On August 5, Iron Mountain (NYSE:IRM) reported second-quarter revenue of $2.03 billion, up 18.5% from a year earlier, and a return to profitability after last year’s loss. The results were strong enough that management raised full-year guidance rather than simply reaffirming it. For a company built on storing paper records, the numbers increasingly tell a different story, one where data centers and digital services are doing the heavy lifting.
The Digital Pivot Accelerates
Iron Mountain’s data center, digital, and asset lifecycle management businesses grew more than 50% year over year in the second quarter, combined, far outpacing the company’s legacy storage operations. Data center leasing hit 110 megawatts year to date, and the pace is picking up: 75 of those megawatts were signed in July alone, more than the entire second quarter’s 13 megawatts. Service revenue, which now leans heavily on these growth lines, jumped 27% year over year to $894 million, while storage rental revenue, the traditional business, grew a more modest 12% to $1.14 billion.
That shift in mix helped drive net income of $106 million, compared with a $43 million net loss in the second quarter of 2025. Adjusted EBITDA climbed 15.7% to $727 million, and AFFO per share rose 16% to $1.44. Management didn’t stop at the quarter. It raised 2026 guidance across revenue, adjusted EBITDA, and AFFO, projecting full-year revenue as high as $8.01 billion, up from a prior ceiling of $7.925 billion.
Growth Isn’t Coming Free
That expansion carries costs the headline numbers don’t show. Adjusted EBITDA margin slipped 90 basis points to 35.8% in the quarter, meaning each new dollar of revenue generates less profit than it used to as Iron Mountain builds out capital-intensive data centers. The balance sheet reflects the buildout too. Long-term debt climbed to $17.13 billion from $16.22 billion at the end of 2025, and net interest expense rose 9% to $223 million for the quarter.
Iron Mountain’s total deficit also widened to $955 million from $709 million at year-end, a reminder that the company operates with negative stockholders’ equity. Stock-based compensation expense doubled from the first quarter of 2026, jumping to $56.8 million from $28.3 million, adding another line item investors will want to watch. The company also booked an $11.5 million loss on disposal and write-down of property, plant, and equipment in the quarter, compared with a $1.0 million gain in the same period last year.
Wall Street Stays Cautiously Priced
39 hedge funds held Iron Mountain heading into the quarter, down slightly from 40, a mild pullback in institutional conviction. Short interest sits at just 3.24% of the float, which suggests little organized skepticism about the stock. Yet the market is paying a steep premium for that growth story, with shares trading at 65.36 times forward earnings as of September 1. That multiple prices in years of continued expansion in the data center and digital businesses, leaving little room for a stumble. The light short interest paired with such a rich valuation shows a market that has largely bought into the growth narrative already.
A Business In Transition
Iron Mountain enters the second half of 2026 as a business in transition, with a legacy storage operation funding an expensive but fast-growing shift into data centers and digital services. The raised guidance suggests management believes that shift can keep paying off through year-end. For the growth story to keep working, data center leasing needs to keep pace with the 110 megawatts already signed this year without margins slipping further. For the skeptics, the widening deficit and rising debt load are the numbers to watch as the buildout continues.
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