Switch, Inc. (SWCH) Tops Q4 EPS by 2c, Revenues Miss; Offers FY19 Revenue Guidance Below Consensus

Switch, Inc. (NYSE: SWCH) reported Q4 EPS of $0.05, $0.02 better than the analyst estimate of $0.03. Revenue for the quarter came in at $103.2 million versus the consensus estimate of $104.15 million.

• Quarterly revenue of $103.2 million, compared to $99.3 million for the same quarter in 2017.
• Operating income of $16.9 million, compared to an operating loss of $54.6 million for the same quarter last year. Operating income in the fourth quarter of 2018 includes the impact of $7.5 million in equity-based compensation expense, compared to $79.9 million in the same quarter of 2017, and $2.9 million in additional depreciation from assets placed into service.
• Net income of $11.2 million, compared to a loss of $60.3 million for the same quarter in 2017.
• Adjusted EBITDA of $53.6 million, compared to $51.1 million for the same quarter in 2017; reflecting EBITDA margins of 52.0%, compared to 51.4% for the same quarter in 2017.
• Capital expenditures of $55.0 million, compared to $118.6 million for the same quarter in 2017.
• Churn of 0.4%, compared to 0.3% for the same quarter in 2017.(1)

"In its first full-year as a public company, Switch achieved several key strategic milestones, while maintaining focus on our long-term business model," said Thomas Morton, president of Switch. "We expect to continue to deepen our relationships with key enterprise and hyperscale cloud partners, and to continue to broaden the scale and scope of our sales organization to position Switch for sustainable long-term growth and profitability."

"We are pleased with Switch\'s progress toward meeting its financial and strategic goals during the final quarter of 2018," said Gabe Nacht, CFO of Switch. "We delivered revenues within our revised guidance range, while our solid cost discipline drove strong profitability with Adjusted EBITDA coming in above the high end of our revised outlook. We enter 2019 well-positioned from a sellable capacity perspective with low debt leverage, and we remain focused on sound execution across all facets of the business."

GUIDANCE:

Switch, Inc. sees FY2019 revenue of $436-445 million, versus the consensus of $449.89 million.

• Adjusted EBITDA in the range of $217 million to $223 million, representing a 50% EBITDA margin at the midpoint.
• Capital expenditures in the range of $210 million to $260 million.

For earnings history and earnings-related data on Switch, Inc. (SWCH) click here.

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