Q3 2024 Iron Mountain Inc Earnings Call
Good morning and welcome to the Iron Mountain 3rd quarter, 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance please sign up conference specialists by pressing the star key, followed by zero.
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Speaker Change: Please know this event is being recorded. I would now like to turn the conference over to Miss Gillian Tiltman, Senior Vice President and Head of Investor Relations. Please go ahead, ma'am.
Gillian Tiltman: Thank you, Chef. Good morning and welcome to our third quarter 2020 Board Irvings Conference Call. On today's call, we'll refer to materials available on our Investor Relations website.
Gillian Tiltman: We're joined here today by Bill Meaney, President and Chief Executive Officer, and Barry Hytinen, Executive Vice President and Chief Financial Officer. After prepare remarks, we'll open the lines for Q&A.
Gillian Tiltman: Today's earnings material contains forward-looking statements including statements regarding our expectations, all forward-looking statements are subject to risks and uncertainties.
Gillian Tiltman: Please refer to today's earnings materials, the State Parbo-Lingwich on Slide 2, and our quarterly report on Form 102 for the session of the major risk factors that cause our actual results to differ from those in our floor looking statements.
Gillian Tiltman: In addition, we used 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 Bill.
Bill Meaney: Thank you, Gillian, and thank you all for taking time to join us today to discuss our third quarter results.
Bill Meaney: We delivered another excellent quarter with record results across all financial metrics of revenue, adjusted EBITDA, and AFFO. This is a direct result of the portfolio-based momentum we have built, which will continue to deliver sustained double-digit growth.
Bill Meaney: During the quarter, we achieved our highest-ever quarterly revenue of $1.6 billion, up 12% from the prior year. We also set a new adjusted EBITDA record of $568 million, up 14%.
Bill Meaney: In addition, AFFO per share on a normalized basis was $1.12, up 10% compared to the prior year.
Bill Meaney: Given our strong performance year to date, we are now on track to achieve the high end of our full year 2024 guidance range.
Gillian Tiltman: I'll now turn to an update of our key achievements during the quarter, which are grounded in the following strategic priorities.
Gillian Tiltman: driving continued revenue growth in our physical storage records management business, delivering differentiated digital solutions which give truly transformative results to our customers in terms of revenue, cost, and cyber security.
Gillian Tiltman: providing asset lifecycle management capabilities which are both economic and environmentally sustainable and supplying differentiated data center offerings through our global scale and customer trust.
Gillian Tiltman: Now let me highlight some important wins from the quarter that showcase how we demonstrate the power of our platform.
Gillian Tiltman: Let's begin with our records and information management business.
Bill Meaney: In Australia, a large government department was looking for a partner that could provide a number of services. We earned their trust and signed a seven-year contract delivering storage, digital solutions, and asset lifecycle management services.
Bill Meaney: Turning to our digital solutions business, this quarter we launched our Insight Digital Experience or DXP, a SaaS based platform.
Gillian Tiltman: We launched this enhanced platform on the 1st of August and we have already booked 24 recurring revenue deals.
Gillian Tiltman: I'll speak to two existing customer wins where we cross sold our DXP offering.
Gillian Tiltman: Let's start with a customer in Mexico.
Gillian Tiltman: Due to new requirements in the country for all pension information to be digitized, a long-standing customer turned to Iron Mountain to swiftly gain compliance.
Bill Meaney: We have secured a DXP contract with this large financial services company to sort, digitize, and manage their pension records over the next 12 months, comprising more than 50 million images.
Bill Meaney: Secondly, in the U.S., a large healthcare company that is an existing records management and ALM customer will leverage our DXP platform to manage a complex set of multi-format records.
Bill Meaney: By digitizing and migrating this data into our DXP platform, our customer will be able to manage their records more effectively, including the elimination of ineligible claims.
Bill Meaney: This is an example how the power of our DXP platform drives value for our customers and our unique ability to support their physical and digital information management needs.
Bill Meaney: In Australia, a telecommunications provider needed services for the secure destruction and disposal of e-waste and IT assets.
Bill Meaney: Given our nationwide scale, this customer determined that we are the right partner for handling a high volume of IT hardware efficiently. As a result, Iron Mountain was awarded a recurring contract for these services.
Bill Meaney: In the U.S., our expanded footprint and capabilities following our acquisition of Regency technologies has resulted in a significant ALM contract with a global technology company.
Bill Meaney: Under this agreement, we will be managing all IT asset disposition services for our customers' U.S. operations, in addition to the records management services that we already provide.
Bill Meaney: The strength of our logistics capabilities was a major factor in winning this contract.
Bill Meaney: Consistent with our strategy to significantly grow our presence in the large and fragmented enterprise asset lifecycle management space, we are pleased to announce the acquisition of WiseTech, an end-to-end IT asset disposition company, which will provide us with an expanded footprint across Europe and the United States.
Bill Meaney: We also completed the acquisition of APCD, a leading Australian IT asset disposition specialist. These acquisitions will enable us to continue to expand our reach across a number of categories.
Bill Meaney: Turning to our data center business, I would like to share two examples that demonstrate the continued demand for capacity at our campuses across the world.
Bill Meaney: In Virginia, our team won a second two megawatt deal with a global technology company building on a similar deal with this customer at our data center in Pennsylvania earlier this year.
Bill Meaney: In Arizona, we are supporting a global fintech provider to migrate from an internal data center in a 1.5 megawatt deal with scope for further expansion. Our compliance program was a deciding factor for this highly regulated customer.
Bill Meaney: The leasing achieved in the first three quarters brings us to 106 megawatts compared to the increased guidance for the year of 130 megawatts.
Bill Meaney: To conclude, I'll leave you with three key takeaways.
Bill Meaney: Our strategy is built on the strength of our portfolio of growth businesses, including digital solutions, data center, and asset lifecycle management, each growing at a CAGR of 20 plus percent.
Bill Meaney: This, coupled with the mid to high single-digit growth of our records management business, will continue to deliver consolidated growth in excess of 10% for years to come.
Bill Meaney: This growth is sustained and resilient given it is based upon a portfolio of products and services that meet the current and future needs of our customer base of nearly 250,000 customers including 95% of the Fortune 1000.
Bill Meaney: and the cornerstone of this strategy is our company's DNA of placing our customers needs and well-being at the heart of how we serve them. This is all thanks to our dedicated team of Mountaineers.
Bill Meaney: With that, I'll turn it over to Barry to provide more details on our financial results and outlook.
Barry Hytinen: Thanks, Bill, and thank you all for joining us to discuss our results.
Barry Hytinen: In the third quarter, our team delivered strong performance across all of our key financial metrics including revenue, EBITDA, and AFFO.
Barry Hytinen: Results for each of those were ahead of the projections we provided on our last call. Our team drove solid performance across all of our business segments, each of which I will discuss in more detail before turning to our outlook for the fourth quarter.
Bill Meaney: During the third quarter, we achieved record revenue of $1.56 billion, up 12% on a reported basis, driven by 9% storage growth and 17% service growth.
Bill Meaney: We delivered strong, organic growth in the quarter of 10%.
Bill Meaney: Total storage revenue in the quarter was $936 million, up $77 million year-on-year. We drove 9% organic storage growth, two-thirds of which was driven by revenue management trends in our global RIM business, and one-third from our data center business.
Bill Meaney: Organic service revenue growth accelerated to 10% year-on-year. I will note this represents our best quarterly growth rate for organic service revenue in the last two years.
Bill Meaney: Revenue was driven by strong performance in our ALM and global ring businesses.
Bill Meaney: Reported service revenue growth at 17.4% reflects the inclusion of our Regency Technologies acquisition.
Bill Meaney: Adjusted EBITDA was $568 million, a new record, up 14% year-on-year, driven by strong growth in our Global Rim, ALM, and data center businesses.
Bill Meaney: On a constant currency basis revenue was up 13% and <unk> was up 11% now turning to segment performance.
Bill Meaney: I'll start with our global rim business, which achieved revenue of 1.2 dollars $6 billion, an increase of $78 million year on year.
Bill Meaney: Organic storage was up in excess of 7% driven by revenue management and consistent volume.
Bill Meaney: Organic service revenue was also up 7% with contributions from digital and core services.
Bill Meaney: A key highlight is the performance of our digital business.
Bill Meaney: Team launched the digital experience platform that Bill mentioned, while also delivering their best bookings quarter, yet consistent with our Matterhorn plan. The vast majority of the digital wins were the result of cross selling.
Bill Meaney: Global rim, adjusted EBITDA was $569 million, an increase of $52 million year on year Global rim. Adjusted EBITDA margin was up 120 basis points sequentially and 140 basis points from last year margin expansion was driven by operating leverage and revenue management.
Bill Meaney: Turning to our global data center business. The team delivered revenue of $153 million, an increase of $26 million year on year from a total revenue perspective, we achieved 20% organic growth, we delivered storage rental revenue growth up 22% from the third quarter of last year.
Bill Meaney: As expected service revenue was down slightly this quarter due to the customer specific installation work, we had last year.
Bill Meaney: As a reminder, installation revenue tends to be at low to breakeven margins datacenter adjusted EBITDA was $67 million, representing strong growth of 26%. Adjusted EBITDA margin was 43, 6% an increase of 190 basis points from the third quarter of last year and up 40 basis points sequentially.
Bill Meaney: Italy.
Bill Meaney: Margin expansion was driven by pricing recent commencement and operating leverage.
Bill Meaney: Turning to new and expansion leasing we signed nine megawatts in the quarter, bringing total bookings year to date to 106 megawatts and we expect to finish the year with 130 megawatts of new leases signed in 2024.
Bill Meaney: Consistent with the strength and expanding nature of our hyperscale customer relationships together with the outlook for long term secular growth in the datacenter industry. We are pleased to announce that we have acquired a development site in Richmond, Virginia.
Bill Meaney: When fully built out the campus will operate with greater than 200 megawatts of capacity as this transaction closed in the fourth quarter. It is not included in our supplemental with this new market. Our total data center capacity rises to an excess of 1.1 gigawatts an increase of over 20%.
Bill Meaney: Turning to asset lifecycle management total a L. M revenue in the quarter was $102 million, an increase of $61 million or 145% year on year.
Bill Meaney: On an organic basis or a L. M team delivered strong double digit growth, which was driven by datacenter decommissioning and expansion in our enterprise business.
Bill Meaney: Regency technologies performed very well this quarter with revenue of $36 million, leveraging regency's capabilities, capturing synergies related to the deal and improved efficiencies in our data center decommissioning resulted in considerable improvement in a L M profitability.
Bill Meaney: Our focus on cross selling is delivering great results for example over 95% of our bookings this quarter were cross sell wins.
Speaker Change: Regarding the a L M acquisitions that bill referenced we closed a P. C D in August and it contributed $3 million to revenue.
Speaker Change: We close wise text in late September. So we had no income statement contribution in the quarter from that acquisition.
Speaker Change: Turning to capital allocation, we really remain committed to our strategy that is balanced between funding our growth initiatives, while delivering meaningful.
Speaker Change: Turns to our shareholders and maintaining a strong balance sheet.
Speaker Change: Capital expenditures in the third quarter were $415 million with $373 million of growth and $41 million of recurring.
Speaker Change: Turning to the balance sheet with strong EBITDA performance, we ended the quarter with net lease adjusted leverage of 5.0 times, which is again the lowest level. We have achieved since prior to the company's REIT conversion in 2014.
Speaker Change: For me a highlight in the quarter was the significant improvement in our cash cycle with the third quarter, having the best performance in that metric in over a decade, our team drove day sales outstanding down by over five days from the third quarter of last year also we improved days payable by two days.
Speaker Change: Turning to our dividend our board of directors declared a quarterly dividend of 71, and a half cents per share to be paid in early January.
Speaker Change: And now turning to our projections.
Speaker Change: For the full year, we are on track to achieve the high end of our guidance.
Speaker Change: For the fourth quarter, we expect revenue of approximately $1 6 billion adjusted EBITDA of approximately $595 million a F. A bowl of approximately $358 million and <unk> per share of approximately $1 and 21 in conclusion or.
Speaker Change: Third quarter results represent another milestone on our growth plan.
Speaker Change: We operate in very large categories with a total addressable market in excess of $150 billion annually and growing.
Speaker Change: Iron Mountain has long standing relationships with nearly 250000 clients many measured in decades and duration and in the vast majority of those relationships. We are only penetrated with a small fraction of our total product offering.
Speaker Change: We are driving value for our customers and we are highly focused on cross selling and expanding market share across our businesses I would like to thank all of my fellow mountaineers for their efforts to serve our clients and grow our company and with that operator would you. Please open the line for Q&A.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: We will limit analysts to one question you can rejoin the queue at this time, we'll pause momentarily to assemble our roster.
Speaker Change: And the first question will come from George Tong with Goldman Sachs. Please go ahead.
George Tong: Alright, thanks, good morning.
George Tong: In your <unk> business can you talk a little bit more about trends that you're seeing in the datacenter and enterprise.
Speaker Change: Business, including how much contribution you're seeing from volumes and pricing.
Speaker Change: Good morning, George Thanks for the question, let me, let me talk about the the overall trends and Barry I'll ask you to comment a little bit on the pricing trends. So as you as you I think alluded to is that we see good growth or a very strong growth coming out of the datacenter decommissioning, especially where a lot of the hyperscale or are renewing their equipment.
Speaker Change: To take advantage of the latest GPU. So we continue to see strength in that trend, but that's not to preclude the hour to ignore the strength in the the growth the volumetric trends that we see also on the enterprise side, but you're right to assume that we see good growth in the Hyperscale segment due to the refresh of some of their equipment to take advantage of.
Speaker Change: Hi.
Speaker Change: And George it's very I would say from a pricing standpoint, we continue to see are expected to trend as I've been discussing throughout the year. You know it was up some on a year over year basis and trending. However, you know the spreads between new and a second handed year have been.
Speaker Change: Then a little bit variable based on the specific component so with memory for example, being a little wider than normal in some of those others being a little tighter as I've said before we're not really predicating our guidance on a really meaningful increase in component pricing and just give you a perspective on this are totally island business was 102 million.
Speaker Change: Oh of revenue almost 103 million actually in the quarter as I mentioned Regency was $36 million and then we had about $3 million from a P. C D, which means our organic revenue in the quarter on a L. M was about 64 million and that compares to last year at $42 million. So we are to Bill's point of volume.
Speaker Change: As is driving a lot of increase.
Speaker Change: And with that volume together with the synergies from our Regency deal, we're seeing the a L. M profitability the up a lot. So we're very pleased with way, our ale and business friendly George.
George Tong: Got it very helpful. Thank you.
Speaker Change: The next question will come from Jonathan Atkin with RBC. Please go ahead.
Jonathan Atkin: Thank you wanted to ask about Capex.
Jonathan Atkin: Capex requirements to kind of fuel the growth going forward.
Jonathan Atkin: Give us a sense as to how to maybe frame that for for the next year I assume a lot of that would be data centers.
Jonathan Atkin: Any color on that would be helpful. Thank you.
Speaker Change: Hi, John It's very you are correct that in light of the strong growth we continue to see in leasing we.
Speaker Change: We will be continuing to invest significantly in data center, our growth capital and in fact, we'll probably be somewhere in the vicinity of a couple of hundred million dollars more growth capital than we were previously expecting.
Speaker Change: Expecting earlier in the year in light of the signings and and as you probably saw in our supplemental we we are advancing pretty heavily in some of the construction of all the pre leased assets is as I've said before important note is nearly everything that we have under construction is already pre leased.
Speaker Change: On very very favorable terms, so our total guidance for capital. This year is probably approaching $1 8 billion and with about.
Speaker Change: Approaching $150 million of that being recurring the vast vast majority of the growth is for data center and I think you should probably expect something of that order or so going forward in light of the signings that we've had and the amount of.
Speaker Change: Capacity will be bringing online under those pre lease agreements. Thank you.
Speaker Change: The next question will come from Shlomo Rosenbaum with Stifel. Please go ahead.
Shlomo Rosenbaum: Hi, Thank you very much could you talk a little bit about kind of the pacing of when you expect some of the construction to come on board there wasn't a ton of sequential revenue growth in the data center business and obviously there wasn't a huge signing quarter relative to what we saw in the last couple.
Jonathan Atkin: Quarters. So once you know if you could just give US you know I know, it's lumpy on the siding side and obviously you have to put something into commission that you're actually the customers using it in order to generate revenue can you give us a little bit of an idea of how we should think about the pacing into the fourth quarter and then in general over the next you know year or so how or how.
Speaker Change: Is that Oh looking are you looking to bring a lot of new capacity or new data centers actually into service.
Speaker Change: Yeah. Thanks, Thanks Shlomo for the question. So there's a few pieces in there. So let me let me start first of all about the signing this quarter the nine megawatts and as you alluded to and I think we said on the last call. There was some that kind of we expected in Q3 last time in Atlanta in Q2, we still feel very good with the pipeline that we have to.
Jonathan Atkin: Our land at 130 megawatts or maybe a little bit better for the year because of the lumpiness of some of these large hyperscale contracts that you that you mentioned, but we're really pleased with the these two contracts that we signed or are the two that I've mentioned on the call for instance, because these are you know more colo, which obviously attract very.
Jonathan Atkin: High margins. So we feel really good about the overall guidance for the year and I think in terms of the revenue growth in the pickup that you mentioned is the commencements are actually driving that so we actually see an acceleration of revenue growth both year over year over year and sequentially as we head into the fourth quarter.
Jonathan Atkin: Which is really going to set us up well as we get the momentum to continue to carry this strong double digits and datacenter case, you know you know north of 20% CAGR in that in the growth of that business as we as we go into 2025 and that's reinforced by the fact that we announced at since the close of the quarter, but.
Jonathan Atkin: In Q4, we've already purchased more land to build out our campus in Richmond, Virginia that Barry mentioned in his remarks. So we feel really good about the setup as we go into 2025, the fourth quarter will be very strong and arrow Barak you want to add anything Shlomo the only other color I suppose I would provide is you would see.
Jonathan Atkin: In the supplemental that we did commence a into a revenue generating and finish construction. If you will on a quite quite a few megawatts, but the vast majority of that was right at the end of the quarter. So it really contributed almost very de minimis amount of revenue to the.
Jonathan Atkin: The headline results and so that's one of the reasons why we have a high degree of visibility to you know something in the neighborhood of probably 20 plus million or more of incremental data center revenue in the fourth quarter versus the third that incidentally is up from our prior guidance, reflecting the fact.
Jonathan Atkin: Our team is doing great job with keeping construction on budget and on time and as you would see in the supplemental we got quite a few commencements coming.
Jonathan Atkin: Over the next couple of three or four quarters. So you should be anticipating ramping levels of datacenter revenue from us going forward and I'll just I'll just point out that as we said before the returns we've been writing have been improving pricing and obviously in datacenter has been getting better for quite some time now.
Jonathan Atkin: And so that's one of the reasons why you're seeing the margin step up sequentially and we expect that trend to continue so we feel.
Jonathan Atkin: Quite good about where we are.
Jonathan Atkin: Next question.
Speaker Change: Your next question will come from Nate Crossett with BNP. Please go ahead.
Nate Crossett: Hey, good morning.
Nate Crossett: I was wondering if you could give us your expectation for RIN volumes in four Q and maybe into next year, what should we expect for room pricing.
Nate Crossett: And then one on the Richmond land does that power provision already and maybe when can we see you start developments on that site.
Nate Crossett: Yeah.
Speaker Change: Thanks, Dan let me start with the the Richmond, Yes that is power provided and as you say that it'll be north of 200 megawatts of critical I T loads, So where we're really pleased for that expansion and I'll, let Barry talk about the the rim, a volume and pricing sure Hi, Nate.
Speaker Change:
Barry Hytinen: As you would see in the supplemental we continue to expand our total physical volume in the quarter and we expect that trend to continue certainly in the fourth quarter and going into next year. You know the team is doing a great job capturing market share and growing our physical volume pricing.
Barry Hytinen: Our revenue management, we were clearly focused as I mentioned on driving value for our clients and with that value I think where you really only provider that can serve clients, especially our larger clients in the ways that we do and we're offering new offerings that make the value of that much higher things like smart store image on demand.
Barry Hytinen: And our DXP platform among among numerous other offerings that drive value for clients. So you would see that the total revenue in global rim on the storage side was up a little over 7% organic in the quarter and that was very much in line in fact, a little bit ahead of what.
Barry Hytinen: We were expecting as the team continues to do very well driving that value. Thank you.
Barry Hytinen: Oh, and I would say you mentioned about for next year. So you know our long term outlook continues to be that our physical volume will be flattish to slightly up I see no reason why at this point that would be any different next year and similarly, I think as long as we're continuing to drive value for clients. As we are you should be anticipating our revenue.
Speaker Change: Management opportunities to be of the same order that we've been speaking about for some time, which is that mid to upper single digit. Thank you.
Speaker Change: The next question will come from Kevin Mcveigh with UBS. Please go ahead.
Kevin Mcveigh: Great. Thanks, so much good morning, I guess, a very I think you'd talked to kind of revenue and EBITDA at the upper end of the range last quarter or two it looks like you beat by a little bit in the quarter.
Speaker Change: And any thoughts as to just why was reaffirmed as opposed to not take it up with one quarter left in the year.
Barry Hytinen: Was that FX hit any puts and takes on that.
Speaker Change: Hey, Kevin So good morning, really appreciate the question I appreciate the kind words I would say you know we have been saying all year long that what our full year guidance was and we've just taken it to the high end and frankly, if you work through the guide you'd find that we're probably going to be a.
Barry Hytinen: A little bit above the high end for revenue and EBITDA are based on our fourth quarter projection. So and then a F O and ethical per share kind of works out to right at the high end of the guidance of course, you're right FX has been a headwind to us all year, probably at least as much of a headwind in the fourth quarter as it was in the third quarter in light of the dollar.
Barry Hytinen: Frank and I know that.
Barry Hytinen: It makes sound a little bit just getting into the weeds, but that may sound a little counter to what you expect when you look at it say the pound and the euro but don't forget we have a fair amount of exposure in Latin America, We've got a great business. There incidentally, our Latin America business is doing phenomenally, well really growing bookings in our digital business has taken off dramatically in Latam and but with.
Barry Hytinen: That we are exposed to the Argentine peso, the Chilean currencies of the Brazilian real and so all of those you would see how it had a really tough go versus the dollar. So that's disproportionately impacting our revenue and our EBITDA, but look we feel really good about where we are.
Barry Hytinen: And our outlook is is very favorable and as we've said before we are running well ahead of our long term target for a CAGR of 10% that we issued at the Investor day.
Barry Hytinen: We're probably running to 300 basis points or more above that for the first few years of that target and we continue to expect to be at or above those levels and driving considerable profitability and that is based on our.
Barry Hytinen: Our growth portfolio that bill spoke about we expect that growth portfolio to continue to grow at an excess of 20% for a long period of time, that's a L M digital and data center, coupled together with the strength of our global rim business.
Speaker Change: Next question.
Speaker Change: Next question will come from Andrew Steinman with J P. Morgan. Please go ahead.
Andrew Steinman: Hi, everybody a question on I insight you caught my ear with the 'twenty two when John in fact, DXP platform I wanted to know if I am out Jan is getting much revenues French site I know kind of initially that wasn't the strategy more of a cross sell so if you're not getting much revenue years, what's kind of a typical revenue.
Barry Hytinen: It was you're getting from new storage contracts that are bundled with the insight capability and it's a 22, a large number of insight wins like why why should we understand this to be important.
Speaker Change: Thanks, Andrew.
Speaker Change: I appreciate the question. So so first of all it's 24, but who's counting but I'm just but first of all we don't do anything for free. So these are when I say highly profitable. These are the typical kind of double digit service contracts that you that you're used to watching US you know them.
Speaker Change: Think of these things depending on the length of the contract depending on.
Speaker Change: How much productivity, we build enduring the length of the contract, but think of it in somewhere between 20, and 40% gross margin contracts and the nice thing about these with the DXP platform not only we are attracting those contracts is I mean, you've been watching our company for a long time, you know our when we started up our digital businesses that we were doing relatively little.
Speaker Change: Area of workflows much more feeding their data lakes by the Digitization of physical documents. This DXP platform not only you know part of that is you know there there is a digitization part, but more importantly, what I'm talking about the 20% to 40% margin depending on the length of the contract are they and how much productivity we can build.
Speaker Change: During the course is lots of times, it's taking in data that's completely digital is born digitally and we're putting that onto our SaaS platform, creating metadata automatically and putting workflow around that so I think I highlighted are the.
Speaker Change: The the the savings Bond example, recently that was the precursor to DXP, where we took 2 billion micro Fisher images of historical savings for savings bonds, where they couldn't find the owners and 96% of them, we were able to process with the precursor of DXP, which we called insight.
Speaker Change: And without a person in the loop and identify the owner so it's that kind of power in this platform and of course, we've taken at the next step further and it's a fully SaaS based platform, but yeah. We are we like the profitability of this business, we really like the growth of the business and generally I think you know me well enough I don't do anything for free.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: The next question will come from Eric Lu Chao with Wells Fargo. Please go ahead.
Speaker Change: Thanks appreciate you taking the question maybe.
Speaker Change: Maybe you could just touch on kind of some of your longer term aspirations with a O M. I know at your Investor Day, a couple of years ago, you talked about getting to nine.
Speaker Change: 900 million or so of revenues by 2026, that's obviously a pretty massive ramp from where you're currently at so I just wanted to confirm if that's still your stated goal and maybe how you can kind of bridge from where you're at today call. It just north of $400 million.
Speaker Change: And annualized revenue to our cause.
Speaker Change: That number you know whether it comes from component pricing volume or or incremental M&A that you may or may not do.
Speaker Change: Let me thanks, Eric I appreciate the question. So I think yes, we still very much have line of sight to the targets that we set out on Investor day now obviously, that's a combination of organic growth and as Barry pointed out we had very very strong organic growth this quarter.
Speaker Change: We continue although it was up over 50%. This quarter. We continue to guide that we can maintain over 20% growth because there's obviously some fluctuation in the pricing of components over time, and we saw that you know a year and a half or two years ago, but if you look at the volumetric trends that we see in that business, whether it be an enterprise whether it be on hyperscale.
Speaker Change: Data centers or even enterprise data centers decommissioning is the are the amount of volume that because people have a different a different need as they refresh their equipment than maybe they had 10 years ago, both environmentally and from a security standpoint, we see the volumetric trends of that are really strong.
Speaker Change: Double digit growth business and in addition, we like the two acquisitions, we highlighted that we did in Q3, we see that there's a number of these acquisitions that will continue to build so we feel really good about the targets that we outlined on Investor day, I don't know Barry if you want to add anything.
Barry Hytinen: Hi, I think Eric the topline target that we provided for the whole company was 10% and we're obviously running you know as I mentioned earlier, a couple of hundred three to 300 basis points ahead of that we I think our growth portfolio continues to outperform and our global business.
Barry Hytinen: So it's considerably ahead of where our.
Speaker Change: Projections were at that time in the scenario that you're referring to.
Speaker Change: I'll just underscore a L. M is a really big category and the Tam. There is is it means we're already one of the if not the largest player and I think Gulf from an organic and inorganic standpoint, we can be.
Speaker Change: Become the market leader in that space and you saw us.
Speaker Change: Doing that both on the organic side as well as with the couple of recent complementary deal. So we feel.
Speaker Change: Quite good about a L. M. It is very much on track with our strategy for cross selling and.
Speaker Change: Driving more value for our clients next question. Please.
Speaker Change: Next question will come from Brendan Lynch with Barclays. Please go ahead.
Brendan Lynch: Great. Thank you for taking my question I'm going to stick with the L. M theme can you just give us some more details around why stuck in the a b C. D in terms of their geography and their product offering maybe their customer focus between enterprise and Hyperscale.
Speaker Change: And also your.
Speaker Change: The <unk>.
Speaker Change: Appetite you have for larger acquisitions instead of maybe some of these bolt ons.
Speaker Change: Thanks, Brian for the question. So let me I'll talk a little bit about the categories that they are in geographies that they bring so wife's tech really helps us expand our our portfolio primarily in Europe, and North America. So they had a good presence in both markets.
Speaker Change: They also bring strong customer relationships both on the enterprise, but also we picked up a new hyperscale customer through the acquisition of <unk>, which was great. This is a customer that we have a relationship in some of our other businesses already.
Speaker Change: But you know having picking up the the hyperscale relationship on the a L. M side. In addition through the through the wife's Tech acquisition was really great. I think also you know obviously the acquisition we did in Australia does build out our capabilities in Australia, which has always been in there.
Speaker Change: Strong and important market for Iron mountain, but it allows us to actually broadened our portfolio of services for our customers. There are Barry if you want to talk a little bit more about.
Barry Hytinen: Hi, Brendon good morning, we didn't really disclose financial terms on these couple of smaller deals, but I will tell you that combined they probably represent in the vicinity of 70 580 million run rate U S. Dollar revenue and they are wise Tech is based in Ireland.
Barry Hytinen: That has decent size operations as bill was mentioning both in Europe, as well as U S and a little bit in Asia.
Barry Hytinen: A P C D. As I mentioned is based in Australia, and the thing about Australia is a that's a that's a large datacenter market is I know you know because you follow the data center industry. So well so that is an underpenetrated opportunity for us both in terms of enterprise as well as decommissioning and so.
Speaker Change: We feel very good about these opportunities you've seen what we've been able to do even still early on with our regency.
Speaker Change: Acquisition I think all of these create more scale more capability and more reach for us to serve our global client base a much more effectively.
Speaker Change: And as it relates you mentioned there are we open to larger deals. The thing about this is there's really I mean, we're already the largest player. So after you get past us and a couple others that are you know say half our size. They are then the all the all the players that are in the space are relatively small Brendan so you're thinking like 100.
Speaker Change: Million revenue or less and so I don't think you should anticipate anything.
Speaker Change: Large in that space, and but you know frankly, where we're doing quite well on the organic side and we're very happy to welcome the team from Wise Tech and a P. C D to our to our company. So thank you for the questions.
Speaker Change: Okay.
Speaker Change: This concludes our question and answer session and the Iron Mountain third quarter 2024 earnings Conference call. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Okay.
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