Switch, Inc. (SWCH) Reports In-Line Q2 EPS, Slight Miss in Revenues; Offers FY20 Revenue Guidance

Switch, Inc. (NYSE: SWCH) reported Q2 EPS of $0.06, in-line with the analyst estimate of $0.06. Revenue for the quarter came in at $126.9 million versus the consensus estimate of $127.18 million.

Second Quarter 2020 Financial Results

• Total revenue of $126.9 million, compared to $112.0 million for the same quarter in 2019, an increase of 13%.
• Income from operations of $25.3 million, an increase of 21% compared to $20.9 million for the year ago quarter.
• Net income of $13.3 million, compared to net income of $4.7 million for the same quarter in 2019. Net income in the second quarter of 2020 includes the impact of a $4.1 million loss on interest rate swaps, compared to an $8.8 million loss in the prior year quarter.
• Net income per diluted share in the second quarter of 2020 was $0.05 and adjusted net income per diluted share was $0.06.
• Adjusted EBITDA of $69.1 million, compared to $58.8 million for the same quarter in 2019, an increase of 17%. Adjusted EBITDA margin was 54.5%, compared to 52.6% in the year ago period.
• Capital expenditures of $85.6 million, compared to $54.2 million for the same quarter in 2019. Maintenance capital expenditures were $1.9 million, reflecting 1.5% of total revenue.
• Total signed contract value of $79 million, representing annualized revenue of $24 million at full deployment, including $12 million of incremental recurring revenue.

"Switch's second quarter 2020 financial results validate the critical nature of our technology ecosystems in providing a dynamic and resilient platform for customers to reliably conduct essential business functions," said Rob Roy, CEO, chairman, and founder of Switch. "Moreover, our recent announcement regarding the groundbreaking of three new mega-scale solar energy plus battery storage systems reflects our long-term commitment to environmental sustainability, and ensures customer access to low-cost, 100% renewable power for the foreseeable future. Switch remains relentlessly focused on bringing innovative and sustainable technology solutions to market while delivering value to customers and shareholders."

"Following strong second quarter results Switch remains on track with respect to our 2020 operating plan and growth objectives," said Thomas Morton, President of Switch. "We continue to closely monitor developments surrounding COVID-19 and remain committed to the safety of our employees, customers, and suppliers. Importantly, despite company-imposed travel restrictions, our sales teams remain highly engaged with customers, which continues to support a strong activity pipeline."

"Our second quarter financial performance reflects continued strength in top-line growth trends accompanied by an improvement in margins," said Gabe Nacht, CFO of Switch. Our strong cash flow generation and low balance sheet leverage provide the flexibility necessary to fund our growth initiatives while returning cash to shareholders in the form of increased dividends."

GUIDANCE:

Switch, Inc. sees FY2020 revenue of $507-521 million, versus the consensus of $518 million.

Switch is re-affirming its 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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