Company profile

Ticker
SWCH
Exchange
CEO
Rob Roy
Employees
Incorporated in
Location
Fiscal year end
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SWCH stock data

(
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Calendar

9 Aug 19
16 Sep 19
31 Dec 19

News

Company financial data Financial data

Quarter (USD) Jun 19 Mar 19 Dec 18 Sep 18
Revenue 111.59M 107.03M 103.21M 102.77M
Net income 1.18M 700K 2.55M 6K
Diluted EPS 0.01 0.01 0.05 0
Net profit margin 1.06% 0.65% 2.47% 0.01%
Operating income 20.65M 15.48M 16.91M 12.53M
Net change in cash -26.79M 5.4M -22.95M -79.49M
Cash on hand 60.17M 86.96M 81.56M 104.51M
Cost of revenue 57.89M 57.3M 55.21M 59.15M
Annual (USD) Dec 18 Dec 17 Dec 16 Dec 15
Revenue 405.86M 378.28M 318.35M 265.87M
Net income 4.05M -15.21M 31.37M 73.47M
Diluted EPS 0.09 -1.88 0.15 0.37
Net profit margin 1.00% -4.02% 9.85% 27.63%
Operating income 54.68M 18.83M 51.07M 79.56M
Net change in cash -183.11M 241.95M 8.52M
Cash on hand 81.56M 264.67M 22.71M 14.19M
Cost of revenue 224.41M 198.23M 168.84M 141.06M

Financial data from Switch earnings reports

Financial report summary

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Risks
  • A slowdown in the demand for data center resources and other market and economic conditions could have a material adverse effect on us.
  • Any inability to manage our growth could disrupt our business and reduce our profitability.
  • Our operating results may fluctuate.
  • The data center business is capital-intensive, and our capacity to generate capital may be insufficient to meet our anticipated capital requirements. Failure to obtain the necessary capital when needed may force us to delay, limit or terminate our expansion efforts or other operations.
  • Our success depends on our ability to license the space in our existing data centers. The failure to license the space in our data centers may harm our growth prospects, future business, financial condition and results of operations.
  • We face risks associated with having a long selling and implementation cycle for our services that requires us to make significant time and resource commitments prior to recognizing revenue for those services.
  • Our outstanding indebtedness may limit our operational and financial flexibility.
  • We may not generate sufficient cash flow to meet our debt service and working capital requirements, which may expose us to the risk of default under our debt obligations.
  • Increased power costs and limited availability of power resources may adversely affect our results of operations.
  • We generate significant revenue from data centers located in one location and a significant disruption to this location could materially and adversely affect our operations.
  • Any failure in the critical systems of the data center facilities we operate or services we provide could lead to disruptions in our customers’ businesses and could harm our reputation and result in financial penalty and legal liabilities, which would reduce our revenue and have a material adverse effect on our results of operation.
  • Delays in the expansion of existing data centers or the construction of new data centers could involve significant risks to our business.
  • We are continuing to invest in our expansion efforts but may not have sufficient customer demand in the future to realize expected returns on these investments.
  • If we fail to protect our proprietary intellectual property rights adequately, our competitive position could be impaired, and we may lose valuable assets, generate reduced revenue and incur costly litigation to protect our rights.
  • We may in the future be subject to intellectual property disputes, which are costly to defend and could harm our business and operating results.
  • We rely on the proper and efficient functioning of computer and data-processing systems, and a large-scale malfunction could have a material adverse effect on us.
  • We may be vulnerable to security breaches, including cyber security breaches, which could disrupt our operations and have a material adverse effect on our financial condition and results of operations.
  • A significant portion of our revenue is highly dependent on a limited number of customers, and the loss of, or any significant decrease in business from, these customers could adversely affect our financial condition and results of operations.
  • Our customer contract commitments are subject to reduction and potential cancellation.
  • Our customer base may decline if our customers or potential customers develop their own data centers or expand their own existing data centers.
  • Our churn rate may increase or we may be unable to achieve high contract renewal rates.
  • If we do not succeed in attracting new customers for our services and growing revenue from existing customers, we may not achieve our anticipated revenue growth.
  • The migration from colocation data centers to the public cloud may have a material adverse effect on our results of operations.
  • Unanticipated changes in the tax rates and policies of the states in which we operate could materially and adversely affect our results of operations.
  • The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could seriously harm our business.
  • Future consolidation and competition in our customers’ industries could reduce the number of our existing and potential customers and make us dependent on a more limited number of customers.
  • We may not be able to compete effectively against our current and future competitors.
  • We have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties.
  • If we are unable to adapt to evolving technologies and customer demands in a timely and cost-effective manner, our ability to sustain and grow our business may suffer.
  • We depend on third parties to provide Internet, telecommunication and fiber optic network connectivity to our customers, and any delays or disruptions in service could have a material adverse effect on us.
  • The occurrence of a catastrophic event or a prolonged disruption may exceed our insurance coverage by significant amounts.
  • Environmental problems are possible and can be costly.
  • Our leases for self-developed data centers could be terminated early and we may not be able to renew our existing leases and agreements on commercially acceptable terms or our rent or payment under the agreements could increase substantially in the future, which could materially and adversely affect our operations.
  • Any difficulties in identifying and consummating future acquisitions, alliances or joint ventures may expose us to potential risks and have an adverse effect on our business, results of operations or financial condition.
  • If our or our customers’ proprietary intellectual property or confidential information is misappropriated or disclosed by us or our employees in violation of applicable laws and contractual agreements, we could be exposed to protracted and costly legal proceedings, lose customers and our business could be seriously harmed.
  • Competition for employees is intense, and we may not be able to attract and retain the qualified and skilled employees needed to support our business.
  • We have entered, and expect to continue to enter, into joint venture, strategic collaborations and other similar arrangements, and these activities involve risks and uncertainties. A failure of any such relationship could have a material adverse effect on our business and results of operations.
  • Uncertain economic environment may have an adverse impact on our business and financial condition.
  • Our current international operations through our joint venture, or future international operations, may expose us to certain operating, legal and other risks, which could adversely affect our business, results of operations and financial condition.
  • Future legislation and regulation, both domestic and international could have an adverse effect on our business operations.
  • We may incur significant costs complying with other regulations.
  • Our facilities may not be suitable for uses other than as data centers, which could make it difficult to sell or reposition them and could materially adversely affect our business, results of operations and financial condition.
  • Our principal asset is our interest in Switch, Ltd., and, accordingly, we depend on distributions from Switch, Ltd. to pay our taxes and expenses, including payments under the Tax Receivable Agreement. Switch, Ltd.’s ability to make such distributions may be subject to various limitations and restrictions.
  • The Tax Receivable Agreement with the Members requires us to make cash payments to them in respect of certain tax benefits to which we may become entitled, and we expect that the payments we are required to make will be substantial.
  • Our Founder, Chief Executive Officer and Chairman has control over all stockholder decisions because he controls a substantial majority of the combined voting power of our common stock. This limits or precludes a stockholders’ ability to influence corporate matters, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.
  • Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the Members that will not benefit holders of Class A common stock to the same extent as it will benefit the Members.
  • In certain cases, payments under the Tax Receivable Agreement to the Members may be accelerated or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement.
  • We will not be reimbursed for any payments made to the Members under the Tax Receivable Agreement in the event that any tax benefits are disallowed.
  • Fluctuations in our tax obligations and effective tax rate and realization of our deferred tax assets may result in volatility of our operating results.
  • If we were deemed to be an investment company under the Investment Company Act of 1940, as amended, or the 1940 Act, as a result of our ownership of Switch, Ltd., applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.
  • We are a controlled company within the meaning of the NYSE rules, and, as a result, we qualify for and rely on exemptions from certain corporate governance requirements that provide protection to stockholders of other companies. Our stockholders do not have the same protections afforded to stockholders of companies that are subject to such requirements.
  • The Members have the right to have their Common Units redeemed or exchanged into shares of Class A common stock, which may cause volatility in our stock price.
  • An active trading market for our Class A common stock may not be sustained.
  • If our operating and financial performance in any given period does not meet the guidance that we provide to the public, our stock price may decline.
  • If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our Class A common stock, the price of our Class A common stock could decline.
  • The trading price of our Class A common stock may be volatile or may decline regardless of our operating performance.
  • Our anti-takeover provisions could prevent or delay a change in control of our company, even if such change in control would be beneficial to our stockholders.
  • Limitations on director and officer liability and our indemnification of our officers and directors may discourage stockholders from bringing suit against a director.
  • We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the price of our Class A common stock.
  • We are subject to securities class action litigation and may be subject to additional litigation in the future, which may harm our business and operating results.
  • Substantial future sales of our Class A common stock, or the perception in the public markets that these sales may occur, may depress our stock price.
  • We are an emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make our Class A common stock less attractive to investors.
  • We cannot predict the impact our capital structure may have on our stock price.
  • We incur costs as a result of being a public company and in the administration of our complex organizational structure.
  • We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls or disclosure controls and procedures, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
  • Our ability to pay dividends on our Class A common stock is subject to the discretion of our board of directors and our amended and restated credit agreement as well as future agreements.
  • The provision of our articles of incorporation requiring exclusive forum in the Eighth Judicial District Court of Clark County, Nevada for certain types of lawsuits may have the effect of discouraging lawsuits against our directors and officers.
Management Discussion
  • Switch, Inc. | Q2 2019 Form 10-Q | 26
  • Revenue increased by $9.4 million, or 9%, for the three months ended June 30, 2019, compared to the three months ended June 30, 2018. The increase was primarily attributable to increases of $9.6 million in colocation revenue. Of the overall increase, 57% was attributable to new customers initiating service after June 30, 2018, and the remaining 43% was attributable to growth from existing customers. Our revenue churn rate, which we define as the reduction in recurring revenue attributable to customer terminations or non-renewal of expired contracts, divided by revenue at the beginning of the period, was 0.2% and less than 0.1% during the three months ended June 30, 2019 and 2018, respectively.
  • Cost of revenue increased by $2.7 million, or 5%, for the three months ended June 30, 2019, compared to the three months ended June 30, 2018. The increase was primarily attributable to an increase of $4.0 million in depreciation
Content analysis ?
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H.S. freshman Avg
New words: agreed, battery, commencing, county, discovery, exact, hyperscale, irrevocably, legislature, longer, narrowed, storage
Removed: begun, construction, decided, deposit, headcount, hyper, original, performed