EQIX - Earnings call transcript Q3 2018

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Operator

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

begin. may You

Katrina Rymill

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

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

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

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

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

Charles J. Meyers

their afternoon feel Having of quarter am Good team am nearly for as as and about opportunity to lead digital agenda our am excited I around I my privileged as the and honored Katrina. our employees proud in Thanks, X,XXX to call. part dedicated the of to our incredible eight about each value we first success. and to this to years, of and globe track earnings shareholders. record been team customers, drive a helping leadership call at role to extremely CEO investors. of the the in I Equinix I welcome today our ever for play the our past creation host Equinix other, customers transformation third represents service the

quadrupled than and of our the capital more to XXXX, $XX of globe platform, over are as have the interconnection size build a billion of trusted business across world. world's leading We since the emerging cloud-first deployed center have rapidly we now the

we evolve also industry's remain scaled core rapidly the adapt world, of in interconnection a cloud most on I'm our in priority quantifiable on shareholders. believe remain density, But demonstrably differentiation: so, stewards needs the we we returns continue focused must extending foundation excellence. as in ecosystems, and and to exceptional, As service delivering the to network fortunate our portfolio, market. model, a to recognize customers. changing we sources durable, global strong doing sustain global and will team, an of further which our infrastructure superior deliver our most to to important and the some business is of In and digital market-leading comprehensive for this reach, will superior certainly digital I unwavering outsized and that response our commitment can of will value turn build

we next plan business to priorities the for our shape XXXX We operating early year. guidance our and will you prepare refine continue as on to our update

want noting immediate agenda. worth as priorities to of are our go-forward six elements outline I central that However,

investing First, architecture we will the choice. momentum multi-cloud behind and implement helping expand customers, significant have, as our go-to-market engine, hybrid their we of

yields we'll will Second, more coming to services over powerful, Equinix product help years. and enhance our to evolve us new make digital capabilities portfolio sustain use, delivering that easier drive platform more transformation, and to accessible cabinet the

reach. margin share. significantly increased solution the operating balance expansion, as in focus will go-to-market the business, we our priority of our look AFFO ecosystem, focus delivering long-term shortlist hit and and behind we'll enable leverage more our us global advance partners invest amplify drive people allowing continue performance. and we cloud extend to high sustained reducing per on we And on culture engage our and sheet. to our deeply strategy, will primary to investments against leadership fuel sharpen Third, substantially a our that Fourth, our strain the will most can driving importantly, believe our Fifth, on we to our engine while in in finally,

of on the this our these and will continued As platform. will third for strong long-term mind, had and top value, results appropriately appropriate, generate growth great are it reflecting end the as creation We I'm we we shy to our of a our away EBITDA operating of be above when revenues guidance against an priorities, strategy interconnection as outsized sensitive those with QX. business return. confident focus, the share our quarter adjusted the not the to excited in execution always has in will With we investments ranges, our investments been, but remain and that of from we near-term execute results, will firmly sustainable

over Adjusted particularly, basis. These same the expectations. in EBITDA costs content were outpace colocation cloud XX% year-over-year. As currency to Bookings in a constant and strong billion, timing robust across AFFO normalized our depicted APAC and and growth with regions and revenues ahead a of of to $X.XXX on due continued was on verticals. guidance lower year. are rates at were the growth slide Interconnection X, revenues growing up X% X% and last record quarter was spend, our above the integration

Our counts, and and metrics healthy the interconnection our cabinets, of were Cab strategy. all billable solid quarter reflect this MRR across per execution

our acquisitions, substantial We with and Infomart, progress three Verizon, Metronode which against also expectations. latest well our saw all tracking of are

multinationals. as increased we're has and providers Metronode, building For cloud in Perth, further service interest in Melbourne well as which Sydney new our and seen Metro from

locations finally, Infomart with markets NAP the campus in confidence new Denver, focused For our year. of us São final well as the growth capacity management the give in Miami, the in we pipeline our assets asset, we Verizon, Infomart plan of churn master combined X. Houston the our refine next government and including marquee strong long-term Americas to focused of Dallas Verizon will for to continue Dallas, for opened And key including five location Culpeper capacity as The that for these return Paulo. new phase

comments development Now, on make organic our let me few activity. a

Frankfurt, X $XXX early Team we're project we continued CapEx million place With expand we generating pipeline and year. fill campuses and with predictable initial and actively and strong and is have financing levels allocated markets maintain as Greater by projects each respect quarter, across de design high generated to rates underway London than expansion to demand. to next which that established XX finalize of our work are build builds XX% our over well interest, markets in early hybrid seeing our drive are in in momentum. of current we're HIT, parallel, revenues. These third Singapore. opened capture expect have and Hyperscale tremendous momentum metros Infrastructure our investing wins response capacity, expansion We a of XX XX we in across Rio or team which and to nine capital customer adding Janeiro capacity facilities to In such Miami, and as to In the structures, interconnection.

We use XXX,XXX we Virtual Fabric, despite customer high speed first secure, global in Shifting customers cases. and seen adoption world, to we key connections XX,XXX quarter We nearly our some market-leading virtual X, our only dedicated the facility, now over our between continued net functionality of Paris that migrations. adds Equinix, not pre-leasing over cross-connects a on supporting connections for with now adds and transformation is more with the powering cloud IT any ECX strong solving than around will service pressure have interconnection, cloud platform next supports had interconnection Fabric but healthy strong open XXX-gig see connections X,XXX consumption on customers. have from early for portfolio. have XX,XXX our to year variety digital ECX across HIT customers. providers, Platform

early Fabric We to will include year. next ECX connectivity expand inter-regional the full

year-over-year. XX% also traffic Our continued saw peak platform over momentum up with Internet Exchange

service quarter, internet globally. in and operate This now in we markets new and launched Bogotá XX exchanges Amsterdam, this

Now, cover verticals. our highlights let me from

Our customers. record and their telecom footprint to new to edge, Fortune augmented in expanding operators reach Chinese operator hyperscale included to their and network from by Global enterprise cable telecom vertical a wireless serve bookings captured infrastructure global Europe XXX-gig extend as Expansions carriers provider providers. logos support a at regional XXXX support solid better requirements the upgrading XXX to

banking, vertical led strength financial markets. and broad by Our insurance, saw capital services

ecosystem. infrastructure profile APAC, with we top New record a wins In securely several and including high media, digital as access transformation data Equinix global Credit led deploying saw expansions included Alibaba by digital to and Navy accelerate. to stock moving to improve included financial exchange, wins, expansive Union Federal both and Customer Tencent. bookings XX management content continues our

and globally. cloud IT vertical ECX Our by on led increase demand rapid bookings strong produced participants in in APAC Fabric Hyperscaler and a

seeing bookings vertical, multiple to travel, enjoy sub-segments architectures Services. led the type fastest well, oriented manufacturing, BuildCloud vertical to infrastructure and continue we're new and space demonstrating of including and capture, flexibility strong in this growing digital this to transformation. TechFlow of enterprise quarter logo new by our continues recording healthcare be firm growth providers (XX:XX) We logo wins any undertaking The interconnection diversified in relevance as across

New mobilized contributing to enterprise more again as company network quarter, than multinational help Fortune Platform of and extend improve power NetApp, Equinix. transforming strong our go-to-market and wins via management, included a airline connecting the services our to a supply all to of new sales chain and traffic AT&T, localizing cloud logos XX% transforming XX% topology extensive their bookings XXX had Channel performance, Lenovo over like oilfield Microsoft reach. Telstra, and another partners

their wins a Services Orange in this New the platform winning for digital to wealth targeted jointly XX a opportunity service provide quarter infrastructure the channel worldwide. we as provider management that cloud with countries private Business included

let to results cover Keith, for the the me turn to quarter. call Now, the over

Keith D. Taylor

and Thank afternoon you, good everyone. to Charles,

Across of our had we for net yields pricing MRR each highest adjusted and both guidance. ever in simply expectations decisioning physical of cabinet recurring an our sized medium organic revenues quarter, faster quarter remains value were of strong our all or spot share virtual the by overall we EBITDA, delivered remained three at firm highlighted multi-market, of growth pricing Also bookings with the we ahead continued for quarter-over-quarter regions, AFFO the step and small had additions based high results solid versus quarter, a Cross-connect sales to sake. in the pipeline We Charles, As in for number Americas third us with than with and deals. time interconnection multi-region positive a revenues. reflection growing to actions our improving AFFO top and had The per up significant business. a grow revenues, per strong gross opportunities.

we're deployment making our all across progress is sizes activity financing and HIT healthy hyperscale great initiatives. Our with

new we is the plan much this with of asset leverage M&A Metronode's to we've planned. we have multiple efforts. made $XX accretive, rate these and very Turning significantly assets good footprint respectively. substantial we've purchase. Australia. in and about forward increased to Also, to acquisitions, for revenue Infomart the than our We're we EBITDA open raising And $XX capacity our our run reduced adjusted to headway million acquire the million annualized progress Metronode continue across XXXX, to integration acquisition and multi-city performance, looking the With respect assets. Metronode's with value Effectively, Verizon to made now sooner to feel used both

confident will activity return quarterly revenues incremental the highly flat Verizon strong assets and XXXX. feel of end in the current through to discussed online largely that churn, due to the While booking the brought growth the the essentially remain the will capacity previously year, MRR we

million. to our lowering the to we're relates integration it our as costs, cost to Finally, $XX estimated integrate XXXX acquisitions

at section all revenues turning in are basis. quarter depicted normalized slide Now, our on quarter, X%. $X.XXX on QX Note, the momentum fastest over a Verizon the to business. XX% the the constant rates market this and region at rates, Americas as growth growth than of of end at Americas grown our and our churn, a respectively, the were business growing X%, XX%, billion, Americas basis year-over-year last the global above third were up currency range. broader the by the than reflecting X% would greater regions followed the APAC Absent have and better year, top guidance continued EMEA same X, on substantial

to continue $XX are rates was included expectation the mitigate FX million, results, are the hedges QX of lower guidance a current FX our to currencies revenue average net rates. the our their flow put, hedges effectively QX dollar. quarter negative Simply same revenues when timing to integration operating of million our foreign through, FX year the when over impact spend hedged X% While the to and and pressure currency QX put spot volatility FX better than adjusted rates EBITDA working of U.S. and than last currency to the negative due $X currently compared up operating higher our million Global rates. our $XXX on costs. FX a compared impact our

adjusted Our XX%. was EBITDA margin

would a quarter. guidance This EBITDA of adjusted was our our the and rates. been or average QX quarter AFFO AFFO when than in FX costs, compared FX to when higher QX $XXX to $X straight QX of per net the Exclusive $X.XX, eclipsed of negligible million per Global per negative $X.XX. impact impact hedges the million, share compared had then Our third have share FX AFFO threshold negative share performance integration expected. a $X.XX we've reflects rates,

income recurring higher quarter absorbed AFFO and capital the Our tax in expense increasing expenditures.

related reflective was quarter Looking churn taxes MRR third over normal forward, be deductions X.X%. acquisitions we of to expect the to benefited as from quarters more expense tax QX the two refinancings. and of first burden, the our level tax global

continue and X% X.X%. the to For quarterly churn MRR year, XXXX we expect between average to

the lighter to MRR full whose to on the X bookings solid delivered and deals. yield levels high expected due remained deal slides healthy timing within another the than and regional while Turning small and churn. results to and EBITDA record had through quarter exported installations. were to strong with two mix cabinet region billing Americas The of team mid-sized solid covered highlights, prior the X, of performance, results revenue absorbing other regions. due both the are adjusted region the Americas per interconnection Verizon firm Cabinets customer quarter,

businesses. in metric by We and quarter, expect led this to strong rebound German QX. EMEA had Dutch another our

We roll by seeing the with builds being a cloud offset From EMEA hedges, continue across region across cost to driven significantly want I expand This utility to underway, quarters. that perspective, coming cost higher is over do XX the largely partially which prices and enterprise note we're our increase currently utility opportunities. will markets. the by off

updated with record MRR and counts guidance. bookings the with from strong up this step per in costs utility positions strength remained new Singapore and Our market firm in consistent key Asia-Pacific region. hedge cloud a And content, in wins increased Cross-connect our particular track enterprise reflected quarter-over-quarter verticals. these movements will cabinet are had with and delivered

recurring XX%, and stepped to added XX% respectively, XX% and capacity. over cross-connects recurring Americas were interconnection total significant revenues total revenues. was in up above and perspective, our our incremental interconnection EMEA The which Turning revenues. again, we of a interconnection was port net the of to company activity, X% Asia-Pacific X,XXX – quarter, revenues while From

$XX our X. please our refer Now, looking billion. respect it scale slide to greater to balance and sheet, structure, than capital continues at With remains to

quarter Net our is dividend, adjusted part capital our leverage our due and Our X.X to times cash at remains decrease over in flow. balance offset million, cash annualized a the cash by expenditures operating quarterly approximately EBITDA. prior $XXX unrestricted ratio QX debt

We future to we've Program fund per also shares of shares X.X quarter, share million an $XXX or approximately ATM $XXX per just roughly our To-date, share. our an over Program, $XXX million, issued accessed average under of average an raising needs. price ATM under XXX,XXX price at at investment the

program with supportive timely equity, value. maximize market debt of to to highly us access while basis, this a type desire continue fund strong the it a balance due our be allows the recognizing We on business both and to to our of to working shareholders as

for we $XXX to expenditures land almost Also, adding own have recurring the cabinets, XXX as capital facility projects million. XX%. our X owned expansions quarter, company We Also, XX our future well and and slide stepped as XX to-date. Turning revenues our The currently we investment including from capacity an assets $XXX were underway. campus for construction opened IBXs a Bogotá of X,XXX markets, bank Frankfurt expansion. $XX of nine now purchased quarter, over to million, million CapEx land XX across has now parcel up this

expect to of to development our assets activities will on owned increase continue We be revenues from properties. owned as two-thirds

Our delivering the shown capital returns, and on slide strong healthy XX. expenditures are growth as

revenues a XXX by and largely asset constant Our X% increasing on currency colocation basis, stabilized year-over-year grew revenues. interconnection driven

and Excluding churn QX quarter. to similar non-recurring high stabilized a have the the revenue X% XX% Americas our to bridges. increased are finally, of gross in through this at These assets our stabilized grown XXXX, slides PP&E XX please XX XX% assets last on utilized refer approximately invested. cash-on-cash and and quarter the slightly And return updated would collectively generate XXXX for guidance

by the FX to we're For million part increasing our the and does in $X growth AFFO This a share business to rate, $XX EBITDA impact. AFFO We're adjusted share per to per drive momentum costs guidance And $X midpoint per of imply lower as primarily both and guidance of excluding $XX.XX negative reported revenue a acquisitions XXXX, $X by approximately guidance by AFFO part Also raising million is at the margin from guidance, growth. healthy our our EBITDA a revenue due impact. our offset of per we're favorability share offset continuing by guidance largely adjusted XX%. due full-year million integration raising recent currency XXXX in costs. X% million year-over-year $XX.XX negative integration share or

is basis. XX.X Assumed XX% basis. diluted on a outstanding as expected fully weighted of an grow shares reported AFFO to year-over-year average on a million

the our We respect continue will between to range And to finally, billion share. dividends $X.XX cash our for capital non-recurring be and to $X.X quarter, expenditures expect per billion. the XXXX $X.X with dividend fourth

now the cash to an $XXX payout about we ratio XXXX, dividend total XX%. of approximately expect payout For be or AFFO million

So with back that, turn to let it I'll me stop here and Charles.

Charles J. Meyers

truly Keith. closing, healthy our through us and delivered business the build and we differentiated into clear Today, innovative adjusted and third product strong position In growth, a Thanks, metrics peers. our a board. portfolio puts great that a in EBITDA center AFFO is quarter great market the from and across scale, and leader substantially with flow model on we're data to

in our to across unparalleled enhancing and extending putting and long-term model focus on position we we and our focus financial ecosystems, reach, value service remarks, sights leverage, in delivering balance our and power sharpening interconnection with global center driving the XXXX, on sheet on digital efforts building opening As HIT globe. transformation six pole the through innovation. upon Platform will on accelerated Equinix all our operating These the set logo capture new creation my our priorities outlined

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

Operator

session. begin our question-and-answer now will We formal

question Sami Credit is Suisse. Badri The coming first from of

question one announced, X. Securities has couple Credit they quarter Thank which some year quarters several Badri a around only (USA) we've LLC - the announced per guess, first Paris more maybe Hi. being going than announced there'd of actually dedicated more project hyper-scale per color takeaway been on that selectivity you when was of been of It Sami these on had in yet seen Suisse announce my was be you. forward HIT. I HIT a are line mainly couple is give not or it's could because deals question us degree your and or is quarters? development is just about is the been My expansions or more investors Your why maybe main open. one,

Charles J. Meyers

actually think facility, there's I side you're about supply out of months. What Yeah, HIT last side. got actually Sure. – is speaking first demand, kind shape and of mean solid I And the a finance. it's was on I very projects, really through the few I they in facility, stool; to are is is next demand its HIT we've deals. think the sort supply week, our to pipeline very track walked X and of there in three-legged Paris as great strong, open, of number a

are So that's them. tracking of other we announced number a have well. And just there projects, not

And waiting our number some strong made a just venture a land to have terms of their in joint have degree, necessarily bank of projects on fully We underway the have way and They those to underway. approvals. not we're through. not

APAC color region? pricing or hybrid just MRR And in a clouds Suisse projecting maybe up there increases ever years the has projects So, term, of as do EMEA you level And interconnection, deploy Got are next Credit enterprises we Sami will question it. one-third your is so two cross-connect EMEA the adjusting phases on, level can over through for just my be of go but planning yet. underway announced those your we Badri get assuming the Americas, MRR this for the we're - the sense with could that rate is about to about next the not accordingly? have in should them. of Securities as double. start (USA) and we we Longer just on Thank LLC

Charles J. Meyers

team and one asked I our Yeah. Fair our EMEA in operating review. question

we So, to ought that. absolutely expect

that there unique that fact the believe there a cross-connects when that so, about we did was Telecity our that customers value. the that value and acquisition, talked to justify our And we we delta the provide

to together integrations in rolling those would so more you the do should deliver to increases your continue complexity think through. And it. and we that in rise we as is, our But you. obviously customers. always Credit some the to Sami try LLC little question see Securities and one (USA) Thank that friction I put that to that terms Suisse those system - yes, Badri that as answer a than value Got there's short of hope and get

Operator

Synesael from & is The coming question Cowen next of Colby Company.

is open. Your line

Colby Synesael

you. thank Two if Great, may. questions I

impact, basis. just faster. the the you Is in year-over-year stabilized what's to one and business a the similar of to your even of First the year, of I overview, all one areas with start still is to X% guidance basis. call. this a mentioned typical Americas one just growth or under the churn are talk any that what the about growth that focus expectations a your you Americas the Day Can being would focus that is us you the you. Americas there provided on comps. off new your in things I'm intact what growing secondly, go-forward something that rates that's stabilized is, areas other Thank all, your curious giving growth and the for at Americas grew the your Charles, somewhat And though of just leadership? you out being else does on And of stuck that the guys just part tough that's assume there Analyst going earlier was thank actually for on U.S. Verizon of the know then little churn that of change or point X%

Charles J. Meyers

Colby. Sure. there, Lots in

one So, after go let time at here. a me

still our the priorities Day we answer holds, and that about at As is whether talked what Analyst to to yes. the

good you feeling going are about those as for still for to means what that. February to And a sense we ranges. then in we're come XXXX, and So, back give it

through that look. that Day. to priorities make ranges those we business all and will means have how So our of and of the digging still still through when good into out how details and now, in more we'll investments year in work play we and provided forward think, we do feel But Analyst about I right play terms at the may what the the

drivers, was believe dug the like growth, result a the asset it – we erosion as of quarter that there's number stabilized an – any it, and the don't fundamentals. underlying to As and reflects really into of into business we

and a in talked as a again, churn little assets. the stabilized is was was to one So although concentrated as in of due with that of QX comp line said you about tough the our our we it elevated one, expectations, the NRR some in in last year, it script,

it for And think what that the line I did impacted in expected, stabilized growth. but so, – it was we asset impact

Now, that being coming Verizon, some some in of being mind. specific my that in multi-tiered But nothing associated with nothing assets some some stabilized unusual through. of were that's There churns new architectures us. but organic, for

And so, about. don't overly there concerned that see I'm I anything

into little we're to of continue a of on for is headwind say metric said, of And neighborhood. to that that bit those, to normalized see X% us X% due So going that would That historical below take believe sort factors. a our norms. this probably I couple would that we

the XX-gig asset interconnection XXX-gig almost First, all concentrated the our pool. to be to hubs, stabilized which in are in migrations tend

stabilized specifically down the And that a well. asset so, as you noticed interconnection in as bit one in little performance, was

that. of part that's think I so, And

do the they're course with Now and ones rolls XXXX. start to the from of going players and then the there. wherewithal with over because taper tends the It biggest that expect to to highest it we motivation do that's it the

which in sites interconnection critical degree as a hotels telco to and the do in facility, sort XX some priority. XXX secondly, stabilized we think Xth trying pool, we're through Both Avenue actively the that those hotels, Secaucus New of York we the is And taper Marietta be density then our carrier York, of and X, assets X, got a actively year. XXXX, so, to facilities New traditional we've shift which that'd in handful will is customers like Atlanta. Atlanta migrating own but multi-carrier through that continue in then whether our those And to ATX markets of or are from view and and those business Street

and that asset a some of showing site-by-site that up at that. looked stimulating we're in results to – when and in stabilized growth, we this So, is happen that saw

that think going the we've the the towards sort where Americas. do more neighborhood. of of point I kind is in of last to been be So, And then that low-end that's X%

is drag is I despite flat. an market as still size having amazing the business, same $X.X dead Americas CoreSite billion think but X,XXX retail business growing a business about from Verizon the the which business, above prevailing approaching customers, a the growth

like And growth will so but think were provide and Verizon and we we that new we is a we churn the $X,XXX as next online, a feel recognizing going the is in we with cab. and also turn to – and business some going business, the really business get that return interconnection as XX% that to lift that said, expansions to Americas mitigates almost growing year yielding that for growth is

So very business. attractive a

do think an we opportunity over time. I have

we that's quarter to think something get the way that's the business the top priorities new deliver juice to next me probably over continue key of We can And the six of we our in priorities about you services quarter, number One of Americas talk the going can and that – well that's believe impact have on my continuing attach after. (XX:XX). out time. innovate heard was not rates to cabs

answer. long So, equally long question,

Colby Synesael

Thank appreciated. much you. Very

Charles J. Meyers

You bet.

Operator

Jonathan RBC Capital The from next Atkin, question Markets. is coming

Your open. is line

Jonathan Atkin

leverage of and single then And companies relationships a new ecosystem to carriers, within matter words, a your just for your be connect project resellers, a One XXXX in and in for the or you they tethering. to Thanks. initial basically that value fund to And markets I parasitic regions wonder more platform fully On seats, arrangement to financing Charles, two. with would so at this Thanks. that to you a when and wanted you or it's open forth. little to that ecosystem would dynamics discrete but regions the from an ecosystem are talked fresh your – competitive opportunity topic they other do Equinix the in proposition. providers down a eyes comprehensive partnering leverage such for multiple then of drill be Charles. neutral bit to expect new the or one intend other pay I or be look be HIT, would In your the selective on early you is like part as not more no or arrangement do partners Keith, cover all for how it CEO – their given have about peering place about your issue,

Charles J. Meyers

Jonathan. Great. take the Do Great questions, HIT you want to first?

Keith D. Taylor

Yeah.

So, let the me take Jonathan. one, first

it's it relates said, have legged three a absolutely As the – demand to stool. it as relates as HIT. Charles We

sheet basis. the and is potential balance Smith as be probably and appreciate. sure balance have also it's come can to markets, on going to hard Jim to making you leadership we an supply and appropriate supply off assets absolutely develop on placed discretely financing multiple We develop the the partners versus in his That to that so can And opportunity working team are continue sheet. finance,

that partners deployments assets. we sure Jonathan, we to how and the facilities to, what As we same on forward, want do financing our want the ideology business. have work, referred X to as London those example type HIT We But got make and we've to as want with hybrid we on look of you're fund aware, sheet. moved up of our line we that quarter, last – where we have some have to an XX already, into balance

And and, I you have share that partners to about assured, our it is the discrete will demand, partner, is But be so, the we in and to that identify recognize feel this different well there have Jim, say very, as of and Rest we financial the stands might as as we'll with we cases, some might others world that very supply, the as opportunities, but down a the JV is partner. in road. are there hard mean partners with more there good a regional Charles we and business working the our get suffice further something opportunity, today. markets that it HIT

Charles J. Meyers

JV I've to we that – regionally will the I what? to I of partner in comprehensive telling would terms got going that that little now the What been to it sort likely focused is in first JV has and bit internally or we prove mousetrap, we've think be designed is to the here but will And acceptable. expect we of it off Jonathan, was likely – we about that more (XX:XX), first I or that a a your catch some it's scope be find think out might that pick team that one a mouse. terms is particular question

to scope, of so, that fact, in I then that And scenario quarter that think has from certainly there. add a and may, a we'll That's possible be potentially terms one go more one first would we catch the contained outcomes. in in

Jonathan Atkin

it. Got

Charles J. Meyers

say it's to you're to your as one. question. neutral scale an and our not and traffic go us we've be investment we continues it's a on I that, Having believe the of a made question substantial of think the drive that business. then, sort value going right; on first the fair aggregator of I'm be very continuing our And end to simply strategy new get But at ecosystems the to for inside to to – also And for a to that, creating that party that yes, that – our said question tethering, facilities. interesting second return the build of investment

shareholders when tax, but it it services we'll call as return people call and our we so, And a appropriately you will, price value, that toll, what get are a made. access gain in it that investment to the to appropriate have a tethering on our to call

for that's perfectly appropriate the think And I business. so,

providers their sure to delivering that to We want want rewarded and are and and but facilities value and them. ecosystem them want should across access believe But to we into aggressively posture, will – do we that's do cheaper be of appropriate, continue maintain that. be that that the for where, we that lot the our people example, ours and of empower something a embrace hyperscale value and embrace continue to who across we and that ecosystem. Carrier fairly to but ecosystem, enable from put services, able who that's into customers we've value make infrastructure that the can Equinix, can open customers, to when are basically, you also again, competitive an saying, we directly get for the investment

that's So, our that posture to relative topic. kind of

Jonathan Atkin

much. very Thanks

Operator

coming of Flannery Simon Stanley. Morgan is from question Next

Your line is open.

Simon Flannery

much something Great. much. the them low evolving XX now, like you material then, on some of Charles, be priorities, back run grow on get market four to expanding XX talking the just these to to to the are was we here, just or or Thank talked invest is Can product, times Thanks. the months it? you just go to fairly you very months, of And go you going Are of can ATM. this scale Are about for to one about to it it's six earlier, something into opportunities. the in coming sounds leverage Keith, leverage fours? rate? trying the comfortable, within you the down kind in like

Charles J. Meyers

Simon. Yeah. Thanks,

hitting if So priorities, use things. the some where we and one, to of like and the you invest, first dollars yeah, it those augment, there definitely expand takes are those read words do and

figure do of are is. those how be to sometimes, we the there appropriate company extent where of we doing we're those will be are think to And to those, look the CapEx should, any priorities, dollars are stack okay, seek do rank as what process we we'll those is that. dollars. I if company, make resources what At through sometimes might at doing us, our now, going what can as and the we to saying, OpEx that might areas need investments, available the self-fund believe we investment same so, and means out what time, think, And a I that and priorities

sort really share on of I of details that; the go that into through that with full and, won't in and sorting that, plan, you And think, XXXX solidify so, I the and all we'll really February. we're think have, until we

Simon Flannery

Okay.

Keith D. Taylor

just our just adding Charles in investing said, – well. and Simon, what not initiatives product it's has new maybe market haven't like we to been to on as go

the a really and do so, leadership, And what emphasize expansion And we're it's investment. we've previously. decisions focus areas Charles' of in that is made of continued the going under to

not it we mean that we us. you want just investments. we that is will comfortable time a That'll a make our I the need as we the But to run of front in opportunity feel to is so, not of point sizable does we'll company. are size rate; that the different be make And really at determine something in lot

the different said going that, to invest your to provider Having services we're that and We global and that products to have making important get posture, and ATM, we going and use a our as debt balanced the around company question, we point of really on ATM back differentiation the second interconnection all being leverage both sure a with that. as which the as appropriate. attached on raise that to very of is going still a equity and view the have

a As in you're AFFO lot cash also generate aware as flow reflected our of we metric.

So our as with growth de-lever. going a business to naturally we're just

XX%. be requirements an FFO those reflective the at lower we things. Analyst X% of the was times Day one, perspective over where range grow to Number I period to said an going ranges to we funding was think, within I to the talked was a environment we when funding, that going not whether at think the AFFO at a of XX% end grow when to revenue few do you discrete And reflect X% – through equity. from or XXXX. debt might it it's and to

And going so, and to some is we're capital additional cash view to we're that that grow our capital. roughly well to our margin grow revenue, as going us raise as of EBITDA going dividend. $XX a fund billion And with require to growing will we're

we year. something we on grade overall, months And my was in quarter that reasonably is balance get bring AFFO Whether current course what business. being the AFFO growth. to view getting on where raised of happen our want have we capital XX can with period. raising under speed reasonable, you a that's about investment to is structure and can that share grow impact this how capital reasonable, that are XX to and the an that's $X.XX because get think timeframe, there investment for deleveraging capital think you're $X.XX while to the time posture of and roughly mindful just think But basis our raise to I reasonable we our always We to and and that shares with about a we grade a belief a and we will of into going we balanced short is the per business

raise to capital to equity the it so we'll more think continue you we want forward we the guide and we opportunities. and we for And continue growth that, our accordingly to with about as update in balance debt make future sure our

Simon Flannery

Okay. Thank you.

Operator

is Sadler, from coming Jordan Markets. KeyBanc The Capital question next

open. is line Your

Jordan Sadler

Thank you and good afternoon.

that that materialize call the greater you think MRR the or in that XXXX, a to an was curious, to? factor a you half point third quarter last this was second on going expected quarter I'm is talked of in to mitigating and step-up to there about quarter degree the fourth would in I step-up

Keith D. Taylor

quarter Yeah. when QX. Jordan, look we foremost, in and first organic highest had the the step-up, you again this incremental at step-up MRR

we're guidance QX, of million As the I on a $XX look roughly range for forward basis. to guide a revenue using

revenue of If range, you more you or even up the take taking higher revenue look we're $X non-recurring midpoint guiding, recurring QX that QX see revenue. is there meaningful step-up revenue. actually, it non-recurring the will to in will you'll below if the to because midpoint be end another the take probably we're into that at consideration differently, out that of or the quarter-over-quarter increase Or million we're going of be non-recurring in said

meaningful QX well. a step-up we're as seeing So in recurring revenue

Jordan Sadler

the that there rebound bit to seemed there little was And billing with mentioned a timing a know issue come? I you of specifically Americas, with be to regard to a cabs

Keith D. Taylor

our normalized of so U.S. from currency two growth, outside now basis, XX% other the to having But as of you've XX% growth we're Well, XX% a think outside majority growth alluded, organic the the on a and success resides great of Americas of and and speaking, business will grow. the in come certainly and got business lot sort I constant we'll frankly the that more of regions the U.S. continue in organic, so Charles than the

Jordan Sadler

Okay. you. Thank

Keith D. Taylor

Sure.

Operator

is next The from Philip JPMorgan. coming Cusick, question

Your line is open.

Philip A. Cusick

on XXXX? think everything utility of HIT impact power as you at Keith, Keith. quantify this for Thanks. impacted the this and And the expect Two there about guys. then, expand ruled can out and or table? is are structures the green Hey, fundraising, should initiative hedges? still the also we that what you for you How point has

Keith D. Taylor

Great.

to relates you regulated we it and and unregulated very utility to market regulated of share hedges, As the markets things no want surprise to is probably the one with there's and just I do. anybody, can little

looking always markets, As consume we the but today we're we what hedges unregulated buying only in we at put place relates future it to what forward think we consumption, anticipation and in will of not tomorrow. consume

make exposure. Again always hedges out in so, assumptions we're appropriately XX% hedging the putting roughly just volatile let float. of markets something place to always so want that and our underlying And are and we

invested initiative, relates energy. heavily sources it to of green we've As in alternative again

become we've to year. we've and our more was we a I investment sure that's relates it's a and reflects As is whether costing to you're wind a year carbon demand investment. made this there or our it of roughly us that the And $XX we're consumption. making that's as of would And as order is an It's need a frankly, magnitude million today. an guidance, otherwise, money or that becoming to neutral it green. made solar requirement argue customers stakes in therefore, and but our stick commitment our It table aware, of

our revenue is million move, relatively meaningful on going important and a Now, this of and the a so, power being with equal. about you It the make continue and making we basis we relatively XX largest if basis. It's It's prior power market certainly depending a XX.X% a But, XX.X% mountain call that's – of our think year. $X it's will sort variable about a of prevailing an and depending purchase year-over-year on to are year, there's service our kilowatt in point our investment between fluctuate represents component. a investments, quarter one. providers. course, But, it's – price to arrangements of on conditions we what else dynamics all and

with that and ourselves. to the we through So pass can higher to That prices. associated a rising exposure have we of find it we mitigate to customers, rates, of very consume attention we unfortunately and higher that's some our utility close pay ways is something cost some with other them to

put the again, so, we other have that Charles And hedges running as can these ways as the team, some with place our leadership costs doing in we making and of highly a of we're incremental including of also sure making appropriate. business we're in business and sure incremental more efficiently, very under focused offset

Philip A. Cusick

you. Thank

Keith D. Taylor

which just structures. was HIT second the So, of sorry, reminding (XX:XX) me was question

the I with different table structures are all working frankly. think partners. We're on quite still

America. week he certainly all As in Charles and there's partners throughout Asia, Europe, alluded back that partner last met the North elsewhere, U.S. partners in in

so But probably anything structure it'd the at balance the we over we JV continue versus like fund look time. that that – a versus we'll we of on I our first and best of for structure we that And maybe of outcome structure is. different. to and there's structure a course sort such look something it recognizing, And thing on ways period would of as that on will is, supply level one might think other create reflect But best depends just fund now, what whatever ourselves approach more sheet. determine do do it the partner And it the to right a of JV than else. if

side. of of in certainly having this but the it that I discussion we to And or this enough We'll break to want we not to use we're the but we capital to balance those momentum very get off again, certainly a sheet, some off as on of discrete it's and Sometimes hybrid going think on move to be sheet the start in we and balance here we if make XXXX, it you but into out continue results will our the billings our get most right highest it's is material now best future, can't there's facility. sure adjust, we'll details XXXX for some of subject. reasons can, more as be get

Operator

from Markets. Klein, question coming The BMO is Aryeh next Capital

line is Your open.

Aryeh Klein

little lot about then additions? you more a color EMEA earlier for And a you Thank plan those been you in your what bit be visibility Can you might strong bit a may you services, market can describe have provide capacity those you. a talked priorities for new be? adding and of there. Charles demand has six additional your into on

Charles J. Meyers

Sure.

true EMEA, with say board. I this and starting across the So is would

little variety terms have struggled really capacity supply into into has we've a EMEA I have bit strong and does As large over things that and of ahead the and feel layer, the of so improved the very that circuits, new in well of making we of beyond has to of of – at terms growing business across of and is look the a we've It bit the inter-regional that And in the continue and in years to different one a product visibility and we Fabric beyond. to think again mix. will pipe our visibility discipline sales continue QX pipeline performed that enhanced of really Fabric. number slightly It's a have I of driven XXXX at on year solid a circuits, business there's business higher ways, really But the regions. that next ECX think used all but the its we about well. the that pipeline. will into and perform a good element continues virtual things, interconnection last and the ECX and to ports, a next and forward couple think I investments different market business. has add very be That quarter. a returns projects mix. expect case, better footprint there is we strong to three pipeline EMEA services, that very both we're the to we that that Relative deliver revenue and

network type function about to our our We easily in in sort things implementations. area our of virtualized services hub be to deliver we terms augments that of delivering virtualization as to performance services best-in-class able and other of functions add-on the business customers have might to talked

more be precise to higher things more as for place we a service we'll here make something it but partnering And of so example, that to we and some which more in some that easier Equinix easier consume platform bring are we'll value-added only use, won't transformation number be where digital can looks there that's overly view to bring with players demanding, like, not that think their very say I customers our what forward their that customers. to to we large that, a solutions, of customers exactly able excited where place terms terms investments end able a degree I are platform channel and for our on how about. I accessible, services, then And value value we very do in we can in enterprise to we're but to providers, are And mobilize their our that which there think beyond that a make behalf simply a be is of they set effectively. of can can to deliver platform think

the toolkits, ease it accessible. of of kind be those that developer So is some things API, going make use really ways to about platform more

investment and over So that be for I think stay an ongoing years. tuned the will coming us

Aryeh Klein

Thanks.

Operator

from The Stifel. next is Rasmussen question coming of Erik

is Your line open.

Erik Peter Rasmussen

taking questions. for Thanks the Yeah.

back circling on First, HIT initiative. the

us maybe to to of sort can that help that give that can metrics Any and expectations. your depth but opportunity? the you bit of more on compares understand you little commented us pipeline You that better how you're level a prior is the activity like healthy, seeing provide

Charles J. Meyers

way – to quantify specifically would to it able we the have than we won't in be I demand more satisfy. other probably want to than Yeah. pipeline have we that say or

demand so, that our is And strategy. in to to believe that, it something accretive know, we hyperscaler is relative participate retail we you large premium guys posture is the as want to because our footprint

And about so, be there. we'll selective participating

us that sheet retail assets, right we create we the once and HIT about might the in would going to there's, and assets, be we that say like once selective that aggression. would probably of we in the step community more I now, get the ability have balance right we in we'll that structured on – more know now, may up level our again put business that the to work get do. have firepower doesn't business, with we're You hyperscale cost JV demand than opportunity way But to right

Day that business A side to rate you Analyst the presentation, at billion my a is really $X.X rest business. with year really and in retail what two-thirds the try retail So, highly I highly relative of is a the based for take Z we'll the we'll and And well side. recall over-indexed based on business our I us to with select you and facilities our showed growing of build hyperscalers a the projects below large as fits business. hyperscalers that's can beyond with and We'll today both continue and that prioritize right the their on footprint. And kinds would go to also – needs just them. then relationship work and on interconnected, to highlight of that

on effort we're side, that footprint to And energy of up hyperscaler push to as bit side going things down we'll so, of the then that And large be continue every we can. probably bear. and selective, JVs on hyperscale's the come to then, pedal business and that with step

Erik Peter Rasmussen

And and improvements growth, to you've have just by that might year? up make to you just what follow-up, thoughts significant next your trying I end of on expectations been seen growth bringing maybe to the investing to coming return assets business? par, guess, this we're any you that your that able regarding are for you have Thanks. I'm altered point. mean what Have at been that understand into – on those Okay. the business year as my to progress now Verizon,

Keith D. Taylor

One to that said of to decisions going again, it's the be we the stabilized make. grow very or should growth, you previously it we things to expect our above asset at specific

inventory way assets at it platform. We right that say sure don't right a the in best As you across way, in want use it. we Verizon that the manage across the portfolio. a We would if make likely way. in But know, one we or entire our – you see and the our actually with to growing at what it's I we better, to look principles at it say... to and at push a sell that's also look to look the discrete think customers but stabilized level way asset very highest IBXs we very And we positive And applications. would fair look just

Erik Peter Rasmussen

Thank Okay. you.

Keith D. Taylor

ownership. business, look but One moved assets – the other at Verizon see quarter say, slight just capital anymore, we've physical the we sorry both the been tremendous We're the there this quarter investing know a increase this this thing asset as fully We're core did up X-K was revenue it can't the our we a we and that and we we to I'd had the making prior (XX:XX) if able which portfolio, We've associated it acquired in but when you – assets in investing integrated human and to you you Verizon across But a the was quarter. think with revenue transaction, the of starting for some last filed it the see in grew it. we're in stabilize well. difference. – business quarter acquired are we're as there's asset this over to to non-recurring assets integrating Part we when deterioration of our recognizing stabilization base, the the that again, we originally, was standards and activity increased substantially, and assets. – –

portfolio the step activity As to gross We is acquisition the booking to with is turn because performing. realistically how happen back, up Clearly, revenue and to we absolutely it's strong. we abate. inside assets that think to continue step delighted the of like and going the we are

on think the portfolio, you'll basis. continue my nicely to go-forward see we And it's grow turn so, assets can I strong now – investments, the that we once have that a a to get abate Verizon our make and belief

Erik Peter Rasmussen

Thanks.

Operator

Michael Rollins from The question coming next is Citi. of

Your line is open.

Michael I. Rollins

Thanks.

Just of a couple questions.

coming and quarter, development Asia like were how in some as the if of facilities of just that of schedule temporary the amount in as First, turned and the think in you Americas the on of seeing sales fallen you sell years. And shift on significantly. respect cloud indirect where Americas look how cetera. announced, cabinets maybe from, looks and then, actually has curious versus at about better are seeing over of is that And the is development direct Asia-Pac pipeline should and slow a on networks? in what's from described, coming on side, versus more been on a and development the in well you're growth we off if bit to just versus – what little pipeline And secondly, that's much the sort next get maybe where with Thanks. if with third the the color to are the it side, et couple enterprise that a the

Charles J. Meyers

Sure.

in So we of sort development do pipeline think waves. I to things come that is what tend first, find

a think European wave. I midst we're saw in we of so, And that sort the of capacity

does look you start at I I to balance more. that out broader deeper and tend think think the that little to bit if pipeline, a

to as and again, at Although, time. XX%, over going the said two those dollars development the on growing are probably are take XX% more respectively, of other regions earlier, Keith when

of there So things. talked also the the of will Dallas investments Americas, make sort those there's kind meaningful plan in as master of I we'll balancing because you some think about, see and in we Infomart that that,

So I EMEA think in is you'll see some regions, opportunities that. like but again, of balancing feel substantial more the the But growth and got we across we've APAC.

us. on its the for is network, a across strong as wireless of thing sort to – to As then as continued continue they Networks to sell-through our pipeline continues – in and would high to be we performance terms again, the segment. see and the networks. cloud and of say lot those, they're seeing I at so invest business a every of well a meaning to in in verticals, world one their But it reorient towards we're and segment enterprise. historically, one, pipeline, networks continue demand, seeing The sell-to virtually we're good both – also,

actually of the certainly so, at pipeline our portion And enterprise. is aimed a network

partners partners, team, internally a sell and is everything alliance channel a our say our alongside again, NSP we through over-indexing when you materially that's we're the the And market relative would that tried right is motion and I strong though, And now, largely directly characterize now, pipe. with selling here. partners motion our right to is overall selling even so, look motion. our both that at with really pipeline, enterprise that And enterprise other to strategic our

offers market a own. simplify try it's that so, for logo a effectively as could change demand more channel, and and it to its I right on way yet into position us believe working a new of sell – market happen. things empowered And with bringing there's not accelerate those things indirect the fully really is We a to to makers. that's priority think strong their bit that's but things true customer on that to a to But if to really And going that. channel and now, the bring skew decision a make because do with, can the little we we more bring channel

Michael I. Rollins

Thanks.

Operator

UBS. question Hodulik of John last from our coming is And

open. Your line is

John C. Hodulik

on give to upside by Great. on whether Infomart the Thanks. how you the color or progressing? cost on any you are the And on Can sense question acquisitions. and Metronode can on us Maybe side? the driven Thanks. a side provide other a those revenue it's deals, guidance

Charles J. Meyers

John. actually stepping Infomart that up the performance Metronode and mean, both fact and we're our in Yeah, about I remarks, the we the of talked prepared revenues.

performance allowed was us a these the anticipated speed it of immediately. previously has ability Metronode of being to turn after that and assets a deal fact, at In accretive more than accretive going to our to be to time from efficiently period integrate and

this the performance we're so, the the dilution. currency took guidance, seeing again step acquisitions. part and of up before $XX reason seeing revenue of quarter because you're revenues And the in That's up million we

to integration we little at by tail develop and and have the integrations purchase them some all. won't we're or in had us up relative but Does not the things surprise, an tidy were. puts all mean when case that to position we a into master we're this year in do our eight asset we're very bottom-line of cost. So XXXX, to as into through down a large, integrating good as have Still, acquisition is No lot originally we delighted, our underway We're work work And businesses, the end land, we're with a we're the plan position. that which do. we started be year, more of is almost assets buy good there of taking that alluded just next run very to them where to Charles in Infomart, but and associated available we the and platform. rate a of it and go these then, but integrate to bit

John C. Hodulik

Okay. Great. Thanks.

Katrina Rymill

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

Operator

conference. may today's will All this This conclude parties disconnect at time.

Equinix (EQIX) 1 Nov 182018 Q3 Earnings call transcript