Iron Mountain Incorporated Q3 FY2025 earnings call

• Iron Mountain achieved all-time high for quarterly revenue, adjusted EBITDA and AFFO in Q3 with revenue up 13% to $1.8 billion, adjusted EBITDA up 16% to $660 million and AFFO up 18% to $393 million.
• Physical storage business had record revenue in Q3 driven by volume growth, higher retention rates and revenue management.
• Digital Solutions building business had record revenue and continued double-digit growth in Q3 with 33% revenue growth in data center and strong outlook for 2026.
• Capitalized on data center industry demand with 33% revenue growth in Q3 and strong outlook for 2026 growth.
• Asset life cycle management business had 65% reported and 36% organic growth in Q3, expanded profitability with adjusted EBITDA increasing 16% and margin improving 110 basis points.
• Commercial wins include being selected as single vendor for medical record storage in Europe, launching Insight DXP 2.0 platform, new long-term contract with Department of Treasury, acquisition of ACT Logistics, and ALM wins with leading financial services and global company.

Global RIM business achieved record quarterly revenue of $1.34 billion, an increase of $78 million, with reported growth of 6% including organic growth of 5% year-on-year. Global data center business had total revenue of $204 million in the third quarter, an increase of $51 million or 33% year-on-year. Asset life cycle management business had total revenue of $169 million, an increase of $66 million or 65% year-over-year, with 36% organic growth. Global RIM reported growth was 6%, including organic growth of 5% year-on-year. Global data center organic storage rental growth increased 32%. Asset life cycle management total revenue increase was 65% year-over-year with 36% organic growth.

• Reiterated full year guidance ranges with Q4 expected revenue of approximately $1.8 billion, adjusted EBITDA of approximately $690 million, AFFO of approximately $415 million, and AFFO per share of approximately $1.39.
• Data center business expected to have more than 25% growth in 2026 based on currently signed leases.
• Portfolio of growth businesses including data center, digital and ALM expected to drive nearly 30% of total revenue exiting 2025.

• No specific detailed risks discussed in the transcript but mentioned that forward-looking statements are subject to risks and uncertainties as per earnings materials.

Q: Dive into the new $714 million 5-year contract with the U.S. Treasury Department and planned phasing of revenues.

A: William Meaney stated it will be linear with slight growth over 5 years, with seasonality around tax season and they've started building capacity. It's a proof point for the DXP platform.

Q: Touch on the ALM business, volume versus price and memory pricing influence.

A: Barry Hytinen said ALM continues strong with expected $600 million revenue, 36% organic growth in Q3, volume-led and enterprise volume led, and memory pricing varies by component with current view used for Q4.

Q: Elaborate on data center pipeline and demand across enterprise and hyperscalers.

A: William Meaney mentioned uptick in leasing with customers shifting back to inference and cloud build-out, and 450 megawatts available for sale to be energized over next 24 months.

Q: Follow up on treasury contract on high end versus low end capture.

A: William Meaney said it's volume-dependent with feedback from customer on models being positive.

Q: Talk about data center leasing energy capacity energized in next 12 months.

A: William Meaney said 250 megawatts gets energized in next 18 months with another 200 megawatts following in next 6 months, and Barry Hytinen added assets in Tier 1 markets like London, Virginia, Madrid, etc.

Q: Comment on forward-looking CapEx targets for data center.

A: William Meaney said target focus is on inference and cloud build-out, not chasing large language model market, and Barry Hytinen said data center CapEx will gradually rise with forward look on pipeline for additional leasing.

Q: Example of net 11 megawatts leased, what drives that decision and more going forward.

A: William Meaney said it's customer-centric as client shifted loads, and Barry Hytinen added client had not commenced in London and asset is good for higher prices going forward.

Q: Comment on RIM storage business volumes and pricing into 4Q and next year.

A: Barry Hytinen said organic volume in physical storage continued to rise, revenue management actions in mid-single-digit range, and FX embedded in guidance.

Q: Follow up on mix of revenue, storage and services gross margins down sequentially.

A: Barry Hytinen said on storage it's mostly about data center power pass-through, and on service it's mix with ALM and digital being lower-margin businesses.