Csquare — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue increased 25.6% year-over-year to $302.3 million for the quarter ended September 30, 2026, compared to $240.8 million in the prior year period.
• Revenue excluding metered power increased 22.1% to $276.2 million.
• Net loss was $88.1 million for the quarter, compared to a net loss of $29.8 million in the prior year period; net margin was (29.2%).
• Adjusted EBITDA increased 44.3% year-over-year to $132.1 million, with Adjusted EBITDA margin expanding to 47.8% from 40.5%.
• Recurring capital expenditures were $16 million; growth capital expenditures were $149 million.
• Long-term debt decreased from $4.76 billion as of December 31, 2025, to $3.84 billion as of September 30, 2026, following the repayment of approximately $1.1 billion of debt using IPO proceeds.
• Funds from Operations (FFO) for the quarter was negative $3.2 million, compared to $33.2 million in the prior year period.

Guidance and Future Outlook:

• Full-year 2026 total revenue guidance is updated to $1.14–$1.16 billion (prior guidance: $1.13–$1.17 billion).
• Full-year 2026 Adjusted EBITDA guidance is updated to $490–$500 million (prior guidance: $460–$480 million).
• Full-year 2026 recurring capital expenditures guidance is $50–$60 million (prior guidance: $55–$65 million).
• Full-year 2026 non-recurring growth capital expenditures guidance is $620–$640 million (prior guidance: $610–$660 million).
• Entered Q4 with approximately $114 million of contracted annualized revenue backlog, including approximately $104 million expected to commence over the next twelve months.

Business Segments and Product Lines:

• Bookings reached a record $66.1 million, marking the 14th consecutive quarter of sequential bookings growth.
• Contracted power capacity increased 47% year-over-year to 428 MW, with contracted utilization at 108%.
• Sellable capacity ended the quarter at 397 MW, up from 331 MW in the prior year period, following the commissioning of approximately 12 MW during Q3.
• Bookings were generated across enterprise customers, network providers, cloud-related deployments, and higher-density infrastructure requirements.
• Quarterly net revenue churn was 1.9%, consistent with the prior year period.

Market and Competitive Landscape:

• Management cited ongoing supply constraints in many markets and a growing customer focus on delivery certainty and long-term infrastructure planning.
• Demand for carrier-neutral digital infrastructure remains strong and is accelerating across traditional enterprise and higher-density deployments.
• The company operates a geographically diverse portfolio of data centers across major metropolitan markets in the United States, Canada, and the United Kingdom.

Risks and Challenges:

• Net loss increased primarily due to higher year-over-year interest expense, IPO-related transaction costs, post-IPO stock-based compensation expenses, and costs associated with terminating certain pre-IPO compensation arrangements.
• Forward-looking statements are subject to risks including changes in general economic conditions, demand for colocation services, competition, availability of utility power and fiber connectivity, and delays in planned development projects.

Management Commentary and Tone:

• CEO Spencer Mullee stated results demonstrate "strong and disciplined execution" and "continued momentum," highlighting strong revenue growth, record bookings, and meaningful operating leverage.
• Management emphasized the solidity of the recurring revenue model, low net revenue churn, and the strength of customer demand.
• Management expressed confidence in the company's position to capitalize on a strong demand and pricing environment through a diversified portfolio and disciplined capital allocation strategy.

Other Key Points:

• Completed an initial public offering (IPO) in July 2026, issuing 50.0 million shares at $21.00 per share, with an additional 7.499 million shares sold via the underwriters' option, generating approximately $1.16 billion in net proceeds.
• IPO proceeds were used to repay approximately $1.1 billion of outstanding indebtedness, significantly reducing leverage.
• The company reported a gain on lease modification of $40.0 million for the nine months ended September 30, 2026.
• Transaction and other costs for the quarter included $25.3 million in cash incentive compensation and loan extinguishment costs associated with the settlement of legacy pre-IPO incentive compensation arrangements.