Switch, Inc. (SWCH) Misses Q1 EPS by 3c, Revenues Beat; Affirms FY19 Revenue Outlook

Switch, Inc. (NYSE: SWCH) reported Q1 EPS of $0.01, $0.03 worse than the analyst estimate of $0.04. Revenue for the quarter came in at $107 million versus the consensus estimate of $104.95 million.

First Quarter 2019 Financial Results

• Total revenue of $107.0 million, compared to $97.7 million for the same quarter in 2018, an increase of 10%.
• Operating income of $15.5 million, compared to $9.4 million for the same quarter last year, an increase of 65%. Operating income in the first quarter of 2019 includes the impact of $8.1 million in equity-based compensation expense compared to $12.4 million in the same quarter of 2018. Operating income in the first quarter of 2019 also included $4.0 million in additional depreciation from assets placed into service.
• Net income of $3.7 million, compared to $4.0 million for the same quarter in 2018. Net income in the first quarter of 2019 includes the impact of a $5.0 million unrealized loss on interest rate swaps entered into during the quarter, equating to $0.02 per diluted share.
• Adjusted EBITDA of $53.7 million, compared to $46.9 million for the same quarter in 2018, an increase of 14%. Adjusted EBITDA margin of 50.1%, compared to 48.0% for the same quarter in 2018, an increase of 210 basis points.
• Capital expenditures of $45.9 million, compared to $61.4 million in the same quarter in 2018, a decrease of 25%.
• Total signed contract value of $169 million, representing annualized revenue of $34 million at full deployment.

"Switch had a productive first quarter, delivering strong quarterly bookings as we began to reap the benefits of key strategic enterprise and multi-cloud customer initiatives undertaken in 2018," said Rob Roy, CEO, chairman and founder of Switch. "Our team closed several key transactions in the quarter, which we believe are truly unique and transformational in nature, and we remain positive on our sales pipeline for the remainder of the year."

"Entering 2019, we were highly focused on execution, and our first quarter results demonstrate the strength of our people, technology platform, and long-term strategic vision," said Thomas Morton, president of Switch. "In addition to delivering strong quarterly contract volume, we also made key additions to our national and regional sales teams, and continued to make significant inroads with strategic partners to strengthen our unique hybrid multi-cloud ecosystem."

"We are pleased to deliver solid first quarter financial results for our shareholders," said Gabe Nacht, CFO of Switch. "Switch's Q1 results, robust backlog, and ongoing sales momentum reinforce confidence in our 2019 growth outlook; as we continue to innovate and invest in critical infrastructure across the four Prime campus locations."

GUIDANCE:

Switch, Inc. sees FY2019 revenue of $436-445 million, versus the consensus of $440.24 million.

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

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