Cyxtera Technologies today held its 2021 Analyst Day ahead of its public debut on the Nasdaq under the symbol CYXT, which is being accomplished through a $3.4bn business combination with Starboard Value Acquisition Corp (NASDAQ: SVAC), a special purpose acquisition company (SPAC).

Pro forma for the business combination, Cyxtera will be owned by the following shareholders (per its Analyst Day presentation): BC Partners (36.3%), Medina Capital (12.2%), Starboard / SVAC (8.9%), Lumen Technologies (6.1%), and Longview Asset Management (3.3%).

Cyxtera Technologies – Analyst Day Overview

Cyxtera operates 61 data centers, representing 245 megawatts of power capacity. Additionally, these data centers comprise 1.9 million sqft, in North America, Europe, and Asia, supporting 2.3k customers.

Cyxtera Technologies Data Center Map Analyst Day
Click here for a larger version of this image.

Customers

Cyxtera’s Analyst Day showed how the company classifies its customer base into two overall segments: enterprises and service providers. Below are select customers from each of these two groupings:

Enterprises

  • Technology and Media: Dell EMC, Adobe, Pearson, Marvel
  • Financial and Professional Services: NYSE (New York Stock Exchange), Refinitiv, Thomson Reuters, Fidelity, Capgemini, Allen & Overy, Ellie Mae
  • Various Industries: Kaiser Permanente, Geodis, Parsons, Bosch

Service Providers

  • Network Service Providers: AT&T, Lumen Technologies, Zayo, Megaport, Verizon, Crown Castle
  • Software-as-a-Service (SaaS): Zadara, Zenlayer, Palo Alto Networks, Proofpoint, Qualys
  • E-commerce and Gaming: Alibaba, Roblox, Unity
  • Content Delivery Network and Data Storage: Cloudflare, Pure Storage
  • Original Equipment Manufacturers (OEMs): Nvidia, Nutanix, Hewlett Packard Enterprise (HPE), Fujitsu

Lumen Technologies – Key Customer

Lumen Technologies is Cyxtera’s largest customer, comprising 13% of revenue. Indeed, Lumen recently renewed and extended its master service agreement (MSA) with Cyxtera for 5 years.

For 2021E, Cyxtera forecasts that Lumen Technologies will contribute only 11% of the company’s revenue. Furthermore, by 2025E, Cyxtera estimates that Lumen will only provide ~5% of the company’s revenue.

Cyxtera’s Annual Revenue from Lumen Technologies – Historical and Projections

Lumen Technologies Revenue Contribution to Cyxtera Technologies Analyst Day

Overall, the decline in Lumen’s contribution to Cyxtera’s revenue in the future, is driven in-part by an absolute decline in the quantum of revenue from Lumen in future years, as shown in the excerpt from the Analyst Day above.

Utilization

Cyxtera has significant vacancy in many of the Tier-1 data center markets of the United States and Europe. Indeed, the company notes that over 80% of the capacity that Lumen Technologies recently vacated was in these top 10 data center markets.

Cyxtera’s occupancy improved by 0.7% during 2020, from 66.4% to 67.1%. However, the occupancy improvement could have been 3.0%, but for a -2.3% impact from Lumen Technologies to the metric.

In particular, New Jersey, Dallas, Seattle, and Los Angeles all have occupancy levels of less than 65%. Below is an excerpt from Cyxtera’s Analyst Day showing the company’s largest 8 markets by available sqft, which in aggregate, comprise ~480k sqft of vacancy.

Cyxtera Technologies Available Space in Top 8 Markets

Expansion Potential – Cyxtera Technologies

Within the top 10 data center markets, Cyxtera has 492k sqft of available capacity, which it can expand by a further 324k sqft to reach 816k sqft of capacity.

However, of this 324k sqft of expansion potential, 107k sqft (33%) is located in the four markets of New Jersey, Dallas, Seattle, and Los Angeles, which all have occupancy levels of less than 65%. Therefore, near-term expansion potential is, in reality, lower than shown in the excerpt from Cyxtera’s Analyst Day below given existing utilization levels in those markets.

Cyxtera Technologies Expansion Potential in Top 10 Markets

Finally, Cyxtera notes in its Analyst Day presentation that its deployment cost is $7m per megawatt of power brought on-line.

Full-Year 2021 Guidance – Cyxtera Analyst Day

For full-year 2021, the company projects revenue of $681m to $702m and adjusted EBITDA of $217m to $223m. Additionally, the mid-point of the company’s guidance implies a year-over-year increase of 0.1% and 2.0% in revenue and EBITDA, respectively.

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