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CyrusOne Inc (NASDAQ:CONE)
Q2 2019 Earnings Call
Aug 1, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the CyrusOne Second Quarter 2019 Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to Mr. Michael Schafer. Please go ahead.

Michael Schafer -- Investor Relations Vice President

Thank you, Ben. Good morning, everyone, and welcome to CyrusOne Second Quarter 2019 Earnings Call. Today, I am joined by Gary Wojtaszek, President and CEO; and Diane Morefield, CFO. Before we begin, I would like to remind you that our second quarter earnings release along with the second quarter financial tables are available on the Investor Relations section of our website at cyrusone.com.

I would also like to remind you that comments made on today's call and some of the responses to your questions deal with forward-looking statements related to CyrusOne and are subject to risks and uncertainties. Factors that may cause our actual results to differ from expectations are detailed in the company's filings with the SEC, which you may access on the SEC's website or on cyrusone.com.

We undertake no obligation to revise these statements following the date of this conference call except as required by law. In addition, some of the company's remarks this morning contain non-GAAP financial measures. You can find reconciliations of those measures to the most comparable GAAP measures in the earnings release, which is posted on the Investors section of the company's website.

I would now like to turn the call over to our President and CEO, Gary Wojtaszek.

Gary Wojtaszek -- President And Chief Executive Officer

Thanks, Schafer, and howdy, everyone. Welcome to CyrusOne second quarter earnings call. The results for the quarter showed continued strong growth in our business, and we have positioned the company to capitalize on the expanding opportunity in Europe, setting us up well for next year and beyond. As slide four shows, revenue, adjusted EBITDA, FFO and FFO per share grew at industry-leading rates year-over-year. We signed leases totaling $26 million in annualized GAAP revenue, including leases signed shortly after the quarter end as the timing of several large deals moved from the end of June into July. We delivered 21 megawatts of capacity in the quarter, have another 55 megawatts in the development pipeline, which, combined, represent over 10% growth in the portfolio.

We're also developing over 900,000 square feet of powered shell that will position us to deliver raised floor quickly at a low cost to meet demand, and we recently signed a long-term lease for 24 acres of land in Dublin, giving us capacity for 72 megawatts. We're again increasing our normalized FFO per share guidance by $0.20 at the midpoint of the range. The new midpoint represents 10% year-over-year growth, which is significantly above the broader REIT group average. We expect that our FFO per share growth rate will continue to grow at low double-digit rates as all the investments we have made over the past 18 months are realized. We're announcing a 9% increase in our quarterly dividend of $0.50 per share, and the dividend has more than tripled since 2013, while still maintaining one of the lowest payout ratios among all the REITs.

Turning to slide five. In Q4 of 2018, I started mentioning that I was noticing a significant pullback in leasing velocity, particularly in the hyperscalers, and quickly adjusted our business plan accordingly to focus more aggressively on expense control. As we saw this quarter, our overall Q2 bookings, which do not include any of the proportionate share of bookings in our GDS or ODATA partnerships, were light as several deals we expected to close in the quarter got pushed to July. This should result in our Q3 bookings being above the $20 million to $25 million of bookings guidance per quarter that I have given at the beginning of the year. Fortunately, as we saw over the past 3 quarters, our enterprise and interconnection businesses remain very strong with enterprise's accounting for almost 80% of the bookings in Q2 with 13 new logos signed across different verticals.

This is the third sequential quarter in which we have seen very strong demand from our enterprise businesses, which account for roughly 60% of our overall business and highlights how well diversified we are across both hyperscale and enterprise customers. Additionally, our interconnection business grew by 20% this quarter, which is among the fastest rates at which it has ever grown. Our IX business is now nearly a $50 million run rate business and is equivalent to 5% of our revenue. Pricing for deals signed during the second quarter was $183 per kilowatt, which is up 41% over the prior 4 quarter average and one of the strongest pricing quarters in the company's history.

slide six provides updated stats highlighting the importance of the contribution from our existing customers to our growth. Over the last 3 years, nearly 85% of our bookings have been with our existing customers. We have generally added about 16 new customer logos per quarter, which is significant as our customers typically have small initial deployments but consistently grow with us over time. To highlight the magnitude of the growth opportunity, of our top 50 customers, 40 were also customers at the end of 2015. Over this period, compound annual rent growth from those customers averaged 33%. Additionally, once our customers begin to expand with us, they generally prefer longer lease terms. For the same group of customers, the average remaining lease terms was extended and increased nearly 50% over the same period.

As customers grow with us, they expand their existing deployments and also deploy with us in other locations. The customers in this group are in an average of 3 of our facilities, and for the entire portfolio, 76% of rent is from customers that are in multiple locations. An important assumption to our underwriting for the European expansion was the expectation that our existing customers would drive much of the demand, and that has been playing out just as we expected. Our European business grew at roughly 65% year-over-year, and we expect it will grow an additional 20% in the second half of the year. We have fully staffed our European operations and expect to see our EBITDA margins there expand by 700 basis points in the second half of the year, increasing to 49%, and we expect the margin to further increase in 2020 as that platform scales. As slide seven shows, our interconnection business continues to do really well, and we have even seen an acceleration in growth rate compared to recent quarters.

As I mentioned earlier, revenue was up 20% in the quarter compared to last year, matching the year-over-year growth in cross connects. This also relates to the point I just made regarding how customers tend to expand and deploy in new locations, which causes them to meet more cross connects. On average, each customer now has 21 cross connects, 7x higher than the 3 per customer in 2011 when we first started tracking this. We believe that as data growth continues to explode, data center network topology will change and the compute and storage nodes will be more important going forward, which will play to our strengths in the space. Turning to slide eight.

Over the past 5 years, CyrusOne has been the best performing data center REIT with revenue and adjusted EBITDA CAGRs of 26% and 27%, respectively, and our 29 performance will continue that trend. As you can see, we are growing at much higher rates than other REITs across all of the key financial metrics and meaningfully faster than our peer group. We have worked hard to position the business to continue maintain strong growth going forward. The underlying demand trends over the next few years are expected to create a very attractive set of opportunities with data growth accelerating, enterprise outsourcing continuing, cloud adoption increasing and AI in the very early stages of what could ultimately represent hundreds of billions in dollars of value creation for our industry. We have been able to achieve these superior growth rates because we have methodically continued to invest and expand our business, ensuring we have adequate land and shell capacity across all of our markets, and we have extended the same approach into Europe as well.

Currently, we have almost $1 billion of investment, roughly $10 per share that we have made, including $200 million of land and $800 million of in-process construction in all of the key data center markets across the U.S. and Europe. Those investments will allow us to triple the size of our footprint at a relatively low build cost and, thus, are all highly accretive to our earnings. As a result of all the investments, particularly in support of our expansion into the 4 new markets in Europe as well as Santa Clara, we should see a very high flow-through of incremental revenue to our FFO per share results, driving an acceleration in bottom line growth. We expect that our FFO per share growth rate will begin to converge with our revenue and EBITDA growth rates. slide nine reiterates the point that we've made the last couple of quarters regarding the development yield progression that you can expect to see in these new markets that we're making investments in. This quarter, we are showing you the yield progression for our first Northern Virginia campus. We delivered our first data center there almost 4.5 years ago with significant demand from hyperscale companies.

Last quarter showed the same yield trend for Phoenix, and the quarter before that, we showed our Dallas property. And over the years, we have shown many others, and the yield trends always follow the same path with negative initial yields then getting to low single digits, followed by mid-teen yields at full stabilization. We expect a similar yield progression for each of the 4 new sites we are developing in Europe and for our new site in Santa Clara, which would be the largest data center campus in that area. To my knowledge, I believe CyrusOne is the only data center company that has shared these type of details on costs and development yields. In closing, this year's subdued leasing velocity of $20 million to $25 million per quarter is right in line with our expectations. And fortunately, we identified the trend early enough such that we were able to change our business model accordingly.

Our expense in capital structuring initiatives have enabled us to exceed our own expectations and have allowed us to increase full year guidance again. We believe that our decision to expand internationally was the right strategic call, and we have successfully positioned our company to be the third-largest global data center company in the industry with a presence in Europe and partnerships in Asia and Latin America. We have invested roughly $1 billion in land and sit that should enable us to grow our revenue and EBITDA in the mid-teens and FFO per share at low double-digit growth rates.

Also, I have -- as I have mentioned, we do not plan on needing any additional equity capital and will maintain a rock-solid balance sheet consistent with other investment grade REITs. CyrusOne continues to be the fastest-growing company in the data center REIT industry and, on a growth adjusted basis, I believe offers a really compelling investment opportunity.

I will now turn the call over to Diane, who will proceed -- who will provide more color on our financial performance for the quarter and an update on our guidance. Thanks.

Diane M. Morefield -- Executive Vice President And Chief Financial Officer

Thanks, Gary. Good morning, everyone. As Gary said, we are really pleased with our second quarter financial results and our relative growth across all the key financial metrics, particularly compared to the broader REIT industry. As slide 11 shows, revenue, adjusted EBITDA and normalized FFO were each up between 20% and 30% compared to the second quarter of 2018. Churn was relatively low at 0.6%. And while we continue to expect full year churn to be in the range of 5% to 7%, we are trending toward the lower end of that range.

Turning to slide 12. NOI grew 19% on an adjusted basis. The decline in the margin year-over-year was primarily driven by higher equipment sales, which have a low margin, and higher pass-through meter power reimbursements as a percentage of revenue, which result in 0 margin contribution. The equipment sales for the quarter totaled approximately $17 million primarily consisting of sales associated with couple of larger deployments. For comparison, equipment sales in the second quarter of 2018 were only $2.4 million. This increase in equipment sales year-over-year accounted for approximately 350 basis points in the decline in NOI margin between quarters. Adjusted EBITDA grew in line with NOI, and the increase in normalized FFO was driven primarily by the growth in adjusted EBITDA.

As Gary noted, we have invested in our European team to support our expansion in those market, but we should begin to see those SG&A expenses as a percentage of European revenue decline as we build out the platform and that region becomes a more significant portion of our total revenue. Our normalized FFO per share growth rate increased meaningfully, up 14% compared to the second quarter of 2018 on an as adjusted basis for ASC 842. As the chart at the bottom of the slide shows, the adjustments to normalized FFO to arrive at AFFO netted to 0 in the quarter as cash received for customer installations largely offset straight line rent adjustments. Turning to slide 13. We continue to have a very balanced geographic contribution across our market, and our expansion in Europe will further diversify the portfolio.

CSF lease percentage for stabilized properties was down slightly compared to prior year but remains high at nearly 90%, even with a 21% increase in capacity. During the quarter, we elected not to renew our lease on the South Bend Crescent property, a small legacy data center in our portfolio, and that revenue impact was reflected in our second quarter churn. slide 14 shows our development pipeline, which includes projects across the U.S. and Europe. While the preleasing percentage is lower than in prior quarters, we expect that with the conversion of deals in our late-stage sales funnel, these projects will have a significant level of leasing once they are delivered.

The overall portfolio will be 27% bigger on a CSF basis compared to a year ago upon completion of all these projects. And as Gary mentioned, we also have 925,000 square feet of powered shell under construction that can provide nearly 150 megawatts of additional capacity upon full build-out. Combined with our existing shell inventory, we will have nearly 3 million square feet of powered shell across the portfolio. Moving to slide 15. We continue to maintain a very conservative capital structure and a strong balance sheet to support our growth. Our leverage remains low, 5x net debt to EBITDA, meaningfully below the average of -- for investment-grade REIT. We have no near-term maturities, more than $1.4 billion of liquidity, and we remain a fully unsecured borrower. As we discussed on last quarter's call, we have no need to issue additional equity.

And at the company's current scale, we can fund approximately $700 million to $750 million of annual capital investment through free cash flow and additional debt capacity while maintaining our targeted leverage range. Turning to slide 16. We are increasing the dividend in the third quarter of '19 to $0.50 per share with a 9% increase over the previous quarterly dividend of $0.46 per share. This represents an annualized yield in the 3.5% range. As Gary mentioned, we've more than tripled the dividend since 2013 and note that 100% of our dividend payout was return of capital, enhancing the after-tax yields for investors with taxable income. We also continue to maintain one of the lowest payout ratios among REITs in order to retain internally generated cash flow to reinvest in the business. Turning to slide 17.

Our revenue backlog as of the end of June was approximately $24 million with nearly 60% expected to commence in the third quarter, relatively in line with the anticipated commencement phasing in recent quarters. The backlog, combined with the full year impact of leases that commenced within the quarter, the impact of leases that were signed shortly after quarter end, derisked our growth going into 2020. Turning to slide 18. We're tightening the guidance ranges for total revenue and adjusted EBITDA. We are decreasing the range of capital expenditures, and the new midpoint of $900 million is $50 million lower than the previous midpoint primarily driven by the timing of spend as we expect some of the spend will be pushed into 2020. As Gary mentioned, we are increasing the guidance range for normalized FFO per share by $0.20 at the midpoint primarily as a result of lower interest expense than we had previously anticipated.

This is driven by several factors. First, as I just mentioned, the level of capital spend is lower than we previously anticipated, and the timing of that spend is more delayed. Additionally, capitalized interest is higher as a result of higher construction-in-progress balances than originally budgeted. Finally, while we have previously decreased our rate assumptions for the year, our interest rate outlook was still higher compared to our current forecast, particularly given the recent decrease in LIBOR and the current forward curve. In addition, the company has pulled back expenses during the year. That had a positive impact on both EBITDA and NFFO. While the midpoint of our EBITDA guidance remains the same in our current guidance, we were trending below the midpoint but within our range during the first half of the year and now are very comfortable at the midpoint range, given our current outlook.

In closing, we're pleased with our performance and the strong growth across our financial metrics. We have taken a number of steps to position the company to be able to execute on opportunities and maintain our continued strong growth, and we remain very optimistic regarding the ongoing outlook for the business. Thank you for participating on the call, and we're now happy to take your questions.

Operator, please open the line.

Questions and Answers:

Operator

[Operator Instructions] The first question will come from Frank Louthan with Raymond James. Please go ahead.

Frank Louthan -- Raymond James -- Research Division-MD of Equity Research

Great thank you very much. Can you -- what is sort of the nature of the growth in Europe that you're seeing? Is this sort of -- are you seeing more net new business that you're bringing in from some of your existing customers in the U.S. or just expanding the existing base there? And then I've got a follow-up.

Gary Wojtaszek -- President And Chief Executive Officer

Yes, Frank. Yes. The European business, our original underwriting basically assumed that we were going to leverage all of the hyperscale relationships that we have in the U.S. and expand them into Europe, and that's proceeding right according to plan. Recognizing that was going to be the vast majority of our growth, we also knew that we were going to be building out an enterprise sales-focused business there as well, trying to pull in some of our customers from the U.S. and also attack the European market. We've closed a couple of enterprise deals. But as you know, that takes a long time to build that. Typically, from first customer touch to closing, it's about a 3-year process.

So we didn't make any assumptions in our underwriting for that, but we are getting deals. We expect that that's going to just be additive to our results there. But to date, it's all been enterprise. And that was actually the only hyperscale booking that we had this quarter was in Europe. Everything else was enterprise and -- everywhere else, throughout -- entirely in U.S. was enterprise, and other -- and that was the only deal we had in hyperscale was in Europe.

Frank Louthan -- Raymond James -- Research Division-MD of Equity Research

Was that a multi-megawatt deal or just...

Gary Wojtaszek -- President And Chief Executive Officer

Yes, a couple of meg. It was about -- 20%, 25% of our bookings this quarter was hyperscale. The rest was all enterprise.

Frank Louthan -- Raymond James -- Research Division-MD of Equity Research

Okay. And then -- so follow up. As you've expanded a little bit more in the enterprise this year, how can we characterize -- how should we think about the development yields that you're getting off for these customers versus your more standard mix with hyperscale?

Gary Wojtaszek -- President And Chief Executive Officer

Sure. Look -- I mean we included Virginia in our development yield this quarter. That was on top of Phoenix last quarter, on top of Dallas before. And what you see consistent across all of those is yields of 15%, 17%. And the reason that we're able to get the higher yield is because in each of those assets, we're blending into those assets, enterprise deals which command substantially higher returns than just our hyperscalers. And that's why -- so when you hear me talk about that we're underwriting hyperscale deals at the 12%, 13% range, when you actually look at the actual asset yields, they're substantially higher than that because we're putting in enterprise customers. And we're also putting in IX. I mean our IX business this quarter just kind of knocked it out of the park.

Diane M. Morefield -- Executive Vice President And Chief Financial Officer

And Frank, our rate this quarter of $183 per kilowatt is also indicative that 70% of the deals were less than 500 kilowatts and more enterprise-focused. So it's obviously very profitable business.

Frank Louthan -- Raymond James -- Research Division-MD of Equity Research

Okay great. Thank you.

Operator

Our next question will come from Simon Flannery with Morgan Stanley. Please go ahead.

Simon Flannery -- cone

Great. Thanks. Good morning. You talked about the 13% sort of presale on the development. How's the funnel looking? What are you seeing in terms of getting additional contracts there? And maybe what are you expecting -- when are you expecting hyperscale to come back? And then maybe for Diane. Why now on the dividend? I know you did raise FFO. But what's the -- are we on a new cycle now, where you'll review the dividend every kind of Q2? What should we be expecting?

Gary Wojtaszek -- President And Chief Executive Officer

Thanks sure. Yes. So on the funnel, so it's flat quarter-to-quarter. And the mix shift in there is -- actually 30% of the funnel now is associated with our European business. So last quarter, if you recall, it was at 20% of our funnel. So European business has grown quarter-to-quarter. It's flat year-over-year. It's up 90%. So it's still up a lot. That said, we're not really -- we're not seeing any really noticeable change in the hyperscaler environment. We're in more conversations. I mean on the margins, probably slightly better now than it was at the beginning of the year, but not to the point where I feel comfortable calling an end to this. And that's why we really kind of reposition the company this year not knowing when this was going to turn around.

We really kind of buckled down, focused on our expense management and capital structure in order to kind of drive the FFO per share performance up. So hopefully, by the end of this year -- I mean things turn around. But even if it doesn't, the way we've positioned the company now, given all the investments we've made, we should be able to drive really nice low double-digit per share growth with not a lot of top line sales requirements because we're going to be growing into all the investments we've made over the last 18 months. Then Di, you want to take...

Diane M. Morefield -- Executive Vice President And Chief Financial Officer

Yes. So regarding the dividend, Simon, it's a good question. At the beginning of the year when we came out with basically flat FFO per share growth given our outlook back in the January, February time frame, we thought it was prudent to keep the dividend flat because we certainly didn't need to increase it. Our dividend nature is typically return of capital. But as the year progressed and, to your point, as we've increased our per-share guidance now in the 10% growth range, we felt it was time to evaluate an increase in the dividend. Obviously, it's ultimately a Board decision, and the Board agreed that it made sense to increase it, given our per-share growth. As far as timing, just generally, we increased it once a year. Again, we delayed it a couple of quarters this time. But the company's history has always been to increase the dividend every year, and we would anticipate that would continue.

Operator

Thank you. Our next question comes from Robert Gutman with Guggenheim Securities. Please go ahead.

Robert Gutman -- Guggenheim Securities -- Analyst

Thanks for taking the question. You said that the hyperscale deal landed in Europe in the quarter. I was wondering about the second deal subsequent to quarter end, if that was also in the Europe or in the U.S. And I was wondering if you could provide an organic growth number for the quarter in terms of revenue.

Gary Wojtaszek -- President And Chief Executive Officer

Sure. Sure. Yes. So actually, subsequent to the quarter, we actually closed our largest enterprise deal that we've done in a long time. That was almost 5 megs with potential doubling for growth. So our -- and that'll be the new facility that we'll be bringing online in San Antonio. So that'll basically be -- the capacity we'll be bringing online there is 100% sold. That was a really good deal. Then it also allows us to break ground on that new piece of land. That was the only the market in U.S. that we've been sold out at. There was a couple of deals that closed right after the quarter end. That was the big enterprise deal. There were a couple of other cloud deals, and those were in Europe, predominantly.

Diane M. Morefield -- Executive Vice President And Chief Financial Officer

And your question on organic growth, Zenium is in the 14% range.

Operator

Our next question comes from Richard Choe with JPMorgan. Please go ahead.

Richard Choe -- J.P. Morgan -- Analyst

Hi. I was just wondering what kind of visibility do you have for the equipment revenue and what we should be expecting for the year. And then I have a follow-on.

Gary Wojtaszek -- President And Chief Executive Officer

Can you say that again, Rich?

Richard Choe -- J.P. Morgan -- Analyst

What kind of visibility do you have in terms of the equipment revenue for the rest of the year?

Gary Wojtaszek -- President And Chief Executive Officer

We don't really assume much of that because there's really not a lot of low -- not a lot of high-margin business in that. We have a couple of million bucks every quarter. I mean typically, our average has been about $3 million or $4 million every quarter. We had a really strong quarter here, but that's why we also don't see like really big flow-through in EBITDA commensurate with the pop that we got in revenue. There's a couple points in margin that comes through, but the really big improvement that Di was alluding to in terms of within the range has really been the result of expense management. With regard to where we see bookings for the rest of the year, I mean at this point we're still comfortable with that $20 million, $25 million quarterly range. We're not willing to call the bottom of this, and we don't see the second half being significantly stronger than the first half was.

Diane M. Morefield -- Executive Vice President And Chief Financial Officer

Yes. Richard, on the equipment sales, the second quarter [Indecipherable] was really unusually large. So we would not see that trend continuing. We had a couple really big deployments. And I need to correct my answer on -- sorry, that Rob had on organic. The organic for ex Zenium for the full year is going to be in the 14% to 15% range quarter-to-quarter, because unfortunately, we didn't close Zenium until early September, end of August last year. Quarter-over-quarter, the -- our organic growth was 20% between years.

Richard Choe -- J.P. Morgan -- Analyst

And then in terms of positioning the company in terms of development with a refocusing on enterprise, is that affecting development at all? Or are you just kind of going ahead as planned and, at some point, the hyperscale so -- should come back and you'd rather be well positioned for that?

Gary Wojtaszek -- President And Chief Executive Officer

Yes. That's exactly it. so if you think about what we're trying to do, Rich, is, look, we have been putting up really big growth rates. I mean since we IPO'd, we have been the fastest-growing company in revenue and EBITDA performance, and that was against a strong demand backdrop. Over the last 3 years, we would have cumulatively invested roughly $3 billion of capital, and that was all done strategically to build out a really big platform. So while we were small player early on, we built up, I think, a really great franchise in the U.S. And what the -- the way this expansion in Santa Clara, we're in all the key markets that we wanted to be in. When we made the decision to expand internationally, we weren't going to go in on a slow pace.

We were going to play to win. And what you've seen in the period of 24 months is that we've got fantastic franchise in Europe. That just is growing at 65% year-over-year this quarter, going to grow another 20% by the end of the year. And we're planning for that part of our business to be about 20%, 25% of our overall business in a couple of years. That was how we were deploying our capital. But earlier in this year, when we saw that everything was slowing down, particularly in the hyperscale market, we identified that trend early enough such that we really kind of scaled back our business and our aspirations on kind of increasing our SG&A in line with where we thought this was going to go. So we cut that back, and we focused on tightening up some of the other things that we're doing on our capital structure. And result was that we've got really nice FFO per share growth at the double digits. Eventually, that will converge with our revenue and EBITDA growth. We wouldn't expect that revenue and EBITDA growth is going to be growing at -- in the 20% range. We expect that'll come down, and the bottom line performance will increase. So those should converge over time. So as we sit here right now and as we said on the last call is that we're positioned really well.

We do not need any additional equity capital. We can fund all of our capital needs over the next 2 years and not miss a beat. And we think that if the market does turn around, given all the shell capacity that we're bringing online, roughly 900,000 square feet, we position ourselves to take a big share of that market. If it doesn't, we're still in a good position. Because as you know, our speed to market in terms of our product capability allows us to minimize the capital at risk. So we think we're positioned well if it doesn't turn around. But if it does turn around, then we think that the growth rates that we're underwriting to are going to increase. But the bottom line is we could do it all on our own balance sheet with our own internal cash flow, and we feel pretty good where we sit right now.

Operator

Our next question comes from Erik Rasmussen with Stifel. Please go ahead.

Erik Rasmussen -- Stifel -- Analyst

Thanks for taking the question. Yes. I noticed, and this obviously doves -- dovetails into a lot of the comments so far you made about hyperscale and leasing, but you did push out 2 construction projects in NoVA. I think that's by -- each by about 2 quarters. Is -- any other sort of commentary you can give to that? I mean obviously, there's some digestion that the market's going through. But can you just kind of give us a little bit more commentary on that?

Gary Wojtaszek -- President And Chief Executive Officer

Sure. They're all related to the same thing, right? I mean we don't -- we do not -- we build product in line with our -- in line with the demand that we are tracking. So if we see demand slowing down, and then we will be pushing out -- we'll be pushing out capital commensurately. So in spite of some people thinking that we have cowboy mentality here, we are really focused on kind of driving profitability and making money. And we manage those 2 really, really closely. If you look at my personal calendar, you would see that probably 40% is spent on sales and customers and another 40% on capital and then the rest, managing the rest of the business. So those 2 work in tandem. And so on vice versa, it could be seen as doing a lot more in there.

You would anticipate that we're seeing a bigger funnel. So if you look at where our growth is in Europe and the capital investment that we're doing there, that continues to increase because we have the funnel that we're seeing there is increasing. I mentioned on Simon's question, quarter-to-quarter, our funnel, while flat sequentially, the mix has shifted so that 30% of that funnel is now in Europe. And so -- then with the funnel shift, you should also see a capital allocation shift to that as well. And that's why we've always believed that this is a global business. And the best benefit for being global is that your capital decisions are much better because you're playing in a portfolio that's global. And you see some of my peers put up really great numbers this quarter basically because of the international growth and the benefit of being global.

Erik Rasmussen -- Stifel -- Analyst

Great. No. And just mention my follow-up. Maybe just revisiting investment grade. It seem like with the lower capex spend lowering sort of the leverage ratios, can you just give us an update kind of where you stand with that and sort of -- I mean what's the next hurdle?

Diane M. Morefield -- Executive Vice President And Chief Financial Officer

Well, you should call the rating agencies. No. But as you know, we're already there with S&P. Moody's reviews us once a year, and we would anticipate them reviewing us at some point this year. And we've got conversations with Fitch. So we're pretty transparent in the benchmarking, that we feel we're already at investment grade. It's just a slow process to get there formally. But we do manage the leverage. The leverage being lower was more of a function of we raised cash at the beginning of the year through the GDS sale and through the ATM that covered all the equity we needed. And so our leverage is low. We've said we managed generally in sort of the mid-5x range, willing to go above that for short periods. But we do feel it makes sense to stay on the investment grade pact, given the capital intensity of the business. And all the large well-capitalized REITs are investment grade. So we're pretty confident we'll get there in the not-too-distant future.

Gary Wojtaszek -- President And Chief Executive Officer

Yes. It was good to see Equinix finally get there, right? I mean we were -- we got to investment grade with S&P actually before them, which, to me, kind of like a bizarre anomaly because I would thought Equinix should have been investment grade a decade ago. But since they basically now are there with all 3 rating agencies, that just provides a little more comfort to their comfort to this industry. So hopefully, we get some positive benefit as a result of that. But we ended this quarter actually at a lower leverage than we did last quarter. So we're in a really strong position balance sheet-wise.

Operator

Our next question comes from James Breen with William Blair. Please go ahead.

James Breen -- William Blair -- Analyst

Thanks for taking the questions. Just a couple, one on the 20% to 25% sort of quarterly guidance you gave. I'm assuming that's sort of the average over the year, given some of the timing around this quarter. And then secondly, you talked about this being one of the highest pricing quarters based on the mix. How do you think about that as it flows through to FFO and some of the other numbers? How the smaller customers affect as you get to cash flow?

Gary Wojtaszek -- President And Chief Executive Officer

Yes. So yes, the 20%, 25% is an average for the year. So we're tracking right in line with what we had thought. And clearly, we would like to had a higher bookings this quarter. But fortunately, all those deals that we thought we're going to close closed right after the quarter end. So as I mentioned, like in those yield slides, Jim, that we put in there, you can see yields in this chart talking about 17% for Northern Virginia. So we invested about $312 million of capital in there, yielding 17%. The way we achieved that 17% yield is because of the mix of enterprise customers that we have in there. So typically, the enterprise customers are shorter duration but higher priced compared to the cloud customers, which are lower priced but higher duration.

But it's really important to the mix, right? So our business model, we've -- since inception, we never knew what customer is going to walk through the door. We were completely agnostic. We just wanted to make sure we can close that customer so we can handle a customer that just wants a rack up to a customer that wants 50 megs. But the opportunity here is -- on the blended basis, is really what gets you to higher yields. That's what's allowing us to get double-digit FFO per share performance. In spite of revenue growth that I think is going to come down, our per-share performance should actually increase because of the yields.

James Breen -- William Blair -- Analyst

And even though some of those enterprise customers are shorter duration, given your historical knowledge, is there -- do they really end up ever -- can they -- do they end up being a longer duration, they just have shorter renewal periods?

Gary Wojtaszek -- President And Chief Executive Officer

Yes. Yes. If you look -- this was one of the concerns when we first IPO'd. 50% of our entire portfolio at that point in time either had matured or was about to mature in 12 months, right? And so think about it. So every customer, all of our customers, one out of every 2 customers have the ability to leave. And what you see if you look over our historical churn metric over that period, it's been pretty much unchanged. I mean it's in that 5% to 7% range over that period of time. So even though one out of every 2 customers could walk away, the reality is they don't. Because if you provide a good product at a fair price and treat customers really well, they tend to stay. And I think a lot of people get caught into this. Everyone's like into the numbers, right?

But if you step back and you think about how much money a customer is actually paying in terms of the rent for data center relative to all the investment that they have in that data center and the difficulty moving out of the data center, it's not the end of the world if you pay a couple of bucks more, right? And that I think is kind of like a lot of people just get caught up in the numbers all the time and kind of just can't see the forest through the trees.

Operator

Our next question comes from Colby Synesael with Cowen and Company. Please go ahead.

Colby Synesael -- Cowen & Company

So a lot of detail and information in your prepared remarks, which I really appreciate. I'm sure others do as well. You talked very quickly, so I just want to just make sure I understood a few things, get a little bit more color. So first off, you mentioned that in the third quarter, you expect to be above your $20 million to $25 million. You've done $13 million based on what you announced. And if you assume that you do maybe $3 million or $4 million in each of the next 2 months in enterprise, that would get you to the lower end. So it seems like you're expecting some bigger deals still to come. I was wondering if you can give some more color on that and really your visibility on that happening and, maybe just more broadly, your visibility as it relates to your pipeline and being able to close some of those deals. And then secondly, margins.

You guys mentioned this opportunity to really squeeze the margins up, particularly in Europe, over the next year or so. I was wondering, Diane, if you can just give us some more color into the how that's going to ultimately impact the aggregate or total EBITDA margin line item over the next few quarters. Can you quantify or give some more color around that to help us frame out the magnitude of benefit we should expect from some of these things?

Gary Wojtaszek -- President And Chief Executive Officer

Sure. So yes, probably -- so $20 million to $25 million a quarter over 2, that basically gets you to $40 million to $50 million of bookings for the 2 quarters. And I think we're tracking pretty well there. I mean we got $26 million in the bag against that, and we have a lot of deals that we feel pretty comfortable are going to close this quarter to get us back there. So we've got deals in hand. These are in a later stage. So we feel better about being able to deliver that.

Colby Synesael -- Cowen & Company

Any color in terms of markets where you're seeing the biggest opportunities?

Gary Wojtaszek -- President And Chief Executive Officer

Yes. Yes. Again, Europe. I mean that is -- those markets are doing really well. We've got -- and we've got some in U.S. But the more conversations -- I mean the real cloud demand has not -- in my mind, at least what we're seeing, has not really returned yet to the U.S. We've got adequate inventory everywhere. So it's not like a supply issue. It's really more of a demand issue from customers in the U.S. market. So our enterprise business is still really strong in the U.S. But the bigger growth opportunity that we're seeing is in Europe with hyperscalers.

Colby Synesael -- Cowen & Company

So it sounds like some of those deals would close later this quarter, just based on where you're at, that conversation.

Gary Wojtaszek -- President And Chief Executive Officer

That's right. Yes.

Diane M. Morefield -- Executive Vice President And Chief Financial Officer

Yes. Regarding margins, we do see, as the year progresses, an expansion in our EBITDA margin. And the mechanics on SG&A, we're -- I think last year, our SG&A, just shy of 10%. That's trending down to the 9% range for this year. And then going into next year and beyond as we keep SG&A relatively flat because we've already made that investment, particularly in -- growing the Europe overhead, we'll see that come down even further as a percent of total revenue.

Gary Wojtaszek -- President And Chief Executive Officer

Yes. We use to see flow-through in our EBITDA margin by 100 points in the second half, probably another 100 points by the end of next year.

Colby Synesael -- Cowen & Company

Great. Thank you.

Operator

Our next question comes from Nick Del Deo with MoffettNathanson. Please go ahead.

Nick Del Deo -- Analyst

Gary, what do you think pricing will look like for stale deals in Northern Virginia when demand comes back? I mean moderate construction tends to limit excess inventory, but there are a fair number of players who are obviously hungry for business and have basic space.

Gary Wojtaszek -- President And Chief Executive Officer

Yes. Look, I -- we -- there's always a tremendous amount of talk about pricing in here. I mean our yields in that market for the hyperscalers haven't really changed. We're still expecting in the low double digits on a yield basis. But you hear about a lot of stories about -- with inventory out there. But for the most part, most of the supply that you're -- we're looking at is mostly due to land. There's not a lot of people that have delivered a lot of built-out capacity. But in general, I think that Northern Virginia market is absolutely overbuilt. There was like a gold rush mentality going on there with land acquired to probably last 10 years worth of inventory of all the demand. So I think the market is going to be overheated for some time on the supply side.

But I don't know where prices will shake out. I mean the reluctance, I think, as I was mentioned in the marches -- like you have to think long and hard if you are a Fortune 500 company that's entrusted to manage some of the most critical gear for some of the largest corporations in the world and not think that you have some sense of responsibility for dealing with a partner that is financially stable, right? And so if you have a choice of dealing with a partner that has 100% debt financing on an asset versus a partner that is investment grade or soon-to-be investment grade, you have to think that into your calculus when you're going to choose to do business with those folks. So I think that's why if you look historically, 90% of all the deals that have happened in Northern Virginia, with the exception of a couple of deals that were awarded when everyone else ran out of capacity, have all gone to the public players, which is what I would think more advanced supply chains would always opt to do. World-class organizations do not tend to deal with over-levered, financially unstable companies. They tend to deal with highly public companies with strong balance sheets.

Nick Del Deo -- Analyst

But you're maybe -- tying in to the last comment you made, sort of last theme, do you see opportunities in the horizon to pick up distressed assets?

Gary Wojtaszek -- President And Chief Executive Officer

Well, I hope not because that will cause a bigger problem for the industry. So I'm hoping some of these people who did get the brass ring and got a hyperscale lease contract and leased at 100% debt financing are not going to allow those things to go into distress. Because if that happens, I think that will create a bigger problem in terms of leasing velocity for the industry overall. So I hope that does not happen. Clearly, if it did and there were opportunities for us, we would absolutely jump in there and help out any of our customers, make sure that we can provide continuous service.

Nick Del Deo -- Analyst

Thanks Gary.

Operator

Our next question comes from Aryeh Klein with BMO Capital Markets. Please go ahead.

Ari Klein -- BMO Capital Markets

Thanks. Maybe just a quick one on the development spend. As you look out to next year, I think you previously guided for around $750 million in capex. Is that still the case? And then separately, based on the commentary, it sounds like enterprise has been strong. But when I look at the vertical splits, it looks like annualized rent from non-cloud customers actually declined slightly from a year ago. So maybe talk a little bit about what's going well from the vertical standpoint and maybe what's been a drag.

Gary Wojtaszek -- President And Chief Executive Officer

Yes. So with regard to the capital, that $750 million number sounds good. Even if we went above that, that would be fine. I mean the takeaway point is that we can manage our business and never have to issue any additional equity. We built out the platform, and now we're just kind of growing into it. So we're in a really good position there and no longer need to rely on any equity funding, even though we'll be growing at a slower rate. With regard to the verticals, I mean our financial service vertical has been really strong. We expect that that's going to continue and accelerate actually next quarter with one of the deals that I just mentioned, one of the largest enterprise deals that we've signed in a really long time. But pretty much we're seeing financial services, we're seeing some communications and even some smaller tech companies as well in that space.

Operator

Our next question comes from Jon Petersen with Jefferies. Please go ahead.

Jon Petersen -- Senior Vice President

Great. I had a few questions on some markets in Europe. I can just kind of run through them, and you can answer them in whatever order you want. So in Frankfurt, a few weeks ago, you guys announced a new development there. I think it's your third. I was curious if there was any preleasing on that project. And if not, kind of why are you starting the third building there? And then in Amsterdam, I don't think we've had any discussion about the moratorium there. I know you have a development under way. But curious if you had any thoughts on when that's finished, if you'll be able to turn the lights on. And then finally, in Dublin. I know there has been issues in the past with procuring power, even though you've been able to build. And it's an issue, I think, across the whole market. Just curious if there's any update on whether all that's kind of behind us.

Gary Wojtaszek -- President And Chief Executive Officer

Yes. Sure. So I'll take all of those. So look, Frankfurt has been the strongest market in Europe. We're basically sold out there. Right now, that building that we announced in the quarter is 22 megawatt building. We expect that once that's delivered in June, that a good portion of that, if not all of it, is going to be preleased. That was some of the thing -- we're working on a number of deals for that opportunity right now. With regard to Amsterdam, yes, there's a moratorium going on in Amsterdam, for those who've not seen it, on data center builds. We've got a really nice campus in Amsterdam proper right near Schiphol over there. We're on plan with bringing that out of the ground. We expect to have that completed by the end of the year. We'll have about 5 megawatts of capacity in that facility. That is on track, and that is -- we received approval for that. So that won't be impacted by this moratorium. We expect that the moratorium, once they kind of work through that, we expect that our design and what we're delivering is going to be compliant with that. And it's really going to be, I think, moot for us at a certain point because we're going to have plenty of capacity there to sell in the market. And by next year, we expect that, that moratorium is going to be cleared up.

We'll be able to deliver more capacity. So we have a fairly large building there. We're going to have about 50 megs of capacity in that market. Dublin, you're right. That is incredibly constrained market. We have been working on that property for just about 2 years. We also announced after the quarter, we signed a 1,000-year lease. In Dublin, that's another really big development that we're going to be putting up there, and we also have the power secured for that as well. So roughly 70 megs of power, I think, we're going to have there. And then the last is in London. We've got a couple megs of extra capacity available there. But we're going to have our third London site brought online toward the end of this year, beginning of next year, and that would give us additional 10 megs of capacity or so.

Operator

Thank you.Our next question comes from Sami Bardi with Credit Suisse. Please go ahead.

Sami Bardi -- Credit Suisse

Nice. Sami Bardi here. My first question has to do with some of your prepared commentary regarding IX and interconnection. And maybe we could just get an idea on what's going on in terms of flow of connections and flow of traffic. Is this enterprises connecting to clouds? Or is this clouds connecting to networks? Like maybe you could just give us an idea on what exactly is densifying in the network, just so [Speech Overlap]

Gary Wojtaszek -- President And Chief Executive Officer

This really gets my adrenaline going. So we have some pretty searing results in IX this quarter. It was up 20% year-over-year. That's one of the fastest-growing quarters ever for us. So there's a couple of things that are going on. I think this is a really important concept to understand, right, because no one thinks about CyrusOne as kind of a go-to IX company. We're kind of like this nocturnal kind of sleepy little company that people don't really look to us for IX purposes. However, what you've seen is really big growth in IX, because what's happening is that the data sets are exploding at a really, really fast pace. And what's happening is that the data -- the compute nodes and the storage nodes in the data center landscape are growing at a much faster rate than the network nodes.

And that is the part of the business that we play in, right? We're building massively scaled large buildings, going after the largest organizations in the world, and our application targets that has been the 99% of the applications that are in the compute and storage. We've never gone after the 1% of applications that, say, an Equinix has gone after, which is the network and the networking part of it. What's happening, we've seen over the last couple of years, as data becomes really like explosive, we're seeing a change in landscape in the network topology. And that's why over the last couple of years, you've seen a lot more growth in parts of the business that we do versus on the networking side. And so the growth in cross connects here is just the result of that. Two things: one is we've done a great job of getting new logos. So we add roughly one new logo a month from -- on the enterprise space and like 3 or 4 a month on new logos overall. Each time you get a new customer in, they start off with a couple of cross connects and continue to grow. What I've shared in my commentary is that the average number of cross connects per customer has increased to 21. That is up sevenfold from when we first tracked -- started tracking this about 7 years ago.

And we expect that that's going to be a trend that's going to continue to go on over time. And the other thing we always talked about historically is the success that Megaport has been having in driving more connectivity and making customers want to locate with us because they provide our customer with access to all of the different cloud vendors. And not only that, what we're seeing is that the cloud vendors are directing their customers to go to Megaport to pick up access to the cloud. So it's really kind of symbiotic relationship that we have with Megaport. They've enabled us to attract customers they connect into the cloud, and we've done really well just because of the hybrid model that we're going after. As they continue to do more and more deployments, they require more cross connects.

Sami Bardi -- Credit Suisse

Got it. And then another question I have for you is regarding the overall demand market in Europe, and I want to kind of maybe get your take on how to compare this versus the path that U.S. took, right? So U.S. has been big, lumpy. It spikes. It plateaus. Do you think you're going to see a very similar cycle play out in Europe? And maybe just timing around that. Is this like a 1-year window, 2-year window? Do you think it's going to be very comparable from a cycle perspective to the way the U.S. grew? Or is Europe going to be a little bit different in terms of how this ends up unfolding over the next couple of years?

Gary Wojtaszek -- President And Chief Executive Officer

Yes. Look, I think it's going to be similar growth that you've seen in the U.S., and that's why we're really focused on trying to build out that enterprise platform there. That is nothing that we're doing that's going to have an immediate return. We know, though, that once you build up a really strong enterprise platform, you're able to kind of minimize some of those valleys. So we're always going to see peaks associated with big demand from the hyperscalers. But the real strength of your platform is determined by how well you do in those times when sales are a little slow. And so while we're seeing the peaky demands now and lumpiness associated with big hyperscale builds, Tesh is focused on absolutely replicating the success that we've had in the enterprise in the U.S. in Europe. So that in 3 years' time, we're going to have a really great enterprise platform there. And that's why if you look at our results over the last 3 quarters, in spite of hyperscale business being somewhat muted, we've had like record sales in enterprise which comes in at like really high returns. And so that's what we're trying to do in Europe.

Operator

Thank you. Our next question comes from Jordan Sadler with KeyBanc. Please go ahead.

Jordan Sadler -- KeyBanc -- Analyst

Thanks guys. Good morning. So just a clarification on the cross connect volume. You mentioned Megaport. I'm just curious about the split in terms of growth sort of internal CyrusOne physical cross connects versus Megaport in terms of the growth.

Gary Wojtaszek -- President And Chief Executive Officer

Yes. I mean look, the vast majority of our growth is just internal cross connects. And so our cross connect -- and included in that is 3 different actual products, right? You've got your basic cross connect, right, and that continues to go up nicely. I mean we had a really big cross connect growth in terms of the physical cross connects this quarter. That was up 20%. But there's also we do IX, right, where we're -- basically, we've interconnected our data centers in the metros and between metros, so across the country, and that business is now doing really well. That's something that we started years ago, and that's another line of business. The other one that we provide in there is selling bandwidth. So we're -- all of those are doing really well. And actually, the IX business, from a profitability perspective, because we had a lot of upfront cost when we were first doing that, that the EBITDA growth rates in that business are just kind of like off the charts now. We're going up sequentially like a lot. The Megaport business is up 80% year-over-year. So it's still growing nicely. But on a -- from an overall perspective, still not material to our results. But what it is material to is that it's enabling us to connect to other customers or attract other customers that would otherwise not be with us but for Megaport.

Jordan Sadler -- KeyBanc -- Analyst

Okay. And then Diane, just a clarification on the equipment sales. $17 million was the number on the revenue side. Can you help us out what to back out in terms of the expense side or maybe what the per-share FFO contribution was on the equipment sales in the quarter?

Diane M. Morefield -- Executive Vice President And Chief Financial Officer

Equipment sales averaged around 10% margin.

Jordan Sadler -- KeyBanc -- Analyst

10% margin. Okay. And then just lastly, there's been some real volatility in REIT share prices. And yet, as you guys have pointed out, there's tremendous amount of capital queued up on the sidelines in the private markets. I'm curious, Gary, how you're thinking about the private capital market and the difference between the spread, public versus private, and whether or not there's any opportunity for you.

Gary Wojtaszek -- President And Chief Executive Officer

You mean where private or private...

Jordan Sadler -- KeyBanc -- Analyst

No. So your -- where your stock's trading versus what people are willing to pay, private equity players are willing to pay.

Gary Wojtaszek -- President And Chief Executive Officer

Wow. We've been saying all along, I mean it is really difficult to do any M&A, I mean, because the private prayers are willing to pay really big multiples, 25, 30. Sometimes we've seen deals at like 40x in-place EBITDA. Like these are just like really, really high multiples. We cannot afford to invest in those assets. And that's why we strategically made the decision to kind of grow the business organically, recognizing that we're not going to hit the same scale immediately as you would in an acquisition. But we're definitely going to get -- make much higher returns. We'll be able to control our destiny a little better that way, and I think we're kind of seeing that now. That's why even next year, like I'm not expecting our revenue growth to be 28%. I'm expecting that to come down, but I think the bottom line share performance is going to go up really nicely. We'll be able to sustain that for the time until we grow into this platform that we've built.

Jordan Sadler -- KeyBanc -- Analyst

Okay. The angle I was really going for was just, is it -- you mentioned being a public company as being important for some of your world-class customers. Is it important for you to be a public company? Or would you consider availing yourself of maybe the opportunity to take shareholders out at a higher price because there's quite a bit of private capital, that you're willing to pay better -- higher numbers than where the stock is at.

Gary Wojtaszek -- President And Chief Executive Officer

Yes. Look, I think big companies like doing business with other big companies. So I think there's a clear benefit to being a public company, right? And particularly, once you hit investment grade, your access to capital has just really kind of opened up dramatically. I mean one of the tower guys today just posted like a 30-year deal on debt, and that is really, really attractive financing that avails itself to you only if you are investment grade and typically public.

Jordan Sadler -- KeyBanc -- Analyst

That's helpful. Thank you.

Operator

Our next question comes from Nate Crossett with Berenberg. Please go ahead.

Nate Crossett -- Berenberg -- Analyst

Thanks.Yes. And there's been a lot of talk about Europe on this call, but maybe one question on Asia. What are your thoughts expanding into that region? What are the aspirations there outside of GDS? And then maybe you can just give us some color on South America with ODATA and how's that market been.

Gary Wojtaszek -- President And Chief Executive Officer

Yes. Yes. So GDS has just been doing phenomenally well, right? I mean as I mentioned, like that is our partner in Asia. Ideally, they would be the partner longer term to do something more interesting in Asia. But for the time being, we're not focused on doing anything more than focusing on building out what we started in Europe. We've got a number of projects under way for, and we need to focus on making sure that that's successful. So far, the results have proved really, really well. We are right on top of our underwriting expectations in Europe. So we're not interested in doing anything more in Asia than what the relationship that we currently have with GDS. And I think as I've mentioned publicly before, I believe that GDS has probably the best opportunity of all the global data center operators, given that they are in the fastest-growing data center market in the world, and GDS has a position that is second to none in that market. So we think we partnered up with the ultimate player in that market, but have no aspirations for doing anything more at the moment. ODATA is similar story, right?

Brazil is a really hot market. Chris and the whole Ascenty team have been doing really, really well, and I think Ricardo and the ODATA team are equally doing well. The sandbox is pretty big. There's a lot of opportunities, and ODATA is actually growing at a much faster rate than we had regionally underwritten. They're doing a lot in Brazil. And as they show last quarter, they were also expanding into Colombia, and we think that that's going to be a really great franchise to kind of help them succeed throughout Latin America. But in terms of any more direct investments outside of what we've done in GDS and ODATA, we're not focused on that now. It's really just focus on Europe. And we don't think that we're going to need to spend that much more capital building out in Europe versus what we currently have in the plan. And that said, there's no additional need for any additional equity in terms of any plan that we have for our capital program.

Nate Crossett -- Berenberg -- Analyst

That's helpful. Thanks guys.

Operator

This concludes our question-and-answer session. I would now like to turn the conference back over to Gary Wojtaszek for closing remarks.

Gary Wojtaszek -- President And Chief Executive Officer

Sure. Thanks, everyone. We appreciate you taking time to join us today. And like you know, I think I'll just leave it with -- I think what you saw in this quarter was like really strong revenue and EBITDA growth performance, and what you're seeing is the first of what I think you're going to see, many quarters of really strong per-share guidance growth. We took to heart all the feedback that we heard out of the first call. And just given the pullback in leasing and the hyperscales, we thought it appropriate to really kind of scale back our capital investment program, really focus on driving bottom line profitability. And you saw that this quarter, and you're going to see it for the next 1.5 years or so. So thanks, everyone. I look forward to seeing you on the speaker circuit, and have a great summer. Take care. Ciao.

Operator

[Operator Closing Remarks]

Duration: 68 minutes

Call participants:

Michael Schafer -- Investor Relations Vice President

Gary Wojtaszek -- President And Chief Executive Officer

Diane M. Morefield -- Executive Vice President And Chief Financial Officer

Jon Petersen -- Senior Vice President

Frank Louthan -- Raymond James -- Research Division-MD of Equity Research

Simon Flannery -- cone

Robert Gutman -- Guggenheim Securities -- Analyst

Richard Choe -- J.P. Morgan -- Analyst

Erik Rasmussen -- Stifel -- Analyst

James Breen -- William Blair -- Analyst

Colby Synesael -- Cowen & Company

Nick Del Deo -- Analyst

Ari Klein -- BMO Capital Markets

Sami Bardi -- Credit Suisse

Jordan Sadler -- KeyBanc -- Analyst

Nate Crossett -- Berenberg -- Analyst

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