Iron Mountain Q2 2026 earnings call highlights AI-driven data center capex and capacity leasing momentum.
Iron Mountain Incorporated delivered record-breaking second quarter results in 2026, significantly exceeding expectations across all key metrics. Total revenue reached $2.03 billion, representing 19% reported growth and 17% organic growth year-over-year. Adjusted EBITDA climbed to $727 million, a 16% increase reflecting better-than-expected revenue growth and cost discipline. Adjusted Funds From Operations per share reached $1.44, up 16% and surpassing company projections by $0.04.
The company's most significant momentum came from its portfolio of growth businesses. Data Center, Asset Lifecycle Management, and Digital operations collectively grew more than 50% in the quarter, contributing 14 percentage points to consolidated growth. These three divisions now account for 35% of total revenue, up 750 basis points from the prior year, while the highly recurring physical storage business maintained consistent mid-single-digit growth.
Data Center revenue reached $263 million, increasing 39% driven by lease commencements and positive pricing trends. Iron Mountain leased 13 megawatts in the second quarter and 75 megawatts in July, totaling 110 megawatts year to date. Approximately 325 megawatts of leasable capacity are expected to energize over the next 24 months. CEO William Meaney highlighted that data center leasing is being driven by artificial intelligence, noting, "both of these leases are a direct result of the large and expanding pipeline we have around AI inference." He also cautioned that "the leasing at these — for these large hyperscale deals is a little bit lumpy," warning of potential volatility in quarterly signing activity.
Asset Lifecycle Management revenue surged to $288 million, up 88% overall and 82% on an organic basis. Hyperscale decommissioning revenue increased more than 100% year-over-year, including a $30 million timing benefit from accelerated projects. The enterprise segment of ALM grew more than 60% organically. CFO Barry Hytinen noted this segment has "grown about 15 or 20-fold in the last 5 or 6 years," and observed that "our margin performance in the quarter reflects the team's outstanding growth in services revenue, which naturally drives a mix headwind," acknowledging that rapid growth in the services segment can pressure overall margins.
Global Records and Information Management revenue reached $1.4 billion, a record quarterly result representing 8% reported growth. Storage rental revenue within this segment totaled $1.14 billion, up 12% on a reported basis and 5% organically. Digital Solutions revenue grew more than 25% within the Global RIM segment, with recurring digital revenue now exceeding 45%.
A significant contributor to growth momentum is the company's IRS contract performance, which reached $15 million in the second quarter, up from $9 million in the first quarter, with management targeting revenue exceeding $100 million in 2027. The company is also utilizing agentic AI through its DXP platform, with CEO Meaney reporting that "Insight DXP is positioning as a top scorer for agentic AI functionality" among industry analysts.
Operating cash flow for the first half of 2026 reached $888 million, representing the best first-half performance in company history. The company's leverage ratio improved to 4.8x net lease adjusted leverage, the lowest level since prior to the REIT conversion in 2014. The Board declared a quarterly cash dividend of $0.864 per share, payable in early October.
To support its growth trajectory, Iron Mountain issued a new $1.5 billion bond with a 6.25% fixed coupon maturing in 2035, featuring an investment-grade covenant package. The company successfully transitioned to an investment-grade covenant structure while maintaining its lowest leverage levels in over a decade.
Currency headwinds modestly impacted results. CFO Hytinen stated, "the change in FX rates contributed approximately $14 million in revenue year-on-year, I would like to note that this was slightly below what we had assumed in our outlook as the dollar strengthened."
The company identified India as a critical growth region for data center expansion. CEO Meaney noted, "India is quickly becoming a major hyperscale data center market and we are well positioned with another 100 megawatts of future development capacity."
Iron Mountain completed the acquisition of Groupe ATF on August 1, 2026, intended to deepen the company's presence in France and Belgium, with management targeting a post-synergy EBITDA multiple below fivefold. The acquisition is projected to contribute approximately $7 million to second-half revenue.
Management described efficiency initiatives as a permanent operational strategy. CFO Hytinen stated, "transformation is a lifestyle, not a diet," with programs focused on procurement, real estate optimization, and AI-driven productivity.
For full year 2026, Iron Mountain increased guidance across all primary metrics. Revenue guidance was raised to a range of $7.94 billion to $8.01 billion, reflecting 16% growth at the midpoint. Adjusted EBITDA guidance was increased to a range of $2.945 billion to $2.975 billion. Adjusted Funds From Operations guidance was increased to a range of $1.76 billion to $1.78 billion, or $5.87 to $5.93 per share. Management attributed this confidence to strong execution of growth plans, exceptional customer stewardship, the strength of its traditional records business, and the expanding portfolio of growth businesses positioned to compound double-digit revenue and earnings growth.