CyrusOne CEO suddenly leaves as recently departed Europe head replaces him

CyrusOne’s President and CEO, Tesh Durvasula

Confused, you will be after watching the latest episode of Soap…we mean CyrusOne corporate news (and not the muddled and acclaimed 70s US sitcom).

CyrusOne (NASDAQ: CONE) has replaced its CEO after it yesterday published its fourth quarter and year-end results, which showed solid sales growth and a reduction in net losses for the quarter.

The firm has appointed (former, sort of) company man Tesh Durvasula as president and chief executive officer on an interim basis. The appointment follows Gary Wojtaszek stepping down from the same positions and as a director of the company, “by mutual agreement with the board” effective upon the filing of the results. Wojtaszek will provide transition assistance.

Durvasula will be the leader on an interim basis while the board undertakes a search to identify the company’s next CEO, which will include consideration of Durvasula as well as external candidates.

As well as Wojtaszek leaving, the return of Durvasula also came out of the blue, as he actually left the company last month to “pursue other interests”.

The sudden departure and arrival comes a week after new media reports that CyrusOne had received takeover offers. Similar rumours surfaced last year too. Last month, CyrusOne reduced its headcount by 12% after citing slower demand from hyperscale customers.

Alex Shumate, chairman of the CyrusOne board, said: “On behalf of the entire board I would like to thank and recognise Gary Wojtaszek for his strong leadership and vision that has enabled CyrusOne to become one of the largest and most successful data centre companies in the world.

“Under Gary’s leadership, the company has grown to nearly $1bn in revenue, expanded into Europe, Asia and Latin America, achieved an investment grade credit rating, and had a stock price that outperformed its public data centre peers, as well as both the RMZ and S&P 500 indexes, since the company’s IPO in January 2013.” You pretty much run out of breath after reading those achievements, which also makes it an even bigger mystery.

Shumate added: “Tesh is an industry veteran with over 20 years of experience in fibre optics, interconnection and data centres. During his more than seven years at CyrusOne, including serving as chief commercial officer and his most recent role as president of Europe, he has demonstrated that he is a strong and dynamic leader who is customer focused and knows our business well.”

Durvasula said: “I know that I speak for everyone at CyrusOne in thanking Gary for his strong leadership and vision. Over the years, Gary has helped create a strong company culture at CyrusOne focused on excellent customer service and delivering shareholder value, which will remain unchanged.”

Wojtaszek said: “It has been a tremendous journey and privilege to serve as the CEO and a board member of CyrusOne since its IPO and spin-off from Cincinnati Bell. From helping take the company public, to expanding overseas and emerging as one of the top data centre companies in the world, I am incredibly proud of what we have accomplished and the culture we have created.

“I believe in the mission of CyrusOne, I have confidence in Tesh and the team, and look forward to seeing the company continue to succeed and expand.”

Whatever caused the departure of Wojtaszek, the industry will no doubt be wondering where he will be popping up next, but so far there is no clue.

On the results posted yesterday, Wojtaszek said: “We had another very strong year with high growth rates across our financial metrics and significant leasing contributions from many industry verticals and product types across almost all of our locations, with our business becoming increasingly diversified.”

“This was a transformative year for the company, as our European expansion positions us to better support our customers’ global requirements, while achieving investment grade status ensures access to capital at attractive rates to allow us to continue to grow with these customers in the coming years,” he added.

For the quarter, revenue jumped 15% year-on-year to $253.9m. The increase in revenue was driven primarily by a 6% increase in occupied CSF, lease termination fees totalling $4.7m and additional interconnection services.

There was a net loss of $52.1m for the fourth quarter, down from the net loss of $105.8m last year. Net operating income increased to $160.1m in the quarter from the $143.3m in 2018 – up 12%.

On 30 October 2019, the company announced a dividend of $0.50 per share of common stock for the fourth quarter of 2019. The dividend was paid on 10 January 2020. Additionally, today, the firm announced a dividend of $0.50 per share of common stock for the first quarter of 2020. The dividend will be paid on 10 April 2020, to stockholders of record at the close of business on 27 March 27 2020.

Full year sales were up 19% to $981.3m, producing net income of $41.4m.