American Tower Corporation ((AMT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for American Tower Corporation conveyed a generally positive sentiment, highlighting significant growth in the CoreSite data center business and a robust performance in the U.S. services sector. The company has raised its financial outlook for 2025, buoyed by increased application volumes and favorable foreign exchange conditions. However, challenges persist in Latin America, with muted growth and rising bad debt, alongside timing issues in U.S. leasing commencements.
Strong Performance in CoreSite Data Center Business
CoreSite, a key component of American Tower’s portfolio, reported impressive double-digit revenue growth and gross margin expansion. This success was primarily driven by the rising demand for hybrid cloud solutions and AI-related applications. Notably, the acquisition of the DE1 data center asset in Denver added approximately $10 million in property revenue for 2025, underscoring the strategic value of this investment.
Increased Application Volumes and Leasing Momentum
American Tower experienced a substantial increase in application volumes, which surged over 50% year-over-year. This growth was fueled by amendment upgrades and a remarkable 200% year-over-year increase in co-locations, reflecting strong leasing momentum and the company’s ability to capitalize on market demand.
Raised Financial Outlook for 2025
The company has revised its financial outlook for 2025, raising expectations for property revenue by $165 million, adjusted EBITDA by $120 million, and attributable AFFO by $55 million. These upward revisions are supported by favorable foreign exchange conditions and robust core performance, indicating a positive trajectory for the company’s financial health.
Strong U.S. Services Business Performance
The U.S. services business delivered a near-record quarter, driven by exceptional performance in construction services and increased customer recognition of quality and efficiency. This segment’s success underscores American Tower’s strong operational capabilities and its ability to meet customer demands effectively.
Slower Commencement Timing
Despite overall positive performance, American Tower faced slight timing differences in the U.S. due to a modestly slower pace of new business from one customer. This affected organic tenant billings growth expectations, highlighting the importance of timing in revenue realization.
Continued Challenges in Latin America
Growth in Latin America remains a challenge, with the region experiencing low single-digit growth through 2027. This is attributed to consolidation activities and elevated levels of churn, which continue to impact the company’s performance in this market.
Increased Bad Debt in Latin America
The company reported increased bad debt in Latin America, which negatively impacted adjusted EBITDA. This issue highlights the ongoing challenges in customer collections within the region, necessitating strategic adjustments to mitigate financial risks.
Forward-Looking Guidance
In its forward-looking guidance, American Tower provided revised projections, anticipating increases in property revenue, adjusted EBITDA, and attributable AFFO by $165 million, $120 million, and $55 million, respectively. The company expects a $0.12 increase in attributable AFFO per share, projecting it to reach $10.56, representing a 6% year-over-year growth. Organic tenant billings growth is expected to be around 5%, with the U.S. and Canada segment adjusted to approximately 4.3% due to timing delays. The international segment is projected to drive 6.5% growth, with CoreSite contributing over 13% growth in property revenue.
In conclusion, American Tower Corporation’s earnings call reflected a positive outlook, driven by strong performances in its CoreSite data center and U.S. services businesses. While challenges persist in Latin America and with timing issues in the U.S., the company’s revised financial outlook for 2025 suggests a promising future. Investors and stakeholders will be keenly watching how these dynamics unfold in the coming quarters.