Iron Mountain’s Q1 Surge: Strong AFFO and Revenue Drive Optimism for 2025

Iron Mountain (NYSE: IRM) kicked off 2025 with a robust performance, reporting record revenue and adjusted funds from operations (AFFO) that surpassed internal expectations. The storage and data management giant’s first-quarter results, combined with revised upward full-year guidance, suggest the company is capitalizing on strategic initiatives to drive sustainable growth. Here’s what investors need to know.

A Quarter of Resilient Growth

Despite a 78.9% drop in net income to $16.23 million due to adverse foreign exchange impacts, Iron Mountain delivered a strong adjusted EPS of $0.43—matching Q1 2024 results and beating analyst estimates. Revenue hit $1.593 billion, a 7.8% year-over-year increase, with organic growth of 9.4% when excluding currency effects. The surge was fueled by three pillars:

1. Storage Rental Revenue: Rose 7% to $948 million.
2. Service Revenue: Jumped 9% to $644 million.
3. Growth Businesses: Data centers, digital solutions, and asset lifecycle management (ALM) collectively grew over 20% year-over-year.

The Matterhorn growth initiative, launched in 2022, is bearing fruit. These high-margin segments now account for an increasing share of revenue, boosting profitability. Adjusted EBITDA surged 11.8% to $580 million, with margins expanding 130 basis points to 36.4%. AFFO rose 7.6% to $348.4 million, while AFFO per share increased 6% to $1.17—key metrics for dividend sustainability.

Guidance Boost Reflects Momentum

Iron Mountain raised its 2025 outlook, projecting:
- Revenue: $6.74–$6.89 billion (midpoint growth of ~11% vs. 2024).
- Adjusted EBITDA: $2.505–$2.555 billion (midpoint growth ~13%).
- AFFO: $1.48–$1.51 billion (midpoint growth ~11%), with AFFO per share guided to $4.95–$5.05—up ~10% from Normalized FFO (Funds from Operations) also rose 4.1% to $0.77 per share.

CEO William Meaney highlighted the “strong start to the year,” citing improved currency trends and momentum in growth segments. The dividend remains a priority: the $0.785 quarterly payout represents a 9% increase over 2024, supported by AFFO’s resilience.

Risks and Considerations

While the outlook is positive, Iron Mountain faces headwinds. The company cited geopolitical instability, cybersecurity risks, and regulatory challenges as potential threats. Additionally, net income remains vulnerable to currency fluctuations, which shaved ~$40 million off earnings in Q1.

Conclusion: A Solid Foundation for Long-Term Gains

Iron Mountain’s Q1 results and upgraded guidance underscore its transition from a traditional storage provider to a data-driven growth company. The 9.4% organic revenue growth and 20%+ expansion in high-margin segments suggest the Matterhorn strategy is working. With AFFO per share up 6% and full-year guidance pointing to an 11% AFFO growth midpoint, the dividend—already yielding ~3.3%—appears secure.

The stock’s closing price of $89.64 on May 1 reflects investor confidence, though it dipped slightly in pre-market trading due to net income pressures. However, the company’s balance sheet remains strong, with $19.36 billion in assets and ample liquidity.

While risks like cybersecurity and regulatory shifts linger, Iron Mountain’s focus on operational efficiency and high-growth markets positions it to navigate challenges. For income-focused investors, the combination of rising AFFO, a growing dividend, and a 10%-plus revenue growth trajectory in 2025 makes IRM a compelling play on the digitalization of data storage. This quarter’s results are a clear sign that Iron Mountain’s future is brighter than its recent past.