Switch, Inc. (SWCH) Reports In-Line Q4 EPS, Revenues Beat; Offers FY20 Revenue Guidance

Switch, Inc. (NYSE: SWCH) reported Q4 EPS of $0.04, in-line with the analyst estimate of $0.04. Revenue for the quarter came in at $120.5 million versus the consensus estimate of $119.32 million.

Fourth Quarter 2019 Financial Results

Total revenue of $120.5 million, compared to $103.2 million for the same quarter in 2018, an increase of 17%. Fourth quarter revenue includes a $0.5 million benefit resulting from the adoption of ASC 606 and ASC 842.
Income from operations of $18.3 million, compared to $16.9 million for the same quarter last year, an increase of 9%. Fourth quarter income from operations includes a $0.7 million positive adjustment from the adoption of ASC 606 and ASC 842.
Net income of $12.9 million, compared to $11.2 million for the same quarter in 2018. Fourth quarter 2019 net income includes the impact of a $2.8 million gain on interest rate swaps, increasing net income by less than $0.01 per diluted share.
Adjusted EBITDA of $57.6 million, compared to $53.6 million for the same quarter in 2018, an increase of 7%. Adjusted EBITDA margin was 47.8%, compared to 52.0% in the year ago period. The adoption of ASC 606 and ASC 842 resulted in a $0.8 million positive adjustment to fourth quarter Adjusted EBITDA.
Capital expenditures of $86.4 million, compared to $54.4 million for the same quarter in 2018. Maintenance capital expenditures were $1.5 million, or 1.2% of total revenue.
Total signed contract value of $138 million representing annualized revenue of $46 million at full deployment, including $20 million of incremental recurring revenue.

"During 2019 we signed over $500 million in total contract value, an increase of 16% from the prior year. We also added more than 110 new logos to the Switch ecosystem," said Thomas Morton, President of Switch. "The fourth quarter was our most productive sales quarter of 2019 despite traditional seasonal year-end headwinds, with our sales team closing $20 million of incremental annualized revenue bookings."

"Switch's strong fourth quarter financial results punctuated a solid year of double-digit organic growth in revenue and Adjusted EBITDA," said Gabe Nacht, CFO of Switch. "Our nationwide, multi-campus strategy continues to pay dividends, with 34% of total Q4 2019 revenue attributable to customers in more than one Prime campus, up from 23% in the year ago quarter."

GUIDANCE:

Switch, Inc. sees FY2020 revenue of $507-521 million, versus the consensus of $512.04 million.

Switch is introducing full year 2020 guidance as follows:

• Revenue in the range of $507 million to $521 million.
• Adjusted EBITDA in the range of $251 million to $261 million.
• Capital expenditures, excluding land acquisitions, in the range of $290 million to $340 million.

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

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