Iron Mountain Incorporated (IRM) | The Buildout — AI Infrastructure
The Verdict
Iron Mountain is a REIT whose history is physical records storage: it holds boxes of documents and backup media for large organizations in leased and owned facilities. Over recent years it has added three faster-growing lines that touch the AI buildout directly — data center leasing to hyperscalers, IT asset decommissioning and remarketing, and a digital platform, InSight DXP, that uses AI agents to classify and govern customer content. Management groups those three as its 'growth businesses.' Together they give Iron Mountain an unusual position: it houses the physical records of large enterprises, leases the powered capacity AI inference runs on, and dismantles the hardware those operators retire.
| Market Cap | — |
| Revenue (TTM) | $7.6B |
| Revenue Growth | +17.4% |
| EBITDA Margin (TTM) | 32.6% |
| Net Debt | $19.4B |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Growth businesses — Data Center, ALM, and Digital — were 35% of Q2 2026 revenue, up 750 bps year-over-year, and collectively grew more than 50%, adding 14 points to consolidated growth.
- Data Center leasing reached 110 MW year-to-date through July 2026, against an original full-year target of 'over 100 MW'; management guides to 'meaningfully exceed' that, with 325 MW energizing over the next 24 months.
- ALM FY2026 revenue is guided to approach $1B, up from $950M; enterprise ALM is guided to sustain 25%+ annual growth, and the hyperscale decommissioning TAM is expected to double from $3B to about $6B over 4–5 years.
- The core storage base is still compounding: physical volume rose 2.5M cubic feet sequentially in Q2 2026, retention has improved four straight quarters (92.9% to 93.3%), and storage revenue per square foot was $11.74 versus $10.14 a year earlier.
- Leverage was 4.8x at Q2 2026 — the lowest since before the 2014 REIT conversion — alongside the company's first-ever investment-grade covenant package and H1 2026 operating cash flow of $888M, up $315M.
What We’re Watching
- Services mix is a structural drag: services grow faster than storage but carry lower margins. In Q2 2026 Global RIM adjusted EBITDA grew 6% while segment revenue grew 8%.
- Part of ALM's Q2 2026 beat was pull-forward — a $30M timing benefit from hyperscaler projects accelerated into the quarter — and management said it may not repeat.
- Memory-price direction turned less clear: Q1 2026 language was 'stabilized,' Q2 2026 was 'some up and some down.' A reversal would work against the ALM line, now the fastest-growing piece of the mix.
- Data center leasing is lumpy and concentrated in a small set of hyperscalers, and management intends to stop guiding annual leasing, shifting the forward metric to the energization schedule.
The thesis looks intact and, on the operating evidence, still strengthening: two consecutive quarters of raised guidance across revenue, EBITDA, AFFO, and ALM, with Q2 2026 beating the guide management had set just one quarter earlier. The caution is compositional rather than directional — reported growth eased from Q1 to Q2, part of the ALM beat was timing, and the services mix caps margin expansion even as revenue grows. The key open question is whether ALM's enterprise channel can sustain its guided 25%+ growth once the memory-price tailwind and the Q2 pull-forward wash out.
Earnings Beat
In Q2 2026 Iron Mountain reported revenue of $2.03B, up 19% reported and 17% organic, on a gross margin of 52.8%, down from 55.9% a year earlier. Adjusted EBITDA was $727M, up 16%. Both revenue and EBITDA beat the guide management had set the prior quarter. ALM was the standout: revenue of $288M, up 88% year-over-year, with enterprise ALM up 60% organic. Global RIM revenue was a quarterly record at $1.4B, and Data Center revenue grew 39%.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $2.0B | $1.9B | $1.7B | +18.5% |
| Gross margin | 52.8% | 54.0% | 55.9% | -310bps |
| EBITDA | $655M | $587M | $520M | +25.9% |
| EPS | $0.34 | $0.48 | $-0.15 | −322.5% |
| Data Center revenue | $263M | $255M | $190M | +39% |
| ALM revenue | $288M | $232M | $153M | +88% |
we now expect full year revenue to approach $1 billion.— Barry Hytinen, CFO, 2026-08-05
Management tone: Management's tone stayed confident across both 2026 calls. The Q1 2026 call was framed as an exceptional print; on the Q2 2026 call reported growth had eased and management leaned on 'record' framing and a second raised full-year guide rather than dwelling on the deceleration. It disclosed offsetting detail — the $30M ALM pull-forward, a smaller-than-assumed FX benefit, the services-mix margin drag, and the lumpiness of hyperscale leases — and gave same-currency bridges to show the underlying raise was larger than the headline.
Management Guidance
On the Q2 2026 call management raised FY2026 guidance to revenue of $7.94–8.01B, adjusted EBITDA of $2.945–2.975B, and AFFO of $1.76–1.78B. On the same FX rates as prior guidance, the raise was $125M of revenue, $25M of EBITDA, and $35M of AFFO, with $60M / $12M / $20M of that falling in the second half. ALM FY2026 revenue guidance was raised again, to approach $1B. Management initiated a Q3 2026 guide of roughly $1.98B revenue, $745M adjusted EBITDA, and $440M / $1.47 AFFO. It also said it intends to stop guiding annual data center leasing, steering investors to the 24-month energization schedule, while expecting leasing to 'meaningfully exceed' the 110 MW signed year-to-date.
Trajectory
Quarterly revenue has risen every quarter from $1.71B in Q2 2025 to $2.03B in Q2 2026, a +19% year-over-year rate, with organic growth at 17% in both Q1 and Q2 2026. The growth businesses are doing the work: Data Center, ALM, and Digital are 35% of revenue and collectively grew more than 50%, adding 14 points to consolidated growth, while storage compounds mid-single-digits. Gross margin compressed to 52.8% in Q2 2026 from 55.9% a year earlier, which management attributes to services revenue growing faster than storage at lower margins. Trailing free cash flow is negative because growth capital spending — $553M in Q2 2026 alone — runs ahead of operating cash flow.
The Model
The model projects FY+1 revenue of $8,025M and EBITDA of $2,761M, a 34.4% margin, then FY+2 revenue of $9,150M and EBITDA of $3,184M, a 34.8% margin. The near-term anchor is the company's own raised FY2026 guidance and its ALM outlook, with the data center energization schedule and the IRS ramp adding to it. FY+2 depends on more of the 325 MW runway converting into revenue, the enterprise ALM channel sustaining its guided 25%+ growth, and the storage base continuing to compound.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $6.9B | $8.0B | $9.2B |
| YoY Growth | — | +16.3% | +14.0% |
| EBITDA | $2.2B | $2.8B | $3.2B |
| EBITDA Margin | 32.4% | 34.4% | 34.8% |
Projections are the median of 5 independent model runs.
On the Q2 2026 call management raised FY2026 guidance to revenue of $7.94–8.01B, adjusted EBITDA of $2.945–2.975B, and AFFO of $1.76–1.78B. On the same FX rates as prior guidance, the raise was $125M of revenue, $25M of EBITDA, and $35M of AFFO, with $60M / $12M / $20M of that falling in the second half. ALM FY2026 revenue guidance was raised again, to approach $1B. Management initiated a Q3 2026 guide of roughly $1.98B revenue, $745M adjusted EBITDA, and $440M / $1.47 AFFO. It also said it intends to stop guiding annual data center leasing, steering investors to the 24-month energization schedule, while expecting leasing to 'meaningfully exceed' the 110 MW signed year-to-date.
What Could Go Right — and Wrong
- Data center leasing continues at the first-half 2026 pace, adding signed megawatts beyond the 110 MW already leased and pulling the 325 MW runway into revenue faster.
- Enterprise ALM sustains 25%+ annual growth while the hyperscale decommissioning TAM expands from $3B toward $6B, lifting ALM past $1B.
- The government and digital vectors scale: the IRS/Treasury contract steps up to more than $100M annually in 2027 and InSight DXP wins convert into disclosed revenue.
- Transformation savings outpace the services mix drag, expanding consolidated margin rather than just holding it.
- The storage base adds both volume and price, with management's baseline of up to about 50 bps of annual volume growth and storage revenue per square foot already rising.
- Consolidated growth normalizes toward the storage base rate if the growth businesses plateau.
- A memory-price reversal re-rates ALM, where harvesting and remarketing value is tied to component prices.
- The services mix keeps capping margin expansion even as revenue grows.
- A hyperscale leasing pause, or one deferred large lease, swings a quarter because the counterparty set is narrow and deals are lumpy.
- Rising absolute debt — about $19.6B total at June 30, 2026 — and higher interest costs drag on earnings.
Looking Ahead
Over the next twelve months the questions are whether data center leasing keeps pace and whether the 325 MW energization schedule converts into revenue on time. Management's FY2026 guide implies continued double-digit growth, and it initiated a Q3 2026 guide. ALM's second-half outcome depends on enterprise delivery; the IRS ramp moves toward $45M for 2026, with more than $100M expected annually from 2027. Groupe ATF adds a small France/Belgium ALM contribution in the second half of 2026.
- Q3 2026Q3 2026 earnings — Tests whether growth holds versus the ~$1.98B revenue and ~$745M EBITDA guide.
- H2 2026Groupe ATF contribution — About $7M of expected H2 revenue from the France/Belgium ALM tuck-in.
- FY2026Enterprise ALM delivery — Second-half enterprise ALM execution underpins the raised FY ALM guidance.
- Next 24 months325 MW energization — Commencements convert committed capacity into Data Center revenue.
- 2027IRS/Treasury step-up — Business guided above $100M annually, up from $45M expected in 2026.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $6.2B | $6.9B | $7.6B | +12.2% |
| Gross Margin | 56.1% | 55.4% | 54.2% | 73bps |
| EBITDA | $1.9B | $2.2B | $2.5B | +14.9% |
| EBITDA Margin | 31.7% | 32.4% | 32.6% | +75bps |
| Net Income | $180M | $145M | $419M | -19.7% |
| Free Cash Flow | −$657M | −$932M | −$481M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)54.2%
- EBITDA Margin (TTM)32.6%
- Net Margin (TTM)5.5%
- ROIC6.2%
- FCF Conversion-19.5%
- SBC / Revenue1.8%
The Company
Iron Mountain is a global information management company structured as a REIT, describing itself in its FY2025 10-K as 'a global leader in information management services, trusted by more than 240,000 customers in 61 countries.' Its historical core is physical: it stores records, backup media, and entertainment archives for large organizations and offers shredding and digital conversion on top. What matters for the AI buildout is the overlap of that infrastructure with three faster-growing businesses — data center leasing, IT asset lifecycle management, and a digital content platform — which management groups as its 'growth businesses.'
The company operates through three reported segments: Global RIM, Global Data Center, and Corporate and Other, which holds ALM and Fine Arts. As of December 31, 2025 it ran 1,111 leased and 232 owned facilities — 1,343 sites and about 98.6 million square feet. The data center build follows a pre-leased model; the CFO describes the company as 'not a speculative builder,' with the vast majority of what it constructs already leased to high-credit tenants on long-duration leases.
Business Segments
Competitive Landscape
Iron Mountain competes in data center leasing and in IT asset lifecycle management. The only direct competitor quote in the material comes from WhiteFiber, which lists Iron Mountain among 'several prominent data center providers, including Digital Realty, Equinix, Inc., NTT, Cyrus One, Inc., STACK Infrastructure, Inc., Aligned Data Centers, LLC.' Management positions the company differently for hyperscale work, with the CFO claiming Iron Mountain is 'the only provider of a complete end-to-end life cycle solution for the hyperscale marketplace.' That claim is management's own; the WhiteFiber filing acknowledges Iron Mountain as a competitor without asserting its uniqueness.
- Digital RealtyNamed in a WhiteFiber filing quote about data center providers; not discussed by Iron Mountain.
- EquinixNamed in the same WhiteFiber quote; also appears in the supply-chain graph as both customer and competitor.
- NTTNamed in the same WhiteFiber quote about data center providers; not discussed by Iron Mountain.
- CyrusOneNamed in the same WhiteFiber quote about data center providers; not discussed by Iron Mountain.
- STACK InfrastructureNamed in the same WhiteFiber quote about data center providers; not discussed by Iron Mountain.
Supply Chain
Iron Mountain is an operator, not a component maker. It buys data center power, cooling, and IT equipment on the way in, and on the way out leases capacity and sells lifecycle services to hyperscalers, enterprises, and governments.
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More on IRM: Earnings recap