AMERICAN TOWER CORP /MA/ Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Leasing Trends and Carrier Activity: Fifth consecutive quarter of sequential increases in application volumes and services revenue. U.S. carriers have aggressive 5G upgrade goals, Europe sees steady demand, emerging markets show resilience but monitored for economic impacts.
• CoreSite Business: Impressive results with strong leasing, pricing favorability, and first phases of NY3 and CH2 centers online, adding 11 megawatts of capacity with high day-one leasing.
• Capital Allocation and Portfolio Management: Purchased DE1 data center, sold South Africa Fiber, discretionary CapEx towards developed markets, resumed dividend growth, reduced floating rate debt, and strengthened balance sheet.
• Global Operations and Value Proposition: Strong core business with scale, core competencies, and financial flexibility. Innovations in U.S. and international operations, globalization initiatives in early stages.

Segment Performance

• Property Revenue: Consolidated property revenue growth was slightly positive year-over-year and up approximately 3% excluding non-cash straight-line revenue, absorbing approximately 300 basis points of FX headwinds. U.S. and Canada property revenue declined approximately 1% and grew over 3.5%, excluding non-cash straight-line, including over 1% negative impact from Sprint churn. International property revenue was roughly flat year-over-year, with growth of approximately 8% excluding the impact of foreign currency fluctuations. Property revenue in the data center business grew by approximately 9%.
• Organic Tenant Billings: Consolidated organic tenant billings growth was 4.7%, supported by solid demand across the global portfolio. In the U.S. and Canada segment, organic tenant billings growth was in line with expectations at 3.6% and approximately 5%, excluding Sprint-related churn. International segment drove 6.7% in organic tenant billings growth.
• CoreSite: Delivered high-single-digit revenue growth underpinned by robust demand for interconnection hubs.
• Services: U.S. services business delivered its highest quarter of revenue and gross profit since 2021 with applications rising nearly 30% compared to Q4 2024 and up roughly 60% versus Q1 2024, reflecting a mix of continued amendment-driven upgrades and new colocations.

Guidance

• Revised full year outlook with updates to FX assumptions, raising property revenue, adjusted EBITDA, attributable AFFO, and AFFO per share by approximately $50 million, $30 million, $20 million, and $0.04 respectively.
• Reiterated organic tenant billings growth expectations, including greater than or equal to 4.3% in the U.S. and Canada or greater than or equal to 5.3% excluding Sprint churn, and respective growth rates for Africa and APAC, Europe, and Latin America.
• Capital allocation: ~$3.2 billion common dividend, ~$1.7 billion in capital expenditures, including 2,250 newly constructed sites and ~$610 million for data center development.

Risks

• Global economic backdrop impacts, especially on emerging markets and FX.
• Uncertainty around interest rates, political discussions (tariffs), and potential impacts on business and foreign exchange rates.

Q: Matt Niknam asked about portfolio optimization, globalization strategy, and cadence of colo and amendment revs.

A: Steve Vondran and Rod Smith responded, discussing ongoing portfolio optimization, focus on globalization, and cadence of services and new biz revenue.

Q: Jim Schneider asked about U.S. carrier activity priorities and cost-efficiency program.

A: Steve Vondran and Rod Smith replied, talking about carrier 5G deployment progress and cost-saving efforts.

Q: Ric Prentiss asked about capital allocation, Canada market, and colocation amendment split.

A: Steve Vondran and Rod Smith answered, discussing stock buybacks, M&A, Canada market attributes, and colocation amendment split.

Q: Michael Rollins asked about colocation competition and EBITDA cadence.

A: Steve Vondran and Rod Smith responded, addressing colocation competition and EBITDA outlook.

Q: Nick Del Deo asked about services work and EchoStar transactions.

A: Steve Vondran answered, discussing services mix and EchoStar contractual aspects.

Q: Batya Levi asked about LATAM incremental leasing and churn.

A: Steve Vondran replied, talking about LATAM market activity and churn.

Q: Eric Luebchow asked about carrier agreements and CoreSite sales funnel.

A: Steve Vondran answered, discussing carrier agreements and CoreSite demand.

Q: Michael Funk asked about vulnerable markets and service revenue growth.

A: Steve Vondran and Rod Smith responded, addressing vulnerable markets and service revenue drivers.

Q: Ben Swinburne asked about fixed wireless and cost savings.

A: Rod Smith answered, talking about fixed wireless impact and cost-saving process.

Q: Jonathan Atkin asked about inorganic growth in Europe and CoreSite metrics.

A: Steve Vondran answered, discussing Europe acquisition criteria and CoreSite demand metrics.