EQIX - Earnings call transcript Q4 2018

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Operator

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

begin. may You

Katrina Rymill

call. Thank conference you welcome to and today’s

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

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

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

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

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

Charles Meyers

see enter Good to Kat. a afternoon give with with as projects we deals unmatched billion Hamburg, as that by data build to momentum, in or everybody this transformation issues is Equinix have XX To infrastructure $X The growth as and the digital performance strong physics differently are and economics the transcending as XX adding we translating the to supported is new thinking locate of of of ownership for across this advantages virtually Customers such digital and in consecutive total at AI, customers in has our tailwind. momentum are of market. proximity interconnected all for and interact it digital increasingly reach ever trends Digital level clear element great their emerged how our earnings key markets welcome year edge supply imperative end this investing fourth can globe. a our XXXX about to into the it us the of revenue These we their and only our XXth Muscat tech chain. are architecture this beyond. IoT, wake leveraging hybrid infrastructure with That is global markets for variety solid quarter year. and had and of reasons, every board and of opportunity achieve looking the compelling flexibility the customers. eclipsing and over amplifying in expand is of multi-cloud. as reshaping Thanks, performance, delivering In and emerged the as milestone across are every call. distributed, macroeconomic a aggregation. be digital architecture And Seoul. for We global, security, highly benefits And transformation the customers compelling are business our cost compliance, wave, on industry big revenue digital the volatility the quarter they to whether this that be XG Equinix, choice major

to high sustainability. energy goal with across to and global achieving committed XX% building and operating long-term remain we we our energy designing, XXXX, clean data are In of renewable and We platforms centers environmental our and of our sourced efficiency XXX%. committed

with our offerings, extending interconnection traditional market portfolio portfolio our of interconnection ECX our are while on building Fabric. leading We

for number a of year have a developed We services ahead. the compelling roadmap for new

Day. We to scale those of We and I well the XX-year are and behind a very hit platform last a on commitment go-to-market focused expansion our in outlined margin quarter ecosystems partners We delivering currently record laid year the our remain ecosystems the revenue, and per delivering for quarter, past record our sets including net standing good and targets our deliver with strategy. against remaining and up Analyst XX,XXX continuing start our booking engine, expanding to excellence. strong of on while cultivate XXXX. six products us portfolio will are gross we on out at steadfast track our with high All the ended evolving priorities value participants our to share nicely and fourth last AFFO which service

from billion, to of constant multiple metros. bookings across revenues metrics and the meaningfully are Adjusted continued all year-over-year customers continue deployed cross-border rates regions customers increased our expectations. across XX% X, both XX% over the and year-over-year ahead and $X.X three year-over-year. revenues Slide normalized was basis. in by revenues robust our outpace across from year strength currency As growing X% board growth co-location with X% multi-deployment These EBITDA depicted cloud Interconnection for up full up all recurring Today, in was and deployed of AFFO on enterprise. driven were and comes XX%

us significant by to strain large continues our to initiative sheet on and allow balance deployments structures. capture while employing hyperscale Our customers, select balance strategic footprint will enjoy from momentum mitigating sheet off

capacity customer initial with have brought we our and market strong the is seeing We robust. to success are pipeline

of with more have and we XX pre-leased contract an greater than is to Paris our XX% key Our with facility XX customers, XX London years. assets tenure hyperscale pre-sold of capacity megawatts average X than

other several projects have have of Frankfurt. Tokyo number in a including APAC dedicated first XX, our other across including hyperscale project demand high secured Amsterdam also development, and land and We metros, in

progressing financing coming well we with JV a partners have discussions compelling the Our to with expect are months assets. in and our collection first of executed

any ramp Shifting interconnection, structure in we look initiatives. JV the metrics minimal details P&L interconnections, expect interconnection forward the have continue competitor. our transaction. In are announce We to any up interconnections, physical we and more virtual when virtual do comprehensive the per than core quarter and connections most added providing global over XXX,XXX We Xx platform comprising to more to now incremental as annually. QX, impact on X,XXX have XXXX an over X,XXX to the providers than we adding additional other and we including

value a of Customers is the our physical technology across are and our interconnection prop, using virtual thriving also is for a driving creating catalyst reducing portfolio. networking our our for interconnection demand acting friction Software-defined showcasing complementary nature connections as highest buyers of offerings. connections all the environment that users

terabytes all time second and ports For demand our Platform, new and XX was per first in revenues, up Brazil. strong for traffic to EMEA surpassed global Internet and growth up traffic the quarter-over-quarter. were due and peak market IX Exchange X%

from verticals. some highlights Now, let our cover me

have quarter by resale and continued the second well the win network than cable EMEA connecting projects and financial X, landing its over network size XX few Toronto vertical connecting station subsea carry highest NSP private cable Google’s leading been strength New part major included metros along in more enterprise our as years. over Chile customers. of subsea new Los cross-link led and fueled fibers, first bookings cable Our opportunities density also in half by this subsea as and Lake coastal to locations, York cable to Ontario. and the under we our had With in Wins continue Angeles selected LA last subsea

users asset top Our hybrid their services Kong. content led firms and and roadblocks, and across has by bookings digital securely global highest re-architecting as digital as as and saw Thompson X Tencent, and as second strong across media, data been and publishing IBXs. also we company demand a leveraging and a XX that cloud top expansions in well record to multinational new XX bookings of saw strength global well banking In included as manager, well financial performance multi-cloud vertical Hong Lane, a Expansions upgraded XXX-gig logo by XX the insurance network EMEA led transformation. Singapore support metros continued mobile as Fast as gaming a included in sub-segments. platform embrace to edge distributed Customer its connecting insurance

for XX included edge. by led expansions support services British full in led by as cloud IT infrastructure the healthcare to of cloud bookings to services vertical demand a the and as sub-segment provider to cloud diversify, provider StackPath, SaaS continues also which vertical fastest with Our vertical total energy, the well be the metros a retail continues as record in one-third QX deploying bookings expanding across bookings edge our XXXX and of drove sub-segments. The cloud at software leading growing enterprise delivered ERP

quarter expanding for via their with to reach a delivery by New Fortune partner delivering network XX% a performance a manufacturer of chemical re-architecting top partners accounting network represent half all automotive cloud-first bookings across company and third to continue our solid for XXX grocer ecosystem strategy, over parts global included new transforming for sales IT of global wins a our Channel consecutive lever transform and market logos driven our a critical their leveraging types. ECX.

our significant our to engine. of channel pleased X,XXX the flow. repeatable continue XXXX, with progress We of the predictable a very deal selling indication over velocity deals, great are In and channel and drove retail build

New U.S. joint as to as dev community a high-performance engineering win for platform using Verizon bank branches. launching ownership lower a at cost channel user total for experience to manufacturer their a with of CBRE support with regional and wins across included test improve partner new semiconductor Equinix well X,XXX their a win the this infrastructure

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

Keith Taylor

Good everyone. to Great. afternoon Thanks, Charles.

end a across XXXX, beating put one it’s great every core to have metrics. financial year the with we of guidance results wrap As our on our

are Charles level billion, XXXX at driving As X% showing metrics said per how year-over-year a at $X June of threshold as ending our result greater eclipsed great ahead we revenues a the rate. growth year share Day. and $XX.XX, operating value the we was than Analyst key share key tracking at highlighted, the had AFFO another

had our a both and regions to-date. performance we while APAC of quarter, strong had bookings fourth each EMEA, the bookings best record For their second in America across extremely regions, including

deals our metro in a X,XXX are proposition. bookings them quarter our highlighting history, unique and diversity strength the highlighting Our than strength metros our of retail seeing of any of time more multiple Simply, other this at continued differentiated a than and across more customers cross-region had across span multi value we of business. footprint. with our the positive buying the pricing scale of actions net platform global of quarter a reflection We again the co-location

new and compared of to have XX expanding next pipeline are Our our XX And very number interconnected number have sales metros by and to twice over Fortune underway significant pipeline high effectively the XXXX, XXX with of prospects. end edge we we expansion remains a metros active competitor. we largest projects the our of a digital

quarterly section a the in highlights. rates this and the all Note cover will basis. I normalized growth that currency on constant are Next,

above the quarter same Slide when FX same revenues a over the negative currency quarter compared X, X% global to QX average than rates. flow guidance. the hedges top over million adjusted Global up on our FX last due QX end lower net was included and the EBITDA billion, were integration to of million, of year revenues revenue up through and better and our and QX depicted As the costs. last our $X $XXX year guidance both $X.XX QX impact X% expectations

better a million expense QX guidance Our was a due tax seasonally Global FX AFFO expenditures high lower EBITDA expected our our QX QX negative both quarter. and expectations. QX, increase in as the MRR as churn tax than which in Despite better FX our capital including our when had average lower will reflected income the adjusted was non-U.S. income we result million, recurring $XXX to net expect our cost to impact income to in earnings than cash X.X% hedges as global performance of we largely look rates. QX taxes $X compared guidance. our in forward entities increase

For to between per XXXX, X% X.X% and we average quarter. expect MR churn

a net billing regions churn the Turning cross-border deals the bookings, assets expected at Americas assets churn. MR were The the followed The in year-over-year are whose to their had respectively staffed quarterly quarter. normalized to nicely, results growing Americas by adds strong X highlights, APAC Net a assets Slides performance than covered year at rebounded XX% capacity. better region years. regional higher through finish in XX% cross-connection full due MRR to on on the up fastest and and Verizon and increased acquired too. the X, region X%. EMEA the basis best X in we the vast the absorbed bookings opened lower had Verizon newly gross Net as cabinets since part expected

XXXX. assets quarter to and led EMEA Dutch these expect German record in had by We a to return growth businesses. our

markets. activity half to our construction expand towards region global about continue with the the We in flat weighted

and consumption and increased This taxes of seeing hedges higher the significant to will unit average is cost reflected And utility quarter, cloud MRR fourth mentioned in are by impact quarters coming guidance we cabinet from prices, are deployments. across our reset delivered acquisition. of the EMEA Cabinet deployments over of off higher doubled content the of at by last market for solid the our Metronode utility higher metros. rates. than and moved across of down as many cost quarter prices core bookings metros. more and compared roll result These Asia-Pacific offset partially billings each the which the increased increase utility As customers. driven the cabinet new result our our

at virtual net total of The for the recurring were EMEA perspective, refer end to interconnection revenues. revenues. Americas while the to XX% now and Asia-Pacific activity, interconnection connections. please of capital range Slide and and our XX% total to was recurring physical revenues were both respectively, XX% a And structure, interconnection X% Turning adds looking of high revenues company X. were From

our approximately expenditures $XXX prior the balance a and unrestricted capital cash cash over is to dividend. decrease quarter quarterly the Our million, due

annualized Our net leverage debt ratio adjusted EBITDA. at was QX X.Xx

our of exercised in the quarter also the remaining We raising program $XXX million. portion inaugural ATM

we which As through have grade significant an capital steadfastly to includes we operating company. fund value we will the results, unlock driving discussed accessing also value previously, markets to continue investment while becoming desire rated committed the primarily with business to remain strong long-term shareholder the the

importance markets expansions, Dallas opened the Turning our build, up to cabinets. for new flexibility expansions our We stepped given Slide our this the of including London CapEx our significant future decision Informart assets across operating into capital a particularly X $XXX X prior assets our recurring and adding similar assets over XX as meaningful will the XX X Revenues expenditures own to increase for million. to which strategic quarter due to were Dallas market. million, lease quarter, campus. increase New ground largely from the the approximately including in long-term while be X,XXX conversion strategic the the Slough entered a of campus effectively $XX market. adjacent creating X X we to developments, X, securing to campus the We of asset quarter our will in a and over about long-term facilities York new to This financial support landlord XX%, owned the announced with

also We Hamburg, Reserve Janeiro. development Osaka as as X facility land in well de Lisbon, purchased and for Rio Frankfurt,

metric key grade of assets, activities will All real estate help increase from to a level owned revenues aspirations. investment our of the our support

as Our are shown delivering on capital returns investments strong Slide XX.

largely for and gross to XX% of which assets please return to last PP&E for growth on assets finally, headwinds we co-location ASC invested. to adopted Slides by we of the generate XX revenues and collectively through XXX, guidance XX% These with standard on the Also XX% bridges. rate leasing a cash-on-cash year-over-year our and new note XX we that X% constant to XXX absorb increasing the summary XXXX discussed And grew is a refer have currency XX. quarter. are on interconnection utilized expect Starting the Slide XXXX. continuing Our the highlighted revenues, revenues deliver stabilized stabilized impact while the the X% basis driven

in with a QX to increase We the significant revenues year recurring bookings to strong largely in due expect performance. QX our start

year, we result the and the pipeline. annual our absolute expect the to in of a For healthy deliver history, largest performance continued strong full increase operating dollar

to XX% to incur in to year. XX.X% expect leverage XXXX our and adjusted integration significant operating to strong new to expect of accounting cost integration standard. result new of XXXX We the XX% grow of markets, utilities in the the EBITDA business integration be various is previous compared we excluding XXXX EMEA Also million margins higher offset by activities leasing acquisitions. including AFFO the to costs, finalize expected expense $XX the expansion

Analyst to share For AFFO timing, greater per our Including growth approximately X% AFFO X% June XXXX, share we over activities to as XX% increase share we X% And consideration we taking per basis. cash expect and to the on $XXX increase capital excluding a per an expect financings. and prior our grow million, be expect targets to into share consistent XXXX conditions dividends market market AFFO at to a discussed Day. and XXXX XX% per year than with increase

stop me let will and to turn back I Charles. So, it there

Charles Meyers

continue build of center and position we the the cloud-first Keith. market our as In world. Thanks, our trusted cement leadership closing, to

make to scale in we expand remains and reach, the market early peers. customers puts to and a innings hand innovative accelerating build that model playing and our both differentiated on portfolio Our and along durably transformation best of us is the journey business. that us The product our journey it from the are the ability land digital confident a in position business in great substantially

you ahead throughout road to the year. progress and we on the updating about our excited are We forward look

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

Operator

The JPMorgan. now Cusick, is begin [Operator coming question Philip our from We Instructions] session. formal will first question-and-answer

open. is line Your

Unidentified Analyst

in leverage I spend to wanted pipeline have development development lot And the like the mid and you us want rate? your of and lumpy Hi. be sorry, and expect you Asia developments that United in we a EMEA capital along all to kind of your to you X can the new Americas like the feel as EMEA assets it the do it’s ‘XX. Asia can and Thank or into you will X and a and ATM with will focus will is grow enough of a kind and on – now X do of right of therefore year Dallas feel through seems expands? to like following in a or you versus it you it your kind commencements, a follow-up. growth to target, balanced of just big needed fund in – with Richard, two, your in to business and in sense lot do It It in following it seems just along, ramp you give like of terms the you. Verizon it you capacity more this, States coming use

Charles Meyers

the as profile Why our I development development think is it’s are portfolio? rates. pretty of don’t part is with profile Okay. following start the seeing the Actually, of growth we what development the much just you

to bookings now growth have activity region. the in significant And so and in pretty strong we a EMEA continued are build of some period out see very EMEA

the us APAC world you continues well that continue And very us I investment, to and which lump is think extend big Infomart as think important but out to meaningfully are see a to in opportunity I region journey a are the position Americas, so to to us we building sort and EMEA. be the through a will we the extremely leadership the are campus going rate as noted, our invest think going of us, growth to of slower. start we and in that’s for for market you going be getting there. In continue I to

to bookings there. meaningful that well the made engine investments We feed the continue key and very feel assets have in Americas positioned in some

there growth to think sort two region profile I a profile runs you waves So one, of that is maps the what business. in bit sort little of of really saying just just a the region to are and

on think you, Verizon, tough bit a some little lumpy. at was think business I piece tell to is Second little I the degree always

about fact now that some the that, we critical when seeing that. have that the our add you of I is strong so And etcetera, and new was the hope NOTA and bulk where worked then churn added Keith Culpeper, on year. of think I the through those think into lumpier returning throughout progress piece and last demand that the way we capacity good there are to And growth assets will in leverage I and have Houston like on markets sort we we that kind of we believe stabilize. we of positively will the let comment feel

Keith Taylor

over Yes. will did know adjusted we X.Xx to on EBITDA. annualized And you Richard bump QX our up last the quarter this

goal is Xx within As we look to to forward our get again, range. leverage Xx net

de-lever XX ATM we with an grade naturally will an on, between any We overall become billion do business, going easiest with the worth has put, leverage is it’s trying to always going XX think the to line always also points it on important continue to we quest incremental just take we to continue not basis to to accomplish then rated of little balanced have going simply as are particularly in our points and that’s the debt. think and many that growth And company. to investment program. operating to elaborate The basis been different $XX share bit to to aspiration it’s just for we way growth relates top program by help or raise a drive course look most collectively, view the whether capital, us secure I strong the are are ATM as just a to de-lever debt And that of we just of it to simultaneous the ways ways. that on is

top pre-tax on a And to to over well that. operating our the of many debt we million balance multiple investors the we to rating just our assume our shareholders share we $XXX the period range, a so for agencies of year. that that cash can put the line It’s create that’s amount into of bring relatively meaningful with time you the value if of short something up I target work when with show over our would credit rounded really certainly and grow leverage and

So that it’s we for aspirations high will an work area going of in focus we doing have get to grade to so continue XXXX. hard us investment and at are and to

Unidentified Analyst

you. Thank it. Got

Operator

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

is open. line Your

Jordan Sadler

you. Thank

First, the guide, interest for here seems rising XXXX issuance are expense year either of in question kind some from following could some guide that XXXX maybe from XX% expect can the rates you Richard’s growth, of expense a revenue bit maybe it’s interconnection do the provide somewhat to you full I little the slowed think revenue embedded full the on that’s year, I on stabilize from light? down then XXXX fourth maybe volume that granularity connect some to full other year the XQ in leverage XX% of or like cross versus the growth will this booked year-over-year year back along it second what quarter is end or target Thanks. you in ‘XX pace up side you the just noticed the interest fourth the looks or and have at lower getting maybe shed in the you savings driver in leverage reaccelerate And face XQ area, quarter. in like increased for

Charles Meyers

tremendous the the Keith let business, will business. interconnection look part that. I continued interconnection and Jordan. strength a like for second take But the feel quarter in really we of was this Thanks as demonstrates

to and another with top X,XXX virtual physical our at in are interconnections that. top the report range We interconnections on of we the have now starting of end

really that so are that. terrific customers interconnection about our about the and the getting feel And proposition for value value

growth In XX% reported rate, the it terms normalized to XX%. was as of

obviously think bit areas talked more since very opportunities and a something going on us. And there business I of think we of terms some so a it the I two that co-location am is for transaction, the think that opportunity normalizing outpace of to are the about like financial kind think feel represent sorry attractive continuing on And have moves is interconnection to performance. process we Telecity I in One, business depending EMEA pricing little upside for have overall we in factors, but drive which so I to is continue there I began around there. us is

are other we in I of continuing to And – of as continues Americas in an is of revenue to – regions move starting be the think of performance to we their well. positively. in are again strong in see based evolution that continuing percentage two as terms interconnection volumes interconnection terms the portfolio

the to going So going I interconnection be am is not sorry to business. are it’s to in previous – but very at strong expect that going that’s growth that see to again that XX% level, I we think

Keith Taylor

second Jordan question. the Okay. And me let of part take then the

our I per remarks the things are financing, basis. an stated foremost the going of we to have that prepared and highly on First share focused we in on delivering AFFO one deliver of growth are we to is two, wanted grade Irrespective getting in highlight I window. as Number AFFO X% there Thanks. of greater. said per growth have that one. number into is at of lot or back an value the share investment a

We are focus substantial no investment we high us. is advisors of right and our grades agencies to place think getting scenario and the and that there of working execute against better our some rating value for hard one-off to off with gate strategy to create

are pricing, on maximize all me on and that going a as to company want our very specific execute of what looking your let questions look to course that of conditions, target, we timing, quantity, can to market we avenues we say sure relates shareholder it we just source our to value. are at say capital As all at dependent is suffice make so alternatives to and

a our to a above non-investment that also rate cost billion just we over been noted interest have costs in some average notch the is to the as And specifically hard costs. interest but probably it the $XX for can to take XXXX net as modes. you surprise is debt grade result our of across no currency able years with you, And as a we to and the you debt company, we very we off As of have able rate interest it shave of swap a relates incremental our to comes that everybody of benefit one sort expense. reflected – X% down have see into done recently are drive that ex-leases work to

look as going at out, as with down month it’s XX are I was you again thinking are or I basis to So, the was you you of the day as of capital. our X drive a a continue noting you the we dealing possible company, cost much yield are worth out years point flatness to noting are span. curve when whether XX other

overly significantly manage not our the are rise to going up to interest to We shareholders. maximize to the and ourselves over contribute concerned can that will continue near-term so are we rates that we again value

Operator

question Atkin RBC. next of from The Jon coming is

open. is line Your

Jon Atkin

projects, Thanks. so so, are resiliency about together got thoughts in wholesale network there, IBXs market you further terms about And hits as bit you a trends updated the more aside, are adoption? now the well and seeing obviously customer density then build I then on any I around terms just connect little costs build together versus a products pricing financing have comparable what side Americas Thanks. maybe elaborate in in you what’s bump And some or kind Question basically of products? network and that? the other thoughts on as even of could of are if share your interested wondered costs, about as you parameters along considerations that up anything level, in more cost was you versus driving you cities in the thinking

Charles Meyers

Sure. Thanks, Jonathan. all very the side, progress Hit, stool, making progress and side. of financing the side the excellent again, against we legs supply about good the the demand feel there

sourcing build because vary I going terms our In you to cost terms leverage with confident are and we tell in build What can our in of market very significantly we of capabilities the would market engineering that’s that is inline the best of market. etcetera. by

And think do meaningfully sort the that much continue in parity going so cost to be ability retail Obviously to at to be to is to going our very we those are build that. we we of is think given with able right the of terms of price going that facilities, just below we others I but our build are be to that at nature think points. that,

market. terms In we have fairly of pricing, pricing the across stable seen

focused on of So, high market, across like we markets and to globe. have somewhat a access despite to demand where demand relatively pipeline balanced investment We and are we visibility to in feel the that advantaged. still be are we lot is supply the the tend think customers

competitive. business, in so minimize challenged value very is think going but delivering of able have of to to are retail that why we deliver we market, our it slightly to kind are for sort as more we or going to value pursuing be be said it’s to deliver as is strategic returns market that we can above to line maybe a going believe our But more the that the do So than we generate of our sheet comprehensive way hyperscale continue the have key we attractive, proposition believe market We customers. we that exposure we in with to balance product are those sort still of that customers. exactly but which

So hit. to that’s say what I would relative

up In tick nicely. we the terms of Americas, you cross-connect did are in yes, the that trend right particularly see

through the that. their on XX year a that breather a on us are permanent I actually the have that continue moratoriums XXX-gig resonating And me you the And our in the strength in is value this probably due think other continued and saw that in the possible that’s think think by pause be to me the pause, is I course the line side with to tells that the was of talked lower on part the don’t migration. closely consume adds. later which network proposition larger terms think of bit it that’s little we drive are the think the of unfortunately what off might to an adds, a is probably thing of and think to in as churn of some a very partially of given most artifact bit people do gave players product. Well time We to and year. gross gross strong what’s we and you I we I of but fact really seeing the of are that think I that that last will taper what that quarter gross is was continuing that I that that I our the to the glimpse driven to Jon of watch about remember

little we confident the the this a saw again positive I Americas in bit interconnection of the business dynamic so we And feel overall quarter. and about that’s think super

Jon Atkin

on a then your how feel and got on? trending then are you little And making basically strategic that other bit old things have about can progress maybe you encryption that’s just and talk job products, products the like you you

Charles Meyers

but well And we is it SmartKey are Sure. customers number customers. of already things over are there few kind – be overall not ton others rate assisting one contributors perspective new publicly digital around that’s that value sort additive deployed offering. story, give as that that as but added going service bring do material begin differentiate in others what for our of to we with feature over the pilot name, of becoming time top from the think It’s we But are we on get it working our that’s a the and attached as will overall story. are of to the the product a offerings. think we huge things of got to next growth quarter. not terms on their that go is is way can in we are was ECX a meaningful position are a do – business going for – reach to to those and customers added we were product products towards functional it demonstrating we our meaningful through be again in but the to marketplace trial our that as a it will corner we but continue working really with set of NFE think not But contributor customers to continuing as of can last adder well market to have us that was expand example. a new a differentiator party be then having so which trusted in the transformation, you have we to they in interconnection about there probably really it’s already And of But and be stages advance talked actual these finalizing cabinets quarters. as Fabric visibility now we sort will of to

Jon Atkin

Thank you.

Charles Meyers

You bet.

Operator

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

line Your open. is

Ari Klein

And a you. JV in contribution good making are can seems progress guidance? from HIT, more Thank expected, then kind longer color bit little related than It you a bit there. a but XXXX taking search maybe HIT maybe little embedding you lot provide like of on of to are is you what

Charles Meyers

Sure.

pretty are we long, found it’s vast those discussion So of doing. what to a in it’s folks me believe search taking us about have wanting terms itself, not the

aligned has bit legal have the partners. and And accounting sort of taken complexity this through other longer we structuring the began and we that tax those and so the And various of and think are Equinix’ with from things. a of to filter ones initial already had standpoint what with dialogues just is most philosophically

side think thing our at get to And so finally sort those of is terms with business is that say. I The some think that level perhaps good of terms the are have in ground. I this this things time we parallel progressing and demand building pipeline guess frankly I of the should of I mentioned I independent underestimate last in some in off the or of of news ability the that executed

the in making sourcing quickly we in for positioned addition, once land supply that the moving In effective of in parallel. are JV to ramping sure really and all terms established be side are

to team down tax, have accounting has done. trying a our phenomenal the just done hedged literally So this job, of sort get been teams

going think we I coming the to have have said done – as think this we in are I I months. are

We partner. of think very reach as want to us we capabilities are think the next shortlist I we aligned have that of the players and see happen are of And going said philosophically that we a in small and set that with couple a to most most to have would in will months. down kind

Ari Klein

maybe some Got number the that was like quarter, our provide look do and you quarter, in And of it. same-store you ex-Verizon revenue X% then last this number can XXXX? think it’s what that growth then will

Charles Meyers

Sure. Yes.

to stabilized light that a a had quarter right, fourth metric this You we underlying fact having of our going also a a of elevated the assets. again are we to metric. drivers one – which the as some into a so that need are tough the still we quarter a see dig mentioned are NRR lap that’s on meaningful compare last little factors of bit and in is would that It and and sort is you Verizon number suppressing compare. But really of really them

X% a migrations to managing It’s X.X% that for I probably that compare also bit that XXX normalize that of of Verizon mentioned as maybe so are time be sites number to the last in by so once tough same-store the think looking actively you some XXX in impacted being at of select range. stabilized set a another would little bps And bps, us portfolio. a we and out are customer normalized you

the probably a eye expect bit lower historical we’re basis normal close a range will altogether even normalized on persist keeping for our – a a end on that, time. so but towards period of And we of it

Ari Klein

Thanks.

Operator

and coming The Colby next question Cowen Synesael, from Company. is

open. is line Your

Colby Synesael

data Verizon a for from that of growth connecting XXXX potentially there customers think about if you could I X% into didn’t what I to your just you facility last maybe you not potentially was And you’re there do slightly just at I you. this pricing, as you Great. more are expecting bit your the I those early in would particularly efficient expectations that on in was an look improve hoping be centers that last that? who did higher, guess, could partners network your that, X% specifically to think other for growth could organic strategy question, so, talk are driver, expectation can a as what Thank And monetize X% up on now same, happen. quarter, more into ‘XX and and be dive help following is the that then a just and Thanks. little if interconnect some there then you verse your expecting an just for quarter when that that way? to

Charles Meyers

Sure.

we again, picture, growth provide the range. that On

growth to drive contributor. think hard in terms kind drive is going somewhat the of the do to I to we’re stabilized I a asset where continue of being continuing of think business. that it

really I phase we’re of to I Those of a center but they cycles, terms level the once the going driven are deliver think with are see. transition very more a those think cloud-first sales what longer interconnection. that mindset think we kind spot interconnection the you’re tend only types to and But I attractive that’s bit think probably of temporarily of yields deployments, factors in landed, of cap to not that of the business world by of seeing of the [Technical really continued business. is sweet Difficulty] trusted this or levels

like what process. particularly profile add look very So, some upside the think and be new growth I think good to continued do kind Verizon of opportunity the the that’s feel growth rate the a the going I to to over profile said, has going of overall or to to it’s dynamic. we business pace that’s of I think some but both I think services at think those the as of attach I I next next we but be about to – year, subsist the the conservative look it overall deployments, several we’re – of returns over the the the add as headwinds And business and growth We multi-year potential throughout – about that years. trying think what at as appropriately underlying existing which subside.

major be In that there’s to about sure our product but and terms deliver. engagement we meets we always providers value look needs discussions feel price make points, sure in of us, always interconnection for about good them network with we continue we’ve the how I’m about And pricing, partners proposition – the are effectively. active to their that

to trying use to of been deliver and their sort give greater to the of some business. creative flexibility in creatively customers, have benefits how degrees them about across volume more We of as well our interconnection comprehensively as portfolio

growing service good fastest actually reflection that not is are the also strength of enterprise. proposition the I value think the our segment, growing other momentum think enterprises think enterprise I cloud. in with really again is to cloud And there the with only providers clouds the a and network of so, of And and, I the providers, Enterprise our that’s – course, fastest segment. but interconnection

Colby Synesael

Okay, thanks.

Operator

from coming Sami Suisse. is question next Badri, Credit The

is line open. Your

Sami Badri

how be how opting did about give connections there rates any since And Hi, your between you’d question. us billing we comment on virtual are prepared the give that the your model? and seeing good into are you connections, as you’re customers your big on just amount the say also guess, gave you a virtual differ color projectile physical traction regarding using for thinking business. on you connections. make virtual us Could remarks us the some of the physical your, you that just you cross-connects I thank color in Could should context connections and you

Charles Meyers

repeatable flows, where up is or physical dramatically that cross-connect, dynamic it then very customers turning I’m and to we in I basic unit really But physical is full is as was to people I fabric seeing are for seeing have it are profile to customers circuit price sure switched account, average way than that it at now price, write economic look economics represent point, they buy the an you and is a buy get unit hey, with a not, has people a connection that for and we the those. not actually look port as a buy – – virtual using which take at But using can is buy-out right The traffic going because per way – workloads not is the The what is think cost slightly when not a of sometimes virtual of pricing range because our And need cross-connect, we me the better all a be there’s or low your port. use cross-connect individually and Generally, capacity the – a it does cross-connect now, fabric, they use interesting, port, I physical two. unit between we’re on to in the on when as a how environment more a very basis the coincidences across it’s a different cross-connects are into very them terms the they and virtual we’re it appropriate way substantially are can are oh, virtual we on at goods. consume Yes, is lot, of particularly price or is, and which gap. a summarize question Sure. radically the you them them circuits them goods endpoints. different large I moving both virtual And typically, of a as the as than cross-connect. from on is on the higher And huge on well as cases, good. certain just lower cost meaningfully complementary. between look in traffic is down port

IX. a lot – they augment – being who so they Layer fabric, that they’re have And example, we high through way X direct as of directly then use portfolio, fabric ExpressRoute a many to entire get connect across to as cross-connect course, see more Amazon of volumes, they to then our see with the would and it a and And traffic traffic use in cross-connects complex have to strip so private and peers the customers, a they to cloud, ECS or Azure. of when the that with interconnection and for – you and use exchanged they a peering might off that then, they they they want

of complex that And portfolio. difference in and well. tends not – to overall So, of see that return a it’s we again, seeing really a we’re serve profile diverse on there’s across customers extremely portfolio types dramatic of the the economic across – very needs capital terms

Sami Badri

And you. are Thank what then direct-to-customer? versus good second the percentage it. your Got clarifications. Very the coming question is of currently in channel revenues from

Charles Meyers

our that bookings. Yes. about We’d of we’re said XX%

total sized not talk actual and/or bookings. the volume. that it of our XX% half – consecutive generates our – of but have And logo of than we I about had think more third the of necessarily, new way, did we’ve – quarter by We north it’s revenue

about of optimism our talked things future is And a my that so what fact it is that the addressable of the really increase market. when think is real driving the insight the into just gives total you really a – in look Equinix we’ve I about one I think massive

is about really opens customers. is think our than real addressable substantially hundreds realize you this These in optimism I being use the our I larger last flowing feedback through think days. and are that think that These cases. to. – And or not being hundreds driven what this that’s implementation meaningfully deals it enterprise and X,XXX provided And of I by analyst what – is from into customers day the that given by our of we just thousands fueled you analyst real than credit And theories. last channel. addressable market are that couple up is a opportunity of larger are is had of fueled we previously being our market

get to me this let going can’t customers. we’re them, but we While going engine to tell to we’re add we’re not reach to our going add all you, – go-to-market those to year,

And the so to through way reach really channel. the is them

that’s I partners of with thinking their key driving a have over we very sales we’re teams as that somebody reach and was into working for with need sell others, folks wrapped to initial Google gotten of they’re And whether they’ve customers. gotten kind Orange us, hybrid Telstra. look now Amazon, cloud activity volumes brought our those and working around exchange about partners has the to on seeing steal say being often with Cisco now seen and channel very solution. those, partners we customers cloud Business, agile so really account they’re their channel seeing want Microsoft, way partnered another our think and with we we’re we’re and customers We and and heads some then really, Equinix with And effectively with engage with significant also tremendous big enterprise reluctance great Their one. those really AT&T, like partners, And traction them wins. large where really a to is secure

about excited from bookings there. our what’s I coming from I So north go more XX% that as said, channel. in And than expect on that, super the number of to going

Sami Badri

it. Got Thank you.

Operator

Rasmussen Stifel. coming The of next from is question Erik

open. is Your line

Erik Rasmussen

comments be urgency, you’re change of And thinking. there sense of it circling like sort more Yes, in that behavior the it Charles then then taking the to I would these seems sounds support towards move questions. kind made just architectures. on seeing implementing of a thanks what enterprise and for and The was segment, on support you you Maybe back was just that also of their hybrid more does a of commentary?

that especially Just we want to moving as you see into them more you XXXX further look that do see and quickly? as get on thoughts some

Charles Meyers

a I very I sense action I I deliberate because, emerging multi Yes, timing. of is a see – architecture absolutely. sense – a would But hybrid around right, the also see cloud. what yes, yes, sense would and see consensus of urgency. being clear of I but say, choice well, Yes, and of

are them jobs careful. that these so be to careful And require people with

can they measured use test to very think are I And it sort moving, of are that they they figuring embracing workloads also embracing but which are They a way. cloud, absolutely are out in so architecture. they

why sales longer sizes average that’s seeing we’re so And and we’re smaller. deal sure seeing being cycles for

also expand in fruit these and pace they our from I you hybrid at land expand get would their immediately translating substantial And that’s yet sort rates. that’s going of as to in more our increase so think people love on were architectures, think growth I but or we our changes bear inflection the if that’s into efforts. don’t why not look activity I think I points of these think and slope deployment as when it happening, when really comfortable we’re

think increasingly we’re they continue I with that us financials. longer us, and there yes, what so work like having answer smaller And in about to the sense is but so – the cycles, sizes, as is a solving and of engaging relevant sales problem. see They’re urgency, deal opportunity it’s their to through to really about our that how our But business long-term overall terms to and and into be looks them. relevant again, good the ability translates very feel to of

Erik Rasmussen

back my is maybe And to this Thanks. follow-up Verizon.

see investments can that some is talked better would else a anything or growth in potentially in markets, investment? that You return X you maybe turn on growth there that Verizon that but further capacity see into maybe make previously XXXX, get you faster building about that – could

Charles Meyers

been one, investment. return Well, a it’s good damn that on

the of that excited more people, from churn like recently, has super again, elevated has was we about flat opportunity. of that. the saw that. from several that a the we I time in Federal so an group we’re and at the last could But utilization made business NAP return about be creation think of terrific the continued Culpeper. Americas, an believe serving area would know dominated by Equinix facility been we level We and super is investments I the say excited I the that about just here warranted those. the our the growth we fill where I levels accretion customers rates fact yield quarters seems over saw happy down that very That’s as investment value the Verizon outsized I came where think it part to results. and think of transaction, that

carefully, we’re that to going amazing the they’re energized team that’s what group met that, Bogota. an of talked with Denver, track doing doing. people so about And really about We

utilization of quarters. So right invest made to think are will warranted sort fill the and continue carefully the we’re in them. where think the engine the and in we’re going – capacity we it investments we’ve making to do the key rates those the investments, that driving But and I now to watch coming

Erik Rasmussen

Thank you.

Operator

question next Rollins Mike is The of coming Citi. from

Your is line open.

Mike Rollins

with you for the questions. terms longer-term company for building if few investments discuss years? can you some taking the Curious, thanks operating last bridge in over give margins? made if And – if us the leverage at of have you the been could how that Hi, the opportunity looks a

Charles Meyers

You fully we’d talking be the bet, Yes, degree. that some on I call about expect to that Mike.

profile could to have – disappointing would I us to important our as the think and be target overcoming you, as drag. into we you XXXX. call context. we’re can I in that continue CapEx meaningful the deliver ‘XX, you continued key service saying appropriate new It particularly, drag. to the sort – as to margin the we Day, to And business, phases areas, go-to-market which until we first invest that was our about the years, the to the really our drive to and that elements level. leverage – you development And between I are very frankly that our of came on look of view talked in some this some operating if new projects loved that if we’ve I the need that key here’s shared think, based assure level though margin fill. and in those our expansion assumption in that – put doing cases, business no and the several here’s into some anybody took meaningful increased now last going I really substantially when timeframe aspirations up expansion, well. sometime expansion some it’s plot But to and takes of that’s probably it hit well product on and at us It to those our and we guide a it just Analyst the the long-term that, XX% – about and over account us we’re have creates to turns time into level of also At at talked realize and do didn’t investments, the the are at cabinets in of that should surprise expansion spend

And the our you when but to flow as Mike, came way the utilities things things new expansion, And that look understand, very of don’t power. still in also XX this, know think one example, than most who more do utilities thing the different deliver and sort us, at lease but so, sized our significantly bps and pass for cost. understand I that factors, that margin through a our accounting to and of overcome we impact I really competitors can those in believe at we business those we through wholesale where the we then you

the of the utility line chewed in what hoped had expenses so, really the And up drop expansion. margin bottom kind terms of we impact of increased to to deliver

I what continue to was margin the answer target very long question, XX% a is would to say but believe the is, that achievable. we So,

going if to we’ll we I of at through continue to I get the is I impacts. continue behind invest by not think hit the think still over margin if the robust as we’ll And to whether time. impacts But be we’ll continues drag as achievable, to or it that then also, our have and hopefully XX% a timeline, look think utility and to is, it’s of question to think it. I – – grow the target we’re we’re I then moderate going have expansion – although think – utility to if business

Keith Taylor

scale, we size points and just not addition, recognize But and result, let in world. and the expanding. itself out Mike, we to The of projects was we’re prior around there’s underway every and other and different track a the particularly year itself number and many thing But the that smaller markets, drag what just it’s in of in referred and XX Charles business to the fact, out I of what size the are a to expansion one to other drag projects is expansion Charles we’re relative in this as said. going year new add always just the which year year. this and that is, for XX me basis

And so further context, we’re we’re absorb – that it and this you’re down investments. year of going these from get that you’ve going when to road, got into to fruit but to you bear benefit going the the take to bear

you seasonal basis is should guide soft than we is year. margin to throughout EBITDA there’s important back of exited XX delta. But you’d to the some of profile through lease example, what XX expect one think at that’s being a seasonally drag see year, continue as XXXX. as but year the the the I QX thing we XX the year, costs, always Charles expansion improve higher basis note second basis in because else roughly we that margins to exiting as us basis equal we it’s does accounting more that get end year, to will all I to an point the as The points. new is roughly points, look XX points, this think utilities referred is

Operator

Our last question is Sachs. coming Goldman from Brett Feldman of

Your line is open.

Brett Feldman

in. for Thanks squeezing me

you’re some like curious the some doing a that it’s or JV the to talked know be it statement. And I The this as of might During are more point made considerable assets just appropriate running you you it’s to to guess such I may that in talking throw which realized also and discussion the of you grow place, great existing are that IBX I the existing putting discovered have degree this work financial discussions JV would that will partners third they JV see maybe a a to a there once is, of am be model, chance of understanding to there formed take way have vehicle some portfolio once this meaning get because M&A it to these you as a have how an can are the you X. this be in Thanks. you but asset and once in you the partners to you passive that or of is Paris could are assets that you to in like own, assets they you or I or you your maybe approach primarily that on be maybe actually had day asset this to business might have the JV, about venture. do primarily with your everyone could originally in wouldn’t would and and I have one of you sounded partners operating organically heard part see have have be X capitalizing vehicle it form be want for M&A? different will just also an more is really it contribute your can actually align now assets question, they we didn’t is up past maybe

Charles Meyers

I jump help Okay, a there. and them and me. will Keith tackle try to some of in lot can

In far over are terms in skis, might won’t terms of we JV, too out my getting that the I go into say of the assets that go but there simply yes, attractive portfolio. existing in of already parts stabilization and/or level appropriate to either the assets making them have are believe JV those include the of very and we that assets some pre-leasing

– and point also some so into back in system. fact to an believe year the And represent us Equinix during for that, at we that might opportunity capital repatriate

the That And about it’s getting are We think partners. a we is feedback compelling that. really excited story. so are we from

I are will we to Equinix financial In philosophically it want And terms understands simply are we it and to understand is we to who with good partners what types the of that something of certainly interconnectedness would so strategically important it, transactions, say once ecosystem and types, accomplish, over will – what I not want that other those to aligned act partner we trying that’s accomplish. it’s and as tackling know a and and attracting whether then our something as that don’t be on with working right now. radar be that’s in would drive vehicle partners itself we would whether to – I proximity think time the

needs, proceed and structure would look like consumed we upon the with really JV on. agreed what can what decision-making a and how the getting meeting that’s We assets start with customer how because we would fully partner are and focused are

so Keith? that’s to little bit color. Anything a more add, think I in And else there

Keith Taylor

also the is really we things it’s to the and One a balance complexity but was of said to is great, organization what the of as is sheet, there highlight us partnership, Charles the there with as tax. alluded as to there avoiding it on recognizing to, the so this be I the complexity have before lot of for is the simultaneously there JV keep a want ownership, we could off the just structuring And dealing arrangement want think fee so mindful of be important got many. first we of behind structure. result, this this around we And is have consolidation

looking this. So, more about we talking are spending everybody to to time forward

he Charles’ stay tuned. making great tell you tone, progress we As is are can are excited, we and by excited,

Brett Feldman

you. Thank

Katrina Rymill

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

Operator

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

Equinix (EQIX) 14 Feb 192018 Q4 Earnings call transcript