MIAMI--(BUSINESS WIRE)--Cyxtera (OTC: CYXTQ), a global leader in data center colocation, interconnection services and digital infrastructure, today released a business update for the quarter ended September 30, 2023.
“We achieved solid results in the third quarter, demonstrating the strength of our core business, continued support from our customers, and robust demand for our innovative data center platform,” said Nelson Fonseca, Cyxtera’s Chief Executive Officer.
Preliminary Q3 2023 Financial Highlights (unaudited)
- Total revenue increased by $14.0 million, or 7.5% year over year, to $200.5 million in the third quarter.
- On a constant currency basis, total revenue increased by $12.3 million, or 6.6% year over year.
- Recurring revenue increased by $12.8 million, or 7.2% year over year, to $190.9 million in the third quarter.
- Core revenue increased by $16.2 million, or 9.4% year over year, to $189.0 million in the third quarter.
- Transaction Adjusted EBITDA increased by $3.7 million, or 6.3%, to $62.2 million and increased by $2.9 million, or 5.0% year over year, on a constant currency basis, in the third quarter.
Carlos Sagasta, Cyxtera’s Chief Financial Officer, said, “Q3 represented another quarter of growth across the business and we look forward to continuing to deliver consistent financial results as the business moves into its next phase.”
Cyxtera announced last week that it has entered into an asset purchase agreement (APA) under which Brookfield Infrastructure Partners L.P. (NYSE: BIP, TSX: BIP.UN) and its institutional partners (collectively “Brookfield”), will acquire substantially all of Cyxtera’s assets for $775 million. The transaction with Brookfield is expected to close in the first quarter of 2024, in conjunction with Cyxtera’s emergence from Chapter 11 proceedings.
In connection with the APA, Cyxtera also announced Brookfield will purchase the real estate at which seven of Cyxtera’s U.S. data centers are located. These transactions will allow Cyxtera to increase existing facility ownership, secure expansion opportunities, and further strengthen its data center platform.
Fonseca added, “Our APA with Brookfield, along with their investment in increasing our facility ownership, will enable Cyxtera to build on our consistent business momentum and drive our next phase of growth.”
Additional information regarding the Company’s court-supervised process is available at www.CyxteraRestructuring.com. Court filings and other information related to the proceedings are available on a separate website administrated by the Company’s claims agent, KCC, at www.kccllc.net/cyxtera; by calling KCC toll-free at (877) 726-6510, or (424) 236-7250 for calls originating outside of the U.S. or Canada; or by emailing KCC at firstname.lastname@example.org.
Kirkland & Ellis LLP is serving as legal counsel to Cyxtera, Guggenheim Securities, LLC is serving as financial advisor and AlixPartners, LLP is serving as restructuring advisor.
Cyxtera is a global leader in colocation, interconnection services, and digital infrastructure. With IT infrastructure becoming increasingly hybrid, complex, and distributed, Cyxtera continues to expand its portfolio beyond space and power to deliver more cloud-like and flexible infrastructure solutions across its global data center platform and robust partner ecosystem. Today, Cyxtera provides more than 2,300 enterprise and government customers with the technology solutions they need to scale faster, achieve financial goals, and gain a competitive advantage. For more information, please visit www.cyxtera.com.
This press release includes “forward-looking statements” within the meaning of the federal securities laws. Because forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of Cyxtera’s control. Actual results and conditions (financial or otherwise) may differ materially from those indicated in the forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results and conditions to differ materially from those indicated in the forward-looking statements, including, but not limited to, the risk that the transactions contemplated by the APA will not be consummated, or if they are consummated, that the transactions will not close within the anticipated time period or that the expected benefits of the transactions will not be realized when expected or at all; the risk that one or more conditions to closing under the APA cannot be satisfied; the occurrence of any event, change or other circumstances that could give rise to the right of Cyxtera or Brookfield to terminate the APA; the possibility that the transactions may be more expensive to complete than anticipated; risks and uncertainties relating to Cyxtera’s Chapter 11 cases (the “Chapter 11 Case”), including, but not limited to, Cyxtera’s ability to obtain Bankruptcy Court approval with respect to motions in the Chapter 11 Case, the effects of the Chapter 11 Case on Cyxtera and on the interests of various creditors, stockholders and other constituents; Bankruptcy Court rulings in the Chapter 11 Case and the outcome of the Chapter 11 Case in general; the length of time the Company will operate under the Chapter 11 Case; risks associated with third-party motions or other requests in the Chapter 11 Case; the potential adverse effects of the Chapter 11 Case on the Company’s liquidity or results of operations and increased legal and other professional costs necessary to execute the reorganization; uncertainty associated with evaluating and completing any strategic or financial alternative as well as Cyxtera’s ability to implement and realize any anticipated benefits associated with the alternative pursued; the impact of any challenge by creditors or other parties to previously completed transactions; the consequences of the acceleration of the Company’s debt obligations; and any other statements regarding plans, objectives, expectations and intentions and other statements that are not historical facts. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the “Risk Factors” disclosed in Cyxtera’s filings with the SEC from time to time. There may be additional risks that Cyxtera does not presently know or that it currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Cyxtera’s expectations, plans or forecasts of future events and views as of the date of this press release. Accordingly, you should not place undue reliance upon any such forward-looking statements in this press release. Neither Cyxtera nor any of its affiliates assume any obligation to update this press release, except as required by law.
Statement Regarding Non-GAAP Financial Measures
This press release contains Transaction Adjusted EBITDA, which is a supplemental measure that is not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). Transaction Adjusted EBITDA represents the measure of EBITDA disclosed to Starboard Value Acquisition Corp. (“SVAC”) in connection with its consideration of the business combination transaction between SVAC and Cyxtera. Cyxtera defines Transaction Adjusted EBITDA as net income (loss) before the following items: depreciation and amortization, interest and other expenses, net, income tax expense (benefit), equity-based compensation and retention bonus, straight-line rent adjustment, amortization of favorable / unfavorable leasehold interest & asset retirement obligation accretion, stand-up separation & other, restructuring costs & other, goodwill impairment, reorganization items, pre-petition bankruptcy cost, REIT conversion cost and change in fair value of warrant liabilities. As a non-GAAP financial measure, Transaction Adjusted EBITDA excludes items that are significant in understanding and assessing Cyxtera’s financial results or position. Therefore, this measure should not be considered in isolation or as an alternative to net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP. You should be aware that Cyxtera’s presentation of this measure may not be comparable to similarly-titled measures used by other companies. You should review these measures to the most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate Cyxtera’s business.
This press release includes constant currency revenue and Transaction Adjusted EBITDA, which are non-GAAP financial measures and are not meant to be considered in isolation or as an alternative to GAAP revenue and GAAP net income (loss). Cyxtera has presented these non-GAAP financial measures to provide investors with an additional tool to evaluate its results without the impact of fluctuations in foreign currency exchange rates, thereby facilitating period-to-period comparisons of Cyxtera’s business performance. To present this information, Cyxtera’s current and comparative prior period revenues and certain operating expenses from entities with functional currencies other than the U.S. dollar are converted into U.S. dollars at a consistent exchange rate for purposes of each result being compared.