EQIX - Earnings call transcript Q4 2017

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Operator

Good afternoon, and welcome to the Equinix Fourth Quarter Earnings Conference Call. [Operator Instructions]. 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

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

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

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

conference provide GAAP We In at measures will comparable measures page reason addition, list those a and directly release reconciliation why call. provide a we press uses Equinix' of on non-GAAP to most in these company of www.equinix.com. IR the on measures the the measures today's today's

Strategy, President; Innovation. With the page Chief of that and we for to Camp, post today Officer; have available Van time the Keith certain most page from like are remind encourage and information. you and President website Charles and also IR to on to Meyers, on Financial We Interim this website to time other a important presentation information us Taylor, CEO made of about designed discussion, financial our and Equinix' the our IR accompany Services supplemental with along data. you Equinix We'd current information available check regularly Peter

the be we'll sell-side PVC. over time, At Instructions]. this remarks, analysts. I'll prepared from questions [Operator call taking turn to our Following

Peter Van Camp

of It's year. to joining good both Thank quarter fourth full share our strong call. results earnings for welcome quarter all to you you, Katrina. as Good be the our the afternoon, we and and

had is for an interim have As here roles the CEO XX my active both I've years believe to I over team, the role this time in our alongside everyone strategy their And of working in every our assumed the Chairman made Equinix. leadership I privilege aware, and playing the company of period. fortunate role at and major held decision Executive have an I'm of CEO has frame. efforts,

infrastructure accelerate and assuring our As in position we of look to I'm forward, me a play and so industry. thankful excited our as about stewards opportunity customers' our our that digital our digital as continues role transformation we I outpace underlying meaningful has platform it's the momentum can that our future.

record company, to deliver a billion over revenue track XXX delivered consecutive we're in Turning our of longer XXXX. quarter any We well S&P $X growth, of our on and current our XXth performance. just than way to revenues

grows growing investing support than team and are adding quota-bearing business supporting innovation as heads organic in services and experience. sales our and before broader We customer more services, our business, to new ever strategy, around a initiative our products more

we over now cross-connects add to transforming and customers, have to Interconnection digital more Verizon our record industry-leading traffic we assets, XXXX, grow to X/X more with offerings, We come businesses. core remain and of in XX,XXX XXX very the pipeline the as going construction attract a Fortune cabinets volumes our we Forbes continue global X,XXX and forward. XXXX XXX,XXX XX and the and their across have with adding than projects active customers, the of serve Global platform, exchanges. and continue across ecosystems of With XX% now our

currency basis. year-over-year We interconnection industry, revenues colocation, XX% and to continue growing on and the in outpace constant portfolio most have the a complete interconnection normalized

drive Our we activity. another financial of platform year and continues differentiated our bookings to delivered record performance,

to the over Slide generated XXXX, constant we margins This healthy growth while billion addressable As our shown adjusted million AFFO and EBITDA, up currency of $X year-over-year investing achieve business up operating of $XXX continuing delivered expanding year, revenue in normalized and on basis, $X.X in over billion further basis. a a of normalized demonstrating prior XX% XX% strong We significantly on XX% into translated currency the and year-over-year performance. X, a on our market. increase constant or

like I'd the of Equinix. growth to Next, on Platform detail provide more

and completed globally. Our strengthened centers And unmatched the owned marquee is colocation Infomart acquisitions, our The ability of acquisitions, be interconnection and our X remain Dallas, connected we Infomart pressing $XXX markets further of when Americas. XXXX, data Dallas secure hub the a the region, from today, our our including million. enhance assets one reach and global will we of X enterprise to the closes. largest in Infomart, by of our for addition will assets to over home market, XX% the percentage the Dallas Verizon. in the for announced our global and acquisition The platform U.S., one In advantage of continues Americas we XX revenues most to our IBXs in of to expand the to committed increase from it

provider, in world, on Metronode, the X and these Brisbane. XX build close assets. XXXX. majority-owned opportunity us for Australia the of adding expected the It to transaction an us capacity agreement Australian additional in one strengthens acquire new in also and with cloud million, in data and to to impressive footprint, metros. metros fastest-growing national our X in $XXX this Sydney half first which acquisition provides provides markets is in the Adelaide This data signed centers Canberra, also presence brings an center existing is We Melbourne Perth, an December more to and of

connect with to scale of With will markets more Equinix. our deploy, and providing this to digital even close IBXs, expand securely XX infrastructure countries, and the platform with XXX expected acquisition, their XX customers ways Platform

boosted Verizon dramatically interconnection in had the and for Americas density progress the great our which outperformed assets, the and year. saw expectations scale also We with

now and São assets stem healthy now We Denver, to and of seeing global We over metros, expanding Verizon in Miami Houston, highly In select we progress important majority investing Culpeper, the we're $XXX to are conclude -- This completed the continue an this make Shifting platform. in customers our midyear. announced the expect in Paulo. churn. previous evolution bookings the across fully to million our investment have and of Equinix December, assets to of year, these utilized efforts interconnection portfolio. level the from by integration Verizon

ECX around connectivity Equinix dynamically the With customers other enabling connecting to Exchange any we in continue interconnection Cloud exchange. multipurpose participants We location. on a through cloud beyond platform invest Equinix are and the and discover our to IBXs Fabric, X,XXX to this to will virtually any connect world as pure across Fabric, the it over physically customer evolves

investing consistent, also interconnection services ensure that our on are We footprint. available accessible to our and across are entire demand

we've As expansion of which exchange total Internet new this part our XX. X count markets, services the of will commitment, to to announced our IX platform bring

development few our Now organic on comments I'll make a activity.

sales projects high us active underway currently we the response platform, EMEA, significant than are level our to look deliver of mature that business, And in in strong for funnel, market-leading revenue, to which very half is we allocated expansion uptick this where across XXXX XX% our underlying allowing generate have our $XXX most CapEx metros and our expenditures capital a utilized installed across With demand. of strong a a XX ecosystems in million base, inventory expansion pipeline greater we leverage utilization large and region. returns. over established see to we As in with financial of densities

HIT Infrastructure in will focus cloud are As Team building nodes the tuned heavily on integration. previously facilities, announced, organization Today, in hyperscale interconnection majority that or continue Hyperscale the developing of an facilities that we're development players are located to future and and for refer major to we to Equinix requirements. invest also API private the we as that

the request of Our to serve set response more for insight have architecture footprint major accelerate infrastructure players hyperscale range our to targeted needs a of Equinix committed the with of the the efforts customers. large be provided cloud we integration deep us In have with their to provider, a efforts cloud. into full evolving to

this overall cloud the will We these but that in opportunities participating in in believe of important is maintaining position in space pursuit selective ecosystem. remain leadership our extending and

returns. healthy in are longer-term We to that opportunities. provider other a initiative, cloud of of on existing combination represents XXXX. capacity, London, team in builds market cost contracts to we markets significant to including leveraging HIT pipeline this hyperscale a executing with our handful for the X our superior dedicated will have The enable build Paris will key blended and QX customer of focus build, shortening major dedicated target time a reducing and hyperscale a and first win

highlights Now let me from cover networks. verticals, with the starting

launched our position publishing the media and a insurance our as and enterprise quarters content new continued including its quarter, Pacific transforming in space, enterprise performance Chinese partners network well beyond where trading strategically and connecting top Metronode included ecosystem Asia and vertical Itconic Group footprint quarter of consecutive offering as SDN major growth, for its subsea meaningfully to services, embrace group gaming, media continued continue provision transformation. included capture channel jointly securely this which Equinix access cable ramp ecosystems network expansions quarter acquisitions. by China and fifth The momentum financial in diverse financial the a digital as dynamic its achieved providers. provider Expansions Fortune as Adela bookings segments while electronic Equinix applications network and and seeing strengthened and X all cloud with included the Platform employee topology networks XX to digital our XXX uptick bookings Equinix, scale as be wins securely is and Equinix vertical bookings banking in across telecom an to capabilities will and a the capacity conglomerate critical the expand U.S. insurance wireless Customer a as to this market of providers Our to continued region, for support we XXX by led their Fortune Platform expanding diversification also Telecom highest to to AT&T, across base leveraging as our e-commerce and regions leveraging experienced as well advertising rapidly digital our hubs critical these multiple selling subsegments. deploying multinationals. bank In customer important to and saw multiple experiencing market. record and revenue. growth Expansions a

IT their re-architecting existing nodes networks, Cloud are EMEA our record of was further software IT augmented and wins, in more core led Defense, providers traffic and and Agile achieved including quarter, cloud ThousandEyes. and momentum additional subsegments. base services cloud and the IT bookings bringing Our segmenting new by to access region Partners the another vertical customer Solutions, edge. This Clarity with with key providers House Coach services

Turning growing interconnect enterprise vertical rate government users enterprise twice vertical We the quarter momentum across strong to subsegments of forcing Overall, of transformation multiple and the adds. new the any as vertical. and firms transportation, customer record and locations. another retail saw to is other change across they bookings the digital clouds is at how

The the new New strong customer is land-and-expand digital program of business. view enterprise dynamics. company driving network weapon logos, to a from major and and across this originating scale continues manufacturing new our over verticals, efforts continue as these of in with enable and to and company, last We're continued and the these capturing a year. drive customers stream development topology market. North up American a channel quarter, a very steady bookings wins from its to of XX% of optimizing channel adopting bookings consistent XX% our channel global XX% now included channel with multi-cloud exhibit our pleased to And customers, industrial and energy critical IoT

the it So to to results. now I'll turn Keith over cover

Keith Taylor

as highlight had bookings delivering the APAC in Thanks, particular record PVC highlighting and our value PVC. compounded healthy Also of mentioned, our Good both XXXX to the network cloud behind growth that share. to to in quarter XXXX track best-ever objectives strength and against Great. opportunity organic now flow-through our I AFFO to our take also per Day With we year afternoon EMEA finish to great had we on financial want to us, our Analyst global revenue with AFFO with a We continue regions, platform. deliver strong everyone. bookings verticals. and to this

sheet, we've section accretive same raising Additionally, our both revenue note. our our note growth time, to And one including the and just and highlighted of our AFFO by standard, Verizon asset normalized activities, built yet results review points financial do have while fourth the that services. At new will not the close or M&A metric before, some XXXX results toggle equity core the commentary which this per both acquisition, to of that more share. to expected ASC XXX, offer impact drive mid-XXXX. into our building to been XX. now which full value are of Then acquisition, year debt to adopted work the We're peers. in strength growth XXXX. our Metronode differentiation the on balance XXXX and maximize currency. being key our the for long-term Infomart Note future our while the markets include of between ever than quarter highlights. does I'll either products enhancing profitable Also, is capacity guidance final that across constant high-level and business on I'll we've accentuating of the capital rates are shareholders. putting This the and Slide All our

starting under step-ups and demand $X strong in $X.X for In growth an for bookings to opportunity. expanding us revenues. recorded and the rate, XXXX, annual surpass milestone an billion company. Verizon, just deliver revenue, revenues XX% an mark fueling growth So and we'll year-over-year XXXX, XX% revenues, reflecting exciting in excluding meaningful rate, the billion a with market allowing We

accretive the assets. and It's highly guidance hedging Verizon utilized, absorbs but the single-digit highly million XXXX, attached as highlighted to continued margin, $XX in to revenue our of progress churn to be new negative resulting of capacity growth are rate healthy impact growth In point scale maintain corresponding the innovation, from on and will of receive we revenue the half sales expansion incremental adjusted XX.X%, to much-needed Verizon impact our the by and will Verizon on the schedule, and our we're target. to note predominantly anticipated reps customer including Verizon slower-growing important that revenue incremental low the FX growth dilutive Our XXXX, sites offset program partially year. in tracking second in capacity, The we our EBITDA EBITDA year improved the the XXXX. basis XX business our assets leveraging strategy, long-term prior a the acquisitions the while costs, In integration adjusted over in services initiatives. impact key investing improvement XXXX, quota-bearing absorbing margins as make XX% excluding margin and initiatives, and these in experience towards a

at or For margins expect basis. remain we integration an on excluding XXXX, our EBITDA costs, XX.X% to adjusted as-reported XX.X%,

We expect Itconic related Verizon, Istanbul $X.X billion, for the over for to X of to cost the incur AFFO $XX expected acquisitions. year. than was XXXX integration million XXXX and higher

basis, million at common with a expectations as share, we EBITDA includes our $XX.XX, the from incur expect Analyst After tax forward, losses refinancing we we the integration share assumed than ATM XXXX XXXX flow-through XXXX XXXX step-up XXXX the XX.X foreign a cost Looking weighted for in a greater costs. level shares tax diluted XXXX taxes expected is to for over income which continued to strong the commensurate grow our to AFFO discrete fluctuations, the normalized adjusted a adjusting including including equity average expect debt AFFO service on X% XXXX per year, support the in $XX.XX prior We've incremental to activities. in of AFFO, to in to related fully more growth. per outstanding increase debt income AFFO future program. excluding Day. was some set our

use XXXX, AFFO and made share benefit from to strong continue value XXXX totaled fruit in cash to bear and particularly million. be will expect metric business. show momentum, is and we anticipate we key share AFFO as XXXX we a in drive per per investments $XXX the after. which We continue to our dividends will to that

distributions, growing over increase XXXX, shareholder dividends an XX% we $XXX the As our in business we while our million both continue dividend total cash year. prior expect scale to to increase to

reflecting turning and density rising momentum as of XX% saw seeing Asia growth, region business. QX quarter. positive the provision another EMEA interconnection Pacific by fastest-growing we lead to well took as was respectively. Americas And X%, at XX% year-over-year at in performance, Now we're net capacity. the operating our and the healthy as increased quarter cabinet strong fourth the followed billing, port

rates, still Slide to return year, over included modest revenues, negative churn going our average compared currency FX to U.S. but normal revenues, last assets As expectations. a to the customer the step-down last to revenues. depicted partially FX higher-than-planned a revenues EBITDA the X, million prior on of difficult to more revenues revenues $XXX $XXX billion, lumpy quarter our therefore stronger on Nonrecurring forecasted same a certain and over QX dollar. global over million of projecting due depending negative XX% The $X.X guidance contributed was net the were to QX rates impact quarter and Global QX be of nonrecurring due X% the to year. up X% QX XX% compared quarter a the our revenues up can to $X We're hedges, currency timing Verizon above adjusted FX forecast. million ARR same deployments forward. impact when $X million, the of

due the managed basis. Itconic EBITDA excluding margin the costs, services. to our high was of the adjusted Our acquisition, from Fourth or XX% business, quarter on XX.X%, integration also level includes an impact as-reported lower-margin

FX the expenditures activity. year guidance million a rates and QX recurring impact $X and to absorbs was of the churn higher was and X.X% FX between capital X.X%, up we to quarter. prior X% when expect rates. with QX negative global QX, AFFO to the a Global and when churn EBITDA QX performance, to had consistent X% $XXX net year's our the MRR MRR QX XXXX million quarter compared average million, in Our adjusted FX over negative compared hedges, $X continue average last same per impact

consecutive are Also, X. a regions, Now results both that EBITDA the from solid Verizon note the like assets. and EMEA U.K. metrics per Slides to organic cabinets The on XX-market quarter, business adjusted XX% and an metrics the XX,XXX its firm by record we and operating approximately its delivered of on X whose this through added fourth highlights from Verizon region to at XX,XXX bookings, and full I'd led provide cabinet. few the our benefiting which utilization covered saw Americas reach. rate, the cross-connects includes MRR you'll revenue quarter

Pacific Pacific record deals Singapore. Americas, driving with and The of bookings And Korean total and from we in and recurring Kong delivered of Asia XX% XX% to X% revenues. Asia revenues. strong interconnection recurring to a particularly company saw expanding exports total XX%, revenues perspective, stepped Australia, performance globally. were their EMEA up regions, revenues other strong From interconnection footprints Hong and China firms

Now sheet. Slide looking our at to balance X. Please refer

set X upsizing continue at the term debt revolver our a refinance rated we interest initiatives We while our that low refinancing of optimize rates we costs, to existing reduced In environment. December, our advantage company. completed our raised rate investment-grade service capital effectively an billion EUR of debt and attractive very continue number course debt the maturities debt interest taking QX, to become to structure, capacity. us on extended In to

$X.XX our key X.X%. debt at sits and investments borrow approximately billion. of across cash now rate was average instruments Our Unrestricted

net leverage annualized unrestricted cash, adjusted ratio, the Our net at X.Xx remained of debt EBITDA. QX

Slide X. to Turning

part of capital to quarter, expectations due activity. the high $XX a and payments For level $XXX recurring of million, of above CapEx timing in project were including million, expenditures

a markets, around new on our underlying adding increased demand new projects of are the Our our services. and we strong scale rates XXXX underway, products in which construction the in investments the capacity in conditions properties, plan of step-up X/X world. many reflects Currently, assets XX across XX including markets utilization business, across and operating capital owned have of

density. Milan The our healthy Upon Sofia returns, data XX%. to delivering compared cross-connects and and other Chicago cash owned strong recently continue Lisbon prior heavily in down we stabilized centers continue -- of other sorry, quarter, building a acquisitions fourth rate the to These largely driven the quarter our purchased owned from assets year-over-year, we down invested, in in and and and is to Silicon closing due expect pardon invest IBX growth are primary remain Warsaw X% the assets of to investments increasing heavily Revenues Revenue the gross to Metronode to XX% slightly X XX as our stabilized properties Infomart at invest land capital the slightly the prior on well Slide X We're due Valley. owned are XX% PP&E from to assets acquisitions, assets on on land cash generating greater. quarter Itconic a owned and in power to IBXs I'm from lease as XX% proactively Our shown in increase relating return and grew stabilized to in by of and me, compared stabilized revenues Helsinki quarter. or ownership, We both increasing our significantly too. utilization XX. sites inclusion the sites Ashburn, as to deal. X, from

said, that turn PVC. with back it let me to So

Peter Van Camp

Keith. Thanks,

This our wisely strategy, to Slide year, global on refer we XX. please I'd invest leadership Now behind our market to like position. our to and plan build so summarize momentum

press and deliver to replicate. continue for will be others will value very advantage customers to for hard We that our

market the we We digital will trends we'll scale key company will shape company. next that wave, grow, as invest further our responding a foundation in decade. for next the to to and our future as catch transformation work the fuel And

with aligned well evolving is strategy industry forces. secular our fueled by and Our strong

build platform. advantage consistent capability and global to has enhance larger infrastructure, around but have honed interconnection our density Equinix the at that to connecting IBXs and a and acquisitions times, pursuing targeted initiatives ownership. to been hyperscale demanding delivering integration view and services, new are efforts a opportunity it rolling into asset globe Integrating essential significant out around our by acquisitions this We our innovative out these competitive responding new we exceptional as build

support will that more investing value more the and ongoing We customers our and and will We become most spending continue strategic years even will the important for targeting cloud, enterprise the our our and customers. believe create in and Equinix be time will of for we in interconnection ecosystems to proposition ever. as as and grow, emphasis our is come, even so our not and as the to value future people, strong fuel working And we're must we as on to that develop position processes we this state current scale we ensure put but systems more how only well.

we've milestones So XXXX. of in a achieved innovation see and we in coming closing, fundamentals number and significant XXXX, around acquisitions interconnection, solid into

our As delivering infrastructure. anniversary we we reflect core to we've a true of XXth and our for what principles approach on global platform built, our remain customers'

We have year. and our clear another vision successful looking ahead of strategy are opportunities to forward and a

me and open it for stop there, let So we'll questions.

Operator

Instructions]. [Operator

from Synesael first Colby Cowen comes and with The Company. question

Colby Synesael

Two if I may. questions

start look XXXX. I shaping little just investments XXXX? obviously Any Can EBITDA how the we just one, get in secondly, year or we beyond that can meant on you're on. was XX% some that? so -- Street a the We're kind will, into investment what little about us and it information that seeing give back to to margin? can that sense margin bit better than those to appreciate on is First for But you'll growth could you looks to And than then going about of -- just expecting. more what the like can bit XXXX perhaps XX% more Infomart a is, so you perhaps we trying position this just from sustain for a exit give what up understanding that's talk of greater is Metronode making a the we as us later is The think modeling to opportunity you be the outer years? you for a get color but help we margins, payoff to depression perspective, when of Just EBITDA as go if what that greater

Keith Taylor

we're -- first components As part take underway. There's a the in sort we start, XX Why investment we Colby? sense question, that of to to projects Once we which the investment, as we X transactions, we're don't XX capital be going have relates that talk it. X of you the making, gives I the the markets. about, talked to about close when it there's

So I that's And number of we're what go no therefore, would up, making and a surprise, phase will those from levels call and perspective. first be capital utilization we're a seeing investments sites, our investments.

The OpEx going grow the to other be dedicated recognizing -- thing, I is organic will that. to that going to the When Verizon, we've portion certainly CapEx think, we PVC that's around are a invest absent that note Again, program that to. HIT alluded of side said you think about the of XX%. greater the going again, equation, we're to is that grow than business to important

And so than. that a greater is

by going we're basically will think going of we're to margins core -- Itconic, basis our But XX And second is points. you about costs. to business, that is you adjust deliver deliver implication the flat embedded a the margin leave thought. in to when erode when part you XX.X% want which that integration So for I with at the XX.X%

business. to think don't other so again, teams. business. and Innovation be heads And is the his Services initiatives quota-bearing going more going is so the experience appreciated, to be SSI It's it roughly growth-orientated so Charles that's which fully the a into to and I initiatives, there. around But invest investments, margin putting develop your we of question, need the -- to and customer XX% oriented it's And that Strategy, and in we're to part going customer-focused, around

of points. basis that roughly XX All is

point. by invest the decision margin will, and profile the in we're future, Itconic this So between basically if to the X you muting, roughly full

looking And we're towards know, to objective of shareholder drive that well But occasionally, further or so getting because even pause make road to to to XX% investments we on as greater much EBITDA margins. the we're further have down our you way value.

$XX because where of be tends And at particularly look to thing QX in on seasonal the can all year, you roughly seasonal will The this for will very we that's see and costs, of last have from SG&A, so we are what you experienced as say that remain of we area, that to the that a and QX, is SG&A rest with similar in always I intents quarter the just QX, QX investment. through purposes, cost million last year. flat

the is to forward revenues to QX had level. when we then to as more step will of exit you each of from making nonrecurring a and other look standard quarter expect and 'XX The that year. X, 'XX, But as QX step come down revenues you QX you and the we X part we're into up assumption QX,

like. again, puts then within sight, expect we than year the certainly the to with us, XX% high-margin particularly business the around organic a our we of objective a And is than started we business. growth So exit The greater the part year. trajectory on that

about... little a talked we So bit

Peter Van Camp

Itconic.

Keith Taylor

to Yes. be as that When in going The Infomart when is deal. comes Infomart move Itconic roughly said, to to I XX%. and -- deal, now, margin Metronode again, the going as to we we the relatively close. then then We're consistent into Australia update you that margin profile around both get it get the the as discussion is, Dallas, right the in

dilutive it's PVC -- would would slightly over expect in as business It's margin. outset, of Asia to be that it to, alluded Pacific the markets. As -- relates Metronode, we ultimately the will to slightly it X get level that, the it's at but

Operator

from The with Tim next Horan question Oppenheimer. comes

Timothy Horan

from color a of there seeing hyperscale them, from on you kind was there are lot possibly more the And of they the kind growth bit hearing base? you're and but them? how do little a to what environment give Obviously, compare guys? pricing you from Can out what your of

Charles Meyers

think of characterize the as focus, I know, And Charles. as we're mean, overall Yes, on you yield. pricing disciplined, would and seeing course, it's more pricing. firm is our I I guys environment Tim,

-- instability don't I so demand and space but our across of spot firm. And is really in would all imbalanced even we to to in -- the pricing pricing. say significant the globally relative Supply and particularly be markets, retail spot seem see

the power, business. then we're really over that's I and the deals add with yield deals fuels So to able to interconnection think and targeted time what and those win

them, it to market price-competitive. to I we as a relates that cost that we on selective basis, And going not on to reasonable very hyperscale, continuing we're hyperscale participation more total part can But that's But be to also said in a our -- a going tuned and with we've competitive we we it's platforms key meaning and facilities therefore be are, do our undoubtedly, a It returns. to as market. And less that lower of is we portfolio their competitive then the working relationship more returns is our our between of looking build it being going the in think blended is requirements, that deliver making that hyperscale substantially responsive Specifically given And I think But more market. sure important. to to to somewhat that to be those dedicated deepening partners, deliver believe is differentiated clearly said with about linkages substantially those. why therefore, that's are build. and portion our enhance that are those blended having script, a then needs to attractive revenue, big as continue market.

Timothy Horan

And such they strategy period. a you do such of kind data are Charles, you just How Net with your for follow-up kind key What this channel point? on centers. long-haul long the conflict between the the saying neutrality providers? at has of to interconnection a quick of the manage a component been

Charles Meyers

Yes, be the that continues to case.

our value exists been strategies, opportunities they deploying and furthered their on in might enterprise and depth enterprise their that serve be that depth seek why us to of the fact, to clear the to to that themselves to the for what the in to network service NSPs And really example, leveraging in fabric finding is finding order and to by of NSPs the value focus can the needs. proposition providers think our or the Candidly, understanding look interconnection been our but to the of advantage enterprise own. engaging as not only the the is of are meet I data those of how there's network our themselves on is SDN we're is centers density customers to we've broader inside important facilities Platform leverage with customers. provide fabric of Equinix And -- connectivity customers they've connectivity customers extremely take seen a us. what those between provides

say longer very through would date, So across and has the response I incumbents the the been ranges partners positive, very, providers. service that to large and really tail of

And it's to in a market. been a so win-win today, see the very very and positive response continue we much

Operator

Markets. RBC question next with Capital The from Jonathan comes Atkin

Jonathan Atkin

of that you Or clarification, the that had So or as part as transaction? was asset a just land to Infomart, of interested, the separate a it, already I separately? point comes adjacent was bought on that

Peter Van Camp

the did the part come of acquisition. a land Jonathan, Yes, as

place already thoughtful making we build. so in we've about the all So can been sure compliance just is very

returns what a see market. And will in the we so that help over good really time certainly as

Jonathan Atkin

on have given and -- you're wondered bought. rather the kind that in could if profile Dallas. why And hyperscale the company Infomart, customer Portland So and have given had that assets buying the you Ashburn, would of you other San considered topic, other company than the Jose selling just just entire that and the you -- I

Peter Van Camp

and Well, we the push and Infomart asset. taken a part frankly, in interconnection so kind assets. southern have it, Americas it as would now Dallas, nothing Infomart unique the Equinix. remaining in when strategic was we level of we did. everything to about network to you to was routes have piece all from flow value the there the or really interesting total different of half think most a at the we that strategic assets other Obviously, hard didn't But the of for And look those Dallas, whereas the and

Dallas we the became real objective at so Infomart the this as looked interesting business. And

Jonathan Atkin

put. HIT I at there'll number kind the you the product, limit develop I point? be of So consider on is would wholesale this guess, offering And in more, as there a you wondered, expansion of which metros

Charles Meyers

and I don't a the metro do bright look at is the level each those any appetite, market. that intensity, would and in think Jonathan, opportunity regard, we competitive dynamics terms individual that our cultivate hyperscale in the in of concentration to of into play serve all in we what enterprise I lines say market. in have in interconnection, we I that of to of I think, ecosystem think cloud therefore us although for play No, And in of terms terms

in I a think for number I and derisk we around question there other the if were an as use the in could an into entry And are us attractive of see of potentially I anchor investment having markets that say courtesy significant of which as hyperscale don't tenants that opportunity. right world conditions the hyperscale so by out it would having And markets to would an also see we that by strategy -- the that, significant initiative. as

number. magic no So

I generating the of revenue. of a is the markets out list a commented have in significant and that $XXX question. entry strategy, consider us market as think be all would number there large again, a for We not would using say we we're number clear I around our million-plus pretty appropriate to a that's world. where that it already then at

Jonathan Atkin

there aspect any finally, kind And kind is on that business part the of are the quite then you latter and cloud on of Itconic, acquired on-ramp of services wonder, That it? interesting. managed learning I space early there

Keith Taylor

energy X -- quarter. services-oriented. Itconic still Itconic any a more recognized, originally acquisition number It it frame. little Istanbul we only you we And million bit world, the But asset. get XX the you, the that it's better still global through early part business surprise including of For managed the of was for than quarter, is comment. still asset broader focus. process XXXX we That is the us to did have the the as of bit the we're integrating integrated to No putting anticipated. little and behind a We're a in that QX will between around make in assets first time for

of we and to excited do. Continental still we're of the platform broadening lot about So the of part work Europe. the that have But a to

And one. so stay tuned this on

Charles Meyers

company offer, to cloud of I'd their focused customers as very Yes, in also choice. they quite in the architecture helping interesting hybrid that journey were of Jonathan, the the on sort

a some we're portfolio, which their customers had positioned, well at. Equinix with in taking with integrate And hyperscalers there propositions were Services, were our what that in doing in serving actively is who relationships good interesting they their have regard look in we're market. Professional services the to I hard So they going already think value themselves,

in have as services assets years that the that managed number so underway. you then over services had And work know, And business. a is perspective, we've come from part sorted market have the way what managed of a of right often to of important to And but somewhat the those through handle dynamics. local profile But services they're we are. an dilutive margin the sort that

those to in continue we'll way evaluate acquisitions. done we've with So prior same the

Operator

with comes Investment question next Citi The Michael Research. from Rollins

Michael Rollins

about I strength was talk wondering, expectations the the in about going a and of XQ Keith, your if terms revenue that's what XXXX. you more in nonrecurring to bit fall why could in drove for

fair to also times, would prior think say been that I it's slow it's at item you've in line thought expectations. think your and given, has that it prior some guides a I down, of you outperformed

a into might in And activities the drive that what going year? it what's expectation? maybe next change So are that

Keith Taylor

Michael. great a question, It's Sure.

said nothing not its Having just fourth level growth. that And we that having there's items lumpy does in foremost, we're be recognizing prevent always of There's up nonrecurring very that, on not First expecting of are line, stepping from nonrecurring and and although we nature place happen same in us revenue tends to year-over-year, recur. lot the saw the to one-off take that. and or discrete quarter. a the

of was absolutely saw, basis, FX-neutral As top guidance well of -- on end above part nonrecurring and our you that above we're range, due to the an activity. well

assume strong of But on prudent being -- more us particularly much quarter the from we came a the of make revenues what taking you on We to view nonrecurring just a our same again, X.X% prevent quarter. a don't basis. from outcome. fourth we're get as revenue to as to the there's nothing go-forward So go, very in that assumption very, off want total realizing just

utilization, those And the particularly on revenue amount why XX% needing just assets contracts. deliver a that and So we from a our ourselves XXXX. to can making a that's incremental conversion than greater prudent And a we've Verizon line. stepping at then to for perspective, through being need fact It that guidance the the the capacity also we're diluted customers We're at will position than the going number marginally in do going you. nonrecurring if come greater for said still we that of and to see grow results, the to taking is view against -- that have of by Equinix business for and we're working the you're through we're expectations onto back nonrecurring that sure put XX%. the better,

Michael Rollins

you think get in in And is productivity side? as to and you opportunities about to what the organization do sales of way versus -- XXXX, out sales the for expect distribution of direct on at look the there investments terms improvement in indirect a your

Peter Van Camp

to add that. to certainly, But investment been before going strong reach little continuing talked we've a I on sales prior to force. to enterprise. as heads ultimately, about has Well, about is there the And calls, cycle the think, XXX, longer Mike, go-to-market XX we're

to a to investments that. particularly the So making now we But this uptick direct the sales the organic continue just drive we're time, is year, behind activity. feel in sizable

Now saw last growth channel, this great we at XX% to in the the over year getting year XX%. said, that

think as we So the is is all enterprise growth. be helping you'll to to path bigger their that important the continue customers and generating critical these an to a channel. thing But our I ultimately, continue see And piece sales the going go still out channel cloud, absorb force demand it. find direct to the of investment

Operator

question comes Phil JPMorgan. next with The from Cusick

Yong Choe

I'll figure at is for take I This Phil. shot another Richard it.

to you assets, Are is level, said, growth. just into the XX-plus Verizon and wrong and to Equinix things expect an like conservatism? that could looking accelerating of expansion Colby's the 'XX the end it, year. at to And percent. Or were for half plans go point, the at late seems second it level of year of the seems we start then that single-digit like, way? are you those next Given kind it of It level would this the

Keith Taylor

the perspective results because natural what QX. let of talked the beyond, the and revenue made. Richard, SG&A look in QX just I've moderating I for you from me be output about the QX you line at and partly costs line would an seasonal Clearly, we're that comment validate and of mean, in and accelerating the what when an to investment spend guiding

that So the XX with would back year the conclusion projects. you we're coupled of end building acceleration see at sense. the the that fact does make But coming it's also

period platform But innovation, We Verizon walk overall you up business if and capacity. overall bodes the of we we -- have on as customer out asset well Verizon underway, They're business same away from assets; I'd that you a about of strategy, utilized because build of investments time. the how heads, churn, growth, we a making tracking absorb sheet, have projects believe as particularly 'XX an the hate around fill can disciplined top that we're to here. our very business, accelerate over XX and global again, capacity services thinking going quota-bearing as Verizon one, view important we're the highly level the we that experience assets aggressive XX% are can to into get a for you number impact be growth X Equinix they're line the The many that that to departure number selling two, more the expansion to 'XX. recognize on we're take And accelerating all those utilized. of of we overall -- to of and them projects denoted we've this projects markets. very

Yong Choe

quick give on for that that phase us on capacity hyperscale build. a future that? Can a color dedicated more customer? be Or to is the X And then the you Paris little can And reserved customers? given other already question

Charles Meyers

into design dedicated No, facility. sort first in into point -- existing in facilities. there. Paris have there sort -- that for obviously facility is available It terms are both is capacity of we is sell of customers of opportunities we a deep that X and -- our lower that Paris different pipeline of have the not the already allowing to pipeline a But of have very a that do we opportunity, deep of customers. so But is hyperscale terms build, in cost

Operator

John next with comes question The Hodulik UBS. from

John Hodulik

more Is how numbers, many years? be A X? sort for of follow-up target to of facilities would could question. hyperscale we next I there have, megawatt over a facilities every an sort seeing you the philosophically, its in mean, Paris major market us of drive a where maybe of expect should you its you're on side? operate? it cost X to like business Or sort own guess is I you of of hyperscale the pricing given And in attractive stand then does give currently the type these I this mean, of on one to mean, if that is I Richard's in mean, terms drive dedicated rough end on business the and Or growth market? own? colo expected And further value -- of thinking it it just sense, is per I

Charles Meyers

lot there. A

of that terms to Let looking I of yet right. market away differentiated at those functionality to in are continue or can we deliver making to their in that me on of of probably think own be all we them. all attractive requirements to the cost or south that that continue get in to to point sort returns Relative deliver continue facilities sure and chip point, at a kilowatt try price X,XXX

sort 'XX, any capacity we're we've of in again, all this. guide our of then there. requirements. have be not that the might specific number, What the spent the CapEx allocated guidance we may to Not going is to several also kind number hundred that As of towards existing forecasting hyperscale-type see of but that in our -- not we're some you -- in toward of use we million said

apart. a haven't tough So we're bit to that. tease one little specifically -- But it's we not a on fully of guided

project will we'll going we that capital form we'll there. provide to going And But I of them. likely probably level think augmenting we would of learn on timing we're of the we business I these to going to go that do alternatives it's said to would builds number in expeditiously forward, some off-balance in. extent support again, forward. any go. whether be the what highly most reevaluate sort want sheet it as we initial recycling, is We're going terms can going to we do -- because to on-balance of from think guys them be balance to And then and guide that you JVs, in of be other possible that with have of and activity, financing, sheet sheet

ask the think So I those what were there items terms key was. in of your

Keith Taylor

to thing And add sorry, to said. what I Charles want just one

I think think when we've about for important you virtually this understand have guide that assumption year, revenue on for XXXX. HIT made it's the we to no that

another And in line. that's upward momentum to continue for there's so plan. way the the us of again, revenue not opportunity the much XXXX on show in But to assumptions

Charles Meyers

in opportunity this business its And to make of to own -- Equinix and And available attractive a have one think going answer depends. your that we here, Is question to substantial and that that want its John, hit, with The superior returns we're where is apply I significant acceptable? can this there risk is mid-teens -- that. and opportunity kind of sort there right. of is was other to willing I there was to pool -- market interesting I returns one what we are relative Yes. finds it to is a that capital but be depth of and provide expanding to substantially profile want and an is sure clear. to we capital out that our it

to the ecosystem pie. retail place that driver this to saying put strategy. on this a ecosystem-driven market think accretive doing believe about out therefore opportunity cloud is call, in means we we're retail is growth therefore those grab an projects tapping need last fundamental made and to are hyperscale the these to premium that interconnection-oriented as we piece I more the that long-term somehow where This the a instead a belief clear in are about that of going interconnection-driven and so And end. go for a isn't our strongly for

we'll there. our sure is the we've to enter out objective, and interconnection is is what opportunity along the of that believe right the and but hyperscale our to relationship over out it portfolio, cloud strategic That got necessary hyperscalers, differentiated that simply a resources, we that run accomplish big between mean clearly platforms I'm doesn't into And our the people we'll to strategy, so frankly, other the the level aren't do. to can't value fight the very going due our And that think figure that market which way, others and but the with cloud our those integration of we proposition the depth breadth assets, support are goal. exchange

Operator

question The from Sami next with comes Suisse. Badri Credit

Ahmed Badri

So a a follow-up dedicated little of regarding more the bit hyperscale.

Maybe be dedicated to for you us and give going color X to Europe a deals to the, say, here or doing can strategy be hyperscale a Asia? you the targeted to to to So or looking you a this specifically X estimated year? just think hyperscale? each specific want of you'll is be do years? number Is XX only on going more specifically do I these what of deals little Is it there? Are

Charles Meyers

Yes.

said, really it. I we sized haven't As

it very I of Europe market. would think has global right there's Europe think be that been robust do anticipate a business. sort that opportunity, now, and particularly meaningful in a we We

post-Telecity the position the taking are leader of growth commanded accelerate position leadership market. advantage in -- European We really to our we've

requirements deliver greatest think, metro behind strategies is there really investment. see at Americas to hyperscale we strong hyperscalers there near in actively continues value in hyperscale support think in the opportunity to as market market still that. the is say as North then do strong and in term. an America very and both that, probably well where But opportunity here that have look America. I Behind would that serve interconnection we South the propositions, the that that Asia, we opportunity We'll So absolutely for opportunity growth as we

aren't specific So numbers. giving again, we any

of in. dozen support those a real build each think more a at I size there's -- that tend deals As markets a us facilities handful investing appropriate of said, I phases. those would probably and through hyperscale very going into or And a of probably, couple for to we are into to to that markets represent facilities consider

comfortable sheet point expect allocated you to that a to and do back going get other give all And than to clarity. we'd to at a so where be we that's Analyst able I'd be more on Day point balance probably say probably come with this little we're better can few the give color and to about we've at probably that that. hundred a to to frame start on million you

Ahmed Badri

question is And Europe. regarding the Got it. then second

going you Looking that through you get pricing can current been us color there. observations could just what's and XXXX or is demand and the more give you've both And supply seeing, comment on aspects that so on the general market we on dynamics? softening? of market maybe Maybe can strengthening better a idea

Peter Van Camp

a higher rate which up, this higher to getting there actually we good Obviously, solid largely as year. Telecity lot much year, Europe, just be of have And grow. great they a into a momentum we've lot of to us said, had The great transaction growth Well, will utilization. been a see is Europe why capital year through of been and sent actually going continue headroom finish there. Europe because be to momentum to filling I'll the And that a year. will that first, say next the in we gave so capital

Operator

And Chao Bank. Deutsche comes with the question last from Vincent

Vincent Chao

year. the this have going Just been back quick question a to made that investments

obviously the past. quite taken recent few down acquisitions in You've a

be in Or should with mean, mode as acquisition that to we departure we Just Steve's tying curious, of I perspective? from in pace should well, an maybe a continue? digestion more expect

Peter Van Camp

lot going talked to value we as I lot strategic strong and done very press look know meaningful and going of see broadening our Those meant strategy, position we'll a at was to advantage. but such in think to continue continue about in I them footprint their a Metronode Australia to of selective we're EMEA us. those us And in made we've giving forward. been a about market. our No, they've But also Clearly, the that a we've and acquisitions, one, sense. what

and set operating As you even mentioned plan, the in we're the everything departure, strategy you it, with Steve's just think about has 'XX and been as pursuing and year place. this

it's team carrying with out So year very a think as the business in that's ultimately, leadership usual I focused being plan in the place.

So I or wouldn't our look approaching our we're for dramatic how thinking changes opportunity. in

Vincent Chao

thinking if in. XXs lot just very going maybe then it Infomart. the like maybe additional a you expansion And the Keith. build sounds returns given that about back about of you the of just to high the top curious, I going-in are correctly, of interpreted I'm here margin of out your there comment how XX Okay. EBITDA And high It's on cost mean, valuation? going high how Obviously, multiple are that. there's sort a capacity to sort thinking megawatts? I

Keith Taylor

globally strategy. from alluded to Charles And I is is going as for me, a right we're and us foremost, both Charles months for PVC pardon an colocation and transaction. what our a we a think in XX perspective. just fact PVC, there's to AFFO-accretive make market the what real very first and said, and Steve then strong it that Dallas value Freudian, -- the The from we'll enterprise closing, market invest was

going future. recognize we're drive but high-value that and a that by able will drive to very believe and out We is build going to it the we the value business the that bottom to that returns we going to is develop deal, number be us. is, so we're our to shareholders to And And strategy important not-too-distant building to line capacity. a to get being space immense over belief to contiguous one, intrinsic can the that the value

Charles Meyers

might just Yes, Vince, add. I

things of on a in of NOTA with that our that now with Dallas in the and Brazil, sort all the of in in capacity, Infomart combined Infomart have bit in is enterprise out position telescope you leadership market add think combined combined I strength to appetite to we depth asset, the value. when think and I what little it it, of integrate stir good that to you you and a and say and position of multi-cloud the the forward Dallas U.S. be the with of feel our terms a of ecosystem the to things, value to building of that have and hyperscale transaction, which terms position, to now and about partner creating potential sort lens to choice mean the the set create put all add America. those move transaction some together broader our digest out continuing does you cloud, think of of in combine market asset, add mix our you current I enterprise And together it in the hybrid South and in our in and the ability overall long-term take to very

Vincent Chao

the since is I'm how of an the questioner could the any just comment sort things give update at on search, And the transition it. morale here, Got like with last organization? you at and post where departure, maybe Steve's you're that on

Peter Van Camp

but Sure. Well, I'll start kickoff. Charles our annual global and I'll had, Katrina, just look we ago, actually and two at Keith weeks and

So go-to-market get XXXX. as was engine well the whole together motivated as to educated really for

was the I to turning the heads right think are direction. and in great this the launch all year, So a

the think be first my were about understand I to leadership focus going it. and that, all So the for on I That be this this part would as the my of as there it well was plan for to near team as think, -- experience strong thing very, a is all as term team said, a our we because XXXX. is well, executing is the

the it's I plan business again, the usual said earlier, opportunity. as with strategy, in operating place, a As

that enabled relationship some a is that had with time. fact of certainly working team the good by the Some for I've

with keeping now on far. they'll We aligned we transition focused continue have and do obviously be best board's the that choice that smooth so that But well this unfolds. plan operating the ensuring a one board's chair very note blending appointed. the is to to I'll being are also so have here, selecting and a this well, in objectives for So board the as the support going, been a interests CEO. year subcommittee that's

we a to maybe as we need unique for solve but opportunity do this the quarters of the thorough have thoughtful as over and it's diligent And to luxury, kind we to, as be really so come.

manage make a So I very yet any busy comments all timing. further And in we're think at not we're ready on the good process position to work. to but

Katrina Rymill

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

Operator

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

this disconnect at may time. You

Equinix (EQIX) 14 Feb 182017 Q4 Earnings call transcript