EQIX - Earnings call transcript Q1 2019

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

Operator

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

begin. may You

Katrina Rymill

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

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

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

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

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

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

Charles Meyers

best best bookings QX afternoon up and history, end Katrina. revenue largest the ever, our strong our step and our reflecting first customer great including had in welcome to net earnings second year quarter, call. you, demand We delivering a to Good our Thank churn. quarter lower and

cross quarter, volume more Our We the customer business, diversity X,XXX booking bookings and highlighting in processed to customers, we up of year-over-year. go the X,XXX and and over border our retail engine. deals market built high span our substantially scale nature the across support colocation entire than with

a which into of quarter against three increased our organization we trusted scale the consistent execution with We org. company customers to announced facing execute businesses business, opportunity our During also the their to operating advisor transformation. velocity adjustments the customer architect including enabling digital global under on structure and value strategic all new and Strohmeyer, platform single Equinix has business. growing globalize for as model, functions us veterans to Karl roles, digital to into undergoing increased a a provide concentrating deliver our moved

on ahead AFFO QX Adjusted revenues expectations. up of depicted year-over-year. $X.XX XX% and our up billion, As year-over-year XX% three was were was slide EBITDA meaningfully for

outpace colocation, to XX% cloud These interconnection scale. continues performing growing ecosystem normalized continuing all a reach Global XX% are in as to well, basis. leading X,XXX rates Fortune with as market nearly and Penetration Our currency increased year-over-year, of is the XX% the into of enterprise. on our deepen revenues the and franchise accounts we XXX the constant lighthouse opportunity the expanding showcasing growth

we with announced financing now with final of leader are and XX the Frankfurt, expanding of stages potential projects our Hong Kong, partners. regard With discussions the London, our countries in market across of and platform are with the list which highly Shanghai. We now to QX and short initiative, a Paris, attractive in hyperscale openings XX markets, XX operate, we in out in we're XX

announce to first of EMEA expect both assets. QX, development in our a with stabilized in JV and collection We

interconnections to customer our the is will tracking and virtual solid X and XX significant strategic P&L the remain to allow announced structure connections. XXXX. cloud JV the London added balance while the ahead XX extend have Shifting in we transaction, impact combined. assets that over all strong to of We'll with rest of of JV that interconnections Paris we our leadership, will us at on added more We In competitors on up QX, fully add a see highly additional We to strain hyperscale for details deliver mitigating when an lease than provide X,XXX, year-over-year structure rapid confident including development demand returns, the the XXX,XXX sheet. continue value our X,XXX now and and expectations. continue expect interconnection, clip. We our minimal we incremental but top

between has exchange our EMEA peak interconnection the IX QX Europe, adds. from full over Americas, of our Fabric, the saw and customers customers markets Asia-Pacific. with XX% fabric For establish traffic, ECX to internet strong Latin platform, In American strength now network seeing our completed enterprise and SDN-enabled in on-demand we're we X,XXX growth new and year-over-year. service connections the ECX time the for enabling globalization first up

integrates customers is platform vision digital provider edge. the at our way into keep capabilities fuel critical interconnects digital with to pace our to digital continue enterprises world. striving and to looking edge for global the service an evolve is a businesses at for increasingly broader global Our in platform Expanding transformation to Equinix and that the

several over of and a our quarters. We the We of about services. possibilities roadmap developed are have rolling compelling new the evolving excited next platform anticipate out

infrastructure and a leading to British leading Fabric migrating operator ECX highlights from driven latency. for notes let to Hutchison, and this cable included Asian and telcos, major cover NSP resale. Expansions bookings AP Now, services, quarter by in solid strength subsea mobile our led experienced by and mobile upgrading the well operators network vertical a as network as verticals, communication cloud our XG low provider, support connecting me

strong near EMEA banking. Our led and insurance saw growth financial a services vertical record in and by bookings

optimizing included, topology to connecting insurer Global global a companies IT continue media as wins led multiple top their vertical their one of and models. insurer commercial The strive the cloud clouds a transforming experience sub-segment and first securely largest fortune bookings in to providers a with strategy, digital produced while social payment the solid delivery XXX media strong of by and scope to transforming corporate content networks. expand demand technology the three auto improve New network and user business

e-commerce sub-segment the and and led year-over-year including Tencent, by fast gaming Our roadblocks. customers, neighbor grew

Government and robust the Our markets also push vertical multi-cloud cloud towards well services. SaaS and powered as provider expanding AI providers Expansions as a to customer led upgrading growth rapidly SaaS an as diversifies by continue included platform commerce additional growing to a as new to support markets a user IT base. roll the leading Federal cloud cloud out service architecture. experience hybrid enhance strong captured support and to with see new and a pipeline in bookings We

led vertical our this travel As growing continues legal accelerates vertical be to healthcare, by digital sub-segments and transformation enterprise fastest the quarter.

saw improve partner a included networks user wins the X clients. key firms Cisco, New accelerated to logos. four infrastructure of of Air success North multi-cloud network deploying and technology five for re-architecting dense top half interconnect deploying American over employees We're with our our both cloud big delivering audit strength to to seeing also bookings and alliance the Microsoft and and accounting one Channel bookings selling XX% for partners, ecosystems hybrid Canada, and Oracle. interconnecting new multi-cloud Google, experience and continued Space strategy, and of a including airline

platform, a as win win quarter freight this wins a a French network U.S. with included AT&T Bank as channel well accessing our leading a and transportation New deploying Anixter provider. company with cloud mobility for for and top-five logistics

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

Keith Taylor

Charles you, and everyone. once afternoon to Thank again good

we business smaller at able how diverse to the are XXth highlighted As delighted consecutive our and we're to spent net great target expansion, We're this dollars, Charles new weighted revenue same business line planned, it fulfilling bookings lower gross of start SG&A the to reflecting organic guidance reduce product With by year MRR Day. growth. retain alongside percent a the and increase scale leverage with and the yields sizes. momentum churn firm still our the as both set to relate priority towards more our our SG&A Analyst and across in quarter and in we're value of a our as well we've to time, XXXX of tracking as QX invest XXXX well been remained of and new growth set as by raising customer deal MRR continuing services the operating revenues. was in at demands and leverage the our us board initiatives delivering allowing than the our against

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

the revenue depicted last quarter QX above inherent revenues guidance quarter slide the $X.XX and revenues of same year total global our Nonrecurring over over were of reflect line. revenues, end and were on an range. the of As four X% increase XX% the top prior up billion, XX% lumpiness this

same our QX elevated but was the prior to expect $XXX levels to up included to positive strong Global customer net a we nonrecurring more FX over reflected maintenance compared million expect We utilities largely our return and the repairs performance EBITDA million, in typical which guidance. when activities, our is planned hedges in last revenues quarter our second to than revenues and lower year, year, $X and to XX% of to in QX, the FX due of operating benefit guidance adjusted half ranges. expense. remain QX given visibility current

the to portion FX to guidance QX FX our a million denominated strong lower taxes due X.X%, when of higher Global AFFO interest a expected. due quarter. expense to to recurring than largely U.S. impart QX due EBITDA QX increase. the of quarter floating by expenditures, borrow was range. debt $X million, Our debt adjusted a as for operating rating net our $XXX credit expectations lower in compared global positive prior on had profit rate capital offset cost benefit was the our seasonal swap Also performance cash lower a on MRR as net included better well currency cross our to we as and churn hedges

in churn timing. quarter, higher per and at X.X% MRR end mainly to expect due X% we between XXXX, average range although For of to our QX the

our covered X%. a basis, and at slides normalized APAC the region are region had regions results at start XX% across followed a respectively, a other full revenues healthy of exports level in the were on whose sell teams with our highlights, five pricing the XX% higher platform. bookings regional regions, strong meaningful year to Americas by EMEA and mix MRR deals, record and Americas including of to environment. seven. had the pipeline through continue America as fastest to net small globally solid The to growing has year-over-year Turning and with non-recurring a on quarter, two a

business In year. had EMEA flat cabinet rest quarter our to additions strong of a and continuing markets, very opened across we the Our region pipeline QX, meaningful the the strong new with our build a by U.K. capacity with billings significant over interconnections. led

We for the by Japan our in refer significant near-term at then And the the capacity growing to of cabinet proximity Kong and cloud European businesses. APAC remained saw Asia will installations the also IBX the asset channel a network purchased campus slide region now infrastructure East particular led Amsterdam supported Netherlands at acquired highly digital please to capital absorbing CapEx XX, strong in help delivered MRR verticals fill strength close structure, This the and existing the content enterprise, by looking and firm for our creating to end despite year. an deferred in team. eight. demand And last the new Amsterdam. market. Hong connectivity as cabinet Pacific in broader South our bookings while

over to cash cash But equity the of capital impart $X.XX dividend. billion, due operating flows raise. and expenditures strong billion is balance $X.X unrestricted cash approximately increase by on and offset follow an course, the quarter Our corporate prior our

three capital to the Also, path the within our which fund net equity annualized leverage. rating, the commitment use in strong attain a we're to debt ratio costs given X.X Our range our all upgraded QX and and times four of our grade to liquidity our net corporate investment believe our and times debt to adjusted very to us solid family second EBITDA, remains momentum growth, dropped business targeted to will investment allow and lowering our strong to attained We debt thereby borrow. our future well both grade. on leverage position once S&P to access IG a rating future markets, debt

cash, ratios have business creates have one continue to the So of maximize industry. day, the we payout immense and flexibility and scale we liquidity, we the in end we're value. of we to at as This lowest levered, long-term have the appropriately drive shareholder AFFO our

$XXX IBXs in Shanghai slide to recurring adding $XX We the nine a expenditures opened capital this quarter quarter, million. for builds of three new new CapEx million seven Turning London, were cabinets. approximately X,XXX Paris and including including

our as assets in also II and up XX. We capital purchased strong stepped our owned facility Milan, to Paulo well Sao from land Revenue development for on XX%. returns as shown as slide Frankfurt. investments delivered And

annual years now Our our with currency revenues of basis. prior the reflecting X% categorization. refresh moderation quarter-over-quarter, IBX XXX prior headwinds grew constant QX, Also consistent a the assets year-over-year a stabilized Increasing experienced. completed of on we during

on generate assets due strength of to cash XX added return These to and summary through IBXs. now bridges. Our stabilized slides assets XXXX portfolio. this the stabilized gross please increased refer new PP&E the a are utilized, count collectively XX% asset four XX% for cash of net guidance and finally, the on invested updated And XX a to a by stabilized

includes growth adjusted strong operating by For we're X% to our revenue $XX by million of and This guidance primarily XX% XXXX, of AFFO to of EBITDA revenue the and adjusted $X basis. $XX.XX, expected compared per core full to $XX which our X%, AFFO to million EBITDA of year, our range share costs. the from raise. share outstanding AFFO We're QX healthy performance. we're excluding basis. grow previous margin million, we midpoint is net dilutive or average or Also, increase implies at the year to XXXX year-over-year, due dividends which per diluted increase million guidance shares AFFO we year to our raising million, approximately XXXX the business, And and interest a on also reducing We've million, a the grow upgrade. metrics. benefits $XX increase our our XX%. between expect guidance integration includes And over a a $XX to operating the given credit to on an $XXX narrowing share assumed the share reduction XX% costs XX% compared We're XXXX improve guidance. attributed per common the a weighted to prior assumption XX% equity prior fully AFFO continue and raising impact to a million a cash X% XX.X by momentum the rate to integration XXXX X% rating to a per

and So here with turn to that, to going call the I'm back stop Charles.

Charles Meyers

our our extend service portfolio of we an expanding value record that In Keith. leadership. superior persist driving force the track us With unparalleled a and deliver global reach services, excellence, digital to market industry's platform we on you, for are comprehensive confident seize And of remain as positioning Thank in economy. unmatched we global and edge and build our customers, to in ability the believe that to allowing momentum. most ourselves our closing, interconnection transformation will

ahead targets. a our and set And drive share have XXXX clear of for durable for our to priorities of this are tracking shareholders. year AFFO growing we We per

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

Operator

Thank comes Instructions] Suisse. from from Badri The you. [Operator question first Sami Credit

Your line is open.

Sami Badri

Hi, thank you.

your XQ, double average at in like in it XXXX. Europe, it year-over-year per connect down Looking digits cross was looks revenue

on that idea happening to we get are there. want better the a So just market dynamics

the business upward? just your of the think mix you is see financial perception give a and in would industry's stabilizing a color Europe, you and us that region? the in dynamics Could Just to services, exposure you that on with shift some that standardizing bit

Charles Meyers

I and more, would generically. would say I that particular say look at step. more if And I Yes,

continues the including across the interconnection - very be EMEA inclusive and globe think business I to of strong.

be the think I so interconnection, of interconnection to And solid. services full demand our portfolio interconnected for both across continues

As pricing process across the our we the interconnection of in we've Equinix of normalizing mentioned are to sort board. levels

an to performance to our uplift that continue we're So I'd time, over region. going see terms of expect in in that unit

demand. macro at continues Europe level, interconnection healthy be very a So with to in strong

Keith Taylor

we Sami of things Telecity cross base. of in just would some quarter, one the some as the last we add, install the connect did, other the thing we reconcile adjusted the of I counts

but And so to upwards adjusted of count the the reflect revenue units. was the still was there, number

seeing out you're in reduction but through a XXXX. said, a in of fundamentally structure of little our has nothing roll there bit that so changed pricing that, Charles within And model. that we And because as was we're normalizing our as Europe fact, pricing

Charles Meyers

about forgot Keith, right, that's I Yeah, that.

because maybe account take optical conservative installed we and do when that's bit in times was a audit up doing of So up fairly the thing. that - going we acquisition view ends base often was a is end an It an differently. the whenever you essentially

that in this a on basis, a revenue sort bit but we And a shows in had of there disconnect. was of there so the out setting optical we and reserve unit so case then an a essentially reserve - it that bought

Sami Badri

Got you. it, thank

Keith Taylor

deck On on the QX that Sami. earnings chart

Sami Badri

in Got the I QX specifically. it, you. Yes, changes thank saw

other ECX maybe of we better had can that are get a I idea The using percentage question to multiple to customers regions. the connect your on was and on ECX the just fabric

you that'd specifically customers get just as as differentiator want this percentages more an a in give We quantified versus get their the idea Just leaning to many great. on just traditional how clients kind sense. on of deploying or be we key idea us or - are any could

Charles Meyers

implemented you how the a a sense for remains our have X,XXX just us for customers obviously are get do of customers get there. sense many you on upside and actually also much the for We how so it

so number of connectivity uptake though of even it still but small, as sort total but think lot That's It avail a the customers of of actually terms that of we're are those ahead well a that of it's in what differentiator. small had yet think there. was I they opportunity with relatively faster of themselves customers our on are is of that percentage Fabric. cross seeing plan than relatively multi-regional would But absolutely and upside the key yet ECX seeing have we regional, the I aspect expected. the percentage think I that still using total

chosen confidence interconnect for of cloud to think or and and the part are own that I value And them aren't ECX for in as their proximity location of platform very so infrastructure infrastructure the their they the multi-cloud then market. how to the the days, can ability sales our endpoints and out with a playing performance I primary that generate teams house compelling these them. cost is rest that with out proposition that I'm have benefits as at Fabric tell will you Equinix to they on conversations pleased the private continue hook for being to in in the to with that's least and customers see

Sami Badri

we profiles And on in form? bit laser and the partnerships that look given it are coming Great, similar thank little and we looking to question out different then out XXXX given you. in XXXX return that of digestion JVs starting to you the these what Day are or announced future and Europe JV based JVs you the with as my Analysts do a some should agreements. laid focused laid Day time just at some that in return expect has and your were profiles to in last Are on Analysts and your you've structured

Charles Meyers

haven't any - - talking are announced no JV. there's hyperscale specifically about we the you Again

Sami Badri

That's correct.

Charles Meyers

on well to are we I about as we reflects expectations, on structure and very will to talking feel and management then And And right at good think fee fees is for customer there that supporting solid focused going tracking to very Day announcements notion headline really the fees said now. us projects. the first that pipeline returns I the expect Equinix our we think JV as yet, the that. due financing just float flow consistent returns as then those in juice well. the us of Analysts we're I partners the and some What We'll fees in script EMEA see from other that the we we'll be that there equity showed continues get upsize announced some solid be we're opportunity uptake. returns no that our good as think as well with see the some see fees to as good from and Yes,

view I feel and structure So on would the well that different think I Keith the good - we that structure look overtime. you unless tracking overall, don't about different meaningfully that. think had

Sami Badri

you. Thank

Keith Taylor

announce timeframe. JV partner in We'll again QX in update formation that discuss final we'll JV to excited QX, the and you and the of the we're the

Sami Badri

you. thank Great,

Operator

The comes KeyBanc. from Sadler next question form Jordan

open. is line Your

Jordan Sadler

want actual an Thank or think was could gun but it of don't you, assets the I to the clarify on you enough some if planned stream, then announcement, relative follow the P&L? no in stuck guidance be of jump you're to follow made up. XXXX And guidance, especially I into as impact good afternoon. a you would the fee the what's result a relative have Then your there's to wanted just P&L as had up potentially stabilized a think, there to I Charles, a mentioned, specifically if to I the guys JV. uplift JV, just you because comment referencing being I to

Keith Taylor

touch me just let so Jordan, base. Yes,

investing the team. what do So we initiative hyperscale update are of did we team the net on burn we call, basically to earnings is refer we're the what you right last our now gave an hit in as

stabilized some of we So forward - and taking doesn't today the to that will into AFFO a be you if of in when we to said there we'll the no into out on that on be some developments. the you say cost through in - so coming guidance. the because new an go what was last we're but cash call phase, what the will AFFO future basis, anticipation what so you lot JV what There impact And the then share assets that's development and going will in not putting fund that is, make meaningful is embedded as cash is a What alluded impact the going seen Charles is business. investing P&L developments. per there's have the all of then meaningful the announcement, of back to that a that amount cash, earnings and

we there's want assume incremental about lot a And in year AFFO to to to so per anybody respect any share don't but with talk JV, XXXX to related fiscal this.

Jordan Sadler

It - it redeployed could like a in. in you'll your I be cash issue, flow that'll sounds time have mouth. if initially and And - Okay. could drag words over there flows be coming as a over putting be not from time, am that'll

Keith Taylor

It and you said, at level assets very goes what back if for Charles the financing be we good - to ourselves at project really when our to returns look look at believe partner. you what on both the

And so returns. project at we the are happy

a amount income Equinix will receive In fee with it. certain of addition, associated

for upside look a at there's you then return us. depending equity. partners. on for as point it's how our our the very the when It's project asset. this the always So And good very, on we for the liquidate at return the investment future, in decision And some a potential attractive in

Jordan Sadler

cross in And rate providing you appreciated then curious; sense. make I cross speak is disclosure faster to the I'm growth growing a just you the at Connect been there. versus guys the if volume clearly lastly, could physical have virtual virtual connects?

be would expectations your what you elaborate to talk other. maybe versus the one could on And if then there pricing? Just

Charles Meyers

is very to and interconnection we intersection think cases of And very different a of one the portfolio. sure. I Sure, varied a solve differences set rich continued bring to health that's key for of options see we our Yes, that see customers used across set the them. we

needs, in so on alternatives. choose depending duration the and flows, on And different their they want depending timing on accomplish, confidence what might their depending to they of traffic

to may right enterprise to of should expected But into then will fabric happens buy the works. it's so, over surprise workloads business a time, and to that that a But - of going seeing that no See Fabric, cloud. are to cloud. They over moving of now, test the that capacity cloud. do provision initially port strong how be maturation using cost be them And uptake from begin a Connect often we private particularly actual anybody. were more continue what stage performing sort cloud effective on conductivity our the ECX future And sort actually to we the tremendous where connectivity and to people things a to of at their physical a and forward. an maturation move a in very for strategy. is cross of staging often of element That

And as so customer portfolio. the of buying case. needs across that's sort that right particular typically whatever of what on is we based see given used the a them for And

there's of continue why really we've And of very complimentary. said that's as see don't So, that we - generally probably well. to some that's both them but modest we level substitution, grow why them

cost to enable connects. pricing, do unit of the the port In terms essentially you virtual that recognize have to those virtual for pay but cost individual a upfront connect is lower, you have to

difference. we're And port provision a seeing single of on might so in terms yield now, to it connects many right not But us dramatic you virtual can depending over meaningfully. how vary a

on price are than physical. scale, economics I exceptionally and But on of will the virtual think as cross for Equinix. lower for products virtual slightly return those both a again, see of capital average you point connect good volumes both

Jordan Sadler

Thank you.

Operator

from comes question Philip next The from Cusick JP Morgan.

line is Your open.

Philip Cusick

plan guys, am into scaling? more then, to the Hey sales the for costs? trend can high to versus different you anticipate different single differentiated little think protect I revenue for subsidize how legacy price JV the should done trying new we just for SG&A Keith, and be long-term I those one forward you going sales do being or to business JV for business? dig going processes what's being and this from a about thanks. think it's about And in customers the Charles, can, Equinix think process? if legacy you the Two being the facilities, and control to I used to Thanks. a between How

Charles Meyers

Yes, so let me JV first. take the

hyperscale said, partners. deliver us to that is more key things comprehensive of we a be able to we wanted As of portfolio our the one to for offers

from and a and were As needs our their as of unified what integration the the the platforms for - top we to portfolio the up we Day, type their to we there's though, XX at was larger, $X.X showed how service relationship well the wholesale distinct we beyond quite be bottom sort more for nodes between with facilities of that And And more as understanding recall, across zones of hyperscalers. networking their as well of type, have different hyperscale our year Analysts interconnection customer, farm that I and that needs. to looking you trust typically the server would interconnected But the - see type have, want And smaller, presented continue time, think opportunity use more we the highly this but private growing single in I of billion a our at to elements currently is kind architectures. Equinix footprints availability line of footprints of at large I using that they footprints nodes, arena. now more with hyperscale business needs. relationship targeted those for that sort and

as partner continue JV think we for clean for those and more a And So targeted as interconnected the plenty with do there's Equinix relatively us our we to footprint, both very to for to there think line footprints. well and large manage. of the grow opportunity there's us to well

Philip Cusick

Okay.

Keith Taylor

well journey SG&A is you appreciate. this the on as on think I scaling, question second can And Philip a

we're last invested to well First the our then on we're our understand, to as the that XX% a team the was out we when we have to certainly strategic taking sort top and you the you XX% sure of into about about and the items. I'd and have share figuring And and that call, to dividends ability purchasing to important just percent piece and and put different it And the alluded most earnings and is we've strategic we many acquisitions we're about we team and started - look parent work the further. that it's our potentially take closer is really had, systems drive the our down continue And want into as first and as of our XXXX procurement there's going the we efficiently. of to if processes. recognition as it's company how how I integrations in to between is, XX% will, and we've scale through you also But at the businesses the foremost, as talked XXXX the we it It make doing element dedicate were integrated - of we units then we as down in is areas. and savings And inside team procurement with couple the them that's we tick and and SG&A in that to our last them functions previously, today cost align and team heavily certainly think of a across pay it right revenue in foremost, and to to different as many with company. organization. Charles quite SG&A dollars you across sort - where XX%, at average with them

want find business to back initiatives, and we the and it we initiatives, alike. into continue product we the facing customer so fund go-to-market take to savings, to dollars the the can new can, put where And strategies, we where those

where And cash of form and invest returning the will in hence back to so put dividend. into an and in there's future. we'll the And it there's our margins drive basically business a the we growing where an up that's element element shareholders

We our organization. appropriately. intended, internally, that say I'd say a job at allocating is, prioritizing there's of of We many the our and of and last go are a can the organization, always seeing highest processes, good we piece SG&A systems, much. capital just how And prioritizing a only the never throughout that job under as an use we the doing leadership, And prioritize focusing here doing we're as revenues so our always just that's to again of and looking you're like - that part project real so again good do Charles's can reason they're percent really but well a projects best that's we real then - do of on our is don't down. we're to

Philip Cusick

guys. Thanks,

Operator

comes next from from Citi. Rollins question The Mike

Your line open. is

Mike Rollins

Hi, good afternoon.

the do nonrecurring it Thanks. What also pace nonrecurring to for robust. the the about revenue, item stay forward? the continues look about First, if installation pretty going you And [ph] and we at future? how be the think is line

Keith Taylor

revenues. quarter-over-quarter. of one Mike, roughly So the step was prepared this meaningful remarks, total It's things at I up NRR it our our custom quarter cases the least as saw in X% of be in said up relates is to goods we in that a might is orders lumpy XX% enter we to some customers. of for large many lumpy It - it with or strategic specific resale a sales our into tends

a And you saw large QX, relatively so QX. increase yes,

step to QX, see we're slightly relative to going it you're NRR start you down guiding then prior to think level. should going - down traditional to to quarter-over-quarter, years. a NRR And QX, still more it into elevated see I going

the again, we're be will work, at and doing the custom try sales to is So it's best anyways, do we could and lumpy. least any going continue of over it of And that deals amount number to reflection given of can things think quarter, a to with we'll and of because sequential guide the what customers, order we're go important an basis. it's on down up it, element that a go I

Charles Meyers

offer do sort with engineering around it's to and were I'll customers trusted really trusting trust a our out that. big also they central global Mike, they're implementing there, advisor these who where engaging our of the does trust, strategic are customers with comfortable implementations level shout mean, to part really developed the Yes, that team and I a phenomenal and relationship us, world do of to this just candidly, - they business us how sales the our think very developing job of I of

us something appropriate piece at - also to of want And we something think and customers our it our we - we our to tapering of of robust the year in to visibility. right do. going a that half we're it's the really watch honestly, first mix think on business. second be sure careful, that the through attractive said, we to It's we But half to are got little of we the - sort margins. and it we've of of have we an now want so, make is as we can But it continue do year we based

Mike Rollins

Thanks very much.

Operator

Morgan Simon from next The from question comes Stanley. Flannery

Your line is open.

Simon Flannery

so thanks Great, much.

to one or are likely transactions other year to Thanks. updates Verizon. down is and it any regions either the On see in of JVs we'll the the Where be maybe And other stand then that to integration good for update progress? on we road? the more see then, some on merger we and likely EMEA or this hyperscale secondly, hear do Infomart EMEA, on

Keith Taylor

the push to second first Why one take don't I one, Charles.

to with but Japan we the over cases, are we progressing we to that. On we still European announcing JVs is would more the forthcoming is forward second near-term. probably little the one, JV. both start. based them shortly market, the And second the be one be going a other a Simon, look is at on it will to is In one least after more anticipate There JV. But - the complex first that JV focused early Asian a it it to bit then, specifically

Simon Flannery

than second the smaller first one? would the whether And be one

Keith Taylor

dedicated they're the in are will London, Japanese to market. be I said. initial Paris, assets into be stabilized unlikely about hyperscale and it's for science the is going gives into getting start somewhat would one first timing that could meaningfully the a sense. initiative. again, it to on funding market second still And to Well, a specific, forward They really JV of and the stabilize in be Amsterdam, JV Frankfurt specific. as we the partnership details JV But move a less going have into have probably moved assets you it one Whereas will a without towards units sort is Europe go again, initially basis be

Charles Meyers

integration, on quickly stuff. the of we're progressed pretty then obviously, most that And well on

down terms the we down remainder see of integration stub to small from it the $XX year in I where You took of that of think was. billion million, left that pretty $X for costs,

the with So the very I to we've be variety work the that, of done. that benefits from financial the pleased bulk continue transactions gained would of and both again, done, strategic that we is say we've

longer those we markets. how for It's longer it's Specifically that thought. we and are through what longer to actually to tail we than churn year that churn little probably all But a and Verizon integrated into that into think momentum we that of further I say sort of it's but bit into this the causing I taking had than had that those bigger that bookings a than the - Verizon about platform they're bit even little that's goodness had bit Equinix the it's what really not would just is thing. revenue not saw growth see still Verizon return great surprising. And a we really work seeing In we assets. mentioned, seeing I bookings the anticipated. end but anticipated, it the tail now, number deferring and actually we're that great of think now seeing assets. into we you in We record it's fully and a a on think

underway to actually project progressing pleased we a So Infomart that that's really overall. of ability we the be outstanding important the to cabinets and position put X,XXX that Infomart on market again that's offerings really and nearly good have in very to our take well, on campus really and there. portfolio will we now large build with feel a transaction a market think about going colo very what

Simon Flannery

Thank you.

Operator

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

open. line Your is

Colby Synesael

I may. Two thank if Great, you.

fourth in at down new a number to cabinets and base. billing and the quarter added bit our X,XXX You quarter, the the which you added little least cabinets X,XXX to was from

on as for step the billing net quarter? to curious that cabinets the you at guiding may EBITDA $XX into come in go secondly, guidance where based that. be second just when will if expect are the quarter, we up flat million to you Just you curious the to then, on down you I what's X,XXX I'm depending out, behind add and look would you that did second add And

that's gross and like margin profile the quarter also tied explains utilities, what what on to the meaningful and of upside maintenance that in to margin that that's benefits so I'm mentioned part first one-time curious assuming was that non-recurring if changes lower the Thank I'm But I it. looks think the maybe quarter-to-quarter. you you.

Charles Meyers

but the there let would cabinets the look sort over will expansion. of the level two level at quarters, adds, adds, the work look adds, just deals, number performance, at second margin encourage guidance, the interconnection margin Keith on last on the take of part to of of body cabinet of and I the I right the overall

we do the is factors. the momentum. on a a happy with billing as always so and we've that of overall be extremely said little bit think performance depending I cabinets to business continue And the of variety

a bit breakout see had a and you hysteresis quarter Asia quarter of sort sometimes that. last a then from of

to And continue so, cabinet to when we're the going business level quarter look now four ads, would I forward. of over right see for rolling seeing is the healthy averages we think expect super and that that

Keith Taylor

first is the it alluded expenses, to relates it of in of that it on the is based. is and just s prepared certainly we number part timing there of as a went utility Colby to question part things in And quarter second the of remarks there's our

but part to on step on basis then call, to in tune the affecting is last what a something recall points. then, you experienced back so about don't would other that's were the much of to quite utilities with as of we roughly and QX, course, basis that talked business they drag utilities up go associated we And to so to earnings XX extent QX. the the up come the wasn't of step and that's in continue planning the If forward anticipated it

and decisions. those again Year, part on kickoff timing, you've sales the cost got annual you've got quarter move Second around our Chinese New anything, our there's like QX when to we and so make just timing is

why going QX. we to QX note big utilities, we that thought come relative we we those in originally would reasons was take is then, we're it year But margins make - So thing say some to ASC investment the anticipated the did it's started just in down we important like. expansion was when is - last and to I would would what And as there the those originally XXX slightly. that it the drag,

forward we up in assumes is XXX still in to roughly taking for have actually the reflected our now, basis look we And slightly XX.X% we're which that that points also year. the margins system, bridges. As drag

global just all so, a into those and of again, timing but recognize - run And different to lines the sometimes we'd business have reality we to nature that and up fall quarters, we it's straight causes nice love not right, how the it's and different based. the in it costs

year, to still And are now that margins, we our raising forward it so, again, higher I the guidance, utilities. preserving raised for just the guide overall as our we're fact we you model and we going cost be to anticipate relates what to

Colby Synesael

Great, thank you.

Operator

from question John next from RBC. comes The Adkins

line is open. Your

John Adkins

much. very Thanks

this or So headcounts, headcount, parts. see to still or missed sales put there maybe any of and in to I'm XX just And a not to XXX point ramps from I migration? about questions, SG&A if shifts the lot market of can kind projected impacts expect don't of engineering of you're some but talk moving to overall know any a not, that seeing are sort I then, kind strategy? interested, or secondly, go gig on of finer you in sales But your if

Keith Taylor

Sure.

to XXX physical about that. all last I tackle to virtual. as think X,XXX we quarter, connects, reported try we me X,XXX let last cross said So quarter The XX

at virtual. a had to of physical. X,XXX X,XXX on We very and So our give we physical quarter the X,XXX typically X,XXX ranges top this that sort much end of

see a to that - in saw that So we some of previously. a hold of we taking XXX have bit of network terms due a resume on of a did mentioned that was gig XX there we pause to bit moratoriums the probably

for projects to are well advanced. XXX very So we larger - that still but believe the XX

also quarter. the some a year, so of impacts provider of saw we'll in tapering we that network the the little bit over service course consolidation see do NSP, probably And we think on

maybe add headcount in the engineering, we XXX sure sales around about - type that do of Americas business solution bit we the and And off, with support ramp, go that think super leverage the to the X.XX productivity. XXX the consolidation taper the on particularly And course we'll both feel to like And yes, will probably that pleased and we'll a of bit heads that, of the but regions, ensure through adds, some probably, in And we're bearing XX a the over have degree, resources side, to so commitments given to careful other headwind or the the gross are over strong but to - resources. with expanding the of operating lesser that we something that XX to overall, course our some with that. the we sort like remainder associated engine. gaining Again, the continue we will then, keep about those we being the think see add we keep things we combined, to to when probably we architect a the SG&A, we - to performance, other XXX. we're we today, of of level we're little will But, make success to little their in the of year of very do core add traffic. that targeting the much full And do are contingent getting I will look in market concentrations good adds. add includes year we at if how But we of gross and ramps will a - year. have a

Keith Taylor

And just thing look you the quarters. one think important, six I it's I if John, at more five, could over that, line add the last trend if in

area. G&A in on on that, to area, as marketing sort see the seeing yeah, you're the we're continuing the of the time dollar said, right is And sales a flat. focusing Charles same basis the at invest in remained You and dollars cash

you're SG&A going front investment you basis So is again, the where a exactly a also But on going comment which to gives deploy we a as greater house earlier facing initiatives, want a customer in to down. is cash of back percent of it sense our revenue seeing of, capital. my

Charles Meyers

working You role just I in his go generic the new effectiveness to engine offer continue also drive Officer and Chief the our overall. closely together are asked really market about efficiency Karl go just that, to and piece and market. a would to Mike Campbell, in more Sales

couple great the that work the One, are of a think investment I a some and features. and Cisco of in and customers. number with AT&T who with partnering joint continued targeting prominent having partners with includes Verizon in likes and success Orange channel some great partnership us, of

logos think to So channel both well then in also add continue continue to seeing we're the land landed going there's an going opportunity. with and invest When we to share we've Global behavior wallet immense already at we as it captured. there we new the of to logo customers that the sort we're of and look Fortune XXX terms as are on we've of much drive resources how to in expand is capture some XXXX

And sales patches that both that so well. the we're shaping the rolls as sure make and to we're drive continuing to

John Adkins

Shanghai or I in contributions on is being time China in sort about quantification XXXX Thank wondering the kind and Pac, think kind the you. past metros out or I And then, my the I successive region? that to focus just cabbies China think metro? ramp you the more. entering And Asia on talked just XX% the there, new break question mentioned does be expected of of of But you maybe last channel, quarters for any you about likely saw one by that talked how of

Charles Meyers

are the our and invested more sort maybe had channel led we've so Yes, channel market there. - and Americas we resources dollars on we of mature just seeing a probably initial in

market. have the we JV relationship a terms think think resources we'll three that monitor for now we're - do do how about - going we One as of to to China well Shanghai relative think high the taking more go. channel revisit and in we're That think do And capacity are of situation the in to allows terms across ground as of China, which I the have of I kind we capital really to we'll global channel. very sort the in things even on consolidated of think online that. them, in driving of good But confidence And regions is plus regions see I to to XX improvements think us now we're embracing capacity the we've then in I that well seeing continue But with is we have world that in a uptake and embracive Karl see three terms the number putting much program it's again, response we approached overall, their percent degree to roll I seen but that a tracking of see market. tracking I customer consistent how we of and come to uptake going think would there think additional kind the are of work of carefully the all occurs on all all have how that sort channel.

John Adkins

very you much. Thank

Operator

Del Nick Deo comes The from from next MoffettNathanson. question

open. line is Your

Nick Del Deo

Hey, questions. thanks taking for my

border would the region the three business than where Can on were And about by if category? split the were rather to You was bookings this detail quarter. deal your noted bookings like that be they we you cross front that think revenue how your sourced the some between regions? respond added give where were substantially to generated, up what's

Charles Meyers

exports more cycles force technology that the embrace flow the selling the do Yes, globe. across to from go model we've just platform you for might it maturation this thing to how given it's force bookings driving the one portion the the selling across teams and think also globalized sort we expect Americas Karl's world. they moving sales are have continued the and rest do a We other of leadership. to sort very a But at look that I significant is We world typical is the efforts really way the again for as global great Nick. question, it of based of of market have seen under rest and that of of to

deals booking. cross So or global there look is. is in we we consider terms look terms the and export assets at we - if of then headquarter there's look where sourced, a are they of where all border we the border in flow a that our of that And at location it - cross at if

Nick Del Deo

think region the often to in deals sense. versus you I and degree siphon bookings Okay, that hit then, most historically being on larger in you might initiative what share And footprint? as makes do consolidated other been And regions. would on Europe, characterize deals growth? willing more one of Europe larger for perhaps weigh to footprint What

Charles Meyers

bookings. used and more no over above think, There's have XXX terms footprint that is variety that's is really we what really think dynamics have capacity large I more we you're like what had I in do looked question, appetite type time, to to spot good as of the bit about of large sweet an pricing that years impart probably that and I our megawatt due don't other plus sort of we really a think a at think, talking now that footprint kilowatt in in there many factors. refer are category. we ago, Yes, But spot I to of think and our deals done magical Europe there situation and more

in kind believe customer it's the in driving for think one asset strongly allocation not funnel those, asset and right I application appropriate to terms those long of would the in, the so our - capital. to because would right we sort desire a ton that have of there's - the we of that's right and use of of returns mantra, And JV, right we be the a do

degree, So, in We've on I would think growth large in our see we've the begin for projected probably our those to I bookings our with footprint rates but I that we to hyperscale the that to to expect some going very the contemplated contemplated migrate the would we're business. that - think And think community, JV. to guidance. affect

reflects that to degree some And it so already.

Nick Del Deo

Thanks, terrific. Okay, Charles.

Charles Meyers

You bet.

Operator

Hodulik The UBS. next John from question from comes

Your line is open.

John Hodulik

a talked Great, second Verizon And a first previous driving the are that just And guys that's on that other their churn for higher you I Two it's on two a sure think agencies, us and and about quarter, thanks. tell of not question. ones, in with part? you then, the we temporary I continue? potentially about what's moves sort if conversations churn the quick timing move of going all, to anything the MRR any could you referenced rating don't know Thanks.

Charles Meyers

Yes, I'll the second let take just one. Keith

kind - low to is X the for think X.X with of and end just our about I thing As the is way deferral churn quarter, us, it think first good we reported very right. a really, to the at to that we of this of relates X.X

so work go to that to quarter. initially best probably we some into quarter, And can as would expected think it I deferrals this away come we hard we have or as it this defer saw make we and in

some of definitely always I nothing the the little absolutely. bit an And of there, think assets, that a of represents think - But a structural yes, do in But uptick that. from bit so is there following we'll Verizon take is quarter. it I

is to when to to selection feel And for range do overtime And, time, we'd deal our to us with lower discipline so. range. the objective that drive our hope in X be that we appropriate to X.X comfortable time over that think so, really continue would I

Keith Taylor

no on heels We're second John, the Hey to upgrade. the of with agencies. the other surprise relates on agencies, with the question, as the with to S&P to working rating it rating you working

have we're a strategic performance like strong I think continuing having. to

grade having you agencies we fund again, both a going one to both and of levered to forward business and our going down upgraded X.X. a leverage ratio other the equity notch investment outlook. below commitment Our No to as use debt one with rating surprise as positive

things going be good to and we're that we again, as put over it's we getting to rating. meaningfully again, doing to as rating in focus distant to stead. remain on the investment a will do do ourselves optimistic agencies second business to that us that continue future. we're need them we expect we rating grade the get to not we're you with should make But up that the why sure going I investment would But we share grade. to hard all to too And with So decide not second believe working

John Hodulik

Great. Thanks, guys.

Operator

Louthan question from James. Raymond last The Frank comes from

Your line is open.

Frank Louthan

A things. quick very about for two sorry noise. the question question on just Quick - you the thank Great, for much. JV, the the JV background

First, the to are talking is multiple is and JV you important helping secondly, leverage, how seeking JV? they balance balance have from then, the partners partners sheet? how And multiple with the sheet important structure about the that the to

Charles Meyers

tag - Frank, one dog's we glad see our your team I'll this, results. let can about to I'm excitement

Frank Louthan

Fired up.

Charles Meyers

forgot But question. I that I think the your -

Keith Taylor

partners. of Number

Frank Louthan

[indiscernible] came the here. value to call

Charles Meyers

No problem.

I initial this done. transaction right really we're think on focused getting that now,

to can. would in more at we We have talked that we multiple we There's about embrace partners be over same the where global time comprehensively doing and fact effectiveness that. could happy the have efficiency time, partners some

So where on we I one kind land and of think depend it on the of will distinctly. evaluate this really each markets we'll

Keith Taylor

return reason balance although was to Frank, off of And to push to minority And so the part think relates more that an consolidate. interest it as basis want debt it's on that second understand have earlier partner. we we that very, really for and I it important we sheet that as we very didn't is book. it said can hold wanted to a to the off question, sure IRR as Equinix the and the on make for profile attractive on, equity return also is our We

arrangement, partnership partners it. one this business more us as through back into or fee it's the look sits structure important about stream back the And pro in, with We get sheet that core the care will parent agencies capital But the a in alluded in having again. what there's rating we then the reasons basis, a allows Charles Again, and potential appropriate. on the our and capital, JV other leverage happen as that to for is of our so balance recycle the the allocate to with get they'll to, to will amount it a part couple put And metrics. JV rata company. into associated typically JV

and gives retail continue the having strategic focus to the it same partners. sheet it with our to So cash us value our opportunity balance off by on the our time energy increasing business at

Frank Louthan

appreciate Thank very much. great. Okay, you it. I

Katrina Rymill

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

Operator

That today's participating. Thank call. does conclude you for

disconnect You time. this at may

Equinix (EQIX) 1 May 192019 Q1 Earnings call transcript