EQIX - Earnings call transcript Q1 2018

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Operator

Good afternoon and welcome to the Equinix First 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

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

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

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

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

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

Peter F. van Camp

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

penetration built anniversary, quarter new we presenting XXX which we As consecutive to we excited their market revenue are digital XXth the set the growth our of and up to Fortune our continue XX size, operate, to that we've powerful opportunity the XXst of are world. the in as and XX post reach continues countries now our reflecting scale tick we expanded around our digital ecosystems to With global out of for a on acquisitions, recent target. up us serve XX% we an the come infrastructures, leader as evolve in We cultivate customers scale. on

Turning quarter, differentiated drive to the to our the platform performance. financial continues of results

are As quarter while quarter, XX% depicted EBITDA the XX% the constant basis. a billion, AFFO over These currency same on same slide the XX% quarter Adjusted rates up for normalized over X, first up year-over-year. on year. $XXX million last quarter revenues was was were growth growth year, last $X.XXX and

colocation, our MRR across interconnection quarter outpace architectures. currency of importance logo customer reinforcing the and asset a strong new our new an basis, to And performance. channel today's revenues program had channel hybrid normalized growing healthy. on and cabinet, per XX% contribution constant metrics year-over-year Interconnection Our XX% were another growth cross-connect and outsized acquisition continue all and with stabilized our of the originating additions, strong to in from multi-cloud bookings foundational

Platform closed have doubled Equinix demand have scale infrastructure of the business our good XXnd momentum a period. recently pipeline. through full both years and acquisitions both three which the Infomart fundamentals For with last closing the solid XXst and see continues effectively our our strong Metronode, saw growth. size and We as we over the we during M&A organic year, to global continues of as and we strong

now our a their securely Dallas care directly world. to digital platform across interconnected the providing to XX around most and in Infomart infrastructures North customers footprint IBXs hubs one and deploy markets, and global extends Our the home connect XXX of America density, is Dallas creating four also in our the the technology, landmark one U.S. business strengthening adding and in sectors, grow colocation of this eight we're our the By of largest opportunities energy while to IBXs. facility, new our health banking, markets in interconnection

tenants, we megawatts currently of more land landlord. will XX a houses both the provide additional And as and manage on future, In than in to XX the adjacent for property capacity which hyperscale. be addition, building retail will over sizable developed other this the

presence Verizon and for wider well in Our we new a interconnection Equinix this continue and to value efforts with us as leader digital four pleased establishes site to subsea new hub Canberra a in Metronode are as our Australia, five data transaction. will between the to in Metronode accelerate intercontinental become on and Brisbane, leading metros the our market be in integration and acquisition metros existing station cable deployments centers our footprint stronger Equinix from from Perth. expanding landing benefits Perth for in traction strategic Vocus and the Adelaide, and financial existing XX connectivity nationwide. This gives very positions footprint a with acquisition the Singapore, progressing Sydney. Meanwhile, the and Australia edge builds and our

base. the However, this terminations acquired we identified note customer pre-close I should absorbed quarter higher than installed we within

integration efforts to from both expect we our demand and solid fully see new by and continue year the to of customers. existing We the end conclude

we we Verizon solid a revenue from work healthy Verizon year be for in we sites through while assets. to Miami portfolio line Sao and anticipated the we expect have Culpeper, stabilized Houston, balance, the Longer the as our expansions planned in flat for rate other the with churn, expect our and pipeline gross Verizon Paulo. on growth Denver, this So into continued bookings see term,

comments Now, a development activity. few our organic on

underway We we predictable XX our rates. over than out ecosystem across revenue completed data mature is currently quarter, high to In response With each a to and funnel, these to region, expansion and the in the projects utilization where platform. Chicago, CapEx greater most of our of of established million the utilized build are fastest and Paris campuses this growing very that allocated fill strong first and density in investing in metros a generate $XXX are pipeline EMEA, active create Osaka Half and projects platform growing XX% we centers. with and builds our sales level strong capital demand. in expansion have inventory underlying

continue first as end year, as progress will We're tuned Infrastructure focus discussed HIT, We of on Team, early hyperscale requirements building to the Hyperscale in see stages facilities our at quarter. Paris last this for to we our initiative. and this the represents dedicated X, also opens developing known build which that

to important balance progressing exposure. are with We well sheet also limited allow with pursue financing will this that market us structures

over connection route the our net this healthy to be interconnection, XXX-gig. to despite expect the portfolio add hyperscale have adds next year of to builds XXX,XXX some for across markets attractive continued migration have everything to cross-connects complete We and handful now healthy We Shifting industry opportunities. have a strategic interconnection and a quarter in key is to of with we we pipeline the most over headwinds require. customers the goal

strong industry volumes saw also exchanges. across We traffic peak our leading

broadened the to Provisioned Internet as traffic Fabric. connecting its deployment uptake saw IBXs Exchange customers record our Equinix Exchange advantage implementing port in ECX the Cloud Cloud of last XXX-gig the Exchange capability. to And and new the We Equinix this adoption a on process architectures. physically the EMEA good saw emerge through stepped and Our customers. our And virtually Capacity continued Fabric over expansion over expanded quarter strong over and tool up now in customers world around foundational for levels now adds with markets. X,XXX XX we're taking of multi-cloud

a of We our in in new with to plan evolve quarter, addition quarters. services, companies service platform and SmartKey products this first multi-cloud key facilitating security and the announced are multi-cloud. coming and of we shift services We enabling their continuing to digital for the new several Equinix management to the global introduce

new data that to across connect increasing on them globally provide our and value are center customer-inspired services and consistent interconnection delivering product and We platform. a customers focused

Now, let me cover some highlights from verticals. our

momentum fueled and is position stock European our this with and NSP our partners. achieved to included exchange footprint re-architect multi-cloud Our by where second quarter offering; expansions EMEA. space Equinix we meaningfully best which services; capital support Equinix financial by and strength important to Customer In growth adopting markets expanding and by significant support a footprint led cable network IT extended global digital build support and the regional content to is subsea by a business bookings its momentum SD-WAN continuity with infrastructure insurance CenturyLink and bookings services, ecosystems Verizon its our support Metronode quarter its of expanding the Asia upgrading continued strengthened global region in end with vertical gaming acquisition. to infrastructure providers by led improve The digital by its Orange, experienced e-commerce, footprint delivery. top commercial multi-cloud. a management and continued business CDN expansion to support had as three and the top media and digital to leveraging strong reseller seeing well as vertical sub-segments. The footprint Pacific both asset also out bookings its telecom solid increasing content and firm included: and dense cloud the needs customers core

by multi-cloud solid SaaS a cloud IT diversify Our architecture. as led and produced customers bookings towards vertical providers

international to deploying to with DigitalOcean to included: services footprint StackPath storage metros compute its Dropbox across adds its growing its the customer platform. platform; scalable community and security support at edge; New extending cloud infrastructure a XX provide developer expand

new the across to delivered enterprise our adds. diversified vertical, legal vertical growth growing strong with health logo and fastest Turning travel care,

health for a Fortune company deploying and the data large insurance global compliance, for cloud and in and management. wins workforce Equinix New regulatory distributed using a XXX connectivity management global Platform included data provider beauty

and a hybrid leveraging ecosystem rental to connect IT Platform car company We to also to Equinix expansions Hotels saw top in Group three cloud global key partners accelerate implementing from metros. transformation Intercontinental

So, stop over turn call to there results. cover and the to me let Keith the

Keith D. Taylor

imports both benefit regions, to we a APAC had yet particular of a platform. in strength due of global selling region, another and everyone. the to highlighting with to like that by capabilities and bookings in level a strong reflection and of start I'd solid PVC, had We year. the part Thanks, our start from afternoon EMEA to received our Americas global the good

scaling port QX interconnection investing between our differentiation sales of and our continued included MRR services, and Our cabinet, grows, a increased to and peers, including experience. both And broader performance, our basis. and key around on as a initiative business by firm points new supporting metrics region business force we capacity, consolidated provisioned the strong per products accentuate in and our customer

competitors, see Our us business to differentiated this pursue investment that to of front allow decisions in us. from continue as ourselves our opportunity we we separate

closed strong For run experience much revenue the incremental which be on the capacity, both our one Once Dallas In connected includes revenue the continued and purchase, additional close And the that the assumes government assets the step adjusted customer driving Australia XXXX, XX%. quickly The we're to than of inventory at in IBX Infomart of footprint ten Verizon EBITDA Equinix to cash in in as in expect XXXX. X% America. growth. includes revenue are transactions. out through North the the including of to April, and to XX% million guiding base, our annualized than The to national most this transaction. up a Metronode market the in is assets. asset acquisition We're guidance nine $XX additional to meaningful an AFFO. utilized footprint a provide very we flow expect reflected Metronode available highly show current excited Dallas momentum a Metronode builds This with build which now buildings of bookings and land with out, we Infomart guidance Metronode in about more makes greater a move EBITDA leader we will healthy growth of greater assets also margins traction. strong a rate larger Metronode while approximately business we for base of expansions. future The revenue and owned, and adjusted portfolio, Metronode

revenues while tenant of Infomart, to approximately related margins in liability rent emphasis expense opportunities be $XX million current existing adjacent and versus become annualized effectively will we'll of and generates primary on lease also the the cash including enjoy adjusted million shareholder our continue own increased in which capital maximizing the expanded savings of accretive base, benefit which $XXX Our our our will decrease development as value business, a The $XX inside leases we the to EBITDA other assessing our building million support capital land. Infomart as business of drive to landlord. operating to deal Also, the be interest reduction current as were our our will a we treated leases. and with

we're updating million for costs, and Metronode $XX guidance now related million our integration to of to approximate $XX Infomart XXXX cost For including acquisitions. the

strong the first quarter at looking performance. another of Now, operating QX quarter, was

slide on billion, $X.XXX QX last Global depicted X, the quarter up was As same over year. revenues XX%

at The each, and EMEA identified revenues followed regions the and were by X% million quarter-over-quarter decreased outlined. terminations compared of revenues as revenues, to $XXX assets consistent total customer fastest NRR expected, As the million of PVC our our bringing the growing XX% growth Verizon QX, levels. X%. NRR revenues, higher with $XX APAC absorbed historical at and contributed credits as year-over-year we Americas flat pre-close by to

we year, to FX QX a revenues, to behind was benefit and us the the and rates than same expect to to of and of profit, revenues compared lower range U.S. up investments of core benefit average currency last than expectations positive weakening improving the our included a due over asset dollar. our XXXX, million, markets. As Verizon to higher $X in compared expense QX million grow when and currency made net the we guidance due the gross the FX with Verizon FX QX integration due positive when adjusted costs. planned nicely quarter the XX% integration being to utility Global hedges, EBITDA $X million largely $XXX the timing exit

integration margin Our adjusted costs. XX.X% excluding was EBITDA

first Global due million benefit to of capital and FX last our than guidance both quarter compared was $X FX Our when QX same hedges, positive QX EBITDA over performance, adjusted share uplift a our XX% churn recurring rest continue for was quarter, MRR to XXXX rates. net same largely we the we year. and lower XX% average in $X churn of eclipsed a per time AFFO share and expect X.X% year. $X.XX; the adjusted AFFO global the average $XXX expenditures. up MRR was the threshold and to between million, to rates quarter over planned per the performance strong and QX had the the quarter a last EBITDA meaningful X.X%, FX X% year, QX per

regional X. the covered to turning Now slides through full whose results X on are highlights

in all We continue regions multiple decrease while across customers XX% region with EBITDA the selling of globally our expected of across had revenue non-recurring to results global solid benefit coming in over from or adjusted from The engine the our NRR. three XX% metros. deployed quarter, revenues first and Americas and the power revenues absorbing

to positive, to customer due customers the quarter-to-quarter than their installation billing Cabinets lumpy custom were deployments. previously, be but from work, average four-quarter we lighter and of for related particularly to discussed timing NRR vary As can installations. provided

we our Turning interconnection markets record and quarter led revenues. to saw growth by the German in in bookings our Dutch this with continued EMEA, strength

new deployments London And experienced early and particular best our with delivered Australian Our including strength Frankfurt Singaporean exchange EMEA traction our quarter Internet its bookings solid markets. Asia-Pacific in and second Dublin, markets.

steady leading continue over with adding had Tencent. from Chinese X,XXX of were XX% and of quarter, strong up expansion XX% and we Americas platform perspective, the coming our EMEA pace significant of from our a X% X. activity and Alibaba And revenues total capital revenues. please across momentum strong over XX% cross-connects structure, enjoy up revenues total to at while last to respectively, continue We From service as quarter, providers looking now revenues company were revenues. refer recurring The interconnection recurring a stepped Asia-Pacific interconnection growth. XX% slide Interconnection

high a continue adding to €XXX a sheet take initiatives. at the we balance of and capital optimize liquidity In very offering attractive rate, rate completed our appropriate interest structure QX, environment. our fund million We various on interest low to advantage the yield

two our forma X.X recent to debt leverage annualized times EBITDA. net acquisitions increased ratio pro for our adjusted QX Our

our ratio to four expect revert quarters. net to our few of the debt range next target We leverage to over three times

X, two-thirds to have CapEx of including $XX recurring million, underway, we in million. XX Turning owned construction on of the capital properties, which $XXX slide for Currently, capacity the XX were projects quarter, around markets expenditures new are world. adding

attractive capital step in demand portfolio. across now our XX-market Our significant, XXXX this there business. And is recognition plan a scale that support is investment required up is the to of our

future Helsinki, our X up the and for purchased Frankfurt, We over of in XX% parcels assets also with Stockholm close from acquisitions. data to and Revenue center expansions stepped Infomart Metronode purchased and land recently Tokyo. owned the

capital basis, power Stabilized we X% slide XX. delivering of QX, a increasing Our investments year-over-year are returns during consistent largely new prior and years, Also, increased our strong interconnection shown by refresh density. asset expansion on IBX completed as revenues growth on annual grew and revenues with stabilized healthy store and same driven categorizations.

stabilized utilized and XX refer finally, And are bridges. assets for net guidance slides and a generate collectively XXXX gross our XX summary return count by Our IBXs. of to asset stabilized through These invested. XX XX% on please the XX% PP&E cash-on-cash increased

acquisitions. absorbing $XX momentum continues per growth FX rates full a AFFO and healthy excluding implies raising $XX integration XXXX, year-over-year EBITDA Verizon revenue primarily million, AFFO adjusted the We've their $XX.XX a costs. and drive first weighted-average recent reported assets shares and million AFFO to XX of a our service excluding months XX%, by integration guidance expected and we're XX rate to For of guidance a guidance of and operations. per costs revenue assumed grow debt impact due of year business impact share the The per guidance of to million costs, two outstanding by including adjusted AFFO XXXX This EBITDA integration of of our the fully for favorable margin X% share, costs, our the $XX diluted basis. year-over-year incremental on the basis. maintaining of We're a the share. XX% million on common is acquisitions excluding

capital of We QX turning an out for which Metronode and billion And total per an pay range expect to expect over dividends, the the cash the XXXX billion, we Dallas and $X.XX takes Infomart dividends $X.X dividend is consideration cash prior reflects to expenditures transactions. XXXX, finally now year to into and $X.X between the with share. ratio of quarter, million, increase $XXX XX%. XX% payout Consistent AFFO prior non-recurring approximately

with me let and back to stop So here it turn that, PVC.

Peter F. van Camp

Thanks, Keith. demands transition in investing of a In and performance and as increase multi-cloud continue and MRR digital per we firm of force the interconnection growing closing, The strong with we both to be a customers showing meaningful are solid results penetration, service future XXXX at as pace, IT and hybrid to seeing traction customer the capabilities choice. continue cabinet. healthy we as a adopt and transformation major deliver a our a market in Global provider enterprise architecture

transition uniquely capabilities this to the are of customers investment boosting help market our global We positioned and and evolution are in edge go scale navigate efforts, reach, differentiated our highly and competitive of platform. the through to

pursuing drive the year. are our have pipeline to and to of our are set We scaling and meet remainder the regions demand expanding for strong fueled platform sales targeted the a by opportunity global this

stop Charlotte, it me for up let's let here So, questions. and open

Operator

you. Thank

session. question-and-answer the begin now will We

from comes Louthan first Frank Raymond from James. The question

line is now Your open.

Frank Garreth Louthan

thank Great, you.

of specifically opportunities So due maybe a CapEx, of the a us beginning I was little at expansion Culpeper year, give capabilities then a trying look mean And to Thanks. what lot Miami at you there. which left some the little assets to you through Verizon Europe. through us walk expansion us bit give updated that, idea idea an as of and of the those in are grow in more. an sort

Keith D. Taylor

Sure, Frank.

the others in. jump Let start and me perhaps can

Frankfurt, what European that we're It's our perspective, basically going can are go call we foremost, is London, XX from majority still into as of and currently so markets, that in. momentum we and our so underway. to First Amsterdam flat the and the recognizing theater a Paris. The you have fastest region of projects growing the reflection the see, investment's seeing

really of as I'm you're through majority customers. And continue we we so forgotten the back sort to of middle of the of your going And the of the the year, exit to I QX, I've that the our sort think question. sorry see through install end benefit year now second coming as part of

Katrina Rymill

Miami. and Culpeper It's

Keith D. Taylor

Culpeper Oh, for a create to looking core and a to all more utilized available build a but wanted that's realize. really scale. assets is those for and need right. majority relatively of that the started the to There's about for incremental opportunity capacity cabinets the untapped are continue Verizon – talk first intents was the markets and X,XXX of And to bit the as interesting greater XX% that it to opportunity roughly little Miami We and are we've capacity, purposes, now build. near assets. as an we and small was Americas is untapped result, relates The to things it build did coming one that out forward we of than it Miami, that really we're XX% or we related to major

though the assets. you alluded XX% really from at the quarter. eager top putting Verizon minor the to refinements PVC to the look market said five we're roughly the rates we pipeline and the so more and market also to supportive is work the in Culpeper because capital create develop healthy of made last in get markets That and utilization the we of that XX% expansion Miami to markets we capacity, opportunity. all that those It's we're to Now to want that at some about and when talked

Frank Garreth Louthan

there major building within or the is in just near... same is expansion Miami a And it

Keith D. Taylor

what's is for part and multitude – opportunities of first the only is there same a it's interesting of the Actually, us there. building

of a X,XXX As potential the I said, as the NAP it's it cabinets roughly of incremental in think a Americas. plus –

said cabinets Frank, the had are sheet. available some we going (XX:XX) as – and our we're QX. – really also XXXX, refer quarter last but the to I and second pending we'll that hence the you showing the decided also make we that tracking some half to year a assets the Verizon here, expansion roughly terminations the some through should looking as the we And the through small from basis to me flat roughly assets away noticed year. we say out, hold prudent X,XXX So, expect. of what just build available pre-close forward go-forward part And through build we've that it's it's that our remainder to and customer churn we're recognizing until markets. that in is the assumptions things assumptions be But you in of and of one recognition we about if again, will walk Verizon reason making in be core growth of of talked very the will, is it come let's was the we going on want majority through you churn year, the the not of why to of is part these that the to inventory continue that going the the remaining to

Frank Garreth Louthan

Great.

Peter F. van Camp

Yeah.

dense all America. down Just recall, is the it for hub South interconnection Miami a a Frank, may you the is also note, that as on final destination very routes to

place. site will capacity that fill a Verizon against so the a create to room strong no have once opportunity certainly had So a in we have because it acquisition to that largely into was it the will this expand, room rate be great

Frank Garreth Louthan

you Okay. much. very Great. Thank

Operator

next from Our question Cusick JPMorgan. comes Phil from

open. now is line Your

Peter F. van Camp

Phil?

Philip A. Cusick

Sorry.

As One, year of being the I I expect lead is And to next the building we'll heavy look year pace as a through CapEx, two, that fairly at year. be investment does fair? well? that

Keith D. Taylor

of CapEx you'll get opportunity, thinking end for a year what I see, is momentum to vast interesting the that it majority some with the as have down, expansion do sheet get on will a to to the the the should of – now competitive We're in you the you of the will XXXX. second you spend what's shared build also that can but that We of portfolio. our – the line. not But again of year. at able on we by looking XX,XXX XX,XXX into – say back Phil look expect though Well, eyeballing rates, our a at you that we're with rates. up fill good also we'll And certainly dynamics expect empirical you XXXX that majority of half assets we the on Analyst – sense the it the we'll us probably XX market. of the take opening thinking will about circumstances it's servicing sort know Suffice tracking the XXXX. you will to the breaking update just there we of be do distant as we not for sure through the in we're the specific would Day, – pipeline, mean, see spill pipeline energy going market but continue roughly in future. to not And meaningfully and lot in only be cabinets. to I'm invest facts Again, fill to the as anticipate that too

Philip A. Cusick

is like And the seems Europe? is more capacity to a challenging than side it the It in just Sure. little U.S. coming build in that later on on

Keith D. Taylor

depends it's requirements, difficult. to specific market more appreciate. as the It ability get contractors. you on can Again regulatory I say, the available environment, wouldn't probably the it's any compliance

you're then contiguous in again in proximity, the has historically bit to are longer or takes Where build because the be those existing are markets. been had Europe a because makes work future us like pretty forward London, is the facilities the it first core could from out to from out tracking of easier of for that not over and itself to some that becomes close it Frankfurt, majority markets, going phase assets it's of if as distant more that the lot see, and up Amsterdam, a and experience the a a we're it a our building too strong relatively takes in tough not lot bit you shelf, of be build it but little built you building you're Paris expansion the But building a market. as and market. can to point a other developing difficult than in And in building a you and Tokyo markets. course ground Some sheet we've the are that our and And it assets market market, lot cookie cutter-ish. adjacent land

Philip A. Cusick

Keith. Thanks, Great.

Operator

Jonathan from comes Atkin RBC. question next Our from

Your line is now open.

Jonathan Atkin

around could financings mentioned Keith, nature? around or of of details might Good they kind provide and or of script that are you be afternoon. I in Thanks. wondered, structures regions in they it to kind unique you the kind are countries global hyperscale, certain further – if the

Keith D. Taylor

we we're much lot this, Charles don't want we view. will Analyst global this to spend and to thinking between say a have in thinking We on market a probably but Day, probably region. to the or in suffice take more way Jonathan, a of specific energy Yeah, – we are healthy at our more

going you. important probably little this to Day, leverage going want much use might investment, investing for very tough time doesn't and it's others that to it think, retail to be as for we're balance we sheet and little it about out and have on with in and here more focus benefits continue as that the the the and us to us capital strategic some the can our up partnering bit off yet business. on different different result different. What's it, That give the it, to take try a as possible so bit opportunity, fleshed investors we a and we're really recognizing sense allows with of be is us business a I makes have we'll theaters push and on put Analyst that of enjoy to structures

Jonathan Atkin

Right. To a like financial location, degree by locations next it choice influenced your then? considerations could be of sounds your

Keith D. Taylor

were think, – who take Charles I Well, about it's this one. is and sorry, to going just I deciding more

there's of me us. just there the say Let financing look is, first for out part plenty opportunities

our So, our going about not be to constraint is financing.

Charles J. Meyers

I agree. mean, I Yeah,

and demand we enterprise projects the what accretive leadership to cloud and think I think market the to we're to in investments are is, ecosystem. going our position go based enabled opportunity the which on customer

a opportunities. so really the a set. Jim And – Jim employee, positive he's an as is and skillset to funnel very experience very now the of robust about customer a Smith board response now we exceptional energized bringing building that full-time those is got are We've and we're table. on from

So we're get to quickly in market financing the funnel respond – not – going I what to we're the let, building what going way going to the and we're we're going how of think, opportunity. we're to to

situation against think, that those that agile but Analyst what we be these we're tracking have a different Keith to a said hear a is responsive future capability likely without of well would and we that sheet Keith assets strategic, are want more based So that to – get exposure. those in and ideally our ones of highly number existing hyperscale both Day. The markets. have going to think it's to as you'll the underlying it's slightly may objective, a And said, I that but about get I do profile where requirements. characteristics structures to And to and respond like say we balance lot as on of we

Jonathan Atkin

versus might building? product? integration absorption the Dallas. And cross-connect entire utilization on that your now giving different Verizon, implication demand then traditional you there of you're customer we XX%, marketing Infomart quickly might then appreciate on for are the a any there that And vacated Thanks. kind there, be is I there on you that Americas profile the trends see for it Is just space, number and for own

Peter F. van Camp

growth expand in will there Dallas. certainly in we as to interconnection start Well, be

density in And but see value interconnection to the are they bringing we lot that onboard, and customers more we'll there as come to hub the our a so of already. Infomart

services there. continued you'll as through us set differently it So of acquired see come but more will not it's growth out we've a gotten of customers that we and expand interconnection

Charles J. Meyers

cases, invest what that continue in between – in of as our And really where year. integrations and on Jonathan we to is we'll for that's asset I easier for details important opportunity Dallas Dallas asset. relative Metronode which going we're the us But think that which integrated or the both I what we can are purchase, be XX-building a portfolio We're think continued versus – that of we excited in to right. accomplish this add around a us there's assets, think I a these we has is more we're give here to And Australia. give wholly separation what doing growth which little the you I'd asset with around to to and holding sit really the think in just an top Infomart business operating about says, acquisition, lot on integration PVC bit is really what's a And efforts. of an

Keith D. Taylor

what And question, part of Jonathan? was second again, your the

Jonathan Atkin

what Yeah. and Verizon – marketed? Are Yeah. any different customer you that's versus that IBX? of interest, of profile to into go Equinix vacated seeing being that space The might sort that space extent vacant legacy

Keith D. Taylor

a mean, position made sell it, always we we've platform, I we Yeah, as right. clear as

customer are those that sales to want into the those. across selling portfolio quickly globally we integrate assets base all and ensure So the teams the position then and

different that's a to That's as appeal Verizon. assets assets of true individual use So our of cases, not well. distinction

And so, think how effectively, those are to to speed very – position we're team on we I marketing up is those. the

for imply related are what sort assessment a we We of the, and our were of – what we ought demand in about to just as of sort facilities. through And some the are is fact that finding would flat the that, gross pre-close growth. churn artifact of into of to what remainder is I terms bookings prudent year good guide of revenue of sorted and in is, kind cancellations we're there the on part those that the Verizon what of highlight through of seeing an

those And of, seeing but into so lack we think, demand because not a facilities. reflection solid there bookings – of I are a

Jonathan Atkin

Thank you.

Keith D. Taylor

Sure.

Operator

Our next question comes from Simon Morgan Flannery from Stanley.

line Your open. now is

Simon Flannery

very Great. you Thank much.

update the Thank versus talk moved I Just that Can you search driving other you've and wondering, And the a in to about permanent the you on more puts cabinet, regions? seen the the for referenced was of just per the on U.S. XXX-gig. CEO. board's interconnect volumes, think, if and also there MRR strength any takes a you. little some bit

Peter F. van Camp

Yeah.

there's appointment, there. on CEO really the update no new First

we're a Just opportunity. XXXX to as continuing pursue our team

Internet it here. of a I to interconnection, in a more so add, it seat year-over-year. And think revenue just of to saw for you're that going assume, continue the in a XXX-gig has besides in up it but a XXX-gig. seeing face solid than dense ports course And because new that in of States well showing and as of that as else, have the quarter, We here was nothing to on interesting. we're And whole nice interconnection been is, growth few strongly quarters I'll XX% uptick that. XXX-gig, this see a still United the the is for as in or face interconnection as it interconnect seeing certainly reason we doing interconnection the anywhere it a growing as in is good

Charles J. Meyers

Yeah.

Just color there's – have optics. a small who players, the little investment number sort that there, profile we the actually sort of warrants incremental relatively of of a XXX-gig Simon, the in traffic

through of well to a is of seeing there make justification migration. They're way and is their that we're surprisingly many what where, well, leading strong those economic are investment. those so sort And on the

little to in that we surprising not I term still we what seeing do demand we're kind and gross and gross sure seeing look to we the at we make of closely of to very in profile I'm case. terms what of what is. will is And go bit but the some think a fact adds, but that you the be headwind as sure want is sustained got that this well So as

at would now more more case so in the use in fact, layer of portfolio interconnection seeing diverse at I terms virtual with ECX. physical layer for a broadly, And and that robust argue we're both the cross-connects and

relative cloud key over And a of cases quartiles how portfolio really physical new at respond Internet, the that good changing and goodness And concentration full was the that of enterprise a of then customers a interconnection traffic profile as and I analysis then of which layer just We of to the at we that think well, utility very robust demand we that what analysis and much this tail interconnection having nobody to lot we longer there's time really new move as did just cross-connect. and different they IX can. can the often in looked private profile, sort have connectivity. as in private a the then driving so, – of story a they showed sort including there's finding they there to long-term requirement, start sort performing. – And all-in-all aggregate it it's a or even way and how our now at was think interconnection performance nobody with and ECX virtual the use can

overall. very So is how excited about business the interconnection performing

Simon Flannery

helpful. That's Great. Thanks.

Operator

Our from Synesael from comes question Colby Cowen next and Company.

now open. is line Your

Colby Synesael

Great. Thank if may. you. Two I

sense have much cabinet you off, what's from negative came mentioned to First assets I'm And just I better the and in Americas Verizon they're of get adds, a that there. some going may on installs. think and the on how quarter, trying delayed

if components in to of number. had it secondly the first various so occurred as Just wins the that if I'm any better And mentioned there's past just you the if notable trying you then the you relates however you. HIT understanding out geography, that drove to quarter some want. get other curious quarter by break wins. detailed business, Thank in and a that big could

Keith D. Taylor

or Colby, so made see balance Verizon to assets. in Americas the of opening So, a sheets we is the the just Where actually net had in where on adjustment some our adds, cabinet the comment XXX you'll tracking we quarter. slight non-financial it's adds made

the net XX% that you at the other in question and be down so from that took to really I went when And down might number the But And skewing adds the your non-Verizon, was... core calculation XXX so to. XX% was look referred then and utilization it we business quarter.

Charles J. Meyers

cabinet just and really is up on finish really last We said, We've strong that we've in again, chalk had of of this profile had sort artifact. to let that well, timing. Yeah, some that as quarter and lumpiness generally me adds. a That's, timing quarter that on a one.

multi-quarter of a a that. period at sort cabinet think line over on to really You sort adds and into of trend I look draw have

that So alarm no adds, that's health to as our from of cabinet the one. the perspective so

second win, talked have one did HIT. a that We we had regard wins The with to was about. some

projects we're for dedicated about in both We starting hyperscale up, to are into talking deals now go HIT are existing into actively are some where ramp going discussions oriented that engaged to facilities, but that facilities. deal really

that anchor And start and so there projects projects start we're will that active to European to future. then couple that there's take up that said, we're in Paris of the a looking to being with And in of again, demand. some discussions probably customers as near at now, some we're we other X just doing out centric roll

of would net to it funnel and but that new So winning as in no report, I characterize think the win. progress want healthy kinds I deals wins exceptionally we terms great to of

Colby Synesael

accounting. added, And cabinets, And is the guess the that call so based Americas then say flat guess Verizon the portfolio, you Equinix? basically it to was the just I clarify that to remain is fair those new on we'll I on cabinets traditional that XXX

Keith D. Taylor

Yes.

Charles J. Meyers

Yes, Okay. business. organic

Peter F. van Camp

Yes.

Charles J. Meyers

Yeah. That's right.

Colby Synesael

Okay, great. you. Thank

Charles J. Meyers

You bet.

Operator

Our Barclays. Rozwadowski next from Amir from question comes

is now open. line Your

Amir Rozwadowski

and good very much afternoon folks. Thank you

Peter F. van Camp

afternoon. good Hey,

Amir Rozwadowski

temper sort growth hear M&A thoughts may at We some of activity players some from market. of suggest What M&A on seems inorganic There private company levels. the landscape. commentary that perspective? on other of for your and bit the additional from valuations to a are the I in wanted are of the to touch potential moment your base sort the high

Peter F. van Camp

recent I the Well, a certainly that's acquisition think price probably well very was in private point as in well. evident and Metronode our as interest fair Infomart as equity's end

be be just platform for there. customers complement benefit. period will and might the that the out in M&A for think of time activity more here, be that speak the that where I strategic some the to a So markets focused interesting, are rest is won't but valuable the of or of new that we'll of industry, towards reach I

wanted there influence are ago, a more this So the always a right India, be Korea again but eye is is an market something ultimately another year. of will like play, be and But place South it transformational did could we've and that maybe extending may more these found past the be Verizon a platform have but Telecity we that interesting some years as answer, us. to couple quite to on that like haven't something versus in

Amir Rozwadowski

like we for That's leverage think the where If targets question to if for a your term are, you about the now. think within very Keith. that sort of ratio X helpful. you further we times about notes, M&A, adjust to perhaps of And your senior you're then above how of X follow-up about seems and mean, longer financing? And pursue bring should we progress I target sort continue additional think ratio target right to should How we that should range?

Keith D. Taylor

Amir, Yeah. that's great question. a

again, we So what we're be on PVC going to or next M&A to a a a company maybe market said, know tuck-in adding think new is a lot at as as acquisition. you of what looking opportunity today

and that integration, we two that we'll closed can transactions now. As ongoing with appreciate out are just in of integrations eight different different you forms different in levels go April,

And company going on continue the to integrating efficiency. so to as assets focus bringing a and we're

X.X pro where equity, a both the were value, structure, Clearly the to taken to to using times continued relates We've our capital decrease, in it two and business. adjusted to very closed April of our business continue QX that shareholder going that number prudent as pro always the transactions As view levered, is scale we with growth the – on we're maximizing debt appropriate. forma the forma EBITDA.

we'll off grow as a in continue have to of – we'll to to cases the stated maintain As sheet. today, leverage, next I'm structure Again can, on, investment that's others sure, not XX goal leverage, becoming to and alluded here that or months, some we investment-grade the opportunity as making an of sure with using we'll not but balance aspiration the elements balance have sure sheet within want our of we earlier at point our as times grade. other we become with time, rated sure our making appropriate I'm that get a not our Charles be in too still using leverage objective but some effectively, partner we capital X.X to to that company. Albeit set much without company,

distant I at think, it's expectation the our leverage, range. a of stated not the see us of you towards X reasonable that more line, too get future top over end target bottom So the that's times should

business we three the to next five the As to continue scale over years.

will a assume aspiration position getting grade, I capital. think think, it's of ranges. we'll with reasonable And on target that put view I investment to balanced very, in much our good a our ourselves with very be leverage very within to

Amir Rozwadowski

Thanks much the for very giving color.

Operator

from comes Vincent Chao next Deutsche Bank. from Our question

open. Your line is now

Vincent Chao

Hey, good everyone. afternoon,

to mean, churn I some for of in we rest going the kept Just basically as terminations the a your the you should bit guidance on of that than is the and the Verizon curious, of was guidance a the better doing performance some overall at absent business that, I reductions back interpret mean, I quarterly previously basis. just flat expected, Verizon?

Keith D. Taylor

it's Well, Vin, churn. elevated and the part in of Verizon slightly assets themselves, of

As roughly time you added we the million last we first we and revenue recall Verizon of million then guide acquired exited we assets By out business. $XXX with a were year when XXXX I recall, might $XXX in the revenues. affiliated started we the

guiding that, low single-digit we a the not churn PVC think we reserves had that As to were place. What very alluded to is Charles a we part said strong with the business experiencing to seen is that that's you're that X.X% in the suffice – this we down for looking at we're say got what change to growth assets. and of already little gross of pipeline going that going if quarter roughly were XXXX then scope meaningful the were churn we saying now to that as as overall result a Again, say churn on we're would I so know that now that that pipeline Verizon, element year, organic going up no we result put a feel yet bit just it's we back hold a sorry, expecting we've it then the relates experienced. what flat. had we this you're modeling a we very we there the – recognizing with our an holding and is it's that of a Again it year strong We've to this is but flat. have fiscal bit. our Verizon little sales And going while handle being We that we're in experience as bookings. that in that as we prudent, and year. at churn within average anticipated bookings had But always had there's

not the year XXXX to but assets. only us ourselves solid I we a on of $XX out core investments assets, think, to coming in hold for going flat, the growth you're think fully again markets I of of million, I good to because because Verizon there's as to guidance so the comfortable Verizon this feel see see exit roughly in going million $XX put integrated, revenue adjustment And the And top year. our not those we'll only the you're position we

Vincent Chao

in you terms of because order inflationary higher perspective. on or is the have Thanks. going guess And have going inflation? of side. from the another from sort up planned more construction are the an I covered there of some deals, of just outlined contract year, maybe then much on many We've overall question of construction spending is Okay. costs X% and for heard just look the sort by that you a of how that fixed of that at risk I already When pipeline that that or X% REITs the

Keith D. Taylor

have activity. As – a company we good large construction of pipeline we deep a have very a pretty and

with be to investments broader we probably it's an all – and inflationary have providers. specific. most our that's We given That have than great an market opportunity, think our vendors, there's material relationships we're our we the said, and that we get From perspective, going making. pressures,

and been As part to overall a efficiently that working also construction from some But when built. consideration, to drive specific. to they've IBXs our of the different hard And ways give contingencies pricing of we're design more after down company different building we're it into we comes build, run average techniques, fluctuations. cost real take to guidance

our have be just change facts So overall and I – of that circumstances we got is be to handle on I'd we've you and again, meaningful a say think, what shouldn't to cost specific be there'd a because it'll and feel perceived guidance increases. it, any

Vincent Chao

you. Thank Okay.

Operator

from comes Robert question Guggenheim next Gutman from Securities. Our

now is line Your open.

Robert Gutman

growth weighted given year-over-year be Hi. questions, Two assuming the and Thanks as timing cabinet and for acceleration been half, to the recurring past well, Europe, quarters actually. taking at the in stable scale an a one just several the to expected One, of on And I should because to basis, question. it revenue we deliveries second we in expect it's about the the want or just have after XX%. for should more. that, know you I if accelerate?

Keith D. Taylor

blips should quarter, XX% of acceleration, periodic revenues only you And to the we see that some stream, fashion, you're a over that in the I timely just an we'll – capacity more the capacity. fill as think, going to experienced European, call revenue filling we there's when a this opportunity up result, to recurring it in some growing was comes up year-over-year. EMEA level as where see the certainly by

opportunity certainly back to I go the up think, the end as there's of an get to you see number that year.

Robert Gutman

know And continue proportions of each. coming But – stabilized there add second from density. stabilized question X% and the I density? the density to cross-connect assets. don't to a on is growth in power been is really power the the flexibility regards side, It's assets power in Thanks. there

Keith D. Taylor

power, so mean, power the with infrastructure or into customers managing increased a physical space an cabinet environment, cross-connect, the a cage it's incremental I the and relationship more put given no draw Absolutely, adding as different than of they'll capacity.

our both assets. to very have so we worked in been historically And hard and optimize cases, have

will you will those more interconnection. get as from stabilized power get draw so And assets more you

Peter F. van Camp

more to in Yeah. on make even can the – accommodate hey, therefore the particularly improve slightly upgrades, we power we and assets, And a in assets of density say, we longer with specific take we facility power can occasionally vintage projects cases. as certain

to So certainly us levers business. are the in those available

Robert Gutman

Thank Great. you.

Operator

from question Citi last Research. Michael Our comes Rollins from

Your line is open. now

Michael I. Rollins

the taking could. I if Hi. Two, questions. Thanks for

how revenue you done the maybe us into growth was I that a of update. last terms about give you've And us when stronger Verizon us of thinking you sense some term longer regions others, if since the the acquisitions account Thanks. are much little of the rate in at shaking can wondering the take XXXX company versus for region basis. a an First, a the the out growth number totality of preview organic of about you how you secondly, is of give the if look on guidance? bit at the give a opportunity and within X% sense of maybe Can is guidance including where just each

Peter F. van Camp

that Sure. does overall of with we've some like bigger acquisitions done the the I'll Obviously Verizon add a react to the part. growth just and to first business. size different of rates the

Well, get year, to so give the CAGR half? as we retail Keith, think growth very will And market so growth a the that it? it for second even year, I track outline that a we'll regard. when and relate and thinking then so you better will Day And you about feel go sense rates outpace growth, continuing colocation, on think helpful a to we that growth continued about to what in forward how this you Analyst we it get impact. for definitely positive good did rates was direction. has an our of Certainly, Mike, coming on to be you

Keith D. Taylor

Regional the... color across

Peter F. van Camp

regional Yeah, growth color. for

Peter F. van Camp

Yeah. has very contributing performing we've growth been Well rate. at higher and well as obviously, said EMEA a

to growth as and in rate and solid hit continues to well, contributing overall number bookings very smaller a on doing our well Asia Americas. very,

Keith D. Taylor

Yeah.

Peter F. van Camp

that to to or...? add know, you do color any don't Charles, I want

Charles J. Meyers

Yeah.

market. dynamics, I larger which bit is mature Americas think, yeah, little is the of and a seeing more you're normal

to of The activities follow both terms in both penetration terms in tending other markets substitution and the cetera. demand and of potential et are are of – driving other effects, that some factors

is So, outstanding. I we – EMEA, competitive continue our health there's to – there position think, in we are exceptional see

Our projects strong. pipeline of is

is strong. Our sales pipeline

we we're market. continued those to little see, little market and markets X.X% we're growing a But with the and what has forces APAC the is and secular results still a we're from head Americas think are bit above in our growth meaningfully more think business good starting a the – the is we're most range above seeing the credible yield of the what ahead shoulders again of profile market and estimates We in in rates. dip in rest. bit Americas So in that and growing Americas. driving a strong that the growth doing EMEA return underlying of profile that

pursuing, continuing to focus across but probably about preserve therefore where regions. we're disciplined pricing and markets over can and the but what headwinds, color across we're a on of use on very time, pockets there's value, so And distinctive we little cases, in cases staying deals returns all that's bring certain

Michael I. Rollins

could if one all follow-up, over laid growth your with that is the XXXX in And other just in schedule, goal development the organic I XXXX? development out you've to increase

Charles J. Meyers

well slower really question, June assets energy the and the thinking you inorganic business, that we'll we've the a both organic as our that business. business on Day overall growing over been about and the than the you Thank and last more organic have recognition spend XX on few that updating the to but be buying we been years, certainly (X:XX:XX). there's as like Analyst thinking for

look forward you give and from take you we what through And on as basis how a years XXXX means we go does to color five that so want on XXXX. it out

Michael I. Rollins

Thank you.

Charles J. Meyers

Okay.

Peter F. van Camp

Thanks, everyone.

Katrina Rymill

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

Peter F. van Camp

Thanks.

Operator

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

disconnect. now may You

Katrina Rymill	Equinix, Inc.
Peter F. van Camp	Equinix, Inc.
Keith D. Taylor	Equinix, Inc.
Charles J. Meyers	Equinix, Inc.
Frank Garreth Louthan	Raymond James & Associates, Inc.
Philip A. Cusick	JPMorgan Securities LLC
Jonathan Atkin	RBC Capital Markets LLC
Simon Flannery	Morgan Stanley & Co. LLC
Colby Synesael	Cowen and Company, LLC
Amir Rozwadowski	Barclays Capital, Inc.
Vincent Chao	Deutsche Bank Securities, Inc.
Robert Gutman	Guggenheim Securities LLC
Michael I. Rollins	Citigroup Global Markets, Inc. (Broker)

Equinix (EQIX) 2 May 182018 Q1 Earnings call transcript