Technology

Digital Realty Reports Third Quarter 2024 Results

Published

2 years ago

October 24, 2024

AUSTIN, Texas, Oct. 24, 2024 /PRNewswire/ — Digital Realty (NYSE: DLR), the largest global provider of cloud- and carrier-neutral data center, colocation, and interconnection solutions, announced today financial results for the third quarter of 2024. All per share results are presented on a fully diluted basis.

Highlights

Reported net income available to common stockholders of $0.09 per share in 3Q24, compared to $2.31 in 3Q23Reported FFO per share of $1.55 in 3Q24, compared to $1.55 in 3Q23Reported Core FFO per share of $1.67 in 3Q24, compared to $1.62 in 3Q23Reported rental rate increases on renewal leases of 15.2% on a cash basis in 3Q24Signed total bookings during 3Q24 that are expected to generate $521 million of annualized GAAP rental revenue, including a $50 million contribution from the 0–1 megawatt category and $16 million contribution from interconnectionReported backlog of $859 million of annualized GAAP base rent at the end of 3Q24Raised 2024 Core FFO per share outlook to $6.65 – $6.75

Financial Results

Digital Realty reported revenues of $1.4 billion in the third quarter of 2024, a 5% increase from the previous quarter and a 2% increase from the same quarter last year.

The company delivered net income of $40 million in the third quarter of 2024, and net income available to common stockholders of $41 million, or $0.09 per diluted share, compared to $0.20 per diluted share in the previous quarter and $2.31 per diluted share in the same quarter last year.

Digital Realty generated Adjusted EBITDA of $758 million in the third quarter of 2024, a 4% increase from the previous quarter and a 11% increase over the same quarter last year.

The company reported Funds From Operations (FFO) of $520 million in the third quarter of 2024, or $1.55 per share, compared to $1.57 per share in the previous quarter and $1.55 per share in the same quarter last year.

Excluding certain items that do not represent core expenses or revenue streams, Digital Realty delivered Core FFO per share of $1.67 in the third quarter of 2024, compared to $1.65 per share in the previous quarter and $1.62 per share in the same quarter last year. Digital Realty delivered Constant-Currency Core FFO per share of $1.66 for the third quarter of 2024 and $4.99 per share for the nine-month period ended September 30, 2024.

“In the third quarter, Digital Realty posted over $520 million of new leasing, more than double the record set in the first quarter. Record leasing across both the greater-than-a-megawatt and 0-1 MW plus interconnection segments drove the backlog up nearly 60% above our prior record,” said Digital Realty President & Chief Executive Officer Andy Power. “Our backlog now represents over 20% of annualized in-place data center revenue, enhancing our visibility and positioning Digital Realty for accelerating longer-term growth.”

Leasing Activity

In the third quarter, Digital Realty signed total bookings that are expected to generate $521 million of annualized GAAP rental revenue, including a $50 million contribution from the 0–1 megawatt category and a $16 million contribution from interconnection.

The weighted-average lag between new leases signed during the third quarter of 2024 and the contractual commencement date was 15 months. The backlog of signed-but-not-commenced leases at quarter-end increased to $859 million of annualized GAAP base rent at Digital Realty’s share.

In addition to new leases signed, Digital Realty also signed renewal leases representing $258 million of annualized cash rental revenue during the quarter. Rental rates on renewal leases signed during the third quarter of 2024 increased 15.2% on a cash basis and 27.5% on a GAAP basis.

New leases signed during the third quarter of 2024 are summarized by region and product as follows:

Annualized GAAP

Base Rent

Square Feet

GAAP Base Rent

Americas

(in thousands)

per Square Foot

Megawatts

per Kilowatt

0-1 MW

$23,394

$282

7.5

$262

> 1 MW

425,641

1,102

386

158.8

223

Other (1)

4,684

—

Total

$453,719

1,251

$363

166.2

$225

EMEA (2)

0-1 MW

$20,406

$308

7.5

$228

> 1 MW

17,339

217

9.0

161

Other (1)

168

—

Total

$37,913

151

$252

16.5

$191

Asia Pacific (2)

0-1 MW

$6,563

$324

1.7

$315

> 1 MW

6,764

124

4.4

129

Other (1)

216

—

Total

$13,543

$175

6.1

$182

All Regions (2)

0-1 MW

$50,363

169

$297

16.6

$252

> 1 MW

449,744

1,236

364

172.1

218

Other (1)

5,068

—

Total

$505,174

1,479

$342

188.8

$221

Interconnection

$15,702

N/A

Grand Total

$520,876

1,479

$342

188.8

$221

Note: Totals may not foot due to rounding differences.

(1)

Other includes Powered Base Building® shell capacity as well as storage and office space within fully improved data center facilities.

(2)

Based on quarterly average exchange rates during the three months ended September 30, 2024.

Investment Activity

As previously disclosed, in July, Digital Realty closed on the acquisition of two data centers with a combined IT load of 15 megawatts in the Slough Trading Estate for $200 million, marking the Company’s entry into the west London, UK submarket.

During the quarter, Digital Realty acquired the land and shell of one of its existing data centers in Schiphol Rijk, Amsterdam for €43 million, or approximately $48 million. The site comprises approximately 15 megawatts of fully leased capacity and was previously operated pursuant to an operating lease.

Subsequent to quarter end, Digital Realty closed on the acquisition of a 6.7-acre parcel in Richardson, Texas, adjacent to Digital Realty’s existing campus, for approximately $15 million to support the development of more than 80 megawatts of incremental IT capacity.

Balance Sheet

Digital Realty had approximately $17.0 billion of total debt outstanding as of September 30, 2024, comprised of $16.2 billion of unsecured debt and approximately $0.8 billion of secured debt and other. At the end of the third quarter of 2024, net debt-to-Adjusted EBITDA was 5.4x, debt-plus-preferred-to-total enterprise value was 24.5% and fixed charge coverage was 4.1x.

Digital Realty completed the following financing transactions during the third quarter:

In July, the company repaid £250 million ($316 million) in aggregate principal amount of its 2.75% senior notes;In September, the company issued €850 million aggregate principal amount of 3.875% notes due 2033. Net proceeds were approximately €843 million ($933 million);In September, the company repaid €375 million ($415 million) on the Euro term loan;In late September, the company amended, extended, and upsized both its existing global revolving credit facility from $3.75 billion to $4.2 billion and its existing Japanese yen-denominated revolving credit facility from ¥33.3 billion (approximately $232 million) to ¥42.5 billion (approximately $297 million); andThe company also sold 5.2 million shares of common stock under its At-The-Market (ATM) equity issuance program at a weighted average price of $156.19 per share, for net proceeds of approximately $806 million.

Subsequent to quarter end, the company sold an additional 0.4 million shares of common stock under its ATM program at a weighted average price of $160.81 per share, for net proceeds of approximately $62 million.

2024 Outlook

Digital Realty raised its 2024 Core FFO per share and Constant-Currency Core FFO per share outlook to $6.65 – $6.75. The assumptions underlying the outlook are summarized in the following table.

As of

Top-Line and Cost Structure

February 15, 2024

May 2, 2024

July 25, 2024

October 24, 2024

Total revenue

$5.550 – $5.650 billion

$5.550 – $5.600 billion

Net non-cash rent adjustments (1)

($35 – $40 million)

($25 – $30 million)

Adjusted EBITDA

$2.800 – $2.900 billion

$2.925 – $2.975 billion

G&A

$450 – $460 million

$455 – $460 million

Internal Growth

Rental rates on renewal leases

Cash basis

4.0% – 6.0%

5.0% – 7.0%

8.0% – 10.0%

GAAP basis

6.0% – 8.0%

7.0% – 9.0%

12.0% – 14.0%

Year-end portfolio occupancy

+100 – 200 bps

+150 – 200 bps

“Same-Capital” cash NOI growth (2)

2.0% – 3.0%

2.5% – 3.5%

2.75% – 3.25%

Foreign Exchange Rates

U.S. Dollar / Pound Sterling

$1.25 – $1.30

U.S. Dollar / Euro

$1.05 – $1.10

External Growth

Dispositions / Joint Venture Capital

Dollar volume

$1,000 – $1,500 million

Cap rate

6.0% – 8.0%

Development

CapEx (Net of Partner Contributions) (3)

$2,000 – $2,500 million

$2,200 – $2,400 million

Average stabilized yields

10.0%+

Enhancements and other non-recurring CapEx (4)

$15 – $20 million

$25 – $30 million

Recurring CapEx + capitalized leasing costs (5)

$260 – $275 million

Balance Sheet

Long-term debt issuance

Dollar amount

$0 – $1,000 million

$933 million

Pricing

5.0% – 5.5%

3.875 %

Timing

Mid-Year

Sep-24

Net income per diluted share

$1.80 – $1.95

$1.40 – $1.55

$1.40 – $1.50

Real estate depreciation and (gain) / loss on sale

$4.40 – $4.40

$4.75 – $4.75

Funds From Operations / share (NAREIT-Defined)

$6.20 – $6.35

$6.15 – $6.30

$6.15 – $6.25

Non-core expenses and revenue streams

$0.40 – $0.40

$0.45 – $0.45

$0.50 – $0.50

Core Funds From Operations / share

$6.60 – $6.75

$6.65 – $6.75

Foreign currency translation adjustments

$0.00 – $0.00

Constant-Currency Core Funds From Operations / share

$6.60 – $6.75

$6.65 – $6.75

(1)

Net non-cash rent adjustments represent the sum of straight-line rental revenue and straight-line rental expense, as well as the amortization of above- and below-market leases (i.e., ASC 805 adjustments).

(2)

The “Same-Capital” pool includes properties owned as of December 31, 2022 with less than 5% of total rentable square feet under development. It excludes properties that were undergoing, or were expected to undergo, development activities in 2023-2024, properties classified as held for sale, and properties sold or contributed to joint ventures for all periods presented.

(3)

Excludes land acquisitions and includes Digital Realty’s share of JV contributions. Figure is net of JV partner contributions.

(4)

Other non-recurring CapEx represents costs incurred to enhance the capacity or marketability of operating properties, such as network fiber initiatives and software development costs.

(5)

Recurring CapEx represents non-incremental improvements required to maintain current revenues, including second-generation tenant improvements and leasing commissions.

Note: The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. Please see Non-GAAP Financial Measures in this document for further discussion.

Non-GAAP Financial Measures

This document contains non-GAAP financial measures, including FFO, Core FFO, Adjusted FFO, Net Operating Income (NOI), “Same-Capital” Cash NOI and Adjusted EBITDA. A reconciliation from U.S. GAAP net income available to common stockholders to FFO, a reconciliation from FFO to Core FFO, a reconciliation from Core FFO to Adjusted FFO, reconciliation from NOI to Cash NOI, and definitions of FFO, Core FFO, Adjusted FFO, NOI and “Same-Capital” Cash NOI are included as an attachment to this document. A reconciliation from U.S. GAAP net income available to common stockholders to Adjusted EBITDA, a definition of Adjusted EBITDA and definitions of net debt-to-Adjusted EBITDA, debt-plus-preferred-to-total enterprise value, cash NOI, and fixed charge coverage ratio are included as an attachment to this document.

The Company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis, where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing and/or amount of various items that would impact net income attributable to common stockholders per diluted share, which is the most directly comparable forward-looking GAAP financial measure. This includes, for example, external growth factors, such as dispositions, and balance sheet items such as debt issuances, that have not yet occurred, are out of the Company’s control and/or cannot be reasonably predicted. For the same reasons, the Company is unable to address the probable significance of the unavailable information. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

Investor Conference Call

Prior to Digital Realty’s investor conference call at 5:00 p.m. ET / 4:00 p.m. CT on October 24, 2024, a presentation will be posted to the Investors section of the company’s website at https://investor.digitalrealty.com. The presentation is designed to accompany the discussion of the company’s third quarter 2024 financial results and operating performance. The conference call will feature President & Chief Executive Officer Andy Power and Chief Financial Officer Matt Mercier.

To participate in the live call, investors are invited to dial +1 (888) 317-6003 (for domestic callers) or +1 (412) 317-6061 (for international callers) and reference the conference ID# 0345410 at least five minutes prior to start time. A live webcast of the call will be available via the Investors section of Digital Realty’s website at https://investor.digitalrealty.com.

Telephone and webcast replays will be available after the call until November 24, 2024. The telephone replay can be accessed by dialing +1 (877) 344-7529 (for domestic callers) or +1 (412) 317-0088 (for international callers) and providing the conference ID# 4823548. The webcast replay can be accessed on Digital Realty’s website.

About Digital Realty

Digital Realty brings companies and data together by delivering the full spectrum of data center, colocation, and interconnection solutions. PlatformDIGITAL®, the company’s global data center platform, provides customers with a secure data meeting place and a proven Pervasive Datacenter Architecture (PDx®) solution methodology for powering innovation and efficiently managing Data Gravity challenges. Digital Realty gives its customers access to the connected data communities that matter to them with a global data center footprint of 300+ facilities in 50+ metros across 25+ countries on six continents. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and X.

Contact Information

Matt Mercier
Chief Financial Officer
Digital Realty
(415) 874-2803

Jordan Sadler / Jim Huseby
Investor Relations
Digital Realty
(415) 275-5344

Consolidated Quarterly Statements of Operations

Third Quarter 2024

Unaudited and in Thousands, Except Per Share Data

Three Months Ended

Nine Months Ended

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

30-Sep-24

30-Sep-23

Rental revenues

$956,351

$912,994

$894,409

$885,694

$886,960

$2,763,753

$2,627,233

Tenant reimbursements – Utilities

305,097

274,505

276,357

316,634

335,477

855,959

983,041

Tenant reimbursements – Other

39,624

41,964

38,434

46,418

64,876

120,021

151,218

Interconnection & other

112,655

109,505

108,071

106,413

107,305

330,231

313,521

Fee income

12,907

15,656

13,010

14,330

7,819

41,572

30,596

Other

4,581

2,125

862

144

—

7,568

1,819

Total Operating Revenues

$1,431,214

$1,356,749

$1,331,143

$1,369,633

$1,402,437

$4,119,106

$4,107,428

Utilities

$356,063

$315,248

$324,571

$366,083

$384,455

$995,882

$1,105,753

Rental property operating

249,796

237,653

224,369

237,118

223,089

711,817

672,717

Property taxes

45,633

49,620

41,156

40,161

72,279

136,408

159,420

Insurance

4,869

4,755

2,694

3,794

4,289

12,318

13,029

Depreciation & amortization

459,997

425,343

431,102

420,475

420,613

1,316,442

1,274,379

General & administration

115,120

119,511

114,419

109,235

108,039

349,051

321,769

Severance, equity acceleration and legal expenses

2,481

884

791

7,565

2,682

4,156

10,489

Transaction and integration expenses

24,194

26,072

31,839

40,226

14,465

82,105

44,496

Provision for impairment

—

168,303

—

5,363

113,000

168,303

113,000

Other expenses

4,774

(529)

10,836

5,580

1,295

15,080

1,949

Total Operating Expenses

$1,262,928

$1,346,860

$1,181,776

$1,235,598

$1,344,206

$3,791,564

$3,717,001

Operating Income

$168,286

$9,889

$149,367

$134,035

$58,231

$327,542

$390,426

Equity in earnings / (loss) of unconsolidated joint ventures

(26,486)

(41,443)

(16,008)

(29,955)

(19,793)

(83,936)

164

Gain / (loss) on sale of investments

(556)

173,709

277,787

(103)

810,688

450,940

900,634

Interest and other income / (expense), net

37,756

62,261

9,709

50,269

24,812

109,726

18,162

Interest (expense)

(123,803)

(114,756)

(109,535)

(113,638)

(110,767)

(348,095)

(324,103)

Income tax benefit / (expense)

(12,427)

(14,992)

(22,413)

(20,724)

(17,228)

(49,832)

(54,855)

Loss on debt extinguishment and modifications

(2,636)

—

(1,070)

—

(3,706)

—

Net Income

$40,134

$74,668

$287,837

$19,884

$745,941

$402,639

$930,427

Net (income) / loss attributable to noncontrolling interests

11,059

5,552

(6,329)

8,419

(12,320)

10,282

(9,893)

Net Income Attributable to Digital Realty Trust, Inc.

$51,193

$80,220

$281,508

$28,304

$733,621

$412,921

$920,534

Preferred stock dividends

(10,181)

(30,544)

Net Income / (Loss) Available to Common Stockholders

$41,012

$70,039

$271,327

$18,122

$723,440

$382,377

$889,990

Weighted-average shares outstanding – basic

327,977

319,537

312,292

305,781

301,827

319,965

296,184

Weighted-average shares outstanding – diluted

336,249

327,946

320,798

314,995

311,341

328,641

306,735

Weighted-average fully diluted shares and units

342,374

334,186

326,975

321,173

317,539

334,830

312,867

Net income / (loss) per share – basic

$0.13

$0.22

$0.87

$0.06

$2.40

$1.20

$3.00

Net income / (loss) per share – diluted

$0.09

$0.20

$0.82

$0.03

$2.31

$1.10

$2.87

Funds From Operations and Core Funds From Operations

Third Quarter 2024

Unaudited and in Thousands, Except Per Share Data

Three Months Ended

Nine Months Ended

Reconciliation of Net Income to Funds From Operations (FFO)

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

30-Sep-24

30-Sep-23

Net Income / (Loss) Available to Common Stockholders

$41,012

$70,039

$271,327

$18,122

$723,440

$382,378

$889,990

Adjustments:

Non-controlling interest in operating partnership

1,000

1,500

6,200

410

16,300

8,700

20,300

Real estate related depreciation & amortization (1)

449,086

414,920

420,591

410,167

410,836

1,284,597

1,247,072

Reconciling items related to non-controlling interests

(19,746)

(17,317)

(8,017)

(15,377)

(14,569)

(45,081)

(42,101)

Unconsolidated JV real estate related depreciation & amortization

48,474

47,117

47,877

64,833

43,215

143,468

112,320

(Gain) / loss on real estate transactions

556

(173,709)

(286,704)

103

(810,688)

(459,857)

(908,459)

Provision for impairment

—

168,303

—

5,363

113,000

168,303

113,000

Funds From Operations

$520,382

$510,852

$451,273

$483,621

$481,535

$1,482,507

$1,432,124

Weighted-average shares and units outstanding – basic

334,103

325,777

318,469

311,960

308,024

326,154

302,316

Weighted-average shares and units outstanding – diluted (2) (3)

342,374

334,186

326,975

321,173

317,539

334,830

312,867

Funds From Operations per share – basic

$1.56

$1.57

$1.42

$1.55

$1.56

$4.55

$4.74

Funds From Operations per share – diluted (2) (3)

$1.55

$1.57

$1.41

$1.53

$1.55

$4.52

$4.68

Three Months Ended

Nine Months Ended

Reconciliation of FFO to Core FFO

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

30-Sep-24

30-Sep-23

Funds From Operations

$520,382

$510,852

$451,273

$483,621

$481,535

$1,482,507

$1,432,124

Other non-core revenue adjustments (4)

(4,583)

(33,818)

3,525

(146)

(27)

(34,876)

26,540

Transaction and integration expenses

24,194

26,072

31,839

40,226

14,465

82,105

44,496

Loss on debt extinguishment and modifications

2,636

—

1,070

—

3,706

—

Severance, equity acceleration and legal expenses (5)

2,481

884

791

7,565

2,682

4,156

10,489

(Gain) / Loss on FX and derivatives revaluation

1,513

32,222

33,602

(24,804)

451

67,337

(14,195)

Other non-core expense adjustments (6)

11,120

2,271

10,052

1,956

1,295

23,443

1,949

Core Funds From Operations

$557,744

$538,482

$532,153

$508,417

$500,402

$1,628,378

$1,501,403

Weighted-average shares and units outstanding – diluted (2) (3)

334,476

326,181

319,138

312,356

308,539

326,545

302,740

Core Funds From Operations per share – diluted (2)

$1.67

$1.65

$1.67

$1.63

$1.62

$4.99

$4.96

(1) Real Estate Related Depreciation & Amortization

Three Months Ended

Nine Months Ended

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

30-Sep-24

30-Sep-23

Depreciation & amortization per income statement

$459,997

$425,343

$431,102

$420,475

$420,613

$1,316,442

$1,274,384

Non-real estate depreciation

(10,911)

(10,424)

(10,511)

(10,308)

(9,777)

(31,845)

(27,312)

Real Estate Related Depreciation & Amortization

$449,086

$414,920

$420,591

$410,167

$410,836

$1,284,597

$1,247,072

(2)

Certain of Teraco’s minority indirect shareholders have the right to put their shares in an upstream parent company of Teraco to Digital Realty in exchange for cash or the equivalent value of shares of Digital Realty common stock, or a combination thereof. US GAAP requires Digital Realty to assume the put right is settled in shares for purposes of calculating diluted EPS. This same approach was utilized to calculate FFO/share. The potential future dilutive impact associated with this put right will be excluded from Core FFO and AFFO until settlement occurs – causing diluted share count to be higher for FFO than for Core FFO and AFFO. When calculating diluted FFO, Teraco related minority interest is added back to the FFO numerator as the denominator assumes all shares have been put back to Digital Realty.

Three Months Ended

Nine Months Ended

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

30-Sep-24

30-Sep-23

Teraco noncontrolling share of FFO

$9,828

$12,453

$9,768

$7,135

$11,537

$32,049

$32,251

Teraco related minority interest

$9,828

$12,453

$9,768

$7,135

$11,537

$32,049

$32,251

(3)

For all periods presented, we have excluded the effect of dilutive series J, series K and series L preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J, series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of FFO and the share count detail section that follows the reconciliation of Core FFO to AFFO for calculations of weighted average common stock and units outstanding. For definitions and discussion of FFO and Core FFO, see the Definitions section.

(4)

Includes deferred rent adjustments related to a customer bankruptcy, joint venture development fees included in gains, lease termination fees and gain on sale of equity investment included in other income.

(5)

Relates to severance and other charges related to the departure of company executives and integration-related severance.

(6)

Includes write-offs associated with bankrupt or terminated customers, non-recurring legal expenses and adjustments to reflect our proportionate share of transaction costs associated with noncontrolling interests.

Adjusted Funds From Operations (AFFO)

Third Quarter 2024

Unaudited and in Thousands, Except Per Share Data

Three Months Ended

Nine Months Ended

Reconciliation of Core FFO to AFFO

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

30-Sep-24

30-Sep-23

Core FFO available to common stockholders and unitholders

$557,744

$538,482

$532,153

$508,417

$500,402

$1,628,378

$1,501,403

Adjustments:

Non-real estate depreciation

10,911

10,424

10,511

10,308

9,777

31,845

27,312

Amortization of deferred financing costs

4,853

5,072

5,576

5,744

5,776

15,501

15,832

Amortization of debt discount/premium

1,329

1,321

1,832

973

1,360

4,481

4,000

Non-cash stock-based compensation expense

15,026

14,464

12,592

9,226

14,062

42,083

41,012

Straight-line rental revenue

(17,581)

334

9,976

(21,992)

(14,080)

(7,271)

(46,424)

Straight-line rental expense

1,690

782

1,111

(4,999)

1,427

3,583

1,432

Above- and below-market rent amortization

(742)

(1,691)

(854)

(856)

(1,127)

(3,287)

(3,548)

Deferred tax (benefit) / expense

(9,366)

(9,982)

(3,437)

33,448

(8,539)

(22,786)

(16,995)

Leasing compensation & internal lease commissions

10,918

10,519

13,291

9,848

12,515

34,728

35,193

Recurring capital expenditures (1)

(67,308)

(60,483)

(47,676)

(142,808)

(90,251)

(175,467)

(184,214)

AFFO available to common stockholders and unitholders (2)

$507,474

$509,241

$535,073

$407,306

$431,322

$1,551,788

$1,375,001

Weighted-average shares and units outstanding – basic

334,103

325,777

318,469

311,960

308,024

326,154

302,316

Weighted-average shares and units outstanding – diluted (3)

334,476

326,181

319,138

312,356

308,539

326,545

302,740

AFFO per share – diluted (3)

$1.52

$1.56

$1.68

$1.30

$1.40

$4.75

$4.54

Dividends per share and common unit

$1.22

$3.66

Diluted AFFO Payout Ratio

80.4 %

78.1 %

72.8 %

93.6 %

87.3 %

77.0 %

80.6 %

Three Months Ended

Nine Months Ended

Share Count Detail

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

30-Sep-24

30-Sep-23

Weighted Average Common Stock and Units Outstanding

334,103

325,777

318,469

311,960

308,024

326,154

302,316

Add: Effect of dilutive securities

373

404

669

396

515

391

424

Weighted Avg. Common Stock and Units Outstanding – diluted

334,476

326,181

319,138

312,356

308,539

326,545

302,740

(1)

Recurring capital expenditures represent non-incremental building improvements required to maintain current revenues, including second-generation tenant improvements and external leasing commissions. Recurring capital expenditures do not include acquisition costs contemplated when underwriting the purchase of a building, costs which are incurred to bring a building up to Digital Realty’s operating standards, or internal leasing commissions.

(2)

For a definition and discussion of AFFO, see the Definitions section. For a reconciliation of net income available to common stockholders to FFO and Core FFO, see above.

(3)

For all periods presented, we have excluded the effect of dilutive series J, series K and series L preferred stock, as applicable, that may be converted into common stock upon the occurrence of specified change in control transactions as described in the articles supplementary governing the series J, series K and series L preferred stock, as applicable, which we consider highly improbable. See above for calculations of FFO and for calculations of weighted average common stock and units outstanding.

Consolidated Balance Sheets

Third Quarter 2024

Unaudited and in Thousands, Except Per Share Data

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

Assets

Investments in real estate:

Real estate

$28,808,770

$27,470,635

$27,122,796

$27,306,369

$25,887,031

Construction in progress

5,175,054

4,676,012

4,496,840

4,635,215

5,020,464

Land held for future development

23,392

93,938

114,240

118,190

179,959

Investments in Real Estate

$34,007,216

$32,240,584

$31,733,877

$32,059,773

$31,087,453

Accumulated depreciation and amortization

(8,777,002)

(8,303,070)

(7,976,093)

(7,823,685)

(7,489,193)

Net Investments in Properties

$25,230,214

$23,937,514

$23,757,784

$24,236,089

$23,598,260

Investment in unconsolidated joint ventures

2,456,448

2,332,698

2,365,821

2,295,889

2,180,313

Net Investments in Real Estate

$27,686,662

$26,270,212

$26,123,605

$26,531,977

$25,778,573

Operating lease right-of-use assets, net

$1,228,507

$1,211,003

$1,233,410

$1,414,256

$1,274,410

Cash and cash equivalents

2,175,605

2,282,062

1,193,784

1,625,495

1,062,050

Accounts and other receivables, net (1)

1,274,460

1,222,403

1,217,276

1,278,110

1,325,725

Deferred rent, net

641,778

613,749

611,670

624,427

586,418

Goodwill

9,395,233

9,128,811

9,105,026

9,239,871

8,998,074

Customer relationship value, deferred leasing costs & other intangibles, net

2,367,467

2,315,143

2,359,380

2,500,237

2,506,198

Assets held for sale

—

287,064

478,503

—

Other assets

525,679

563,500

501,875

420,382

401,068

Total Assets

$45,295,392

$43,606,883

$42,633,089

$44,113,257

$41,932,515

Liabilities and Equity

Global unsecured revolving credit facilities, net

$1,786,921

$1,848,167

$1,901,126

$1,812,287

$1,698,780

Unsecured term loans, net

913,733

1,297,893

1,303,263

1,560,305

1,524,663

Unsecured senior notes, net of discount

13,528,061

12,507,551

13,190,202

13,422,342

13,072,102

Secured and other debt, net of discount

757,831

686,135

625,750

630,973

574,231

Operating lease liabilities

1,343,903

1,336,839

1,357,751

1,542,094

1,404,510

Accounts payable and other accrued liabilities

2,140,764

1,973,798

1,870,344

2,168,983

2,147,103

Deferred tax liabilities, net

1,223,771

1,132,090

1,121,224

1,151,096

1,088,724

Accrued dividends and distributions

—

387,988

—

Security deposits and prepaid rents

423,797

416,705

413,225

401,867

385,521

Obligations associated with assets held for sale

—

9,981

39,001

—

Total Liabilities

$22,118,781

$21,199,178

$21,792,866

$23,116,936

$21,895,634

Redeemable non-controlling interests

1,465,636

1,399,889

1,350,736

1,394,814

1,360,308

Equity

Preferred Stock: $0.01 par value per share, 110,000 shares authorized:

Series J Cumulative Redeemable Preferred Stock (2)

$193,540

Series K Cumulative Redeemable Preferred Stock (3)

203,264

Series L Cumulative Redeemable Preferred Stock (4)

334,886

Common Stock: $0.01 par value per share, 392,000 shares authorized (5)

3,285

3,231

3,097

3,088

3,002

Additional paid-in capital

27,229,143

26,388,393

24,508,683

24,396,797

23,239,088

Dividends in excess of earnings

(6,060,642)

(5,701,096)

(5,373,529)

(5,262,648)

(4,900,757)

Accumulated other comprehensive (loss), net

(657,364)

(884,715)

(850,091)

(751,393)

(882,996)

Total Stockholders’ Equity

$21,246,112

$20,537,503

$19,019,850

$19,117,535

$18,190,026

Noncontrolling Interests

Noncontrolling interest in operating partnership

$427,930

$434,253

$438,422

$438,081

$441,366

Noncontrolling interest in consolidated joint ventures

36,933

36,060

31,215

45,892

45,182

Total Noncontrolling Interests

$464,863

$470,313

$469,637

$483,972

$486,547

Total Equity

$21,710,975

$21,007,816

$19,489,487

$19,601,507

$18,676,573

Total Liabilities and Equity

$45,295,392

$43,606,883

$42,633,089

$44,113,257

$41,932,515

(1)

Net of allowance for doubtful accounts of $56,353 and $46,643 as of September 30, 2024 and September 30, 2023, respectively.

(2)

Series J Cumulative Redeemable Preferred Stock, 5.250%, $200,000 liquidation preference ($25.00 per share), 8,000 shares issued and outstanding as of September 30, 2024 and September 30, 2023.

(3)

Series K Cumulative Redeemable Preferred Stock, 5.850%, $210,000 liquidation preference ($25.00 per share), 8,400 shares issued and outstanding as of September 30, 2024 and September 30, 2023.

(4)

Series L Cumulative Redeemable Preferred Stock, 5.200%, $345,000 liquidation preference ($25.00 per share), 13,800 shares issued and outstanding as of September 30, 2024 and September 30, 2023.

(5)

Common Stock: 331,347 and 302,846 shares issued and outstanding as of September 30, 2024 and September 30, 2023, respectively.

Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization and Financial Ratios

Third Quarter 2024

Unaudited and Dollars in Thousands

Three Months Ended

Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) (1)

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

Net Income / (Loss) Available to Common Stockholders

$41,012

$70,039

$271,327

$18,122

$723,440

Interest

123,803

114,756

109,535

113,638

110,767

Loss on debt extinguishment and modifications

2,636

—

1,070

—

Income tax expense (benefit)

12,427

14,992

22,413

20,724

17,228

Depreciation & amortization

459,997

425,343

431,102

420,475

420,613

EBITDA

$639,875

$625,130

$835,446

$572,958

$1,272,048

Unconsolidated JV real estate related depreciation & amortization

48,474

47,117

47,877

64,833

43,214

Unconsolidated JV interest expense and tax expense

34,951

27,704

34,271

42,140

27,000

Severance, equity acceleration and legal expenses

2,481

884

791

7,565

2,682

Transaction and integration expenses

24,194

26,072

31,839

40,226

14,465

(Gain) / loss on sale of investments

556

(173,709)

(277,787)

103

(810,688)

Provision for impairment

—

168,303

—

5,363

113,000

Other non-core adjustments, net (2)

8,642

743

21,608

(35,439)

1,719

Non-controlling interests

(11,059)

(5,552)

6,329

(8,419)

12,320

Preferred stock dividends

10,181

Adjusted EBITDA

$758,296

$726,874

$710,556

$699,509

$685,943

(1)

For definitions and discussion of EBITDA and Adjusted EBITDA, see the Definitions section.

(2)

Includes foreign exchange net unrealized gains/losses attributable to remeasurement, deferred rent adjustments related to a customer bankruptcy, write offs associated with bankrupt or terminated customers, non-recurring legal expenses, gain on sale of land option and lease termination fees.

Three Months Ended

Financial Ratios

30-Sep-24

30-Jun-24

31-Mar-24

31-Dec-23

30-Sep-23

Total GAAP interest expense

$123,803

$114,756

$109,535

$113,638

$110,767

Capitalized interest

28,312

27,592

28,522

33,032

29,130

Change in accrued interest and other non-cash amounts

43,720

(55,605)

55,421

(66,013)

44,183

Cash Interest Expense (3)

$195,835

$86,743

$193,479

$80,657

$184,081

Preferred stock dividends

10,181

Total Fixed Charges (4)

$162,296

$152,529

$148,239

$156,851

$150,079

Coverage

Interest coverage ratio (5)

4.3x

4.2x

Cash interest coverage ratio (6)

3.4x

6.4x

6.3x

3.2x

7.0x

Fixed charge coverage ratio (7)

4.1x

4.0x

Cash fixed charge coverage ratio (8)

3.3x

5.9x

3.1x

5.9x

3.3x

Leverage

Debt to total enterprise value (9)(10)

23.5 %

24.2 %

26.7 %

28.6 %

Debt-plus-preferred-stock-to-total-enterprise-value (10)(11)

24.5 %

25.3 %

27.9 %

29.8 %

Pre-tax income to interest expense (12)

1.3x

1.7x

3.5x

1.2x

7.6x

Net Debt-to-Adjusted EBITDA (13)

5.4x

5.3x

5.7x

6.0x

6.4x

(3)

Cash interest expense is interest expense less amortization of debt discount and deferred financing fees and includes interest that we capitalized. We consider cash interest expense to be a useful measure of interest as it excludes non-cash-based interest expense.

(4)

Fixed charges consist of GAAP interest expense, capitalized interest, and preferred stock dividends.

(5)

Adjusted EBITDA divided by GAAP interest expense plus capitalized interest (including our pro rata share of unconsolidated joint venture interest expense).

(6)

Adjusted EBITDA divided by cash interest expense (including our pro rata share of unconsolidated joint venture interest expense).

(7)

Adjusted EBITDA divided by fixed charges (including our pro rata share of unconsolidated joint venture fixed charges).

(8)

Adjusted EBITDA divided by the sum of cash interest expense and preferred stock dividends (including our pro rata share of unconsolidated joint venture cash fixed charges).

(9)

Total debt divided by market value of common equity plus debt plus preferred stock.

(10)

Total enterprise value defined as market value of common equity plus debt plus preferred stock.

(11)

Same as (9), except numerator includes preferred stock.

(12)

Calculated as net income plus interest expense divided by GAAP interest expense.

(13)

Calculated as total debt at balance sheet carrying value, plus capital lease obligations, plus Digital Realty’s pro rata share of unconsolidated joint venture debt, less cash and cash equivalents (including Digital Realty’s pro rata share of unconsolidated joint venture cash) divided by the product of Adjusted EBITDA (including Digital Realty’s pro rata share of unconsolidated joint venture EBITDA), multiplied by four.

Definitions

Funds From Operations (FFO):
We calculate funds from operations, or FFO, in accordance with the standards established by the National Association of Real Estate Investment Trusts (Nareit) in the Nareit Funds From Operations White Paper – 2018 Restatement. FFO is a non-GAAP financial measure and represents net income (loss) (computed in accordance with GAAP), excluding gain (loss) from the disposition of real estate assets, provision for impairment, real estate related depreciation and amortization (excluding amortization of deferred financing costs), our share of unconsolidated JV real estate related depreciation & amortization, net income attributable to non-controlling interests in operating partnership and, depreciation related to non-controlling interests. Management uses FFO as a supplemental performance measure because, in excluding real estate related depreciation and amortization and gains and losses from property dispositions and after adjustments for unconsolidated partnerships and joint ventures, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our data centers that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our data centers, all of which have real economic effect and could materially impact our financial condition and results from operations, the utility of FFO as a measure of our performance is limited. Other REITs may not calculate FFO in accordance with the Nareit definition and, accordingly, our FFO may not be comparable to other REITs’ FFO. FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

Core Funds from Operations (Core FFO):
We present core funds from operations, or Core FFO, as a supplemental operating measure because, in excluding certain items that do not reflect core revenue or expense streams, it provides a performance measure that, when compared year over year, captures trends in our core business operating performance. We calculate Core FFO by adding to or subtracting from FFO (i) other non-core revenue adjustments, (ii) transaction and integration expenses, (iii) loss on debt extinguishment and modifications, (iv) gain on / issuance costs associated with redeemed preferred stock, (v) severance, equity acceleration and legal expenses, (vi) gain/loss on FX revaluation, and (vii) other non-core expense adjustments. Because certain of these adjustments have a real economic impact on our financial condition and results from operations, the utility of Core FFO as a measure of our performance is limited. Other REITs may calculate Core FFO differently than we do and accordingly, our Core FFO may not be comparable to other REITs’ Core FFO. Core FFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

Adjusted Funds from Operations (AFFO):
We present adjusted funds from operations, or AFFO, as a supplemental operating measure because, when compared year over year, it assesses our ability to fund dividend and distribution requirements from our operating activities. We also believe that, as a widely recognized measure of the operations of REITs, AFFO will be used by investors as a basis to assess our ability to fund dividend payments in comparison to other REITs, including on a per share and unit basis. We calculate AFFO by adding to or subtracting from Core FFO (i) non-real estate depreciation, (ii) amortization of deferred financing costs, (iii) amortization of debt discount/premium, (iv) non-cash stock-based compensation expense, (v) straight-line rental revenue, (vi) straight-line rental expense, (vii) above- and below-market rent amortization, (viii) deferred tax expense / (benefit), (ix) leasing compensation and internal lease commissions, and (x) recurring capital expenditures. Other REITs may calculate AFFO differently than we do and, accordingly, our AFFO may not be comparable to other REITs’ AFFO. AFFO should be considered only as a supplement to net income computed in accordance with GAAP as a measure of our performance.

EBITDA and Adjusted EBITDA:
We believe that earnings before interest, loss on debt extinguishment and modifications, income taxes, and depreciation and amortization, or EBITDA, and Adjusted EBITDA (as defined below), are useful supplemental performance measures because they allow investors to view our performance without the impact of non-cash depreciation and amortization or the cost of debt and, with respect to Adjusted EBITDA, (i) unconsolidated joint venture real estate related depreciation & amortization, (ii) unconsolidated joint venture interest expense and tax, (iii) severance, equity acceleration and legal expenses, (iv) transaction and integration expenses, (v) gain (loss) on sale / deconsolidation, (vi) provision for impairment, (vii) other non-core adjustments, net, (viii) non-controlling interests, (ix) preferred stock dividends, and (x) issuance costs associated with redeemed preferred stock. Adjusted EBITDA is EBITDA excluding (i) unconsolidated joint venture real estate related depreciation & amortization, (ii) unconsolidated joint venture interest expense and tax, (iii) severance, equity acceleration and legal expenses, (iv) transaction and integration expenses, (v) gain (loss) on sale / deconsolidation, (vi) provision for impairment, (vii) other non-core adjustments, net, (viii) non-controlling interests, (ix) preferred stock dividends, and (x) gain on / issuance costs associated with redeemed preferred stock. In addition, we believe EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors, and other interested parties in the evaluation of REITs. Because EBITDA and Adjusted EBITDA are calculated before recurring cash charges including interest expense and income taxes, exclude capitalized costs, such as leasing commissions, and are not adjusted for capital expenditures or other recurring cash requirements of our business, their utility as a measure of our performance is limited. Other REITs may calculate EBITDA and Adjusted EBITDA differently than we do and, accordingly, our EBITDA and Adjusted EBITDA may not be comparable to other REITs’ EBITDA and Adjusted EBITDA. Accordingly, EBITDA and Adjusted EBITDA should be considered only as supplements to net income computed in accordance with GAAP as a measure of our financial performance.

Net Operating Income (NOI) and Cash NOI:
Net operating income, or NOI, represents rental revenue, tenant reimbursement revenue and interconnection revenue less utilities expense, rental property operating expenses, property taxes and insurance expenses (as reflected in the statement of operations). NOI is commonly used by stockholders, company management and industry analysts as a measurement of operating performance of the company’s rental portfolio. Cash NOI is NOI less straight-line rents and above- and below-market rent amortization. Cash NOI is commonly used by stockholders, company management and industry analysts as a measure of property operating performance on a cash basis. Same-Capital Cash NOI represents buildings owned as of December 31, 2022 of the prior year with less than 5% of total rentable square feet under development and excludes buildings that were undergoing, or were expected to undergo, development activities in 2023-2024, buildings classified as held for sale, and buildings sold or contributed to joint ventures for all periods presented (prior period numbers adjusted to reflect current same-capital pool). However, because NOI and cash NOI exclude depreciation and amortization and capture neither the changes in the value of our data centers that result from use or market conditions, nor the level of capital expenditures and capitalized leasing commissions necessary to maintain the operating performance of our data centers, all of which have real economic effect and could materially impact our results from operations, the utility of NOI and cash NOI as measures of our performance is limited. Other REITs may calculate NOI and cash NOI differently than we do and, accordingly, our NOI and cash NOI may not be comparable to other REITs’ NOI and cash NOI. NOI and cash NOI should be considered only as supplements to net income computed in accordance with GAAP as measures of our performance.

Additional Definitions

Net debt-to-Adjusted EBITDA ratio is calculated as total debt at balance sheet carrying value, plus capital lease obligations, plus Digital Realty’s pro rata share of unconsolidated joint venture debt, less cash and cash equivalents (including Digital Realty’s pro rata share of unconsolidated joint venture cash) divided by the product of Adjusted EBITDA (including Digital Realty’s pro rata share of unconsolidated joint venture EBITDA), multiplied by four.

Debt-plus-preferred-to-total enterprise value is total debt plus preferred stock divided by total debt plus the liquidation value of preferred stock and the market value of outstanding Digital Realty Trust, Inc. common stock and Digital Realty Trust, L.P. units, assuming the redemption of Digital Realty Trust, L.P. units for shares of Digital Realty Trust, Inc. common stock.

Fixed charge coverage ratio is Adjusted EBITDA divided by the sum of GAAP interest expense, capitalized interest and preferred stock dividends. For the quarter ended September 30, 2024, GAAP interest expense was $124 million, capitalized interest was $28 million and preferred stock dividends was $10 million.

Reconciliation of Net Operating Income (NOI)

Three Months Ended

Nine Months Ended

(in thousands)

30-Sep-24

30-Jun-24

30-Sep-23

30-Sep-24

30-Sep-23

Operating income

$168,286

$9,889

$58,231

$327,542

$390,426

Fee income

(12,907)

(15,656)

(7,819)

(41,572)

(30,596)

Other income

(4,581)

(2,125)

—

(7,568)

(1,819)

Depreciation and amortization

459,997

425,343

420,613

1,316,442

1,274,379

General and administrative

115,120

119,511

108,039

349,051

321,769

Severance, equity acceleration and legal expenses

2,481

884

2,682

4,156

10,489

Transaction expenses

24,194

26,072

14,465

82,105

44,496

Provision for impairment

—

168,303

113,000

168,303

113,000

Other expenses

4,774

(529)

1,295

15,080

1,949

Net Operating Income

$757,365

$731,692

$710,505

$2,213,540

$2,124,094

Cash Net Operating Income (Cash NOI)

Net Operating Income

$757,365

$731,692

$710,505

$2,213,540

$2,124,094

Straight-line rental revenue

(18,423)

(2,873)

(14,185)

(23,818)

(17,999)

Straight-line rental expense

1,683

959

1,632

4,011

1,844

Above- and below-market rent amortization

(742)

(1,691)

(1,127)

(3,287)

(3,548)

Cash Net Operating Income

$739,883

$728,088

$696,826

$2,190,446

$2,104,391

Constant Currency CFFO Reconciliation

Three Months Ended

Nine Months Ended

(in thousands, except per share data)

30-Sep-24

30-Sep-23

30-Sep-24

30-Sep-23

Core FFO (1)

$557,744

$500,402

$1,628,378

$1,501,403

Core FFO impact of holding ’23 Exchange Rates Constant (2)

(3,281)

—

1,792

—

Constant Currency Core FFO

$554,463

$500,402

$1,630,170

$1,501,403

Weighted-average shares and units outstanding – diluted

334,476

308,539

326,545

302,740

Constant Currency CFFO Per Share

$1.66

$1.62

$4.99

$4.96

As reconciled to net income above.

Adjustment calculated by holding currency translation rates for 2024 constant with average currency translation rates that were applicable to the same periods in 2023.

This document contains forward-looking statements within the meaning of the federal securities laws, which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Such forward-looking statements include statements relating to: our economic outlook, our expected investment and expansion activity, anticipated continued demand for our products and service, our liquidity, our joint ventures, supply and demand for data center and colocation space, our acquisition and disposition activity, pricing and net effective leasing economics, market dynamics and data center fundamentals, our strategic priorities, our product offerings, available inventory, rent from leases that have been signed but have not yet commenced and other contracted rent to be received in future periods, rental rates on future leases, lag between signing and commencement, cap rates and yields, investment activity, the company’s FFO, Core FFO, constant currency Core FFO, adjusted FFO, and net income, 2024 outlook and underlying assumptions, information related to trends, our strategy and plans, leasing expectations, weighted average lease terms, the exercise of lease extensions, lease expirations, debt maturities, annualized rent at expiration of leases, the effect new leases and increases in rental rates will have on our rental revenue, our credit ratings, construction and development activity and plans, projected construction costs, estimated yields on investment, expected occupancy, expected square footage and IT load capacity upon completion of development projects, backlog NOI, NAV components, and other forward-looking financial data. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. Such statements are subject to risks, uncertainties and assumptions and are not guarantees of future performance and may be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. Some of the risks and uncertainties that may cause our actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

reduced demand for data centers or decreases in information technology spending;decreased rental rates, increased operating costs or increased vacancy rates;increased competition or available supply of data center space;the suitability of our data centers and data center infrastructure, delays or disruptions in connectivity or availability of power, or failures or breaches of our physical and information security infrastructure or services;breaches of our obligations or restrictions under our contracts with our customers;our inability to successfully develop and lease new properties and development space, and delays or unexpected costs in development of properties;the impact of current global and local economic, credit and market conditions;global supply chain or procurement disruptions, or increased supply chain costs;the impact from periods of heightened inflation on our costs, such as operating and general and administrative expenses, interest expense and real estate acquisition and construction costs;the impact on our customers’ and our suppliers’ operations during an epidemic, pandemic, or other global events;our dependence upon significant customers, bankruptcy or insolvency of a major customer or a significant number of smaller customers, or defaults on or non-renewal of leases by customers;changes in political conditions, geopolitical turmoil, political instability, civil disturbances, restrictive governmental actions or nationalization in the countries in which we operate;our inability to retain data center space that we lease or sublease from third parties;information security and data privacy breaches;difficulties managing an international business and acquiring or operating properties in foreign jurisdictions and unfamiliar metropolitan areas;our failure to realize the intended benefits from, or disruptions to our plans and operations or unknown or contingent liabilities related to, our recent and future acquisitions;our failure to successfully integrate and operate acquired or developed properties or businesses;difficulties in identifying properties to acquire and completing acquisitions;risks related to joint venture investments, including as a result of our lack of control of such investments;risks associated with using debt to fund our business activities, including re-financing and interest rate risks, our failure to repay debt when due, adverse changes in our credit ratings or our breach of covenants or other terms contained in our loan facilities and agreements;our failure to obtain necessary debt and equity financing, and our dependence on external sources of capital;financial market fluctuations and changes in foreign currency exchange rates;adverse economic or real estate developments in our industry or the industry sectors that we sell to, including risks relating to decreasing real estate valuations and impairment charges and goodwill and other intangible asset impairment charges;our inability to manage our growth effectively;losses in excess of our insurance coverage;our inability to attract and retain talent;environmental liabilities, risks related to natural disasters and our inability to achieve our sustainability goals;the expected operating performance of anticipated near-term acquisitions and descriptions relating to these expectations;our inability to comply with rules and regulations applicable to our company;Digital Realty Trust, Inc.’s failure to maintain its status as a REIT for federal income tax purposes;Digital Realty Trust, L.P.’s failure to qualify as a partnership for federal income tax purposes;restrictions on our ability to engage in certain business activities;changes in local, state, federal and international laws, and regulations, including related to taxation, real estate, and zoning laws, and increases in real property tax rates; andthe impact of any financial, accounting, legal or regulatory issues or litigation that may affect us.

The risks included here are not exhaustive, and additional factors could adversely affect our business and financial performance. Several additional material risks are discussed in our annual report on Form 10‑K for the year ended December 31, 2023, and other filings with the U.S. Securities and Exchange Commission. Those risks continue to be relevant to our performance and financial condition. Moreover, we operate in a competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events or otherwise. Digital Realty, Digital Realty Trust, the Digital Realty logo, Interxion, Turn-Key Flex, Powered Base Building, ServiceFabric, AnyScale Colo, Pervasive Data Center Architecture, PlatformDIGITAL, PDx, Data Gravity Index and Data Gravity Index DGx are registered trademarks and service marks of Digital Realty Trust, Inc. in the United States and/or other countries. All other names, trademarks and service marks are the property of their respective owners.

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SOURCE Digital Realty Trust

Technology

OppFi Reports First Quarter 2026 Results, Record Quarterly Revenue

Published

6 hours ago

May 7, 2026

Total revenue increased 8.3% year over year to $151.9 million, a Company record for the first quarter

Net income increased 165.0% year over year to $54.0 million

Adjusted net income1 decreased 11.2% year over year to $30.0 million

Board approves new $40 million Share Repurchase Program

CHICAGO, May 7, 2026 /PRNewswire/ — OppFi Inc. (NYSE: OPFI) (“OppFi” or the “Company”), a tech-enabled digital finance platform that partners with banks to offer financial products and services to everyday Americans, today reported financial results for the first quarter ended March 31, 2026.

“Operationally, OppFi had a healthy start to 2026, generating record first-quarter revenue, which reflects the strength of our core operations. Strategically, we believe 2026 is a pivotal year of investment for OppFi as we evolve the business with the transformative combination of OppFi’s digital-first platform and BNC’s national bank charter. This initiative unlocks significant opportunities for growth and product diversification. Combining our operations under unified regulatory supervision by the OCC and Federal Reserve simplifies and strengthens our compliance and risk management, which positions us for long-term scalability and sustainable growth,” said Todd Schwartz, CEO and Executive Chairman of OppFi. Our new share repurchase program reflects our continued confidence in OppFi’s long-term growth prospects, our commitment to returning value to our stockholders and belief that our stock currently trades at a significant discount to its underlying value,” Todd Schwartz added.

(1) Non-GAAP Financial Measures: Adjusted Net Income and Adjusted EPS are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures” below for a detailed description and reconciliation of such non-GAAP financial measures to their most directly comparable GAAP financial measures.

Financial Summary

The following table presents a summary of OppFi’s results for the three months ended March 31, 2026 and 2025 (in thousands, except per share data)†. Certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.

Three Months Ended March 31,

Change

(Unaudited)

2026

2025

Total revenue(1)

$ 151,881

$ 140,268

8.3 %

Net income

$ 54,038

$ 20,390

165.0 %

Net income (loss) attributable to OppFi Inc.

$ 28,401

$ (11,372)

349.7 %

Adjusted net income(2)

$ 30,045

$ 33,817

(11.2) %

Basic EPS

$ 1.06

$ (0.48)

321.0 %

Diluted EPS(3)

$ 0.56

$ (0.48)

215.7 %

Adjusted EPS(2,3)

$ 0.35

$ 0.38

(9.3) %

† The financial results do not reflect the simplification of OppFi’s corporate structure to collapse its prior Up-C structure, which occurred after the end of the quarter.

(1) Total revenue is calculated as the sum of interest on finance receivables and other revenue.

(2) Adjusted Net Income and Adjusted EPS are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures” below for a detailed description and reconciliation of such non-GAAP financial measures to their most directly comparable GAAP financial measures.

(3) Diluted EPS calculated on a GAAP basis excludes dilutive securities, including Class V Voting Stock, restricted stock units, performance stock units, and stock options in any periods in which their inclusion would have an antidilutive effect.

Key Performance Metrics

The following table represents key quarterly metrics as of and for the three months ended March 31, 2026 and 2025 (in thousands, except percentage metrics).

As of and for the Three Months Ended

(Unaudited)

March 31, 2026

March 31, 2025

Total net originations(a)

$ 175,975

$ 189,168

Total retained net originations(a)

$ 151,449

$ 168,963

Ending receivables(b)

$ 444,922

$ 406,579

Net charge-offs as % of total revenue(c)

42.5 %

34.6 %

Net charge-offs as % of average receivables, annualized(c)

55.5 %

47.0 %

Average yield, annualized(d)

130.7 %

135.8 %

Auto-approval rate(e)

79 %

(a) Total net originations are defined as gross originations net of transferred balance on refinanced loans, while total retained net originations are defined as the portion of total net originations with respect to which the Company ultimately purchased a receivable from bank partners.

(b) Ending receivables are defined as the unpaid principal balances of loans at the end of the reporting period.

(c) Net charge-offs as a percentage of total revenue and net charge-offs as a percentage of average receivables represent total charge-offs from the period less recoveries as a percentage of total revenue and as a percentage of average receivables. Net charge-offs as a percentage of average receivables is presented as an annualized metric. Finance receivables are charged off at the earlier of the time when accounts reach 90 days past due on a recency basis, when OppFi receives notification of a customer bankruptcy or is otherwise deemed uncollectible.

(d) Average yield is defined as total revenue from the period as a percent of average receivables and is presented as an annualized metric.

(e) Auto-approval rate is calculated by taking the number of approved loans that are not decisioned by a loan processor or underwriter (auto-approval) divided by the total number of loans approved.

Share Repurchase Program

During the three months ended March 31, 2026, OppFi repurchased 1,040,699 shares of Class A Common Stock, which were held as treasury stock, for an aggregate purchase price of $9.9 million at an average purchase price per share of $9.54. As of March 31, 2026, $11.0 million of the repurchase authorization under the Company’s prior repurchase program remained available. On May 6, 2026, the Board of Directors of OppFi approved a new share repurchase program under which the Company may repurchase up to $40 million of its Class A Common Stock. This new program replaces the Company’s prior share repurchase program, which was terminated.

Repurchases under the new program may be made from time to time on the open market, through privately negotiated transactions, or via other methods, in accordance with applicable securities laws and other relevant legal requirements. The timing and amount of repurchases will depend on market conditions, share price, trading volume and other factors. The new program does not obligate the Company to repurchase any specific dollar amount or number of shares, and it may be extended, modified, suspended or discontinued at any time.

Conference Call

Management will host a conference call today at 9:00 a.m. ET to discuss OppFi’s financial results and business outlook. The webcast of the conference call will be made available on the Investor Relations page of the Company’s website.

The conference call can also be accessed with the following dial-in information:

Domestic: (800) 579-2543International: (785) 424-1789Conference ID: OPPFI

An archived version of the webcast will be available on OppFi’s website.

About OppFi

OppFi (NYSE: OPFI) is a tech-enabled digital finance platform that partners with banks to offer financial products and services to everyday Americans. Through this transparent and responsible platform, which emphasizes financial inclusion and exceptional customer experience, the Company assists consumers who are underserved by traditional financing options in building improved financial health. OppLoans by OppFi maintains a 4.4/5.0 star rating on Trustpilot based on over 5,500 reviews, positioning the Company among the top consumer-rated financial platforms online. OppFi also holds a 35% equity interest in Bitty Holdings, LLC (“Bitty”), a credit access company that provides revenue-based financing and other working capital solutions to small businesses. For additional information, please visit oppfi.com.

Important Additional Information will be Filed with the SEC

In connection with the proposed transaction between OppFi and BNCCORP, Inc. (“BNCC”), OppFi will file with the U.S. Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 (the “registration statement”), which will contain a proxy statement of BNCC and a prospectus of OppFi (the “proxy statement/prospectus”), and OppFi may file with the SEC other relevant documents regarding the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS CAREFULLY AND IN THEIR ENTIRETY AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BY OPPFI, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT OPPFI, BNC AND THE PROPOSED TRANSACTION. A definitive copy of the proxy statement/prospectus will be mailed to stockholders of BNCC when that document is final. Investors and security holders will be able to obtain the registration statement and the proxy statement/prospectus, as well as other filings containing information about OppFi, free of charge from OppFi or from the SEC’s website when they are filed by OppFi. The documents filed by OppFi with the SEC may be obtained free of charge at OppFi’s website, at https://investors.oppfi.com/financials/sec-filings/default.aspx, or by requesting them by mail at 130 E. Randolph Street, Suite 3400, Chicago, IL 60601 or by email at corporate.secretary@oppfi.com.

Participants in a Solicitation

This communication is not a solicitation of a proxy from any security holder of BNCC or OppFi. However, OppFi, BNCC and certain of their respective directors and executive officers may be deemed to be participants in a solicitation of proxies from the stockholders of BNCC in respect of the proposed transaction. Information about OppFi’s directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2025 and other documents filed by OppFi with the SEC. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available. Free copies of this document may be obtained as described in the preceding paragraph.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities of OppFi or a solicitation of any vote or approval with respect to the proposed transaction by OppFi or BNCC, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

Contacts:

Investor Relations:
Mike Gallentine
Head of Investor Relations
mgallentine@oppfi.com

Media Relations:
media@oppfi.com

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. OppFi’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “opportunity,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “possible,” “continue,” “positions,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements include, without limitation, OppFi’s expectations with respect to its full year 2026 guidance, the future performance of OppFi’s platform and underwriting models, statements regarding OppFi’s proposed acquisition of BNCC, including the anticipated timing, structure, benefits and strategic rationale of such transactions, OppFi’s expectations with respect to the geographic expansion and product diversification that may come from the acquisition, and expectations for OppFi’s growth and future financial performance. These forward-looking statements are based on OppFi’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Most of these factors are outside OppFi’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to, the impact of general economic conditions, including economic slowdowns, inflation, interest rate changes, recessions, the impact of tariffs, and tightening of credit markets on OppFi’s business; the impact of challenging macroeconomic and marketplace conditions; the impact of stimulus or other government programs; risks related to the proposed acquisition of BNCC including the risk that the transactions may not be completed in a timely manner or at all and the risk of integration or execution challenges; whether OppFi will be successful in obtaining declaratory relief against the Commissioner of the Department of Financial Protection and Innovation for the State of California; whether OppFi will be subject to AB 539; whether OppFi’s bank partners will continue to lend in California and whether OppFi’s financing sources will continue to finance the purchase of participation rights in loans originated by OppFi’s bank partners in California; OppFi’s ability to scale and grow the Bitty business; the impact that events involving financial institutions or the financial services industry generally, such as actual concerns or events involving liquidity, defaults, or non-performance, may have on OppFi’s business; risks related to any material weakness in OppFi’s internal controls over financial reporting; the ability of OppFi to grow and manage growth profitably and retain its key employees; risks related to new products; risks related to evaluating and potentially consummating acquisitions; concentration risk; risks related to OppFi’s ability to comply with various covenants in its corporate and warehouse credit facilities; risks related to potential litigation; changes in applicable laws or regulations, including, but not limited to, impacts from the One Big Beautiful Bill Act; the possibility that OppFi may be adversely affected by other economic, business, and/or competitive factors; and other risks and uncertainties indicated from time to time in OppFi’s filings with the United States Securities and Exchange Commission, in particular, contained in the section captioned “Risk Factors.” OppFi cautions that the foregoing list of factors is not exclusive, and readers should not place undue reliance upon any forward-looking statements, which speak only as of the date made. OppFi does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures that are unaudited and do not conform to GAAP, such as Adjusted EBT, Adjusted Net Income, and Adjusted EPS. Adjusted EBT is defined as Net Income, adjusted for (1) income tax expense; (2) change in fair value of warrant liabilities; (3) other adjustments, net; and (4) other income. Adjusted Net Income is defined as Adjusted EBT as defined above, adjusted for taxes assuming a tax rate for each period presented that reflects the U.S. federal statutory rate of 21% and a blended statutory rate for state income taxes, in order to allow for a comparison with other publicly traded companies. Adjusted EPS is defined as Adjusted Net Income as defined above, divided by weighted average diluted shares outstanding, which represents shares of both classes of common stock outstanding and includes the impact of dilutive securities, such as restricted stock units, performance stock units, and stock options. These non-GAAP financial measures have not been prepared in accordance with accounting principles generally accepted in the United States and may be different from non-GAAP financial measures used by other companies. OppFi believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. These non-GAAP measures with comparable names should not be considered in isolation from, or as an alternative to, financial measures determined in accordance with GAAP. See “Reconciliation of Non-GAAP Financial Measures” below for reconciliations for OppFi’s non-GAAP financial measures to the most directly comparable GAAP financial measures.

First Quarter Results of Operations

Consolidated Statements of Operations

The following table present consolidated results of operations for the three months ended March 31, 2026 and 2025 (in thousands, except share and per share data). Certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.

Three Months Ended March 31,

Change

(Unaudited)

2026

2025

Revenue:

Interest and loan related income

$ 150,526

$ 139,118

$ 11,408

8.2 %

Other revenue

1,355

1,150

205

17.8

151,881

140,268

11,613

8.3

Change in fair value of finance receivables

(64,583)

(49,458)

(15,125)

30.6

Net revenue

87,298

90,810

(3,512)

(3.9)

Expenses:

Salaries and employee benefits

14,254

13,778

476

3.5

Direct marketing costs

10,385

10,288

0.9

Interest expense and amortized debt issuance costs

8,510

10,247

(1,737)

(17.0)

Professional fees

7,264

4,199

3,065

73.0

Technology costs

3,329

2,961

368

12.4

Payment processing fees

1,658

1,630

1.7

Occupancy

871

1,039

(168)

(16.2)

Depreciation and amortization

591

1,760

(1,169)

(66.4)

General, administrative and other

5,074

2,416

2,658

110.0

Total expenses

51,936

48,318

3,618

7.5

Income from operations

35,362

42,492

(7,130)

(16.8)

Other income (expense):

Change in fair value of warrant liabilities

21,295

(21,607)

42,902

198.6

Income from equity method investment

1,120

1,076

4.1

Other income

232

152

191.1

Income before income taxes

58,009

22,041

35,968

163.2

Income tax expense

3,971

1,651

2,320

140.5

Net income

54,038

20,390

33,648

165.0

Less: net income attributable to noncontrolling interest

25,637

31,762

(6,125)

(19.3)

Net income (loss) attributable to OppFi Inc.

$ 28,401

$ (11,372)

$ 39,773

349.7 %

Earnings (loss) per common share attributable to OppFi Inc.:

Earnings (loss) per common share:

Basic

$ 1.06

$ (0.48)

Diluted

$ 0.56

$ (0.48)

Weighted average common shares outstanding:

Basic

26,778,432

23,691,769

Diluted

86,195,269

23,691,769

Condensed Consolidated Balance Sheets

The following table presents consolidated balance sheets as of March 31, 2026 and December 31, 2025 (in thousands). Certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.

(Unaudited)

March 31,

December 31,

Change

2026

2025

Assets

Cash and restricted cash

$ 99,920

$ 93,263

$ 6,657

7.1 %

Finance receivables at fair value

502,558

546,236

(43,678)

(8.0)

Equity method investment

19,145

19,076

0.4

Other assets

98,364

95,515

2,849

3.0

Total assets

$ 719,987

$ 754,090

$ (34,103)

(4.5) %

Liabilities and stockholders’ equity

Accounts payable and accrued expenses

$ 41,610

$ 46,171

$ (4,561)

(9.9) %

Other liabilities

45,975

51,235

(5,260)

(10.3)

Total debt

284,260

321,353

(37,093)

(11.5)

Warrant liabilities

5,160

26,455

(21,295)

(80.5)

Total liabilities

377,005

445,214

(68,209)

(15.3)

Total stockholders’ equity

342,982

308,876

34,106

11.0

Total liabilities and stockholders’ equity

$ 719,987

$ 754,090

$ (34,103)

(4.5) %

Condensed Consolidated Statement of Cash Flows

The following table presents the consolidated statement of cash flows for the three months ended March 31, 2026 and 2025 (in thousands). Certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.

Three Months Ended March 31,

Change

(Unaudited)

2026

2025

Net cash provided by operating activities

$ 90,779

$ 83,740

$ 7,039

8.4 %

Net cash used in investing activities

(21,436)

(34,241)

12,805

(37.4)

Net cash used in financing activities

(62,686)

(47,019)

(15,667)

33.3

Net increase in cash and restricted cash

$ 6,657

$ 2,480

$ 4,177

168.4 %

Financial Capacity and Capital Resources

As of March 31, 2026, OppFi had $63.9 million in unrestricted cash, an increase of $14.4 million from December 31, 2025. As of March 31, 2026, OppFi had an additional $240.7 million of unused debt capacity under our financing facilities for future availability, representing a 46% overall undrawn capacity, an increase from $203.6 million as of December 31, 2025. The increase in undrawn debt was driven primarily by a decrease in the utilization of revolving lines of credit. Including total financing commitments of $525.0 million and cash and restricted cash on the balance sheet of $99.9 million, OppFi had approximately $624.9 million in funding capacity as of March 31, 2026.

Reconciliation of Non-GAAP Financial Measures

The following tables present reconciliations of non-GAAP financial measures for the three months ended March 31, 2026 and 2025 (in thousands, except share and per share data). Certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. Percentages presented are calculated from the underlying whole-dollar amounts.

Adjusted EBT and Adjusted Net Income

Comparison of the three months ended March 31, 2026 and 2025

Three Months Ended March 31,

Change

(Unaudited)

2026

2025

Net income

$ 54,038

$ 20,390

$ 33,648

165.0 %

Income tax expense

3,971

1,651

2,320

140.5

Other income

(232)

(80)

(152)

191.1

Change in fair value of warrant liabilities

(21,295)

21,607

(42,902)

(198.6)

Other adjustments, net(a)

3,035

609

2,426

398.4

Adjusted EBT

39,517

44,177

(4,660)

(10.5)

Less: pro forma taxes(b)

9,472

10,360

(888)

(8.6)

Adjusted net income

$ 30,045

$ 33,817

$ (3,772)

(11.2) %

Adjusted earnings per share

$ 0.35

$ 0.38

Weighted average diluted shares outstanding

86,195,269

87,991,698

(a) For the three months ended March 31, 2026, other adjustments, net of $3.0 million included $1.7 million in expenses related to stock compensation, $1.0 million in expenses related to corporate development, $0.2 million in expenses related to severance, and $0.1 million in expenses related to legal matters. For the three months ended March 31, 2025, other adjustments, net of $0.6 million included $1.3 million in expenses related to stock compensation, $0.3 million in expenses related to severance, $0.3 million in expenses related to legal matters, and $0.2 million in expenses related to an adjustment to the Company’s outstanding lease obligations, partially offset by a $1.4 million addback related to the partial forgiveness of remaining expenses related to OppFi Card’s exit activities. The sum of the individual components of other adjustments, net may not equal the total presented due to the use of rounded numbers for disclosure purposes.

(b) Assumes a tax rate of 23.97% for the three months ended March 31, 2026 and 23.45% for the three months ended March 31, 2025, reflecting the U.S. federal statutory rate of 21% and a blended statutory rate for state income taxes.

Adjusted Earnings Per Share

Comparison of the three months ended March 31, 2026 and 2025

Three Months Ended March 31,

(Unaudited)

2026

2025

Weighted average Class A common stock outstanding

26,778,432

23,691,769

Weighted average Class V voting stock outstanding

58,694,615

62,698,935

Dilutive impact of restricted stock units

556,584

1,341,739

Dilutive impact of performance stock units

12,994

62,377

Dilutive impact of stock options

152,644

196,878

Weighted average diluted shares outstanding

86,195,269

87,991,698

Three Months Ended March 31,

(In thousands, except share and per share data)

2026

2025

(Unaudited)

Per Share

Weighted average diluted shares outstanding

86,195,269

87,991,698

Net income

$ 54,038

$ 0.63

$ 20,390

$ 0.23

Income tax expense

3,971

0.05

1,651

0.02

Other income

(232)

—

(80)

—

Change in fair value of warrant liabilities

(21,295)

(0.25)

21,607

0.25

Other adjustments, net(a)

3,035

0.04

609

0.01

Adjusted EBT

39,517

0.46

44,177

0.50

Less: pro forma taxes(b)

9,472

0.11

10,360

0.12

Adjusted net income

$ 30,045

$ 0.35

$ 33,817

$ 0.38

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SOURCE OppFi

Technology

AAON Reports First Quarter 2026 Results with Record Sales and Backlog, Robust Earnings Growth, and Raises Full-Year Guidance

Published

6 hours ago

May 7, 2026

First Quarter 2026 Results
(All comparisons are year-over-year, unless otherwise noted)

Delivered record sales and accelerated earnings growth on strong demand and expanding production throughputNet sales grew 54.3% to a record $496.9 millionOperating margins reflected early benefits from improving utilization, with margin improvement expected to build as capacity absorption improvesGAAP diluted EPS increased 37.1% to $0.48 reflecting strong earnings growth on higher volumeTotal backlog increased 107.4% to a record $2.1 billion, driven by continued strength from the data center market

Raises 2026 Outlook

2026 outlook now reflects revenue growth of 40%-45%% and gross margins of approximately 27-28%, supported by record backlog, expanded capacity, and improving operational execution

TULSA, Okla., May 7, 2026 /PRNewswire/ — AAON, INC. (NASDAQ-AAON), a leader in high-performing, energy-efficient HVAC solutions that bring long-term value to customers and owners, today announced its results for the first quarter of 2026.

First Quarter 2026 Results

Net sales for the first quarter of 2026 increased 54.3% to $496.9 million, from $322.1 million in the first quarter of 2025. This growth was driven by strong demand across both the AAON and BASX brands, and accelerating production throughput made possible by investments made in capacity and operational execution. BASX-branded sales increased 72.4% to $228.6 million, reflecting continued strength in data center cooling demand, higher production volumes, and increased utilization of recently commissioned capacity. AAON-branded sales increased 41.6% to $268.4 million, supported by a strong backlog and accelerating production rates. Booking activity remained solid across both brands, supporting continued share gains and elevated backlog levels. BASX-branded products ended the quarter with backlog up 160.0%, while AAON‑branded bookings demonstrated continued resilience in a softer market environment.

Gross profit margin in the quarter was 25.1%, compared to 26.8% in the prior-year period. The year‑over‑year decline reflected unabsorbed fixed costs associated with recent capacity investments, temporary outsourcing used to support accelerated growth, and transitory price and cost timing dynamics. These effects are intentional and temporary, and are expected to unwind as internal capacity scales and utilization improves.

Selling, general and administrative expenses as a percent of sales declined 220 basis points to 13.7%, demonstrating strong operating leverage and disciplined cost management.

Earnings per diluted share were $0.48, an increase of 37.1% from $0.35 in the first quarter of 2025.

“First‑quarter results demonstrate strong earnings growth driven by higher volume, improved execution, and continued share gains,” said President and CEO Matt Tobolski. “We delivered record sales, improved cash flow, and higher production throughput across our manufacturing network. Importantly, the additional volume we are taking on is carrying attractive incremental contribution, allowing earnings to grow while we intentionally sequence margin improvement during this phase of capacity ramp.

“Our backlog provides exceptional visibility, particularly across the BASX-brand, and positions us to drive continued growth as we move through the year. At the same time, increasing utilization across existing capacity is expected to support margin improvement over time as fixed costs are absorbed, equipment comes fully online, and productivity continues to improve.

“As we progress through 2026, our priorities are clear and unchanged. Drive throughput, convert backlog, and deliver disciplined margin progression over time. We have built the foundation, and we are now focused on converting that foundation into durable earnings power and long-term returns.”

Backlog

March 31, 2026

December 31, 2025

March 31, 2025

(in thousands)

AAON-branded products

$ 509,806

$ 526,350

$ 403,863

BASX-branded products

1,619,649

1,302,145

623,006

$ 2,129,455

$ 1,828,495

$ 1,026,869

Total backlog increased 107.4% year-over-year to $2.13 billion, and increased 16.5% sequentially. The sequential growth was driven entirely by the BASX brand, with backlog increasing 24.4% from the prior quarter. Sustained data center demand and BASX’s custom-engineered solutions continue to support share gains. As planned, AAON-branded products backlog declined sequentially 3.1%, reflecting a deliberate increase in production to address extended lead times, with manufacturing output exceeding order intake during the quarter. Order activity of AAON equipment remained solid, supporting continued share gains despite softer end-market conditions.

2026 Outlook

Dr. Tobolski concluded, “We are encouraged by the start of the year and the momentum we are seeing across the business. Backlog and demand remain exceptionally strong, providing the visibility and stability needed to maintain a sharp focus on execution, production ramp‑up, and customer fulfillment. We are pleased with the benefits we are starting to see from operational investments, and we have meaningful opportunity ahead to further increase production volumes and enhance productivity, which support improved results over time.

“We now expect 2026 sales to grow 40%-45%, with gross margin of 27%-28%, reflecting intentional ramp decisions early in the year and improving margin as utilization and productivity increases through the year. We anticipate SG&A expenses as a percentage of sales will be 14%-15% and expect depreciation and amortization expenses of $95-$100 million.”

Current

Prior

Metric

FY26

YoY Sales Growth

40%-45%

18%-20%

Gross Profit Margin

27%-28%

29%-31%

SG&A as a % of sales

14%-15%

~16%

Depreciation & Amortization

$95M-$100M

Segment Results

AAON Oklahoma

Three Months Ended

(in thousands)

March 31, 2026

December 31, 2025

March 31, 2025

Net sales

$ 243,967

$ 215,503

$ 161,838

Gross profit

$ 64,272

$ 59,168

$ 40,600

Gross profit margin

26.3 %

27.5 %

25.1 %

Net sales for the AAON Oklahoma segment totaled $244.0 million, an increase of 50.7% year-over-year, driven by a strong starting backlog and ongoing production enhancements that improved backlog conversion despite a challenging industry environment. First‑quarter 2026 results also benefited from an easier year‑over‑year comparison, as the prior‑year period was disrupted by the industry’s refrigerant transition, contributing to regained market share.

Gross margin for the segment was 26.3%, compared to 25.1% in the first quarter of 2025. Overhead expenses associated with the new Memphis facility impacted segment margin by $9.8 million. Excluding these costs, segment margins were 29.6%. During the quarter, the segment was impacted by elevated outsourcing levels, price‑cost timing dynamics, and tariff‑related costs, all of which are temporary and do not change the long-term earnings power of the segment.

AAON Coil Products

Three Months Ended

(in thousands)

March 31, 2026

December 31, 2025

March 31, 2025

Net sales

$ 117,611

$ 102,619

$ 94,023

Gross profit

$ 28,302

$ 21,827

$ 29,858

Gross profit margin

24.1 %

21.3 %

31.8 %

Net sales for the AAON Coil Products segment totaled $117.6 million, up 25.1% compared to the same period last year. Growth was driven primarily by BASX-branded liquid cooling sales of $93.2 million, up 40.5% during the period, while AAON‑branded sales declined 11.8% year-over-year.

AAON Coil Products gross margin was 24.1%, declining year-over-year from 31.8%, but increasing sequentially from 21.3%. The sequential margin expansion reflected improved operating leverage on higher throughput at the Longview facility, including a favorable mix of higher-margin BASX sales.

BASX

Three Months Ended

(in thousands)

March 31, 2026

December 31, 2025

March 31, 2025

Net sales

$ 135,358

$ 106,095

$ 66,193

Gross profit

$ 32,391

$ 28,775

$ 15,906

Gross profit margin

23.9 %

27.1 %

24.0 %

Net sales for the BASX segment increased 104.5% to $135.4 million from $66.2 million in the prior-year period. The year-over-year growth reflected strong demand for data center equipment, supported by robust order intake and elevated backlog levels. Increased production from the Company’s new Memphis facility played a key role by expanding capacity and driving higher sales volumes.

BASX segment gross margin was 23.9%, unchanged from the prior-year period. Margin stability reflected strong volume growth, offset by incremental resources and investments to support future growth and share gains. These incremental costs also contributed to the sequential margin contraction.

Balance Sheet & Cash Flow

As of March 31, 2026, the company had cash, cash equivalents and restricted cash of $1.1 million and a balance on its revolving credit facility of $425.2 million. Andy Cheung, CFO and Treasurer, commented, “During the first quarter, operating cash flow totaled $34.0 million, representing the highest level since the third quarter of 2024. This improvement reflected higher earnings and enhanced working capital efficiency. Capital expenditures totaled $52.9 million, primarily reflecting continued investments in incremental capacity to support future growth. As improvements in profitability and productivity continue, we expect these trends to support stronger cash flow and a healthier balance sheet over time.”

Conference Call

The company will host a conference call and webcast this morning at 9:00 a.m. EST to discuss the first quarter of 2026 results and outlook. The conference call will be accessible via dial-in for those who wish to participate in Q&A as well as a listen-only webcast. The dial-in is accessible at 1-888-880-3330. To access the listen-only webcast, please register at https://app.webinar.net/x89XOEkP41z. On the next business day following the call, a replay of the call will be available on the company’s website at https://aaon.com/investors.

About AAON

Founded in 1988, AAON is a global leader in HVAC solutions for commercial, industrial and data center indoor environments. The company’s industry-leading approach to designing and manufacturing highly configurable and custom-made equipment to meet exact needs creates a premier ownership experience with greater efficiency, performance and long-term value. Its highly engineered equipment is sold under the AAON and BASX brands. AAON is headquartered in Tulsa, Oklahoma, where its world-class innovation center and testing lab allows AAON engineers to continuously push boundaries and advance the industry. For more information, please visit www.aaon.com.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “should”, “will”, and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligations to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that could cause results to differ materially from those in the forward-looking statements include (1) the timing and extent of changes in raw material and component prices, (2) the effects of fluctuations in the commercial/industrial new construction market, (3) the timing and extent of changes in interest rates, as well as other competitive factors during the year, and (4) general economic, market or business conditions. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in any forward-looking statements, see “Risk Factors” and “Forward Looking Statements” in AAON’s Annual Report on Form 10-K for the most recent fiscal year, as may be revised and updated by AAON’s Quarterly Reports on Form 10-Q, and AAON’s Current Reports on Form 8-K.

Contact Information

Joseph Mondillo
Director of Investor Relations & Corporate Strategy
Phone: (617) 877-6346
Email: joseph.mondillo@aaon.com

AAON, Inc. and Subsidiaries

Consolidated Statements of Income

(Unaudited)

Three Months Ended March 31,

2026

2025

(in thousands, except per share data)

Net sales

$ 496,936

$ 322,054

Cost of sales

371,971

235,690

Gross profit

124,965

86,364

Selling, general and administrative expenses

67,906

51,293

Gain on disposal of assets

—

(40)

Income from operations

57,059

35,111

Interest expense

(5,055)

(2,802)

Other income, net

174

Income before taxes

52,081

32,483

Income tax provision

12,266

3,191

Net income

$ 39,815

$ 29,292

Earnings per share:

Basic EPS

$ 0.49

$ 0.36

Diluted EPS

$ 0.48

$ 0.35

Cash dividends declared per common share:

$ 0.10

Weighted average shares outstanding:

Basic

81,756,604

81,472,351

Diluted

83,179,954

83,351,536

AAON, Inc. and Subsidiaries

Segment Net Sales and Profit

(Unaudited)

Three Months Ended March 31,

2026

2025

(in thousands)

AAON Oklahoma

External sales

$ 243,967

$ 161,838

Inter-segment sales

44,509

3,839

Eliminations

(44,509)

(3,839)

Net sales

243,967

161,838

Cost of sales1

179,695

121,238

Gross profit

64,272

40,600

AAON Coil Products

External sales

$ 117,611

$ 94,023

Inter-segment sales

6,818

3,579

Eliminations

(6,818)

(3,579)

Net sales

117,611

94,023

Cost of sales1

89,309

64,165

Gross profit

28,302

29,858

BASX

External sales

$ 135,358

$ 66,193

Inter-segment sales

(2)

Eliminations

(43)

Net sales

135,358

66,193

Cost of sales1

102,967

50,287

Gross profit

32,391

15,906

Consolidated gross profit

$ 124,965

$ 86,364

1 Presented after intercompany eliminations.

The reconciliation between consolidated gross profit to consolidated income from operations is as follows:

Consolidated gross profit

$ 124,965

$ 86,364

Less: Selling, general and administrative expenses

67,906

51,293

Add: gain on disposal of assets

—

(40)

Consolidated income from operations

$ 57,059

$ 35,111

AAON, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

March 31,
2026

December 31,
2025

2026

2025

Assets

(in thousands, except share and per share data)

Current assets:

Cash and cash equivalents

$ 13

Restricted cash

1,087

1,226

Accounts receivable, net

290,161

314,387

Income tax receivable

19,691

27,445

Inventories, net

313,203

261,151

Contract assets, net

298,368

247,037

Prepaid expenses and other

21,177

17,921

Total current assets

943,700

869,180

Property, plant and equipment, net

654,857

631,262

Intangible assets, net and goodwill

171,913

165,799

Right of use assets

17,335

17,988

Other long-term assets

1,907

2,281

Total assets

$ 1,789,712

$ 1,686,510

Liabilities and Stockholders’ Equity

Current liabilities:

Short-term obligations of NMTC1

7,535

Accounts payable

160,139

110,437

Accrued liabilities

136,731

132,213

Contract liabilities

55,229

80,670

Total current liabilities

359,634

330,855

Debt, long-term

425,154

398,320

Deferred tax liabilities

34,899

30,313

Other long-term liabilities

27,038

23,299

New markets tax credit obligations1

8,778

8,738

Commitments and contingencies (Note 19)

Stockholders’ equity:

Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares issued

—

Common stock, $.004 par value, 200,000,000 shares authorized, 81,851,483 and 81,691,075 issued and outstanding at March 31, 2026 and December 31, 2025, respectively

327

Additional paid-in capital

71,913

64,358

Retained earnings

861,969

830,300

Total stockholders’ equity

934,209

894,985

Total liabilities and stockholders’ equity

$ 1,789,712

$ 1,686,510

1 Held by variable interest entities

AAON, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended March 31,

2026

2025

Operating Activities

(in thousands)

Net income

$ 39,815

$ 29,292

Adjustments to reconcile net income to net cash provided by (used in) operating activities

Depreciation and amortization

20,903

18,943

Amortization of debt issuance costs

Amortization of right of use assets

(Recoveries of) Provision for losses on accounts receivable, net of adjustments

(120)

Provision for excess and obsolete inventories, net of write-offs

701

Share-based compensation

7,696

4,021

Other

—

(45)

Deferred income taxes

4,586

5,976

Changes in assets and liabilities:

Accounts receivable

24,346

(17,631)

Income tax receivable

7,754

(3,323)

Inventories

(52,753)

(11,489)

Contract assets

(51,331)

(53,235)

Prepaid expenses and other long-term assets

(1,487)

(2,703)

Accounts payable

50,375

21,625

Contract liabilities

(25,441)

1,508

Extended warranties

4,387

Accrued liabilities and other long-term liabilities

4,483

(2,412)

Net cash provided by (used in) operating activities

33,994

(9,214)

Investing Activities

Capital expenditures

(45,127)

(46,723)

Grant proceeds received

1,650

—

Proceeds from sale of property, plant and equipment

—

Acquisition of intangible assets

(7,808)

(3,717)

Principal payments from note receivable

—

Net cash used in investing activities

(51,285)

(50,388)

Financing Activities

Borrowings of debt

252,867

235,925

Payments of debt

(226,033)

(138,411)

Payment related to financing costs

(1,395)

—

Stock options exercised

3,062

4,356

Repurchase of stock – open market

—

(31,536)

Repurchases of stock – LTIP plans (Note 17)

(3,203)

(6,768)

Cash dividends paid to stockholders

(8,146)

(8,095)

Net cash provided by financing activities

17,152

55,471

Net decrease in cash, cash equivalents, and restricted cash

(139)

(4,131)

Cash, cash equivalents, and restricted cash, beginning of period

1,239

6,514

Cash, cash equivalents, and restricted cash, end of period

$ 1,100

$ 2,383

Use of Non-GAAP Financial Measures

To supplement the company’s consolidated financial statements presented in accordance with generally accepted accounting principles (“GAAP”), additional non-GAAP financial measures are provided and reconciled in the following tables. The company believes that these non-GAAP financial measures, when considered together with the GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results. The company believes that this non-GAAP financial measure enhances the ability of investors to analyze the company’s business trends and operating performance as they are used by management to better understand operating performance. Since adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin are non-GAAP measures and are susceptible to varying calculations, adjusted net income, adjusted net income per diluted share, EBITDA, adjusted EBITDA, and adjusted EBITDA margin, as presented, may not be directly comparable with other similarly titled measures used by other companies.

Non-GAAP Adjusted Net Income

The company defines non-GAAP adjusted net income as net income adjusted for any infrequent events, such as litigation settlements, net of profit sharing and tax effect, in the periods presented.

The following table provides a reconciliation of net income (GAAP) to non-GAAP adjusted net income for the periods indicated:

Three Months Ended March 31,

2026

2025

(in thousands)

Net income, a GAAP measure

$ 39,815

$ 29,292

Add: Memphis incentive fee1

—

2,700

Profit sharing effect2

—

(230)

Tax effect

—

(627)

Non-GAAP adjusted net income

$ 39,815

$ 31,135

Non-GAAP adjusted earnings per diluted share

$ 0.48

$ 0.37

1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our Memphis, Tenn. plant for a percentage of the incentives awarded to us by various entities.

2Profit sharing effect of the Memphis incentive fee in the respective period.

EBITDA

EBITDA (as defined below) is presented herein and reconciled from the GAAP measure of net income because of its wide acceptance by the investment community as a financial indicator of a company’s ability to internally fund operations. The company defines EBITDA as net income, plus (1) depreciation and amortization, (2) interest expense (income), net and (3) income tax expense. EBITDA is not a measure of net income or cash flows as determined by GAAP. EBITDA margin is defined as EBITDA as a percentage of net sales.

The company’s EBITDA measure provides additional information which may be used to better understand the company’s operations. EBITDA is one of several metrics that the company uses as a supplemental financial measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful than, net income, as an indicator of operating performance. Certain items excluded from EBITDA are significant components in understanding and assessing a company’s financial performance. EBITDA, as used by the company, may not be comparable to similarly titled measures reported by other companies. The company believes that EBITDA is a widely followed measure of operating performance and is one of many metrics used by the company’s management team and by other users of the company’s consolidated financial statements.

Adjusted EBITDA is calculated as EBITDA adjusted by items in non-GAAP adjusted net income, above, except for taxes, as taxes are already excluded from EBITDA.

The following table provides a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and Adjusted EBITDA (non-GAAP) for the periods indicated:

Three Months Ended March 31,

2026

2025

(in thousands)

Net income, a GAAP measure

$ 39,815

$ 29,292

Depreciation and amortization

20,903

18,943

Interest expense, net

5,055

2,802

Income tax expense

12,266

3,191

EBITDA, a non-GAAP measure

$ 78,039

$ 54,228

Add: Memphis incentive fee1

—

2,700

Profit sharing effect2

—

(230)

Adjusted EBITDA, a non-GAAP measure

$ 78,039

$ 56,698

Adjusted EBITDA margin

15.7 %

17.6 %

1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our Memphis, Tenn. plant for a percentage of the incentives awarded to us by various entities.

2Profit sharing effect of the Memphis incentive fee in the respective period.

Non-GAAP Adjusted Selling, General and Administrative Expenses

The following table provides a reconciliation of selling, general and administrative expenses (GAAP) to adjusted selling, general and administrative expenses (non-GAAP) for the periods indicated:

Three Months Ended March 31,

2026

2025

(in thousands)

Non-GAAP Adjusted Selling, General and Administrative Expenses

SG&A, a GAAP measure

$ 67,906

$ 51,293

Less: Memphis Incentive Fee1

—

2,700

Profit Sharing effect2

—

(230)

Non-GAAP adjusted SG&A expenses

$ 67,906

$ 48,823

As a percent of sales

13.7 %

15.2 %

1The incentive fee relates to fees payable to our real estate broker associated with the acquisition of our Memphis, Tenn. plant for a percentage of the incentives awarded to us by various entities.

2Profit sharing effect of the Memphis incentive fee in the respective period.

View original content to download multimedia:https://www.prnewswire.com/news-releases/aaon-reports-first-quarter-2026-results-with-record-sales-and-backlog-robust-earnings-growth-and-raises-full-year-guidance-302765303.html

SOURCE AAON

Technology

Tetrous® Wins “Most Exciting New Product” Award at Shoulder 360™

Published

6 hours ago

May 7, 2026

Following its ACE (Advancing Cutting-Edge) Award win in 2024, Tetrous is recognized once again, this time by Shoulder 360™ for its EnFix® product line.

LOS ANGELES, May 7, 2026 /PRNewswire/ — Tetrous, Inc., an emerging leader in orthopedic sports medicine innovation, today announced it has been awarded “Most Exciting New Product” at Shoulder 360, recognizing the company’s continued advancement in solutions for bone-to-tendon healing.

This latest honor builds on Tetrous’ earlier recognition at the AOSSM Annual Meeting, where the company received the prestigious ACE (Advancing Cutting-Edge) Award in 2024—a distinction given to breakthrough technologies with the potential to meaningfully improve patient outcomes in sports medicine. Shoulder 360™ is the pre-eminent forum meeting annually to educate the spectrum of health care providers caring for patients with shoulder disorders.

Tetrous’ product line, including EnFix RC®, EnFix TAC-O®, EnFix TAC-T®, and EnFix ACL™, is designed to address longstanding challenges in orthopedic soft tissue repair, particularly in procedures such as rotator cuff repair, where failure rates remain a significant concern. Restoring the bone-to-tendon interface, known as the enthesis, ultimately determines healing and long-term success.

Tetrous offers the only demineralized bone fiber (DBF) implant designed specifically for placement within bone at the bone-tendon interface, supplying the biological drivers for repair. When the mineral component is removed from allograft bone, the bone morphogenic proteins (i.e. growth factors) are exposed, allowing them to help stimulate new tissue formation. The peg design of EnFix allows surgeons to place the implant directly into the bone at the repair site, while the internal cannulation allows bone marrow cells to access the implant and initiate healing.

Significant Commercial Progress
Since receiving its prior “technology” award, Tetrous has demonstrated significant commercial and clinical progress:

Expanded to more than 100 surgeon users with three times year over year surgeon growthSurpassed 3,500 implanted devices, reflecting strong clinical adoptionExpanded clinical use of EnFix across multiple anatomical enthesesCompleted first cases with EnFix ACL for Anterior Cruciate Ligament ReconstructionScaled distribution internationally, with active markets in the United States, Australia, and New Zealand, and planned expansion into Taiwan

Raffy Mirzayan, MD, DOCS Health, Clinical Professor of Orthopaedic Surgery at USC Keck School of Medicine, Los Angeles, and Co-Founder of Shoulder360 said: “Shoulder360 was proud to award the ‘Most Exciting New Product/Service Award’ for 2026 to Tetrous. The winner of the award is voted on by surgeon attendees. Tetrous stood out for its efforts to highlight Enthesis healing with its exciting new EnFix product.”

“The rapid pace of adoption we’ve seen in the past year is incredibly encouraging,” said John Bojanowski, Director and Chief Commercial Officer. “Surpassing 3,500 implants and expanding internationally are strong indicators that surgeons recognize the value of what Tetrous is bringing to the OR.”

“Our recognition at Shoulder 360 reflects the growing confidence from surgeons who are recognizing that we have introduced a differentiated solution that can complete the healing triad of (a) fixation, (b) structure and, now with Tetrous, (c) biology – leading to better outcomes for patients,” said Bradley Patt, PhD, Co-founder, Director and CEO.

About Tetrous, Inc.
Founded in 2019, Tetrous, Inc. utilizes next generation advanced technologies for enthesis repair in sports medicine applications. The EnFix family of demineralized bone fiber implants includes EnFix RC®, EnFix TAC® and EnFix ACL™, designed to enhance the natural healing response by supporting biologic reformation at the bone-to-tendon junction. By focusing on clinically validated technologies that reduce failure rates, accelerate recovery, and restore function, Tetrous is helping surgeons achieve consistent, evidence-based results that translate into both short-term return to normal activities and long-term positive outcomes for patients.

Tetrous enjoys significant IP protection for its EnFix family of products with multiple issued patents and, additionally, has an exclusive license to the demineralized bone fiber technology used in its products for sports medicine applications from TheraCell, an ISTO Biologics Company.

Tetrous®, EnFix®, EnFix RC®, EnFix TAC® and EnFix ACL™ are trademarks of Tetrous, Inc.

For more information visit Tetrous, Inc., and follow us on LinkedIn.

Media Contact:
Ronda Taylor
Tetrous, Inc.
331-307-7499
rtaylor@tetrous.com

Product Information:
John Bojanowski
Tetrous, Inc.
331-307-7499
jbojanowski@tetrous.com

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SOURCE Tetrous