Iron Mountain (IRM): Record Q2 2026, Raised Guidance - And Why We Say Sell

Iron Mountain (IRM) Q2 2026 — Q2 2026 (quarter ended June 30, 2026): revenue $2,029.1M vs $1,711.9M, +18.5% reported, +17.6% constant-currency and +16.8% organic. Storage rental $1,134.6M +12.3%; service $894.5M +27.4%. Net income $106.1M vs a $(43.3)M loss. Adjusted EPS $0.60 vs a $0.56 bar (+7.1% beat). Adjusted EBITDA $727.0M +15.7%, but margin fell 90bp to 35.8%. AFFO $432.7M +17.0%, $1.44/share +16.1%. FY2026 guidance raised on all four lines: revenue $7,940-8,010M, adjusted EBITDA $2,945-2,975M, AFFO $1,760-1,780M, AFFO/share $5.87-5.93. The 8-K was accepted at 6:47am ET (before the open), so Aug 5 is the reaction session: +1.29% to $127.13, then -4.07% and -0.66% to $121.15 - the move fully reversed. Iron Mountain printed a record quarter, beat on adjusted EPS and raised full-year guidance on every line - and the stock is down 4.7% since the close of the day it reported. The segment tables explain why. Organic physical storage volume grew 0.6%, so roughly 90% of the legacy engine's growth is price rises off a flat base. The single biggest contributor to revenue growth, Corporate and Other, added $134M and still printed NEGATIVE adjusted EBITDA. And AFFO per share has printed $1.44, $1.43 and $1.44 for three straight quarters. We also tested and KILLED the dilution story: diluted shares rose just 0.74%. THE CALL: SELL (3/5, A GOOD BUSINESS AT A MULTIPLE THAT ONLY THIRTEEN PERCENT OF IT DESERVES) — base-case value ~$100.0 vs ~$121.15 today. KEY METRICS: - CALL: SELL 3/5, fair value $100 vs the $121.15 Aug 7 close (-17.5%). Bull $130, bear $69. Street: Buy, 20 analysts, avg target $138.25. - Revenue $2,029M +18.5% (+16.8% organic); AFFO $433M / $1.44 +17%. But adjusted EBITDA margin FELL 90bp to 35.8%. - Organic storage VOLUME +0.6% - ~90% of legacy growth is price. Corporate & Other added $134M of revenue with NEGATIVE EBITDA. What to watch: UP: the 75MW signed in July converts into commenced, revenue-producing capacity at the yields renewals imply (cash mark-to-market +11.8%), which would re-rate the data centre platform above 22x and make our $130 bull case the base; the 684MW land bank and the 160MW under construction (71.2% pre-leased) fund out; Corporate and Other (ALM + digital) crosses into positive adjusted EBITDA and stays there; organic storage VOLUME finally inflects above ~1%. DOWN: Q3 AFFO/share lands at or below the guided ~$1.47, making the implied ~$1.56 Q4 (an 8% sequential jump) unreachable; storage pricing hits its ceiling as customers scan archives; the BB-/Ba3 credit outlook changes while the company still needs ~$1.5B a year of external funding for growth capex. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.