EQIX - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to the Equinix Third Quarter Earnings Conference Call. All lines will be able to listen-only, until we open for questions. Also, today's conference is being recorded. If anyone has objections, please disconnect at this time. I'd now like to turn the call over to Katrina Rymill, Vice President of Investor Relations.

begin. may You

Katrina Rymill

afternoon, Good to conference today's Thank and call. you. welcome

and nature started, Before our making remind in XX-Q in those and statements intend I'd by our on significantly everyone release on be and February risks may get filings most Actual today including involve results uncertainties. that forward-looking and we're recent this to on press identified SEC, on obligation Form statements those forward-looking from statements XXXX. and XX, we to like X, the XXXX, filed we identified August no vary today's risks comment the Equinix some are affected filed XX-K, may and the with of in made call. update assumes or not does

of In the guidance financial Fair an exclusive addition, on Equinix's public is through Disclosure, during comment to policy done light disclosure. Regulation in not its quarter, it unless it's

Services, available President these provide Innovation. conference our we'll and provide President; the Officer; GAAP Chief today's today a addition, current information. measures on the made about In you release us CEO reasons on Steve We'd for data. and and Equinix IR of most encourage remind with Relations list Equinix we directly are of Smith, to why Financial measures, page most We non-GAAP and other of comparable important and financial the also regularly on today's those Equinix's Taylor, the measures company like the to Strategy, certain information and the this check available information supplemental website call. you uses page a that measures from Charles designed Meyers, We've www.equinix.com. page press Investor of our to Keith to post we IR presentation time-to-time website With at along a the accompany in on discussion, reconciliation

of any questions interest I'll call questions up an from wrapping At ask limit time, be one. hour, over in the just sell-side to our we'd analysts. Steve. follow-on In remarks, taking to we'll the to to like this prepared turn Following this call analysts these

[004861-E Stephen M. Smith]

Okay. and share results third quarter. very strong afternoon, for I'm good our Katrina. Thank welcome call. earnings to our quarter the pleased you, And to

is business as capture cloud and this and top builds investing markets. activity scale utilization to levels continued and shift execution land are of on and purchases, go-to-market customers. more rapid Our strong tier complemented growth to capabilities, unparalleled in the our key and to support is services footprint driving by Strong expand notable is in our across well new Robust added record vertical Tier-X every high global additional quality. This performing teams we markets. we customer wins providing strategy is service from into the with interconnection translating inorganic continue particularly our to our with win markets by financial in reach, demand outperformance and our momentum of and extend base targeted our higher enterprise

interconnection our and hybrid and the market and as As IT choice, is of continues strength growth outpace to customers embrace multicloud share. resonating, architecture Equinix gain

and bookings verticals, healthy enterprise in in and particular were the our in fueled the network both Our by strong third growth in European strength regions. quarter Asia-Pacific

deployed. growth year-over-year. success with quarter As to the million a of and up saw last strategy. billion, constant presentation, year, quarter XX% up depicted ecosystem in $XXX XX% AFFO ads and We cross-connects from XX% of the same a for and Adjusted were our are reflecting XX% our on was and grew These demonstrate slide $X.XXX basis, Interconnection interconnection was continuing pace revenues X healthy now last revenues outpace growth the quarter cross-connect quarter, and EBITDA third strong our currency rates centric normalized of performance. revenues over operating year. colocation over year-over-year, same XXX,XXX the

in the scale as the capacity gig to port year-over-year, in platform, XXX see healthy to up Exchange Internet world, increments. Our growth continues largest volumes begin with customers traffic XX%

We with serving EMEA delivering quarter. now the over Exchange, strong traction Cloud XXX also saw and Equinix this customers growth

Our position is platform kinds. in leveraging product of enterprises global for the a our and market strategy unique as interconnection all providers service

flexibility, to strengthen currently We services, year. adding are market well including to and provide as as beta reach customers expanding commerce the end features leadership, support. before the are of in enablement These formally pursuing some this be of new coming opportunities additional our our out that choice interconnection and new offerings geographic will

continues geographic XX unmatched over XX million capacity. global XXX is of feet gross data to extending now Our footprint across and markets, square comprising our reach to with grow centers

customers as and well a are globally experience, the on XX customer of top-XX our digital and cloud, the ensure consistent facilities processes for our in customers This deployed to is as increasing speaks represent IBX the average networks metric enterprises and investment a in largest Our systems to in needs distributed world. and edge. both

a providers. across It also This deployed up support customers subsea came from revenue we all and extends subsea multiple and Portugal growth in between metros. Itconic, through to across than quarter, Spain Africa We and We data to pressing connect deployed XX% from solutions XX% countries. The key our XXX infrastructure through Europe, including five and of into us and marquee cables where further Latin us XX% customers more EMEA. to European in the footprint customers transactions regions, land XXX the connectivity two leadership million. over adds two early came positioning our America traffic new purchased and This last cloud our and many three from targeted gives market. position network new globally remain direct Iberia, locations brands, centers, deal than our advantage enterprise $XXX closed adds mobile more acquisitions. extends access the quarter, approximately And committed leading in quarter, while purchase in and for provider fourth in

a colocation Turkey, Istanbul, in between continues gateway Istanbul expanded demand momentum. gain owned geopolitical address second in Americas, campus Equinix Equinix's Europe boosted and center interconnection all growth IBX which data It continued with in and in million. to This key Asia to in data May and strategic delivering We position the purchasing across path gate The assets a further for and dramatically environment, acquisition have services the a out in metrics. importance. $XX strong our critical enables Verizon of provides Turkey. our scale with the us center completed economic strengthens for also capacity performance These in

in new key coming of NAP have in additional move by both approved expect unlocking Americas Miami's year. facilities, the to and forward expansions in in We are addressing capacity demand pent-up the and with and capacity shortly expansions Denver

We Equinix previous assets have of stem customers. are and churn, cross-selling the progress to from level enjoying significant made the Verizon into success

also and Our that this Early is done the have Verizon in and are we expect we Integration the to federal growing of as progressing is majority opportunity moving have pride operating the systems scale reach we business year-end. teams team marking by nicely, of the work assets to quickly support this this sector. XX program. quarter, this recognize for work the to from with planning incredible significant data a completed execution systems the all point. for this to all integration and cut milestone we centers, We Equinix over Verizon

vast of benefits Bit-isle and efforts recognized have the and to the relates integrations, majority Telecity Japanese completed both in have we it these now expanded and our from markets. As platform European the substantial

and in rich recently Now, Ashburn two and activity. development let Hong make of Kong in important some interconnection on campuses. We few me new opened our comments a IBX's capacity our adding organic most

have projects We underway across XX region. in which utilized our our platform, are currently half most EMEA, expansion of

$XX are States. progress well land purchased Revenues last purchases highlighting in additional and also metric. the XX% now XX% with We from up million Düsseldorf EMEA asset quarter our DUX continued United assets in owned this from progressing represent and for

healthy delivering increasing PP&E strong cash-on-cash stabilized grew returns as generating and and driven density. Revenues from power return cross-connects by are are and investments on invested shown capital up slide X. stabilized moved IBX's XX% our XX%. on gross assets the year-over-year largely Our utilization XX These to X% growth

me cover let and verticals. our industry from gears Now the shift highlights

we across value verticals high with pleased our curate as and seed are We progress see ecosystems. our industry

industries, As record every a and wins through across all our vertical transformation we digital across this channel number added of new quarter permeates direct business sales teams.

and management also enterprise XX Fortune across performance financial, multinational We integrating enable a insights. pharmaceutical a to platforms and hubs XXX data company, deploying including retailer and business wins added new real-time in-store analytics global for

networks. with starting the Now

streaming Growth third traffic operators support its achieved driven their by bookings is being volumes services. vertical network record and they in satellite TV digital by cable this increased requirements infrastructures to video-on-demand, and upgrade quarter. driven other consecutive compute as and Our vertical

this Verizon. of extending are coverage Communications, to In global and included quarter of addition, Cloud portfolio multiple customers Expansions adding their Exchange our Telecom, China carrier many Telstra and in metros Charter services.

within Seaborn and solution see Equinix's the subsea momentum between will We Brazil, platforms diversify route experiencing create but distribute also the systems to space, leading Firms campus. are Aqua Comms most world. submarine within commercial cable to the This in now banking to most York, Secaucus self-service shift insurance across interconnecting In EMEA of locations. strong continue America we Latin in This transformation. and also their vertical and services, vibrant operators markets capital exchange and the digital capturing two direct New Networks London, subsea multiple not financial analytic cable and risk is only to financial sub-segments. in markets in customer and continue growth three cloud-based

and are of ecosystem, one casualty content of we data. a and of to expanding cloud region addition, Family publishing. growth solid to continue investment regulations American and privacy and and the of of content support digital and Invesco, in wins In advertising acceleration the content vertical, distributed applications. Fortune e-commerce healthy the Asia property to the manage gaming, driving saw media included mobile see the the led Pacific expansions management In the in Globally, to firm requirements Insurance insurance expansion compliance groups largest transformation and by edge. increased we XXX Customer digital bookings and enabling

quarter, to led Salesforce.com, utilizing more Exchange. strength placing providers, edge. reached Equinix and re-architecting software-as-a-service included Platform content expanding are optimize content including, and points further Cloud reduce and Equinix this closer experience. core interconnections additional over be user whom expanding the Expansions Additionally, Oracle, to Chinese Baidu, continued IT increasingly latency the the saw Tencent. Equinix at service with growing aggregation to services Netflix, virtual bringing and cloud SAP private access of the nodes their with networks, Blade, customer all particularly hyperscalers vertical can Alibaba, their providers requirements, their and with Priceline to The support services this edge a are quarter user Cloud

by to designed leading the a wide hybrid as performance meet is the have improvement, have and We reduction, edge vertical, And the of single enterprises majority to digital deployments. site, to of numerous to sub-segments, share enhancement expand cases that global Enterprise from by deployments architectures. continues our connectivity for growth in single customers enterprise including saw cloud led begin cloud multi-site, to our finally, use of use addressing cloud multi-cloud and we increasing evolve, need enablement. EMEA, turning margin the connections platform cost security strong cloud many

which New and Walmart provider. included utilizing XXX global digital a continues to commerce, wins Westrock, and invest packaging cloud in solutions Fortune deployments expansions

XX% Performance core quarter. starting their around Our Cloud paying and with the focused build Hub. bookings channel channel of this services offerings efforts Exchange to from our including originating added off value are Partners are

as resellers these reach to to offering to Equinix voice-over-IP critical We services. continued serve and infrastructure bring customers productize We recovery providing with with of our drive partner revenue with Datapipe market to the delivering are Equinix Examples reliable by us working multicloud the benefits to our development NetApp joint a Systems include of our offerings channel scale Association a lever Ontario is enhanced growth sustained working Datalink together believe to the increase disaster to well our and our Medical joint customer solution. share. a as of and

results for stop me over Keith the to quarter. let turn cover for and the a the to minute So, here call

Keith D. Taylor

to another solid of very I'd that start Steve. across had bookings everyone. highlighting platform. we Thanks, like afternoon Good by to our quarter entire

consistent both we our as the planned, in our net bookings Asia-Pacific records were gross and bookings well had highest production And regions, as our quarter As this network EMEA vertical. our with expectations. with particular

net cross-connect per key had nice in cabinets Our MRR a step firm cabinet. including metrics net Also, remained and operating up we billing strong additions.

and market We leadership play XXth including additional and continues to in and for the strategic continue transaction reduce churn EBITDA global platform These to our and and be The us to margins recently completed we're Itconic working reach of business. level giving acquisition MRR asset acquisitions, extend our accretive capacity our adjusted meet continued assets hard strengthening out our AFFO, acquisition marks to to the to experienced Verizon demand. customer with depth strategic to-date. our rationale this previously operating

strong with we've assets. As our to we a results the bookings prudent to revenue Overall, for the combined view our into and Verizon churn. guidance continue delivering for asset specifically and including performance sales higher with reserves a the sales estimates integration Americas take on planned platform level of key to progress is than assets. reviews, attributed raising reflect strength our the Verizon we forward-looking raised force needs The

to million includes million our million we're costs XXXX, of For to costs and expansions. $XX Bit-isle to million and $X Istanbul related for $XX Verizon integration guidance Itconic updating which related and for X the acquisition, our Telecity asset $XX

the performance. of strong turning quarter. was Now QX operating to quarter third another

the included weakening to revenues an in ahead when on over section revenues QX this our were of quarter and year. Do million rate $X.XXX when and X% quarter Verizon normalized benefit over of to growth positive to the million includes that guidance currency our rates note are revenues rates the up the in positive a currency. FX the This last million slide FX currency benefit compared assets. $XX dollar. depicted of the average attributed due hedges $X same all X, FX prior XX% constant billion, U.S. to compared Global QX As $XXX QX

our with and net cabinets. platform meaningful expand X,XXX last million, XX% over healthy a A QX EMEA $XXX quarter, quarter continuation across steady continues added region Asia-Pacific offerings. Global Americas growth from adjusted Global interconnection X%. quarter was to our last up and We produced respectively, up strength the quarter while of service in X,XXX we year. cross-connects showing year XX% same over and the the of same EBITDA the step billing added last of growth XX% a Our a net

or as-reported our EBITDA margin $XX integration costs, adjusted basis. XX% combined Our on cost, lower was of integration million than includes expectations. excluding XX% Adjusted EBITDA an

performance, of benefit compared our a average X.X% same and hedges, last Our rates, absorbs $X number. when million positive QX had million compared quarter $XXX was benefit QX adjusted higher year, up to when FX EBITDA a FX net FX positive the $X to our MRR XX% Global was recurring rates. modestly global including guidance million, over AFFO QX expenditure the QX Verizon. and of the capital churn

And XX all the revenue and an platform. solid a the saw region Americas Verizon X% fourth slides rate attributed I'd our the to our to be fill X.X% assets, outcome churns MRR quarter-over-quarter. business highlights now, adjusted the interconnection We from the and expect provide set quarter X. EBITDA having continue for results diverse to The covered the of Americas metrics both improved core across X organic which regions to and quarter, And in few are in on like range. the to a through assets

also hurricanes Miami EMEA metros the no markets, by for in due former strong and major our its our with of weathered lead record bookings Sustained EMEA campus service driving across third providers planning. as the major to or two damage outages of XXXX. customer any expansions many expand team additional Telecity quarter has delivered vertical, significant the as in dedication team's Houston of well Our cloud wave next as growth markets. and is

performance bookings and delivered in Singapore. Asia-Pacific Australia, Hong record with Kong strong

or on and Korean Asia-Pacific of from XX%, Americas, revenues brands EMEA saw XX% also their recurring basis. global regions, the particularly revenues, deals and were to firms globally. expand interconnection a X% and driving We respectively XX% other exports as Chinese The

please balance slide Now the looking refer at to X. sheet,

optimize structure We our and the continue environment. of low to take capital advantage currently rate interest

of our support lower in expense. investment we our high-yield these interest at annual capital re-priced Selectively, rates $XXX loan continued see demand notes our attractive incremental we expectations. without financing quarter at million transactions that provided our raised term both rate two increasing billion In fund XXXX €X to our rates $X.X of billion refinance and September, This B regions. the we exceeding interest very debt to across of

borrow average a debt the to believe down is our continue per flows now rate of our we increased push and further to costs Unrestricted our investments and incremental across drive raised. key accordingly to cash instruments $X.X capital cash important investment largely grade and Our and therefore is due X.X% borrowing AFFO AFFO and increase share. billion, to

of range. leverage net debt was cash times into step adjusted X.X target our leverage or net has ratio, Our QX unrestricted down annualized EBITDA

Turning to XX me. pardon slide –

of $XXX markets million XX the past adding $XX across our London, and depth expenditures pipeline with Amsterdam, slides consumed please have supply strong markets operating Kong, around including construction capacity million over to our XX nine phases demand adding Dallas, capacity recurring we guidance build XX in For including of new core or were is through Currently, and to line for few level response projects recently Frankfurt, We've finally, in our in capital buildings The markets, of opened new the summary quarters. bridges. world. and CapEx level And underway our conditions the the of inventory and refer XXXX of Toronto. expectations. quarter, Hong in XX our the

normalized million we're guidance AFFO This FX to the performance, guidance by improved EBITDA grow AFFO adjusted a healthy For margin On full-year of raising AFFO that's We're business revenues have adjusted raising constant share and our $XX $XX acquisitions. our of AFFO EBITDA guidance and organic rate we're will by basis, and implies year-over-year. AFFO million. the expectations XXXX, revenue year-over-year and to reported as growth operating $XX.XX continues XX% per of of share. momentum a to drive combination per basis, expected million, deliver uplift our a an XX%. On benefits currency $XX guidance XXXX raising by EMEA XX% and The is share. per an

We common a basis, XX.X have shares integration per an our to assumed weighted guidance. million expected over be share $XX.XX costs, AFFO fully of X% diluted including outstanding on average a increase is prior

to dividends. Turning

be For XX%. out prior the and million, to the we total cash cash AFFO of a increase of expect ratio an over And prior billion will $X.XX $X.X quarter, between paid to per XX. So, is XXXX dividends call approximately expenditures XXXX, to QX capital I'll back share expected our with and the XX% Steve. now pay Consistent be $XXX and out payout we range turn to December dividend on expect $X billion, finally, the year

Stephen M. Smith

Okay. Thanks, Keith.

in deliver solid So to closing, continue this performance we year.

customer and and are as a momentum strategy increase, reflect see interconnection that Equinix existing working rate value ecosystems. executing deployments, penetration. traction in The emerging scale we metrics the we of with our reach depth, and Our multi-region Platform and customers XXX is high continue our at and Fortune expand including to unique continued

more the ecosystems We set company to are our value growth to and to deliver product the accelerating Platform our cloud of channel of customers expanding our growth position to our Equinix, forward. enhancing our service and by providers indirect network bringing going even greater

over open I'll me we'll let turn and it questions. you, it Christine. stop to here, So for up

Operator

from Louthan And time of our Q&A we'll Raymond Thank begin At you. session. this Frank question James. first the is

Your now line open. is

Frank Garreth Louthan

Thank very much. Great. you

meaningful and there, change names that in logos relative expectations a these follow out that is Thanks. acquisition? about on of typically names, tracking Talk up with big looking how Asia. you're traction the of then shift of highlighting, little China, that from Just to How is a us with sort transaction. a you're a the to the at Bit-isle that the seeing some the

Stephen M. Smith

start can is and Frank. here. Keith Why then Okay, Steve. Charles add and I This don't

that we're a on China basis. time logos a So to the in dedicated large now hyperscalers out refer we of are that spending of with amount China, the expanding global

world to are access so network companies the have enablement Baidu, cetera expanding win around And been footprint, nodes, several starting the Alibaba to world. like nodes, over with that their commerce we the quarters compute last enable Tencent, et more around their footprint

of some time example, wins that So for but another with three, quarter on there's and we've was journey those quite this great been for quarter others.

in Korea very out in have that don't exporting we markets, working in small around South deals also We teams that Korea Beijing, the with are and assets where those world. have companies today are

wins and companies deploying good also pretty the some South Korean this are had Beijing, we companies So around infrastructure quarter world. at from that

working the logos for well the is very, else us. cross-border activity very from Anything on China, So guys?

Charles J. Meyers

and own is it's Well, market, happens what add to win global business, our them I we either that extended business go or is with need home a happens us, this they it business that market aspirations, often us. one value China, only relationship. able they when these we've assets I content then for players, And other which in have think, a to partners cloud we their their often for impact. typical our and often work in winning the not not back now, been center as is using. due – more somebody credibility they And the unique don't to in have this that's on do China, would is successful that are globally, media very with which customers, that. immediate expand home businesses, But, data to may but major come pattern in been lot but gain win in and a and an digital and to they with and help may need that proposition them their They they're is we

so, And we're definitely that's seeing. something

Keith D. Taylor

and plan. able to go our that core Steve off and forward not let question off on asset with that very were surprise Bit-isle. number me been the Bit-isle almost that our we've own, our business. of messaging Frank, pleased given sell as alluded they And into assets integrated combination we've of been no just to Japanese finish the with subsidiaries asset a the We've fully the Clearly, to

an seen been we've fact, So we Japanese Japanese actual uptick across when activity you look with the we've across in is extremely how will platform, what performed in pleased and if you right to we is so the that we're market it. can closed and invest now and with pleased in that continue say we I happy very broader all transaction we're will platform,

Frank Garreth Louthan

you Thank very much. Great. Okay.

Operator

Cusick of your Next now line JPMorgan, question from is is open. Phil

Philip A. Cusick

guys. upside? Hey, into better dig helping? like It particular is more you driving the acquisition sounds looks expected. going It than churn what's in Verizon is Thanks. like even Can that mitigation

Keith D. Taylor

a that is are of there going number things with Phil, certainly well transaction. Yeah, the

of we're One our planned, churn the that and reserves selling, planned. some with of a our said on gross we take know putting lot as you the the ourselves. to these go-forward we assets, we creating combine Denver We're force Americas, we than on actually NAP things customers. seeing in better. call, think Verizon selling that asset an Miami's keep of up like sales level have or to a At the can. selling we're assets in opportunity use the the we as it positive. the platform, across continue we're less historically time, do originally basis, less an out flip so last I same conservatism in is additional have, prudence XXX than that's infrastructure new you we're building We've there a lot you when and is net assets, where side of activity sales guidance is of the But, earnings announced build business opportunity for a recently focus so that we've more had to seeing we're We're we're certainly where into

fair understand took we're And it's business we better. a out we say so, the offering conservative, guidance, view just that started to wanted when to we that

those an For first are the with to un-bundled Verizon. customers getting very invoices from basis what on Equinix time, they relative experienced

quarter of we're incremental to under view, we that our reserves. higher sales delighted quarter, prudent fourth revenue so, still potential But, taking holding going for ended because position on for view we're where for of million of why of code $XXX churn $XXX million. that our the out that revenues annualizes ZIP our a concerted to million just in $XXX we're need and/or And and that's million the be view QX with we're the $XXX to

Philip A. Cusick

It seems like your gross....

Charles J. Meyers

this capacity, force One, And you is to asset quickly, ideal – we and might Instead, out aggressively. sales first take accounts integration, I on the definitely don't move who's base, in, saw Yeah. selling you to two up et speed figure cetera. really into say a to have add enable scenario available is come finding a like that, we things. begin in acquisitions do on we're sales you assets that. this team our it that around,

the In fact, we probably portfolio. sales customers. to how now it's think do, assets spend it's they're central this thing high-quality go those and I obviously, they is think were the who effective absolutely who's this, fueled do, these they to increased the bit have the to really they questioning committed performance. fact with market positioning And provider I behind in there's a their leader, And acquisition's at their confidence and immediately customers business that are they of combination ahead the surprised the you in what in to a now And who that was tremendously of in some were an level to that assets saying customer these their position force then combine things that. services had two with long-term a commitment have that only

Philip A. Cusick

Got it. Thank you.

Operator

Thank you. Credit next from is Suisse. Sami Badri of question And our

Hi. now (Broker) Securities Your Sami Thank the (USA) - Suisse LLC you Badri Credit for line open. is question.

of facilities? idea center at better IBXs? far that economics you for Could on you So, can give charge connections. facilities the these us multiple the customers the higher landing of data these rates you've direct have rest So, instance, point so a cable subsea versus announced locations

Stephen M. Smith

Steve. Well, this is

calls give going this in cable kind mentioned previous date. several of a have XX that quarters. of some that just to me projects wins – announced Let subsea for on you we've several baseline to there there's We've XX is been

help it so world. inland because data these our located. is they advanced around – can around We many we of so move today is bring power, we be world. these to it have centers monetize can are And would cables once space, Our very will technology interconnection them notion dedicated, can that to traffic is they further located the cables that charge the some turn the undedicated, obviously be and as attractive they intent land we look the on, some of around these that where data centers and

very for on, these over predicting then that traffic next a able the and cables all the are things we're all but earth win that and it's that when be initially, mobile So traverse these information going land they these interconnect us turn to finally social hyperscalers to decade. to to media traffic are good going

to So the business is a come. lot of

Keith D. Taylor

themselves It's a going lot superior for us, around on the typically to on explode in are economy. the nature tethered Yeah. comes ecosystem and of traffic classic we is and, intercontinental the It's that the which the in ecosystem or facilities these broader traffic because and of right, by this continues way, play because the directly themselves. a to to returns either network, magnets of generate of aren't global

that's once now we effectively be shine. where and needs and so And where to cost headed, of efficiently, the that really it data it's reaches distributed shores

give us revenues And revenues Cloud as could percent Exchange, service Securities a of able currently so I on (Broker) people continue to you Is Got of attract strategic hoping it as it, monetize do accelerating total what was a (USA) point idea on then this And - is? how we're currently? and percent to it. around is Badri of got Sami think Credit aggregation. Suisse that those I Equinix as a LLC things big an

Keith D. Taylor

accelerating. Yes. definitely It's

that's growing out, we'll and broken continue appropriate to faster. it We definitely I to have not think do. whether evaluate is But it

of overall Cloud which material is to business. contributor the Exchange is If you interconnection performance and clearly become the interconnection look at XX%, overall to beginning over-indexing, a

of virtual importantly, us so terms Cloud and that sold good yeah, fit hook our of terms bag and It is very being with of choice? the both in talk ports particularly how multi-cloud teams. of and Let traffic the we're are to momentum, really they say, the pleased in go a 'Hey, can we're about seeing implementing ports that. picture.' on So, virtual central circuits circuits. you as sales hybrid And those into When architecture in Exchange on and you

monitor us. Suisse (Broker) all all of those Credit (USA) trend guys. Sami it. Badri things continue we nicely Thank those of right. So Securities Got very to for All - LLC and you, metrics

Operator

our is Deutsche next Chao from And of you. Vincent question Bank. Thank

is line open. now You

Vincent Chao

Yeah. Hey, guys.

second. would wanted is conservatism known quite does things for baked in, Just in going there. a a that's Verizon downturn if to well there some I sounds to fourth bit It quarter, anything just curious back specifically like Guidance quarter-over-quarter? of are question imply go there a cause the that decline the is that but know and

Keith D. Taylor

we think very I Vincent, quarter. to Yeah, last similar what did

running bit level invoices. little quarter. only were guided this to customers. and we a in those billing we at collecting you no We're of what We're higher quarters the As process than know, the different into two

detailed in taking & forward. us As assets. question, And analogize did inventory then will, you unbundled just I first Equinix. conditions Switch from we years the is time make look on if an sure with a we we're the of and, agreeing the X.X this a sort the Data, pay, with to and items, XXXX the are this work that invoices for it to took prior I And terms all we prudent can very as if us said the almost customers acquisition we the customers receiving as all it view acquisition fully result, line to to as

future is sure for things recognizing our as this a are for make we than in-place we QX. want at prudent local appropriate potential guided churn being our reserve with And there's with reserves process will we've a that we that faster sure us to customers, this running be are also guidance little again, is make so bit invoice for working teams, we we yet the same them, sales uncollectible. inventory the just but an to And time

Vincent Chao

hyperscale looking how Okay. time Thanks category try to well that second change, pretty elaborate talking you of about for that. approach you on question. are a hyperscalers sounds with to you And maybe forward? going then little that this did Last like another quarter. it potentially second capture wave, spent some wave wave and Could It another quarter demand. or how bit we just or you

Charles J. Meyers

Vincent. This is Yeah, Charles.

we're architecture. see of on hyperscalers. we selling mean, elements in So demand various success sustained I their having from continued them great

are strategy been the magnetism central network ecosystem and has a building nodes which with. focus fueling think particular their the piece been always private we interconnection that Our their nodes, we and so on and ecosystem creating have of successful cloud

architecture the seeing partner though, that an with like that of us. select appropriate hyperscalers, set we also, the front those choice, you we of. particularly ones in ways step And 'Look, want like to us shaping as hyperscalers. locations and but And elements for and the our as these for the up past, really architectures pretty are imagine, we're been for staying cloud in that aggressively. the we evolving we We make from say on, Their key that in are of maintain move up we're selective centrality in partner would might some about that continued our customers footprint in quite demand We really large to choice and those sure know, ones as players, we've feel aggressive of a that that in are need provide as you business in ecosystem hearing believe ecosystem, of more being are and of is stepping you we're infrastructure us.' very to anticipating the focused

with to We'll we footprint 'Look, do large And we're say, capital so, you. what we're going of with work some is our going demand those customers. towards will to allocate

needs. off in those us which balance those that financing, sheet sheet deployment and probably and design of about facilities optimize gives of terms need we'll serve to the their how time will needs. creative balance of then both we And construction, be meet to we leverage combination some that We on over finance

customers So continuing The we're those that's team that staff positive. help do up a has We're response us from what to to effectively. to. been extremely

And so updated we'll we progress with that. as you keep to continue

Vincent Chao

Okay. Thanks, guys.

Operator

our from And of Rollins is Michael you. next Thank Citi. question

open. line now Your is

Michael I. Rollins

more Thanks. products and you in could that? I your about you was And interconnection experience of terms of terms you the if were from Hi. Thanks describing curious cloud interconnection beta. facilities the taking a the what you're of in a seeing if bit on the talk what in for density evolving using question. enterprise bit could expand the that you're to looking

Charles J. Meyers

portfolio, of I'll Mike, that on our we're our some of comment comment time of particularly one our probably take with interconnection we've imagine, that bring as to us might well in across the applications been new you terms verticals records relative of question 'Look, and and as is, all as which spent we strengthen And hearing we from your customers seeing you in very some unique as logo with of that want Yes, enterprise to demand coverage saw, set starting all think full I the cloud on regard. capture, the that. a we really product customers lot advantage of to But strengths table geographic can having fuel the what density.

that ask would your portfolio, really out to of do of to you, a those how of I'll destination And what our of easy from so quarter. tell to that kind on you pencil work we customers I saying, that eyes we areas announcements the of geographic we of extending so that's that formal terms sharpened 'How consume just standpoint? And destinations the end a be this cloud provide need more ubiquity in the our use gone And as and are the focus as towards there will keep about to leave from and and we've and do access and have make possible?' for sort it standpoint cloud coming

Keith D. Taylor

in as And, cases industry give just cases do We've the the as commerce are your pushing In the hard as a that I'll that we're really some second verticals. from come see are hybrid to stores that. into positioning enterprise, starting sense seeing the digital we're of you much question, of future. you cloud we with creating the retailers much on migrating got Mike, use the around would to that and of use expect as

and NFV, Network towards of capability extend partnering we and good finding the as their finance work of we're with and across to all our the healthcare the with quarter cloud of We deployments and data to their probably us services. cloud reach the centers very network, we've looking In deploying starting performance regions. analytics industry investment their got reach multiple security providers see applications that their the backbones world deployment we us to are extend the providers things, next-generation In actually hubs performance they're closer. have We've for seeing they're using and the and They're our across oriented to moving starting to to cloud for pharmaceutical networks all the SDN from companies and our cloud firms got we're services, from doing really to towards with WAF XXX-gig upgrading real-time and board. had connecting capability. hubs to – our they're that mentioned all capabilities, partners storage to and the providers of governments to are DDoS data kinds around are that. with financial and with in the networks industry, inside back kinds so use us those compute world deploying cases, it's is multiple a that for cases to are from management with that security a of to around

dig seeing place we're drive Equinix them of kinds that a cases. we're top higher and out, all and We're performance. the studying So proposition, really use find really great – verticals the into value to hard, cost are get starting to that

Charles J. Meyers

things do demand variety industrial manufacturing companies Steve, data looking is chain has it has surprising manufacturing. I one more cases. of that from ranging to me a seen incredible of been mention management been from Internet management are type might supply strength to We've a to who it honestly activities little to the use

that more And which consider cases. seeing would And we're what – then success exciting use area say a propensity so would comment, I horizontal higher us. a one that's for pretty with I would be a better

getting to teams so send and well be resonance that of good to use on understand educate that around And a wrapper with variety our something we're it, vertical out the across is seems little able verticals. of a sales those about a but bit them wide with they go news cases

some definitely vertical now. to use And we cases good sales teams our expertise, solution teams our right but architect horizontal seem the so wave have and have be both who

Michael I. Rollins

Thanks very much.

Operator

Morgan Flannery is of our And question Simon Stanley. next from

is now open. Your line

Simon Flannery

Great. Thanks very much.

Chinese work Thanks. directly. providers. just in bit could think Where do China? channel your the maybe versus and Internet you a economics continued to about that Shanghai, You've about other one, are business for over about in more to you time What's then getting obviously talked And talked two but important what thoughts go You a lot their there. through the partners channel about we becoming XX%. expanding markets up in driving

Keith D. Taylor

I'll the you could channel. in. maybe chime start Charles, with

will We'll probably the us limit has We've drive nicely. into Simon. deliver. think growth what It's XX% next our upper that of I year set had percentage now. progressed channel of XX%s, sequential know goal a channel XX quarters So with the the don't we our channel. can

partners. XXX and new focus the the through XX% the We our and XX% come through to So logos year-to-date and We've really XXX-odd up creeping resellers resellers bookings through towards resellers. had quarter-on-quarter year-on-year shifted channel. this from grew the quarter, new about we're actually channel logos

we working expectations to on the where go, increasing well, move out tell a that would XX% it's but it's today. low I haven't quarter. there set you and want our into It's this every – going XX%.We XX%, it's very the publicly to to are goal So

Simon Flannery

the And economics similar business? are from direct

Charles J. Meyers

be now activity you strong are. a it, little of with higher of you co-sell a you bit be They end the therefore small. the fairly when an value user sale and a look the But incremental partner. is channel we're I and you cost pure of context sale rep customer sell-with contract long fairly a at cost in paying to of lifetime right margins, a with have where particular engage through. mean really really may look doing they than that at may sell might in Yeah, when probably more

side through channel enterprise others. networks, the since balance, range But continue they and to the – business So – effectively. I could really bookings pull have them market be able of we majority I very the offerings service across on side, I could providers, eventually I they're come that strong is providers as a be the would service through the in would on us to say in for mature say a that of is and more on cloud similar think would they're say growth really economics. enterprise enterprise our over-indexing

Stephen M. Smith

accommodate then, are work region And market. the joint to we with in on the into partner venture in that licensing that six that Shanghai us Simon, to China, the go in to China, closely have assets working a requirements announced today we're we deeper we've need

the to aspirations move Our over Beijing time. to up market are

announced would hands well We connected company. work finalizing seeing Most they government and with still on It's coming traffic partnership that have a providing as companies. very of traffic take We've into company operations expect into we're Datang enterprise terms. PRC and is in the into China local good that local majority business joint up a will the That coming the benefits a our that we're some still to deeper we to safe of companies. with and called partnership venture all in. start they're inbound multinational are very the us Datang are partner pair circles you setting over the and that when time we of get need is change multinationals

Simon Flannery

could And something is Beijing that happen in XXXX?

Stephen M. Smith

land has like market partner buildings and need move our 'XX.We're happen things a it well on- working you that. Yes, very could into in hard required access to to the all and to

could well happen in XXXX. it So very

Simon Flannery

Great. Thank you.

Operator

Thank you.

Colby Our next Cowen Co. question Synesael of is from &

open. now is line You

Colby Synesael

I was at the back second look One, number low least quarter over before relatively if row, cross a may. that. we quarters when the Great. several for Two connect in Americas questions, the

forward. to structural deals how good about on might like like now and something relates seems aggressive some thinking right to now it Itconic, there bit? a right get of and we little announced trying to And around in should be starting really that those changed the as push see how out? you want be get roll kind of guys a a something to sense It do you many opportunity how just if of other secondly, world the Just there's to going do that right now opportunities be Zenium or that's to that two then

Charles J. Meyers

that really on the Colby, on the address Having the maybe depth some be connect sophisticated that things value sort a gig and from are in speaks three interconnection to optics the area and one, we able I would implementation that I'll that, comment to and cross performance. Keith Obviously thing Steve comment and cross create the strong on: with of of the overall, our and but XXX the implementing seeing proposition who I probably to pleased said it which and say on that sort our churn and question. add would in are think XX% groom counts performance interconnection to their traffic that. very and platform, would year-over-year of on good But does population players over traffic growth this continue cross connect, overall I the some throughput demonstrating connects Americas increases be time. cross is we of a think M&A aggregate we connect is let most

time been integrate some We're which in rampant of the sort think sort seeing the their has nodes groom backend I years consolidation, to of . of of are core takes that. last also of we them the so and traffic. industry over seeing several It some networks And

on eye look, strong. that. see has to of strong you gross, for – on which some right, but to what be keep be the gross some we going private seeing of is some demand end been continues we're these for so very our us reasons, to to But continue And really churn other connectivity because says, are

And increasingly numbers say ports And on way that to gain ports, would and interconnection for popular so those those exchange those are there. need. and cloud the an that's people then I we're finally, they value seeing VCs don't reflect what the on

happier. number our probably with. on those be our revenue And proposition, look we the But balance we're customers you So, pleased X,XXX and pretty when really value play into to some how react again degree. all couldn't interconnection things is a at and growth

Stephen M. Smith

tell I top the Latin our you this cloud the know corporate We're it would team extending shortage be market or reaching That's is and We're to Keith new is teams platform we're to it'll moves Equinix if into for I there's cloud Southeast the are in the going, extend of needle for us that have priority markets moves the probably activity. and India, you'd Colby, tell opportunities. us And same. have would deeper you South The networking activity on it network development if I in and needle on on looking there. Asia, looking add targeted, and still top but priorities. front, density, a into going where qualify anything no M&A for and of the regional we'll look. Korea, be America. very South Africa interest the new don't markets

Keith D. Taylor

Perfect.

Colby Synesael

Great. Thank you.

Operator

you. from of our Thank next Advisors. Lukas is Hartwich And question Street Green

open. Your line is now

Lukas Hartwich

lease about think owned versus the What land you percentage cable in deals? are landings facilities Good Thanks. when your trying afternoon, and undersea guys. do how of question own those to

Stephen M. Smith

Owned you to versus Keith? leasing, want on start that,

Keith D. Taylor

Yeah.

it first the and highest think the take level. me foremost, let I to

But Our view that assets. the is having continue our other have and But we of don't us breakdown more we to And control will will leased economic is those bode owned asset is the extent already looking I there to always the assets markets we between for. can of are that say objective have area of certainly landed. an breakdown as as valuable company, have opportunity where important. it the suffice to have some to own subsea between own. that cables these you're owned like And not focus we'd well asset having think for wholly that that the fully what or that I extending just actually asset any which is that's is yet, subsea the into asset that to to owned the an leased, cables to most on will the it

Stephen M. Smith

won meaning have question, under landing meaning IBXs metros able station to in enough close deployment. eight announced landing coast to-date be the to construction, getting XX on we've actually a that they're XX the wins on to seven enabled that Lukas, and there's around operation deploying today, that would We've cable we were ready the are support publicly our to cable be And setup. and

their on more yet. traffic to funded the been of all So hyperscalers even coming the desire the this in to world over decade. have by per cables question, have many that's the these the all turned earlier going for are Earth These not yet with biggest traverse capacity

that to up of of with to these turn development So, more XX things XX the projects are and happen. business There's are we're teams. pursuing continue that will ongoing we another aware

So, this is priority us. a for high

Lukas Hartwich

And Great. target your to then, higher growing weigh organically bring that the you at just leverage down end of ATM? or follow-up, How range. with do the either tapping to

Keith D. Taylor

end we structure we're the high the end above at have high strong today. again, previously Well, our of range, really range. capital We're that of

leverage just make that, very want capital to down. growth, scale, what we to ratio flow sure Having leverage where Just our cash future are growth. it that and best to use our business strong. the And our to attributes of through define sheer we continue will appropriate. best We'll fund bring said by source is of very, continue

low We an that can and on business efficient sheet, untapped in billion way $X.X credit. most do is balance the previously at of that we're maximum announced. ourselves. approved ratio value yet balance shareholders. going But payout continue in now, And continue to because our that the allows use be line cash really scale, XX%. to the sure reinvest cash ATM an have the creating I have of scale the sheet for we right the And to we that, the of position making the cash We the we we drive we have are in to increasing time in, theoretical business more given capacity to it's recognizing flow us just like same as our the the to debt

Lukas Hartwich

Great. Thank you.

Operator

question our And of now next open. RBC. Jonathan is is Atkin Thank from Line you.

Jonathan Atkin

Thanks.

for say think XX I over if land about can can mid kind what bigger your pipeline, threshold interested towards picture, months bit at a under lease. talk trajectory, you XX% margin point the do then, you purchases XX, you currently or readily we XX% next as keeping it the So was and from Thanks. just M&A, of little where you the margin when margins And the some sites interrupt higher? obviously, is heading expansion, surpassing about

Keith D. Taylor

you look, in, surprise one to Jonathan. to take me no Let first the I'm the looking Charles jump happy one and Steve or I'm second for but at and maybe

and we it continue will acquiring do actively of in as are those We that it around as land and make that, buildings. we'll can. buildings If senses contiguous much to we do

of XX, up what highly markets call are focused sort that can the around we even XX XX, of Think the you We to where control also We've objective we markets. had make we want to owned. future coming from committed our to that assets our of on top-tier probably get revenues that destiny. go world to the XX% a more are sure as than

objective the we an operate the land today which but buildings underneath is ours. our acquiring future of in land So for the only acquiring growth not

will see most looking the you'll or important to land that proximate that away to number in time, our to acquire of you markets continue facilities. we period I least at is some actively are over adjacent our up. so walk core that And But move thing to to existing want

Charles J. Meyers

Yeah. the the mean business time Amir to serves, question scale. last memory actually to there expansion us available I'll tackle I second I natural is I we margin if the that in one. continue think think asked as but same do

I we some think, And that. see of so

I one we're As think opportunity. we the in (XnX:XX) as the M&A And interrupting and of you creation But I we've value there a blip consistent own has out lot the thing right would think our now, which that trajectory. this, been of that view and terms sustainable in we said say is, sort occasional maximizing of for opportunity business. behind investing intrinsic is there's expansion

our you to is adjustment If to my we performance, SSI areas responding at team kind in not new only and to did our to terms behind near-term look the but of for where the tackle to go growth. to for after, customer invest what continue trying us what needs, of long-term and are is continue positioning new growth we'll those for portfolio that in business, areas service ensure for example organization sustainable

different been out we've to why marker And reluctant put that's any so there.

balanced I through think it we're continuing versus growth. going that into we to drop progress assessment get a should believe really believe of that we're the towards when margin expansion, on investment bottom-line a when we'll and make by we return we to future putting significant

we I of hesitant march, sort So long-term how on to change but the we're continuing think markers. that view

Jonathan Atkin

your globe on that Internet around your soon says suspect talks potentially And in peering would an of then coming cross or on finally a website going your material blue I And of putting the product, and basically metros. that in sheet traditional to – dots business acceleration be your connects? there's there's product a is those interconnect, is that driver that exchange than kind number in is across bilateral say sort amenity just less that of interconnect of important about exchange

Charles J. Meyers

the I But mean to our the "needle sure about interconnection broad to don't and make do I expansion, say overall particularly we of full which to is try interconnection I responsive be effectively unique being customers. geographic portfolio we that depth serve and the and it's range product know have is that is IX we would to is going reach unmatched. it on what what a combination any do that would positions a us really it does and think offering the quite of mover." needs geographic customer think of I is that Yeah, both requirement and

X cross-connects, large Layer And multinational, ECX in IX portfolio. at Layer coverage, the from else X one, the Layer look, but you to geographic they of said they can complex X, full buffet, direct connectivity global want so a and nobody it provide two, form take need the that

stay urge to the I'd about to you again, you'll So, interconnection more through of year. the of that tuned hear sort evolving how and course portfolio we're the

Jonathan Atkin

you. Thank

Operator

you. Thank

Our next of UBS. John Hodulik question is from

open. is line now Your

John C. Hodulik

Thanks guys. Great. Okay.

the quarter in You nice markets. in saw cabinet a uptick the adds across really all

all accelerating that's two the there's probably it out, footprint sort hyperscalers, could the or Now good is and of they're if uptick on pace could out that sort we point mean sort forward? one of driving or I I you of region, going you've and level could the particularly of a fairly quarter dozen or point guide anything but is each given development lumpy sort could this call in different this it would one a point then Thanks. that but And to know if don't it's drove mentioned that maybe expect the that two you you a demand from business, of outsourcing drivers, expansion, great? but be here to maybe number, you

Stephen M. Smith

adds. cabinet the For

Keith D. Taylor

one, foremost bookings adds quarter not I pointed X,XXX Yeah, ever if our that you net tell and billing. highest first you aptly highest, it's net flow. I is, does out and it think vis-à-vis cabinets cabinet ebb think out, as I'd the clearly

we our comments the remarks made of strong. One the in pipeline prepared was is extremely

because to no the bookings, continue we to so, to that We'd be record surprise expect as scaling to you continued we're business. plan And have number significant.

that those and said, we're cabinets. as The active projects XX a markets, we the opportunity other going us. in of recognizing of comments building the the of to around to is, XX and across around continue that's we've front got believe we Charles Hence number are made lot hyperscaler we world part I the said of by consume some projects that

to number going you're think relatively than to experienced that we've inherently reserve before. the I I to right higher that is But be what see continue chunky. want it

just And timing so, it will the it will on and the deployments. times we're of going to based see upwards sometimes move step other back

Stephen M. Smith

these would cases. And John, I what back Charles to earlier horizontal use on talked about point

are today So, to combination most it umbrella, model. an a everything a of enablement their digital companies underneath businesses moving would be

on-premise. all data networks, are over to The are communications moving so across transforming edge. around concept world need things it's out out moving the cloud, a centers analytics the center the to hybrid some we're many a these applications distribute their the to so them. they're applications the they edge so multicloud we and getting industries. world, They're optimizing of they're and moving consolidating, are, capabilities people where of see they're to customers their some requirements seeing, the their So more that those combination moving They're that architecture, the is underpinning more moving data of the multiple enterprises business, model computing colo of some lot public some keeping data the it

Keith D. Taylor

have might growth. large are earnings of as are season, their growing benefit noticed, you significant ours this noticed well to continue they might CSPs, business customers very we that and as have and from you And,

John C. Hodulik

guys. Great. Thanks,

Operator

Thank our question you. is Robert Guggenheim And Securities. of from last Gutman

open. now is line Your

Robert Gutman

question. Thanks for the taking

size number for just So, deployments deployments talking you number curious when megawatts earlier, exclude churn the are what churn churn to of of deployment acquired able terms a core large mentioned of you or And or secondly, range scale mean of footprint what hyperscalers was there? in you would exclude that you about that the would are a provide in assets? sort I

Charles J. Meyers

then second can And the I'll one first on the maybe, Keith, take one. there. you comment

So period single about sort megawatt in anything large ago, when talking – initiative are things, probably comes That footprint, megawatt one of about footprint. more consider but probably of to I'm but of terms of. relatively we're so talking thinking are we're or of kind for in years it X what we sizes XXX probably of hyperscale a multi-megawatt, single implementation, the still over that talking X sort deployment a particular, doing phase, several we'd certain to the bit we're that's what more and not challenge a in average when large sort kilowatts a is is of scale about over of which started hyperscale elevate terminology time, little of in short – probably implementation

large but the within we've our business talk might within about those to footprint will be usually X and accommodate that underwriting for we even that maybe retail within kilowatts, assets retail XXX context megawatt, our that We XXX footprint up of the kilowatts, already. done doing

our in hyperscale a things in X say our megawatts to distinct are current then accommodating X which relatively I again footprint assets. megawatts or of And we're megawatts more of X within period time. over those would view short large to terms So which

Stephen M. Smith

answer easy we question what with is (X:XX:XX) churn quarter the on basis. somewhat overall on this Robert, an the consistent reported

acquisitions or the same. versus the relative the – on roughly inorganic organic are is the So

Robert Gutman

Thanks. Okay. Great.

Katrina Rymill

That QX Thank you. call. Great. you Thank concludes us. our for joining

Operator

your conference. Thank you today's for And participation. that concludes

now You may disconnect.

Equinix (EQIX) 1 Nov 172017 Q3 Earnings call transcript