Iron Mountain (IRM) Q3 2026 earnings review
Iron Mountain signs record data center space, but growth cools
Iron Mountain's data centers had their biggest leasing quarter ever, while its fast-growing computer disposal arm slowed. Revenue grew 13% to a third-quarter record, and cash earnings per share climbed 16% to an all-time high. Chief executive Bill Meaney signed a record amount of new data center space and lifted the dividend. The company's own plan now points to about 10% revenue growth in the fourth quarter, the slowest reading this year.
| Sales growth from businesses it owned a year ago | +12.8% reported growth 13.5% |
|---|---|
| Cash earnings per share, the measure the dividend is set from | $1.53 +16% from a year ago |
| New data center leases signed | 102 megawatts 13 megawatts a year ago |
| Full-year revenue outlook | Raised $10 million middle of the range: 16% growth |
⚖️ Verdict: 🟢 Bullish
The story got better, because the data center leases Iron Mountain signed this quarter feed revenue in 2027 and beyond. Its biggest leasing quarter ever and a larger order book point the same way. One caution: growth at the computer disposal arm fell by more than half from last quarter, and the finance chief now plans for about 25% next year on flat part prices.
The question now is whether the computer disposal arm can keep growing without help from component prices. Hytinen said memory prices have stayed level for four quarters, so growth from here has to come from more machines passing through. If volumes deliver, the roughly 25% planned for next year holds; if they do not, the pace slows again. The February figure for that business settles it.
🐂 Bull Case
Data Center Leasing Hits a Record 102 Megawatts
Iron Mountain rents space and power to companies that need somewhere to run their computers. A lease pays nothing until the site is switched on, so the leases signed now land in revenue later.
Meaney's team signed 102 megawatts in three months, more than the whole of last year. Two large cloud companies became customers for the first time, and India supplied 74 megawatts of the total.
- New leases signed: 102 megawatts, against 13 a year ago
- Signed so far this year: 137 megawatts, against 63 in all of 2025
- Signed-but-unbilled order book: $575 million
- Data center revenue: $274 million, up 34% from a year ago
Finance chief Barry Hytinen raised the 2027 figure for this business to "$1.3-plus billion", and said "the churn was very low in the most recent quarter". The exposure sits in concentration, because a few cloud buyers take almost all the new capacity, and their pause stalled signings through 2025.
What to watch: how much capacity starts billing, rather than how much gets signed. Iron Mountain switched on 29 megawatts this quarter, and a similar figure in February would show the 2027 step arriving on schedule.
Costs Fell Enough to Hold the Margin Flat
Selling refurbished computer parts lowers Iron Mountain's margin, because those parts carry a cost of goods that rented shelf space does not. That line reached 11.1% of revenue, from 8.5% a year ago.
Two other lines moved the other way. Overheads with sales and marketing fell to 17.5% of revenue from 19.1%, and the labour inside cost of sales fell to 16.1% from 17.3%.
"EBITDA margin was also consistent with the prior year, which is noteworthy given the strong growth in our services revenue that naturally drives a mix headwind," Hytinen said. Profit before interest, tax and depreciation held at 37.6% of sales.
What to watch: the product cost line in February, set against overheads. If both keep moving as they did this quarter, Iron Mountain is trading margin for growth on purpose, and the trade is working.
Government Deals Lift Bookings 40% This Year
Iron Mountain also sells Insight DXP, software that reads documents, whether on paper or already digital, and turns them into data other systems can use. Governments are buying it, and Meaney pointed to "the 40% increase in government bookings or public sector bookings across the globe".
Three wins show the shape. A Middle Eastern government signed "a multiyear contract with a government for our largest DXP deployment to date", with a rollout planned across 30 agencies. Standard Chartered Bank put the platform into Singapore, replacing older software, and a United States federal customer awarded a three-year records contract worth $25 million.
What to watch: whether digital revenue keeps setting records once these contracts start billing. Iron Mountain publishes no separate line for the division, so the service revenue inside its records business is the proxy, and February brings the next reading.
🐻 Bear Case
IT Disposal Growth Falls to 38% From 82%
Asset lifecycle management, or ALM, is Iron Mountain's business for collecting old computers, wiping the data and reselling the parts. Its revenue leans on the price of memory chips and on the month a cloud operator strips out a building.
Revenue reached $241 million in the quarter. Growth from a year ago came to 43%, against 88% three months earlier. Hytinen called the result better than planned, helped by enterprise customers, while the part that dismantles cloud computers grew only in low double digits.
- Like-for-like growth: 38%, after 82% last quarter
- Timing: about $30 million of dismantling work moved into the June quarter
- Adding that work back: roughly 60% growth, by our math
- Plan for next year: about 25%, assuming part prices hold
Iron Mountain presents ALM as a share-gain story, and Meaney said "we're not only growing with the market as we're gaining share". Yet Hytinen's plan for next year assumes prices stay put, so a 25% target against a 38% quarter is the firm's own step-down.
What to watch: the fourth-quarter ALM figure in February, which the full-year plan puts near $240 million by our math. A reading near that, with enterprise demand holding, would make this a price story rather than a demand one.
Debt Pays for the Dividend and the Buildings
Iron Mountain funds new data centers and a rising dividend out of cash it has not yet earned. Nine-month operating cash flow of $1.2 billion fell short of what construction and the payout took together, so lenders covered the gap.
- Capital spending, nine months: $1.7 billion
- Dividends paid, nine months: $0.8 billion
- Total borrowings: $18.1 billion, 11% above a year ago, including $1.0 billion of notes due in 2027
The ratio lenders watch sits at 4.8 times earnings, which Hytinen called the lowest since before the 2014 conversion to a property trust. It holds there only because profit compounds, while debt climbs and quarterly interest reached $217 million.
What to watch: the 2027 spending plan, due at the March investor meeting. A programme near this year's $2.2 billion keeps the ratio steady; a larger one on the same payout policy means more borrowing.
Risks This Quarter Didn't Answer
Four standing worries got no fresh number this quarter, either because Iron Mountain does not publish the figure or because the next reading is months away.
- Full-year margin: the plan implies 37.1% of revenue before interest, tax and depreciation, under last year's 37.3%
- Physical records: neither storage volume nor the retention rate appears in these materials, and the tape and disk line fell 9%
- Currency: Hytinen put the stronger dollar at "like $5 million, could be as much as $10 million" off fourth-quarter revenue
- Earn-outs from ALM takeovers: the liability reached $210 million, and revaluing it cost $70 million over nine months, outside the cash measures
What to watch: the February accounts and the new segment split. Separate disposal figures, a storage volume number and a fourth-quarter margin near 38% would answer three of these four at once.
👓 Other Themes
Permit Fights Miss Iron Mountain's Sites
Several American states are tightening the rules on new data centers. Meaney named Texas, Ohio and Georgia as the most restrictive and added: "We're not developing any sites in those 3 markets." The 325 megawatts Iron Mountain expects to switch on within two years already carries permits and committed power.
Segment Reporting Changes Next Year
Iron Mountain reports two segments, records and data centers, with the computer disposal and digital businesses folded into a corporate line. Hytinen said the finance team is "evaluating how we align our segment reporting" and will set out the new shape in February. Investors would then see disposal revenue and profit on their own.
💲 Other KPIs
Rent grew 11.3% from a year ago, slower than last quarter's 12.3%, with data centers doing the heavy lifting. Records rent rose 5.4%. Hytinen said that stripping a one-off benefit in last year's tape and disk business lifts that figure above 7%, "this is the highest growth rate the team has delivered on that line in over 2 years".
The tax charge rose to $56.7 million from $16.6 million, after Iron Mountain set aside allowances against foreign tax assets. That cost roughly $0.09 per share of reported earnings by our math. The measure the dividend is set from excludes such items, so cash earnings per share still rose 16%.
Money owed by customers grew 9.9% from a year ago, slower than revenue at 13.5%, which is the direction a landlord wants. Hytinen credited "significantly improved working capital" for part of the cash result. Nine-month operating cash flow of $1.2 billion is the highest the business has recorded.
The count rose 0.7% over the year, as staff share awards vested. Iron Mountain buys back no stock, so shareholder cash leaves entirely as dividends, which came to $790 million over nine months and step up again in January.
🔮 Guidance
Unchanged in substance. The plan calls for about 10% growth, the slowest reading of the year and below this quarter's 13%. It falls inside what the August full-year range already implied, by our math. The base explains part of it, because last year's fourth quarter carried a large Chicago lease start and high memory prices.
Raised. The middle of the range moved up $10 million, leaving growth of about 16% for the year. It is the fourth increase in four quarters, and each is smaller than the last: +$175M, +$100M, +$10M. Hytinen said the new range absorbs a stronger dollar since August.
Unchanged in substance. About $780 million implies 11% growth. The margin lands near 38.4% of revenue, which is where the fourth quarter sat last year. It rests on year-end seasonality and on a revenue mix tilting back towards rent as part sales ease.
Raised. The middle of the range moved up $3 million, which leaves growth of about 15% for the year. By our math the year still ends at 37.1% of revenue before interest, tax and depreciation, a shade under last year, because reselling computer parts carries a cost of goods.
Unchanged in substance. Iron Mountain looks for about $473 million of cash earnings, 10% above last year. This is the figure the dividend is set against. The quarter just reported came in $18 million above the August projection, mostly on lower cash interest and taxes.
Raised. The middle of the range moved up $20 million, to roughly 16% growth. Nine months are done at $1,317 million, so the fourth quarter needs about $473 million. Hytinen named working capital, cash taxes and capitalised interest as the levers behind this year's run of better-than-planned results.
Unchanged in substance. About $1.57 a share means 9% growth, the slowest quarterly rate of the year, because last year's fourth quarter was already strong. The dividend declared for the period takes roughly 63% of that, in line with the policy Iron Mountain states.
Raised. The middle of the range moved up $0.07, to about 15% growth. This is the fourth increase in four quarters, each smaller than the one before: +$0.085, +$0.075, +$0.070. The quarterly dividend rises 15% from January, which matches that rate.
Raised. Hytinen said: "we now project ALM revenue to be modestly ahead of $1 billion for the full year". Nine months brought $761 million. The fourth quarter therefore needs about $240 million by our math, close to the quarter just reported. The plan assumes memory prices stay where they have been for four quarters.
❓ Key Questions
What does the IT disposal business earn on its own?
Iron Mountain reports asset lifecycle management inside a corporate bucket and gives only 'solid improvement in contribution'. Investors cannot see whether enterprise work or the lower-margin resale of cloud hardware carries the profit.
How much of ALM revenue comes from part prices?
Hytinen says memory prices have been flat for four quarters and next year's 25% plan assumes they stay there. The split between price and volume in this year's revenue has never been published.
Which deals do the earn-out liabilities belong to?
Deferred purchase obligations reached $210 million from $134 million at year-end, and revaluing them cost $70 million over nine months. The maximum payout and the deals behind it are not disclosed.
What happened to storage volume and retention?
The presentation calls storage volume a record, but neither the release nor the quarterly filing gives the cubic feet or the retention rate. Both numbers decide whether price increases rest on a stable base.
What will the new segment split show?
Hytinen says the reporting lines are under review, with an answer in February. Whether ALM and digital get their own revenue and profit lines changes how much of this story investors can check.