Iron Mountain (IRM) Q2 2025: ALM Organic Growth Hits 42%, Accelerating Shift Toward Diversified Revenue
Iron Mountain’s Q2 2025 results showcased record performance, with Asset Lifecycle Management (ALM) organic growth of 42% and data center momentum underpinning a step-change in business mix. The company’s strategic pivot toward digital, data center, and ALM solutions is driving a higher-growth, more diversified portfolio, even as physical storage remains robust. Management raised full-year guidance across all key metrics, signaling confidence in sustained double-digit growth as new business lines expand their share of revenue.
Summary
- ALM and Digital Expansion: Growth segments now comprise nearly 30% of revenue, accelerating IRM’s business mix transformation.
- Margin Leverage from Scale: Operating leverage and mix shift drove record EBITDA margins, with data center profitability surging.
- Guidance Lift Reflects Outperformance: Management raised 2025 outlook, citing strong customer wins and pipeline visibility.
Performance Analysis
Iron Mountain delivered record quarterly revenue, adjusted EBITDA, and AFFO, driven by broad-based strength in both legacy and growth segments. Storage revenue, the company’s historical core, grew organically as physical records management posted its 37th consecutive year of rental growth, underlining the durability of the base business. However, the standout was the Asset Lifecycle Management (ALM) segment, which posted 70% total and 42% organic growth, reflecting both volume gains and successful cross-selling into its vast customer base.
Data center revenue increased 24%, with organic storage growth of 26% and continued strong pricing on renewals. The digital solutions business also hit a record, buoyed by the DXP platform, which is increasingly recognized by customers and analysts for AI-driven workflow automation. Margin expansion was notable across all businesses, with adjusted EBITDA margin up 120 basis points and data center margins exceeding 50%, reflecting improved pricing, operating leverage, and mix shift toward higher-return segments.
- ALM Volume-Driven Surge: ALM growth was primarily volume-led, with enterprise and data center decommissioning both contributing, and minimal reliance on price increases.
- Data Center Profitability Jump: Data center adjusted EBITDA margin rose 760 basis points, as pre-leased assets and pricing discipline took hold.
- Digital Platform Scaling: DXP’s traction in enterprise and government verticals is driving double-digit digital revenue growth and a $540M run-rate.
Capital deployment was focused on growth, with $477 million invested, mostly in pre-leased data center construction, supporting future revenue visibility.
Executive Commentary
"Our double-digit growth reflects continued successful execution of our strategic priorities. We are driving continued revenue growth and our physical storage business achieving record revenue in Q2. We are delivering AI-powered digital solutions across industry verticals and quickly becoming a key leader recognized by customers, as well as industry analysts, with our Intel Insight Digital Experience Platform, or DXT."
Bill Meany, President and Chief Executive Officer
"Adjusted EBITDA margin was 36.7%, up 120 basis points year on year, which reflects improved margins across all of our businesses. For me, a key call out is our team's performance delivering significant operating leverage resulting in an incremental flow-through margin of 47% in the quarter."
Barry Heitman, Executive Vice President and Chief Financial Officer
Strategic Positioning
1. Growth Portfolio Scaling
IRM’s growth portfolio—data center, digital, and ALM—will represent nearly 30% of total revenue exiting 2025, up from prior years. This shift is not only accelerating top-line growth but also improving margin structure, as these segments deliver higher returns and recurring revenue characteristics, especially as data center assets are largely pre-leased and digital solutions gain enterprise traction.
2. Physical Storage Resilience
The legacy records management business remains a stable cash generator, posting its 37th consecutive year of organic storage rental growth. This recurring revenue base provides a strong foundation for funding growth investments and supports the company’s dividend and capital return profile.
3. Data Center Market Focus
IRM’s data center strategy targets inference and cloud infrastructure, not the hyperscale LLM training segment. With 500 megawatts of capacity in prime markets (Northern Virginia, Richmond, Amsterdam, Chicago, Madrid), IRM is positioned to capture demand as customer focus shifts from LLM buildout to inference and cloud expansion. The pipeline is robust, and pre-leased assets reduce risk.
4. Asset Lifecycle Management Differentiation
ALM’s growth leverages IRM’s global footprint and chain of custody expertise, allowing it to win both enterprise and hyperscale decommissioning deals. The business benefits from cross-selling into a 240,000-customer base, with flexibility to offer secure destruction, recycling, or resale, tailored to client needs.
5. Digital Solutions as a Platform Play
DXP is evolving from document digitization to end-to-end workflow automation, using AI to structure unstructured data and automate processes. Recent wins with SaaS and government clients signal IRM’s ability to compete with leading AI software and BPO vendors, expanding its total addressable market.
Key Considerations
This quarter marks a clear inflection in IRM’s business mix, as growth segments drive both topline and margin expansion while legacy storage continues to provide ballast. Strategic capital allocation, cross-selling, and global scale are enabling IRM to capture share in fragmented, high-growth markets.
Key Considerations:
- ALM Synergy with Core Base: Cross-sell opportunities in ALM are being unlocked by leveraging decades-long records management relationships.
- Pre-Leased Data Center Pipeline: Revenue visibility is high, as most new capacity is already committed, reducing risk from leasing volatility.
- Digital Platform Recognition: Analyst and customer validation of DXP is a leading indicator for continued digital growth and margin improvement.
- Operating Leverage from Scale: High flow-through margins and disciplined expense management are magnifying profit growth as new segments scale.
Risks
Data center leasing softness in the first half reflects customer focus on LLM buildout, raising near-term uncertainty around new signings, though management expects a rebound as focus shifts to inference demand. ALM and digital segments, while high-growth, operate in fragmented and competitive markets, requiring continued execution to maintain share gains. Macroeconomic or regulatory shifts in data privacy and disposal could also impact momentum.
Forward Outlook
For Q3 2025, Iron Mountain guided to:
- Revenue of approximately $1.75 billion, up 12% YoY
- Adjusted EBITDA in excess of $650 million, up more than 14% YoY
- AFFO of approximately $385 million, up 16% YoY
For full-year 2025, management raised guidance:
- Total revenue of $6.79 to $6.94 billion (12% YoY at midpoint)
- Adjusted EBITDA of $2.52 to $2.57 billion (14% YoY at midpoint)
- AFFO of $1.505 to $1.53 billion (13% YoY at midpoint)
Drivers of the guidance increase include continued strength in ALM and digital, robust data center commencements, and incremental contribution from the CRC India acquisition. Management expects data center revenue growth of at least 25% in 2026, even without additional leasing, due to pre-leased asset commencements.
Takeaways
IRM’s Q2 results reinforce its transformation into a diversified, higher-growth platform, with growth segments scaling rapidly and legacy storage providing stability. Investors should watch for sustained execution in ALM and digital, as well as the pace of data center leasing as inference demand accelerates.
- Growth Engine Scaling: ALM and digital are now material contributors, changing IRM’s revenue and margin profile.
- Margin Expansion Sustainable: Operating leverage and favorable mix are driving record profitability, with more to come as high-margin segments scale.
- Next Phase of Data Center Demand: The shift from LLM buildout to inference will be a key watchpoint for leasing velocity and capital allocation.
Conclusion
Iron Mountain’s Q2 2025 performance validates its strategic pivot to growth segments, with ALM, digital, and data center businesses driving both scale and profitability. Execution risk remains, but the company’s diversified platform and robust pipeline position it well for continued double-digit growth.
Industry Read-Through
IRM’s results highlight the accelerating convergence of physical and digital information management, with AI-driven workflow automation and secure asset disposition emerging as major growth vectors across the sector. The company’s success in cross-selling ALM and digital solutions into a legacy customer base is a playbook for others navigating digital transformation. Data center demand remains robust, but the shift from LLM training to inference and cloud workloads will reshape leasing patterns and capital deployment for the industry. Competitors in asset disposition, digital workflow, and data center infrastructure should monitor IRM’s ability to leverage global scale and end-to-end solutions as the market consolidates.