QTS, a provider of hybrid colocation and mega scale data center solutions, has reported its results for the first quarter of 2020. Since the beginning of the economic disruptions from COVID-19, QTS has experienced a modest increase in customer requests for payment relief. The quarter ended well though, with consolidated revenues of $126.3 million – an increase of 12.1% compared to the same period in 2019.
QTS owns, operates or manages 24 data centers and supports more than 1,200 customers primarily in North America and Europe.
QTS has reported an Adjusted EBITDA of $66.8 million for the quarter ended March 31, 2020, an increase of 13.5% compared to Adjusted EBITDA of $58.8 million for the same period in 2019.
The COVID-19 related increase in customer requests for payment relief was primarily concentrated in the retail, oil and gas, hospitality and transportation customer verticals, according to QTS. As of March 31, 2020, less than 10% of QTS’ MRR balance was generated from these industries. The total revenue associated with customers requesting some form of payment relief represented less than 5% of QTS’ revenue for the three months ended March 31, 2020.
The large majority of customers requesting some form of payment relief were current on their rental payments. While QTS has not reduced their future payments, it has in certain circumstances provided additional flexibility in the form of extended payment terms.
“In the midst of unprecedented disruption across the economy as a result of the COVID-19 pandemic, QTS’ business has continued to execute well,” said Chad Williams, Chairman and CEO of QTS. “Following a year of record leasing performance in 2019, we are pleased to extend our momentum with another strong performance in the first quarter. Our strategic differentiators, record booked-not-billed backlog and strong balance sheet and liquidity position QTS well to continue to drive market share growth.”
Modest Selays in Construction Activity
QTS is actively monitoring developments with respect to COVID-19 and has taken numerous actions based on corporate policies specifically focusing on the safety and wellness of its customers, partners, and employees, as well as providing continuous and resilient services.
In addition to these customer requests for payment relief, QTS also has experienced modest delays in construction activity in a few of its markets primarily as a result of availability of contractors and slower permitting. However, none of these delays are expected to create a material adverse change in QTS’ anticipated infrastructure deliveries to customers.
From a supply chain perspective, given the long-lead time generally associated with larger components in data center development, such as generators, UPS systems and chillers, QTS has acquired the vast majority of equipment needed to complete its 2020 development activities. In addition, the company has accelerated the acquisition of additional infrastructure equipment to support its early 2021 expected development activity around its customers’ continued growth expectations.
Although the COVID-19 pandemic is causing significant disruptions to the United States and global economy and has contributed to significant volatility and negative pressure in financial markets, these developments have not had a known material adverse effect on QTS’ business. Each of the company’s data centers in North America and Europe are fully operational and operating in accordance with its business continuity plans. Across each of the respective jurisdictions in which QTS operates, its business has been deemed essential operations, which allows QTS to remain fully staffed with critical personnel in place to continue to provide continued service and support for its customers.