Executive Summary / Key Takeaways

• Iron Mountain is successfully executing its Project Matterhorn strategy, transforming into a diversified information management and digital infrastructure provider with accelerating double-digit growth.
• The company's growth portfolio (Data Center, Digital Solutions, ALM) now represents over 25% of revenue and is growing at a CAGR exceeding 20%, complementing a stable, high-margin traditional records business.
• Strong Q1 2025 results demonstrated broad-based strength with 8% reported revenue growth ($1.59B), 12% Adjusted EBITDA growth ($580M), and significant margin expansion, particularly in the Data Center segment (+960bps YoY).
• Increased full-year 2025 guidance reflects management confidence, projecting 11% revenue growth ($6.74B-$6.89B midpoint) and 13% Adjusted EBITDA growth ($2.505B-$2.555B midpoint), driven by organic performance, revenue management, ALM strength, and favorable FX.
• Key competitive advantages include a vast global real estate network, integrated physical and digital solutions leveraging technologies like the InSight DXP platform with embedded AI, and a trusted brand, positioning IRM effectively against both diversified and pure-play competitors.

Setting the Scene: From Physical Vaults to Digital Frontiers

Iron Mountain Incorporated, historically synonymous with the secure physical storage of corporate records, has undergone a significant strategic evolution. While its roots remain firmly planted in managing vast archives of paper and tape, the company has successfully transformed into a diversified provider of information management and digital infrastructure solutions. This journey, notably accelerated by the "Project Matterhorn" initiative launched in September 2022, positions Iron Mountain at the intersection of the physical and digital worlds, addressing the complex data lifecycle needs of nearly 250,000 customers globally, including 95% of the Fortune 1000.

The industry landscape is defined by the ongoing digital transformation, the exponential growth of data, and the increasing importance of data privacy, security, and sustainability. Within this environment, Iron Mountain competes across several fronts. In traditional records management, it faces established players in secure storage and destruction. In the burgeoning data center market, it competes with hyperscale and colocation giants like Equinix (EQIX) and Digital Realty Trust (DLR). In digital transformation and asset lifecycle management (ALM), it encounters a fragmented market with specialized providers and broader IT service companies, including those offering cloud alternatives like AWS (AMZN) and Google Cloud (GOOGL).

Iron Mountain's overarching strategy, embodied by Project Matterhorn, is to leverage its foundational strengths – a vast global real estate footprint, deep customer relationships built on trust and security, and operational expertise – to become a one-stop-shop for integrated information management solutions. This involves accelerating growth in higher-expansion areas like data centers, digital services, and ALM, while continuing to derive stable, high-margin revenue from its core physical storage business.

A critical differentiator underpinning this strategy is Iron Mountain's evolving technological capability, particularly its InSight Digital Experience Platform (DXP). This SaaS-based platform is designed to manage and create structure from unstructured content, increase efficiency through process automation, enable visibility of "dark data," increase compliance, and make information actionable. Leveraging embedded AI and machine learning, DXP automates metadata extraction and streamlines workflows. For instance, it has been used to process millions of images for customers, enabling significant cost reductions and operational efficiencies. The platform's ability to handle both physical and digital inputs, integrating with Iron Mountain's traditional services like document imaging and secure destruction, provides a tangible benefit: a unified, end-to-end solution that competitors focused solely on digital or physical assets often cannot match. This integrated approach can offer customers greater efficiency and value by consolidating vendors and streamlining complex information workflows. While direct quantitative comparisons of all technological benefits across all competitors are not publicly detailed, Iron Mountain's customer wins, particularly in cross-selling DXP and ALM services to existing records management clients, suggest that this integrated technology platform is a meaningful competitive advantage, driving larger deal values and shorter sales cycles in its digital business.

Strategic Execution and Performance Momentum

The execution of Project Matterhorn has demonstrably shifted Iron Mountain's growth profile. The portfolio of growth businesses – Global Data Center, Digital Solutions, and Asset Lifecycle Management – which represented 15% of total revenue at the project's inception, now accounts for over 25% and collectively grew by more than 20% in the first quarter of 2025. This acceleration complements the consistent, mid-to-high single-digit growth in the Global RIM business, creating a powerful engine for consolidated double-digit expansion.

The first quarter of 2025 provided strong evidence of this momentum. Total revenue reached a record $1.59 billion, an 8% increase year-over-year (9% constant currency, 8% organic). Adjusted EBITDA hit a first-quarter record of $580 million, up 12% year-over-year (13% constant currency). This performance translated into significant operating leverage, with an incremental flow-through margin greater than 50%, the highest achieved in years. Adjusted EBITDA margin expanded by 130 basis points to 36.4%, driven by favorable overhead management and improved margins across all businesses.

The Global RIM business, the company's foundational segment, delivered $1.26 billion in revenue, growing 3.8% reported (5.5% organic). This growth was primarily fueled by revenue management initiatives and consistent storage volume, which continues to increase modestly each quarter. The segment's Adjusted EBITDA margin improved by 80 basis points to 44.3%, reflecting operating leverage and revenue management success. Within RIM, the Digital Solutions business achieved record revenue, with a growing portion being recurring, and saw strong traction for the InSight DXP platform, evidenced by increasing deal values and cross-selling success. A notable recent win is a contract with the Department of the Treasury, valued at approximately $140 million, leveraging DXP and AI for digital transformation, with the majority of revenue expected in 2026. This win has already led to a marked increase in the digital services pipeline within federal agencies.

The Global Data Center business continues to be a high-octane growth engine. It generated $173.2 million in revenue in Q1 2025, a 20.3% reported increase (21.2% organic). This was driven by strong organic storage growth of over 24%, fueled by lease commencements and improved pricing. New commencements in Q1 totaled 12 megawatts, including 8 megawatts in Northern Virginia. Pricing trends remain robust, with the average price per kilowatt on new commencements up 15% compared to the prior year, and renewals seeing strong spreads (19% cash, 27% GAAP). The segment's Adjusted EBITDA margin saw dramatic expansion, increasing 960 basis points year-over-year and 60 basis points sequentially to 52.4%, a direct result of improved pricing, recent commencements, and cost containment. While Q1 did not see new hyperscale contract signings, management is responding to strong interest across key global sites (US, Europe, India) and expects these to convert, aligning with the full-year target of 125 megawatts of new leasing. The company is actively expanding its land bank, which when fully developed will support 1.3 gigawatts of capacity, more than triple the current operating portfolio, including a significant new campus site in Richmond, Virginia. The recent joint venture with Ooredoo (ORDS.QA) also expands Iron Mountain's data center footprint into the fast-growing Middle East market.

The Asset Lifecycle Management (ALM) business, part of the Corporate and Other segment, also demonstrated impressive growth, with Q1 2025 revenue of $121 million, up 44% reported and 22% organically. This organic growth was driven by volume increases in both the enterprise and hyperscale channels. The business is benefiting from recent acquisitions like Regency Technologies, APCD, Wisetek, and Premier Surplus, which have expanded capabilities and geographic reach. ALM profitability is improving significantly, aided by acquisition synergies and operating performance. Management sees strong tailwinds for decommissioning work in the hyperscale channel due to robust data center development and is leveraging Iron Mountain's data center operator differentiation to capture additional share. The enterprise channel is also seeing success, with Iron Mountain's brand and security reputation becoming increasingly important as companies prioritize secure IT asset disposal. Over 95% of recent ALM bookings have been cross-sell wins, highlighting the power of the integrated portfolio.

Financial Health and Outlook

Iron Mountain's financial position reflects its strategic investments and operating performance. As of March 31, 2025, the company reported total assets of $19.36 billion and total liabilities of $18.86 billion. Long-term debt stood at $14.18 billion net of current portion. Despite significant investments, the company ended Q1 2025 with net lease adjusted leverage of 5.0 times, in line with management's expectations and maintaining compliance with debt covenants (Net total lease adjusted leverage ratio 5.00 vs. max 7.00; Fixed charge coverage ratio 2.40 vs. min 1.50). The weighted average interest rate on debt was 5.70% at quarter-end. The company utilizes interest rate swaps ($1.49B notional) and cross-currency swaps ($859M notional) to manage interest rate and FX risk.

Cash flow from operations increased significantly in Q1 2025, up $67.3 million year-over-year to $197.3 million, primarily due to improved working capital timing. Capital expenditures remain substantial, totaling $674.8 million in Q1 2025, heavily weighted towards growth investments ($628.5 million), particularly in data centers ($576 million). For the full year 2025, total capital expenditures are projected at approximately $1.95 billion, with $1.8 billion allocated to growth and $150 million to recurring needs, planned to be more first-half weighted.

Management's confidence in the business trajectory is reflected in the increased full-year 2025 guidance. Total revenue is now expected between $6.74 billion and $6.89 billion (11% growth at midpoint), Adjusted EBITDA between $2.505 billion and $2.555 billion (13% growth at midpoint), and AFFO between $1.48 billion and $1.51 billion, leading to AFFO per share of $4.95 to $5.05 (10% growth at midpoint). This guidance raise is attributed to strong Q1 performance, a positive outlook, favorable FX movements, continued strong revenue management, improved ALM performance, and the Premier Surplus acquisition. The significant Treasury contract win, while not included in the guidance, is expected to contribute revenue primarily in 2026, further bolstering future prospects. For the second quarter of 2025, the company expects revenue of approximately $1.68 billion, Adjusted EBITDA of approximately $620 million, and AFFO per share of approximately $1.18.

The dividend was increased by 10% effective with the April 2025 payout, bringing the quarterly dividend to $0.785 per share. This increase aligns with the company's target payout ratio in the low to mid-60s percent range and signals management's confidence in sustainable AFFO growth.

Competitive Dynamics and Risks

Iron Mountain operates in competitive markets, facing both diversified players and specialized niche providers. Its core competitive advantage lies in its unique ability to offer integrated physical and digital information management solutions on a global scale, leveraging its vast real estate network and trusted brand. This contrasts with pure-play data center operators like EQIX and DLR, who excel in specific areas like interconnection or energy efficiency but lack Iron Mountain's breadth across the information lifecycle. While EQIX and DLR may offer faster processing speeds or lower energy costs in their specialized data center offerings, Iron Mountain's integrated approach can provide customers with overall cost savings and simplified vendor management. Similarly, against players like Stericycle (SRCL) in secure destruction, Iron Mountain's advantage is its ability to bundle destruction with storage, digital conversion, and ALM services, offering a more comprehensive solution.

However, Iron Mountain faces competitive challenges. The rapid pace of technological innovation, particularly in cloud computing and AI, requires continuous investment to keep its digital offerings competitive. While the InSight DXP platform with AI capabilities is a step forward, pure-play tech companies may still hold an edge in specific digital functionalities or innovation speed. High compliance costs associated with managing sensitive information across diverse regulations globally can also pressure margins compared to competitors in less regulated niches. In the capital-intensive data center market, access to power and permitting delays are industry-wide challenges that can impact development timelines and costs, although Iron Mountain is managing these through standardization and land bank expansion.

Key risks highlighted include potential impacts from changes in political and economic environments, fluctuations in interest rates affecting debt costs, the ability to fund significant capital expenditures, and operational risks such as service interruptions or equipment damage. Litigation, particularly related to damage to customer assets, is an ongoing risk, though management does not currently believe any existing litigation will have a material adverse effect. Potential tariffs, such as those on IT hardware, could impact the ALM business (though management sees limited exposure and diversification efforts) and data center construction costs (estimated at less than 5% exposure).

Conclusion

Iron Mountain's strategic transformation under Project Matterhorn is yielding tangible results, driving accelerating double-digit growth across its diversified portfolio. The company is successfully leveraging its foundational strengths – a global physical footprint, deep customer trust, and operational expertise – to capitalize on the massive addressable markets in data centers, digital solutions, and ALM. The InSight DXP platform, with its integrated physical-digital capabilities and embedded AI, represents a key technological differentiator, enabling cross-selling success and providing significant value to customers navigating complex information landscapes.

The strong performance in Q1 2025, coupled with increased full-year guidance, underscores the positive momentum and management's confidence in the outlook. While competitive pressures exist across its various segments from both diversified and specialized players, Iron Mountain's unique integrated value proposition positions it favorably. The company's ability to continue funding its growth investments, particularly in the high-demand data center space, while maintaining a solid balance sheet and returning capital through a growing dividend, will be critical for sustaining this trajectory. For investors, Iron Mountain represents a compelling opportunity rooted in a resilient core business, amplified by high-growth engines, and underpinned by a strategic vision focused on meeting the evolving information management needs of the digital age.