Image source: The Motley Fool.
Switch, Inc. (NYSE:SWCH) Q4 2018 Earnings Conference Call March 12, 2019, 5:00 p.m. ET
Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:
Operator
Please stand by. We're about to begin. Good day, and welcome to the Switch Fourth Quarter and Full Year 2018 Earnings Call. Today's call is being recorded. At this time, I'd like to turn the call over to Matt Heinz. Please go ahead.
Matthew Heinz -- Vice President of Investor Relations and Financial Planning & Analysis
Thank you, Operator. Good afternoon and welcome to Switch's Fourth Quarter and Full Year 2018 Conference Call. On the call today are Thomas Morton, Switch's President, and Gabe Nacht, Switch's CFO. Today's call may include forward-looking statements, including references to expectations, projections, or other characterizations of future events or market conditions. Actual results may differ materially from those expressed in our forward-looking statements. They are subject to certain risks, uncertainties, and assumptions.
Our statements are made as of today, and we assume no obligation to update our disclosures. We described some of these risks in our SEC filings, specifically on our Form 10-K, particularly in the section entitled "Risk Factors." In addition, today's call includes discussion of non-GAAP financial measures, which should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Please refer to today's press release and supplemental package for further information, including a reconciliation of non-GAAP measures.
Our fourth quarter 2018 press release has been furnished to the SEC as part of our Form 8-K and is available on our investor website at investors.switch.com. I will now turn the call over to Thomas Morton, Switch's President.
Thomas Morton -- President and General Counsel
Thank you, Matt. And good afternoon, everyone. Thank you for joining us today. During 2018, we opened one sector at our Core Campus and two sectors at our Citadel Campus. We also significantly expanded the land footprint of the Citadel Campus with the acquisition of 722 acres of land. An additional sector in the Pyramid Campus was also opened in 2018. Most importantly, we advanced construction on the Keep Campus in Atlanta. The walls of the first data center are up, and it is on schedule to be open for customer deployment in late Q4 2019. We also secured the Switch Bill in Atlanta, which provides for zero sales and personal property taxes to customers who deploy at our Keep Campus.
In all, we made significant progress toward establishing the Switch PRIME as hyperscale technology ecosystems, while focusing our sales strategy on becoming the colocation provider of choice for mission-critical enterprise workloads. Executing this strategy involved expanding upon our approach to our customer relationships, in which we have invested more time and effort than ever before in order to ensure that customers truly understand the full range of capabilities that Switch can offer, leading to a larger and more meaningful long-term business relationship with those customers.
As we have discussed in prior earnings calls, this effort has lead to lengthening sales cycles and deployment timelines, which impacted our 2018 bookings and revenue growth. We firmly believe that this was a prudent investment designed to optimally position Switch to be a leader in enterprise hybrid cloud transformation.
In 2019, we remain focused on supporting the continued growth of Switch's Enterprise Elite Hybrid Cloud Ecosystems, including both Fortune 1000 enterprise and leading cloud service provider deployment. On that note, we continue to work closely with major public cloud platforms as we execute toward our vision of transforming the Switch PRIMES into the four largest zero latency, hybrid cloud availability zones in the world. Our highly scalable and 100% green power infrastructure, significant land banks in low tax jurisdiction with low risk of natural disasters, and unmatched pricing on connectivity offer the ideal environment for enterprises to establish their primary colocation workloads.
And for cloud providers, we believe the ability to tap into our ecosystem of hundreds of enterprises in a single campus environment represents an unmatched value proposition unique to Switch. Now, I would like to provide an overview of our recent sales and marketing initiatives before turning the call over to Gabe to provide our 2019 financial outlook.
Our sales strategy consists of a three-tiered structure, including our national sales team, local sales teams, and channel sales. We have recently launched a national sales team, or senior sales specialists. And this is a team of seasoned data center sales professionals with established books of business, these professionals are focused on driving growth with large enterprises across our national campus footprint. Second, our local sales team members who are based in the PRIME campus cities have in-depth knowledge of their respective local markets and are primarily charged with delivering an unmatched concierge's experience to current and prospective customers. In addition to their own self-generated leads, local sales reps will also provide deal support from leads generated by national sales, channel partners, and online, direct inquiries.
Third, our channel sales team is tasked with managing our existing channel relationships, vetting and onboarding new channel partners, and supporting the local sales teams with channel RFPs, facility tours, and deal closure. In total, we expect to add between 5 to 10 customer facing sales professionals in 2019. And we'll adjust that number based on success, need, and opportunities.
On the customer front, Switch added 26 new logos in the quarter, bringing our total to 138 new logos in 2018, compared to just over 120 new logos in the prior year. Some of our new customers include a leading retirement and college savings plan administrator, two regional transportation authority organizations in California, one of the largest theme park operators in the United States, and a publically traded mortgage insurance provider.
In 2018 Switch continued to expand and monetize its intellectual property portfolio. We filed an additional 136 patent claims and 11 patent applications. We successfully achieved the issuance of an additional 63 patent claims, including our Black Iron Forest design and additional protections for our T-SCIF configuration and external wall penetrating, air handling systems.
We expanded our licenses to include Munters, and the Vertiv Corporation. Additionally, we are in development of further data center design innovations with our partnership with Vertiv. In 2018, we filed 145 trademark applications and saw 45 trademarks successfully register with the USPTO.
2018 also saw the advancement of Switched ON. In March 2018, Switched ON received a license from the Federal Energy Regulatory Commission, FERC, to sell electricity to end-users. Switched ON also joined the Western States Power Pool, which opened pathways to sell power into 11 states in the western portion of the United States. Switched ON currently has 8 customers who have signed letters of intent to utilize Switched ON as their partner for their energy services. All of the customers are in different stages of the application process with the Nevada Public Utilities Commission to receive direct access energy from Switched ON.
We anticipate that the first three will likely receive approvals by the end of 2019 and begin receiving service from Switched ON in 2020. We believe that this is the touchstone to yet another strategic advantage Switch can offer its customers as part of a holistic enterprise solution.
With respect to our direct electrical consumption, Switch is on pace to recapture the $27 million impact fees paid in 2017 to Nevada Energy through energy cost savings by being a direct access customer. With our current load and growth considered, we anticipate recapturing the entire amount by the end of August 2019. This will constitute a 27-month repayment period. We project our savings to grow in coming years as our load continues to increase, constituting a further delta in total dollars paid for energy by being a direct access customer, versus what Switch would have otherwise paid as a fully bundled customer of the incumbent utility.
Our Combined Ordering Retail Ecosystem, or CORE, the telecommunications portion of Switch Connect saw a solid year of growth as well. Connectivity revenue grew 9.3% year-over-year, with more than 80% of Switch's customer participating in CORE. CORE grew from 17.9% to 18.2% of our total revenue, while maintaining consistent overall margins. With increased adoption and growth momentum, we are excited about the prospective continued growth of CORE in 2019.
I will now turn the call over to Gabe to discuss our financial results. Gabe.
Gabe Nacht -- Chief Financial Officer
Thanks, Thomas. Today, I'm going to review our financial results for the fourth quarter and full year of 2018. I will then provide our outlook for 2019. In the fourth quarter 2018, we achieved quarterly revenue of $103.2 million, an increase of $3.9 million from the fourth quarter of 2017. This is primarily attributable to a $3.1 million increase in colocation revenue and a $0.7 million increase in connectivity revenue. With the full year of 2018, we achieved revenue of $405.9 million, an increase of $27.6 million from 2017. This is primarily attributable to a $19.5 million increase in colocation revenue and a $6.3 million increase in connectivity revenue. Thirty percent of the revenue increase resulted from new customers initiating service during the past year, while 70% of the revenue growth came from customers who have been with Switch longer than one year.
In the fourth quarter and for the full year of 2018, more than 95% of our revenue was recurring, consisting primarily of colocation, which includes the licensing and leasing of cabinet space and power, and connectivity services, which include cross-connects, broadband services, and external connectivity. Colocation revenue for the fourth quarter of 2018 was $82.9 million, compared to $79.8 million reported in Q4 of 2017. And activity revenue in Q4 of 2018 was $18.4 million, compared to $17.7 million in the same period of 2017. Other revenue, including professional services, accounted for $1.9 million in Q4 of 2018, essentially unchanged compared to the same period in 2017.
For the full year, colocation revenue was $324.2 million, compared to $304.7 million reported in 2017. Connectivity revenue for 2018 was $74 million, compared to $67.7 million in 2017. Other revenue, including professional services, accounted for $7.6 million during 2018, up from $5.9 million in 2017, which has become a strategic partner to approximately 900 customers. And we continue adding new logos at all of our PRIMES. As of December 31, 2018, Switch had over 14 thousand billable cabinet equivalents generating over $2300 per cabinet equivalent in monthly recurring revenue. We had more than 5000 billable cross-connects as of December 31, 2018. And cross-connects accounted for approximately 3.6% of our total revenue in 2018.
During Q4, we signed over 400 contracts equating to more than 8 megawatts, with total contract value of more than $73 million and annualize MRC of over $20 million, inclusive of both renewals and sales of incremental services. Our 15 largest customer transactions in Q4 accounted for 78% of total contract value and resulted in incremental annualized MRC of more than $7 million. All metrics discussed on today's call are in our investor presentation posted on the investor relations section of our website.
Churn for the fourth quarter of 2018 was 0.4% and was 0.5% for the full year 2018, relative to our trailing three-year average annual churn of 0.7%. As a reminder, we define churn as the reduction in recurring revenue attributable to customer terminations or non-renewals of expired contracts divided by the revenue at the beginning of the period. Cost of revenue increased in 2018 compared to 2017 primarily due to a $16.8 million increase in depreciation and amortization expense due to additional property and equipment being placed into service. SG&A expenses in 2018 were $126.8 million, compared to $161.2 million in 2017, a decrease of 21% percent, which was in large part attributable to a $49.2 million decrease in non-cash compensation expense, primarily due to the accelerated vesting of equity-based awards in connection with Switch's initial public offering in 2017.
Income for operations in 2018 was $54.7 million, compared to $18.8 million in 2017, due in part to $49.1 million in higher equity-based compensation in 2017. Interest expense increased by $1.3 million to $26.4 million in 2018, primarily driven by higher LIBOR rates in 2018. Subsequent to the close of 2018, we executed swaps to fix $400 million of our floating-rate debt through June of 2024 at an average LIBOR rate of 2.48%.
Net income for 2018 was $29.3 million, compared to a net loss of $8.6 million in 2017, primarily driven by the $49.1 million in higher equity-based compensation in 2017, previously discussed. Adjusted EBITDA totaled $201.7 million for 2018, compared to adjusted EBITDA of $194.7 million in 2017. Adjusted EBITDA margin for 2018 was 49.7%, compared to 51.5% in 2017.
Capital expenditures for 2018 totaled $276.2 million, compared to $402.6 million in 2017, down 31% due to lower spending in the Core, Citadel, and Pyramid PRIMES partially offset by increased investment in the Keep Campus. We deployed $134.8 million of capital in our Core Campus in response to additional customer demand in density needs, opening one sector in Las Vegas 10, opening Las Vegas 11, and adding 20 megawatts of power and cooling capacity across Las Vegas 10 and 11. We also invested $88.9 million in the Citadel Campus, opening two additional sectors, adding 10 megawatts of power and cooling capacity, and acquiring 722 acres of land.
In 2018, we spent 28 million on additional expansions in the Pyramid Campus, opening one new sector and acquiring 139 acres of land to support wetland mitigation, which also invested $24.3 million on the completed site development and continued building construction at the Keep Campus in Atlanta, which remains on track to open in the fourth quarter of 2019. Maintenance capex for 2018 was $8 million, or 2% of revenue, compared $4.6 million and 1.2% of revenue in 2017. This increase is primarily due to a power infrastructure upgrade at our Las Vegas East Campus. Growth capex was $268.2 million in 2018, compared to $398 million in 2017.
At the end of 2018, we opened Las Vegas 11, adding approximately 340 thousand gross square feet and up to 40 additional megawatts of power and cooling. Our existing facilities at our PRIME campus locations currently encompass 11 data centers, with an aggregate of over 4.4 million gross square feet of space and up to 455 megawatts of power. As of the end of 2018, the utilization rates at these PRIMES, based on the currently available colocation space, were approximately 91%, 58%, and 88% at the Core Campus, the Citadel Campus, and the Pyramid Campus, respectively, versus 90%, 57%, and 86% in the prior quarter.
Looking now at the balance sheet, as of December 31, 2018, the company's total debt outstanding, net of cash and cash equivalents, was $524.5 million, resulting in a net debt-to-last quarter annualized adjusted EBITDA ratio of 2.4x. As of December 31, 2018, Switch had liquidity of $581.6 million, including cash and cash equivalents and availability under its revolving line of credit. We believe this is sufficient to fund our growth plans for the foreseeable future.
In August, the Switch board of directors authorized a program to repurchase up to $150 million of outstanding common units. In August, Switch completed a repurchase of 6 million units from Intel Capital for approximately $61 million, retiring the units and the corresponding Class B shares. We have approximately 89 million remaining under the approved repurchase program. Our existing unit holders will have their next opportunity to exchange common units for Class A shares on April 1st. There are currently 23.6 million units expected to be exchanged. We are still determining if we will utilize the repurchase program to repurchase any of the units being exchanged.
Now, turning to 2019 guidance. Revenue is expected to be in the range of $436 million to $445 million. Adjusted EBITDA is expected to be in the range of $217 million to $223 million. And our capital expenditures are expected to be in the range of $210 million to $260 million. And now I will turn it back to Thomas for some closing remarks.
Thomas Morton -- President and General Counsel
In conclusion, we firmly believe that Switch is well aligned with industry dynamics and competitively positioned to jump start enterprise migration into a hybrid cloud environment. We continue to execute on our large enterprise, retail, colocation opportunities, which remain the strongest that we have ever seen. We look forward to announcing these transactions in due course. We would once again like to take this opportunity, on behalf of our management team, to thank our fellow employees, customers, and our partners for their continued support of Switch. We would now like to open the line for questions.
Questions and Answers:
Operator
Thank you, ladies and gentlemen. If you'd like to ask a question at this time, please press *1 on your telephone keypad. If you are on a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Once again, that's *1 if you would like to ask a question today. And our first question will come from James Breen with William Blair.
James Breen -- William Blair -- Analyst
Thanks for taking the question. Can you just talk about sort of color around the individual builds at each of the campuses? And then, how you see the capex getting spent there? And then, what penetration levels are looking like in the Core, Vegas campus, versus in Tahoe? Thanks.
Gabe Nacht -- Chief Financial Officer
I may not have caught the last part of your question, Jim, but you're asking about the age of the campuses. Well, Las Vegas has been in business for 18 years. The East campus, the east side of Las Vegas, is where we started. And we did, as I mentioned on my remarks, we did spend some maintenance capex to upgrade the power infrastructure on the east side of Las Vegas. But the larger buildings that you've seen are on the west side of Las Vegas on our West campus. And Las Vegas 7, which was the first of those buildings, is about 10 years old. And we've been building ever since. The Citadel Campus in Tahoe Reno's been open for about two years, as has the Pyramid in Michigan. And we're still under construction in Atlanta, as you know. Did I -- I didn't catch the last part.
James Breen -- William Blair -- Analyst
Yeah. So, I was asking about the penetration levels you're seeing there, where you're seeing the growth coming from across campuses, obviously Atlanta not open. And then, how the spending, the target for this year, translates into each of those individual campuses? Thanks.
Gabe Nacht -- Chief Financial Officer
Sure. The penetration in Las Vegas is always in the high 80s, low 90s because we're usually one to two sectors ahead of customer demand. And we have 2 million square feet that is essentially filled. So, the denominator is already for the most part filled. So, that penetration level doesn't jump around too much as we open up a sector. It'll move around a couple of percentage points.
In the Citadel Campus in Reno, we have four sectors open out of the 11 that are currently slated for the first building. And our penetration is in the mid-50s. And it rises. It's been rising the last couple of quarters. But, of course, it dropped when we went from two sectors to four sectors because we doubled the available space.
Thomas Morton -- President and General Counsel
Jim, to give you one thought -- this is Thomas -- though we build these buildings and they are built out, they're not necessarily completely full or built out completely when they first open. We build out sectors, as Gabe said, within a building. So, for example, in Tahoe Reno, we have 11 sectors inside that building. And as we start to fill up a sector, we build out another sector inside the same building. So, we continue to build outbuildings on campuses as well as fill existing buildings. And then, even once a building is full, unlike most providers, we can go back and add additional power and additional cooling to that building.
And the example that we often give is that Nap 7 has been full for several years. But that building is equipped to provide 100 megawatts of power. It currently is running around 60 megawatts of power. So, we can still put 40 more megawatts of power and cooling inside that facility. So, as our customers refresh and dense up their gear, we can continue to monetize those customers, both in terms of power and cooling, as well as telecommunications revenue.
Gabe Nacht -- Chief Financial Officer
And then, in the Pyramid campus, we're currently at 88% of committed available space. And we'll be opening up another sector in that building as well next year. But the interesting thing -- you asked about how does that translate to spending -- we've expanded from one PRIME campus to four PRIME campuses over the last several years. And our capex has gone from over $400 million in 2017 down to $276 million this year. And you've seen our guidance for next year, which will bring that capex down even lower because all of the infrastructure build that goes into opening a campus is essentially done, other than in Atlanta where we're under construction. And that will open at the end of 2019. All of the other infrastructure is done. And that building will be based on customer demand.
And unlike some of the peers in our space, we're entering 2019 with a very healthy backlog of available space to sell because we've been investing for past several years. So, we're very comfortable with our position going into '19.
James Breen -- William Blair -- Analyst
Great. Thanks.
Operator
Our next question will come from Frank Louthan with Raymond James.
Frank Louthan -- Raymond James -- Analyst
Great. Thank you. Can you give us a little bit of an update on the status of some of the larger deals that are potentially getting pushed out? And also, to what extent is the margin improvement coming from the new energy deal in Nevada? And will that go backwards a little bit as Michigan and Georgia campuses ramp up? Thanks.
Thomas Morton -- President and General Counsel
Frank, thank you very much. Always good to hear your voice. The first thing is the larger deals that we've been talking about are working themselves inexorably close to the closure. There several that are very close. And we hope to do announcements on them in the near term. They did not close in the first quarter. Well, they may close in the first quarter. Sorry. They didn't close by the end of the year. So, we'll be looking to have them closed hopefully. But they continue to progress. And none of them have fallen off. So, that continues to be something that we look positively toward and looking like it's growing.
In terms of power margins, I don't expect a significant change in power margins and the amount that we are saving on our power. We've saved a lot on our power by being an independent procurer. And we expect that to continue. But Gabe has some specific stats to provide to you.
Gabe Nacht -- Chief Financial Officer
Well, to date, we've saved about $20 million since we became an independent purchaser of power. And most of that, in terms of margin pickup, happened in 2017. Particularly, in the third quarter of 2017, we became an independent purchaser of power in June of 2017. And, historically, that third quarter was always our weakest EBITDA quarter because we were impacted by peak power pricing in Las Vegas. So, as we moved into '17 third quarter, we really saw a very significant change in that margin. But as we moved into '18, we've been a buyer for the entire year. So, there really hasn't been a significant improvement in the margin throughout '18. But we expect margins to continue to be favorably impacted -- our power purchasing to be favorably impacted by being an independent purchaser.
And in Michigan, I wasn't quite sure what you were getting at in Michigan because we actually have a very good contract with Consumers Energy in Michigan to provide power at very competitive rates. It's 100% great.
Frank Louthan -- Raymond James -- Analyst
Well, I just wanted to be just curious if the rates in Michigan and Georgia -- you forecast them to be at or better than Nevada? Or as those ramp up, might we see a little bit of a margin contraction? But it sounds like probably not the case.
Thomas Morton -- President and General Counsel
Yeah. They won't be at or better than the ones we've been able to achieve in Nevada. But they will not impact margin.
Frank Louthan -- Raymond James -- Analyst
Got it. And as a follow up to my first question, it sounds like your guidance is a little conservative. If some of these larger deals come through, can we see an update to the guidance? Or how much of these deals you're looking at are you baking in the guidance to close?
Thomas Morton -- President and General Counsel
Well, when we look at next year, our guidance is realistic. We want to make sure that we are achieving the numbers that we put forth. If some of these larger deals close and more importantly deploy, we can always adjust our guidance at that point in time. The guidance that we put out there is about 30 -- at the midpoint, about 8.5% growth -- at the midpoint, about $36 million in total growth. About $15 million of that is coming from our current backlog of what's not filled. But the rest means we've gotta sell cabinets. We've gotta sell circuits. So, it still requires work.
Gabe Nacht -- Chief Financial Officer
Frank, what we wanted to do is we put a lot of thought into our guidance. And we wanted to put guidance out there that we felt that we could achieve and that wasn't overreaching, so that we were providing the market with as accurate a picture as we felt we had into what the growth will be next year. Certainly, if we exceed those numbers, we will adjust later on. But at the current, looking at what we have on our plate, and looking at what we have available, we felt this was a very reasonable picture of where the company can be expected to produce in 2019.
Frank Louthan -- Raymond James -- Analyst
Great. I appreciate that. Thank you very much.
Operator
Our next question will come from Richard Choe with J.P. Morgan.
Richard Choe -- J.P. Morgan -- Analyst
Great. Thank you. Wanted to ask is the 8.5% kind of the high single-digit raise the new normal for revenue growth? Or can we see that accelerate as the other campuses kinda ramp up and see a higher growth rate? And also wanted to ask about -- the connectivity revenue been pretty flat for the past two quarters. Should that start to reaccelerate at some point? Or is the 18.5% how we should think about that?
Thomas Morton -- President and General Counsel
Hi, Richard. Thanks for the question. As far as the new normal, we don't know what the new normal is. We certainly don't believe it should stay in the single digits. The idea of having four campus locations and four PRIMES is that they're all adding recurring revenue over time. And that should help accelerate growth over time. But in order to see growth accelerate, not only do we need to close transactions -- and we've talked about a bit of the lengthening sales cycles on some of these larger deals -- but then they need to deploy. And only after they deploy, are they billable. So, we wanted to make sure that we were putting forth guidance that we're comfortable with, particularly going into '18.
If some of these deals sign and then deploy faster than we expect, we will certainly adjust. But as we look forward to 2020, '21, and beyond, we would certainly want to see accelerated growth. And the second part of your question?
Richard Choe -- J.P. Morgan -- Analyst
The telecom.
Thomas Morton -- President and General Counsel
Oh, on the telecom. On the telecom side, there was -- the flat revenue that you're seeing from three to four that we talked about on the last quarterly call, that we did have a couple of large telecom renewals that impacted that number because telecom, as it renews, is typically a declining price point. If somebody renews a 10-gigawatt circuit today, they're inevitably gonna pay less than they did three years ago. Typically, what we see clients do is either upgrade their capacity for the same dollars, or you'll see a slight decrease in the pricing. It just so happens that in Q3, we had two large telecom renewals hit, and they saw price declines, given that they were three-year deals. And that's what's impacting that flatness.
Telecom has been growing faster than colocation. And we expect that to continue into 2019, not tremendously faster, because we want to make sure we're balancing the margins from telecom and the margins from colocation, but certainly a point or two higher.
Richard Choe -- J.P. Morgan -- Analyst
Great. Thank you.
Operator
Erik Rasmussen from Stifel has our next question.
Erik Rasmussen -- Stifel Nicolaus -- Analyst
Yeah, thanks for taking the questions. First, bookings in looking at the chart that you provided in your PowerPoint presentation, bookings have decelerated, I think you mentioned in the prepared remarks, to about greater than $20 million. Is this more related to timing? And then, could you just walk us through what may be or maybe what drove that? And then, as we look at your guidance for 2019, is there a target range that you can provide that we can expect, so we can start marking that? And then, I have a follow-up.
Thomas Morton -- President and General Counsel
As far as bookings go, Erik, the fourth quarter is typically a slower bookings and deployment quarter, simply because of the holidays. So, our clients, even if they sign deals, they're not necessarily moving cabinets in during the holiday period because their staff is on holiday. And unlike software companies, where there's quarterly pressure to sign deals, we don't experience that. And given the holidays, it tends to be a slower, contractual quarter. I don't think that's necessarily true just for Switch. I think you see that across that entire industry. So, I wouldn't read too much into that number.
And then, as far as the range, I guess I'm -- maybe I'm not following where you're going, but we did provide a range in our guidance.
Erik Rasmussen -- Stifel Nicolaus -- Analyst
No, yeah. That's helpful. No, I guess I could back into that number. And it seems like there's a lot of variability around that from quarter to quarter from your explanation now. That's fine. And maybe as my follow-up, in looking at your plans for bringing on new capacity, it seemed like there had been some push outs into 2020. Could you just elaborate on what's going on there? And you reiterated Atlanta opening in Q4. Maybe just talk about that market because there's obviously a lot of development there. And it seems like there's a lot of new players coming into this space, including a lot of the already established players in the market, just some thoughts on the Atlanta market.
Thomas Morton -- President and General Counsel
Yeah, let me -- so, real quick, Erik, don't know of any push outs till 2020. We don't have any that I know of. But Gabe can elaborate if there are any that he's seeing. But as to Atlanta and new players coming in the market, we've seen a series of new announcements in the Atlanta market. But we haven't seen much in the way of new construction in the Atlanta market and certainly haven't seen anything of our size and our breadth in terms of what that construction is. And so, those that have announced haven't built. But there's always some people that are doing some small construction in the area. So, we're looking forward to coming online. We are online. We are on time to do the deployment in Q4.
The only thing that would slow us down from that timeline is Mother Nature. If anybody looks at the weather forecast down there in Atlanta, they have received epic amounts of rain. And they continue to receive that. And once we get the roof over the building, then the rain will be less impactful. But certainly when you're getting ready to pour foundation, you're pouring foundation -- rain has a significant impact on your timeline. So, that rain can continue, but it will have a diminishing impact on our ability to open on time with our new customers there. So, we're looking forward to the growth there. And then, we're looking forward to building out the latest sector in the Pyramid. And we're also continuing to build out the data center in Reno and opening buildings in Las Vegas as well. So, the growth is continuing on all four compasses. And we look forward very much to bringing Atlanta online.
Gabe Nacht -- Chief Financial Officer
Yeah, we actually haven't pushed anything. The 2020 -- we've actually accelerated some of our building plan. And we enter the year with very, very healthy inventory of sellable space. At Citadel Campus, we have two sectors that are sellable today that are essentially filling up. And we're 56% committed on four sectors, which means we essentially have two sectors that are ready to be sold. At the Core Campus, we just opened up our Las Vegas 11 facility, which is 340 thousand square feet, three-sector design. The building is open. The power system's on. And the first sector of that building is waiting for the last sector of Las Vegas 10 to be full. So, we enter '19 with a very healthy inventory in Vegas.
At the Pyramid Campus, we're 88% committed, but we'll open up the next sector in Q1 of this year. And then, the last piece of that period will open in Q4 of 2019. So, we feel very good about our inventory and our sellable capacity. And we really haven't pushed out any capex. We have the ability to accelerate if customer demand is there.
Erik Rasmussen -- Stifel Nicolaus -- Analyst
Okay. Great. Thank you.
Operator
Next, we'll take a question from Brett Feldman with Goldman Sachs.
Brett Feldman -- Goldman Sachs -- Analyst
Thanks. Thanks for some of the color you provided around your outlook. If I could just follow up on that a little bit, specifically with regards to revenue. It would seem like, based on the way you framed the guidance, that you're probably expecting some degree of acceleration in the business as you move through the year. I just want to make sure I'm interpreting that correctly. And then, also, I apologize if I missed this earlier. But in the past, you had noted that you had a large customer who was looking for financing before they went ahead and commenced. I was wondering if there was any update on that and if any of that business is captured in your 2019 revenue guidance? Thanks.
Thomas Morton -- President and General Counsel
So, thank you very much, Brett. Let me answer the second question first, which is as to the customer that was looking for financing. There's been no advancement on their part. Their numbers, we took out of all forecasts last year, about halfway through the years, which was part of the reason for our adjustment in guidance. They are not in our 2019 guidance at all. So, that is not a moment that we have financially in here.
Second thing as to guidance and it accelerating, yeah, we believe the company's going to continue to grow. Gabe gave the number that we have already in our book but not billed for this year. And we believe that we are on a trajectory to continue to grow and expand this company. And when we bring Atlanta online next year, we believe that that will also continue to accelerate the growth of this company. So, we are bullish on our opportunities for the futures and our ability to sell. And as Gabe said, we have spent money and time building up inventory. And so, we do have inventory to sell to customers. It's readily available to them. And they are looking for that space from us.
Brett Feldman -- Goldman Sachs -- Analyst
If you don't mind, just one quick follow-up, as it sounds like you'll be bringing Atlanta online very late this year. Should we expect that by the fourth quarter the total contract value that you're reporting would include sales in Atlanta? Or is that something we're probably not gonna actually see until we get into next year?
Thomas Morton -- President and General Counsel
It really simply depends on when that contract signs, Brett. When it signs, we'll report it as total contract value.
Gabe Nacht -- Chief Financial Officer
Yeah. We would very much like to give you that news. And we'll be working toward doing that.
Brett Feldman -- Goldman Sachs -- Analyst
Have you started trying to sell in the market? Or is that just way too early to try that right now?
Gabe Nacht -- Chief Financial Officer
We are absolutely starting to sell in that market. And we actually have a group there this week working on local customers in and around that area. So, we are actively targeting the Atlanta market and sales in that market.
Brett Feldman -- Goldman Sachs -- Analyst
All right. Thank you.
Operator
Our next question will come from Sami Badri with Credit Suisse.
Sami Badri -- Credit Suisse -- Analyst
Hi. Thank you for the question. So, I'm looking at your midpoint of your growth rate at 8.5% for 2019, and the 8.5% growth rate is either directly in line with the overall market growth rate about for this sector. And I hear the confidence you guys are saying in your guidance and the bills planned, etc. These all sound great right now. Are there some things that we should really be cognizant about as we think about your transitory performance through 2019? Are there churn events? Are there any things that we should really be looking at to keep us really in check because we've gone through a couple of fluctuations over the last couple of quarters? We just wanna be prepared in how we look at 2019 and as we Segway into 2020.
Gabe Nacht -- Chief Financial Officer
Yeah. Sami, thank you. With regard to churn events, there are none that we know about that would be unusual. But, of course, we don't control that. With regard to the midpoint of the guidance as I mentioned, it's not a slam dunk. It does require that we have to sell cabinets and circuits. There's about a $36 million increase forecast. And out of that, there's about $15 million that is coming out of our book-not-filled backlog. So, we do have to continue to sell to our existing customers, bring on new customers. And more importantly, customers have to deploy on a timeline that allows us to bill and record revenue.
So, we think we're comfortable with that number; otherwise, we wouldn't have put it forward. And depending on the timing of some of these other deals that Thomas mentioned, we may or may not revisit that number. But for now, that's the best look that we have going forward.
Thomas Morton -- President and General Counsel
When we have a customer start to talk to us about a sale, there's three things that we have as considerations. The first is when are they going to close, and what's the size of that closing. The second is when are they going to start their installation. And third, what is the ramp that they have as they start to deploy. And so, even though we may sell a customer with a very high TCV, the question is how quickly is that total contract value realized as we ramp into the deployment there because, as they fully deploy, obviously, that's a large expense load and a large revenue load for us. So, the faster we can get them to full deployment the better the deal is for us. But we just don't know what that deploy is until they come to us and do stage one and two, size and close.
Sami Badri -- Credit Suisse -- Analyst
Got it. Thank you for the color. And then, I just have a follow-up regarding Vertiv and some of the other licensing agreements you guys are talking about. Could you give us an idea on the volume of revenues that you guys are referring to when specifically in this kind of business or this kind of licensing? And where do you see this going probably over the next two to three years as the entire IP of the company essentially licensable? Or just give us some guiding views and hopefully maybe a revenue number so we can understand what's going on.
Thomas Morton -- President and General Counsel
Yeah. So, the revenue isn't that significant. It'll be a couple million dollars, but that's not the main reason that we're doing this. The main reason that we're doing this is the protective measure. Each of these manufacturers have agreed that they will not use our IP for products that are going to be deployed in facilities that have the capacity to compete with us. So, it is a way for us to protect our unique advantage strategically with companies, as much as it is or more than it is a revenue source. So, by having Munters, Vertiv, Schneider, and others agree that they will not supply product into the market. We are limiting the access that would-be competitors would to our technology and the ability to deploy our technology in competition with us.
So, there's a strategic reason for doing these license that is more important to us than the actual revenue. The revenue, as I said, is a couple million dollars. It's not gonna be a needle mover for us, but it will be a strategic protective. Now, it also allows us to work with people like Vertiv -- that we are working with Vertiv to make innovative designs and to do some advancements on new products that we look to offer into the market. So, by licensing our technology to them, allowing them to play with it and collaborating with them on enhancements, we are working toward advancing our data centers and keeping them at the forefront of data center technology for the industry.
Sami Badri -- Credit Suisse -- Analyst
Got it. Thank you.
Operator
Ladies and gentlemen, if you'd like to ask a question, please press *1. Once again, press *1 for any questions today. Our next question will come from Michael Rollins from Citi.
Michael Rollins -- Citigroup -- Analyst
Hi. Thanks. Couple questions if I could. First, can you share with us the pricing changes on renewals on average that you were able to achieve in the quarter? The other thing I was curious about is if you look at just the aggregate revenue growth year-on-year in the quarter, which I think was 3.9%, how does the Core Las Vegas Campus compare to that? And what should we take from that in terms of the longer-term implications of growth in the Las Vegas footprint? Thanks.
Gabe Nacht -- Chief Financial Officer
Sure. In terms of the pricing of renewals, Mike, as I think you knew, our renewals are rarely straightforward renewals. Typically, when a customer renews, they don't just simply renew their 10 cabinets and say, "Sign us up again." They're either changing their densities. They're changing their circuits. They're adding. They're adjusting their footprint in one way, shape, or form. So, on our renewals, it's about -- if we were to look at our straight renewals, it's probably about 2% in terms of the pricing growth. But one of the encouraging things this quarter is if you look at our $20 million of MRC, about $7 million of that was incremental. And so, those were renewals with changes.
The new deal that we signed -- we signed 26 new logos. But if you look at our chart, you'll see that they were relatively small. They didn't add a lot of total contract value. So, most of that contract value that we signed this quarter was renewal and adjustments within renewals. And we have about $700 million of incremental revenue there. So, that's an encouraging sign.
Thomas Morton -- President and General Counsel
One important thing, Mike, to bring as Gabe said that we got about 2% increase. We have a list that we do in March of each year. We have a list that we do for the billing. However, we do not list power unless there's a corresponding increase in power costs. So, it doesn't mean that our entire revenue's gonna go up 2%. The net impact of that list is actually closer to 1% all in because there are certain aspects of the business that we don't do annual raises on.
Michael Rollins -- Citigroup -- Analyst
That's helpful. And if you can talk about the Core Campus performance relative to aggregate revenue growth.
Thomas Morton -- President and General Counsel
Yeah. The Core Campus actually grew faster than the other campuses when you look at quarter-over-quarter, year-over-year growth. If you recall, Mike, Q4 was really the peak quarter of eBay's contribution to Reno last year, prior to their signing their new expansion with us this year. And so, in terms of year-over-year comparisons, Reno actually had a much tougher comparable than the Core Campus or the Pyramid Campus. So, overall, we grew 3.9%. Core Campus grew a bit higher than that. And Reno had a tougher comparable.
Michael Rollins -- Citigroup -- Analyst
And then, going forward, what's the rate of growth to think about in the Core Campus? Is it the same kind of ballpark of what you're achieving now?
Thomas Morton -- President and General Counsel
As I said earlier in the call, our midpoint of the guidance is 8.5% for 2019. Over the longer-term, when we look out to 2020, 2021 and beyond, we certainly would hope that that would accelerate.
Michael Rollins -- Citigroup -- Analyst
Okay. Thank you.
Thomas Morton -- President and General Counsel
Thank you.
Operator
Our next question will come from Jennifer Fritzsche with Wells Fargo.
Jennifer Fritzsche -- Wells Fargo -- Analyst
Thank you for taking the question. If I could ask just a bigger picture one if I may, just your opinion on 1.) The competitive environment you're seeing out there and 2.) The length of the sale cycle. If you had to think back two to three years, has the customer gotten, I don't know, more sophisticated in their ask might be the right word, which I would think fits into your business plan? But are you seeing a change in the customer and the change in sales cycle or the length of the sales cycle as the customer grapples with questions of hyper cloud, etc.? Thank you.
Thomas Morton -- President and General Counsel
Yeah. Jennifer, great questions. And the first thing is to the competitive environment. The one thing that we've all seen -- it's very interesting -- if you have a large amount of newbies, or new entrants into the industry, and some of those are funded by -- whether they be sovereign funds or some sort of longer-term fund that can take a return. So, you're starting to see smaller operators with a significant amount of product they have available and the ability to or willingness to accept the lower return. So, on some people, especially when you go to Tier 2-type data centers, they're beginning to see some compression in that field with that level of data center. Not so much affecting the type of customer that we do, but we are seeing that competitive shift in the environment with the Tier 2 or the cloud-type spaces.
And the second thing is, as to the sophistication of the customers, what we are seeing is we have a number of customers that had a data center. Say it's 100 thousand square feet that wasn't incredibly efficient for them as their enterprise data center. They'd given up a third of that data center by moving equipment to the cloud. So, now they have a data center that wasn't efficient to begin with. And now it's even a third less full. So, the economics are driving them toward the colocation environment, but they've never done colocation. And so, they don't have mechanisms, or they don't have a procedure for lifting all their gear and getting it into a colo-environment. Those customers have a longer curve of figuring out what their protocols and procedures are going to be for moving their gear from their enterprise data center into a colocation environment.
They're also much more sensitive as to the quality and nature of that environment. So, they are not going to move from their Tier 4 facility into a Tier 2 or Tier 3 minus facility. They're going to want to move into something that's more sophisticated. So, we are talking to a lot of those customers. But because they are not used to or are as comfortable with doing those types of lifts in shifts, they are slower in the process of doing that. They really want to do it. They see the advantage of doing it. They just need more time to figure out how, in their enterprise, they can make that happen.
Gabe Nacht -- Chief Financial Officer
And the interesting thing, Jennifer, is I think you're premise is exactly right. They are getting more sophisticated in their ask because they're thinking more strategically over how they're going to run their tech stack over the next decade or more. And it really is more of a consultative kind of a sale. And it isn't a real estate transaction where it's X amount of square feet, and they're just gonna load in their cabinets. We're really trying to help the customers try to understand how they're going to deal with their connectivity structure, how they're going to deal with their densities going forward, where they can buy their serves and the right chipsets to run their computer stack.
So, it's really a much more consultative type of approach. And therefore, it has length in the sales cycle, but we are very comfortable with that approach. We're used to providing that consultation. And once you get the customer to move, you really are married to that customer for a very significant length of time.
Jennifer Fritzsche -- Wells Fargo -- Analyst
Got it. Thank you.
Operator
And that does conclude our question and answer session at this time and also concludes our conference call for today. Thank you all for attending. Please enjoy the rest of your day. You may now disconnect.
Thomas Morton -- President and General Counsel
Thank you, all.
Duration: 56 minutes
Call participants:
Matthew Heinz -- Vice President of Investor Relations and Financial Planning & Analysis
Thomas Morton -- President and General Counsel
Gabe Nacht -- Chief Financial Officer
James Breen -- William Blair -- Analyst
Frank Louthan -- Raymond James -- Analyst
Richard Choe -- J.P. Morgan -- Analyst
Erik Rasmussen -- Stifel Nicolaus -- Analyst
Brett Feldman -- Goldman Sachs -- Analyst
Sami Badri -- Credit Suisse -- Analyst
Michael Rollins -- Citigroup -- Analyst
Jennifer Fritzsche -- Wells Fargo -- Analyst
More SWCH analysis
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
10 stocks we like better than SwitchWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Switch wasn't one of them! That's right -- they think these 10 stocks are even better buys.
See the 10 stocks
*Stock Advisor returns as of March 1, 2019
Source: Wikipedia 
Warren Buffett: Joint health-care initiative is a long-term project 8:44 AM ET Mon, 25 Feb 2019 | 01:58 
How American health care got so expensive 4:27 PM ET Thu, 14 March 2019 | 14:58
Zynerba Pharmaceuticals Inc (NASDAQ:ZYNE)’s share price was up 5.1% during trading on Tuesday following a better than expected earnings announcement. The stock traded as high as $5.14 and last traded at $5.11. Approximately 736,648 shares traded hands during mid-day trading, a decline of 30% from the average daily volume of 1,048,403 shares. The stock had previously closed at $4.86.
