Switch, Inc. (SWCH) Tops Q1 EPS by 4c, Revenues Beat; Offers FY21 Revenues Outlook

Switch, Inc. (NYSE: SWCH) reported Q1 EPS of $0.09, $0.04 better than the analyst estimate of $0.05. Revenue for the quarter came in at $130.9 million versus the consensus estimate of $129.03 million.

First Quarter 2021 Financial Results

• Total revenue of $130.9 million, compared to $128.1 million for the same quarter in 2020, an increase of 2%. Revenue growth was negatively impacted by 330 basis points due to a $4.0 million decrease in non-recurring fiber revenue, compared to the year ago quarter.
• Income from operations of $24.2 million, an increase of 15% compared to $21.0 million for the year ago quarter.
• Net income of $24.4 million, compared to a net loss of $3.5 million for the same quarter in 2020. Net income in the first quarter of 2021 includes a $5.4 million gain from the sale of our ownership interest in the international joint venture that held an equity interest in the SUPERNAP Italia data center, a $3.2 million gain on interest rate swaps, and a $2.8 million non-recurring license fee allowing our technology and patents to be used for data centers in the Kingdom of Saudi Arabia.
• Net income per diluted share in the first quarter of 2021 was $0.09 and adjusted net income per diluted share was $0.08.
• Adjusted EBITDA of $73.4 million, compared to $61.5 million for the same quarter in 2020, an increase of 19%. Adjusted EBITDA margin was 56.1%, compared to 48.0% in the year ago period. Adjusted EBITDA benefitted from $2.8 million in non-recurring license fee income, which increased Adjusted EBITDA margin by 210 basis points.
• Capital expenditures of $100.4 million, compared to $80.9 million for the same quarter in 2020. Maintenance capital expenditures were $2.1 million, or 1.6% of total revenue.
• Signed total contract value of $117 million, representing annualized revenue of $37 million at full deployment, including $18 million of incremental recurring revenue.

"Switch sustained its robust sales momentum in the first quarter of 2021 as our team continues to execute favorably, achieving a record revenue backlog for the second consecutive quarter," said Rob Roy, Founder and CEO of Switch. "Overall customer demand remains elevated across the Prime footprint and we are continuing our accelerated efforts to bring on additional inventory with a highly active construction pipeline. The recently announced agreement to acquire Data Foundry and launch of our Fifth Prime Campus in Texas will help to address near-term supply constraints while expanding our addressable market longer term, along with the strategic benefits of broadening Switch's Fortune 500 customer base and geographic reach."

"Switch had a strong start to 2021, with our teams making favorable progress toward key strategic priorities including sales execution, construction, and customer installations," said Thomas Morton, President of Switch. "We are excited for the next chapter of Switch's domestic expansion efforts with the execution of the agreement to acquire Data Foundry, which will provide a tremendous platform for growth as we launch our Fifth Prime Campus in Texas."

"We are pleased with our solid first quarter performance, particularly our improving margin profile as the Prime locations increase in scale," said Gabe Nacht, CFO of Switch. "We are also encouraged by the continued growth in our sales pipeline and booked-not-billed backlog, which improves visibility toward accelerated revenue growth as we progress through the year."

GUIDANCE:

Switch, Inc. sees FY2021 revenue of $543-555 million, versus the consensus of $547.05 million.

Switch is adjusting its full year 2021 guidance, excluding any potential contributions from the announced agreement to acquire Data Foundry, as follows:

• Revenue in the range of $543 million to $555 million.
• Adjusted EBITDA in the range of $281 million to $290 million.
• Capital expenditures, excluding land purchases, in the range of $330 million to $370 million.

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

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