[November 05, 2015]

CyrusOne Reports Third Quarter 2015 Earnings

Global data center service provider CyrusOne Inc. (NASDAQ: CONE), which specializes in providing highly reliable enterprise-class, carrier-neutral data center properties to the Fortune 1000, today announced third quarter 2015 earnings.

Highlights

• Third quarter Normalized FFO per share of $0.57 increased 30% over the third quarter of 2014
• Third quarter Adjusted EBITDA of $59.0 million increased 40% over the third quarter of 2014
• Third quarter revenue of $111.2 million increased 31% over the third quarter of 2014
• Leased 29,000 colocation square feet totaling $13 million in annualized GAAP revenue, with utilization increasing slightly to 89%
• Added three Fortune 1000 companies as new customers, increasing the total number of Fortune 1000 customers to 169 as of the end of the quarter
• Substantially completed the integration of Cervalis
• Increased 2015 Normalized FFO per share guidance range to $2.11 to $2.15, with new midpoint up $0.03 from prior guidance midpoint

"This was another strong quarter for our company driven by the continued exponential growth in data and a secular outsourcing trend which is causing more enterprise companies to outsource more of their mission critical data center requirements to CyrusOne," said Gary Wojtaszek president and chief executive officer of CyrusOne. "We are also glad to report that we have substantially completed the integration of Cervalis ahead of our initial timeline and believe that we are well positioned for growth in 2016."

Third Quarter 2015 Financial Results

Normalized Funds From Operations (Normalized FFO)³ was $41.2 million for the third quarter, compared to $28.9 million in the same period in 2014, an increase of 43%. Normalized FFO per diluted common share or common share equivalent⁴ was $0.57 in the third quarter of 2015, an increase of 30%. Adjusted Funds From Operations (AFFO)⁵ was $42.8 million for the third quarter, compared to $29.1 million in the same period in 2014, an increase of 47%.

Revenue was $111.2 million for the third quarter, compared to $84.8 million for the same period in 2014, an increase of 31%. The increase in revenue was driven by a 27% increase in leased colocation square feet and additional interconnection services. Net operating income (NOI)¹ was $69.0 million for the third quarter, compared to $51.8 million in the same period in 2014, an increase of 33%. Adjusted EBITDA² was $59.0 million for the third quarter, compared to $42.2 million in the same period in 2014, an increase of 40%. The Adjusted EBITDA margin of 53.1% in the third quarter increased from 49.8% in the same period in 2014.

Leasing Activity

CyrusOne leased approximately 4.8 MW of power, or 29,000 colocation square feet (CSF), in the third quarter. Leases signed in the third quarter represent approximately $1.1 million in monthly recurring rent inclusive of the monthly impact of installation charges, or approximately $13 million in annualized contracted GAAP revenue⁶ excluding estimates for pass-through power. The Company added three new Fortune 1000⁷ customers in the third quarter, bringing the total to 169 customers in the Fortune 1000 and 929 customers in total as of September 30, 2015. The weighted average lease term of the new leases based on square footage is 57 months. Recurring rent churn⁸ for the third quarter was 0.7%, compared to 2.9% for the same period in 2014.

Portfolio Utilization and Development

As of September 30, 2015, CyrusOne had approximately 1,512,000 CSF across 31 data centers, an increase of approximately 312,000, or 26%, from September 30, 2014. CSF utilization⁹ as of the end of the third quarter was 89%, up from 88% in the same period in 2014. In the third quarter, the Company commissioned a second data hall at its Northern Virginia facility, adding a total of approximately 37,000 CSF. CyrusOne currently has development projects underway in Austin, Houston, and San Antonio that will add 145,000 CSF and is also constructing a new facility in Phoenix that will add 150,000 NRSF. The Company is also expected to begin construction on the fifth data hall at its Carrollton location in Dallas in the fourth quarter, adding approximately 55,000 CSF.

Balance Sheet and Liquidity

As of September 30, 2015, the Company had $982.7 million of long term debt, cash and cash equivalents of $39.8 million, and $437.9 million available under its unsecured revolving credit facility. Net debt¹⁰ was $955.7 million as of September 30, 2015, approximately 29% of the Company's total enterprise value or 4.0x Adjusted EBITDA for the last quarter annualized. Available liquidity¹¹ was $477.7 million as of September 30, 2015.

Dividend and Distribution

On August 5, 2015, the Company announced a dividend and distribution of $0.315 per share of common stock and common stock equivalent for the third quarter of 2015. The dividend and distribution was paid on October 15, 2015, to stockholders of record at the close of business on September 25, 2015.

Additionally, today the Company is announcing a dividend and distribution of $0.315 per share of common stock and common stock equivalent for the fourth quarter of 2015. The dividend and distribution will be paid on January 8, 2016, to stockholders of record at the close of business on December 24, 2015.

Guidance

CyrusOne is increasing its guidance for full year 2015 Normalized FFO per diluted common share or common share equivalent and increasing the lower end of the guidance range for Adjusted EBITDA. The Company is reaffirming its guidance for Revenue and Capital Expenditures.

The annual guidance provided below represents forward-looking statements, which are based on current economic conditions, internal assumptions about the Company's existing customer base and the supply and demand dynamics of the markets in which CyrusOne operates.

Upcoming Conferences and Events

• NAREIT's REITWorld conference on November 17-19 in Las Vegas, Nevada

Conference Call Details

CyrusOne will host a conference call on November 5, 2015, at 12:00 PM Eastern Time (11:00 AM Central Time) to discuss its results for the third quarter of 2015. A live webcast of the conference call will be available under the "Investor Relations" tab in the "Events and Presentations" section of the Company's website at http://investor.cyrusone.com/events.cfm. The U.S. conference call dial-in number is 1-866-652-5200, and the international dial-in number is 1-412-317-6060. A replay will be available one hour after the conclusion of the earnings call on November 5, 2015, until 9:00 AM Eastern Time (8:00 AM Central Time) on November 16, 2015. The U.S. toll-free replay dial-in number is 1-877-344-7529 and the international replay dial-in number is 1-412-317-0088. The replay access code is 10073899.

Safe Harbor

This release and the documents incorporated by reference herein contain forward-looking statements regarding future events and our future results that are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "predicts," "projects," "intends," "plans," "believes," "seeks," "estimates," "continues," "endeavors," "strives," "may," variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this release and those discussed in other documents we file with the Securities and Exchange Commission (SEC). More information on potential risks and uncertainties is available in our recent filings with the SEC, including CyrusOne's Form 10-K report, Form 10-Q reports, and Form 8-K reports. Actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

Use of Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures that management believes are helpful in understanding the Company's business, as further discussed within this press release. These financial measures, which include Funds From Operations, Normalized Funds From Operations, Adjusted EBITDA, Net Operating Income, Adjusted Net Operating Income, and Net Debt should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of these non-GAAP financial measures to comparable GAAP financial measures have been included in the tables that accompany this release and are available in the Investor Relations section of www.cyrusone.com.

Management uses FFO, Normalized FFO, Adjusted EBITDA, NOI, Adjusted NOI, and AFFO as supplemental performance measures because they provide performance measures that, when compared year over year, capture trends in occupancy rates, rental rates and operating costs. The Company also believes that, as widely recognized measures of the performance of real estate investment trusts (REITs) and other companies, these measures will be used by investors as a basis to compare its operating performance with that of other companies. Other companies may not calculate these measures in the same manner, and, as presented, they may not be comparable to others. Therefore, FFO, Normalized FFO, NOI, Adjusted NOI, AFFO and Adjusted EBITDA should be considered only as supplements to net income as measures of our performance. FFO, Normalized FFO, NOI, Adjusted NOI, AFFO and Adjusted EBITDA should not be used as measures of liquidity or as indicative of funds available to fund the Company's cash needs, including the ability to make distributions. These measures also should not be used as substitutes for cash flow from operating activities computed in accordance with U.S. GAAP.

¹Net Operating Income (NOI) is defined as revenue less property operating expenses. Amortization of deferred leasing costs is presented in depreciation and amortization, which is excluded from NOI. CyrusOne has not historically incurred any tenant improvement costs. Our sales and marketing costs consist of salaries and benefits for our internal sales staff, travel and entertainment, office supplies, marketing and advertising costs. General and administrative costs include salaries and benefits of our senior management and support functions, legal and consulting costs, and other administrative costs. Marketing and advertising costs are not property-specific, rather these costs support our entire portfolio. As a result, we have excluded these marketing and advertising costs from our NOI calculation, consistent with the treatment of general and administrative costs, which also support our entire portfolio. From time to time, there may be non-recurring costs in property operating expenses, and as a result the Company may present Adjusted Net Operating Income (Adjusted NOI) to exclude the impacts of those costs.

²Adjusted EBITDA is defined as net income (loss) as defined by U.S. GAAP before noncontrolling interests plus interest expense, income tax (benefit) expense, depreciation and amortization, non-cash compensation, transaction costs and transaction-related compensation, including acquisition pursuit and integration costs, restructuring costs, severance costs, loss on extinguishment of debt, asset impairments and (gain) loss on disposals, lease exit costs, and other special items. Other companies may not calculate Adjusted EBITDA in the same manner. Accordingly, the Company's Adjusted EBITDA as presented may not be comparable to others.

³Normalized Funds From Operations (Normalized FFO) is defined as Funds From Operations (FFO) plus transaction costs, including acquisition pursuit and integration costs, transaction-related compensation, (gain) loss on extinguishment of debt, restructuring costs, severance costs, lease exit costs, legal claim costs, and other special items. FFO is net (loss) income computed in accordance with U.S. GAAP before noncontrolling interests, (gain) loss from sales of real estate improvements, real estate-related depreciation and amortization, amortization of customer relationship intangibles, and real estate and customer relationship intangible impairments. Because the value of the customer relationship intangibles is inextricably connected to the real estate acquired, CyrusOne believes the amortization and impairments of such intangibles is analogous to real estate depreciation and impairments; therefore, the Company adds the customer relationship intangible amortization and impairments back for similar treatment with real estate depreciation and impairments. The Company believes its Normalized FFO calculation provides a comparable measure to that used by others in the industry.

⁴Normalized FFO per diluted common share or common share equivalent is defined as Normalized FFO divided by the average diluted common shares and common share equivalents outstanding for the quarter, which were 72,624,898 for the third quarter of 2015.

⁵Adjusted Funds From Operations (AFFO) is defined as Normalized FFO plus amortization of deferred financing costs, non-cash compensation, and non-real estate depreciation and amortization, less deferred revenue and straight line rent adjustments, leasing commissions, recurring capital expenditures, and non-cash corporate income tax benefit and expense.

⁶Annualized GAAP revenue is equal to monthly recurring rent, defined as average monthly contractual rent during the term of the lease plus the monthly impact of installation charges, multiplied by 12. It can be shown both inclusive and exclusive of the Company's estimate of customer reimbursements for metered power.

⁷Fortune 1000 customers include subsidiaries whose ultimate parent is a Fortune 1000 company or a foreign or private company of equivalent size.

⁸Recurring rent churn is calculated as any reduction in recurring rent due to customer terminations, service reductions or net pricing decreases as a percentage of rent at the beginning of the period, excluding any impact from metered power reimbursements or other usage-based billing.

⁹Utilization is calculated by dividing CSF under signed leases for available space (whether or not the contract has commenced billing) by total CSF. Utilization rate differs from percent leased presented in the Data Center Portfolio table because utilization rate excludes office space and supporting infrastructure net rentable square footage and includes CSF for signed leases that have not commenced billing. Management uses utilization rate as a measure of CSF leased.

¹⁰Net debt provides a useful measure of liquidity and financial health. The Company defines Net Debt as long-term debt and capital lease obligations, offset by cash, cash equivalents, and temporary cash investments.

¹¹Liquidity is calculated as cash, cash equivalents, and temporary cash investments on hand, plus the undrawn capacity on CyrusOne's revolving credit facility.

About CyrusOne

CyrusOne (NASDAQ: CONE) specializes in highly reliable enterprise-class, carrier-neutral data center properties. The Company provides mission-critical data center facilities that protect and ensure the continued operation of IT infrastructure for more than 925 customers, including nine of the Fortune 20 and 169 of the Fortune 1000 companies.

CyrusOne's data center offerings provide the flexibility, reliability, and security that enterprise customers require and are delivered through a tailored, customer service-focused platform designed to foster long-term relationships. CyrusOne is committed to full transparency in communication, management, and service delivery throughout its more than 30 data centers worldwide.