Iron Mountain Q3 2025 Earnings Report

Iron Mountain EPS Results

• Actual EPS: $1.32
• Consensus EPS: $1.29
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $1.13

Iron Mountain Revenue Results

• Actual Revenue: $1.75 billion
• Expected Revenue: $1.75 billion
• Beat/Miss: Beat by +$1.79 million
• YoY Revenue Growth: +12.70%

Iron Mountain Announcement Details

• Quarter: Q3 2025
• Date: 11/5/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, November 5, 2025
• Conference Call Time: 8:30AM ET

Iron Mountain (NYSE:IRM) is a global information management company that helps organizations protect, store, and manage their physical and digital information. The firm provides a range of services including secure records storage, document imaging and digitization, secure shredding and destruction, and information governance solutions designed to support regulatory compliance and business continuity. Iron Mountain also offers specialized secure storage environments and logistics for sensitive assets such as art, medical records, and legal archives.

Beyond traditional records management, Iron Mountain has expanded into technology-driven services to support customers’ digital transformation. Offerings include data center and colocation services, cloud backup and recovery, electronic discovery and data migration, and secure IT asset disposition. These services are often paired with consulting and lifecycle management to help organizations reduce risk, control costs, and modernize their information infrastructures.

Originally established as a records-storage business, Iron Mountain has grown through geographic expansion and service diversification to serve a broad mix of corporate, government, healthcare, legal and financial clients. The company operates on a multinational basis across North America, Europe, Latin America and the Asia-Pacific region, delivering integrated physical and digital information services through a network of facilities and technology platforms.

Iron Mountain’s strategy emphasizes information protection, regulatory compliance and continuity of access while pursuing growth in higher-margin digital and data-center offerings. The company is managed by an executive leadership team and board of directors focused on security, operational discipline and adapting services to evolving regulatory and technological requirements for clients across industries.

Iron Mountain Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record quarter: Revenue rose ~13% to about $1.8B, adjusted EBITDA increased 16% to $660M, and AFFO grew 18% to $393M with a 110 bps margin improvement, driven by broad-based strength across businesses.
• Positive Sentiment: Data center momentum: Q3 data center revenue grew 33%, the company has a 450 MW pipeline to be energized over 18–24 months (250 MW in 18 months) and sees >25% data center revenue growth in 2026 based on signed leases.
• Positive Sentiment: Asset Lifecycle Management is scaling rapidly, delivering 65% reported (36% organic) Q3 growth, aided by acquisitions like ACT Logistics and cross‑sell wins, and the business is expected to approach roughly $600M of revenue this year.
• Positive Sentiment: Shareholder return increased: the board approved a 10% quarterly dividend bump (fourth consecutive year of increases), targeting a payout ratio in the low‑60s of AFFO per share.
• Negative Sentiment: Near‑term margin and mix headwinds: storage gross margins were pressured by data center power pass‑throughs, FX strength, a decline/normalization of Clutter revenue, and inclusion of lower‑priced India volumes that reduced storage ASP ~100 bps, which could temper near‑term storage profitability.

Presentation

[Mark Rupe, SVP and Head of Investor Relations at Iron Mountain]

Good morning, everyone, and welcome to our Third Quarter 2025 earnings conference call. Joining us today are Bill Meaney, our President and Chief Executive Officer, and Barry Hytinen, our Executive Vice President and Chief Financial Officer. After our prepared remarks, we'll open the lines for Q&A. Today's call will include forward-looking statements, which are subject to risks and uncertainties. For a discussion of the major risk factors that could cause our actual results to differ from these statements, please refer to today's earnings materials, including the Safe Harbor language on slide two, the earnings presentation, and our annual and quarterly reports on Form 10-K and 10-Q. Each of these items, as well as reconciliations of non-GAAP financial measures referenced during this call, can be found on our Investor Relations website. With that, I'll turn the call over to Bill.

[Bill Meaney, President and CEO at Iron Mountain]

Thank you, Mark, and thank you all for joining us to discuss our third quarter results. We are pleased to report that our team has delivered another quarter of record financial performance and double-digit growth. We achieved an all-time high for quarterly revenue, Adjusted EBITDA, and AFFO driven by strength across our business. Revenue increased 13% to $1.8 billion, Adjusted EBITDA grew 16% to $660 million, and AFFO increased 18% to $393 million. Our exceptional performance in the third quarter is a result of our team's unwavering focus on meeting our customers' needs with innovative solutions and consistent execution of our strategic priorities. We are delivering revenue growth in our physical storage business, achieving record revenue in Q3 driven by consistent volume growth and higher retention rates, as well as revenue management. Our digital solutions building business is building momentum.

[Bill Meaney, President and CEO at Iron Mountain]

We are winning new contracts with our AI-powered digital solutions across industry verticals and drove record revenue and continued double-digit growth in the third quarter. We are capitalizing on robust data center industry demand with 33% revenue growth in Q3 and a strong outlook that supports more than 25% growth in 2026 based on our currently signed leases. Additionally, we saw a nice uptick in Q3 leasing and into Q4, which together with our pipeline puts us in a good position to execute against our portfolio capacity of 1.3 GW. We are driving substantial growth in our asset lifecycle management business, increasing revenue with existing customers and winning new business through cross-selling, resulting in 65% reported and 36% organic growth in the third quarter. We expanded profitability with Adjusted EBITDA increasing 16% and margin improving 110 basis points as compared to last year.

[Bill Meaney, President and CEO at Iron Mountain]

This clearly shows that we have strong momentum behind our commitment to sustain industry-leading revenue and earnings growth. Our portfolio of growth businesses, including data center, digital, and ALM, drove 2/3 of our revenue growth in the quarter, or 8 percentage points on a consolidated basis. This will remain an important tailwind going forward as the growth portfolio further increases its percentage of total revenue, expected to be nearly 30% of total revenue exiting 2025. This is on top of the strength in our physical storage business, which is growing at a mid-single-digit rate and will contribute approximately five points of consolidated growth in 2025. The momentum across our business, as I just highlighted, along with our foundation of established relationships and trust with over 240,000 customers, Comprehensive Solutions Offering, Reputation for Security, and a Global Footprint firmly position us to deliver our growth commitment for the foreseeable future.

[Bill Meaney, President and CEO at Iron Mountain]

Based on our strong outlook and excellent 2025 results, our board of directors authorized an increase of our quarterly dividend by 10%. Let me now share some recent commercial wins that illustrate the strength of our synergistic business model. First, in Records Management in Europe, we were selected as the single vendor for medical record storage for a hospital that has been a customer for more than 15 years, displacing a competitor. Additionally, we secured a new customer with a public sector entity that could no longer manage and store its records in-house. Both of these deals were attributed to our strong reputation for secure records management and our proven ability to provide efficient and cost-effective services. In our Digital Solutions Business, we continue to win new business with our DXP platform. In late October, we successfully launched our Insight DXP 2.0 platform.

[Bill Meaney, President and CEO at Iron Mountain]

The new platform offers enhanced Content Management and Smart Document Processing, an easy-to-use, secure platform with workflow tools and AI agents. This will allow the customer to make faster and more insightful decisions, as well as eliminate obsolete and duplicative data to save costs. As it relates to our digital award with the U.S. Department of the Treasury, in September, Iron Mountain was awarded a new long-term contract for Digitization services. This new five-year contract, with a value of up to $714 million, expands our current scope of work, subsuming the contract awarded to us in April. This is a significant win for Iron Mountain, and we are thrilled to continue supporting the United States government on this efficiency opportunity. We are currently executing under the new agreement and collaborating with the department on next steps whilst preparing for the high seasonal volume expected in the spring of 2026.

[Bill Meaney, President and CEO at Iron Mountain]

Let me now turn to our Data Center Business. The Data Center market remains very strong, and we have seen leasing activity and pipeline pickup as Hyperscale has resumed their focus on building out inference and cloud capacity. We leased 13 MW in the quarter, including a couple of larger enterprise deals with financial services firms. In early Q4, a key Hyperscaler leased our entire 36 MW Chicago site, transferring and expanding the customer's previous lease of 25 MW in London for a net incremental 11 megawatts leased. This is a great outcome for the customer who is looking to transfer to the Chicago market, and for us, given the strong interest we have in the London location they are vacating. This London site has the power coming online in 2026.

[Bill Meaney, President and CEO at Iron Mountain]

We have high confidence in sustaining our Data Center Revenue Growth with the levels we have achieved over the past few years. This is underwritten by our pre-leasing backlog, strong pipeline, as well as 450 MW, which is available for sale and will be energized over the next 18 months-24 months. These assets coming online within the next two years have a collective capacity which is the size of our current operating portfolio. The large and expanding pipeline for these assets is from Hyperscale customers having the highest credit quality. Turning to our Asset Lifecycle Management business, as we previously shared, ALM represents a major growth opportunity for Iron Mountain. The market is very large and highly fragmented, and we are well-positioned to capitalize on growth through expanding business with existing customers, gaining new customers through our cross-selling efforts, and strategic acquisitions to expand our capabilities and geographic footprint.

[Bill Meaney, President and CEO at Iron Mountain]

Our results in Q3 show that we are successfully capitalizing on this meaningful opportunity. Consistent with our strategy, in September, we acquired ACT Logistics, which further strengthens our ALM Market Leadership position in Australia. Let me now share some of our recent ALM wins that support our confidence in the long-term opportunity. A leading financial services company with more than 200,000 employees globally has selected Iron Mountain as its ALM partner for the first time, building on our decades-long partnership for records management and digital solutions. Our established relationship, strong reputation for security and compliance, and global footprint was an important factor in winning this deal. A global company headquartered in Germany has engaged Iron Mountain to support a key decommissioning and remarketing program across six data centers in the U.S., Europe, and the Asia-Pacific region.

[Bill Meaney, President and CEO at Iron Mountain]

Iron Mountain has also provided Records Management, Digital, and Data Center Co-location services for this customer over many years. We are pleased to extend our solutions thanks to our ALM team's operational scale and robust sustainability reporting capabilities, which are a critical requirement for this project. This relationship demonstrates the power of our Synergistic Business Model, where we successfully cross-sold all of our key lines of business to a long-term customer. In conclusion, I am proud of the exceptional results our dedicated mountaineers have continued to deliver in 2025 and what that means to our shareholders as we announce another increase in our dividend of 10%. As you heard today, our record results are a testament to our strategic focus on customer needs, innovative solutions, and consistent execution. Our strong business momentum continues to build, and a tremendous growth opportunity continues to lie ahead of us.

[Bill Meaney, President and CEO at Iron Mountain]

We are just scratching the surface of the $165 billion total addressable market for our services. With that, I'll turn the call over to Barry.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Thanks, Bill, and thank you all for joining us to discuss our results. As you've heard this morning, our team continues to successfully execute our strategy, driving strong revenue and earnings growth in the third quarter. We achieved record revenue of $1.75 billion, up $197 million year-on-year. This was an increase of 13% on a reported basis, 12% on a constant currency basis, and 10% on an organic growth basis in the quarter. Total storage revenue was $1.03 billion, up $97 million year-on-year, and up 9% on an organic basis. Total service revenue was $721 million, up $100 million from last year, and up 10% on an organic basis. Adjusted EBITDA of $660 million was an all-time quarterly record and expanded $92 million, or 16% year-on-year. This was $10 million ahead of the projection we provided on our last call, driven by operational strength and productivity across the business.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Adjusted EBITDA margin was 37.6%, up 110 basis points year-on-year, which primarily reflects improved margins in our Data Center and ALM businesses. We continue to be pleased with our team's ability to deliver meaningful operating leverage, achieving an incremental flow-through margin of 47%, consistent with last quarter. AFFO was $393 million, up $61 million. This was also an all-time quarterly record and represented strong growth of 18% as compared to last year. AFFO on a per-share basis was $1.32, up 17% to last year. Now turning to segment performance. In our global RIM business, we achieved record quarterly revenue of $1.34 billion, an increase of $78 million. RIM reported growth was 6%, including organic growth of 5% year-on-year. This was driven by Revenue Management, higher Digital Revenue, and consistent Organic Volume.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Stored revenue growth increased 5% on an organic basis and was up 6%, absent a decline in Clutter revenue. As we discussed last year, Clutter's peak revenue was in the third quarter of 2024 before we began the actions to improve profitability. Global RIM organic service revenue was up 4.7% in the quarter, similar to last quarter, improving retention and consistent levels of destruction pressured revenue growth. All other services increased 7% on an organic basis, reflecting strong growth in our digital business. As it relates to the multi-year Department of the Treasury contract, we recognize revenue of approximately $2 million in the third quarter and expect $4 million in the fourth quarter prior to building into tax season in the first half of next year. In the third quarter, we began to staff up to ensure we are fully ready to support the significant ramp in this contract.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Global RIM Adjusted EBITDA increased $29 million to $598 million, yielding an Adjusted EBITDA margin of 44.7%. Turning to our acquisition in India, we are very pleased with CRC's performance with integration ahead of plan. In the quarter, CRC added $6 million to revenue, including $1.2 million to storage revenue, along with 7.4 million cu ft of volume. For modeling purposes, it is important to note that while the margin for our storage business in India is similar to our margin in the U.S. and Europe, the price per cube is approximately 20% of our company average. As a result, the inclusion of CRC lowered our storage ASP by about 100 basis points in the quarter. Turning to our Global Data Center business, total data center revenue was $204 million in the third quarter, an increase of $51 million, or 33% year-on-year.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Organic storage rental growth increased 32%, driven by lease commencements and positive pricing trends. In the third quarter, new commencements were 3 MW. We renewed nearly 300 leases for a total of 11 MW. Pricing remained strong with renewal pricing spreads of 14% and 19% on a cash and GAAP basis, respectively. Third-quarter data center Adjusted EBITDA was $107 million, up $41 million year-on-year. Adjusted EBITDA margin was 52.6%, up 900 basis points from the third quarter of last year. Improved pricing, recent commencements, and operating leverage were the key drivers of the margin expansion in the quarter. In the fourth quarter, we expect data center revenue growth in excess of 30%. We have high visibility to this forecast as we are commencing 36 MW of new leases.

[Barry Hytinen, EVP and CFO at Iron Mountain]

This will also drive meaningful EBITDA growth in the period despite beginning to lap the significant step-up in data center margin, which commenced in the fourth quarter of last year. Turning to Asset Lifecycle Management, total ALM revenue was $169 million, an increase of $66 million, or 65% year-over-year. On an organic basis, we delivered 36% growth. The strong performance was driven by our team's operational execution, particularly strong growth in our enterprise volume and component pricing trends. Our recent acquisitions are performing well and contributed $30 million to revenue. Regarding our acquisition of ACT Logistics, I should note this was completed in September and contributed less than $2 million to revenue in the third quarter. For modeling purposes, we expect the business will contribute revenue of approximately $7 million to our full-year results.

[Barry Hytinen, EVP and CFO at Iron Mountain]

From a profitability perspective, our team drove expanded ALM margins in the quarter through improved operating performance across the business and acquisition synergies. Turning to capital allocation, we remain focused on growing the dividend and investing in high-return opportunities that drive double-digit growth while maintaining our strong balance sheet. In light of our performance in 2025 and outlook for AFFO, our board increased our dividend by 10%, effective with the January payout. This will mark the fourth consecutive year in which we increased the dividend and the third consecutive 10% increase. This aligns with our commitment to growing the dividend while maintaining a payout ratio of low 60s as a percentage of AFFO per share. In terms of capital investments, we invested $472 million of growth CapEx and $42 million of recurring CapEx in the third quarter.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Turning to the balance sheet, with strong EBITDA performance, we ended the quarter with net lease-Adjusted leverage of 5.0x, in line with our expectations for both the quarter and year-end. Reflecting our strong credit profile, our team successfully raised EUR 1.2 billion in a considerably oversubscribed debt offering, achieving a 4.75% fixed coupon maturing in 2034. We appreciate the continued long-term support of our fixed-income investors. Now turning to our outlook. With strong performance in the third quarter, we are well on track for the year and are pleased to reiterate our full-year guidance ranges. For the fourth quarter, we expect revenue of approximately $1.8 billion, an increase of 14% to last year on a reported basis, and up over 12% on a constant currency basis.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Adjusted EBITDA of approximately $690 million, an increase of 14% to last year on a reported basis, and up 12% on a constant currency basis. AFFO of approximately $415 million, an increase of 13% to last year on a reported basis, and up 10% on a constant currency basis. AFFO per share of approximately $1.39, an increase of 12% to last year on a reported basis, and up 9% on a constant currency basis. In conclusion, our team has delivered excellent year-to-date results, driving industry-leading double-digit revenue and earnings growth with record-setting performance across our business. We have strong momentum and significant long-term growth in front of us. I would like to express my thanks to our entire team for their best-in-class customer stewardship and commitment to Iron Mountain. With that, Operator, would you please open the line for Q&A?

[Operator]

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. We will limit analysts to one question, and you can rejoin the queue. At this time, we will pause momentarily to assemble our roster. The first question will be from George Tong from Goldman Sachs. Please go ahead.

[George Tong, Business Services Senior Research Analyst at Goldman Sachs]

Hi, thanks. Good morning. I wanted to dive into your new $714 million five-year contract with the U.S. Department of the Treasury. You mentioned expectations of high seasonal volumes in the spring of 2026. Can you talk more about the planned phasing of revenues, including whether the contract will ramp linearly across five years or whether it'll be front-end loaded into 2026?

[Bill Meaney, President and CEO at Iron Mountain]

Good morning, George, and thanks for the question. Yeah, I think first we're really excited to have the opportunity to work for the federal government on this project for the IRS. As you can expect, it will be linear with slight growth as you go forward as people get added to the taxpayer roll over that five-year contract. It isn't front-loaded per se, but there is a seasonality aspect to do with tax season, which is generally in the spring for most people. We do expect a ramp, and we've already started building the capacity, obviously, upfront in terms of putting the people through the necessary clearance process so that they're ready to go when the season starts. I think first and foremost is the thing that we're super excited about.

[Bill Meaney, President and CEO at Iron Mountain]

It's another proof point in terms of the technology that we've built with this DXP platform, which, as you remember, goes back to when we were the AI/ML partner of the year seven years ago with Google. To me, it's another proof point that what we've built really resonates with customers, and in this particular case, the IRS, which is very sophisticated on these types of things.

[Operator]

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

[Eric Luebchow, Director and Senior Equity Analyst at Wells Fargo]

Great. I wanted to touch on the ALM business. It looks like you expect about $600 million in revenue this year. I think that's a slight uptick from what you guided last quarter. I wanted to kind of break down what you're seeing on volume versus price. We've seen a pretty significant increase in memory pricing recently the last couple of months. Just wondering if you're starting to see that flow through at all in your results and how that could potentially influence growth rates as we look forward into 2026. Thank you.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Hi, Eric. Good morning. Thanks for the question. ALM continues to be very strong, as you point out. I would say you're correct. We're expecting now for the business to deliver approximately $600 million. That is up some from our guidance last quarter. If anything, we were probably being a little bit conservative with the numbers last quarter in light of the growth trajectory the business has been on. Look, 36% organic growth. We're expecting something in that same vicinity again in the fourth quarter. Very strong performance coming out of the team. It is volume-led, and it's also enterprise volume-led, as I mentioned on the call. I think that's the important part as we build the business. That enterprise business, as you know, is the higher-margin business, and that's helping drive the.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Improved profitability that we mentioned on the call and that you see in our results as well, Eric. You mentioned memory pricing. Certainly, pricing for some components on the data center and decommissioning side has continued to rise. As you know, that can be very subject to change and really component by component. We have seen some increases on memory. We have seen some increases on hard drives, but not everything is moving in the same, let's say, velocity. As we get into next year, we will be happy to update you on what we are seeing as it relates to commodity prices at that time. We are basically using a current view of pricing for the fourth quarter as we traditionally do. Thanks.

[Operator]

Thank you. The next question will be from Tobey Sommer from Truist. Please go ahead.

[Tobey Sommer, Managing Director at Truist]

Thank you. I was wondering if you could elaborate a bit on the data center pipeline and demand across both enterprise and hyperscalers as we turn the page into next year.

[Bill Meaney, President and CEO at Iron Mountain]

Thanks, Tobey, for the question. First, as I said in my remarks, we have seen, and in fact, we started seeing it even in August, as I pointed out in the last call, a shift back to our largest hyperscale customers, back to inference and cloud buildout. You could see that in our leasing both in the quarter and then as we ended Q4 with the leasing out. The 36 MW in the Chicago site for a customer that was originally taking 25 MW in London. We are starting to see definitely an uptick on that. More broadly, if I look at the pipeline that we are building for the 450 MW that get energized over the next 24 months, again, the depth of that pipeline and the number of our customers coming back to that.

[Bill Meaney, President and CEO at Iron Mountain]

Again, for cloud buildout and inference is very marked vs the first half of 2025.

[Operator]

The next question will be from Brendan Lynch from Barclays. Please go ahead.

[Brendan Lynch, Director at Barclays]

Great. Thank you for taking my question. I just wanted to follow up on the Treasury contract. If I heard you correctly, it's up to $714 million over five years. Can you talk about what would get you to the high-end vs what might be the low-end of what you might be able to capture?

[Bill Meaney, President and CEO at Iron Mountain]

Thanks for the question, Brendan. It's volume, right? In other words, we have agreed pricing with the Treasury, and it just is dependent on the volume and which forms that they actually send to us. What I have to say is that obviously preparing for tax season, the team's been working very closely with the Treasury. The feedback from the customer in terms of what we're able to do with our models has been very positive.

[Operator]

Thank you. Our next question is from Shlomo Rosenbaum from Stifel. Please go ahead.

[Shlomo Rosenbaum, Managing Director of Business Services Sector at Stifel]

Hi. Thank you very much for taking my question. Bill, I just wanted to go back to some of the data center leasing. It's certainly heartening to see we're starting to pick up. In terms of the rate of leasing from the last few quarters to what you saw, a little bit of an improvement now. I was just wondering, can you talk about how much energy capacity is expected to be energized in the next 12 months that could really spur the near-term leasing activity? What I'm trying to figure out over here is, are we going to start to go back to those quarters where you had some really large leasing numbers in the near term based on some of the stuff that's going to be lit up pretty soon?

[Bill Meaney, President and CEO at Iron Mountain]

Yeah. Good morning, Shlomo. And thanks for the question. Yeah. So I'm going a little bit maybe granular in the 450 megawatts that I said that gets energized over the next 24 months because I think that's really the capacity that people start focusing on. If I even go a little bit deeper on that, in the next 18 months, 250 MW gets energized. And so there's another follow-on 200 MW the following six months for the total 450. The reason why I'm parsing it out at 18 MW, if you can appreciate, is that most of our customers are the large hyperscale customers, which are almost a build-to-suit. I mean, there's a customization on that. It's really kind of the 18-month window up to a 24-month window that they look at because that's the time that's required to get the design to their specification and obviously construct.

[Bill Meaney, President and CEO at Iron Mountain]

To answer your question, yes. I mean, I think we feel really good over the as we enter into 2026 and we look at the first 18 months, we have 250 MW that we can be in active conversations with our customers and deliver almost in their minds immediately. And then if you look six months beyond that, we're almost doubling that again with adding another 200 MW on top of that. If I take a step back, as we say, the 25% revenue growth next year for data centers is already in the bag. I mean, this is stuff that we've already contracted for and leased.

[Bill Meaney, President and CEO at Iron Mountain]

If I look at that 250 over the next 18 months with another 200 to follow the six months later, the total 450, we feel really good about our ability to be able to maintain that kind of revenue growth as we get into 2027 and beyond.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Shlomo, I'll just add a couple of more granular points to support that. The assets that we have coming on that are energizing are in some fantastic markets. If you look at what we've got in London, we have over 20 MW energizing soon. We've got Virginia. We have 28 MW. We've got quite a few megawatts energizing soon in Madrid, Miami, Amsterdam. These are really tier-one markets. As you get to the outer timeframe that Bill was speaking about, you get into some very large capacity in Richmond, which, as you know, is a significantly growing development zone as considerable capacity spills over from Northern Virginia into that market. The other thing I will just add is, as Bill was referring to, the backlog that we have for revenue even beyond 2027 is like $250 million of revenue that will be coming. That's just on the already pre-lease. So we feel like we've got a very good growth trajectory going forward for leasing, Shlomo.

[Operator]

Thank you. The next question will be from Andrew Steinerman from JPMorgan. Please go ahead.

[Andrew Steinerman, Business and Information Services Equity Research Analyst at JPMorgan]

Hi, it's Andrew. Could you comment anything on kind of really forward-looking CapEx targets, kind of multi-year? Obviously, you raised your dividend here. I'm just really thinking that in the data center industry, there's a real shift towards these more mega projects and just wanted to know the CapEx approach in 2026 and beyond you might be doing to prepare for those opportunities.

[Bill Meaney, President and CEO at Iron Mountain]

Good morning, Andrew. Thanks for the question. I'll start and then have Barry comment more from the detail in terms of what that means for CapEx. I mean, to ask your the driver, I think, behind your question is, are we going to participate in these Large Language Model campus buildout, the 1 GW? For sure, we look at large campuses, but our target focus is for the inference and the cloud buildout. That's not saying that on some of our campuses that we're looking at, say, north of 500 MW, could someone come in and say they want to develop Large Language Models? Yeah, that's a possibility. We're not chasing that market because the nature of our customers and our relationships is really about building out cloud infrastructure and inference.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Andrew, I would just add that while we haven't given guidance for next year, a couple of thoughts on capital. Look, as we continue to build out our pre-leased backlog, naturally, we'll be expending CapEx on that. As we have a very positive forward look on the pipeline for additional leasing, you should probably anticipate that our data center CapEx will continue to gradually rise some with that expectation on additional leasing. The key point, I think, is we really are building to pre-leased assets, right? We're not speculatively building. It's capital that's going to very high-return contracts that we've already signed with that are very long-term with some of the highest credit quality clients you can have. I mean, think about companies that have $500 billion or more market cap.

[Operator]

Thank you. The next question will be from Kevin McVeigh with UBS. Please go ahead.

[Kevin McVeigh, Managing Director at UBS]

Great. Thanks. For the one example, I think it was a net 11 MW leased. I guess. When a client shifts like that, I guess, what drives that decision? And given kind of how diversified you folks are, would you expect more of that going forward? I wanted to start there, if possible.

[Bill Meaney, President and CEO at Iron Mountain]

Good morning, Kevin. Thanks for the question.

[Kevin McVeigh, Managing Director at UBS]

Good morning.

[Bill Meaney, President and CEO at Iron Mountain]

It's not usual, but I have to say that we're always happy to do that because, as you noticed in the Wall Street Journal polling recently, we won the most customer-focused or centric company in the publicly listed companies in the U.S. That's kind of a testament, a proof point in terms of the way we work with our customers because this particular customer saw their loads shift, and Chicago was a more important market for them in the near future than London was. We said, "Yeah, we can accommodate that for them." We were able to do that. We had a very happy customer. I will say, from our standpoint, it also was very good.

[Bill Meaney, President and CEO at Iron Mountain]

I mean, the Chicago market is a very interesting market, but we took a customer that was going to do 25 MW in London and upsold them effectively to 36 MW in Chicago. And then the space they're vacating in London in the Slough estate, actually, we have very strong interest in that 25 MW and always have. The pricing has actually improved since they've shifted over to Chicago. It is a win-win for everyone, but it does not happen often. We are very customer-centric as a company. If we can help a customer in that way, then we do our level best to do that.

[Barry Hytinen, EVP and CFO at Iron Mountain]

What I'd add, Kevin, just to make sure you're clear on this, is the client had not commenced in London, right? We were still in the process of building out that site. You would not anticipate seeing this sort of activity on deployments that have already commenced in sites. The other thing I'll just note is, in light of the timing, it is a very good asset for us to be able to lease at higher prices going forward.

[Operator]

Thank you. If you have a question, please press star, then one. The next question is from Nate Crossett from BNP. Please go ahead.

[Nate Crossett, Real Estate Equity Research Analyst at BNP]

Hey, good morning. Just on the RIM storage business, can you comment on what you're expecting for volumes and pricing into Q4 and next year? Thank you.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Hi, Nate. From a volume perspective, as you saw, our organic volume in physical storage continued to rise very much in line with our trends of, I think it was 30-40 basis points in the quarter. We continue to have a positive outlook for organic volume. That includes next year. Frankly, for the foreseeable future, our team continues to find ways to consolidate additional volume from our existing client base. Obviously, as you know, we win new clients, particularly in some of the emerging markets. As we've talked about so often, the volume that we bring in is very much an annuity stream. The average box is staying with us for nearly 15 years, and that has not changed. From a revenue standpoint, we continue to anticipate revenue management actions in that kind of mid-single-digit range.

[Barry Hytinen, EVP and CFO at Iron Mountain]

That would be the case for the fourth quarter as well. I'll just note we are now lapped over the Clutter consumer storage headwind. As I mentioned in prepared remarks, that was the peak volume and the peak revenue in the third quarter of last year. The other thing I'll just mention, since it hasn't come up yet, but you asked about the quarters, is we have assumed that FX is a little bit more challenging on a sequential basis, as you've probably seen the dollar has strengthened recently. That's embedded in our guidance as well, which I think speaks to the fact that we've got a very nice outlook in light of projecting 14% revenue growth in the fourth quarter.

[Operator]

Thank you. The next question is a follow-up from Shlomo Rosenbaum with Stifel. Please go ahead.

[Shlomo Rosenbaum, Managing Director of Business Services Sector at Stifel]

Hey, thank you for taking the follow-up. Barry, I just want to get into kind of a mix of revenue. Both storage and services gross margins were down sequentially. I assume that it's mixed because that's usually what's going on. I wanted to ask if you can confirm that and just give us a little bit more detail on the sequential movement.

[Barry Hytinen, EVP and CFO at Iron Mountain]

Thanks, Shlomo. Yes. If I break it down between the two, on storage, it is mostly about data center, particularly power. As you know, as our clients draw more power and commence, that is a pass-through. We generate revenue, but we do not generate incremental profit. If it was not for power, it would have been up, actually. The other thing that I should mention on storage is data center, as I have talked about before, is a lower gross margin for us on storage as a company. As you know, it is a very accretive EBITDA margin, and the team is just doing phenomenally well with profitability in data centers. You saw the margins up to 52+%. That is also with the headwind of power, just as a reminder on the EBITDA margin. On service, what you saw there in terms of the decline is.

[Barry Hytinen, EVP and CFO at Iron Mountain]

As you said, it's much about mix. It's all mix, actually. So the ALM business continues to perform very strong. As you saw, the growth that we've been delivering both year-on-year and sequentially, as well as digital. And as we talked about before, both of those are generally kind of lower-margin businesses for us than our average service. Lastly, I'll just point out with better retention rates. We have less permanent withdrawals and terminations. That's a bit of a headwind to rate as well. Obviously, that's a very good story for the long term in light of seeing retention continue to rise over the last few quarters. Thank you, Shlomo.

[Operator]

Ladies and gentlemen, this concludes our question and answer session and the Iron Mountain Third Quarter 2025 earnings conference call. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Barry Hytinen, EVP and CFO
• Mark Rupe, SVP and Head of Investor Relations
• Bill Meaney, President and CEO

Analysts

• Tobey Sommer, Managing Director at Truist
• George Tong, Business Services Senior Research Analyst at Goldman Sachs
• Kevin McVeigh, Managing Director at UBS
• Andrew Steinerman, Business and Information Services Equity Research Analyst at JPMorgan
• Shlomo Rosenbaum, Managing Director of Business Services Sector at Stifel
• Nate Crossett, Real Estate Equity Research Analyst at BNP
• Eric Luebchow, Director and Senior Equity Analyst at Wells Fargo
• Brendan Lynch, Director at Barclays