Iron Mountain Incorporated Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Record Performance: Fourth quarter and full-year 2025 were record years with revenue up 12% to $6.9 billion, adjusted EBITDA up 15% to $2.57 billion, and AFFO up over 15% to $1.54 billion. Organic revenue in the fourth quarter was up 14%.
• Growth Segments: Data center revenue grew 30% in 2025, including 39% in the fourth quarter. ALM revenue grew 63% in 2025, with 40% organic growth. Digital revenue exceeded $500 million in 2025 with double-digit growth.
• Commercial Wins: Secured deals with a Fortune 500 healthcare company, a major UK government department, a global media/entertainment company, and a leading Asia financial services company. The Treasury contract is expected to ramp with $45 million in 2026 revenue.
• Operational Execution: Adjusted EBITDA increased 15% with a 90 basis point improvement in margin at the enterprise level. SG&A expense ratio was the lowest in years, demonstrating strong operating leverage.

Segment Performance

• Global RIM: Fourth quarter revenue reached $1.37 billion, a $115 million increase. Reported growth was 9%, including 7% organic growth. Storage revenue saw 7% reported growth and 5% organic growth. Service revenue grew 12% with 10% organic growth. Adjusted EBITDA increased $43 million to $622 million, with an adjusted EBITDA margin of 45.3%.
• Global Data Center: Fourth quarter revenue was $237 million, a $67 million increase (39% year-on-year). Fourth quarter data center adjusted EBITDA was $122 million, up $34 million year-on-year, with a margin of 51.5%. For 2026, guidance is over $1.0 billion in revenue, representing over 25% year-on-year growth.
• Asset Lifecycle Management: Total ALM revenue in the fourth quarter was $190 million, a $78 million increase (70% year-on-year). Organic revenue growth was 56%. For 2026, guidance is $850 million in revenue, representing approximately 35% year-on-year growth.

Guidance

• 2026 Outlook: Total revenue expected to be between $7.625 billion and $7.775 billion, representing 12% year-on-year growth at the midpoint. Adjusted EBITDA is forecasted to be between $2.875 billion and $2.925 billion, a 13% year-on-year growth at the midpoint. AFFO is expected to be between $1.705 billion and $1.735 billion, a 12% year-on-year growth at the midpoint. First quarter 2026 revenue is expected to be approximately $1.855 billion (+16% year-on-year), adjusted EBITDA ~$685 million (+8% year-on-year).
• Data Center: Confidence in sustaining strong growth with backlog driving over 25% revenue growth in 2026 and over 20% in 2027. Anticipates leasing over 100 megawatts in 2026.
• ALM: Expecting the ALM business to be a multibillion dollar opportunity with ~35% year-on-year growth in 2026.

Risks

• No specific risks detailed in the transcript beyond general forward-looking statement risks mentioned initially, such as those related to actual results differing from forward-looking statements, which can be found in earnings materials and reports.

Question and Answer

Q: Touch on the data center pipeline A: We went into 2026 with strong momentum from over 40 megawatts leased in the fourth quarter. Sites in Northern Virginia, Richmond, Madrid, and India are attracting interest. There's 400 megawatts of capacity set to be energized in the next 24 months, with focus on cloud buildout and inference.

Q: ALM organic growth and acquisitions A: ALM is seeing growth in existing customers and adding new logos. In 2026, enterprise business is forecasted to have ~20% organic growth, with a focus on cross-selling and global footprint expansion through potential acquisitions.

Q: ALM fourth quarter organic growth breakdown (volumes vs pricing) A: Hyperscale and enterprise growth were balanced. Memory pricing had a positive impact, with pricing contributing $15M - $20M more than initial guidance in the fourth quarter. Current pricing trends are being factored into 2026 forecasts.

Q: Gross margin trends in services A: Services gross margin was up over 100 basis points year-on-year and 350 basis points quarter-on-quarter. Improvements are seen in Global RIM, ALM, and data center services, driven by execution, operating leverage, and some pricing.

Q: M&A in ALM and data centers A: Data center growth is focused on organic expansion with existing platforms. ALM is looking at M&A opportunities in the large, fragmented market to build global footprint, with 61 countries served.

Q: Restructuring charges and CapEx in 2026 A: No restructuring charges are expected in 2026. CapEx is slightly down, with ~$1.8B focused on data centers, driven by pre-leasing focus. Cash flow assumptions include $905M cash interest and ~$20M higher cash taxes.

Q: RIM organic constant currency storage growth A: Impacted by dollar strength and a strong third quarter data management comp. Physical business was up 8% year-on-year, with mid-single digit growth expected in 2026, aided by completed revenue management actions.

Q: Treasury contract 2026 ramp and SG&A guidance A: Treasury contract is expected to have $45M in 2026 revenue, ramping to over $100M annually from 2027. SG&A is expected to drive 40 basis points of additional EBITDA margin expansion in 2026 through AI adoption and operating leverage improvements