Cyrusone Inc. (NASDAQ:CONE) Q3 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 11:00 am ET


Cyrusone Inc. (NASDAQ:CONE) Q3 2020 Earnings Conference Call - Final Transcript


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Bruce Duncan

share grew 14% versus last year, and the leasing volume remained strong with $37 million in annualized GAAP revenue side. The backlog as of the end of June was nearly $100 million, which positions us well for growth in 2021 and beyond. Turning to slide five. We completed construction on 212,000 square feet of colocation space and 27 megawatts in the quarter primarily in the U.S. We have another 336,000 colocation square feet and 82 megawatts under development, with nearly 80% of the square footage pre-leased.

We continue to strengthen our balance sheet, raising nearly $300 million in forward equity during the quarter through our ATM program, giving us a total of more than $410 million in available forward equity as of the end of June. We are also announcing a 2% increase in our quarterly dividend from $0.50 to $0.51 per share in the third quarter. Slide six provides details on our leasing results for the quarter. Both revenue and MRR per KW signed were up compared to the prior fourth quarter period. With a higher MRR per KW driven by particularly strong pricing on enterprise deals in the second quarter.

The weighted average lease term was seven years, and the relatively long average term reflects the significant contribution from hyperscale companies. The $10 million enterprise bookings is within the quarterly range, we have consistently seen in recent years, and we added three new Fortune 1000 companies as customers. The leasing was well diversified across markets and industry verticals, which has also been a long-term trend and reflects the broad appeal of our platform. Hyperscale companies accounted for 72% of revenue signed in the quarter. Through the first half of the year this segment accounted for approximately 77% of total revenue signed, up significantly from 51% in 2019.

As we have been communicating since early in the year, we have had much more productive leasing discussions with the hyperscalers compared to 2019. They are addressing near-term capacity requirements across both U.S. and European markets, and this has been reflected in our leasing results for the last two quarters. We continue to maintain a good dialogue and are in discussions with these customers on a number of opportunities, although it's obviously difficult to predict the timing and certainty of closing these deals. As of the end of the quarter this vertical accounted for 48% of total portfolio rent.

Moving to slide seven, our interconnection revenue increased 15% in the second quarter compared to last year. And nearly 90% of leases signed had an interconnection component. The interconnection growth continues to be primarily driven by a couple of factors: the first being the expansion of ecosystems within our data centers, resulting in additional demand for cross connect. Additionally, we continue to see strong take-up of SDN enabled offerings, particularly for Megaport as part of our customers' implementation of hybrid, multi-cloud solutions. On the right-half of the slide, we have provided updated key portfolio metrics for the company.

Turning to slide eight,