Technology
Digital Realty Reports Second Quarter 2024 Results
Published
2 years agoon
By
AUSTIN, Texas, July 25, 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 second quarter of 2024. All per share results are presented on a fully diluted basis.
Highlights
Reported net income available to common stockholders of $0.20 per share in 2Q24, compared to $0.34 in 2Q23Reported FFO per share of $1.57 in 2Q24, compared to $1.52 in 2Q23Reported Core FFO per share of $1.65 in 2Q24, compared to $1.68 in 2Q23Reported rental rate increases on renewal leases of 4.0% on a cash basis in 2Q24Signed total bookings during 2Q24 that are expected to generate $164 million of annualized GAAP rental revenue, including a $40 million contribution from the 0–1 megawatt category and $14 million contribution from interconnectionMaintained 2024 Core FFO per share outlook of $6.60 – $6.75
Financial Results
Digital Realty reported revenues of $1.4 billion in the second quarter of 2024, a 2% increase from the previous quarter and a 1% decrease from the same quarter last year.
The company delivered net income of $75 million in the second quarter of 2024, and net income available to common stockholders of $70 million, or $0.20 per diluted share, compared to $0.82 per diluted share in the previous quarter and $0.34 per diluted share in the same quarter last year.
Digital Realty generated Adjusted EBITDA of $727 million in the second quarter of 2024, a 2% increase from the previous quarter and a 4% increase over the same quarter last year.
The company reported Funds From Operations (FFO) of $511 million in the second quarter of 2024, or $1.57 per share, compared to $1.41 per share in the previous quarter and $1.52 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 $1.65 in the second quarter of 2024, compared to $1.67 per share in the previous quarter and $1.68 per share in the same quarter last year. Digital Realty delivered Constant-Currency Core FFO per share of $1.66 for the second quarter of 2024 and $3.33 per share for the six-month period ended June 30, 2024.
“Digital Realty’s second quarter results reflect the continued strength of demand for data center capacity, along with a keen focus on our value proposition,” said Digital Realty President & Chief Executive Officer Andy Power. “We have returned our balance sheet to below-target leverage levels and broadened our capital sources to capitalize on the global opportunity we see for data center infrastructure.”
Leasing Activity
In the second quarter, Digital Realty signed total bookings that are expected to generate $164 million of annualized GAAP rental revenue, including a $40 million contribution from the 0–1 megawatt category and a $14 million contribution from interconnection.
The weighted-average lag between new leases signed during the second quarter of 2024 and the contractual commencement date was 20 months.
In addition to new leases signed, Digital Realty also signed renewal leases representing $215 million of annualized cash rental revenue during the quarter. Rental rates on renewal leases signed during the second quarter of 2024 increased 4.0% on a cash basis and 7.5% on a GAAP basis.
New leases signed during the second quarter of 2024 are summarized by region and product as follows:
Annualized GAAP
Base Rent
Square Feet
GAAP Base Rent
GAAP Base Rent
Americas
(in thousands)
(in thousands)
per Square Foot
Megawatts
per Kilowatt
0-1 MW
$13,980
58
$239
4.4
$263
> 1 MW
87,212
359
243
49.8
146
Other (1)
183
6
32
—
—
Total
$101,375
423
$239
54.2
$155
EMEA (2)
0-1 MW
$19,397
48
$406
4.9
$331
> 1 MW
14,309
80
178
7.6
158
Other (1)
37
4
10
—
—
Total
$33,743
132
$256
12.4
$226
Asia Pacific (2)
0-1 MW
$6,264
20
$316
1.7
$304
> 1 MW
8,728
27
327
2.8
264
Other (1)
129
1
118
—
—
Total
$15,121
48
$318
4.5
$279
All Regions (2)
0-1 MW
$39,642
126
$315
11.0
$299
> 1 MW
110,249
466
236
60.1
153
Other (1)
349
10
34
—
—
Total
$150,239
603
$249
71.1
$176
Interconnection
$14,011
N/A
N/A
N/A
N/A
Grand Total
$164,250
603
$249
71.1
$176
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 June 30, 2024.
Investment Activity
As previously disclosed, Digital Realty closed on the sale to Digital Core REIT (SGX: DCRU) of an additional 24.9% interest in a data center facility located in Frankfurt, Germany for €117 million, or approximately $125 million. The transaction valued the Frankfurt facility at €470 million, or approximately $504 million (at 100% share).
Also previously disclosed, Digital Realty expanded its existing joint venture with GI Partners in Chicago, with the sale of a 75% interest in a third stabilized hyperscale data center that is situated on the same campus as two stabilized hyperscale data centers that were contributed to the joint venture with GI Partners in July 2023. Digital Realty received approximately $388 million of gross proceeds and maintained a 25% interest in the joint venture.
During the quarter, Digital Realty acquired a 4.1-acre parcel of land in Amsterdam, near one of its existing campuses for approximately €7.4 million or $7.9 million. The site comprises approximately 70,000 square feet leased to local tenants and approximately 39,000 square feet of land which will be used to develop a new high voltage substation to drive growth at the campus and optimize the use of a previously acquired land plot in the vicinity.
Also during the quarter, Digital Realty liquidated its 17% interest in Colovore, generating gross proceeds of approximately $35 million. Digital Realty realized a gain of approximately $27 million on its original investments, made in 2015 and 2017.
Subsequent to quarter end, and as previously disclosed, Digital Realty closed on its purchase option to acquire two data centers located in the Slough Trading Estate for $200 million. The two stabilized data centers offer a combined 15 MW of IT load, with an established community of 150+ customers, including a broad array of connectivity providers, technology companies, and financial services firms, utilizing over 2,000 cross connects. The acquisition marked Digital Realty’s entry into the west London, UK submarket, complementing Digital Realty’s existing colocation capabilities in the City and the Docklands.
Balance Sheet
Digital Realty had approximately $16.3 billion of total debt outstanding as of June 30, 2024, comprised of $15.6 billion of unsecured debt and approximately $0.7 billion of secured debt and other. At the end of the second quarter of 2024, net debt-to-Adjusted EBITDA was 5.3x, debt-plus-preferred-to-total enterprise value was 25.3% and fixed charge coverage was 4.1x.
Digital Realty completed the following financing transactions during the second quarter:
In April, the company repaid €600 million ($647 million) in aggregate principal amount of its 2.625% senior notes;In May, Digital Realty sold 12.1 million shares of common stock at $144.63 per share pursuant to a follow-on equity offering, raising $1.65 billion of net proceeds; andThe company also sold 1.2 million shares of common stock under its At-The-Market (ATM) equity issuance program at a weighted average price of $148.99 per share, for net proceeds of approximately $177 million.
Subsequent to quarter end, the company sold an additional 1.4 million shares of common stock under its ATM program at a weighted average price of $152.77 per share, for net proceeds of approximately $219 million. In July, the company also repaid £250 million ($316 million) in aggregate principal amount of its 2.75% senior notes.
2024 Outlook
Digital Realty maintained its 2024 Core FFO per share and Constant-Currency Core FFO per share outlook of $6.60 – $6.75. The assumptions underlying the outlook are summarized in the following table.
As of
As of
As of
Top-Line and Cost Structure
February 15, 2024
May 2, 2024
July 25, 2024
Total revenue
$5.550 – $5.650 billion
$5.550 – $5.650 billion
$5.550 – $5.650 billion
Net non-cash rent adjustments (1)
($35 – $40 million)
($35 – $40 million)
($35 – $40 million)
Adjusted EBITDA
$2.800 – $2.900 billion
$2.800 – $2.900 billion
$2.800 – $2.900 billion
G&A
$450 – $460 million
$450 – $460 million
$450 – $460 million
Internal Growth
Rental rates on renewal leases
Cash basis
4.0% – 6.0%
5.0% – 7.0%
5.0% – 7.0%
GAAP basis
6.0% – 8.0%
7.0% – 9.0%
7.0% – 9.0%
Year-end portfolio occupancy
+100 – 200 bps
+100 – 200 bps
+100 – 200 bps
“Same-Capital” cash NOI growth (2)
2.0% – 3.0%
2.5% – 3.5%
2.5% – 3.5%
Foreign Exchange Rates
U.S. Dollar / Pound Sterling
$1.25 – $1.30
$1.25 – $1.30
$1.25 – $1.30
U.S. Dollar / Euro
$1.05 – $1.10
$1.05 – $1.10
$1.05 – $1.10
External Growth
Dispositions / Joint Venture Capital
Dollar volume
$1,000 – $1,500 million
$1,000 – $1,500 million
$1,000 – $1,500 million
Cap rate
6.0% – 8.0%
6.0% – 8.0%
6.0% – 8.0%
Development
CapEx (Net of Partner Contributions) (3)
$2,000 – $2,500 million
$2,000 – $2,500 million
$2,000 – $2,500 million
Average stabilized yields
10.0%+
10.0%+
10.0%+
Enhancements and other non-recurring CapEx (4)
$15 – $20 million
$15 – $20 million
$15 – $20 million
Recurring CapEx + capitalized leasing costs (5)
$260 – $275 million
$260 – $275 million
$260 – $275 million
Balance Sheet
Long-term debt issuance
Dollar amount
$0 – $1,000 million
$0 – $1,000 million
$0 – $1,000 million
Pricing
5.0% – 5.5%
5.0% – 5.5%
5.0% – 5.5%
Timing
Mid-Year
Mid-Year
Mid-Year
Net income per diluted share
$1.80 – $1.95
$1.80 – $1.95
$1.40 – $1.55
Real estate depreciation and (gain) / loss on sale
$4.40 – $4.40
$4.40 – $4.40
$4.75 – $4.75
Funds From Operations / share (NAREIT-Defined)
$6.20 – $6.35
$6.20 – $6.35
$6.15 – $6.30
Non-core expenses and revenue streams
$0.40 – $0.40
$0.40 – $0.40
$0.45 – $0.45
Core Funds From Operations / share
$6.60 – $6.75
$6.60 – $6.75
$6.60 – $6.75
Foreign currency translation adjustments
$0.00 – $0.00
$0.00 – $0.00
$0.00 – $0.00
Constant-Currency Core Funds From Operations / share
$6.60 – $6.75
$6.60 – $6.75
$6.60 – $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 July 25, 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 second 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# 2977783 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 August 25, 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# 2171709. 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
(737) 281-0101
Jordan Sadler / Jim Huseby
Investor Relations
Digital Realty
(737) 281-0101
Consolidated Quarterly Statements of Operations
Second Quarter 2024
Unaudited and in Thousands, Except Per Share Data
Three Months Ended
Six Months Ended
30-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
30-Jun-23
30-Jun-24
30-Jun-23
Rental revenues
$912,994
$894,409
$885,694
$886,960
$869,298
$1,807,402
$1,740,273
Tenant reimbursements – Utilities
274,505
276,357
316,634
335,477
330,416
550,862
647,565
Tenant reimbursements – Other
41,964
38,434
46,418
64,876
46,192
80,398
86,342
Interconnection & other
109,505
108,071
106,413
107,305
104,521
217,576
206,216
Fee income
15,656
13,010
14,330
7,819
14,908
28,666
22,777
Other
2,125
862
144
—
932
2,987
1,819
Total Operating Revenues
$1,356,749
$1,331,143
$1,369,633
$1,402,437
$1,366,267
$2,687,892
$2,704,991
Utilities
$315,248
$324,571
$366,083
$384,455
$374,934
$639,818
$721,298
Rental property operating
237,653
224,369
237,118
223,089
224,762
462,021
449,623
Property taxes
49,620
41,156
40,161
72,279
46,718
90,776
87,141
Insurance
4,755
2,694
3,794
4,289
4,385
7,449
8,739
Depreciation & amortization
425,343
431,102
420,475
420,613
432,573
856,445
853,771
General & administration
119,511
114,419
109,235
108,039
105,964
233,931
213,730
Severance, equity acceleration and legal expenses
884
791
7,565
2,682
3,652
1,675
7,807
Transaction and integration expenses
26,072
31,839
40,226
14,465
17,764
57,911
30,031
Provision for impairment
168,303
—
5,363
113,000
—
168,303
—
Other expenses
(529)
10,836
5,580
1,295
655
10,306
655
Total Operating Expenses
$1,346,860
$1,181,776
$1,235,598
$1,344,206
$1,211,407
$2,528,636
$2,372,795
Operating Income
$9,889
$149,367
$134,035
$58,231
$154,860
$159,256
$332,196
Equity in earnings / (loss) of unconsolidated joint ventures
(41,443)
(16,008)
(29,955)
(19,793)
5,059
(57,451)
19,957
Gain / (loss) on sale of investments
173,709
277,787
(103)
810,688
89,946
451,496
89,946
Interest and other income / (expense), net
62,261
9,709
50,269
24,812
(6,930)
71,970
(6,650)
Interest (expense)
(114,756)
(109,535)
(113,638)
(110,767)
(111,116)
(224,291)
(213,336)
Income tax benefit / (expense)
(14,992)
(22,413)
(20,724)
(17,228)
(16,173)
(37,405)
(37,627)
Loss from early extinguishment of debt
—
(1,070)
—
—
—
(1,070)
—
Net Income
$74,668
$287,837
$19,884
$745,941
$115,647
$362,505
$184,486
Net (income) / loss attributable to noncontrolling interests
5,552
(6,329)
8,419
(12,320)
2,538
(777)
2,427
Net Income Attributable to Digital Realty Trust, Inc.
$80,220
$281,508
$28,304
$733,621
$118,185
$361,728
$186,913
Preferred stock dividends
(10,181)
(10,181)
(10,181)
(10,181)
(10,181)
(20,363)
(20,363)
Net Income / (Loss) Available to Common Stockholders
$70,039
$271,327
$18,122
$723,440
$108,003
$341,366
$166,550
Weighted-average shares outstanding – basic
319,537
312,292
305,781
301,827
295,390
315,915
293,316
Weighted-average shares outstanding – diluted
327,946
320,798
314,995
311,341
306,819
324,451
304,452
Weighted-average fully diluted shares and units
334,186
326,975
321,173
317,539
313,022
330,687
310,588
Net income / (loss) per share – basic
$0.22
$0.87
$0.06
$2.40
$0.37
$1.08
$0.57
Net income / (loss) per share – diluted (1)
$0.20
$0.82
$0.03
$2.31
$0.34
$1.01
$0.52
(1)
The Company has made an adjustment to previously reported amounts to correct an immaterial error in the computation of fully diluted earnings per share in each of the interim periods ended June 30, 2023, September 30, 2023, and December 31, 2023. This adjustment does not impact any of the other diluted measures per share for FFO, Core FFO or Adjusted FFO.
Funds From Operations and Core Funds From Operations
Second Quarter 2024
Unaudited and in Thousands, Except Per Share Data
Three Months Ended
Six Months Ended
Reconciliation of Net Income to Funds From Operations (FFO)
30-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
30-Jun-23
30-Jun-24
30-Jun-23
Net Income / (Loss) Available to Common Stockholders
$70,039
$271,327
$18,122
$723,440
$108,003
$341,366
$166,550
Adjustments:
Non-controlling interest in operating partnership
1,500
6,200
410
16,300
2,500
7,700
4,000
Real estate related depreciation & amortization (1)
414,920
420,591
410,167
410,836
424,044
835,511
836,236
Reconciling items related to non-controlling interests
(17,317)
(8,017)
(15,377)
(14,569)
(14,144)
(25,335)
(27,532)
Unconsolidated JV real estate related depreciation & amortization
47,117
47,877
64,833
43,215
35,386
94,993
69,105
(Gain) / loss on real estate transactions
(173,709)
(286,704)
103
(810,688)
(89,946)
(460,413)
(97,771)
Provision for impairment
168,303
—
5,363
113,000
—
168,303
—
Funds From Operations
$510,852
$451,273
$483,621
$481,535
$465,844
$962,125
$950,589
Weighted-average shares and units outstanding – basic
325,777
318,469
311,960
308,024
301,593
322,151
299,452
Weighted-average shares and units outstanding – diluted (2) (3)
334,186
326,975
321,173
317,539
313,022
330,687
310,588
Funds From Operations per share – basic
$1.57
$1.42
$1.55
$1.56
$1.54
$2.99
$3.17
Funds From Operations per share – diluted (2) (3)
$1.57
$1.41
$1.53
$1.55
$1.52
$2.98
$3.13
Three Months Ended
Six Months Ended
Reconciliation of FFO to Core FFO
30-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
30-Jun-23
30-Jun-24
30-Jun-23
Funds From Operations
$510,852
$451,273
$483,621
$481,535
$465,844
$962,125
$950,589
Other non-core revenue adjustments (4)
(33,818)
3,525
(146)
(27)
27,454
(30,293)
26,566
Transaction and integration expenses
26,072
31,839
40,226
14,465
17,764
57,911
30,031
Loss from early extinguishment of debt
—
1,070
—
—
—
1,070
—
Severance, equity acceleration and legal expenses (5)
884
791
7,565
2,682
3,652
1,675
7,807
(Gain) / Loss on FX revaluation
32,222
33,602
(24,804)
451
(7,868)
65,824
(14,647)
Other non-core expense adjustments (6)
2,271
10,052
1,956
1,295
655
12,323
655
Core Funds From Operations
$538,482
$532,153
$508,417
$500,402
$507,501
$1,070,634
$1,001,001
Weighted-average shares and units outstanding – diluted (2) (3)
326,181
319,138
312,356
308,539
301,806
322,619
299,730
Core Funds From Operations per share – diluted (2)
$1.65
$1.67
$1.63
$1.62
$1.68
$3.32
$3.34
(1) Real Estate Related Depreciation & Amortization
Three Months Ended
Six Months Ended
30-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
30-Jun-23
30-Jun-24
30-Jun-23
Depreciation & amortization per income statement
$425,343
$431,102
$420,475
$420,613
$432,573
$856,445
$853,771
Non-real estate depreciation
(10,424)
(10,511)
(10,308)
(9,777)
(8,529)
(20,935)
(17,535)
Real Estate Related Depreciation & Amortization
$414,920
$420,591
$410,167
$410,836
$424,044
$835,511
$836,236
(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
Six Months Ended
30-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
30-Jun-23
30-Jun-24
30-Jun-23
Teraco noncontrolling share of FFO
$12,453
$9,768
$7,135
$11,537
$9,645
$22,221
$20,714
Teraco related minority interest
$12,453
$9,768
$7,135
$11,537
$9,645
$22,221
$20,714
(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)
Second Quarter 2024
Unaudited and in Thousands, Except Per Share Data
Three Months Ended
Six Months Ended
Reconciliation of Core FFO to AFFO
30-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
30-Jun-23
30-Jun-24
30-Jun-23
Core FFO available to common stockholders and unitholders
$538,482
$532,153
$508,417
$500,402
$507,501
$1,070,634
$1,001,001
Adjustments:
Non-real estate depreciation
10,424
10,511
10,308
9,777
8,529
20,935
17,535
Amortization of deferred financing costs
5,072
5,576
5,744
5,776
5,984
10,648
10,056
Amortization of debt discount/premium
1,321
1,832
973
1,360
1,339
3,153
2,640
Non-cash stock-based compensation expense
14,464
12,592
9,226
14,062
13,893
27,056
26,949
Straight-line rental revenue
334
9,976
(21,992)
(14,080)
(16,151)
10,310
(32,344)
Straight-line rental expense
782
1,111
(4,999)
1,427
520
1,893
5
Above- and below-market rent amortization
(1,691)
(854)
(856)
(1,127)
(1,195)
(2,545)
(2,421)
Deferred tax (benefit) / expense
(9,982)
(3,437)
33,448
(8,539)
1,339
(13,420)
(8,456)
Leasing compensation & internal lease commissions
10,519
13,291
9,848
12,515
11,611
23,809
22,678
Recurring capital expenditures (1)
(60,483)
(47,676)
(142,808)
(90,251)
(53,498)
(108,159)
(93,963)
AFFO available to common stockholders and unitholders (2)
$509,241
$535,073
$407,306
$431,322
$479,873
$1,044,314
$943,679
Weighted-average shares and units outstanding – basic
325,777
318,469
311,960
308,024
301,593
322,151
299,452
Weighted-average shares and units outstanding – diluted (3)
326,181
319,138
312,356
308,539
301,806
322,619
299,730
AFFO per share – diluted (3)
$1.56
$1.68
$1.30
$1.40
$1.59
$3.24
$3.15
Dividends per share and common unit
$1.22
$1.22
$1.22
$1.22
$1.22
$2.44
$2.44
Diluted AFFO Payout Ratio
78.1 %
72.8 %
93.6 %
87.3 %
76.7 %
75.4 %
77.5 %
Three Months Ended
Six Months Ended
Share Count Detail
30-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
30-Jun-23
30-Jun-24
30-Jun-23
Weighted Average Common Stock and Units Outstanding
325,777
318,469
311,960
308,024
301,593
322,151
299,452
Add: Effect of dilutive securities
404
669
396
515
213
467
278
Weighted Avg. Common Stock and Units Outstanding – diluted
326,181
319,138
312,356
308,539
301,806
322,618
299,730
(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
Second Quarter 2024
Unaudited and in Thousands, Except Per Share Data
30-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
30-Jun-23
Assets
Investments in real estate:
Real estate
$27,470,635
$27,122,796
$27,306,369
$25,887,031
$27,087,769
Construction in progress
4,676,012
4,496,840
4,635,215
5,020,464
4,635,939
Land held for future development
93,938
114,240
118,190
179,959
193,936
Investments in Real Estate
$32,240,584
$31,733,877
$32,059,773
$31,087,453
$31,917,644
Accumulated depreciation and amortization
(8,303,070)
(7,976,093)
(7,823,685)
(7,489,193)
(7,739,462)
Net Investments in Properties
$23,937,514
$23,757,784
$24,236,089
$23,598,260
$24,178,182
Investment in unconsolidated joint ventures
2,332,698
2,365,821
2,295,889
2,180,313
2,040,452
Net Investments in Real Estate
$26,270,212
$26,123,605
$26,531,977
$25,778,573
$26,218,634
Operating lease right-of-use assets, net
$1,211,003
$1,233,410
$1,414,256
$1,274,410
$1,291,233
Cash and cash equivalents
2,282,062
1,193,784
1,625,495
1,062,050
124,519
Accounts and other receivables, net (1)
1,222,403
1,217,276
1,278,110
1,325,725
1,158,383
Deferred rent, net
613,749
611,670
624,427
586,418
613,796
Goodwill
9,128,811
9,105,026
9,239,871
8,998,074
9,148,603
Customer relationship value, deferred leasing costs & other intangibles, net
2,315,143
2,359,380
2,500,237
2,506,198
2,825,596
Assets held for sale
—
287,064
478,503
—
593,892
Other assets
563,500
501,875
420,382
401,068
414,078
Total Assets
$43,606,883
$42,633,089
$44,113,257
$41,932,515
$42,388,735
Liabilities and Equity
Global unsecured revolving credit facilities, net
$1,848,167
$1,901,126
$1,812,287
$1,698,780
$2,242,258
Unsecured term loans, net
1,297,893
1,303,263
1,560,305
1,524,663
1,548,780
Unsecured senior notes, net of discount
12,507,551
13,190,202
13,422,342
13,072,102
13,383,819
Secured and other debt, net of discount
686,135
625,750
630,973
574,231
554,594
Operating lease liabilities
1,336,839
1,357,751
1,542,094
1,404,510
1,420,239
Accounts payable and other accrued liabilities
1,973,798
1,870,344
2,168,983
2,147,103
2,214,820
Deferred tax liabilities, net
1,132,090
1,121,224
1,151,096
1,088,724
1,128,961
Accrued dividends and distributions
—
—
387,988
—
—
Security deposits and prepaid rents
416,705
413,225
401,867
385,521
417,693
Obligations associated with assets held for sale
—
9,981
39,001
—
4,990
Total Liabilities
$21,199,178
$21,792,866
$23,116,936
$21,895,634
$22,916,155
Redeemable non-controlling interests
1,399,889
1,350,736
1,394,814
1,360,308
1,367,422
Equity
Preferred Stock: $0.01 par value per share, 110,000 shares authorized:
Series J Cumulative Redeemable Preferred Stock (2)
$193,540
$193,540
$193,540
$193,540
$193,540
Series K Cumulative Redeemable Preferred Stock (3)
203,264
203,264
203,264
203,264
203,264
Series L Cumulative Redeemable Preferred Stock (4)
334,886
334,886
334,886
334,886
334,886
Common Stock: $0.01 par value per share, 392,000 shares authorized (5)
3,231
3,097
3,088
3,002
2,967
Additional paid-in capital
26,388,393
24,508,683
24,396,797
23,239,088
22,882,200
Dividends in excess of earnings
(5,701,096)
(5,373,529)
(5,262,648)
(4,900,757)
(5,253,915)
Accumulated other comprehensive (loss), net
(884,715)
(850,091)
(751,393)
(882,996)
(741,484)
Total Stockholders’ Equity
$20,537,503
$19,019,850
$19,117,535
$18,190,026
$17,621,456
Noncontrolling Interests
Noncontrolling interest in operating partnership
$434,253
$438,422
$438,081
$441,366
$436,099
Noncontrolling interest in consolidated joint ventures
36,060
31,215
45,892
45,182
47,603
Total Noncontrolling Interests
$470,313
$469,637
$483,972
$486,547
$483,702
Total Equity
$21,007,816
$19,489,487
$19,601,507
$18,676,573
$18,105,158
Total Liabilities and Equity
$43,606,883
$42,633,089
$44,113,257
$41,932,515
$42,388,735
(1)
Net of allowance for doubtful accounts of $50,609 and $42,624 as of June 30, 2024 and June 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 June 30, 2024 and June 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 June 30, 2024 and June 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 June 30, 2024 and June 30, 2023.
(5)
Common Stock: 325,885 and 299,240 shares issued and outstanding as of June 30, 2024 and June 30, 2023, respectively.
Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization and Financial Ratios
Second Quarter 2024
Unaudited and Dollars in Thousands
Three Months Ended
Reconciliation of Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) (1)
30-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
30-Jun-23
Net Income / (Loss) Available to Common Stockholders
$70,039
$271,327
$18,122
$723,440
$108,003
Interest
114,756
109,535
113,638
110,767
111,116
Loss from early extinguishment of debt
—
1,070
—
—
—
Income tax expense (benefit)
14,992
22,413
20,724
17,228
16,173
Depreciation & amortization
425,343
431,102
420,475
420,613
432,573
EBITDA
$625,130
$835,446
$572,958
$1,272,048
$667,866
Unconsolidated JV real estate related depreciation & amortization
47,117
47,877
64,833
43,214
35,386
Unconsolidated JV interest expense and tax expense
27,704
34,271
42,140
27,000
32,105
Severance, equity acceleration and legal expenses
884
791
7,565
2,682
3,652
Transaction and integration expenses
26,072
31,839
40,226
14,465
17,764
(Gain) / loss on sale of investments
(173,709)
(277,787)
103
(810,688)
(89,946)
Provision for impairment
168,303
—
5,363
113,000
—
Other non-core adjustments, net (2)
743
21,608
(35,439)
1,719
22,132
Non-controlling interests
(5,552)
6,329
(8,419)
12,320
(2,538)
Preferred stock dividends
10,181
10,181
10,181
10,181
10,181
Adjusted EBITDA
$726,874
$710,556
$699,509
$685,943
$696,604
(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-Jun-24
31-Mar-24
31-Dec-23
30-Sep-23
30-Jun-23
Total GAAP interest expense
$114,756
$109,535
$113,638
$110,767
$111,116
Capitalized interest
27,592
28,522
33,032
29,130
27,883
Change in accrued interest and other non-cash amounts
(55,605)
55,421
(66,013)
44,183
(60,612)
Cash Interest Expense (3)
$86,743
$193,479
$80,657
$184,081
$78,387
Preferred stock dividends
10,181
10,181
10,181
10,181
10,181
Total Fixed Charges (4)
$152,529
$148,239
$156,851
$150,079
$149,181
Coverage
Interest coverage ratio (5)
4.3x
4.3x
4.0x
4.3x
4.5x
Cash interest coverage ratio (6)
6.4x
3.2x
6.4x
3.4x
7.4x
Fixed charge coverage ratio (7)
4.1x
4.0x
3.8x
4.1x
4.2x
Cash fixed charge coverage ratio (8)
5.9x
3.1x
5.8x
3.2x
6.6x
Leverage
Debt to total enterprise value (9)(10)
24.2 %
26.7 %
28.6 %
30.6 %
33.3 %
Debt-plus-preferred-stock-to-total-enterprise-value (10)(11)
25.3 %
27.9 %
29.8 %
32.0 %
34.7 %
Pre-tax income to interest expense (12)
1.7x
3.6x
1.2x
7.7x
2.0x
Net Debt-to-Adjusted EBITDA (13)
5.3x
6.1x
6.2x
6.3x
6.8x
(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
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.
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 from early extinguishment of debt, (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.
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.
We believe that earnings before interest, loss from early extinguishment of debt, 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, (vii) 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, 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 June 30, 2024, GAAP interest expense was $115 million, capitalized interest was $28 million and preferred stock dividends was $10 million.
Reconciliation of Net Operating Income (NOI)
Three Months Ended
Six Months Ended
(in thousands)
30-Jun-24
31-Mar-24
30-Jun-23
30-Jun-24
30-Jun-23
Operating income
$9,889
$149,367
$154,860
$159,256
$332,196
Fee income
(15,656)
(13,010)
(14,908)
(28,666)
(22,777)
Other income
(2,125)
(862)
(932)
(2,987)
(1,819)
Depreciation and amortization
425,343
431,102
432,573
856,445
853,771
General and administrative
119,511
114,419
105,964
233,931
213,730
Severance, equity acceleration and legal expenses
884
791
3,652
1,675
7,807
Transaction expenses
26,072
31,839
17,764
57,911
30,031
Provision for impairment
168,303
—
—
168,303
—
Other expenses
(529)
10,836
655
10,306
655
Net Operating Income
$731,692
$724,482
$699,629
$1,456,175
$1,413,594
Cash Net Operating Income (Cash NOI)
Net Operating Income
$731,692
$724,482
$699,629
$1,456,175
$1,413,594
Straight-line rental revenue
(2,873)
(2,522)
12,116
(5,395)
(3,815)
Straight-line rental expense
959
1,369
722
2,328
212
Above- and below-market rent amortization
(1,691)
(854)
(1,195)
(2,545)
(2,421)
Cash Net Operating Income
$728,088
$722,474
$711,272
$1,450,563
$1,407,570
Constant Currency CFFO Reconciliation
Three Months Ended
Six Months Ended
(in thousands, except per share data)
30-Jun-24
30-Jun-23
30-Jun-24
30-Jun-23
Core FFO (1)
$538,482
$507,501
$1,070,634
$1,001,001
Core FFO impact of holding ’23 Exchange Rates Constant (2)
3,841
—
5,180
—
Constant Currency Core FFO
$542,323
$507,501
$1,075,814
$1,001,001
Weighted-average shares and units outstanding – diluted
326,181
301,806
322,619
299,730
Constant Currency CFFO Per Share
$1.66
$1.68
$3.33
$3.34
1)
As reconciled to net income above.
2)
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;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;our ability to attract and retain customers;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;our inability to retain data center space that we lease or sublease from third parties;global supply chain or procurement disruptions, or increased supply chain costs;information security and data privacy breaches;difficulty 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 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;impact on our operations and on the operations of our customers, suppliers, and business partners during a pandemic, such as COVID-19;the expected operating performance of anticipated near-term acquisitions and descriptions relating to these expectations;environmental liabilities, risks related to natural disasters and our inability to achieve our sustainability goals;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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Technology
AudioEye Reports Record Third Quarter 2026 Results
Published
33 minutes agoon
October 26, 2026By
Third quarter GAAP net income profitability of $1 million with expectation of increased profitability in the fourth quarter
Third quarter adjusted EBITDA up 58% year over year, and the fourth quarter expected to be up 56% year over year
Sequential annualized fourth quarter revenue growth expected of approximately 20%
TUCSON, Ariz., Oct 26, 2026 /PRNewswire/ — AudioEye, Inc. (Nasdaq: AEYE) (“AudioEye” or the “Company”), an industry-leading digital accessibility company, reported financial results for the third quarter ended September 30, 2026.
“Starting in 2025 we set an aspirational goal of producing 30-40% annual growth over three years in adjusted EBITDA and adjusted EPS. In the second year, we are on track to exceed this goal with approximately 50% year-over-year growth while also generating GAAP profitability in the third quarter. In Q3 gross margins also improved by over 550 basis points to 83%, with an adjusted gross margin of 88%. We are increasing adjusted EBITDA guidance, and we now expect to generate over $17 million of annualized adjusted EBITDA in the fourth quarter with continued GAAP profitability. We also expect to generate significant cash going forward and recently announced a stock repurchase program of $15 million, which represents 15% of the outstanding shares at current prices,” said Kelly Georgevich, Chief Executive Officer of AudioEye. “The business is strong, and we expect annualized sequential revenue growth of approximately 20% in the fourth quarter, contributing to increased operating leverage.”
Georgevich continued, “In October, we launched two new AI products, Agentic Audits and the AudioEye SDK MCP, both powered by AudioEye Intelligence, our proprietary dataset built from more than one million human reviews over a decade. We expect that these new tools will improve our industry leading legal protection rate even further.”
Third Quarter 2026 Financial Results
Total revenue increased 7% to a record $11.0M from $10.2M in the same prior year period. During 2026, the Company has reduced its emphasis on non-recurring revenue to focus on growing Annual Recurring Revenue (“ARR”), which grew 12% in the third quarter over the same prior year period.Gross profit increased to $9.1M (83% of total revenue) from $7.9M (77% of total revenue) in the same prior year period. The increase in gross profit was driven by higher sales and efficiencies including AI use.Adjusted gross margin was 88% in the third quarter of 2026 compared to 83% in the same prior year period. Adjusted gross margin is defined as gross margin adjusted for non-cash items such as stock-based compensation and depreciation and amortization expenses in cost of revenue.Operating expenses were $7.8M, a decrease of 5% from the comparable prior year period. The decrease was primarily due to lower sales and marketing expenses as well as reduced research and development expenses driven by AI efficiencies.Net income was $1.0M, or $0.08 per diluted share, compared to a net loss of $(0.6M), or $(0.04) per diluted share, in the same prior year period. The change was primarily due to higher gross profit and lower operating expenses.Adjusted EBITDA was $3.9M, and adjusted EPS was $0.30 per diluted share, compared to adjusted EBITDA of $2.5M and adjusted EPS of $0.19 per diluted share in the same prior year period. For Q3 2026, the adjusted EBITDA and adjusted EPS results reflect adjustments primarily for stock-based compensation expense, depreciation and amortization, litigation expense, and interest expense.ARR as of September 30, 2026 increased sequentially to $43.3M from $42.3M as of June 30, 2026.At September 30, 2026 the Company had $9.3M in cash and cash equivalents.
Other Updates
On October 20, 2026, AudioEye announced that its Board of Directors authorized the repurchase of up to $15 million of the Company’s outstanding common stock through October 18, 2027. The new program replaces the Company’s prior share repurchase authorization and is expected to be funded with working capital and cash from operations.On October 8, 2026, AudioEye launched two new AI products, Agentic Audits and the AudioEye SDK MCP, both powered by AudioEye Intelligence, the Company’s proprietary accessibility dataset built from over one million human reviews across more than 100,000 sites. Agentic Audits deploy an AI agent that navigates a site the way a person would and can find up to 50% more high-severity issues than automation alone, while the SDK MCP brings AudioEye Intelligence directly into the AI coding tools developers already use.On September 30, 2026, AudioEye published research showing that leading AI coding tools failed to build accessible websites, with 91% of the issues found rated medium or high severity.On September 24, 2026, AudioEye published research showing that AI agents completed up to 68% fewer tasks and used 43% more tokens on average on inaccessible websites, demonstrating that digital accessibility is the foundation for AI readiness.On August 27, 2026, AudioEye released UK findings from its 2026 Digital Accessibility Index, which scanned over 14,400 pages across 475 UK websites and found an average of 66 accessibility issues per page, with AI search increasingly routing users to less accessible interior pages.As of September 30, 2026, AudioEye had approximately 130,000 customers, up 7,000 year-over-year from September 30, 2025, driven by increases in both the Partner and Marketplace channel and Enterprise channel.
Financial Outlook
AudioEye expects revenue of between $11.4M and $11.6M for the fourth quarter of 2026, which is expected to result in revenue of between $43.6M and $43.8M for the full year 2026. The Company expects adjusted EBITDA of between $4.2M and $4.4M for the fourth quarter of 2026, which raises expected full year 2026 adjusted EBITDA to between $13.4M and $13.6M, representing approximately 50% year-over-year growth. The Company expects adjusted EPS of between $0.32 and $0.33 per share for the fourth quarter of 2026 and at least $1.04 per share for the full year 2026.
Conference Call Information
AudioEye management will hold a conference call today, October 26, 2026, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results, followed by a question-and-answer period.
Date: Monday, October 26, 2026
Time: 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
U.S. dial-in number: 877-407-8289
International number: 201-689-8341
Webcast: Q326 Webcast Link
Please call the conference telephone number 5-10 minutes prior to the start time. If you have any difficulty connecting with the conference call, please contact Gateway Group at 949-574-3860.
The conference call will also be webcast live and available for replay via the investor relations section of the Company’s website. The audio recording will remain available via the investor relations section of the Company’s website for 90 days.
A telephonic replay of the conference call will also be available after 7:30 p.m. Eastern Time on the same day through November 9, 2026 via the following numbers:
Toll-free replay number: 877-660-6853
International replay number: 201-612-7415
Replay passcode: 13763375
Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
About AudioEye
AudioEye exists to ensure the digital future we build is accessible for people with disabilities and AI agents. AudioEye’s comprehensive solution for over 130,000 customers combines industry-leading AI automation technology with expert fixes informed by the disability community. This powerful combination delivers industry-leading protection against lawsuits and readiness for AI agents. With 25 US patents, AudioEye’s solution includes 24/7 accessibility monitoring, automated WCAG issue testing and fixes, expert testing, developer tools, and legal protection, empowering organizations to confidently create accessible digital experiences for all.
Forward-Looking Statements
All statements in this press release about AudioEye’s expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are “forward-looking statements” as that term is defined under the federal securities laws. Forward-looking statements are often, but not always, made through the use of words or phrases such as “believe”, “anticipate”, “should”, “confident”, “intend”, “plan”, “will”, “expects”, “estimates”, “projects”, “positioned”, “strategy”, “outlook” and similar words. You should read the statements that contain these types of words carefully. Such forward-looking statements contained herein include, but are not limited to, statements regarding future cash flows of the Company, anticipated contributions from new sales channels, long-term growth prospects, opportunities in the digital accessibility industry, our revenue, adjusted EBITDA, adjusted EPS and ARR guidance, and our expectation of investments in marketing and sales. These statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what is expressed or implied in such forward-looking statements, including the variability of AudioEye’s revenue and financial performance; sales channels and offerings; product development and technological changes; the acceptance of AudioEye’s products in the marketplace; the effectiveness of our integration efforts; competition; inherent uncertainties and costs associated with litigation; and general economic conditions. These and other risks are described more fully in AudioEye’s filings with the Securities and Exchange Commission. There may be events in the future that AudioEye is not able to predict accurately or over which AudioEye has no control. Forward-looking statements reflect management’s view as of the date of this press release, and AudioEye urges you not to place undue reliance on these forward-looking statements. AudioEye does not undertake any obligation to update such forward-looking statements to reflect events or uncertainties after the date hereof.
About Key Operating Metrics
We consider annual recurring revenue (“ARR”) as a key operating metric and a key indicator of our overall business. We also use ARR as one of the primary methods for planning and forecasting overall expectations and for evaluating, on at least a quarterly and annual basis, actual results against such expectations.
We manage customers through two primary channels, Enterprise and Partner and Marketplace. Enterprise channel consists of our larger customers and organizations, including those with non-platform custom websites, who generally engage directly with AudioEye sales personnel for custom pricing and solutions. This channel also includes federal, state and local government agencies. The Partner and Marketplace channel consists of our CMS partners, platform & agency partners, authorized resellers and our marketplace. This channel serves small and medium sized businesses who are on a partner or reseller’s web-hosting platform or who purchase an AudioEye solution from our marketplace.
We define ARR as the sum of (i) for our Enterprise channel, the total of the annualized recurring fee at the date of determination under each active contract, plus (ii) for our Partner and Marketplace channel, the annual or monthly recurring fee for all active customers at the date of determination, in each case, assuming no changes to the subscription, multiplied by 12 if applicable. Recurring fees are defined as revenues expected to be generated from services typically offered as a subscription service or annual service offering such as our automation and platform, periodic auditing, human-assisted technological fixes, legal support and professional service offerings and other services that reoccur on a multi-year contract. This determination includes both annual and monthly contracts for recurring products. Some of our contracts are terminable prior to the expected term, which may impact future ARR. ARR excludes non-recurring fees, which are defined as revenue expected to be generated from services typically not offered as a subscription service or annual service offering such as our PDF remediation services business, one-time website and mobile application reports, and other miscellaneous services that are offered as non-subscription services or are expected to be one-time in nature.
Use of Non-GAAP Financial Measures
From time to time, we review adjusted financial measures that assist us in comparing our operating performance consistently over time, as such measures remove the impact of certain items, as applicable, such as our capital structure (primarily interest charges), certain non-cash items, including stock compensation and depreciation and amortization expense, and other expenses that do not relate to our core operations, including significant transaction and litigation-related expenses and other costs that are expected to be non-recurring. In order to provide investors with greater insight and allow for a more comprehensive understanding of the information used in our financial and operational decision-making, the Company has supplemented the consolidated financial statements presented on a GAAP basis in this press release with the following non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA margin, Adjusted earnings (loss) per diluted share (adjusted EPS) and Adjusted gross margin.
These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of Company results as reported under GAAP. The Company compensates for such limitations by relying primarily on our GAAP results and using non-GAAP financial measures only as supplemental data. We also provide a reconciliation of non-GAAP to GAAP measures used. Investors are encouraged to carefully review this reconciliation. In addition, because these non-GAAP measures are not measures of financial performance under GAAP and are susceptible to varying calculations, these measures, as defined by us, may differ from and may not be comparable to similarly titled measures used by other companies.
Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Earnings (Loss) per Diluted Share
We define: (i) Adjusted EBITDA as net income (loss), plus interest expense, plus depreciation and amortization expense, plus stock-based compensation expense, less change in fair value of contingent consideration, plus certain litigation expense, plus certain acquisition expense, plus certain severance expense, plus loss on disposal or impairment of long-lived assets, plus loss on extinguishment of debt, and plus lost deposit on alternative financing; (ii) Adjusted EBITDA margin as Adjusted EBITDA as a percentage of GAAP revenue; and (iii) Adjusted earnings (loss) per diluted share (EPS) as net income (loss) per diluted common share, plus interest expense, plus depreciation and amortization expense, plus stock-based compensation expense, less change in fair value of contingent consideration, plus certain litigation expense, plus certain acquisition expense, plus certain severance expense, plus loss on disposal or impairment of long-lived assets, plus loss on extinguishment of debt, and plus lost deposit on alternative financing, each on a per share basis. Adjusted earnings per diluted share includes incremental shares in the share count that are considered anti-dilutive in a GAAP net loss position.
Adjusted Gross Margin
We define Adjusted gross margin as gross profit, plus stock-based compensation expense and depreciation and amortization expense allocated to cost of revenue, expressed as a percentage of total revenue.
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted earnings (loss) per diluted share, and Adjusted gross margin are used to facilitate a comparison of our operating performance on a consistent basis from period to period and provide for a more complete understanding of factors and trends affecting our business than GAAP measures alone. All of the items adjusted in these calculations are either recurring non-cash items or items that management does not consider in assessing our ongoing operating performance. In the case of the non-cash items, such as stock-based compensation expense and valuation adjustments to assets and liabilities, management believes that investors may find it useful to assess our comparative operating performance because the measures without such items are expected to be less susceptible to variances in actual performance resulting from expenses that do not relate to our core operations and are more reflective of other factors that affect operating performance. In the case of items that do not relate to our core operations, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.
Adjusted EBITDA is not a measure of liquidity under GAAP, or otherwise, and is not an alternative to cash flow from continuing operating activities, despite the advantages regarding the use and analysis of these measures as mentioned above. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted earnings (loss) per diluted share, and Adjusted gross margin, as disclosed in this press release, have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP; nor are these measures intended to be measures of liquidity or free cash flow.
To properly and prudently evaluate our business, we encourage readers to review the consolidated GAAP financial statements included in this press release and not rely on any single financial measure to evaluate our business. Reconciliations of Adjusted EBITDA to net income (loss), the most directly comparable GAAP-based measure, Adjusted earnings (loss) per diluted share to net income (loss) per diluted share, the most directly comparable GAAP-based measure, and Adjusted gross margin to gross margin, the most directly comparable GAAP-based measure are provided in tables later in this press release. We strongly urge readers to review these reconciliations, along with the financial statements included in this press release.
Forward-Looking Non-GAAP Financial Measures
This press release and statements made in our conference call today also include the forward-looking non-GAAP financial measures of adjusted EBITDA, adjusted EBITDA margin, adjusted EPS and free cash flow guidance for the fourth quarter and full year 2026. We calculate forward-looking non-GAAP financial measures based on internal forecasts that omit certain amounts that would be included in GAAP financial measures. We have not provided quantitative reconciliations of these forward-looking non-GAAP financial measures to the most directly comparable forward-looking GAAP financial measures because the excluded items are not available on a prospective basis without unreasonable efforts. In addition, the Company believes such reconciliations would imply a degree of precision and certainty that could be confusing to investors. It is probable that these forward-looking non-GAAP financial measures may be materially different from the corresponding GAAP financial measures.
Investor Contact:
Tom Colton
Gateway Group, Inc.
AEYE@gateway-grp.com
949-574-3860
AUDIOEYE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three months ended September 30,
Nine months ended September 30,
(in thousands, except per share data)
2026
2025
2026
2025
Revenue
$
10,963
$
10,227
$
32,232
$
29,817
Cost of revenue
1,871
2,312
6,439
6,545
Gross profit
9,092
7,915
25,793
23,272
Operating expenses:
Selling and marketing
3,304
3,649
10,806
11,169
Research and development
889
1,118
2,848
3,471
General and administrative
3,644
3,506
13,365
10,998
Change in fair value of contingent consideration
—
(40)
—
(1,350)
Total operating expenses
7,837
8,233
27,019
24,288
Operating income (loss)
1,255
(318)
(1,226)
(1,016)
Other expense:
Interest expense, net
(265)
(236)
(763)
(709)
Loss on extinguishment of debt
—
—
—
(300)
Total other expense
(265)
(236)
(763)
(1,009)
Net income (loss)
$
990
$
(554)
$
(1,989)
$
(2,025)
Net income (loss) per common share – basic
$
0.08
$
(0.04)
$
(0.16)
$
(0.16)
Net income (loss) per common share – diluted
$
0.08
$
(0.04)
$
(0.16)
$
(0.16)
Weighted average common shares outstanding – basic
12,583
12,414
12,512
12,417
Weighted average common shares outstanding – diluted
12,971
12,414
12,512
12,417
AUDIOEYE, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30,
December 31,
(in thousands, except per share data)
2026
2025
ASSETS
Current assets:
Cash and cash equivalents
$
9,327
$
5,288
Accounts receivable, net
5,772
6,557
Prepaid expenses and other current assets
878
777
Total current assets
15,977
12,622
Property and equipment, net
105
146
Right of use assets
297
168
Intangible assets, net
10,826
12,515
Goodwill
6,682
6,682
Other
41
97
Total assets
$
33,928
$
32,230
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses
$
3,442
$
4,851
Operating lease liabilities
57
218
Deferred revenue
8,350
8,619
Contingent consideration
300
225
Term loan, current
850
503
Total current liabilities
12,999
14,416
Long term liabilities:
Term loan, net
15,380
12,479
Operating lease liabilities
254
—
Deferred revenue
81
5
Contingent consideration, long term
—
300
Other
138
226
Total liabilities
28,852
27,426
Stockholders’ equity:
Preferred stock, $0.00001 par value, 10,000 shares authorized
Common stock, $0.00001 par value, 50,000 shares authorized, 12,676 and 12,383 shares
issued and outstanding as of September 30, 2026 and December 31, 2025, respectively
1
1
Additional paid-in capital
110,937
108,201
Accumulated deficit
(105,862)
(103,398)
Total stockholders’ equity
5,076
4,804
Total liabilities and stockholders’ equity
$
33,928
$
32,230
AUDIOEYE, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
(unaudited)
Three months ended September 30,
Nine months ended September 30,
(in thousands, except per share data)
2026
2025
2026
2025
Adjusted EBITDA Reconciliation
Net income (loss) (GAAP)
$
990
$
(554)
$
(1,989)
$
(2,025)
Change in fair value of contingent consideration
—
(40)
—
(1,350)
Interest expense, net
265
236
763
709
Stock-based compensation expense
1,191
1,281
3,678
3,693
Acquisition expense (1)
21
—
123
33
Litigation expense (2)
492
607
3,398
1,936
Severance expense (3)
—
—
344
304
Lost deposit on alternative financing
—
—
—
50
Depreciation and amortization
927
918
2,901
2,581
Loss on disposal or impairment of long-lived assets
—
5
5
61
Loss on extinguishment of debt
—
—
—
300
Adjusted EBITDA
$
3,886
$
2,453
$
9,223
$
6,292
GAAP Net income (loss) as a percent of revenue
9
%
(5)
%
(6)
%
(7)
%
Adjusted EBITDA margin (4)
35
%
24
%
29
%
21
%
Adjusted Earnings per Diluted Share Reconciliation
Net income (loss) per common share (GAAP) — diluted
$
0.08
$
(0.04)
$
(0.16)
$
(0.16)
Change in fair value of contingent consideration
—
—
—
(0.10)
Interest expense, net
0.02
0.02
0.06
0.06
Stock-based compensation expense
0.09
0.10
0.29
0.29
Acquisition expense (1)
—
—
0.01
—
Litigation expense (2)
0.04
0.05
0.26
0.16
Severance expense (3)
—
—
0.03
0.02
Lost deposit on alternative financing
—
—
—
—
Depreciation and amortization
0.07
0.07
0.23
0.20
Loss on disposal or impairment of long-lived assets
—
—
—
—
Loss on extinguishment of debt
—
—
—
0.02
Adjusted earnings per diluted share (5)
$
0.30
$
0.19
$
0.72
$
0.50
Diluted weighted average shares (GAAP)
12,971
12,414
12,512
12,417
Includable incremental shares (Non-GAAP) (5)
—
229
348
174
Adjusted diluted shares (Non-GAAP)
12,971
12,643
12,860
12,591
(1)
Represents professional fees incurred in connection with acquisitions and dissolutions.
(2)
Represents legal expenses related primarily to non-recurring litigation.
(3)
Represents severance expense for an employee from a previously acquired business and for employees impacted by a reduction in force in 2026.
(4)
Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of GAAP revenue.
(5)
Adjusted earnings per adjusted diluted share for our common stock is computed using the treasury stock method.
AUDIOEYE, INC.
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
(unaudited)
Three months ended September 30,
Nine months ended September 30,
(in thousands)
2026
2025
2026
2025
Adjusted Gross Margin Reconciliation
Revenue
$
10,963
$
10,227
$
32,232
$
29,817
Less: Cost of revenue
1,871
2,312
6,439
6,545
Gross profit (GAAP)
$
9,092
$
7,915
$
25,793
$
23,272
Gross margin (GAAP)
83
%
77
%
80
%
78
%
Add expenses included in cost of revenue:
Depreciation and amortization
$
466
$
494
$
1,458
$
1,432
Stock-based compensation
56
61
202
198
Adjusted gross profit (non-GAAP)
$
9,614
$
8,470
$
27,453
$
24,902
Adjusted gross margin (non-GAAP)
88
%
83
%
85
%
84
%
View original content to download multimedia:https://www.prnewswire.com/news-releases/audioeye-reports-record-third-quarter-2026-results-302919827.html
SOURCE AudioEye, Inc.
Technology
Lingbo to Showcase Intelligent Electric Drive Systems and Powertrain Solutions at EICMA 2026
Published
33 minutes agoon
October 26, 2026By
MILAN, Oct. 26, 2026 /PRNewswire/ — Wuxi Lingbo Electronic Technology Co., Ltd. (Lingbo), a China-based developer and manufacturer of intelligent electric drive systems, will participate in EICMA 2026, held November 3–8, 2026, at Fiera Milano Rho, Italy. At Hall 18, Booth E53, Lingbo will showcase its motor control technologies and integrated powertrain solutions to European manufacturers, distributors and industry partners.
Lingbo develops motor controllers, electric motors, battery management systems (BMS) and integrated powertrain solutions for electric two-wheelers and light electric vehicles. Combining in-house hardware and software development, the company provides electric drive solutions for manufacturers with different vehicle configurations and performance requirements. Built around proprietary field-oriented control (FOC) algorithms, Lingbo’s motor controllers are designed for smooth torque delivery, responsive acceleration and low operating noise. The solutions support regenerative braking, closed-loop torque control and CAN bus communication, enabling integration across electric motorcycles, off-road electric motorcycles, light electric vehicles and electric three-wheelers.
Beyond individual components, Lingbo offers integrated hardware and software solutions, supporting customized powertrain development and vehicle integration. Its in-house R&D capabilities and experience serving international two-wheeler brands support collaboration with manufacturers seeking electric drive technologies.
Through EICMA 2026, Lingbo aims to strengthen its presence in Europe and connect with OEMs, distributors and technology partners to explore product development, technical collaboration and regional distribution opportunities. “Europe is an important market for Lingbo. EICMA provides an opportunity to introduce our technologies and connect with manufacturers seeking reliable electric drive solutions,” said Julian Xu, Senior Overseas Marketing Manager at Lingbo.
About Lingbo
Wuxi Lingbo Electronic Technology Co., Ltd. focuses on the research, development and manufacturing of core components for new energy transportation vehicles. Its main products include intelligent controllers (PDU/VCU), brushless DC motors (BLDCM), permanent magnet synchronous motors (PMSM), BMS, and instruments, which are widely used across applications including electric two-wheelers, shared mobility, water transportation, and special vehicles. The company integrated intelligent safety functions such as TCS and steep slope descent control.
Industry professionals are invited to visit Hall 18, Booth E53, from November 3–8, 2026, to explore Lingbo’s technologies and discuss potential partnerships.
Website : https://www.lbelectronic.com/
Business Inquiries: julianxu@lingbomc.com
Media Contact: maozenan@lingbomc.com
View original content to download multimedia:https://www.prnewswire.co.uk/news-releases/lingbo-to-showcase-intelligent-electric-drive-systems-and-powertrain-solutions-at-eicma-2026-302919836.html
Technology
Robo.ai Inc. Announces Results of Extraordinary General Meeting
Published
34 minutes agoon
October 26, 2026By
DUBAI, UAE, Oct. 26, 2026 /PRNewswire/ — Robo.ai Inc. (Nasdaq: AIIO) (the “Company”), a UAE-based, U.S.-listed company, today announced that each of the proposed resolutions submitted for shareholder approval as set forth in the notice of extraordinary general meeting of shareholders dated October 16, 2026 has been adopted at its extraordinary general meeting of shareholders held in Dubai, United Arab Emirates today.
After the adoption of the proposed resolutions, the seventh amended and restated memorandum and articles of association are adopted. Following the effectiveness of the share consolidation and increase in authorized share capital on November 6, 2026, (i) the Company’s authorized share capital will be US$19,250,000 divided into 385,000,000 shares, comprising 35,000,000 Class A ordinary shares with a par value of US$0.05 per share, and 350,000,000 Class B ordinary shares with a par value of US$0.05 per share, and (ii) the Company’s issued and outstanding shares will comprise 552,700 Class A ordinary shares with a par value of US$0.05 and 8,894,680 Class B ordinary shares with a par value of US$0.05. All fractional shares resulting from the reverse stock split will be disregarded and not be issued to the shareholders of the Company but all such fractional shares will be aggregated and, if possible, sold and distributed to the underlying shareholders as per latest decision of the board of directors of the Company.
About Robo.ai Inc.
Robo.ai Inc. (Nasdaq: AIIO), headquartered in Dubai, United Arab Emirates, is a Nasdaq-listed technology group building intelligent infrastructure across four platforms: artificial intelligence; robotics and smart mobility; advanced manufacturing; and digital assets and capital. Its industrial group, Alif Holding, is dedicated to building intelligent industries through the development, integration and manufacturing of AI systems, serving government, public sector and mission-critical domains. Through its subsidiary Neurovia AI, the Company develops AI software and visual data infrastructure. Quantum Core Capital (“QC Capital”), its AI-powered deep-tech holding and venture-building platform, incubates, invests in and operates businesses across artificial intelligence, robotics, digital infrastructure and the next-generation digital economy.
Forward-Looking Statements
This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “targets,” “likely to,” “challenges,” and similar statements. Robo.ai may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including statements about Robo.ai’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Robo.ai’s strategies, future business development, and financial condition and results of operations; Robo.ai’s limited operating history in its current business; Robo.ai’s ability to generate positive cash flow and profits; Robo.ai’s ability to compete successfully; Robo.ai’s ability to build its brand and withstand negative publicity; and changes in customer demand and government incentives, subsidies, or other favorable government policies. Further information regarding these and other risks is included in Robo.ai’s filings with the SEC. All information provided in this press release is as of the date of this press release, and Robo.ai does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
For investor and media inquiries, please contact:
For investors:
Robo.ai Inc. Investor Relations
E-mail: ir@roboai.group
For media:
Robo.ai Inc. Corporate Communications
E-mail: pr@roboai.group
Website: www.roboai.group
View original content to download multimedia:https://www.prnewswire.com/news-releases/roboai-inc-announces-results-of-extraordinary-general-meeting-302919698.html
SOURCE Robo.ai Inc.
AudioEye Reports Record Third Quarter 2026 Results
Lingbo to Showcase Intelligent Electric Drive Systems and Powertrain Solutions at EICMA 2026
Robo.ai Inc. Announces Results of Extraordinary General Meeting
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