Cyxtera Technologies, Inc.

Hello and welcome to today's Sixterra second quarter 2022 earnings call. My name is Bailey and I'll be the operator for today's call. Later on, you will have the opportunity to ask a question. If you would like to register a question, please press star followed by one on your telephone keypad. I will now hand over to our host, Juan Edica, Senior Director of Finance. Please go ahead.

Thank you, Bailey. Good morning and welcome to our second quarter 2022 earnings conference call. On today's call, we will refer to materials available on our investor relations website at ir.sextera.com. We are joined here today by Nelson Fonseca, President and CEO, and Carlos Sagasta, our CFO. After prepared remarks, we'll open up the lines for Q&A. Before we begin, I would like to remind you that today's earnings materials contain forward-looking statements. including statements regarding our future expectations. All forward-looking statements are subject to risks and uncertainties. Please refer to today's earnings materials, the safe harbor language on slide two of our presentation, and our SEC filings for a discussion of the major risk factors that could cause our actual results to differ from those in our forward-looking statements. In addition, we use several non-GAAP measures when presenting our financial results. We have included the reconciliations to these measures in our supplemental financial information. With that, I'll turn the call over to Nelson.

Thank you, Kwong. Good morning, and thank you for joining us for our second quarter earnings call. We are pleased to report continued momentum for Sextera in the second quarter as we delivered solid results. and finished the first half of the year with strong demand for a full suite of infrastructure solutions. In addition, less than two weeks ago, we celebrated the one-year anniversary of becoming a public company. As we approached the anniversary, Sixtera was added to the Russell 2000 Index, which served as yet another proof point that our team's ability to execute our plan is delivering strong growth. These are significant milestones for Sixtera, And I want to thank all of our team members across the globe for their hard work and focus during this complex period. The second quarter represented the best net bookings quarter in our company's history, which further validates our strategy focused on developing and delivering leading edge infrastructure solutions from our global data center platform. Core bookings came in at over 28 million, an increase of 2.5 million with core churn dropping down to 0.7%, an improvement of 30 basis points over the previous quarter and 20 basis points year-over-year. We are ahead of our sales expectations at the midpoint of the year, and we enter the second half of the year with a strong pipeline of opportunities and a favorable pricing environment as a result of the robust demand from enterprise and service provider customers. This strong go-to-market momentum is also reflected in other key indicators across the business. Our stable occupancy is now over 74% as we continue to drive customer deployments in our existing data center footprint, a key component to our growth strategy. This increased occupancy is coming with pricing and revenue per cabinet that is stable to up in most markets. All of these metrics reinforce the strength of our differentiated strategy to provide easy-to-consume, cloud-like co-location on a global scale to meet the needs of the modern digital enterprise. Our results from the second quarter also point to the continued positive momentum from investments in our channel program. Annualized channel bookings in the quarter increased by 1.4 million, or 23% year-over-year, to 7.5 million. The channel produced about a quarter of the total bookings and highlights the significant progress we've made in this area. Our successful sales efforts are delivering strong revenue performance for the company. Total revenue increased by 8.7 million or 4.9% year over year in the second quarter. Court revenue increased by 9.4 million or 5.9% year over year. Transaction-adjusted EBITDA in the quarter decreased by $2.3 million, or a negative 3.8% year-over-year, but increased by $1.4 million, or 2.4% quarter-over-quarter. As we look at EBITDA performance, keep in mind that second quarter 2021 was Sixterra's last quarter as a private company, so we have successfully absorbed significant public company costs. While the fundamentals of our business continue to show strength, we do expect to experience some impacts from the macroeconomic trends that are affecting providers across the industry for the remainder of 2022. The increase in utilities cost we have experienced during the first half of the year is expected to accelerate during the second half of the year. Although we have established a cost recovery process that successfully passes through over 90% of the increased cost to our customers, there is an approximate 90-day lag to this process. Therefore, continued increases in utilities costs in the second half of 2022 cannot be completely recovered in this fiscal year. The completion of our Northern California data center has been delayed due to a combination of local regulatory and supply chain challenges. The data center is still scheduled to be completed in 2022, but the delay will impact second half 2022 performance. Effects will negatively impact second half 2022 performance if it remains at current rates. Although we can't fully quantify the exact impact of these items at the moment, we believe that our full-year EBITDA performance will now be in the low range of our initial 2022 EBITDA guidance. As a result, we are modifying 2022 EBITDA guidance to $232 million to $242 million, representing a lowering of the midpoint by 2.9%. Revenue and CapEx guidance remain unchanged due to our continued go-to-market momentum. Although the lowering of the EBITDA guidance range is disappointing, we are energized by the strong performance of the base business and recognize that these challenges are mostly timing in nature. Second half 2022 utilities cost increases that are not recovered in this fiscal year are expected to be recovered at a 90 plus percent attainment in 2023. The Northern California Data Center is expected to deliver full revenue and EBITDA impact in 2023. We remain committed to the long-term success of Sextera and are confident that our current trajectory positions us well to achieve our long-term objectives. Now let me pass it on to Carlos for some additional detail on the results.