Iron Mountain reported data center decommissioning activities are increasing in demand, largely attributed to the rise of AI services requiring refreshes to bring in state-of-the-art equipment. | Bandersnatch/Shutterstock
Major ITAD provider Iron Mountain reported second-quarter revenue growth of 30% over the prior year, which company leaders attributed to higher business volume and improved used component pricing.
Portsmouth, New Hampshire-headquartered Iron Mountain calls its ITAD operations “asset lifecycle management,” and in its financial reporting the company houses this ITAD segment alongside a separate business providing technical expertise in storing and handling fine art. In the company’s Aug. 1 quarterly financial report, this combined business segment reported combined revenue of $131.1 million, up from $122.8 million the prior quarter and up from $80.0 million during the same period a year earlier. Company-wide, Iron Mountain reported revenues of $1.53 billion, up from $1.48 billion the prior quarter and $1.36 billion during the same quarter last year.
However, operating expenses increased 5.9% from the prior quarter and 13.9% year-over-year, leading to lower income for the quarter. Income totaled $230.3 million, down from $245.6 million the prior quarter but up from $212.5 million year-over-year.
In an Aug. 1 earnings call with investors, company leaders provided specifics on the ITAD operations, noting this portion of the business reported $90 million in revenue during the second quarter. That’s up 111% year over year, they said, with a significant portion of that growth – $35 million – attributed to the company’s late-2023 acquisition of Regency Technologies.
Excluding the growth from the acquisition, Iron Mountain’s ITAD operations reported an organic year-over-year revenue increase of 30% in the second quarter.
During an Aug. 1 call with investors, William Meaney, Iron Mountain’s president and CEO, said two-thirds of that revenue increase came from additional volume of business. The remainder came from higher prices for device components. These values have rebounded from what Meaney called “the record lows that were 12, 18 months ago.”
Barry Hytinen, executive vice president and CFO, added that he expects used component pricing will continue to trend higher. He also noted the price trends vary significantly by component type. For instance, while the price difference between new and used memory has widened, the new and used prices for hard drives have come closer together.
Meaney said the company is seeing success in selling ITAD services to its existing customers in other business segments. For example, he noted a global cloud-based software company that has used Iron Mountain for records management and other services in the past recently hired the company to perform data center decommissioning at 30 locations worldwide.
Hytinen added that 95% of the company’s bookings during the second quarter came from that kind of cross-selling.
Iron Mountain is a large player in the data center decommissioning segment of the ITAD industry, and the company noted this portion of the business is ramping up in volume. That’s partially due to data center refresh trends, they explained.
Meaney acknowledged to investors that the company observed “reticence” to refresh assets on the part of hyperscale data center operators last year. He said that was largely because of difficulty obtaining new equipment to install during the refresh. Now that trend is reversing.
Meaney said some of the largest hyperscale data center operators in recent weeks announced they’re “ramping up their refresh of their data centers to bring in the most capable GPUs, so that they are AI-ready, and they can build up some of their AI services.”
AI is a heavy driver of data center demand, and industry experts have projected it will lead to strong demand for data center decommissioning in the years to come.
Executives also praised the Regency team that has now been under the Iron Mountain umbrella for two quarters. Hytinen said he sees the potential to “continue to utilize and optimize further” the recently acquired Regency operations.
“There is a lot of opportunity,” he said. “We have considerable capacity to expand the business, both in terms of what is already in place as well as the opportunity to expand the footprint at relatively low capex, I might add.”