What Csquare (CSQR) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue grew 25.6% to $302.3 million and adjusted EBITDA rose 44.3% to $132.1 million. Net loss widened to $88.1 million, largely due to IPO-related costs and post-IPO compensation expenses.
• Bookings rose for the 14th consecutive quarter, and annualized revenue backlog increased to about $114 million, with roughly $104 million expected to start within 12 months. Renewal spreads reached approximately 17%, while AI-related deals accounted for about 30% of Q3 deals by monthly recurring revenue.
• Csquare repaid about $1.1 billion of debt after its IPO and ended the quarter with $1.1 billion in available liquidity; it is targeting net leverage of 6–7 times. For 2026, it forecast revenue of $1.14–$1.16 billion and adjusted EBITDA of $490–$500 million.

Csquare NYSE: CSQR reported 25.6% revenue growth in the third quarter of 2026 as strong bookings and pricing helped the data center operator expand its contracted backlog and increase adjusted earnings.

Revenue rose to $302.3 million, while adjusted EBITDA increased 44.3% from a year earlier to $132.1 million. The company’s net loss widened to $88.1 million from $29.8 million, primarily reflecting approximately $58.6 million in IPO-related transaction costs, post-IPO stock-based compensation and costs to terminate certain pre-IPO compensation agreements, Chief Financial Officer Steve Cook said.

Annualized bookings reached $66.1 million, the company’s 14th consecutive quarter of sequential bookings growth. Annualized revenue backlog increased to approximately $114 million from about $76 million at the end of the second quarter, with roughly $104 million expected to commence over the next 12 months.

Bookings and pricing gain momentum

Chief Executive Officer Spencer Mullee said enterprise customers are planning further ahead and committing to capacity earlier as they seek certainty over delivery times and costs. Demand spans industries including financial services, health care, technology and communications, he said.

Many third-quarter deals have relatively short expected deployment timelines because they use existing space or require targeted infrastructure improvements rather than larger expansions, Mullee said. He expects a number of those deals to come online in the fourth quarter.

Renewal spreads were approximately 17%, the highest in five quarters, while booked pricing rose by double digits year over year and net revenue churn was 1.9%, Cook said. Mullee attributed the renewal increase in part to supply and demand and said some legacy customers remain below market rates.

Mullee said a significant renewal involved Csquare’s largest customer and that he did not foresee another of that size on the horizon. When asked about a normalized renewal spread excluding that deal, he said the company’s historical renewal spread was approximately 8%; he did not provide an adjusted third-quarter figure.

Cook said roughly one-third of the portfolio is addressable for renewals every 12 months. Csquare also increased portions of its rate card near the end of the third quarter, Mullee said.

Existing facilities underpin expansion plans

Csquare has access to nearly 2 gigawatts of utility feeder capacity, compared with about 1 gigawatt of installed transformer capacity and roughly 400 megawatts of installed sellable uninterruptible power supply capacity, Mullee said. About two-thirds of available floor space is currently sold.

The company sees an opportunity to add power and cooling infrastructure within existing buildings at a lower capital requirement than constructing new building shells or developing new sites. Mullee said Csquare sold 21 megawatts of new deals in the third quarter, some in existing capacity and some in new capacity. He later estimated the future cost of those sales at about $3.8 million per megawatt.

Cook said larger under-roof expansions tend to be at the upper end of the company’s targeted $4 million to $8 million net capital expenditure range per megawatt. Mullee said that range remains reasonable for current deals, though individual projects can fall outside it.

Mullee also said the company is installing 150-kilowatt and 250-kilowatt racks across multiple data centers. Strictly AI-related deals represented about 30% of third-quarter deals measured by monthly recurring revenue, he said, while sales remained strong across other customer categories.

More than 85% of Csquare’s monthly recurring revenue comes from core enterprise customers. Mullee described AI inference as an incremental demand source rather than the foundation of the business.

Debt reduction and full-year outlook

Csquare repaid approximately $1.1 billion of debt after its IPO, including its entire revolving credit facility balance. It ended the quarter with approximately $1.1 billion in available liquidity and net leverage of about 8.4 times annualized year-to-date adjusted EBITDA.

Cook reiterated a target leverage range of 6 to 7 times, saying the company expects growth in adjusted EBITDA from contracted deployments to be the primary driver of progress. Substantially all outstanding debt is fixed-rate, with a weighted average interest rate of approximately 5.4%, he said.

Asked about funding growth, Mullee and Cook said issuing equity was off the table. Cook said the business was free-cash-flow positive before growth capital spending and expects to use substantially all of that free cash flow for incremental growth, alongside available liquidity lines where appropriate.

For full-year 2026, Csquare expects revenue of $1.14 billion to $1.16 billion and adjusted EBITDA of $490 million to $500 million. It projects growth capital expenditures of $620 million to $640 million and recurring capital expenditures of $50 million to $60 million.

Executives did not provide 2027 capital spending guidance. Mullee said the company is trying to direct sales toward already built and powered space, which could help reduce capital spending, while Cook said project selection would balance demand with capital intensity.

About Csquare (NYSE:CSQR)

Csquare Inc is a provider of carrier-neutral data center solutions. The company's digital infrastructure platform offers carrier-neutral colocation and interconnection services which support the applications. Csquare Inc is based in COPPELL, Texas.

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