QTS Realty Trust Inc (QTS) Q4 2020 Earnings Call Transcript

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QTS Realty Trust Inc (QTS)
Q4 2020 Earnings Call
Feb 17, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the QTS Realty Trust Fourth Quarter and Year End 2020 Earnings Conference Call. [Operator Instructions] Please also note today's event is being recorded.

I'd now like to turn the conference over to Stephen Douglas, Head of Investor Relations at QTS. Please go ahead.

Stephen Douglas -- Executive Vice President, Finance

Thank you, operator. Hello, everyone, and welcome to QTS' fourth quarter and year end 2020 earnings conference call. I'm Stephen Douglas, Head of Investor Relations at QTS. I'm joined today by Chad Williams, our Chairman and Chief Executive Officer and Jeff Berson, our Chief Financial Officer. We also are joined by additional members of our executive team who will participate in Q&A.

Our earnings release and supplemental financial information are posted in the Investor Relations section of our website. We also provided slides and made them available with the webcast and on our website to make it easier to follow our presentation today.

Before we start, let me remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties, including those related to the effects of the ongoing COVID-19 pandemic as described in our SEC filings and future -- actual future results may vary materially.

Forward-looking statements in the press release that we issued yesterday, along with our remarks today are made as of today and we undertake no duty to update them as actual events unfold. Today's remarks also include certain non-GAAP measures including NOI, FFO, operating FFO, adjusted operating FFO, monthly recurring revenue, ROIC, EBITDAre and adjusted EBITDA.

We refer you to our press release that we issued yesterday and our periodic reports furnished or filed with the SEC for further information regarding use of these non-GAAP financial measures and a reconciliation to our GAAP results.

And now I'll turn the call over to Chad.

Chad Williams -- Chairman & Chief Executive Officer

Thanks, Stephen. Hello, and welcome to QTS' fourth quarter and year-end 2020 earnings call. We look forward to reviewing the details of the strongest bookings quarter in QTS history. However, before turning our attention to the fourth quarter, I'd like to spend a few moments highlighting some of our key achievements during a year of exceptional performance.

Turning to Slide 3, QTS' strategy of leveraging our core differentiators across three target customer verticals continues to support consistent growth and strong return on invested capital. For the full year 2020, QTS delivered total revenue growth year-over-year of approximately 12% while adjusted EBITDA growth -- grew approximately 20%, reflecting incremental margin expansion of approximately 340 basis points year-over-year.

A portion of that margin acceleration we achieved was the result of lower utility cost and corporate travel expense as a result of the pandemic. These COVID related cost benefits aggregated to approximately $3 million for the full year of 2020.

Consistent with our previously stated expectations, even excluding these cost benefits, we achieved margin expansion of more than 250 basis points year-over-year, reflecting continued operating leverage in our business and ongoing digitization initiatives across the company.

For the year, we delivered OFFO per share growth of 8% year-over-year, at the high end of our longer-term stated target of 5% to 9% annual growth. While delivering strong current bottom line results, we also invested the most in our history back into the platform in 2020, to support the future growth and value creation.

Underpinning our strong financial growth, QTS reported the highest annual leasing volume in our history during 2020, which was up more than 40% year-over-year and delivered an industry-leading level of customer churn.

In addition to our strong financial and operating results, we enjoyed a number of significant achievements that reflected the strong execution of the QTS team and our differentiated platform. During 2020, we completed the construction of over 60 megawatt of gross power capacity in direct support of our accelerating signed leasing activity, which represents more capacity delivered in the prior three years combined. Our development activity during the year included new data center construction projects in Atlanta, Hillsboro and Eemshaven, all which were officially opened in 2020.

In addition, we continued to support significant growth in Ashburn with our 32 megawatt site now largely sold out, we look forward to bringing additional capacity to this market this year. In 2020, we also extended our track record of excellence in customer service and support. 2020 marked the fifth consecutive year that QTS has led the data center industry in customer satisfaction, as measured by net promoter score or NPS.

QTS achieved an NPS score of above 80 which was approximately double the average NPS score for the data center industry. In addition, QTS extended its record to 12 consecutive years of five nines facility uptime performance.

Finally, for the second consecutive year, QTS was ranked as a global industry leader among data centers in sustainability by GRESB, the Global Real Estate Sustainability Benchmark, demonstrating our commitment to the highest standards in corporate sustainability.

2020 was a strong year for QTS. These achievements in the face of the pandemic reflect of our powered-by-people culture and the commitment of our QTSers to deliver world-class service to our customers and industry leading value to shareholders.

Move to Slide 4, a key enabler of our consistent performance during 2020 is our continued focus on innovation through technology and digitization of our internal and external systems. Over the past several years, under the leadership of Brent Bensten and Jon Greaves, we've successfully consolidated our systems into a handful of core software platforms.

This includes QTS' Service Delivery Platform or SDP which empowers our customers to interact with their data center infrastructure through remote environment. The utility of this platform accelerated amid the pandemic as many of our customer's priority shifted toward remote visibility and management capabilities of their infrastructure.

Over the course of 2020, customer's reliance on SDP grew significantly with increased overall usage and engagement. During the year, new unique logins to the platform grew 20% year-over-year. Importantly, the average session time across our active SDP user base increased to more than 30 minutes during 2020. And for our top SDP users, average session time grew to more than one hour, which is approximately double the engagement levels we experienced in 2019.

SDP continues to emerge as QTS' primary customer interaction tool with 80%-plus increase in total contract value of orders placed through the platform. Throughout the year, we experienced increasing levels of demand for additional connectivity and ancillary services. Total connectivity revenue grew by more than 20% year-over-year and connectivity now represents approximately 9% of recurring revenue, up from approximately 8% a year ago.

SDP has facilitated this acceleration with nearly 70% of the new cross-connect orders today placed and fully automated through this platform. Our focus on innovation through technology remains a core differentiator for QTS. SDP is driving differentiation with our customers, accelerating our win rates and supporting our premium return on invested capital and delivering operating efficiencies to our business.

The majority of new SDP feature requests originate from our customers and we have a robust multi-year backlog of feature enhancements to expand our differentiation. We believe that customers demand for remote monitoring and management capabilities will only continue to grow and we are well positioned to meet this need through our innovation technology platform.

Next on to Slide 5; during the fourth quarter, QTS signed new and modified leases representing $40.3 million of incremental annualized revenue, which represents the single largest quarterly leasing result we have achieved as a public company, and nearly a 70% increase relative to our prior four quarter average. This brings our full year leasing total to approximately $109 million of incremental annualized revenue, representing a year-over-year increase of more than 40%.

We are pleased to close out the year with such a strong momentum, which sets up 2021 as another year of robust financial growth and performance. The acceleration in our leasing performance resulted in a backlog of signed but not yet commenced annualized recurring revenue of approximately $154 million at the end of the quarter, which is up approximately 18% sequentially.

Adjusted for the effects of revenue which have begun to recognize via straight-line rent, our backlog as of the end of the fourth quarter was approximately $87 million, up 14% quarter-over-quarter. This level of backlog is the highest in our history and de-risk our financial performance and development activity in 2021.

Pricing on new and modified leases signed during the fourth quarter was up approximately 4% relative to prior four quarter average, which is particularly noteworthy considering the large increase in signed leasing volume in the quarter. Strong pricing trends reflect a balanced mix of leasing across our target customer verticals, including steady performance within our hybrid co-location vertical.

Enterprise hybrid co-location remains a core engine of growth for QTS. Enterprise customer support, enhanced diversification and capital efficiency are typically associated with that premium return on invested capital for QTS. As we have discussed in prior quarters, during 2020, we experienced a slower pace of new enterprise logo activity resulting from the pandemic.

Despite this trend, we continue to generate steady performance within hybrid co-location over the course of the year by supporting the continued growth of our embedded customer base. We are encouraged that during the fourth quarter, we experienced a slight uptick in new enterprise logo performance relative to the second and third quarters of the year. While new logo activity remains below historical levels, we have begun to see an acceleration in our enterprise deal funnel and are encouraged by the pace of activity we are seeing across our markets.

We currently expect to return to a more normalized level of new enterprise logo activity as we move through 2021 supporting accelerating hybrid colocation performance this year. During the fourth quarter, pricing on installed base, which is more heavily weighted toward our enterprise customers remained healthy.

We reported same space renewal rates down 1.5% in Q4. However, this is primarily driven by the renewal of one of our larger enterprise customers as a part of a broader multi-site expansion plan. Excluding this specific customer, same space renewal rates increased approximately 2.3% relative to pre-renewal rates.

Churn during the quarter also remained consistent with our expectations at 0.8%. Churn for the full year 2020 of 3.7% came in at the lower end of the guidance of 3% to 5% and our initial guidance range of 3% to 6%. Overall, we remain pleased with both the velocity and return profile of our leasing activity and look forward to executing on an expanding enterprise leasing pipeline in 2021.

Turning to Slide 6, the acceleration in leasing activity we experienced during the quarter was primarily driven by our hyperscale and federal verticals. Starting with hyperscale, which contributed more than half of the overall leasing activity in the quarter, we signed several multi-megawatt expansions during the quarter within existing hyperscale customers.

Our fourth quarter leasing results included an incremental 12MW expansion in our new Atlanta data center with a large Hyperscale customer. Including this lease we have now sold more than 40 megawatts in our Atlanta DC-2 data center, which is a tremendous performance for our team considering we just opened the new facility a few months ago.

At full stabilization, the facility will be able to support a total of 72 megawatts of critical power capacity and including 50 acres of adjacent own land, QTS' metro -- Atlanta Metro campus is expect to support more than 275 megawatts of power capacity upon full build out.

Atlanta remains a market of strength for QTS based on our power cost advantage, significant operating leverage, strong embedded connectivity ecosystem and an existing customer base, which continues to expand with us. We look forward to extending our momentum in the market leadership, leveraging these differentiators to support our customer's continued growth.

Moving now to Manassas, we signed an incremental 5 megawatt lease with a leading software-as-a-service company. As a reminder, this customer previously signed a build-to-suit agreement for a full 24 megawatt powered shell in Manassas and have since gradually expanded into a turnkey capacity within the facility. This latest expansion brings our total committed turnkey capacity to more than 17 megawatts and we expect them to continue to ramp into the balance of the remaining capacity over the coming quarters.

As this Manassas facility was contributed to our 50-50 joint venture with Alinda Capital, our leasing results for the fourth quarter only reflect a 50% contribution from the incremental 5 megawatt commitment. Overall, we are very pleased with the pace of hyperscale leasing activity we experienced in 2020.

In total, we signed five hyperscale leases that were more than 5 megawatt or greater size, well ahead of our initial target of 1 megawatt to 3 megawatt. This, in addition to a number of smaller 1 megawatt to 2 megawatt hyperscale expansions and the acceleration we experienced in our federal vertical, we expect 2021 to represent another year of strong hyperscale growth. As a result of our momentum and funnel visibility, we have increased our hyperscale leasing volume target in 2021 to two to four larger 5 megawatt-plus leases.

We continue to view hyperscale as an attractive opportunity to strategically accelerate growth with the world's largest and fastest growing technology companies, supplemented by continued momentum in our hybrid colocation and federal verticals.

Shifting now to Federal, as we recently announced via press release during the fourth quarter, QTS signed a 5-plus megawatt lease with a hyperscale cloud provider supporting the federal government. This represents the third consecutive quarter in which we've signed a multi-megawatt lease with federal -- within federal, demonstrating continued momentum and differentiation of our capability to support federal deployments.

Including the lease signed during the fourth quarter, QTS signed leases representing in excess of 15 megawatts in 2020, supporting federal deployments. This level of activity represents more than double the aggregate federal leasing volume during 2018 and '19 combined.

Over the last several years, we positioned the platform for success within the federal with strategic investments in necessary processes, operational capability and talent. These investments combined with the growing track record of building and operating data center infrastructure in support of federal agency requirements have established QTS as a leading federal data center services provider.

Federal remains a strategic focus area for our business and we expect this growth opportunity to continue to support a unique value creation opportunity for shareholders.

Overall, we are excited to close out 2020 with such strong performance. Our balanced business approach, leveraging core differentiators continues to support consistent results and our record booked-but-not-billed backlog provides tremendous visibility into another year of strong growth in 2021.

With that, I'll turn it over to Jeff Berson, our Chief Financial Officer. Jeff?

Jeff Berson -- Chief Financial Officer

Thanks, Chad, and good morning. Turning to Slide 8, I'd like to begin by reviewing QTS' development plan for 2021. Over the course of the year, we currently expect to deliver over 300,000 square feet of new raised floor capacity in Atlanta, Ashburn, Irving, Chicago, Piscataway, Richmond, Santa Clara, and Manassas. Included in our capital plan is a formal opening and commissioning of the first phases of development at our new 42 megawatt facility in Ashburn.

Since opening our existing Ashburn facility two years ago, we've largely sold out the entire 32 megawatt site and look forward to extending our momentum in our new facility supporting additional customer growth in what is still the largest and fastest growing data center market in the country.

Also included in our 2021 development plan, is the commissioning of a new site in Manassas, supported by leasing success during 2020 and visibility in our funnel to incremental demand. The new construction in Manassas will be able to support the breadth of our target customer verticals. However, it's currently expected to skew toward our hyperscale customer base. The new site will support approximately 42 megawatts of total critical power capacity upon full build out.

To date, we've already pre-leased more than 20% of this site, which is consistent with our de-risked approach to development and overall capital allocation. To support our record booked-not-billed backlog and particularly strong momentum exiting the fourth quarter, we're currently projecting cash capital expenditures in 2021 of between $800 million to $900 million, excluding acquisitions.

Importantly, more than 70% of our current development capital spend expectation in 2021 is directly tied to leases that have already been signed. As always, we'll continue to evaluate the amount and timing of our capital allocation to align with customer demand, balancing our focus on achieving both near-term and long-term growth in shareholder value.

Next on Slide 9, I'd like to review our current balance sheet and liquidity position. During the fourth quarter, we completed a number of debt capital markets transactions that extended the weighted average maturity of our outstanding debt and reduced our weighted average interest rate. In October, we completed a successful $500 million offering of eight-year senior unsecured notes with 3.875% coupon and used the proceeds to fund the redemption of our previously outstanding $400 million of 4.750% senior notes.

In addition, during the fourth quarter, we completed a new $250 million term loan with a five-year maturity. With the proceeds used to pay down a portion of amounts outstanding on our revolving credit facility. As of our Q3 earnings release on October 26th, QTS had access to approximately $452 million of net proceeds through forward stock issuances.

Subsequent to our third quarter 2020 earnings call, through our ATM program, additional equity representing approximately $135 million of net proceeds was sold on a forward basis. This results in net proceeds through forward stock issuances available to QTS of approximately $588 million as of yesterday's earnings release.

Based on QTS' current capex guidance, forecasted growth in adjusted EBITDA and retained cash flows, these available equity proceeds represent funding sufficient to largely fund QTS' current capital development plan for 2021.

We currently expect to drawdown our forward equity proceeds over the coming quarters to fund our future development plan while maintaining leverage at a level consistent with where we have historically operated in the mid-to-high five times range. We plan to maintain a proactive approach to funding our forward business plan, largely leveraging our equity ATM Program to de-risk future funding needs while minimizing equity dilution.

We ended the quarter with leverage of approximately 3.9 times net debt to annualized adjusted EBITDA including available forward equity proceeds. Excluding forward equity proceeds, our leverage at the end of the fourth quarter was approximately 5.7 times. We'll continue to monitor capital markets conditions for opportunities to enhance the health of our balance sheet further and improve our overall cost of capital.

Now on to our financial outlook on Slide 10. For the full year 2021, we expect total revenue to be between $599 million and $613 million. We expect full-year 2021 adjusted EBITDA to be between $330 million and $340 million, implying an adjusted EBITDA margin of 55.3% at the midpoint.

As Chad mentioned, during 2020, we recognized approximately $3 million of COVID related net cost benefits, which we are not currently forecasting will recur in 2021. Adjusting for the year-over-year impact of these net cost benefits, our current 2021 adjusted EBITDA guidance reflects approximately 50 basis points of year-over-year margin expansion.

Our 2021 financial guidance assumes rental churn for the full year of between 3% and 6%, which is consistent with our initial target range in 2020. In addition, our 2021 guidance assumes quarterly net leasing will average in the $17 million to $20 million range per quarter. Depending on product mix and timing, our ability to outperform this target could drive upside to our current financial outlook.

Moving to OFFO per share, we expect operating FFO per share in 2021 to be between $2.92 and $3.04. Our outlook reflects our continued focus on balancing long-term investments for future growth with an expectation of continuing to deliver OFFO per share growth consistent with our historical target range of 5% to 9%.

Overall, we're pleased with the financial and operating success we achieved during the fourth quarter and full year 2020. With a record booked-not-billed backlog, strong momentum in our sales pipeline, and a capital plan that is largely funded, we believe our 2021 financial performance is materially de-risked.

We will remain focused on capital allocation decisions that accelerate our differentiation and market share gains while delivering consistent growth in shareholder value over the course of 2021.

I'll now turn the call back over to Chad.

Chad Williams -- Chairman & Chief Executive Officer

Thanks, Jeff. Despite the many unforeseen challenges that we were presented in 2020, QTS delivered the strongest year of performance in our history. We continue to execute effectively against our long-term strategy, capitalizing on our core differentiators to win market share and deliver consistent growth in our shareholder value.

This performance is a testament to our QTSers and their servant leadership culture and I'd like to thank each one of them for their continued focus, resiliency and commitment to delivering world-class service to our customers and our surrounding communities. It's an honor to serve with you. I would also like to thank our critical operation employees, who have remained working in our site, supporting our customers throughout the pandemic.

Before closing, I'd like to highlight one of our newest Board members, Ms. Joan Dempsey, who officially joined QTS' Board of Directors in December. Joan brings extensive operating experience with a particular expertise in cyber-security and federal, having served in various leadership roles at Booz Allen Hamilton and the federal government across the 35 plus year career. Joan's addition to the Board also further demonstrates QTS' continued focus and momentum in providing data center solutions for federal government customers.

I'd like to close by thanking our customers and shareholders for their continued trust and confidence in QTS.

With that we'd be glad to take questions, operator.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Eric Luebchow with Wells Fargo. Please go ahead.

Eric Luebchow -- Wells Fargo Securities -- Analyst

Great, thanks for taking the question. I'm curious if maybe you could talk a little bit about your sales funnel given how strong you executed this past year, the $17 million to $20 million in guidance, I mean, what do you see kind of the mix between hyperscale, federal and enterprise? And it sounds like you're expecting perhaps enterprise at some point this year could be an increasing percentage of your business, so could you talk a little bit about that? And then, in the hyperscale side, do you see more new deals coming from kind of existing customer expansions or new logo opportunities? Thanks.

Chad Williams -- Chairman & Chief Executive Officer

Thanks, Eric. This is Chad. On hybrid, we are encouraged about hybrid, part of our differentiation, it's been the engine of our business to deal with hundreds of enterprise customers and our focus on the Fortune 1000. We just feel like there is a lot to do in that area. Companies were resilient during 2020 and the pandemic and continue to be, but they have a pretty sharp list of things they want to accomplish and we're starting to see that pick up.

So, largely across the board, 2020 was about strong incumbency both in hybrid and hyperscale for us and the continued growth of those customers that have been with us a long time, but we just feel like that people are going to be focused in 2021 to get back to a list of things that they definitely want to see whether it's digitization or enhancement of their business services across their platform.

So we're encouraged across the board, Tag and the hyperscale team continues to find great success within our current customer base, but we also put a couple of new logos in each year and they continue to grow the year after. And that's a dynamic that we're excited about. We are getting opportunities, but it's a pretty mature list of hyperscale customers now within QTS.

So, as we think about that, we see good growth in the embedded base which is absolutely the cleanest path to expansion is just being able to kind of work with the customers that you have in the portfolio that rely upon you day to day and have great relationships with. So we're encouraged about both.

Eric Luebchow -- Wells Fargo Securities -- Analyst

Great. And just one follow-up, given your success that you've had in Northern Virginia now, building out more capacity in Manassas. Maybe comment just on the returns and pricing you've seen. I think we've heard that supply and demand maybe in slightly better balance in Northern Virginia versus a year ago. So wondering if you've seen any kind of favorable movements in new lease pricing or what the supply outlook looks like competitively as you look out the next 12 months?

Chad Williams -- Chairman & Chief Executive Officer

Yeah, I think it's pretty stable. I mean, we opened our Ashburn facility, our first mega data center there in Ashburn probably in the most competitive market that had been in Ashburn for some time. I know people were pretty focused on that. We do believe that we are truly differentiated not just in hybrid colocation and federal but in hyperscale, it's been a long time ago. But when we put our first hyperscale anchor in that Ashburn facility, there was a price difference between QTS and the next bidder of approximately 10%.

So we sell value, we don't apologize about that because we do believe we're differentiated and deliver service in a much different way through the platform and technology and customers value that. And -- so we've seen a pretty stable environment, but it is -- Ashburn is a robust market, you've got a lot of capital that continues to go there and it's a competitive market.

Manassas may be a little less so, just because it's not quite as mature a market, but it is a growing market and certainly the offshoot of where Ashburn is going to go is Manassas and some other areas in that part of the country, but we're encouraged about both Ashburn and Manassas and feel like our differentiated product gives us a good opportunity and we feel confident enough to invest.

Eric Luebchow -- Wells Fargo Securities -- Analyst

Okay. Thanks, Chad.

Chad Williams -- Chairman & Chief Executive Officer

Yeah.

Operator

And our next question today comes from Jonathan Atkin with RBC Capital Markets. Please go ahead.

Jonathan Atkin -- RBC Capital Markets -- Analyst

Thanks. So, I have a follow-up on the comment about new logos and I want to ask you about just the kind of the margin expansion prospects longer term. But on the new logos, can you share with us what portion of these have been new to colo as opposed to just placing demand that was with a competitor?

Chad Williams -- Chairman & Chief Executive Officer

Jon, this business is, as you know, very resilient. You don't catch a lot of customers that are coming out of one deployment to go to another, you really catch customers in expansion modes and some new acquisition modes as they have new loads pop up. So I mean it's fairly resilient business. The majority of our deployments like most is just growth in the sector.

So, we do feel like we are differentiated. I'm not saying that we've never taken a hyperscale or a hybrid customer away from a competitor. But the good thing is they're resilient and unless you're doing something wrong to impact that customer, they generally stay and so we mostly see new acquisition of growth in platforms where they're growing.

Jonathan Atkin -- RBC Capital Markets -- Analyst

And then, on the margins. I think the guidance calls for mid-50% EBITDA margins, and you've got peers that are above that level as well as below that level. And do you feel like that's kind of the right level or what would you think about your longer-term goals for that metric?

Chad Williams -- Chairman & Chief Executive Officer

Sure, Jon, if you look at the margin at the midpoint of our guidance for 2021 technically that's flat from 2020. But when you adjust for the $3 million of benefit coming out of lower travel, entertainment and utilities in 2020, it is effective operating leverage margin improvement year-over-year of about 50 basis points.

That's consistent with what we've looked and focused on trying to drive from margin improvement over the last few years, although obviously in 2020, we saw a much bigger jump in improved margins, which we're quite happy with. So going forward, I think continuing that target of about 50 basis points of improvement is realistic.

Jonathan Atkin -- RBC Capital Markets -- Analyst

And then, lastly in the guidance that you gave, can you be a little more specific on which capital markets activities are included? How much of the forward equity, for instance, you plan to take advantage of?

Chad Williams -- Chairman & Chief Executive Officer

Yeah, I mean, generally, obviously the way we're funding our business is retaining cash flows after dividends and then utilizing as our EBITDA grows to leverage capacity, maintaining leverage in that mid-to-high 5 turns. And then beyond that, forward funding it with equity. What we -- specifically on the just under $600 million of forward equity proceeds, we believe that gives us the ability to effectively fund the business largely through the year.

Operator

And our next question today comes from Jordan Sadler with KeyBanc Capital Markets. Please go ahead.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Thank you and good morning. So, wanted to circle back on the volume this year and sort of sustainability. So, obviously fantastic year in terms of overall volume and I think the number of hyperscale deals likely significantly exceeded the one to three target framework.

I think we circled back on this question a couple of times, but -- over the last several quarters I think, but just kind of curious how we should be thinking about and what's being baked in to sort of a 2021 guidance as we look at your ability to sustain the pace set in 2020?

Chad Williams -- Chairman & Chief Executive Officer

Jordan, this is Chad. We feel good about the pace. We have went from one-to-three to two-to-four, so that's an increase. But you know, we're not -- this platform is not billed to go chase everything. In fact, as I've said before, we've said no to more deals in 2020 and even in 2021 than we ever have as a company. That means we're getting a lot of at-bats, which means the quality and the focus on returns on invested capital continues to be a primary driver of those choices, plus partnerships that we have with embedded base and new opportunities.

So the new guidance is two to four. We haven't built the platform to go chase everything. Could we dial it up? Yeah, but we're also managing our bottom line OFFO per share growth that we've said is 5% to 9%. So we want to be able to invest in the future at the same time maintaining bottom line performance and we think we found that balance in 2020 and we're going to do it in 2021 too.

Jeff Berson -- Chief Financial Officer

Jordan. One thing I'll just add, the 17 to 20 of average leasing that we're looking to do per quarter in 2021; that supports the model we've laid out. So that's really the target that we're gearing toward.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay. No and I did catch that notched up incrementally and I guess I'm just looking at the prior four even before this quarter and it was a higher level above that, but I know it doesn't necessarily make sense to set the bar too high.

My follow-up is a little bit of a non-sequitur on Texas. Can you speak to the cold snap there, might be understanding it, and sort of potential impacts. I know you guys have meaningful exposure in terms of rent, but can you talk about actual exposure in terms of to what's going on in terms of utility prices and outages, if you will?

Chad Williams -- Chairman & Chief Executive Officer

Yeah, Jordan, cold as a perspective, in Kansas this morning, it was 9 degrees. So anyway, there is a cold streak in Texas. We're certainly focused in that area, first, to protect our people and provide service to our customers. We're participating in that.

I think we've had a pretty long-term strategy and sustainability about the way we purchase power. Obviously, you've seen the commitment to renewable energy, which we've been a leader in but we also -- with that come contract pricing.

So our power is -- pricing is stable because of our long-term contracts in the power purchasing arrangement that really drives our renewable commitment. So, everything has been moving forward and we're keeping our people safe and keeping our customers engaged and get through this together.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

So tenants have no exposure to spiking power prices.

Chad Williams -- Chairman & Chief Executive Officer

Yeah. Our contract structure is a long-term contract, yes. So our customers would be sheltered from some of this really market volatility that they're seeing down there, which is a great benefit. And that's something that our energy and sustainability group have worked on for years.

Jeff Berson -- Chief Financial Officer

Yes, so Jordan, those contracts is at fixed price and so we're not anticipating any material impact for customers or for QTS.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Any outages? I didn't hear if you guys had sustained any.

Chad Williams -- Chairman & Chief Executive Officer

No.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay, great. Thank you.

Operator

And our next question for today comes from Colby Synesael with Cowen. Please go ahead.

Colby Synesael -- Cowen & Co. -- Analyst

Great, thank you. Two if I may. You beat your EBITDA and FFO guidance pretty meaningfully in the fourth quarter and then ultimately for 2020. I'm just curious what happened in the two months since when you gave that guidance on that third quarter call that you weren't anticipating.

And then, I guess, was any of that one-time in nature, because if you take your fourth quarter EBITDA and you just multiply it by four, you're effectively at the midpoint of your guidance for 2021. So, it'd seem that we're going to see a step down in the first quarter and I'm just curious if you could kind of talk about that.

And then secondly, as it relates to The Netherlands, I'm just curious if you can give us an update on activity conversations and what you think the likelihood is that you could sign some type of multi-megawatt hyperscale type deal in 2021? Thank you.

Chad Williams -- Chairman & Chief Executive Officer

Yeah, Colby. I'll take The Netherlands first, we couldn't be more excited about our entry into Europe with our two assets, one largely based on hybrid colo. We've just seen a higher retention rate of customers because it was an operating data center and then a pretty meaningful uptick of customers that were in the facility, continuing to grow and add business and new logos. So, that facility has been, in Groningen, just a wonderful addition at scale.

We went through the repurposing of the large hyperscale facility largely last year and just brought on the first phase of that which gives us about 20 megawatts of hyperscale in Eemshaven; a meaningful footprint with lots of expansion capabilities, some unique power, renewable power aspect where The Netherlands have struggled with power availability, that is not an issue in our facility which we think will be attractive to a lot of hyperscalers.

And then some very unique fiber opportunities with some transatlantic fiber that's coming in to that landing station. So we couldn't be more excited. We're meaningfully in Europe now with close to 30 megawatt and a lot of expansion. And you're going to continue to see us really execute. We have a senior executive in the Netherlands, Mr. JD Luycks that we're excited to have on the team, been with us over a year and a very experienced data center executive. And we're building on that and couldn't be more excited to get that asset up and going and have meaningful impact financially in a very profitable way for us. So we're moving forward on that. Jeff, you want to...

Jeff Berson -- Chief Financial Officer

Sure. Hey, Colby, a couple of areas there. So for the Q4 beat versus where we were at the end of September, nothing that honestly is materially one-time that that drove those numbers in an unusual way. I think part of the beat was that we just had lower power costs in Q4 than we'd anticipated. And then a bigger aspect that really is helping us in driving the business going forward, as we have some customers that took on some early commencements toward the latter -- toward the end of the year that we were anticipating really commencing early in 2021. So that helped us come in at the high end of our expectations for Q4.

In terms of Q4 relative to 2021, we always have seen the circumstances where our Q4 numbers and margins, in particular, are very high and then step back down in Q1, and that's driven by a couple of things. One is we just -- we always have a situation where payroll and other accruals tends to pull down the margins a little bit in the first two to three quarters of the year. And then once that sort of gets fully paid off and accrued, you get some margin benefit in Q4. And then you also have the benefit in Q4 just generally because of the winter months that power costs are low. And so we always see big margins in Q4, and then that steps down Q1. And typically it's not unusual for that margin to step down 150 to 200 basis points. So that's just sort of all normal performance.

Operator

Thank you. And our next question today comes from Michael Funk with Bank of America. Please go ahead.

Michael Funk -- Bank of America Merrill Lynch -- Analyst

Yeah. Hi, good morning. Thank you for the -- thank you for the questions. I wanted to come back to the leasing commentary and the $17 million to $20 million leasing per quarter in 2021. Does that imply an overindexing on the enterprise side in 2021 versus the historic? And if it does, is it a snapback from the lower leasing in 2020 or is it a more sustainable level going forward?

Jeff Berson -- Chief Financial Officer

I think across the board, we really are confident in $17 million to $20 million, but also the balance of it. You're going to see our continued focus on picking the right hyperscale, focusing on hybrid enterprise and then seeing the federal vertical, which is very lumpy in its timing just because of the way the nature of those procurements work. But we'll see a good balance across it, I think, in 2021. So we're focused in all the areas.

Michael Funk -- Bank of America Merrill Lynch -- Analyst

And then on the lease expirations in 2021, if I could. Look at the renewal rates of the lease expiring in 2021. It does seem to imply some upside of the renewal rates. Can you just make comment on leases expiring in 2021 opportunity for renewal rates?

Jeff Berson -- Chief Financial Officer

Yeah, I mean, it's -- what's best about it is, as a percentage of our total MRR, it's a smaller percentage, but it's all good existing customer base that's relied upon us. So it's always competitive in the market, but these are long-lasting customers that have counted on us for years. And we're working through the process. And, traditionally we see kind of 1% to 2% increase on those and we expect that to be consistent going forward.

Chad Williams -- Chairman & Chief Executive Officer

Mike, one thing I'll add is, while at renewal pricing can move around, as you know, we don't have any embedded customers that we have significant mark to market risk in terms of material downgrades and renewals. Again, that doesn't mean that we won't see any, but nothing that we think creates an undue burden on the business.

Operator

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

Erik Rasmussen -- Stifel -- Analyst

Yeah. Thanks for taking the questions. First, the federal business continues to be quite strong. Could you just maybe comment on the deals you are tracking? And then maybe what's driving the strong leasing and then what do you expect in the upcoming year?

Chad Williams -- Chairman & Chief Executive Officer

Yeah. The federal business has been an exciting opportunity. I'd like to remind people that we've been working on it for 10 years. So it's a long process, a hard skill set to acquire, a hard experience to put people's confidence in. But it is at a point where we feel like the insource to outsource is at kind of the very early innings. And so those deals are large and lumpy, and we're going to continue to track them. But we feel like we're putting the right people in the right seats to have a real track record to have success in the future, both by working with the integrators, which largely is the way we built the business, but also having direct opportunities as we grow and mature that business class. It's just hard to sit down and predict that business. But we're going to be meaningful and continue to focus on that area and think there's going to be some great opportunities. There are a lot of opportunities. So I know, historically, everybody's been kind of pivoted to one program or two programs. I think the most encouraging part of what we're seeing is there's multiple programs that are working their way through the system, and we're going to try to attach ourselves to many of them as we can.

Erik Rasmussen -- Stifel -- Analyst

Great. Maybe just my follow-up. You gave some highlights on Eemshaven, and just Europe in general. But any desire to expand further into Europe, and then, against -- with that, any desire to make acquisition to enter any new markets that you're thinking might be like today?

Chad Williams -- Chairman & Chief Executive Officer

Europe is always an opportunity for us. But, we're just not the kind of company that goes and spends a lot of money for something to get someplace, we've always kind of created the value and been very comfortable with that, that's probably going to be the tendency of us going forward. We build things, and that's what we do. And we're going to build our European platform based off our two assets that we have there and continue to focus on the value creation and the shareholders' return of those assets. We're very happy with having 30 plus megawatts in [Indecipherable] and we're going to continue to build off that. And we'll see what happens. Customers come to us and want us to go someplace that always encourages us or derisks the opportunity. We'll take a look at those opportunities. But we're very satisfied with where we are, and we're going to build value against what we have.

Erik Rasmussen -- Stifel -- Analyst

Great. Thank you.

Operator

And our next question today comes from Richard Choe with JPMorgan. Please go ahead.

Richard Choe -- JPMorgan Chase & Co. -- Analyst

Great. I just wanted to ask about churn to start. It came in at 3.7%. Guidance is for 3% to 6%. Is there any reason that it should be at that higher end? Or is that just giving kind of the range to start the year? Are you seeing anything between COVID or anything else in terms of the lease expirations?

Chad Williams -- Chairman & Chief Executive Officer

No, Richard, we're not seeing anything. I mean, we started last year at the same point at 3% to 6%. As we get more visibility during the year, we tightened the range to 3% to 5%. It's standard, business as usual. So we don't see anything and we'll be consistent with what we've done in the past we think.

Richard Choe -- JPMorgan Chase & Co. -- Analyst

And Chad, you've kind of touched on this a little bit, but to kind of ask you a little bit more clearly. I mean, you've guidance of 12% growth, you're trying to manage growing the business and also providing value. But it seems like this might be a really good time for QTS to push maybe a little bit harder, grow a little bit faster and be more aggressive. Is that something you have interest in? Or is the organization kind of at peak efficiency right now, and it would be harder to kind of make that bigger leap to a bigger platform?

Chad Williams -- Chairman & Chief Executive Officer

I don't know if we're ever going to be satisfied with where we're at. That's part of the goodness of QTS is that we're always feeling we can do something better and get stronger. I think particularly last year, we kind of entered the year with let's just say round numbers of $400 million capital plan and ended the year with investing almost $800 million in the capital plan at the same time guiding and delivering not just 5% to 6% OFFO per share growth, but 8%. So we are constantly monitoring and trying to manage -- I think capital intensity is in this business. Everyone knows it. We've got to stay committed on our bottom line performance. And I think the way Jeff and I talk about that is 5% to 9%, we need to give people parameters of what they can count on. At the same time, we're going to build the value for the future of this business. So we've turned down deals that didn't meet our return threshold. We're not necessarily proud of that. But we also don't believe it's all about size and scale. We're at a size and scale where we're in the game every day. And I don't feel like this is about just growing for the sake of growing. Bottom line performance is what pays people and shareholders, and so we're going to manage that, and hopefully, people will become more and more confident that we're going to invest in the future. That's what we're all talking about. But at the same time, we're going to try to do the best we can every day to deliver in-year performance, because our shareholders have all sorts of horizons on timing, and we need to be thoughtful of that as we grow the business. So we're more focused about the bottom line and the investment in the future, balancing each other.

Richard Choe -- JPMorgan Chase & Co. -- Analyst

Great. Thank you.

Operator

And our next question today comes from Nate Crossett with Berenberg. Please go ahead.

Nate Crossett -- Berenberg Capital -- Analyst

Hey, good morning. I was wondering, maybe just a funding question. Can you guys give us your latest thinking on the JV with Alinda? And could we see some additional projects potentially added to that this year?

Chad Williams -- Chairman & Chief Executive Officer

I mean, Alinda has been a great partner and they continue to be active in the market. Jeff and I continue to be active with them, tossing ideas back and forth. I think it's just a matter of time before we find the right opportunity to kind of fit into that. And we're going to take advantage of that vehicle. They're great partners. Our asset in Manassas continues to meet everyone's objectives, which is nice to have the first one kind of work out like we all thought it would. And we're going to look for more opportunities. We think that access to funding is important and a very strategic part of the way that we can grow the platform.

And back to the last comment, it also gives us the ability to accelerate in some of those situations at work, and not impact the bottom line as much. So it's a great partnership. We continue to look forward to be active.

Nate Crossett -- Berenberg Capital -- Analyst

Okay. That's helpful. And then can you just give us a quick update on what's going on in Richmond lately, the subsea cables? I'm just curious if demand has picked up in the last few months.

Chad Williams -- Chairman & Chief Executive Officer

Yeah, it's been one of our most active sites. Clint and the hybrid team continue to kind of build momentum around the technology and the fiber interconnection that continues to develop there. It's a special, special place. Obviously, there's some large hyperscalers in the neighborhood who help bring concentration. I couldn't be more encouraged about the opportunity, not just for hybrid enterprise and the connectivity story, but also Tag and the hyperscale story continues to have one of the largest opportunity sets there, both with our powered shell and our excess landholdings. Richmond will be a highlight to this portfolio over the next decade. It is something that we are all very confident in.

Operator

Thank you. Our next question today comes from Tim Long at Barclays. Please go ahead.

Timothy Long -- Barclays -- Analyst

Thank you. Just also two, if I could. Can you talk a little bit about the connectivity business? Obviously, pretty strong, up 20% in 2020. How do you think about sustainability of that growth? And then second, back to the hyperscalers. Obviously, it's been a really strong period for you, guys. But we also noticed Amazon last year leaned a little bit more on internal data centers. So could you kind of maybe just at a high level update us on how you're thinking about hyperscalers using their own data centers or colocation? Thank you.

Chad Williams -- Chairman & Chief Executive Officer

I think it's going to be continued -- well, with the hyperscaler conversation, it's going to be a continued balance. All these companies have big balance sheets with lots of cash in where they feel like they need to step in and do something for the sake of speed or location or some strategic thing, they're going to continue to be thoughtful on that. But we don't see any big shift in the balance that they're going to outsource a percentage of it, and they're going to do some themselves. AWS is probably the example of probably the most aggressive at doing stuff internally. But everyone else is. We're seeing a good balance of internal and external.

As far as connectivity, yes, we're going to continue to see connectivity. Brent and Jon have done an amazing job of putting this Company in a position to become a connectivity leader. And one of the ways that they've done that through the platform, our software, our service delivery platform, is making the connectivity seamless for the execution of the purchase. So it has transformed the way that customers engage with us. They don't necessarily care about all of the details that it takes to make the connectivity work with all the transatlantic fiber and all the connectivity and the providers. They just need access and ease to get to it. And that's what Jon and Brent have done an amazing job of doing. So, yes, I continue to think about that. And I think over the next number of years, people are going to think a lot differently about QTS and connectivity than they have in the past.

Operator

Thank you. Our next question today comes from Simon Flannery with Morgan Stanley. Please go ahead.

Simon Flannery -- Morgan Stanley -- Analyst

Thanks very much. Good morning. So, you've made some comments about the enterprise conversations improving versus Q3, but still below historical levels. Can you just provide a little bit more color on what's going on with the enterprises and their ability to make long-term decisions given the current environment around uncertainty around COVID? And how much have you baked that recovery into your 2021 guidance? Or is that still going to be a gradual process into '22 and beyond?

Chad Williams -- Chairman & Chief Executive Officer

Yeah, Simon, this is Chad. I mean, we just -- probably the clearest way that we're seeing it from Clint and Tag, both in hybrid and hyperscale, it's just customer engagement. I mean, just the engagement and the metrics we're looking at. People have kind of got their sea legs. This pandemic has been horrible and transformational in so many ways. But people understand they've got to move their businesses forward. So the biggest indication is, we're just seeing the engagement level in the contacts that we're making in that Fortune 1000 just be much more involved.

Yes, we've baked in good success in the hybrid colocation because we actually believe that will play out that year. But I guess the other thing is, we believe that the balance of our business is still the strength. So we expect all segments to perform in federal, hyperscale and in hybrid colocation during the year, and we expect that will play out that way.

Simon Flannery -- Morgan Stanley -- Analyst

And do you think the hyperscale, it went up quite a bit to 37% this year. Do you think we'll see that pushing more toward 50-50? Or do you think it'll always be dominated by the hybrid/colo?

Chad Williams -- Chairman & Chief Executive Officer

We don't -- we honestly don't wake up trying to hit a specific percentage. We let the right returns and the right fields play out in our business. You're going to continue to see hyperscale chip away just because of the size and scale of our platform and those deals. But we're just really trying to find the right balance across the platform. There's no magic number from our standpoint on what we need to achieve to have success. We just let the individual deals and the returns on those deals, and their strategic nature of them drive that mix in our business.

Operator

Thank you. Our next question today comes from Frank Louthan with Raymond James. Please go ahead.

Frank Louthan -- Raymond James & Associates -- Analyst

Great. Thank you. Can you comment a little bit on SDP, and how much is that driving incremental bookings? And do you have any sort of renewal or expansion statistics along the lines of customers that are heavier users versus those that are not using the systems as much?

Chad Williams -- Chairman & Chief Executive Officer

Frank, it's driving a big difference. SDP is the differentiator. Brent Bensten's here with this today, and he gets pulled into a lot of these conversations with customers. I might have him kind of just give a quick overview of kind of what customers are asking him and what did they find interesting about SDP, just to give you a little deeper perspective on that.

Brent Bensten -- Chief Technology Officer

Sure, Frank. Good to talk to you again. The reality is, SDP has gone from the backside of a conversation to the front side of a conversation. Customers are coming to us or prospects are coming to us now and asking to see the platform first and foremost. So I would say, it is changing. And then Clint's team has done such a phenomenal job of getting the tool out in front of our prospects. So doing 1,800 plus demos this year in a time of a very difficult time, obviously, in the world has proven that the platform really -- really does have its legs underneath it. So we're excited about the continuing prospects for customers using the platform.

Frank Louthan -- Raymond James & Associates -- Analyst

Okay. Is there any metric you can share with us, churn differential when customers start to engage on that or percentage of renewal or expansion with customers that more that you can give us to kind of quantify that?

Jeff Berson -- Chief Financial Officer

Frank, the value that we're seeing from SDP right now is in win rates, it's in differentiating price, it's in operating efficiencies for our own use, it's in customer flexibility. I do expect going forward that it will be an important tool on retaining customers. But frankly, SDP haven't been out for just a couple of years. It's too early to really track separately, renewals around SDP. But logically, given customer utilization, it's just another great way to keep those customers happy and keep them on our platform.

Chad Williams -- Chairman & Chief Executive Officer

I do think, Frank, one statistic that Jeff just mentioned that I pay probably the most attention to is, is it differentiating the ability for us to win and with leasing up so dramatically year-over-year, we would say, yes, it's making an impact.

Operator

Thank you. Our next question today comes from Brett Feldman of Goldman Sachs. Please go ahead.

Brett Feldman -- Goldman Sachs -- Analyst

Yeah. Thanks for taking the question. Just coming back to the outlook for enterprise. You talked about seeing it return to sort of normal activity levels. In the past, you tended to average between $6 million to $8 million a quarter of hybrid colo bookings. Is that kind of what you're talking about that maybe you were a bit below that as you exited the year? But as you've structured your outlook for this year, you have a lot of confidence you'll be back within that average? Or is there a different point? And then just as you talked about how the engagement level with the enterprise customer funnel is picking up, could you give us a little more maybe qualitative color around that funnel? Is it the usual suspects, meaning the types that enterprise customers you typically would have expected to see in the funnel, and they're just prepared to kind of get back to doing business? Or are you beginning to see maybe a broadening of the base sort of consistent with this general narrative around IT acceleration? Thank you.

Jeff Berson -- Chief Financial Officer

Brett, on the 6% to 8% for the enterprise side, the nice thing is, while our new logo activity in 2020 was down given just the activity we had with our existing customer base, which is a robust group of customers growing, we still were within that 6% to 8%. So enterprise wasn't light in the quarter, it just had a different mix. Now, that being said, we are anticipating the growth in enterprise, both existing customers and new logos in 2021 and would expect to see enterprise actually accelerate in 2021. And maybe, Clint will jump in with a little more detail around what we're seeing in that pipeline.

Clint Heiden -- Chief Revenue Officer

Well, as Jeff mentioned, we're seeing the deals getting larger in terms of what we're seeing in the funnel. We're seeing more deals come in from a new logo focus and a strong Fortune 1000 push. So it's well rounded all the way around.

Operator

Thank you. Our next question today comes from Ari Klein of BMO Capital Markets. Please go ahead.

Ari Klein -- BMO Capital Markets -- Analyst

Thank you. On the comments around early commencements in Q4, is there something you could see more of in your backlogs, given the pace of demand and with what looks like 30% of it commencing beyond 2022?

Chad Williams -- Chairman & Chief Executive Officer

Potentially, Ari, we're definitely seeing more and more circumstances where customers are anxious to get in as quickly as they can and to increase their load faster than early anticipation. So there's definitely some upside there. I'd say, nothing material that I suggest changes the modeling of the business right now. But we definitely see more opportunities and upside there than down.

Ari Klein -- BMO Capital Markets -- Analyst

Got it. And then, just on hyperscale, the size of the deals you've been winning has grown larger with some 12 megawatt deals this past year. Historically, maybe you've shied away a little bit from some of the really large deals in the market. Are you more willing to go there now, assuming they meet your return thresholds? And are those types of deals in the pipeline?

Chad Williams -- Chairman & Chief Executive Officer

The returns are very important to those type larger deals. But when you have incumbents that are continuing to grow and we can find the right deals, we have the scale and opportunity to do large deals. It's never been an issue. It's just finding the right mix of that. So we could have a tendency to see more of that just as the platform grows in sheer size.

Operator

Thank you. Our next question today comes from David Guarino with Green Street. Please go ahead.

David Guarino -- Green Street -- Analyst

Hey, thanks, guys. A question for you, Chad, on the deals you mentioned that you turned down due to price. Can you talk about what the gap between where QTS was willing to price the deal, and where it ultimately settled? And then, specifically, I guess, how is competitive pricing played out in the Atlanta market, given all the new supply there over the last year?

Chad Williams -- Chairman & Chief Executive Officer

Yeah. Just taking on Atlanta, I mean, I don't think we have had a more successful story in the Company since the beginning. From a time of building open to today having 40 megawatts leased in a new facility is unprecedented. And that was done with pricing and returns that were at the high end of our 9% to 11% return range. In Atlanta, the sheer size of that platform, the hundreds of customers, the interconnection ecosystem that's there and the power-cost advantage because of the scale of purchasing really does have us in a very lead position. And we see the deals that come through that market. That market is going to continue to grow. And I think competitors will do well in that market also just because of the sheer size and appeal of what that southeastern market means to the digital economy. And I think you're even going to see hyperscalers continue both to source space there and build space on their own there in those markets. So it's just overall a great, great market and great opportunity. I'm so thankful that we led really the tier 1 transformation of that market and continue.

Pricing and deals. I think probably the thing I'd point you back to, as I said earlier, we can genuinely get a premium for our pricing and our services, because people value that. But the range I think that we've talked about before has been 10% kind of range difference on what people have been able to price and pay as a separation and value point. I don't know all the metrics and all the numbers from competitors. But it's a pretty tight range. It really depends on what market you're in and what competitor you're against. But it's fairly stable in that regard.

Operator

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

Nick Del Deo -- MoffettNathanson -- Analyst

Hey. Good morning, guys. First, as we think about your '21 revenue outlook, can you peel back the onion all and share what MRR growth might look like as opposed to total revenue growth? I'm just thinking between utility price fluctuations and hyperscale driving straight line, it might make it a bit tricky to tease out the relationship in most years. And second, if I'm not mistaken, federal is currently probably a high-single-digit or maybe 10% of your MRR. Where was that a few years back? And where might that land a couple of years from now?

Chad Williams -- Chairman & Chief Executive Officer

Well, if you go back when we start at zero, so federal has grown from nothing to something. And I do -- I think you're going to continue to see an uptick as both MRR and total revenue -- the federal space is an area that we're going to continue to focus on. And it's very difficult to acquire and very hard to predict. But we have had great success the last couple of years. We're going to continue to focus on it. I think you'll continue to see that inch up as we work through. Jeff, you want to talk about 21?

Jeff Berson -- Chief Financial Officer

Sure, Nick. We did have more straight-line benefits and growth beyond MRR in 2020 because of just the size and scale of some of the deals that we got done. And so, you could see some moderation of that going forward. But the truth is, we expect to continue to do some pretty large deals and continue to scale them. So I'd say, back of the envelope, you could assume MRR growth is sort of in line with total revenue growth.

Operator

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to Chad Williams for any final remarks.

Chad Williams -- Chairman & Chief Executive Officer

Yeah. Just want to thank our QTSers for an amazing year in 2020 during a very difficult time. Wish you all the best of health and happiness. And we'll talk next quarter. Thank you.

Operator

[Operator Closing Remarks]

Duration: 68 minutes

Call participants:

Stephen Douglas -- Executive Vice President, Finance

Chad Williams -- Chairman & Chief Executive Officer

Jeff Berson -- Chief Financial Officer

Brent Bensten -- Chief Technology Officer

Clint Heiden -- Chief Revenue Officer

Eric Luebchow -- Wells Fargo Securities -- Analyst

Jonathan Atkin -- RBC Capital Markets -- Analyst

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Colby Synesael -- Cowen & Co. -- Analyst

Michael Funk -- Bank of America Merrill Lynch -- Analyst

Erik Rasmussen -- Stifel -- Analyst

Richard Choe -- JPMorgan Chase & Co. -- Analyst

Nate Crossett -- Berenberg Capital -- Analyst

Timothy Long -- Barclays -- Analyst

Simon Flannery -- Morgan Stanley -- Analyst

Frank Louthan -- Raymond James & Associates -- Analyst

Brett Feldman -- Goldman Sachs -- Analyst

Ari Klein -- BMO Capital Markets -- Analyst

David Guarino -- Green Street -- Analyst

Nick Del Deo -- MoffettNathanson -- Analyst

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