Switch — Q4 2018 Earnings Presentation
27 slides from Switch's earnings presentation, Mar 12, 2019
Slide 1: Investor Presentation Q4 2018
INVESTOR PRESENTATION | Q41 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 powering the sustainable growth of the connected world
Switch IS A TECHNOLOGY INFRASTRUCTURE COMPANY POWERING THE SUSTAINABLE GROWTH OF THE CONNECTED WORLD
Slide 4: Financial Highlights
FINANCIAL HIGHLIGHTS 2018 • Total revenue of $103.2 million, compared to $99.3 million for the same quarter in 2017, an increase of 3.9%. Year-to-date, total revenue of $405.9 million, compared to $378.3 million for the same period in 2017, an increase of 7.3%. • Net income of $11.2 million, compare
Slide 5: Company Snapshot Q4 2018
Switch COMPANY SNAPSHOT Q4 2018 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: 455 MW Future U.S. facilities: 8M GSF Future U.S. facil
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 % - Year Gross Square Feet Utilization % - Power Capacity Campus(1) By Available Data Operational (up to)(2) By Campus(3) (up to)(4) Center Space(3) The Core Campus(5) 2003-2018 2,340,000 78% 91% 315 MW Current: 9 Facilities(6) The Citadel Campu
Slide 8: Compelling Financial Model
COMPELLING FINANCIAL MODEL • 70% of the increase in 2018 revenue was attributable to growth from customers who have been Track Record of Organic with Switch over one year, while the remaining 30% of the increase in revenue was attributable to Top-Line Growth new customers initiating service after De
Slide 9: History of Organic Growth
HISTORY OF ORGANIC GROWTH (IN $ MILLIONS) Revenue Adjusted EBITDA 1 $406 $378 $202 $195 $318 $266 $153 $142 $207 $112 2014A 2015A 2016A 2017A 2018A 2014A 2015A 2016A 2017A 2018A ¹ See Appendix for a reconciliation of Net Income (Loss) to Adjusted EBITDA 9
Slide 10: Q4 2018 Revenue & Adjusted EBITDA vs. Q4 2017
Q4 2018 REVENUE & ADJUSTED EBITDA VS. Q4 2017 Revenue & Adjusted EBITDA Performance $120 $100 $103.2 $99.3 $80 $60 $53.6 $51.1 $40 ($ millions) ($ $20 $0 Q4'18 Q4'17 Actual Actual Revenue $103.2 $99.3 Adj. EBITDA $53.6 $51.1 Adj. EBITDA Margin % 52.0% 51.4% YOY Actual Revenue Growth % 3.9% YOY Actua
Slide 11: Rolling Quarterly Revenue Performance
ROLLING QUARTERLY REVENUE PERFORMANCE Rolling Quarterly Revenue Performance $120 $100 $102.2 $102.8 $103.2 $97.7 $97.7 $99.3 $92.1 $89.2 $80 $60 ($ millions) ($ $40 $20 $0 Q1'18 Q2'18 Q3'18 Q4'18 2018 Actual Revenue $97.7 $102.2 $102.8 $103.2 2017 Actual Revenue $89.2 $92.1 $97.7 $99.3 YOY % Growth
Slide 12: Rolling Quarterly Adjusted EBITDA Performance
ROLLING QUARTERLY ADJUSTED EBITDA PERFORMANCE Rolling Quarterly Adjusted EBITDA Performance $70 $60 $50 $53.6 $50.3 $50.9 $49.7 $51.1 $46.9 $47.1 $46.8 $40 $30 ($ millions) ($ $20 $10 $0 Q1'18 Q2'18 Q3'18 Q4'18 2018 Actual Adj. EBITDA $46.9 $50.3 $50.9 $53.6 2017 Actual Adj. EBITDA $47.1 $46.8 $49.7
Slide 13: Q4 2018 Total Contract Value Highlights
Q4 2018 TOTAL CONTRACT VALUE HIGHLIGHTS New Existing Metrics Total Customers Customers Contracts¹ 42 382 424 Customers 26 165 191 Power (MWs) >0.3 >8.1 >8.4 Annualized MRC² ($ millions) >$1 >$19 >$20 Wtd. Avg. Contract Term (yrs) 3.5 3.9 3.9 Total Contract Value³ ($ millions) >$4 >$69 >$73 ¹ Include
Slide 14: Q4 2018 New Customers Highlights by Industry
Q4 2018 NEW CUSTOMERS HIGHLIGHTS BY INDUSTRY • Over 420 contracts signed in Q4 2018 for new services, renewals, and expansions • 26 new customers Industry Description Finance & Banking One of the largest independent retirement and college savings provider in the US Logistics / Transportation One of
Slide 15: Q4 2018 New Contract Highlights
Q4 2018 NEW CONTRACT HIGHLIGHTS (IN $ MILLIONS) Total MRC Total NRC Total Annualized % of Total Rank Industry Contract Contract Contract MRC TCV Value Value Value (TCV) 1 Healthcare $2.2 $10.6 $0.1 $10.7 15% 2 Cloud, IT & Software $2.7 $8.6 $0.1 $8.7 12% 3 Cloud, IT & Software $1.8 $8.2 $0.1 $8.3 11
Slide 16: Customer Revenue & Recurring Revenues
CUSTOMER REVENUE & RECURRING REVENUES (IN $ MILLIONS) Customer Revenue Category Q4'18 Q4'17 Growth (%) Q4'18 YTD Q4'17 YTD Growth (%) Colocation $82.9 $79.8 3.9% $324.2 $304.7 6.4% Connectivity $18.4 $17.7 4.3% $74.0 $67.7 9.3% Other $1.9 $1.9 0.8% $7.6 $5.9 30.3% Total $103.2 $99.3 3.9% $405.9 $378
Slide 17: Diverse, Long-Tenured Customer Base
DIVERSE, LONG-TENURED CUSTOMER BASE Q4 2018 Customer Revenue by Industry Q4 2018 Top 10 Customers Healthcare Network & Telecom Other 7.1% 9.3% 5.1% % of Q4 2018 Customer Company Industry Classification Government & Revenue Since Utilities 1 Retail & Consumer Goods 11.4% Sep-10 2.7% Cloud, IT & 2 Fin
Slide 18: Revenue Growth, Cabinet Equivalents & Churn
REVENUE GROWTH, CABINET EQUIVALENTS & CHURN New vs. Existing Customer Revenue Growth Q4 2018 Q4 YTD 2018 % of Revenue Growth From New Customers 98% 30% % of Revenue Growth From Existing Customers 2% 70% Key Revenue Drivers Q4 2018 Billable Cabinet Equivalents¹ > 14,000 MRC per Cabinet Equivalent > $
Slide 19: 2018 Capital Expenditures & Campus Highlights
2018 CAPITAL EXPENDITURES & CAMPUS HIGHLIGHTS (IN $ MILLIONS) 2018 Capital Expenditures Campus Highlights The Core Campus: • Opened the Site, Shell, and Power System 1 (10MW) in LAS 2018 Total Capex of $276.2 VEGAS 11. Sectors 1 & 2 will be open in Q2 2019. • Opened 1 sector and supporting 10MW of p
Slide 20: 2019 Development Pipeline
2019 DEVELOPMENT PIPELINE 20
Slide 21: Debt & Liquidity
DEBT & LIQUIDITY (IN $ MILLIONS) Q4 2018 Capital Leases $20 Other Debt $587 Less: Cash & Cash Equivalents ($82) Net Debt $525 Fourth Quarter 2018 Annualized EBITDA $215 Net Debt / Fourth Quarter 2018 Annualized EBITDA 2.4x Liquidity¹ $582 ¹ Liquidity defined as: Remaining undrawn revolver capacity p
Slide 22: Full Year 2019 Guidance Summary
FULL YEAR 2019 GUIDANCE SUMMARY (IN $ MILLIONS) 2018 2019 Guidance Financial Metric Results Low High Revenue $406 $436 $445 Adjusted EBITDA¹ $202 $217 $223 Capital Expenditures $276 $210 $260 ¹ Switch does not provide reconciliations for the non-GAAP financial measures included in the 2019 guidance
Slide 23: Appendix
APPENDIX 23
Slide 24: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES To supplement Switch’s condensed consolidated financial statements, which are prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), Switch uses Adjusted EBITDA, Adjusted EBITDA margin, recurring revenu
Slide 25: 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 Q3 2018 Q4 2018 Net income (loss) $16.7 $18.5 $15.9 ($19.8) $20.3 $15.0 $16.5 ($60.3) $4.0 $9.5 $4.7 $11.2 Interest expen
Slide 26: 2014-2018 Adjusted EBITDA Reconciliation
2014-2018 ADJUSTED EBITDA RECONCILIATION (IN $ MILLIONS) Adjusted EBITDA Reconciliation 2014 2015 2016 2017 2018 Net income (loss) $ 56.5 $ 73.5 $ 31.4 $(8.6) $ 29.3 Interest expense 6.8 7.7 10.8 25.1 26.4 Interest income (1.0) (0.3) (0.3) (0.6) (2.4) Depreciation and amortization 43.9 55.4 66.6 89.
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