Switch, Inc. (SWCH) Tops Q3 EPS by 1c; Offers FY20 Revenue Outlook

Switch, Inc. (NYSE: SWCH) reported Q3 EPS of $0.05, $0.01 better than the analyst estimate of $0.04. Revenue for the quarter came in at $128.79 million versus the consensus estimate of $128.98 million.

"Switch delivered strong third quarter 2020 financial results while continuing to execute upon important strategic initiatives, bolstering confidence in our long-term growth outlook," said Rob Roy, Switch Founder and CEO. "Furthermore, Switch is extremely excited to welcome Angela Archon and Liane Pelletier to its recently expanded Board of Directors. Ms. Archon and Ms. Pelletier bring over 50 years of combined leadership in the technology and telecom industries and each will add unique and valuable perspectives to the Switch boardroom."

Third Quarter 2020 Financial Results

• Total revenue of $128.8 million, compared to $122.4 million for the same quarter in 2019, an increase of 5%. Excluding $4.3 million in non-recurring fiber revenue in the year ago period, third quarter 2020 year-over-year revenue growth was 9%.
• Income from operations of $22.9 million, an increase of 4% compared to $22.0 million for the year ago quarter.
• Net income of $13.2 million, compared to net income of $10.1 million for the same quarter in 2019. Net income in the third quarter of 2020 includes the impact of a $1.6 million loss on interest rate swaps, compared to a $3.9 million loss in the prior year quarter.
• Net income per diluted share in the third quarter of 2020 was $0.05, compared to $0.03 in the prior year quarter.
• Adjusted EBITDA of $67.2 million, compared to $60.8 million for the same quarter in 2019, an increase of 11%. Adjusted EBITDA margin was 52.1%, compared to 49.7% in the year ago period. Excluding $3.2 million of Adjusted EBITDA related to a non-recurring fiber transaction in the year ago period, third quarter 2020 year-over-year Adjusted EBITDA growth was 17%.
• Capital expenditures of $82.6 million, compared to $121.2 million for the same quarter in 2019. Maintenance capital expenditures were $2.0 million, reflecting 1.6% of total revenue.
• Total signed contract value of $109 million, representing annualized revenue of $27 million at full deployment, including $18 million of incremental recurring revenue.

"Switch's strong third quarter results and bookings performance reflect our unrelenting drive to deliver superior value to customers and our commitment to sustaining profitable growth in 2020 and beyond," said Thomas Morton, President of Switch. "Customer demand remains robust across the four Primes, and the continued expansion from several of our largest customers demonstrates an appreciation for the value proposition delivered by Switch's technology ecosystems."

"Our third quarter results exhibit solid underlying operating performance and continued efficiency gains across the organization," said Gabe Nacht, CFO of Switch. "The recent execution of Switch's inaugural unsecured bond offering was an important milestone for the company, achieving the dual purpose of securing low-cost growth capital for our business and building further credibility in the capital markets with investors."

GUIDANCE:

Switch, Inc. sees FY2020 revenue of $510-518 million, versus the consensus of $516.47 million.

Switch is updating its full year 2020 guidance, as follows:

• Revenue in the range of $510 million to $518 million.
• Adjusted EBITDA in the range of $261 million to $267 million.
• Capital expenditures, excluding land acquisitions, in the range of $295 million to $325 million.

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

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