Iron Mountain's data center and ALM engines re-accelerate — now it's mining the seams

A record Q2 with 19% revenue growth as ALM approaches a $1B run-rate and hyperscale leasing snaps back on the AI-inference wave.

IRM · Earnings Call · 2026-08-05

The whole range gets sold

Iron Mountain reported a record second quarter that, in management's words, "“exceeded our expectations across all metrics” — William Meaney, President and Chief Executive Officer · 2026-08-05." Revenue grew 19% year-over-year (17% organic), adjusted EBITDA rose 16% to a record $727M, and AFFO was up 17% — the kind of print that lets a REIT raise full-year guidance with confidence (revenue $7.94–8.01B at the midpoint, AFFO $1.76–1.78B). But the engine behind the beat is no longer the legacy records box.

Our Data Center, ALM and Digital businesses collectively grew more than 50% in the quarter or 14 percentage points on a consolidated basis. These 3 growth businesses accounted for 35% of our second quarter revenue, an increase of 750 basis points as compared to last year.
William Meaney, President and Chief Executive Officer · 2026-08-05

The hyperscale decommissioning business — the single hottest keyword on the company's own quarterly trajectory, at momentum 219 in Q2 2026 — is now doing the heavy lifting inside ALM. ALM revenue rose 88% to $288M, helped by "$30 million of timing benefit related to a couple of large projects that hyperscalers accelerated into the quarter." Management now expects ALM to "approach $1 billion" for the full year, up from $600M as recently as 2025. The strategic prize is the enterprise channel: 75% of a $35B market, growing 60%+ organically this year, with what the team calls sustainable 25%-plus annual growth.

The data-center leasing comeback

This is the sharpest reversal versus a year ago. In mid-2025 management openly acknowledged hyperscaler demand had pivoted to large-language-model campuses, leaving IRM's inference-and-cloud assets in a quieter booking period — "in the first half of the year, they were building or prioritizing the building of the large campuses for large language models. And now they're kind of back to where we play" (Q2 2025 call). One year later, the megawatt lease cadence has snapped back: 13MW in Q2, 75MW in July, 110MW year-to-date — "meaningfully above" the 100MW target that earlier this year was still cast as "advanced discussions." The marquee win: a 51MW, 10-year lease in Mumbai from a major global hyperscaler, with another 100MW of future development capacity flagged in India. London 3 is now fully leased at 25MW, and Amsterdam and Richmond round out a 325MW energization pipeline over the next 24 months. The common thread is AI inference: management says both the London and Amsterdam leases "are a direct result of the large and expanding pipeline we have around AI inference" — the exact market where hyperscalers had gone quiet a year earlier.

ALM and the neo-cloud seam

Iron Mountain increasingly pitches itself as the end-to-end life-cycle partner of the data center world — build it, operate it, decommission it. The Groupe ATF acquisition (closed July 31/Aug 1) deepens the ALM platform in France and Belgium at a low-20s EBITDA margin and a sub-5x synergy-adjusted multiple — the same tuck-in playbook as Wisetek, Premier and Regency before it. As Barry Hytinen put it, "we've seen before with other tuck-in acquisitions, we've been able to drive considerable growth of top line as well as a considerable improvement in margin." More novel is the emergence of neo-clouds as a new customer class in the decommissioning funnel — a "new element of data center that's coming in as an incremental leg," per management. IRM was "selected by a neo-cloud customer to decommission and remarket tens of thousands of IT assets," a signal that the GPU-heavy refresh cycle is opening a brand-new revenue seam. It sits alongside the broader Cloud mega-theme, and the company's pitch is that it is the only provider offering the complete cradle-to-grave solution: lease, operate, then harvest the gear. The digital side keeps compounding too: the DXP Platform won a 3-year global managed-services deal with a fintech (processing 500,000 inbound items annually via AI agents) and a 40-million-image paperless digitization in Australia. The US Treasury/IRS contract is ramping faster than plan — $15M in Q2, up from $9M in Q1, with $100M+ expected in 2027.

Credit quality, on a REIT's terms

Amid the growth spend, the balance sheet is notably stronger. Net lease-adjusted leverage sits at 4.8x — the lowest since before the 2014 REIT conversion — and the company's first-ever investment-grade covenant package accompanied a $1.5B bond at a 6.25% coupon maturing 2035. "We are very pleased to have achieved a new milestone with this offering. It includes our first-ever investment-grade covenant package." That credit posture underpins the capital-allocation story: Funds From Operations hit $341M in Q1, up 110% year-over-year, and the company now guides AFFO per share to $5.87–5.93 while holding the trailing payout ratio at 60%. Net profit margin has expanded to 7.7% from near zero a year ago as ALM's higher-margin enterprise mix, data center EBITDA margins above 52%, and digital's recurring shift all compound. The one flag management raised itself is that hyperscale decommissioning remains lumpy and memory-price-sensitive — which is why they keep framing the enterprise channel, not the hyperscale spikes, as the durable $35B market they intend to own. Even so, advanced discussions across a 325MW energization pipeline, plus a fresh neo-cloud customer class, suggest the cross-business seams that Matterhorn was built to mine are finally yielding.