Barry Hytinen

Thanks, Bill, and thank you all for joining us to discuss our results in the third quarter. Our team delivered strong performance across all of our key financial metrics, including revenue, EBITDA and AFFO 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, during the third quarter, we achieved record revenue of $1.56 billion, up 12% on a reported basis, driven by 9% store growth and 17% service growth delivered strong organic growth in the quarter, up 10%. 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.
Total service revenue was $622 million, up $92 million from last year. Organic service revenue growth accelerated to 10% year on year. I will note this represents our best quarterly growth rate for annex service revenue in the last two years.
Revenue was driven by strong performance in our ALM and global wind businesses. Reported service revenue growth at 17.4% reflects the inclusion of our Regency Technologies acquisition. Adjusted EBITDA was $568 million, a new record, up 14% year on year, driven by strong growth in our global room ALM. and data center businesses.
Adjusted EBITDA margin was 36.5%, up 50 basis points year on year, which reflects improved mark margins across all of our businesses. AFFO was $332 million, up $31 million, which represents growth in excess of 10% for the third quarter of last year. From the third quarter of last year.
Reported AFFO on a per-share basis was $1.13, up $0.11 from last year. AFFO per share included a $0.01 benefit due to our GAAP share count in the quarter. Normalizing for that AFFO per share was up 10% to $1.12, which is comparable to the projection we provided on our last call of $1.10.
The outperformance to our guidance was driven by higher adjusted EBITDA. As expected, the strength of the US dollar continued to be a headwind increasingly. So, toward the end of the quarter, on a constant currency basis, revenue was up 13% and AFFO was up 11%.
Now turning to segment performance. I'll start with our global wind business, which achieved revenue of $1.26 billion, an increase of $78 million year on year. Organic storage was up in excess of 7%, driven by revenue management in consistent volume. Organic service revenue was also up 7% with contributions from digital and core services. A key highlight is the performance of our digital business. The team launched the digital experience platform that Bill mentioned, while also delivering the best bookings quarter. Yet consistent with our matter one plan, the vast majority of the digital wins were the result of cross selling global room. Adjusted EBITDA was $569 million, an increase of $52 million year on year.
Global in 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. 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.
As expected, service revenue was down slightly this quarter due to the customer specific installation work we had last year.
As a reminder, installation revenue tends to be at low to breakeven margins. Data center 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.
Margin expansion was driven by pricing, recent commencements and operating leverage. Turning to new and expansion leasing, we signed nine megawatts in the quarter, bringing total bookings year to date to one of the year. 130 megawatts of new leases signed in 2024, consistent with the strength and expanding nature of our hyperscale customer relationships, together with the outlook for long-term secular growth in the data center industry, we are pleased to announce that we have acquired a development site in Richmond, Virginia 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 in excess of 1.1 gigawatts, an increase of over 20%. Turning to asset lifecycle management. Total ALM revenue in the quarter was 102 million, an increase of 61 million or 145% year on year. On an organic basis, our ALM team delivered strong double-digit growth, which was driven by data center decommissioning and expansion in our enterprise business. Regency technologies performed very well this quarter with revenue of $36 million. Leveraging Regency's capabilities. Capturing synergies related to the deal in improved efficiencies in our data center decommissioning resulted in considerable improvement in ALM. profitability.
Our focus on cross-selling is delivering great results. For example, over 95% of our ALM bookings this quarter were cross-sell wins regarding the ALM acquisitions that Bill referenced, we closed a PCD. in August and it contributed $3 million to revenue. We close those WiseTech in late September. So, we had no income statement contribution in the quarter from that acquisition. Turning to capital allocation remains remain committed to our strategy that is balanced between funding our growth initiatives while delivering meaningful returns to our shareholders and maintaining a strong balance sheet.
Capital expenditures in the third quarter were $415 million with $373 million of growth and $41 million of recurring. 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 a lowest level we have achieved since prior to the Company's reconversion in 2014. For me two minutes for five days from the third quarter of last year. Also, we improved days payable by two days.
Turning to our dividend, our Board of Directors declared our quarterly dividend of $0.715 per share to be paid in early January. And now turning to our projections for the full year, we are on track to achieve the high end of our guidance. For the fourth quarter, we expect revenue of approximately $1.6 billion, adjusted EBITDA of approximately $595 million, AFFO of approximately $358 million, and AFFO per share of approximately $1.21. In conclusion, our third quarter results represent another milestone on our growth plan. We operate in very large categories with a total addressable market in excess of $150 billion annually and growing Iron Mountain has long-standing relationships with nearly 250,000 clients, many measured in decades and duration in the vast majority of those relationships.
We are okay. We penetrated with a small fraction of our total product offering. 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?

Question and Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instruction) We'll pause momentarily to assemble our roster. In the first question will come from George Tong with Goldman Sachs. Please go ahead.

George Tong

Hi, thanks. Good morning. In your ALM business. Can you have a little bit more about trends that you're seeing in the data center and enterprise side of the business, including how much contribution you're seeing some volumes and pricing?

William Meaney

Morning, George, that thanks for the question. Let me let me talk about the overall trends and very us to comment a little bit on the pricing trends. So, as you as you I think alluded to is that we see good growth are very strong growth coming out of the data center decommissioning, especially where a lot of the hyperscale's are renewing their equipment take advantage of the latest GPUs. So we continue to see strength in that trend, but that's not to preclude the are to ignore the strength in the growth, the volumetric trends that we see also in 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 AI.

Barry Hytinen

And George, it's very, I would say from a pricing standpoint, we continue to see expected to trend, as I've been discussing throughout the year, goes up some on a year-over-year basis in trending. However, the spread between on new and second-hand year have been then a little bit variable based on the specific component. So, with memory, for example, being a little wider than normal and 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. You just give you a perspective on this are totally aligned. Business was $102 million of home.
As I mentioned, Regency was $36 million, and then we had about $3 million from APCD., which means our organic revenue in the quarter on a limb was about $64 million, and that compares to last year at $42 million. So, we are to Bill's point of volume is driving a lot increase. And with that volume together with the synergies from our Regency deal, we're seeing the airline profitability the up a lot. So, we're very pleased with where our ALM business is trending. George.

George Tong

Got it. Very helpful Thank you.

Operator

Your next question will come from Jonathan Atkin with RBC. Please go ahead.

Jonathan Atkin

Thank you all. Wanted to ask about on CapEx requirements to kind of fuel the growth going forward. Give us a sense as to how to maybe frame that for the next year? I assume a lot of that would be data centers, but any color on that would be helpful. Thank you.

Barry Hytinen

Hi, John, it's Barry. You are correct that in light of the strong growth we continue to see in leasing, we will be continuing to invest significantly in data center growth capital and in fact will probably be somewhere in the vicinity of a couple of hundred million more growth capital than we were previously expecting earlier in the year in light of the signings and as you probably saw in our supplemental, we are advancing pretty heavily and some of the construction of all the pre-leased assets is, as I've said before, our important note is nearly everything that we have under construction is already pre-leased. one very, very favourable terms.
So our total guidance for capital this year is probably approaching $1.8 billion. And with about approaching $150 million of that being recurring, the vast, vast majority of growth for data center, 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 capacity will be bringing online under those pre-lease agreements. Thank you.

Operator

The next question will come from Shlomo Rosenbaum with Stifel. Please go ahead.

Shlomo Rosenbaum

Hi, thank you very much of the key. Talk a little bit about kind of the pacing of when you expect some of the construction to come on board. It wasn't a ton of sequential revenue growth in the data center business. And obviously there wasn't a huge Sun wing quarter relative to what we see saw in the last couple of 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 them 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 that pacing into the fourth quarter?
And then just in general, over the next year or so, how are how is that oh looking? Are you looking to bring a lot of new capacity or new data centers actually into service?

William Meaney

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 in the last call, there was some that kind of we expected in Q3 last time that landed in Q2. We still feel very good with the pipeline that we have to 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 do that you mentioned that we're really pleased with the. Yes, these two contracts that we cited are the two that I mentioned on the call, for instance, because these are more coal low, which obviously attract very high margins.
So we feel really good about the overall guidance for the year. I think in terms of the revenue growth in the pickup that you mentioned is the commencements are actually driving this. We actually see an acceleration of revenue growth both year over year over year and sequentially as well. We head into the fourth quarter, which is really going to set us up well as we get the momentum to continue to carry this strong double digit and data center case, you know, north of 20% kegger and that the growth of that business as we as we go into 2025. And that CEO reinforced by the fact that we announced since the close of the quarter.
But in Q4, we've already purchased more land to build a lot of 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 very if you want to add anything.

Barry Hytinen

Shlomo, the only other color I suppose I would provide is you would see in the supplemental that we did commence on into a revenue generating and finish construction, if you will, on a quite a few megawatts. But the vast majority of that, it was right at the end of the quarter.
So really contributed almost very de minimum amount of revenue to the home to the headline results. And so that's one of the reasons why we have a high degree of visibility to something in the neighbourhood 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 to reflect putting the fact that our team's doing a 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 on over the next couple, three, four quarters. So, you should be anticipating a ramping levels of data center 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, obviously, in data center has been getting better for quite some time now. 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 quite good about where we are.

Operator

Our next question. The next question will come from Nate Crossett with BNP. Please go ahead.

Nate Crossett

Hey, good morning. I was wondering if you could give us your expectation for volumes in 4Q and maybe into next year, what should we expect for RIM pricing? And then one on the Richmond land, is that power provision ready? And maybe when can we see the developments on that site?

William Meaney

Thanks, Nate. Let me start with the Richmond light. Yes, that is power provided. And as you say, that will be north of 200 megawatts of critical IT. load. So, we're really pleased with that expansion. And I'll let Barry talk about the RIM volume and pricing.

Barry Hytinen

Sure. I need them, 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. The team is doing a great job capturing market share and growing our physical volume, pricing revenue management. We were clearly focused, as I mentioned, on driving value for our clients and with that value.
And I think where you think the 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 that much higher things like small, our store in the John demand, RDXP. platform among numerous other offerings that drive value for clients. So, you would see that the total revenue in global room on the storage side was up a little over 7% organic in the quarter. And that was very being as the team continues to do very well driving that value.

William Meaney

Thank you, Tim. And I would say you mentioned, but for next year, so 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 will 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 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.

Operator

The next question will come from Kevin McVeigh with UBS. Please go ahead.

Kevin McVeigh

Great. Thanks so much. Good morning. I guess a bariatric, you talk to kind of revenue and EBITDA at the upper end of the range last quarter to look like you beat by a little bit in the quarter on and any thoughts as to just ways reaffirmed as opposed to not take it up with one quarter left in the year. Was that affected any puts and takes on us?

Barry Hytinen

Hey, Kevin. So good morning. Really appreciate the question. Appreciate the on time. Words, I would say 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 little bit above the high end for revenue and EBITDA based on our fourth quarter projection. So, and then AFFO and AFFO per share kind of works out to right at the high end of the guidance, of course, you are 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 strength. And I know that, and 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, say, the pound and the euro. But don't forget, we have a fair amount of exposure in Latin America.
We got a great business there. And incidentally, our Latin America business doing phenomenally well, Greeley growing booking in our digital business, taking off dramatically in Latin-America. And but with that, we are exposed to the Argentine peso that Chile and currencies of the Brazilian real. And so, all of those you would see had had a really tough go of versus the dollar. So that's disproportionately impacting our revenue and our EBITDA.
But look, we feel really good about where we are, and our outlook is very favourable. And as we said before, we are running well ahead of our long-term target for a pager of 10% that we issued at the Investor Day. 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 growth portfolio that Bill spoke about. We expect that growth portfolio continue to grow it in excess of 20% for a long period of time. That's ALM. digital and data center, coupled together with the strength of our global wind business. Next question.

Operator

Next question will come from Andrew Steinerman with JPMorgan. Please go ahead.

Andrew Steinerman

Hi, everybody. A question on inside. You caught my ear with the twenty two wins on the inside the XP platform. I wanted to know if I am out Jane is getting many revenues, French site. I know kind of initially that was at the strategy more of a cross-sell. So, if you're not getting much revenues, what's kind of a typical revenues you're getting from new storage contracts that are bundled with the Internet capability? And if twenty two to a large number of Insight wins, like why should we understand is to be important?

William Meaney

Thanks. Sandra, I appreciate the questions. So, first of all, as 24, but who's counting, but just the first of all, we don't do anything for free. So thinking that these are when I say, highly profitable, these are the typical kind of double digit service contracts that use that you're used to watching LCL when you think of these things, depending on the length of the contract, depending on how much of productivity we build in during the life of the contracts, but think of them somewhere between 20% and 40% gross margin contracts. On the nice thing about this with the DXP platform. Not only we are tracking those contracts is I mean, but you've also been watching the Company for a long time.
Our when we started up our digital businesses that we were doing relatively little in the area of workflows, much more exceeding their data lakes by the digitization of physical documents, this DXP platform, not only a part of it is there is a digitization part but more importantly, what I'm talking about, the 20%-40% margin, depending on the length of the contract and how much up productivity we can build during that course, is lots of times it's taking in data that's completely digital is born digitally, and we're putting that on to our SaaS platform, creating meta data automatically and putting workflow around that.
So I think I highlighted the savings bond example recently that was the precursor to DXP, where we took 2 billion microfilm 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 call that insight and without a person in the loop and identify the owners. So, it's back hydro power and that's platform. And of course, we've taken at the next step further, and it's a fully SaaS-based platform. But yes, 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 free.

Operator

Your next question will come from Eric Luebchow with Wells Fargo. Please go ahead.

Eric Luebchow

Thanks. Appreciate you taking the question on video. You just touch on kind of some of your longer-term aspirations with Alnylam. I know your Investor Day a couple of years ago, you talked about getting to $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 in annualized revenue to up to that number, whether it comes from component pricing, volume or incremental M&A, but you may or may not do. Thank you.

William Meaney

Let me add. 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 have very, very strong organic growth this quarter. 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 and in the pricing of components over time. And we saw that a year-and-a-half two years ago.
But if you look at the volumetric trends that we see in that business, whether it be on enterprise, whether it be on hyperscale data centers or even enterprise data centers, decommissioning is the amount of volume because people have a different a different need as they refresh their equipment and maybe they had 10 years ago, both environmentally and from a security standpoint, we see the volumetric trends. So that's a really strong double digit growth business.
And in addition, we like the two acquisitions we highlighted that we did in Q. threes. 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 at Investor Day. I don't know, Barry, if you want to add anything,

Barry Hytinen

I think are the top line target that we provided for the whole company was 10%. And we're obviously running, as I mentioned earlier, a couple of hundred thousand. I think growth portfolio continues to outperform, and our global business also is considerably ahead of where our projections were at that time in the scenario that you're referring to. Yes, I'll just underscore ALM is a really big category and the TAM there is immense.
We're already one of the if not the largest player and I think go from an organic and inorganic standpoint, we can become the market leader in that space. And you saw us doing that both on the organic side as well as with a couple of recent complementary deal.
So we feel quite good about ALM. It is very much on track with our strategy for cross-selling and odd driving more value for our clients. Next question, please.

Operator

Next question will come from Brendan Lynch with Barclays. Please go ahead.

Brendan Lynch

Great. Thank you for taking my question. I want to stick with the ALM theme. You just give us some more details around WiseTech and you see in terms of their geography in their product offering, maybe their customer focus between enterprise and hyperscale and also your offer to the appetite you have for larger acquisitions that have maybe some of these bolt-ons?

William Meaney

Thanks, Brent, for the question. So let me I'll talk a little bit about the categories and geographies they break out. So, I've WiseTech really helps us expand our portfolio, primarily in Europe and North America. So, they have good presence in both markets. In addition, they also bring strong customer relationships, both on the enterprise, but also, we picked up a new hyperscale customer through the acquisition of WiseTech, which was greater than a customer that we have a relationship and some of our other businesses already. But having picked up the hyperscale relationship on the AL side, in addition through the through the WyoTech acquisition was really great.
I think also you're obviously the acquisition we did in Australia does build out our capabilities in Australia, which has always been in a strong and important market for Iron Mountain, but it allows us to actually broaden our portfolio services for our customers. Barry if you want to talk a little bit more about Brenda

Barry Hytinen

Hi Brenda 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 $75 million - $80 million run rate USD revenue. And the WiseTech is based in Ireland that has decent size on operations, as Bill was mentioning, both in Europe as well as U.S. and a little bit in Asia. MAPCD., as I mentioned, is based in Australia. And the thing about us really is that's a that's a large data center market, as I know, you know, because you follow the data center industry so well, so I that is an underpenetrated opportunity for us, both in terms of the enterprise as well as decommissioning.
And so we feel very good about these opportunities. You've seen what we've been able to do even still early on with our Regency acquisition. I think all of these create more scale, more capability, more reach for us to serve our global client base much more effectively. And as it really mentioned, are we open to larger deals.
The thing about this is really and we're already the largest player. So after you get past us and a couple others that are owned, say, half our size, they then that all the all the players that are in the space or relatively small finance, are you thinking like $100 million revenue more or less.
And so I don't think you should anticipate anything large in that space. And but frankly, we're doing quite well on the organic side, and we're very happy to welcome the team from wise Tecan APCD. to our company. So, thank you for the questions.

Operator

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.