EQIX - Earnings call transcript Q2 2019

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Operator

Good afternoon and welcome to the Equinix Second Quarter Earnings Conference Call. All lines will be able to listen-only until we open for questions. Also, today's conference is being recorded. If anyone has objections please disconnect at this time.

I'd now like to turn the call over to Katrina Rymill, Vice President of Investor Relations, you may begin.

Katrina Rymill

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

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

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

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

also most encourage Equinix page information to time you to We with important accompany would regularly IR a this other remind and have certain and post of discussion you the our we information. available about supplemental the made like to for available website presentation page on We time, the IR data. along website, that our designed to on current financial check from information

Officer. Chief President today are us Charles With and Equinix's CEO and Taylor, Keith Financial Meyers,

analysts of within taking remarks, the to we limit sell-side questions this just following these like one. will an call Following wrapping from to to In questions ask we'd our any prepared be analysts. hour, interest

over the to time, Charles. this call I'll turn At

Charles Meyers

Good second Thank quarter our call. you, afternoon Katrina. earnings and to welcome

in momentum enjoy results, our in we see significant can continue our you business. As to

Our as strong durable digital value for logo ability customers is and feeling performance to bookings accelerated our their new pursue agenda they and deliver distinctive transformation capture.

differentiated providers global scale to Our center separating our other highly the cloud from trusted positioning data of world. of as and platform us us interconnection the be to vast continues and reach, platform, our the operating center due power first superior

to continue second for achieving against deals quarter gross more incremental our the well team. We than customers by of X,XXX execute cross-border our strong our strategy, with and driven best largely Americas bookings bookings

XX revenue serve number XXXX S&P XXX tops Fortune consecutive achieved we XXX. the We pipeline. of now With of more than growth, a half the still quarter in and among our companies, record prospects, Global and XXX Fortune of

deals, deals and metro of foreshadowing to and future continues land of majority their mid-sized multicloud aspirations. diversity, implementing the and to the expand multi for velocity tremendous quarter, centric over business health of the Generating the in as The our interconnection use as selling hybrid Equinix shine. nexus small these volume customers engine our comprised X,XXX retail with reflecting opportunities, and

of and strategy. regions three with delivering at continues start our saw multi-region deployed of the We year, at channel all revenues XX% our from against including XX%. to Our progress global top-line the six up ticking customers go-to-market evolving reach across fuel outlined I expanding hyperscale the to on including priorities revenue and our engine portfolio substantial products, our

unique deployments core Xx regions, scaler a openings builds billion Tokyo. Seattle, greater of with with fund Osaka, deal workload Sofia, in signed companies. underway And Madrid, group we platform three Chicago, wealth Singapore's first serve Frankfurt, QX the Paris London JV sovereign and across to all development projects continue hyperscale XX projects expand Perth, hyperscale our including global and including than We for and to $X GIC, our targeted a targeting Amsterdam,

to transformation think priority variety differently a our their about of making are Digital infrastructure. top them in for key customers continues trends a be

investing strengths by to responding demand our across are traditional changing and layering capabilities. this We both in incremental

We interconnection the portfolio. have and years. center yields offering launched and planned Positioning are first our accessible and will and the more rates an and services driving enhancing to enhanced us expanding platform platform more in footprint now our Equinix our easier coming market-leading that data as valuable attach sustain cabinet use, help over

Turning to quarter. the

XX% As year-over-year $X.XXX ahead our to Slide operating billion, strong was year-over-year. meaningfully EBITDA was depicted were revenues for up QX of expectations and X, on due XX% Adjusted AFFO performance. up

as ecosystems normalized Our all revenues and growing interconnection These currency our well, scale. growth to collocation platform continues rates basis. to once constant again, continue XX% are a outpacing perform year-over-year, on

competitor. now have incremental closest In We an in QX, with virtual strong over next X,XXX the more we added four-times interconnections connections. than XXX,XXX growth interconnections

platform, seeing our For are capacity provision XX% Internet up and exchange in IX the APAC with EMEA we strength markets year-over-year.

ECX now Fabric, SDN-enabled over our interconnection XXXX has customers. service

new and network of cases, destinations a use end and between We by diversification frictionless providers. adoption enabled for deployments level increasing hybrid more ECX and API including ICX are cloud market-leading seeing multicloud integration of ECX

also Edge and way efficient easier our NFV extend that services Equinix, offer we portfolio more provides launched to virtual deploy as QX, and we In faster, of interconnection network services Network enterprises a offerings. at

from been as response including firewalls Networks. Alto has such partners, services Juniper virtualized great. choose and Palo leading Cisco, balancers routers, industry can and customer Early Customers load

coming working a with healthy have build are and the ahead over service partners and additional pipeline we the quarters. to out locations offering We

verticals. Now from let highlights some cover our me

EMEA experienced Our our by in solid global strong top resale led network vertical network partners. from growth activity bookings and

including on and XXXX in the the of Fortune networks those to also XXX available Platform with Global in continue XXXX. We deepen XX% density, our provider network Equinix, every network over now

and to provider for Wander, Chinese XX% of China's customers. regional deploying telecom a services users residential New Internet included serving Coast wins West wireless a infrastructure U.S. ISP launch

three and Life to Reassurance, Group, Services partners top exchange, and record capital sub embrace connecting with Financial top global included and and insurer vertical their win led by as five Hannover a to infrastructure Our Expansions network a firms digital global banking achieved key ecosystem deploying segments, insurance connecting Markets, bookings ECX re-architecting transformation. a Fabric. CME securely

strong solid publishing Akamai, mobile And support led sub-segments. and and top the Zynga a by coverage growth scale solutions. produced developer leading enterprise expanding & supporting a included and and extending Americas bookings Content IT. Digital security Platform existing to content wins Expansion gaming distributor gaming Media The Equinix in across vertical

Cloud captured in service continues our with connectivity for Our on-ramps led bookings the cloud solution over region IBX's by Equinix services today, & XX% leading our across sub-segments. the of infrastructure IT cloud top providers be vertical in the record cloud and to all the from APAC metros.

service hosting support to services customer Fortune its and a rapidly footprint this company now, Expansions expanding unified quarter communication included technology its growing XX base.

Our with sub-segments. travel, diversified in growth strength enterprise vertical and healthcare particular experienced legal

operator as roads the services enabling three of Premium, and transportation as expansions, their New a data wins top global included and strategy analytics. Tapestry IoT leading food fashion company brand, with systems enable multi-cloud a well toll smart to and network implementing build re-architecting a access

had go-to-market partners business driving amplify great bookings our channel of to XX% broad-based with XX% and high of engagement we for another our over significantly strength reach. new with priority accounting quarter deepen as Our our logos,

partners, our efforts which creation Verizon offer more and We alliance our are joint and and Telstra, reseller across focusing Orange, Microsoft, productivity WWT. Oracle, include and Amazon, AT&T, driving

win increase computing, win channel Genomics storage included to with solving a connectivity quarter Telstra and for this cloud resiliency. New England for

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

Keith Taylor

And to Charles. And Great. afternoon thanks, good everyone.

in our a business to results. strong first by the gross after bookings We the QX has quarter, metrics. in While great momentum activity enter in net very QX ever followed strong our discuss the reflected quarter, year, addition the continued to best including better to it's operating expected cross-border healthy see core in had than now we and

continues as differentiate bearing ourselves our from This our strategy Equinix is indication simply to Platform positive another that is fruit competitors.

we and due raise guidance our including raising performance result, the across are better a business. in revenue metrics expected a board and AFFO the As improved than AFFO leverage per in key to operating XXXX substantial share

and And grade clear rating as investment position. of our you grade Fitch, expect, our - debt leverage delighted received to from liquidity to might credit efforts investment are second our a improve recognition we have

excited investments are while capture and partnership balance flexible sheet. GIC. opportunity and strategic our we a the maintaining deployments, quarter, hyperscale footprint large announce this joint This to provide to Also us strong to targeted very capital significant venture will with JV make

we Paris incurred venture. X Upon and to London receive the as IBXs development cash expect closing earned net the the joint venture, cost well joint to proceeds from XX and proceeds properties, of of our related of other and fees net other sale from the as reimbursement

GIC are QX. in transaction hard delighted with continue to close to work to be and we partnering We the will

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

year, last deals than in quarter. revenues billion, part mix QX global and X, Slide to XX% same on revenues revenues small depicted in closed better-than-expected over up expected $X.XXX quarter the medium-sized and were of lower recurring non-recurring due the the As reflecting

As we NRR have activity before, is inherently stated lumpy.

NRR prior the the expect modestly earnings percent of call. XXXX comments levels on half revenues a We for from second decrease current with to consistent as our of

incurred. the EBITDA timing adjusted certain to million, our performance quarter better QX up strong Global last and was revenue costs $XXX same and than over expectations, of recurring XX% due year largely

across it Over new scaling related leases, half platform. the expansion to we higher continue guidance, year initiatives, EBITDA and in utility includes the it increased our incurring which to also adjusted and second spend expect the growth of to while the invest despite drag markets

AFFO global Recurring prior and than was operating million, through over the churn increased $XXX same largely planned. last the flow MRR quarter net QX was due interest Global lower capital QX expenditures over X.X% increase to XX% better million $XX a expected. as strong quarter year, expense.

to We our X% expect year. guided over within of to quarter churn of the per the MRR remainder range remain X.X%

Slides XX% followed APAC a the fastest full X%. regions year-over-year results XX% normalized MRR X. X by growing Americas were the and region covered regional basis, highlights, are to at turning at Now on through and respectively EMEA whose on

a saw vision solid reflected two net metric fair platform for remains source cabinet a to of region Americas small of other activity. fully as cross-border pricing, a continued the per strong say global It's level in mix including strong MRR and and high the embraces the momentum, deal bookings, of deals flow our region including healthy Americas The regions.

had Dutch robust in increase and billable EMEA another saw strong businesses. and quarter, UK by cabinets We interconnections. Our our region very led

markets and flap emerging inventory. consuming new As you opening nicely this across aware, are have our we meaningfully been and capacity

by capacity into sole quarter. region, across Australia in We medium-sized deal deals mostly led our new small booked past solid first delivered to open our businesses. London, by And soon to and and driven Sofia we region Madrid Asia opened Pacific IBX. Singapore bookings And our the this

to the structure, looking now X. Slide refer And at please capital

repayment balance and proceeds were operating cash ATM approximately the cash Our as quarter, offset quarterly and last over debt program dividend. our $X.X capital flow by higher the the is unrestricted billion, cash expenditures, flat from

Our balance to sheet and us. liquidity advantage a create for strategic continues position

Our well ratio net X.X-times debt to EBITDA, leverage within our dropped range. adjusted QX annualized at targeted

leverage, strategic grade commitment to milestone investment company. Our future our to investors equity ownership grade the both pool lower now as have ensures second environment use macroeconomic Fitch from a market and provides us we rated in. capital and to of and full-fledged a to debt debt growth, set establish cost and increased Reaching this strength, investment drove fund that at deeper asset a operate our immunity access a of greater lower a we of rating

funds our to the current outstanding incremental business as as and substantial refinance debt the load over few expect our savings borrow in years, initiatives. interest we to we drive growth also into new future rate both invest We next

including for in CapEx Sofia and $XX new Turning X to seven $XXX million. new including opened Capital the two million expenditures recurring Slide other quarter. IBXs, were approximately We of the Tokyo. one in builds,

inventory future cabinets available we our quarter, land purchase for XXXX added continue For and the to to we expansion.

This in acquired land Madrid. we development for quarter

XX%. owned Lastly, revenues remained from assets at

And our as delivered investments shown returns XX. capital Slide on strong

on recurring basis, revenues year-over-year a over constant currency Our XXX an improvement quarter. assets increased the stabilized X% prior by

PP&E including utilized assets stabilized now asset cash-on-cash XX% are and gross return Our as the our stabilized are increased the XX% stabilized Metronode IBXs, The four a on generate count applicable in invested. net we by collectively account. now assets

through bridges. and for earnings of deck. as impact closing Please other rates EBITDA that note XX are refer joint quarter-over-quarter quarter the revenues hyperscale updated adjustments, both expected one-time Slides to updated the now the adjusted our of Finally, third venture and to for in certain shown in and XXXX growth guidance XX include summary

of operating For to our absorbing a strong primarily in attributed $XX business. the the after EMEA raising million EBITDA revenue our sale to $XX reduction $X the million guidance performance in XXXX, to full by and JV, due we're guidance the year revenue by IBXs adjusted million, hyperscale

rate are growth cost revenue margin $X million our a of XXXX implies - a we to $XX healthy reduction. adjusted X% revenue of reducing a year-over-year applies guidance This million, integration XX%. a EBITDA approximately and Also

joint And business, the absorbing our AFFO our $X the given reduction the AFFO AFFO share XX% IBXs and a sale the improve million, a strong by per largely from due to our previous to net metrics. year, performance compared $XX After AFFO expense. operating and we venture, interest to the and growth we're momentum of between XXXX XX% raising continuing in net EBITDA rate our million adjusted of a to lower

AFFO includes both and raise. our is the X% prior expected ATM between per and share the which to program grow from dilutive impact equity X%,

an increase per fully reflects the million increase dividends outstanding a on XXXX to basis. We XX.X shares X% diluted $XXX increase a over And approximately XX% have cash assumed now share a year to on a prior basis. expect weighted and we common year-over-year average million,

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

Charles Meyers

Keith. Thanks

delighted In urgency we we're business as and We and a the the embrace as and uniquely to their this architecture positioned of with large are capture opportunity focus we customers of see our choice. to market multi-cloud against transformation with digital hybrid closing, adopt execute priorities. performance and believe opportunity, and continue expanding and

and and us We balance remain scale platform, to the interconnection ecosystems, strength market leadership. our our our the of reach the further our sheet confident that portfolio the allow breadth our will of of extend depth global of

developing operating our innovative our to curating expansion on and leverage, our us and ecosystem that top-line We in drive robust additional a engine focus with partner sustain services return are investment scale will continuing new growth will help margin and balancing go-to-market on maintain capital. industry-leading

the our and creation firmly delivering in our on talent develops and inspires value durable remain customers value focused long-term to We our industry, company sustainable building and attracts, a that to shareholders. best distinctive

look become strategy the our of sharing road line, well to differentiated continued progress. on is world. the forward trusted executing the ahead Company cloud-first Bottom a center the highly and about excited We're to

stop open me questions. and there Let up it for

Operator

comes [Operator first JPMorgan. with question Instructions] Our Cusick from Philip

open. is line Your

Philip Cusick

of acquisitions characteristics do the And do? is or the your what portfolio? here? into about what to from there of price, Let's significant are year, that from important the organically talk potential need Korea to in Thank that moved holes you. else company sort here. are drive grow to decision Outside really You've last the left left in South you inorganically either strategic

Charles Meyers

organically I Sure. for Phil, add mean, definitely Keith substantial as I'll can on there start we non-organically. are needed. growth think Look, and remaining and opportunities the business both

organic - with strong I think the exceptionally in those side, particular, our are customers strong new focus I which expand to logo seeing is activity and proposition, land growth, we're the bookings our think, capture really value I'd responding on customers. well and

as we're our to So, on continue going that factor. to growth primary focus

in we think do said the tool is we've I on think multiple there toolkit said, us. That a still that are, occasions, it for M&A

our global add to opportunities market in terms in in of of terms leadership We reach. there gaps expanded platform to our have are think we said that the and

about opportunities customers African Eventually asking areas, include include our of for are opportunities, potentially a the other another border us - us, as the India. of our couple Those about here. opportunity south probably us future We've and talked continent plans. select think I where including specifically for Mexico an they

those at growth. for understanding that an is to be assets as we'll there, available think I do that so be said, there for look those carefully I disciplined we'll think but represent have us - price the about of terms for and you well those opportunity that, And in might

Keith Taylor

deliver, new to think is NFP two mind, is, new the it's example continue to certainly top just and other Phil And Charles services. products on service things product come it's Charles a alluded invest my that growth. what going we're what and around going one to as said, I've of of just to we're of offerings potential and there's for to a but to that I'd said add service

to the below majority come albeit would least of growth continuing to in be the JV flow line. going Certainly in basis hyperscale the in that invest cash is a initiative, on the that, the it's included at

last U.S. macro and certain of the operating then you it environment, we're with today's strength for of of as a dollar in that And the thing XX% reminder, the given sort the feel of rough and is strong to soon policy business dollar on a and maybe the got policy we've a, numbers weaker outside a in a U.S. the basis. go-forward with be U.S. dollar

flush that's revenue an growth, the implications it's out an that the would about provide opportunity our is There of of affected our Brexit element hedges how basis, of a beyond. markets other currency and we as base in UK to matter Europe Brexit the - that whether and and on how no think out I

of So, in there I think opportunity has addition for is to. to a what growth alluded lot Charles

Philip Cusick

really I we small on if really of acquisitions side. tuck-on once, you follow-up That's company? the new think as a you. currency of the think Or knowledge of sort service possible? should can interesting drive relatively is do capabilities the internal bigger acquisitions to Thank of

Charles Meyers

that I edge which to portfolio, and we're in grow interconnection our the edge feature think the then going function to Well, of services in and is services portfolio. reach terms probably, services portfolio in continue of terms

so line a of the and these is off blend little between to one which a first interconnection Network is services. edge bit Edge, speak, the The

organic a we whether And targeted that M&A, I But have posture probably potentially think over standpoint. development a from services but there that we'll in time, initially. we to, at capabilities, that that be the warrants looking will of determine, aggressive augmenting think look or not I more our we'll portfolio are going at through lot to addition

Operator

Capital BMO Markets. with comes Our from Klein next question Ari

is line open. Your

Ari Klein

in of you a market, expect what that Can to rate little It are about better improve few sounds next the there that and you Americas. quarters? the you momentum kind seeing growth talk how maybe bit like over you're seeing some

Charles Meyers

attractive Yes, that its profitability you Sure. business think of to for be continues size, us I what exceptional business. Americas an the the know business,

look really standpoint It's good but as that engine the for traction you per at an large If a and at of to selling from MRR customers number huge world. a business, team, local market, the exceptional cab a rest it cab. really the only our almost capacity $XX from for selling not of outbound

of colocation with And in so, respects, It the business. that's we're probably growing broader think the pleased retail performance the I at line a But of super rate in with is roughly some market. what I we addressable that's unfair would because our the XX% are an is for market opportunity say is, deliver comparison, yield. services - a a cash-on-cash real market bit that colocation

And I'll vary a at tell in being impressive accomplishment. you an to substantially our and business than share business is grow to rate higher it's I in that is, the share then of terms think high that able market

still talked we continues bit that to create bit longer little good in seeing are the but of we thing, business. Verizon a that, bit of take we assets it about some of in out little in come had it little headwind that's So, net-net, a Again a from anticipated. headwinds particular, churn does tail a just to than

have sustain But yes, I we of see things, to good new the very going as a Network and add services to success. in continue some business And think the positive I opportunity think we're way. to Edge that we now, like other

Operator

Our comes with Jon next from Petersen question Jefferies.

Your is line open.

Jon Petersen

Europe. joint talk the in to GIC about wanted venture I

details. have about little the bit been coy guys You a

balance that year over us what the for impact remarks expect in next I hoping AFFO Keith to growth the can we balance a of is on should year. million $X maybe of towards couple of the the and of little end kind more think for But a you I'm net said then you details years. JV the give the the about of just

Keith Taylor

a comment. Sure. to just there's Jon, start clarifying let I off, make want me sure

with the we when QX going selling that. by million earnings you we all and on $X about basically are update that impact, we'll you're aware, million to So, is said, of That as assets the so in talk to the because call the JV, AFFO details. the all from next specific reducing the certainly our all transaction us we're close $X

cash there given happen important going going are amount the thing to back the and say, is first for number Paris into a suffice that our But it the is of things come the business, XX of to that and or Paris sale proceeds everybody to be London of X that's note, assets.

rate but our flow. said get recovery basically cap the we're to get We're also our cash we've costs, of that to we're going equity the better add joint venture. XX% going of And in or get interest market reimbursement fees, again, on stake reimbursement going our to of

opportunity. excited so we're And that about

going two that will assets for earnings is clear, announced about the the go we then be this value stabilizers, the the getting add the the active This We've to to elsewhere in strategic platform. business. make we've gate in by in out the But we're us want deck. highlighted as world. into overall potentially to our about be very, more, is of And that really we not decisions very on being wholesale would to franchise

that be we the about deals And so very we'll do. transparent

in We income - momentum will they're the be going come years to from the will typically different that established coming sense below will give of good market. and share that line. a of quarters JVs be and which will be going the be through you the to value that will affiliated with over a the number there's But entities,

fee typically top-line, will the we fees be but income that will with JV of on again, just the Some the I on fee earn and top-line. from the income. typically be And will be be will the the it

we're discussion lot deals a of decisions our here, very the delighted the about and get we're there's but optimistic by got partner. add we're close, out I'll be to making So, with still to

be global a in. market partner to to to almost that choose partner any going we for go that great us I will think they're

Jon Petersen

the I and decision of a can - I'm balance whole And rates. about you partner then bringing GIC process I would once into curious essentially versus stabilized, follow-up. cap as kind sheet probably joint which to then guess develop just maybe it's sell venture, the of a like assume in a takeout development you lower through development share one partner, a more your on own carry finding where the

capital Just you around to curious in? that how come your wanted thought process

Charles Meyers

Yes.

I recognizing get investment of the we've including projects, those assets. made, go-forward first stabilized, what we're decisions not return going is on dear decision think think as development full is profit first to with the are basis, a our which two that fund the take all to for capital we is and said That's use business. it low means very a try associated a to returning and

We think partnering with the adding in balance the GIC, to platform, retail growing we're sheet business. happy to focus share business Analyst on in on we're our those the the overall shared really is all consume as global that retail last we development Day more the and and profits because on our we going capital in to have

the a and decision, of I've new at and sort mode, into is the about services, interconnection the we're I our the includes the - making So, number around said new our value hyperscale at shareholder investment augmenting, base between mode of and good meetings, not services. same driving this time a which widening a our of number on deepening said We're - business. only also

think get levered to, and us and with let use our a We'll I attached get our returns income those outsized to fee because capital just that And returns. partner participate returns. of good appropriate that's the

Operator

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

is open. line Your

Colby Synesael

considering any taking were cabinets equity much any and expect range and just consideration year before. that developments million two quarter just the further expectations on Thank back quarter, raised the they have surprised into are extent connects the talk you possible. go questions then of on how both we just color the raise connects can the just bit what of about done you and building we ATM a well? cross you is for year cross out, as Can quarter-over-quarter down you. as the half I to on connects in give cross the and into color physical, modeling and you One us $XXX And this cabinet actually. secondly the

Keith Taylor

at use take needs a Charles knew XXXX And first the time. and I where the and Colby at there Company and we Why always end as second. don't we we right into that looked now take always funding of it the the One one, between we market thing would our volatile be as of that were, the little ATM, I bit to with we take that they an at this right thought conditions that ATM share. roughly time doing table $XXX off ATM and using - right the was price being certainly as will would be as a We was this take appropriately felt it year the of a the always little said we've what and a do. deal average the on

that I debt. that, our a prepared in my highlight from to look I - remarks, we really said Having ones wanted trying new come to our as was will forward lot of capital needs

debt. that make we sure we continue that So, balance to want to

a scores that assured sell shareholders. market. get second of one, for the same we with the that rating. could price was equity, debt time, we to the good it market got but knew and We've us opportunity equity a the our unique to this capital investment-grade The also because for Yet at -

also period second And savings now million, we back million, million market some step perspective, time. can of conditions was historically and $XXX that, ultimately reflect interest it cash rating today the to and I you now could say it $XXX very of number between very, reaction $XXX an potentially saw so when after save interest positive. from we I could on said, And what investment that because of be market over $XXX be million, given that grade believe do

basis. but debt more on that liquidity position, sparingly, thing, the anything would point. have at And the ATM absent strong other we any on of making it's that's, you the we'll or - excited this us, balance tell use focus M&A would what else I strategic any sure sort really a typically sheet, we go-forward than

Charles Meyers

lumpy adds in And then to and of We Colby. second momentum sort one cab depending said cabinets. Relative the the that of timing business. take on capacity I can we one and about four always rolling health the in at cabinets, little sort really be billable utilized is folks ability good We've that will as of of a sort to other average factors feel and an into of encourage so. indication quarter translate to the various sort look our very

at And across And deal continues is note trajectory lot also we with attractive regions all it think three that that to It when a look we're that be is have we the a capacity. again strong. you very important very of added to doing mix. that

of And a a value. as so large way cabinets, much not deals there's just are a to way lot to add add

so, I still at deliver seeing is attractive are to and being cabinet And returns. what much think mix our appropriate think by additions in and higher doing shifting you're we that the that able is

so particular. the about again, the primarily that good to and And overall feel connect - really to look connects four interconnection and encourage relative you average cross at And primary as quarter rolling we in we physical cross metric. then

XX adds impacts we Solid Gig were I of little migration our that down continued sort in of the we’re the XXX to a do bit bottom little of a continue terms quarter sort to right that be gross think very bit, strong. but seeing of range. at end of slowing

interconnection which as profile about and and that is looks of add and with similar actually that every virtual us to you economics. very on in ARPU I combine both And previously, actually recognize are our physical. then you when virtual at We good you're that you very is very number important think seeing return And as a the talked good. that bit look them

speak. a it's choosing so of for the different so tools different matter And to jobs, - a just customers

going And to so we're that I see. do think

XX year. - evolution prior that think at upside this views Gig on by think of flattening kind will XXX sort of I year. as to migration And go of stick represent the we out the in the next of into end Americas we our some we

interconnection we great So XX% year-over-year overall, growth. feel about

we're platform pricing globally think I strong some performance again overall. seeing in improvements the on and

Operator

comes James. Our next with Frank question Raymond from Louthan

open. Your line is

Frank Louthan

and in a I in what a have comment bit little seeing business on follow-up? you Can Virginia you're the then Northern particularly pricing, and Americas

Charles Meyers

Virginia, Northern the capacity the reported have of revolve the dynamics which large the, I yes, of in supply-demand and sort of revolves Sure primarily business that think of think and business. I around hyperscale others around footprint the some some that who challenges

in the think in kind as pass Virginia. in playing said of we've taking market relative a to Northern I that on we're that past, hyperscale

and again of relative sort and world the the the Instead, ecosystem that relative the of to that center in we’re market, so. which be interconnection market universe in teller kind overall to largest to of continues

which impacting of some out see to pricing solid continue I to we cabinet center a terms think that think the ecosystem. good our really side significant in interconnection, yields feel at really So having I is play and there be, business there sorting like hyperscale but the it's in of is differentiated is strong we there going levels of not there, effect on pricing, out position

Frank Louthan

the in played will earlier in believe pretty price Europe was raise the to half? quarter much - - bleed anymore year, back pricing I much in you to the that those if out - is impact pretty is increase

Charles Meyers

time. really appropriate of And we approach period in did long were a of measured market over getting we exceptionally to actually terms what an is thought about for on those we in how a in that because high to long-term to bleed relationship make measured. very do variety a rates. to that think what fair with way wanted a want that We reasons But we of took going who normalizing go also sure to we that service. we value is want they're Now a the customers value the return we're

them we've that as we've renewals And typically. so, at done way in the rolled

adds. And price new and as so, in on the we've already they're - coming changed

And to will quarters others And have and roll coming over so, and years. the will then an renewals to in impact. those begin obviously

growth will we impact a positive a but ongoing slow have a of sort it think of So, be it there, will that and in bit lift business.

Frank Louthan

Any from competitive reaction that?

Charles Meyers

think, I there is that delivering. I in that, terms in of No what we've well seen stability that people general market is think

lift think has there in overall pricing. market been some I upward the

so. again And of customer to and the so, a value and I think reflection that's the delivered

seems going well. to it be overall, So

Operator

we from hear Tim will Next with Horan Oppenheimer.

go ahead. may You

Tim Horan

speaking? on a to that will Well, designed you by what little And that's Thanks. and The more broadly growing been bit, ramps XX% you you of cloud think platform ramps just elaborate of percentage Equinix do as share those that thanks capture of could guys. on is all mean on do a that.

Charles Meyers

a it's question. great Yes,

we will they're of - We with think and will - level know that led for on-ramps a on share providers of I often I because some for looking don't that most in frequently continue the - grow redundancy are the us. to looking on-ramps multiple times They've market. very

position. large think is share so I out we why And a jumped with very that

them. ratings market And very hopefully And to maintain to high we grow continue our footprint I very, can as there. expands, think with continue geographic share so,

- coverage largest have If a XX% at the a in it we - and of on-ramps operate, from coverage in share providers you service cloud we markets overall. look in of which standpoint XX% the coverage with terms a

to going to our combination of for continue us the able be to an invest us. with hyperscale think the that relationships it's portions in We Equinix. sort being of of area focus retail-centric to continue So of

to then balance large the the our focus ecosystem. the very GIC differentiated overall for leverage and to we're we a And on in play strategy And scale continue position us. think right spot footprint cloud pursue on is And going our JV sheet being X firepower able the of to that. really with to strength absolutely

Tim Horan

products guess, material to add And be platform for I it Equinix can new can you a business many like you? and

Charles Meyers

topline we to to edge augmentations that I being Yes the edge looking think of contributor our years and a absolutely of and period edge services that as think yes, is at we're look meaningful portfolio. a I network portfolio the services at services capable other over

to to low very can we will out at think us attach rates sustain come and I at can they think, allow think to we to meaningful strong rates sale that leading will that rates. additions. absolutely be on very, attach And economics. we be able attractive capital prove be - cost market And invested think our those return

Operator

Our Simon with Morgan Stanley. next Flannery comes from question

line is open. Your

Simon Flannery

the the more just us And that. a and can the color I on spend, bit delayed currencies, you on just give can remind talked just around you think EBITDA, then, hedges on you the or that it hedges? Keith any what that have comment some little months about coming back existing XX your you to is us into do deep extend now and X right remaining say left Thanks. term pretty much the of have you X, hedges -

Keith Taylor

delayed that you rate timing course expansion AFFO at it outset to roughly beginning Again relates we of about guidance to to growth we is the talk this relates P&L spend. never this at and we've of was a seen as recognize, $XX our year at million that timing $XX when and that year, about we to highlighted when we've talked a - before. as and the line. that company of year, been as I the the things EBITDA, And we million relative of EBITDA the think able increase part some areas expose about to it

second in making half see you're Singapore, those to going Kong, for of the or where we're costs come the Through the future costs some substantial P&L. through of run year, will whether investments Seoul and those Hong opportunity

a from that's spend it. going $X both year And experienced utility lot hit as roughly by half of up Now utilities roughly perspective, it us going by We've we've $X then is pricing our a perspective we the another incrementally. to felt through and second the a said, and consumption are affect and million. of million

that So guidance costs least reflect at we've outcome. there's we into $XX embedded million our that anticipate that of

see that we I our as eight press with call it the you quarters. in And what our blended delivered over can As typically we relates the then you we rates. - breakdown see currency, release, that to hedge can stated out guidance just

now So roughly and the at but rate hedge not hedged Pound only spot, is hedged at right out and at XXX euro we're XXX. the trading and XXX at the also we're with is XXX.

sense, our pound is got we've sorry me you. of one that to a is let position. And revenues the euro of I'm size so for XX% of a our roughly telling me revenues. and was and it things that And The X% just gives good really you so, hedge

again pre-Brexit currency about you to Of hedges of in is, But are course, we'll X think that continue if smooth fall sterling will telling - off the next from sorry to in and the movement. was impact UK and where over sort the the future today. me X very of pre-Brexit, alone those and to the to we quarters feather thing

rate when was today The it’s roughly, and the pound roughly is XXX dollars to differential XXX. it

pre-Brexit. on the a that for our for revenues is we $XXX roughly that's $X.XX $XXX mean pound X% to back its there - million topline. million have us go movement the So to of I of are $XXX and roughly level million to just

that relatively a and get time. this of short in we've currency sense over you how substantial the so, movements impact have the And of absorbed period those been business

optimistic one be. one we're whenever normal, to So that back as things day will get day

hard it's imagine to anytime So soon.

to the a benefit see to in growth portfolio going occurring business of because You're the will that this of of with diversified markets accrete lot U.S. our outside

Operator

with Our next Citi. Michael question comes from Rollins

open. Your line is

Michael Rollins

future to Just back results year annually? than And of X% how you a you revenue Thanks. goals, performance had XX% you now see annual more the those and a of including thinking financial a target little year curious ago, And some little goals. a of I'm over long-term operating relative provided progress. some to

Charles Meyers

about good we've what delivered Yes, that June Analyst last - we Day strong And Mike in think feel Day about that. past I expectations. think year, our at relative continue we retrospect relative to to the I over talked to in Analyst fashion plus those our

the another And I so, think direction. today show results in step that and

So very again, business I think performing is our well.

we're had kind with we think there. out comfortable what I of laid

We opportunity continuing top and are on the incremental services new We actually to think market we're think deliver a huge for doing. what by think to there is we of addressable expanding. adding actually already us. is We it

about articulated. good And we so yes, feel what we

Operator

Kvaal Jeff Nomura's comes next Our from question Instinet. with

open. Your line is

Jeff Kvaal

And very to is as of lean, bit in growth a maybe organic your up Mike's inorganic bit it is it for sounded little on you more also and your time range. your that sort thank much. I'd a like organic sounded question over though growth. to X% Yes, as follow little remarks the though on prepared in intention

how growth should up if or guess some of only about to organic growing suggesting XX% think that we I with that So that? X% products rate. these pick new growth you X% should a is bit little at the Are of organic

Charles Meyers

referencing, I our stabilized growth our number. growth combined at X%. much think asset is you're higher But

again comfortable just articulated. - think the I in we're that range growth So, we that our in organic had

year-over-year. was just So, we I a delivered think in quarter fact, that X%

comfortable growth we range that can that feel the articulated. very - so we had the And organic sustain in that

Jeff Kvaal

ongoing makes that Okay, sense? CapEx so

Keith Taylor

over I normalized be non-acquisition should we you Jeff movements just for five-year eight on that delivered have expect years, five-year call five next and I is XX our X% when a be mean what a growth the We currency over fair, basis, investors in the this the XX% and - Analyst over like period. and normalized to guidance growth to said to to we period June at Day. Yes stated our

We would And that be play in that X% inventory a in the reasonable expectation that of XXXX. development on it our like was timing from XX% that. CAGR range feel, XXXX depending to builds and through and is

Jeff Kvaal

prior if downcycles? can how is a business of now since different business then And you or the I'm has you Charles, follow-up, in turn prior macro, on the has downcycles bit understand some of being I resilient sort to respects. while And wondering there been talked think us your been a little how quite a in a played about help it's bit down from

Charles Meyers

Well, during history terms good. our our been performance of in downcycles has again, think very, I very

that infrastructure their And the business resilient. operate how in we quite makes of and I terms I so I importance think customers that of they think to - our it think provide the

us that's priorities architecture, business, cost you through performance our terms look their we of use out. like particularly for how improving true as a at way customers also is things the of they thinking think I taking but in of when which the like

we and of fluctuations implement performance very those things are dollars very, and drive to as resistant think their conditions. CapEx to be hybrid or way that application to stretch and are a they so, sort going as And multi-cloud macroeconomic

I very macroeconomic the through resilient about will again, it we So of business, believe and be good feel our cycles. strength the

Keith Taylor

one Jeff, let of me a add quick comments. just a other couple

done Charles as and can thrived in be sort we at that so of reacts times the we've years. and advantage yes, we can historically at foremost how love we've over opportunities of resilient and of influence values economic we and certainly periods take that market the and First turmoil said, the the can fact we and start,

our I that on that $X The an other line rated have sheet, understanding we that cash an billion. $X.X unused investment tried highlight really we company but think of balance grade today to of part of being billion credit we have

AFFO think of from generating year billion can grow meaningfully we and over grow are five-year a you We $X.X it that - can we said that period.

payout Our our partnered the of hyperscale to mid ratio going it's be for GIC We've with extended times. leverage initiative. is in over our And sort X.X low to just time, period an mid to of XXs.

and And of so the Company a pull have flexibility back. lot a that strategic as gives thing to extent us we

can We're the we absolutely weak. spend. felt always the or whether levers push capital We've operating and pull as spend needed it's

think our who of have we remarks, said doing we what in anybody space. in we comfort else advantage we're as prepared lot relative strategically the in So we and are to we're and a

Operator

comes Deo Nick MoffettNathanson. with next Our from Del question

is open. line Your

Nick Del Deo

willingness as you're your we that that regarding customers introduce, or products that limit the should or of for to to introducing about we example compete far out, that hardware services customers, how consume First, and are terms consider you're push nature? new may virtually services there think in of willing planning things to with boundaries

Charles Meyers

global think do be think we think to I excellence. and value adapt would interconnection proposition, ecosystem and adapt the say centered service is and I and consuming think market really which as that around deliver think, people we I Yes, willing and changing access, ourselves needs view reach, I infrastructure company how to have what I an infrastructure changing the those is our is we about to but ways underlying

think And probably stack. - will we likely way up I the that go we not are to so

to that every with out themselves be of provider ecosystem other is of whether value the service partners, aspirations. that's our I of combining and propositions continue people transformation that that road. - infrastructure network think or an proposition the with we our our look infrastructure comfortable down proving those we to have provider by things very the I we'll day likes value think broader sort further are being layer hyperscalers we partnerships believe an We other unlock enabler digital partners at or value higher of sort

So I believe we deliver going we're from things But think what to too what's that from needed slightly at. certainly away not value been, also if traditional the customers. think than really that's far has away shy go I business our what that different good we we're our to wouldn't proposition to to - we're that going are

- I terms we continue do that are competitive that believe of partner. that to really be overlap and So, we trusted we need to in think

an to strategy us be of still stick a has choice been broad need that And and a will have a to reason broad heritage. to ability gave business our provider sort our - to access underlying on a We people built within I think neutral proposition. value that

Nick Del Deo

amount what the a And how lose scale exclusivity determine component to GIC? index more of A to was on get you hoping leasing the shift into few the then I or xScale, deployments of details goes how and xScale your do going agreement Equinix. versus current tight what material with

Charles Meyers

type on-ramp a some they a availabilities difference requirements very the them terms on very deployments. of sort in there take footprint network of for But is of they of typically look node. And me and platform either let really, than hyperscalers large pretty look can needed. different zone and as multi-megawatt distinct add of as Yes, at typical that a Keith or

try side capital. our the that's direct that, to so way I a business to think a very And we to we allocate xScale that so better of because and of think most on will facilities large

place again on there evaluate those and in overall. very returns that environment do And just to we provides there xScale take so better - are availability to that have capacity because of us prefer for that in to we mechanisms would footprint an large if

Nick Del Deo

real take what there is what xScale done your saying deployments understanding targeting My European historically? follow you're to a willing was Just even is in footprint, you've quick. some that than larger larger

Charles Meyers

is hybrid Well, of being recap, as that now it sort that sold and in JV. facility for was London that you example being the in to was look of at a what we footprint XX and did exactly facility that type

that. that we've prior is some hybrid we facilities do call we the I And mean, talked there are or last Europe. But of this doing the I our in some done we of selectively think a that little - so, before one or last - been those, bit - earnings neither yes, one, were that I in

our has would think the prefer us of centers. into the availability xScale would from in the a to capacity different. it's move JV. xScale to market, preclude something to do that say of out data that druthers, capacity preference That I dynamics But either we given question our from the would the be or standpoint doing

Nick Del Deo

regarding exclusivity then the And component? Okay.

Keith Taylor

selves. the flexibility not again can are there we choose is interested go it do something do can they that ourselves or do Then, their something they that and exclusivity extended to with a in. we on but so compelling partner exclusive that other there we of Yes, other is allowing for the parties other, lot to reasons and to the period want each go

where there to there tension have chooses is we each that markets could other operate sort we the are careful against is interested. no And to in understanding the that's of overall, again not be parties but But we're the be other market, competitive markets in. the And of compete be the of there other that not one in. to - in going

Operator

Stifel. question with next Our from comes Erik Rasmussen

Your open. line is

Erik Rasmussen

we at what but number that and should How - the of compare full especially particulars of the out relation in out laid to expect build the just to think you was announcement a was just I Maybe out? the at xScale. Day. you is be, then xScale with capacity what know put opportunity, of how compares in would continue sites what just laid initially about maybe around do And capacity out. Analyst

Charles Meyers

vision it's first think I along of Day. step very what Yes, we Analyst the the at much painted

so that I So key obviously ventures, really recall time. that doable are think from to XXX a and that we think talking you of covers the were think over about probably slide ecosystem. number are we of like that we through markets I there, critical four absolutely larger to we sort think I and this feel Those markets series continue overall one are can, joint things of that if megawatts,

can, the have think additional And we yes, so, think very even add think think we is grow. we add laid incremental as metros, to out vision that I I we - accessible. the even If I JVs may very, we'll and may it we opportunity not,

think for I than collection overall JVs something better that that. is the of xScale to

deep big to into We a the think at think we're there is pull going and. sort of there We opportunity the operate there. demand

this sure a in too And to first great and is so I'm step distant for future. I the not come think more us several

Erik Rasmussen

And properties, for and under on heard any relates just be in the data thoughts recently construction, then I of others. you And about to this the was on maybe to the in would development, will just related do project. guess guess committed that that, moratorium Amsterdam. XX-month one mean what under center that relation potential and to have maybe impact might it I what And we've be

Charles Meyers

that to of and close sort mean Amsterdam close that. us. moratorium I market through And the we'll to and our projects think things of runway we sort in think moving to is of global significant keep have, Yes, think are things good we've I for that news scheme going have very grandfathered capacity the on I already a And that we've plenty in the sort so obviously I we that. stay stayed the is - to very as we're of

we're leader committed have because market. I development Well, market opportunity, so to think much really continue do. the there But have to already to going serve as the also and we that to that a

through we well that positioned as I go to be phase. think we're going

Operator

We question. for time do more have one

comes question last with Robert Guggenheim Gutman from Securities. Our

is open. line Your

Robert Gutman

Yes, thanks for taking question. the

deal it say going say would. - you $XX you what demand, head deals this with more would is it it anything any stuff it, Is talked Is better can than multi-region the of plan. call, channel services in you pushing attributed million it's is portion thought a outperformance, about in to the you it's than guidance particular the but to specificity something faster revenue Europe, of is it uptake. faster. lot your would that's We've would raise performing you Regarding that highlight

Keith Taylor

is of So part the where where Robert the for And forward element is it's on for of XX modest to look at that we from us relatively our recurring sort important the now, guide our of strength overall give us to in indication stream. one, of I highlighting just mean the an prepared to highlight us try when revenue is - coming second everybody is quarter remarks, then the in the of to situation you QX so year, the the reimbursed fourth two, number number than for the more guide get costs and really how on you we momentum for of telling to the come in going sales Dallas. half that which that under through differentials one-off some of third is based a going ruling QX in anomalies they're there with some some from our book-to-bill results favorable asset tax that quarter

three that they're was alluded the I all we're and to portfolio what momentum across delighted But right how on platform regions, the and is and performing overall, across Charles with there mean today. earlier really

Katrina Rymill

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

Operator

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

disconnect may time. at You this

Equinix (EQIX) 31 Jul 192019 Q2 Earnings call transcript