE FACILITIES Utilization % - Gross Square Feet Utilization % - Power Capacity Campus ¹ Year Operational By Available Data (up to) ² By Campus ³ (up to) ⁴ Center Space ³ The Core Campus Current: 8 Facilities ⁵ 2003-2017 2,000,000 87% 87% 275 MW Future: 1 Facility 2018-20
Slide 8: Compelling Financial Model
COMPELLING FINANCIAL MODEL • 61% of the increase in revenue for the quarter ended June 30, 2018 was attributable to growth from Track Record of Organic customers who have been with Switch over one year, while the remaining 39% of the increase in Top-Line Growth revenue was attributable to new custom
Slide 9: History of Organic Growth
HISTORY OF ORGANIC GROWTH (IN $ MILLIONS) Revenue Adjusted EBITDA ¹ $378 $318 $195 $266 $153 $142 $207 $200 $181 $112 $94 $97 2014A 2015A 2016A 2017A Q2 YTD Q2 YTD 2014A 2015A 2016A 2017A Q2 YTD Q2 YTD 2017 2018 2017 2018 ¹ See Appendix for a reconciliation of Adjusted EBITDA to Net Income (Loss). ²
Slide 10: Q2 2018 Revenue & Adjusted EBITDA vs. Q2 2017
Q2 2018 REVENUE & ADJUSTED EBITDA VS. Q2 2017 Revenue & Adjusted EBITDA Performance $120 $100 $102.2 $92.1 $80 $60 ($ millions) ($ $50.3 $40 $46.8 $20 $0 Q2'18 Q2'17 Actual Actual Revenue $102.2 $92.1 Adj. EBITDA $50.3 $46.8 Adj. EBITDA Margin % 49.2% 50.8% YOY Actual Revenue Growth % 10.9% YOY Actu
Slide 11: Rolling Quarterly Revenue Performance
ROLLING QUARTERLY REVENUE PERFORMANCE Rolling Quarterly Revenue Performance $120 $100 $102.2 $97.7 $99.3 $97.7 $92.1 $89.2 $80 $81.7 $81.9 $60 ($ millions) ($ $40 $20 $0 Q3'17 Q4'17 Q1'18 Q2'18 2018 Actual Revenue $97.7 $102.2 2017 Actual Revenue $97.7 $99.3 $89.2 $92.1 2016 Actual Revenue $81.7 $81
Slide 12: Rolling Quarterly Adjusted EBITDA Performance
ROLLING QUARTERLY ADJUSTED EBITDA PERFORMANCE Rolling Quarterly Adjusted EBITDA Performance $60 $50 $51.1 $49.7 $50.3 $46.9 $47.1 $46.8 $40 $41.0 $34.6 $30 ($ millions) ($ $20 $10 $0 Q3'17 Q4'17 Q1'18 Q2'18 2018 Actual Adj. EBITDA $46.9 $50.3 2017 Actual Adj. EBITDA $49.7 $51.1 $47.1 $46.8 2016 Actu
Slide 13: Q2 2018 New Customers Highlights by Industry
Q2 2018 NEW CUSTOMERS HIGHLIGHTS BY INDUSTRY • Over 550 contracts signed in Q2 2018 for new services, renewals, and expansions • 46 new customers Industry Description Cloud, IT & Software Global leader in the semiconductor industry Cloud, IT & Software Global provider of data and hybrid cloud analyt
Slide 14: Q2 2018 Total Contract Value Highlights
Q2 2018 TOTAL CONTRACT VALUE HIGHLIGHTS New Existing Total Customers Customers Contracts ¹ 61 497 558 Customers 46 190 236 Power (MWs) >15 >4 >20 Annualized MRC ² ($ millions) >$20 >$20 >$40 Wtd. Avg. Contract Term (yrs) 4.5 3.1 3.9 Total Contract Value ³ ($ millions) >$100 >$65 >$165 ¹ Contracts in
Slide 15: Customer Revenue & Recurring Revenues
CUSTOMER REVENUE & RECURRING REVENUES (IN $ MILLIONS) Customer Revenue Category Q2'18 Q2'17 Growth (%) Q2'18 YTD Q2'17 YTD Growth (%) Colocation $81.2 $74.3 9.2% $158.9 $146.3 8.6% Connectivity $18.9 $16.2 16.2% $37.1 $32.1 15.6% Other $2.1 $1.5 40.8% $3.9 $2.8 38.0% Total $102.2 $92.1 10.9% $199.9
Slide 16: Revenue Growth & Churn
REVENUE GROWTH & CHURN (IN $ MILLIONS) Existing vs. New Customer Revenue Growth Q2 YTD Customer Type Q2 2018 2018 % of Revenue Growth From New Customers 39% 36% % of Revenue Growth From Existing Customers 61% 64% Churn ¹ 0.2% <0.1% Q2 2018 Q2 2017 ¹ Churn is defined as a reduction in recurring reven
Slide 17: Q2 2018 Capital Expenditures & Campus Highlights
Q2 2018 CAPITAL EXPENDITURES & CAMPUS HIGHLIGHTS Q2 2018 Capital Expenditures Campus Highlights The Citadel Campus: • Continued build-out of 2 new sectors which opened in Q2 $57 $99.4 Million Total 2018 • Added power and cooling infrastructure to support 10MW of new capacity for the next power syste
Slide 18: Development Milestones
DEVELOPMENT MILESTONES Development Milestones Target Date MW Increase (Up To) Sector Increase The Core Campus LAS VEGAS 10 Sector 1 Q2 2018 - 1 LAS VEGAS 10 Power System 1 Q1 2019 10 MW - LAS VEGAS 11 Sector 1 & Power System 1 Q4 2018 10 MW 1 The Citadel Campus TAHOE RENO 1 Sectors 6 & 7 Q2 2018 - 2
Slide 19: Debt & Liquidity
DEBT & LIQUIDITY (IN $ MILLIONS) Debt & Liquidity ¹ Q2 2018 Capital Leases $22 Other Debt $589 Less: Cash & Cash Equivalents ($184) Net Debt $427 LQA Adjusted EBITDA $201 Net Debt / LQA Adjusted EBITDA 2.1x Liquidity $684 ¹ Liquidity defined as: Remaining undrawn revolver capacity plus cash & cash e
Slide 20: Full Year 2018 Guidance Summary
FULL YEAR 2018 GUIDANCE SUMMMARY (IN $ MILLIONS) 2017 2018 Guidance Financial Metric Results Low High Revenue $378 $405 $408 Adjusted EBITDA¹ $195 $197 $200 Capital Expenditures $403 $260 $310 ¹ Switch does not provide reconciliations for the non-GAAP financial measures included in the 2018 guidance
Slide 21: Appendix
APPENDIX
Slide 22: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES To supplement Switch’s condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), Switch uses Adjusted EBITDA, Adjusted EBITDA margin and recurring revenue, which a
Slide 23: 23 INVESTOR PRESENTATION | Q2 2018
23 INVESTOR PRESENTATION | Q2 2018
Slide 24: 2016-2018 Adjusted EBITDA Reconciliation by Quarter
2016-2018 ADJUSTED EBITDA RECONCILIATION BY QUARTER (IN $ MILLIONS) Adjusted EBITDA Reconciliation Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Net income (loss) $17 $19 $16 ($20) $20 $15 $16 ($60) $4 $10 (+) Interest Expense 2 2 2 4 4 5 9 7 6 6 (+) Interest Income
Slide 25: 2014-2017 Adjusted EBITDA Reconciliation
2014-2017 ADJUSTED EBITDA RECONCILIATION (IN $ MILLIONS) Adjusted EBITDA Reconciliation 2014 2015 2016 2017 Net income (loss) $ 57 $ 73 $ 31 $(9) (+) Interest Expense 7 8 11 25 (+) Interest Income (1) (0) (0) (1) (+) Depreciation and Amortization 44 55 67 89 (+) Loss on disposal of property and equi
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