Switch stock drops after quarterly earnings call
Switch, a data center company based in the Las Vegas area, saw shares drop about 6 percent after hours following the company’s quarterly earnings report Tuesday.
New deals take a long time to show in the company’s earnings because of how Switch structures its contracts for storing data.
“We’re confident they will deploy and that will turn into revenue,” company Chief Financial Officer Gabe Nacht said during a conference call Thursday.
Nacht and company President Thomas Morton used the stock market as an example of what can delay signed deals. Because of a downturn, a client hit delays in financing for moving data onto Switch’s services.
In a project delay attributed to Mother Nature, the executives said rain has impacted construction of a new data center campus in Atlanta, pushing the completion date to the last quarter in 2019.
This campus will put Switch in a more competitive market. Its existing locations are in the Las Vegas area, Reno area and in Grand Rapids, Michigan. Its customers range in size from startups to Fortune 100 companies. The company stores digital information created by businesses such as casinos, movie studios and video game makers as well as nonprofits and government agencies.
The company posted a net quarterly income of $4.7 million, down 72 percent year over year, and quarterly operating income of $12.5 million, down 51 percent year over year.
Switch blamed the decreases in part on payments related to going public in October 2017 and $6.1 million in depreciation.
Still, the company posted year-to-date revenue of $302.6 million, an increase of 8.5 percent over last year.
The company added 30 new clients during the third quarter, or 112 year to date. It signed 450 contracts, a value of $135 million.
One of its largest customers, eBay, also committed to a $56 million expansion to Switch’s campuses in the Las Vegas and Reno areas.
Switch holds debt of $503.2 million and $604.5 million in cash and credit.
Contact Wade Tyler Millward at 702-383-4602 or wmillward@reviewjournal.com. Follow @wademillward on Twitter.
