IRON MOUNTAIN INC Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Strong start to 2025 with all-time high quarterly revenue of $1.6 billion (8% YoY growth) and record first quarter adjusted EBITDA of $580 million (12% increase YoY).
• Growth businesses (data center, digital solutions, asset lifecycle management) collectively grew over 20% in the quarter. Traditional records business also achieved record results.
• Key customer wins: Greek bank chose Iron Mountain for records storage post-merger; global insurance company in Thailand awarded records management agreement; secured 10-year contract in UK and three-year deal in Europe for digital solutions; awarded $140 million contract with Department of Treasury.
• Data center business had revenue growth over 20% YoY, with strong leasing backlog and pipeline. Welcomed new EVP and GM of Data Centers, Gary Aitkenhead.
• Asset lifecycle management business had 44% reported revenue growth, including 22% organic growth, with acquisitions like Premier Surplus expanding capabilities.

Segment Performance

• Global RIM: First quarter revenue of $1.26 billion, an increase of $46 million year-on-year. Driven by revenue management and digital solutions, partially offset by the stronger US dollar. Organic storage was up 6%, organic service revenue up 5%. Reported service revenue down sequentially due to terminations and stronger dollar.
• Global Data Center: Total data center revenue in first quarter was $173 million, an increase of $29 million year-on-year. Organic storage rental growth increased 24% driven by lease commencements. First quarter data center adjusted EBITDA was $91 million, up 48%. Adjusted EBITDA margin up 960 basis points from prior year.
• Asset Lifecycle Management: Total ALM revenue was $121 million, an increase of $37 million or 44% year-over-year. Organic growth was 22%. Acquired Premier Surplus in late March, contributing to growing strength in the segment.

Guidance

• Full year 2025 total revenue expected to be within $6.74 billion to $6.89 billion (11% growth at midpoint).
• Adjusted EBITDA expected to be within $2.505 billion to $2.555 billion (13% growth at midpoint).
• AFFO expected to be within $1.48 billion to $1.51 billion, AFFO per share $4.95 to $5.05.
• Q2 2025 expected revenue ~$1.68 billion (10% YoY growth), adjusted EBITDA ~$620 million (14% YoY growth), AFFO ~$350 million (9% growth).

Risks

• Tariffs exposure: In Global RIM, exposure essentially zero as revenues and costs matched by market. In ALM, vast majority of revenue from IT gear decommissioned and resold in same market, limited cross-border impact. In Data Center, less than 5% exposure to tariffs as most construction costs not subject to tariffs.

Question and Answer

Q: Talk about market for leasing and data center tariff exposure.

A: Bill Meaney discussed good leasing activity in enterprise colocation, confident in 125 MW guide for data center leasing. Barry Hytinen noted data center construction cost exposure sub-5%, pricing strong, and supply on long-term commitments.

Q: Changes in data center demand from customer set.

A: Bill Meaney stated no change in appetite for hyperscale customers across North America, Europe, India; strong pipeline in key regions like Northern Virginia, Amsterdam, Mumbai.

Q: Sales strategy initiatives and tracking.

A: Bill Meaney highlighted Matterhorn strategy with Chief Commercial Officer driving single point of contact and cross-selling across businesses, leading to double-digit growth.

Q: Disaggregate $90 million revenue increase.

A: Barry Hytinen said $75 million due to FX, $10 million from Premier Surplus, remainder from operating performance.

Q: Data center region opportunity set and ALM mix/mergers.

A: Bill Meaney discussed strong pipeline in US (Northern Virginia, Chicago, Miami), Europe (Amsterdam, Madrid), India (Mumbai, Chennai). Barry Hytinen noted ALM mix 59% enterprise, 41% hyperscale, trending more enterprise for better margins; actively seeking ALM acquisitions with mid to high single-digit EBITDA multiples.

Q: ALM volume trigger and market changes.

A: Bill Meaney attributed ALM volume growth to consistent customer wins, enterprise book of business growth, and flow-oriented business model rather than pricing changes.