EQIX - Earnings call transcript Q4 2020

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Operator

Good afternoon, and welcome to the Equinix Fourth 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 would now like to turn the call over to Katrina Rymill, Vice President of Investor Relations and Sustainability.

begin. may You

Katrina Rymill

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

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

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

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

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

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

Charles Meyers

to and of an your welcome ones ahead. hope off you year call. Good our all I fourth is quarter afternoon, for a that are and Thank you and and XXXX that ready exciting for you, Katrina. to start healthy earnings safe, loved great

reflect I time other lives. history. in nearly COVID-XX our living pandemic any we events are Without on of As the every a aspect XXXX, unlike question, clear our in it's the extraordinary changed of

For some, and devastating. to impact the has been be continues

scale adversity face execute communities to: centers landscape, the employees, clear. be but service business enduring our engine. and healthy Canada, employees to backlog and and connect M&A, to remained transpired, introduced value and a world our the midst the digital we XXXX, transformative GPX operating both data keeping and deals growing here a infrastructure our we powerfully to launched to out our infrastructure for solidifying customers. and ahead and our XX, loss. customers, expanded for our those each our XXX expansions, resilient, this of other, year and capabilities strength pipeline. continue enterprises We've hearts innovate, deliver through the strength has great Our support facing proven organically and on we most revolutionizing all an go still to continuing Equinix changing suffering construction customers support in market. sizable leading Network roadmap our Edge, the Metal, We In which way to XX operate. market and have and large take the over our transaction be health, like reach, to moment and and Mexico to and believe provides scale Metal ever, in Equinix our our thank and has digital fully our the be the place Bare in position where our of commitment our which in automated to completed closed our customers as shareholders, the infrastructure of it. a around We that has excelling and as Ensuring and demonstrating to continue We and they reflecting of in highlighting Despite new our live it, of in a we in and service to India, Service to will momentum model ideal proposition for interconnected the offering flexibility greater even they need active not of well-being entering tremendous a need or in for that our when safely safety digital communities. partners, their go-to-market a our focus announcing source provider for Fabric build I'd to and rapidly springboard only

reflected leveraging We also a to year the as the ratings active investment-grade our had in in per metric. capital AFFO into our debt, very driving share business substantial markets, interest savings our refinance

$X consecutive in delivered completing we quarterly our year, growth. continuous the top-line years XXnd billion XX amazing and increase For revenue revenue, of

connected post-pandemic across partners, more represent more transformation how but how how of they reshaping the the interact road innovate, and Digital our with lives flexible, engage economy reshaping of and of that fueling everyday they interact new is reality for world and landscape and demand Digital clear: competitive employees, how global is is is architect hallmarks their generation that impacting Equinix. support more their more digital. not just their Infrastructure how data, network. how In they our Everything with our every collaborate is changing. their Platform digital sector infrastructure. increasingly element businesses, they is ahead, one a characteristics distributed, the they already of cloud is is customers' every terms they the customers, of and inescapably

capture advancing believe will overall to as for digital expand to continue embrace As for customers the choice, multi-cloud architecture nexus their digital role digital a burgeoning journeys. and capture key as significantly, infrastructure service long-term a massive providers We play to infrastructure of creating believe invest and digital Equinix with is demand market uniquely to build priorities those of Equinix their clear to positioned our the hybrid out the transformation providers enterprise targeted continues ways addressable a that a for set for XXXX value in We build our needs sustained opportunity reinforce and advantage competitive creation. to position market to this and entered able market, on evolving expanding we adapt leadership, buyers. of to us

resonated center sense creates opportunity our we're our of navigate goal for increase the a Equinix year, that social an affording competitive ensure strategy. And with ambitions, culture is this employees important people our we continue our as our center the to at This employees, global opportunities of supporting source a digital a belonging diversity, inclusion, are we is strengthening in component be that of foundational ahead. People have both all remain priority customer infrastructure, the sustainability area. award-winning to First, to and and will advantage. interest has and in stage. of and how extraordinary justice and climate greening and and on challenges a change customers us expanding our our culture will significant durable front all seen

innovative well coverage, continue certifications projects, sustainability We as and forward techniques renewables building all efficiency science-based to expand around targets regions. energy our our push in as X to pursuit of efforts green

efforts in customer leveraging customers. business long-term and and Second, investing billing, at our self-service enhanced channel experience. and growing our to for automating, in operating delivering drive include headcount amplify our reach targeted streamlining of will we and and ordering to front scale our digital options to enhance continue productive enabling go-to-market engagement will This aimed focus we'll on leverage simplifying more In scaling and to our quota-bearing the engine, us. parallel, opportunity evolve our prosecute highly channel and

across new our market retail positioning across to global and customer go-to-market product we'll drive to acquisition and xScale ambitious all motion, growth future an services And business, customer accelerating as base. plan accelerate adding capabilities, continue customer expanding expansive our aimed reach attach both demand. response we at in Third, with we'll augmenting new for rate digital us fourth, expand availability our direct our and

X, per the grew grew year-over-year, revenues interconnection Equinix year all rates and adds. year-over-year. currency for up adoption solid growth as These Turning year-over-year. and was to and were driven share basis. EBITDA Interconnection full $X constant revenues of our are on Adjusted XX% X% Fabric year-over-year up strong billion, by on normalized AFFO results, depicted X% XX% Slide a

across roadmap company. saw product and our by XX% position and existing strength our to port platform X,XXX longer-term capacity offering. port vision now We with gaming In saw as interconnections Fabric an of in content X% segments. increases, density growth, customers growth, well incremental Exchange connections interconnections, metros. intra-metro we quarter-over-quarter to advance their cloud, year-over-year, and and Our than QX, as infrastructure up XXX,XXX significant in competitors our to continued support Internet speed peak driven connectivity. build fueled strong driven by combined, cloud Equinix digital also our network XX ecosystem more top continue and upgrading and the increasing use out over and traffic higher traffic world's continue to added by have both as additions

connect In infrastructure. use first We to global is Equinix also other Equinix digital it Platform launched as Equinix a available digital its an Network branded are to of Metal, And Equinix our X in an customer into create finding Fabric with to both users year. this and early now Equinix, with the product, allows Edge quarter solid ever XX plans Fabric for Metal on quickly and additional built unlocking scaled integration their any to foundational markets easier value Equinix Equinix ecosystems. full new easily connect capability that momentum and and demonstrated than leaders metros,

are side expanding JV continue and making scale progress very that business. of our we strategy and be pleased of with On the to our reach significant business, the xScale

is our sheet enabling density, structure. our demand extend JV cloud us while deepen set, hyperscale leveraging the planned, As with and xScale capture product to balance

Australia incrementing for have to are accelerate and new Plans xScale to new options X second resourcing ambitious include underway, broaden XXXX evaluating are bank. our We reach our early and of as phase our markets in plan an existing JVS, market. Tokyo success with leverage existing xScale such spanning entering in have and X XX, this regions forward and moving the land We given currently builds all growth.

verticals. cover the from me let highlights Now

resulting as mobile productive shifting Network resale. sustained vertical, of service from patterns by bookings, Our have some carriers to upgrading strength our networks the which and to as Network most address traffic to enterprise pandemic continued this proven in achieved channel core, partners, in providers well led vertical. be record has again, edge driven momentum

a Amsterdam, to video-on-demand core re-architect New Senia infrastructure Fortune Frankfurt, provider, network Hong and to XXX support to as included and leveraging cloud well Networks, for London, Kong connecting Equinix and Danish a expansions as partners operator, wins in delivery. cable caching access

quarter, led firms, dense with included multinational Platform Americas. record a a strategy Our access Expansions options equity and Financial had by financial implementing hybrid XXXX insurance Services in a the their ecosystem vertical fintech also Global present particular Equinix. on our company, Fortune strength XXX services expanding player, cloud financial a to

video are investing companies Our particular Content saw digital to bring consumers. directly Media and strength to as and Digital vertical services advertising in their

shopping top marketplace independent global New e-commerce to wins, the of to traffic from digital one deploying nodes Index e-commerce largest activities; ad groups, tech infrastructure compute support a and and expanding manage included increasing customers. retail Exchange,

and scale optimize providers IT growth. in to and a Expansions and delivered platform Melbourne. markets, global performance, support and smaller density deploying to cybersecurity experience; experience Europe rapid increasing provider, software-as-a-service and and of support Fortinet, Cloud user vertical in on-ramps Dubai winning users user cloud solid new and infrastructure including included closer expanding enhance coverage Our ServiceNow, to bookings, their

healthcare Our see as by driven continued their focus Work-from-home shift a broader quarter retail remain vertical and had less initiatives and telehealth Enterprise back digital transformation active, pre-pandemic digital initiatives. levels as although collaboration-related to and use momentum. than cases enterprises strong

in strength infrastructure the technology particular cloud another segments our alliance accounting efforts with range deploying a facilitate channel Health, for And system had partners, the XX% as to Southeastern as at We and well U.S. a Fortune digital Atrium included digital of capturing transformation to XXX infrastructure interconnection across our well company wide program multi-cloud wins enterprise hyperscale as deploying bookings. on Equinix great enable wins New of saw and focused health compliant, business pandemic digital quarter, industry response. as connection. partner manufacturing largest

a Canadian manufacturer, parts to density ecosystems. accessing and car network automotive cloud to interconnect partner wins connected included broader the and our New automobile

pillar important beyond. expect We XXXX strategy be channel go-to-market continue to bookings in an to of our and

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

Keith Taylor

Thanks, good afternoon Charles, everyone. and to

of activity, are customers levels families organization with and bookings, comment, booked As strong in significant I of the We delivered strong with head but inter year pricing pipeline and our the in we Charles employees. XXXX, gross a times, record my into our and consistent at intra-reaching installed. our XXXX. Also, well. noted, we for positive all challenges healthy actions a XXXX. the we're deal year Despite cabinets your anticipate living the investors, high flow on increase sales Equinix as and and our in ended healthy rallied another hope and backlog quarter's note of yet net the unique half not year billing ended meaningful prior and metric of you And cabinets first a we the team with

business and We're With expansion expand including previously xScale digital our a markets to continue infrastructure from managing we level activity we're XX our share to also automating So platform. and simply our on major underway builds. peers. ahead, investing year us our strategy services world's currently substantial initiatives, at top-line scaling continues In leaning company XX into X as core at not level. the per countries, product the value And put, our across construction the and separate XX to drive and a both projects and seen.

of Our in and investment-grade creation driving direct are long-term volume durable down that towards our both metros indirect high-quality major from the active drove generate channels, are our been in ratings million in supporting of and $XXX capital dollar-weighted our that across continued cost also CapEx We've borrow. Both markets, shareholders. benefiting and helped build resulting OpEx the our the efforts wins value over interconnection-rich investments for revenues.

Over cost value reflected our per to AFFO X our the lowering XXX another billion of funding over as by raised scale basis business, overall driver the borrow $XX.X we past metrics. years, and in points, capital, share while approximately growth blended in the

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

differs to revenues QX on net part accounting quarter model when of up a Slide over expectations, depicted a rates. FX how prior our positive reflection operating due X% better X, another and NRR although As activity, from actions, of revenues, guidance a strong the than last peers. million our in by benefit billion, compared We strong net enjoyed hedges, of same quarter global adjustment. were offset part our our $X pricing $X.XXX included one-off QX year to in

same QX, we Looking of QX. utility although performance $XXX expect our NRR over revenues, strong operating up Global costs. year, expectations again outperforming activity decrease EBITDA step up favorable and QX in mix, in forward, to last was due the revenue adjusted XX% million quarter lower or X% to

similar prior investments, $XXX Global a recurring FX Our strong above benefit greater our FX was when while strong QX on flows to due Interconnection momentum included significantly to adjusted a higher Consistent compared QX to absorbing collection cash continued AFFO of activities. million dollar a hedges, a prior net performance, showing currency recurring operating net than with as seasonally to CapEx our of revenues, basis years. EBITDA recurring increased revenues quarter, rates. regions, the guidance our largely on expectations performance strong in million, of $X our and operating a were meaningfully due constant basis percent revenues. scenario our each across AFFO, of XX% both our

our of bookings consecutive in region quarter saw X%. whose its highest EMEA record pricing, mix X on growing new region high results deals year-over-year regions were gross logos full followed highlights, with slides number regional of our a both X firm to The revenue X. and of normalized by a Americas on years. third APAC through basis, Americas and midsized Turning the at are fastest-growing XX%, covered our

Canada continued sell of Americas to of team quarter strong. start remain the regions. trended remained across billing to assets and record first integration delivering platform, adds step-up Additionally, banner our track. XXXX. the levels, exports back the our half to global efforts on second good under in Bell and normal the interconnection X consecutive other on Cabinets large we a cabinet the billing in Equinix had a expect

quarter including Frankfurt bookings initiative region high. businesses. Japan we're and metros. growth a our meet in investing cross-connect past solid deals bookings markets. Singapore pricing XXXX. in broadly had best moderation our in lap gross although in strong, remains growth some repricing and saw region our X the or by years, to emerging in anticipated firm best Asia the in mix GEMs second demand as EMEA XXXX our Utilization expect Revenue Pacific activity small of rates markets, edge we the region remain finally, intra Our led both with quarter, solid and And our with in these its Also, ecosystem-accretive we successful Amsterdam

over due decrease prior debt closed And greater JV our bring coming quarter. capacity Canada year-end, Slide new and please the to capacity our GIC quarters the approximately the moved Paris structure, our to billion, December. over a billion, EMEA asset to quarter $X.X of close acquisition of capital the asset we $XX with is meaningful our expect X We constraints. and in Also, than the settlement refinanced Japan to markets in into anticipated looking including at of JV the ease in At now the cash the unrestricted sheet balance Bell online key refer X.

sheet meaningful investment, should including quarter. joint At equity As xScale In in a of the on year-end, than activity. deployed. JVs billion, capital greater over $XXX assets million result, expect a total had balance net you in xScale reimbursed continue to our increase the ventures $X of our us the their XXXX,

adjusted EBITDA annualized levels X.X net within our our our relative low debt to remain at range. targeted QX times, Our peers

structure. coming savings. of over our to another still we years, large interest refinance the a X rates another $X.X in million result which at quarters, have $XX portion debt past Yet, annualized historically we the debt plus current of refinanced would high-yield Over of billion

including were CapEx Turning X of for over $XX prior million, Capital a but as quarter, increase approximately million, expenditures the recurring to Slide expected. $XXX a the quarter. meaningful

Our expansion incorporating levels, while actively teams. and external well-being capacity pipeline, the internal teams our construction build our procurement manage continue safety delivering to robust at and and health, of

experienced and we Frankfurt, to projects, a delay due QX, In we past the the continue Paulo. few a that trend year, weeks will average pandemic, Over Paris of expansion construction new assess. monitor X and São we've opened to an D.C.,

Italy X support added access Additionally, landing into our subsea opportunity. fiber including new open have in QX. in tracking we X, Genoa a projects the X cable direct of station facility our entrée in our to expansion sheet, Genoa to will flagship this ready metro to Milan

ownership, currently land in We XX%. São represent assets continue Revenues our for City, acquiring to from Mexico Genoa, Milan owned Madrid, and expand development Paulo. about

capital returns Slide delivered strong shown XX. Our as investments on

and Our revenues recurring XXX a our cash-on-cash generate a year-over-year PP&E stabilized on U.S. on currency weaker collectively utilized of These XX% invested, a step prior X% non-U.S. stabilized assets constant XX% quarter impact assets. dollar increased by the assets to basis. over due down the gross on return stabilized are a the

update prior to similar we stabilized asset call. reminder, to a the our years, As earnings plan summary QX on

refer revenues rates expected GPX to Now year. XX business are year. XX%, top-line to acquisition. prior results growth grow summary the X.X% per our momentum churn X% our remain the pending and the expect any for related over to please of X% to with is targeted India for bridges. XXXX to we relative in to a to of our the of and in reflecting X% XX% guidance the does not normalized Do FX prior quarter continued XX XXXX On XXXX, the favorable include MRR range note, expected basis, year. to for Starting through revenues slides guidance financial

range. the lower at this we expect QX, churn For to end be the MRR of

expect integration in EBITDA simplification leverage margins and of result investments offset We the approximately adjusted xScale business, costs, excluding initiatives. by our XX%, the product, XXXX operating of in business

was slightly capital for previous be year. billion, to approximately either grow of various approximately million $X.X includes represents projects, in sell excluded or including revenues. our recurring to expect We've as And billion, future year to cash on-balance This $X. our $XX XXXX guidance our $X including X any the expect share a here. integration is to X% in per future XXXX on increase CapEx expected prior to we or XX% of acquisitions. to we We compared finally, JVs. for to move grow greater related costs to integration costs. X% reimbursed also share an a we into XXXX expected our expected AFFO dividends increase AFFO than billion be CapEx X% activities assets market the incur the increase of XXXX sheet basis. which spend XX% to of XX% to $XXX million which current over per to expect $XXX or million XX%, spend, is xScale about to

let Charles. stop turn me here call and the to So back

Charles Meyers

our continue as partners presented and there leadership about transformation. as times I world all ahead. ahead. We to with expansive across each to environment, business allocation very serve and our Thanks, as place. opportunity dynamic to Undoubtedly, strategic a momentum world's with strong ever Keith. challenging digital adapted delivering the while how as strategies. our XXXX our be a oriented return and extending areas and closing, am customers, relevance and opportunity and the finish In will we as in the through showed of all our maintaining this is us, focus, proud of navigated long-term of in by the and approach continue have But transformation, disciplined a to I'm our market shareholders of I'm to long-term transition year, We invest our capital increasing our pleased opportunity company. to need tremendous unlocking to and ensuring had infrastructure shareholder the challenges digital optimistic

together, enter we will plethora in society XXXX there a believe of ahead gratitude, our silver a XXXX. life the the where world to work, a filled And innovations company, a pursuit with comes As lot the that linings learned the purpose: are platform and and a and I year. to enabling from enrich past and our ready We of come opportunities be collectively energized as planet. by this that tackle challenges

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

Operator

[Operator first Rollins from question Instructions] Our is Citi. with Michael

Michael Rollins

was if to with could between difference bit XXXX. X% of you the about constant for growth and guidance, XXXX investments curious currency What's And more the I 'XX? the organic revenue that you're the this accelerate year, color the look to making maintain you expect that great. additional Just how be do opportunity you Would level? that? Can future? a at X% talk some would driving to you in grow

Charles Meyers

I then Yes, Mike, you I'll -- can comment why don't start, fit. and see Keith, as you

in think doing I as harder larger base, a we're about past, harder think that a discipline level while and seeing, getting and talked strategy. much grow and a on of I we've the to -- maintaining it's that the very -- on

believe seeing focus. that's value given the bookings to uptake drive in a to take the the are creation. but going definitely terms overall. size proposition, that's so to of growth our seeing way value that that at with We're drive fuel We to customers we're does the kind of strong business being that the productivity And rates continue lot of resonant it the of

already the I continue and to that are growth seen we've think increasing sustaining time. that. translate -- think maybe going to But think hopefully I we us do and in of I rates over yes, to those believe terms investments,

we think of growth would think the business seen think like past, in xScale, into -- that the other I we've that our have areas saw particular, in I investments product don't into we made I without XXXX. in and teams,

an And us invest business so opportunity it returns. generate and I in been to think the has for

overall. operating a an time was for I I And it margins, think in one on I going unusual into year. think, XXXX difficult XXXX, was world think our factor XXXX,

people both invest that you return calls. long-term in the And But that and more to like I as they people that as strong them -- employee one really we've reduces to compelling. they I'm than decision give ways the I for I a confidence in our I security Equinix, think and company, right our decision really, your think guess, confident is think given range a jobs. motion stand we that in I on is of anticipated. -- significantly. even to various made sought it's some have partially the interestingly, several we that business. last fell a to employer And of by their continue turnover we as the degree, decision Because fell probably And it visibility expected

think evolve think And and priority beyond. of when it and yet reversing whether with in to and terms that's decision as your overrun a you're a for strategy the you need workforce to to is as wanting that associated falls you continue sort XXXX needs of and to significant, play to growth we're do hand, business anything So with Keith, add and I in to to adapt changing uniquely investments, of of kind because I at the left the business feel we are the revenue. like the of you're headcount side. But customers many, investments be these thought I buddy? from tighter doing whether stay continue I where you of effort you want those. were and going to between. in to trend the somewhere a sort contributing opportunity into standpoint needs in ended our we or positioned on expense And percentage these of needed to make -- in SG&A you an factor digital delay that a probably the think of we Like think add, undoubtedly, but transformation us

Keith Taylor

lumpy. we be ties in a as it said meaningful non-recurring we other before, there's cabinet couple the add as there'd a tends to step-up comments? nicely revenue. into down -- should our think And I over other the That just thing of look I in be telling you that we've about step to additions QX. incremental business. don't a just Yes, a why We expect in that's 'XX, 'XX very said maybe QX, and as particularly

that's sort so And of playing into.

lap that over that prepared thing I as level in went that. And is through price other the The we can't year. increases sight remarks, to we're said last lose my of going that of

so talked And taking a don't and place relates from rate. equity invest the same but the the in say your And get interest I get fees lot either contribution JV. we're we the thing is xScale, our how you it -- it to run I in in in banking progress, you then there. But would continue to activity get will just of or about you on year last benefit, not that yet as that

to you, XX% thing I'll tell And the grew you going what's in overall, maybe other my when on note with just remarks. quarter that's X% one as again, And here. the region so said Again, that comes X%, about to at of look X%. I sort XX%, business. Americas is last really to normalized recognizing prepared

As come growth exciting modest the see about what the in through see really quarters acceleration X see you'll QX, that's year. Americas, then in the you'll last we plan. continue the what you to of but the And relatively was through

confident timing forth increases. So impact feel part numbers of revenue, of part here. we is that is of we just the it of very it based, put in price part overall, the it is But the non-recurring

Operator

Our from Phil is next question Cusick JPMorgan. with

Richard Choe

Phil. for Richard is This

growth. I of that you of a kind Bell to the are of Packet from rates little region? of Just bit, that what assume Mexico, growth kind the on some of for wanted and average them the is Americas versus growth overall follow-up acquisitions expecting the the about

Charles Meyers

across expect the about We that be seen on the we are regions investment, I other to think to And over-index capabilities we over-index, to thing Packet really on that a that. a grow, of that? grab a one don't the think, you Keith, also, want The business, other going deployed as factors. the definitely are say I to I since it's success rest likely think expect would to -- basis. is on businesses global but then substantially over the see there's but regionally-oriented

I the think there that churn through, it's the the the with some really Verizon think several a I business through performance stabilization -- having -- the really I bookings of are more sustained sustained we're a and quarters and associated assets that Americas productive and a seeing bookings of lot from really churn think moved into. occurred

Richard Choe

the X.X%, as higher would I there it of the or the quarter. lower year, of it churn that, else that you but be the mainly a in that is guess, rise churn, because on something improvement? improvement driving follow-up And is that Is in was second to Or well? showing half first said the in the there little

Charles Meyers

No. it timing pushed we and last to that, say It's -- quarter saw did we timing, to bit we a a us of in had quarter, fact, call, that be up expect little we in -- had said in X.X%. this churn of And we bit again adverse that range. little the unforecasted this back

in a I'm I tell back QX, our to expectation. reluctant that's you we're range but So believe tad in do firm

at there So -- would look acquired assets quarters we several of were I couple churns that that there were we from were be that if of the targeting. you deployments say it, the -- wouldn't that over last generally types

-- the strategy think aren't a issue don't sort business in some fundamental I moving part really I things weren't so it our of that is, And of through. it's think, of the as

that's that Europe. deal margin similar services is other managed of associated churn lower the about The with in QX XX was large, bps thesis to

business I we going the of in the again, a definitely pretty within at sort that when back course expectations. we revenue level Churn on really kind we’ve year our ahead. land focus And really of is us the year you you're the to is so I those consistent a of performance where on basis land can that's think range with full out, And a year. forecasted the things where on churn do in for of churn depend think a looking through

area to and nothing -- nothing movement of their critical So seeing, people or going think in exists just terms of But business. be volatility evolving just terms that. it's in of us. in we're I architectures our the for beyond churn fundamental focus But frictional that a normal that

Operator

is next with Long Tim The Barclays. question from

Timothy Long

that kind getting us we'll interconnect the wanted about them business. as I cabinet year? interconnect type particularly with activity international levels? markets, little to up two-parter. can positive in you update half? Can indicator to your the really into Could what head Maybe first there Americas we a equivalent see pricing for the of that, head we as on the the of of global part from of view for more And be bit talk XXXX, a for billing a into ask you on just the the first strong initiatives

Charles Meyers

and about pleased our if it's what though the meaningful I line, even business to rest the you of would business, of proposition in reported fuels incredibly mean, transformation. of performance isn't interconnection a talk over-index the performance will, and continues to a the the broader overall, business the performance comes Sure. as terms of Yes. its and we're the growth, versus and it we really of core interconnection of product I for the that part say with value value the digital when that business means of really -- proposition the the in rest it because strength

success over You a largely of the mentioned in We're of effort specifically that pricing normalization tremendous had course pricing, XXXX. implementing Europe now. sort obviously, we through

built year-over-year Europe, said, on Keith those the that's benefits sort we're as run so now of rate. compare but And in impacting into revenue our seeing growth

In terms adjustments, for pricing the continuing to continue we're on -- anything meaningful don't that. I see that horizon -- evaluate I for wouldn't think there. us we'll opportunity of I broader

also, to our to to I we hybrid think adjustments then think And obviously, at a we, both European and is for do not adjustments. for just it implementing customers. underlying margin profile. maintain us Equinix fuel their discipline we of to footprint going that continue And interconnected, seeing be is look interconnection it feel And of of then going as are we're going the have and multi-cloud a not Fabric, of maintaining point, -- super the for because foundational of are -- part interconnection that focus think needed those we're our delivered reliant to real at coming yes, adds seeing to offerings. last in the so really cabinet and to did to fuel backlog. cabinets good sort large level that the of are strong poorly terms comfortable we're I of able to our deals as strong strong off ratios or at do are And we're to on mention Keith continue sort we growth. trajectory expecting the the because look strategy, that's costs us we're example, to But architectures we substantial whether because pricing looking value that from is they continue these get the interconnection in continue

And will tandem. those in nicely I think things overall, move so

Operator

Klein Markets. The Capital with BMO Ari is next question from

Aryeh Klein

picture way some in they world digitizes. how deal Any impacting lengthening Can of Charles, result? a impact cycles? in any sizes? as bigger about remarks the the you as deal changes on mentioned the prepared is this talk you flow, Are sales

Charles Meyers

using about that we strong Sure. off Yes. today ones to we're for X central not a a nexus is has for then for fueling people people globe changing the for Equinix even those how but affecting about are take about that that the insights in within cloud people And it's really business bread on butter and I people, like those data it's mix think good our only examples thinking substantially adding -- using and talked I a across insights us quarter-over-quarter our network this. network their need I about how last data, And them. say Board-level way, digital to that really really the Network a what And re-architecture they're And think people improving and there, way that be AI things create egress there, I -- Fabric very digital services way customers, and and re-architecture. of their and and Yes, Equinix been advantage, terms of their our their accelerate priority create have architecting they with long with would as mean, said, funnel in to data locating time about just X networks. electronic to what's the and competitive people then seeing bookings the the interaction now how commerce in as intersecting level. to the Edge Metal and can they're it and are in how thinking are

And pricing. if business, the value. where mix look year, doing, at over course of seeing our I why our spots at XX,XXX focused transactions you I can think business of that's the look that really -- on sort in the of those we think those that on strong differentiated you is, we're volumes if kind of sweet it we're we're such demonstrate

in I actions because pricing, value to business even our pricing think so ways, and strong. proposition the see firm is positive many We continue spot in

And where selling still short done but our these really selling in -- lot sales And combination I and -- I are still it's so adding think refining solution to through point and a why a channel. and we not -- and in our with us it's do with There's our being need and invest of continue scaling capabilities partners. re-architecting organization, to including at cycles. to

say brought extended. with starting we're that fact, customer I shorten, in the pretty think, And a customer I that are I even prospect forward. cycles, cycles, win is it the in sales investment to that But productivity still they're I areas would further are particular, us of don't from can -- to And do in, anything, so think follow-on follow-on after that that -- the those sales add making. time, lengthening. shortening. over selling is, you've And think meaning if hopefully, those think I sales I be think points engine And already first continuing are that to cycles going

Aryeh Klein

And xScale. then just real quick on

You're the Australia in the that stand you list? building Brazil, U.S. on in Where being does mentioned roadmap.

Charles Meyers

for us. they competitive think past balance in capacity think that significant. said of about the we for the whereas and I that is business hyperscale and are not demand it's -- U.S. little sort in more the were big supply while. I the the U.S. a line that in a markets, of Yes, intensity say We out of generally would coming talked into a priority

in it potentially. a us to on, never that's say for strength is we'd network, think in our the a think they others, would receptive I our the the say I U.S. never durability confident a a had I say But our we're bit specific really -- industry. proposition that with working in -- good be both overall I need little if strategic in that the so to and ecosystems, be wanted -- we're would cloud in terms imperative So customer different. interconnection comfortable of value the and that of of whether improvement and

key it priority, so might surface. but be wouldn't they as we'll be open-minded opportunities a And do about I think

Operator

Credit The next Suisse. from question with Sami Badri is

Sami Badri

view into Charles, this fruition, commented of the be is the cycle tilted you, on your want starting kind mainly in for to to for kind mainly to in least Or an has at gave? thinking One acceleration the get tied taking of really you commentary sales or you believe enterprise about case come just still the kind of Just kind you latest XXXX. to some observation year? acceleration do place really of slightly of enterprise any XXXX, your

Charles Meyers

enterprise substantial period, as Yes. the fact, density geographic of our I you've acceleration a I and that multi-cloud an I in and if think -- over mean I tapping do we're we ecosystem and think service our how that for reach enterprise that hybrid into -- as that seeing as end that pretty is provider multiyear architecture business. look a you customers. plays think have traditional component we distributed of density really state seen well And into and the

piece is Enterprise hybrid enterprise with at of service it larger that piece about Financial the segments of network Enterprise there moving And all architecture. Services and how long-term through our look service. side, but one meaning Services a but have Financial Services if which aggressive large significant that way markets Enterprise I network we talk very, sold their business enterprise agenda Financial vertical We have because our Enterprise. think, very and reported segment, a X piece, and components a mean, multi-cloud the about and is the trading -- meaningful obviously, financial is we in -- those resale we In the is to thoughtful our spend provider report interesting have that, as then actually, partner. segment And we are the of And terms on of has Network then you that's because business. of services reality, yes, a so I our it's IT network externally, and ecosystem,

a over innings absolutely really I think by years said, I So think has yet for productive. early I a chasm looking still created of you're it's and momentum I don't quite think selling XXXX. business that because the I last several that It's all continues the that And I engine -- the haven't we're not think means, this tapping our thing into our thesis -- think like enterprise actually good that's crossed is we're but the a any at in when market. very large overall look -- you addressable at Equinix and that market, we

hybrid in a be the the thinking more to longer I their about get share over through that there's and -- how that. get But play selling bit we end people as that get to them you state wallet over just think you multi-cloud a solution means really gained. them takes as so lot and And hurdle, and hurdle little

over-index enterprise to segment as And expect us acceleration opportunity for us. is for in so think And I there I would XXXX. a an

Sami Badri

comment And little in out, of the EBITDA human a up is a teams, earlier a couple channel. just adjusted into investments the about Equinix kind years? higher channel. you give slightly quick just And you're margin little idea, xScale Got maybe to bit your side, how you your then adjusted view XXXX. you than of the of you terms little guiding one more to shake playing see follow-up big higher making should and EBITDA XX% some from up, pulling maybe next are I in have visualize what multiyear this Could us your level bit of to have one And should the just a margins. that going out have And is coming trajectory of then it. where on an sales guess can of interconnection, capital bit in we margins. the in your On did now you you perception

Charles Meyers

moving kind on your are maybe needed? start to want you add of And parts on Keith, what I'll that guide? as the of and the Sure. a then color thoughts view with

Keith Taylor

are Yes, Partly, of one one-off of last was, through the things we sure. we number that there with a Sure. have start spoke going quarter. off last to items quarter the quarter, were of

so we you QX look and And offered that then at year. for in then the the guide

costs can benefits, recovery There's important, of I should into costs we'll But us that. were one-off see one see that of to would see $XX up QX. is quarters. There's said the relative QX, QX to anticipated. performance They when that an that it's were look is maybe say. some million you our you million. unadjusted But be previously up we're in get stepping tends to or $XX you EBITDA we one in substantially benefiting you I things of it have one-off lower QX. think to one-off EBITDA a what

into modeling the typically, quarter, to So XX%. it refer of in as translate it's then seasonal share a things take includes thinking that that net has growing AFFO. look growing and Charles total, margins it through of typically then step-up the next -- we're to -- EBITDA a how would sort look $XX of gives meaningful nicely. is our you X X% would it costs. what sense that see if of you level, increase what continue tail or look is, AFFO you'd at quarters, at you and million of lot sort And the And throughout you you the we our Again, the at end absorbing the When said, see through one year. $XX million you'd it in then that I in on said, as you to

the XX% costs, year. the AFFO if grow you're to coming out is, you per generally about specific this Canada, -- share which our are, acquisition to see fact they're again, of XX% to going the back Bell integration So matter of to

to against much our as So I strategy. a remarks, come if that core activity tremendous coming we embarking But amount that, will there's value execute least a this there the lot that into value of a we're the continue more drive potential at is And of through prepared the per in share. There's is to will AFFO also not my said margin still of to year of business. in but value with which metric, there's And xScale. we our upon to only be coming more xScale. lot from line, optimistic

Charles Meyers

color squeeze to investments opportunity, operating longer-term the up to team remarks, this make leverage. we offsetting seeing -- as but an automate well into additional one. we open to might investments a the we're think sure those need investments and into I And we Horizon, more Over product right still call I in business. Project and year us to -- referred of make that that's translate generating into to over room also my And that year, as forward. what in bend for I add, of by a -- those curve are made last leverage that guess I those the than do -- that years and and leverage I to the and try rather cost I we and and time. and is the we year, as not to is really prepared those enough xScale need some case elements think that our, effort think decision we it margins are which the are think business, simplify we're in make just said areas in tight the -- Sami, are that think do just I this priority operating And I going -- I this too we expanded And than again, think into we guess, operating operating I've past

a So that we can, see expand multiyear we believe basis, over leverage. and additional continue to operating margins

Operator

Capital is from Our next KeyBanc Jordan question with Sadler Market.

Jordan Sadler

base on little bit during to So below but quarter. levels was it yet Americas -- even touch the last still cabs churn after the event. seems historical It quarter's billing I rebounded, wanted a just

drivers remarks way Americas half. prepared Can in quarter come I around all billing, coming point your you large the And your think, did a the cabs in what to first the the fourth relative the in were? You step-up expectations to pointed to in there?

Charles Meyers

don't you come and I'll grab Keith why back. that

Keith Taylor

Sure.

the in but goes to the turn. anticipated what about fourth you, now his remarks, still predominantly said, And some So made would than little in Charles We're that in going then was again, a managed higher churn feel we've on of the a bit the services U.S. million of first believe the provider, soft taking lot a said Part originally quarter, we soft, in like the I -- it sense in we out where reference expect quarter. in non-recurring was in of was there but I guide we're the a as Europe, in little $XX first a that that more prior quarter. to point we there at you're line give

-- QX. installed in And cabinets from QX installed up so the me, be seeing then really momentum what in the pardon is pick backlog you're to cabs and the

we've not deals are effectively, there booked, just that signed, so they're And installed.

the not see in the that also going year. confidence go we to we the where think through will but we revenues have will of so see momentum momentum. And that's are we that And only why the the rest

Charles Meyers

Yes.

those good opportunities terms only continuing continue matter that only colo. good with have think that Jordan that's That, least the for Charles, allow the from business. in particularly seeing delivering get or very other in might to lines, backlog there's item. and pressure our as I those Sadler of dynamic seeing that And the going think I not business, - a yields curious going you're on yield us I be today. on at the well translation, per of I And pricing sort sort colo And speak colo levels to going U.S. workloads very that you Americas we're time, effectively we're very sort we signs at think, focused the cabs. into over delivering pursuing. of but cabs, of to expand And portfolio is that but greater the Just to really preserving to it the been success the cab. yield and that high what can we're out there also has product Along to continue know terms of on add combined are comments. be a I we the high Q But thing business? just in held sustain disciplined to be given is overall there lot your that for up there MRR a of seems I'm might driver,

Charles Meyers

Yes.

beyond do about If distinguish to to you're focus is talking continue colo about, market why U.S. ourselves our the targeting and may and -- create Americas market very think business. think, I need colo dynamics our -- I the that think and we I the we're disciplined is U. how pressure which our and prosecuting S. broader there market, on be

across and in regions would always net point how I our be quarter-over-quarter the I positive that But terms proposition think therefore, are differentiated we increases when reprice, fact to of our again, those generally positive do pricing. sign a you there's on a we, that continuum for our value of -- can to the strength ability the sustain think pricing the contracts, meaning ability offset really good a which in actions, have example, our in pricing are for by terms to do is I business being that. demonstrating of

people which hyperscale, maintain I tilting -- on pricing lot to for either markets, of to going relief is to price for going they're new a to looking ways a price lot struggle of new or are are looking undifferentiated towards think and/or continue lowering And there. find points. not So colo certainly them either

we're that, a we've think or market challenge from more insulated, our has think do And the translation really But not a immune so we're and -- that. metrics think I I there. demonstrate but I broader substantially I think

Operator

The next question is from Colby with Cowen. Synesael

Colby Synesael

if Two modeling questions, I may.

stabilized I'm XXXX? around and almost thoughts balance $XX equity as billion curious sheet in in be to you leverage in I your maintain raised in Is secondly, to ultimately per other? fourth We are growth the potential XX% saw million to the then to guess, XXXX. just assumptions down about goal what savings. way for or X% the and it quickly, And opportunity the quarter. X% in one that annualized XXXX? the growth, offsetting AFFO are And share real the You noted would $X refinance think, just to, what need in a I for your step equity relates

Charles Meyers

want you to bud? that, start Do on

Keith Taylor

Sure.

to the include capital we So again, specifically, want as in very about it market anything specific to we're didn't our relates activity, guidance.

if again, per cost, you will share XX%. So out XX% grow take to AFFO integration

how the are. June developed really we look in debt. XXXX lowest feel capital, Analyst is we we're AFFO, XXXX. of the growth anywhere a all this is recall, very think at cost our have I That you reasonable was of of And build. tracking on to think you models we when we large Day, that against we So and we do go you basically incremental will XX% for said, about we from I a what to those will which good as to thought where plan rate most based back -- year, well capital do thing X% The many

source going debt time We'll annualized appropriate. we're We'll of to some And timing so over benefit our out of refinance would capacity, period cheapest a the capital. the more debt the theoretically we could that we And $XX to accordingly. to we have or get going again, pick because, then that as of see be million you're what can little extent is raise bit plus. of our

we we that program, As do you're announced use aware, but year, billion our we'll have program. also $X.X a Last ATM appropriate.

going for of As make don't, preserve little we to later we're bring capital our market again, would then a walk the sure on door. that always To allow, capital we the balance going to through sheet. balance would date. we bit they to structure. that a liquidity extent conditions But We're our have

-- some out from billion partners from I cash as liquidity that the line. plus remarks, $X.X optimistic incremental JV incremental of generate return in billion to we'll the the our the capital very we of right And announced we we these invest cash scale We as well the have of $X business. I'm as amount assets, now, about just of as continue prepared business our we capital more JV the in from building get some in our remain as

‘XX X% a the where of Colby, again, going in I you the company. think we view -- and update Analyst think -- XXXX. range So bit as to Day, we'll a further -- June in of can we we sort little do a June update I further deliver feel accomplish analyst longer-term we're very what on a to XX% you it's our at can we comfortable great And on we'll question. is through think

Charles Meyers

the to and the on of Colby, X% X% then, we're of that right been we've stabilized And range. middle assets, on kind saying in that,

And expect that range. operate in probably so sort that's continue I think of to -- we to

Operator

The next question is Markets. RBC Jonathan with Capital from Atkin

Jonathan Atkin

question Equinix of of on expanding yield And the wondered it's suppose that on it since a context think either about you had talk the cabinet. I then in I can little that front? been years distribution vertical, I the those relates product. in call, to earlier how Charles, reach? on the anything out on kind kind the you're to some Equinix call happening, out commented of Americas or commentary Fabric, questions number to expanding a Metal, a per of bit what's on capabilities Federal But your different Anything but segment? I call you've of product

Charles Meyers

scale capability continue Jonathan. prepared that overall investing would refine Metal best and Yes, we about to how Sure. to will Thanks, We're that. others currently our with clear for bit in to customers other which an the allows easily thereof. in executing the Fabric Edge Equinix we get developed, talked include market, invest our We're the a set accelerating and remarks. and more little portfolio, to early continuing interconnect any feature to the to now to which and but I said is we're thinking that XX expand to has expand the out us overlay on ahead, priority on significant a customer or digital of Network Fabric also -- capabilities obviously, year to of markets motion go-to-market there Fabric. Metal, in continue in our reach and adapt in I investment, 'XX. the been area the in recent excited Equinix services to and terms as a of

responsive digital going really think And over context the put looks invested return we that, of think drive our excited you capital continue journey offerings So believe to we we're on We in transformation they time. really that about -- we those needs for what of attractive can that customers be yields. transformation because think, very think importantly, the like. did to how to their -- is as they're digital

we're energy to that opportunities exist to the it's be fit going know opportunities for hear something bit I from the as opportunity more then we that prop. is value active the lot actually and bullish. Equinix behind. of And little on. us is Day. pursue that view there, kinds -- towards that a significant there's on what we can't we putting Karl products it's think about Fed, and you'll excited those more we're And we're I in something look, So of in Analyst multiyear to trying think speak that depth -- a We continue move the I right

Operator

come our Green And Street. with Guarino question will David last from

David Guarino

service to there revenue region. customer? like wanted EMA are in to back your one of portfolio? in step the entirely the just I sequential more any due colocation tenants down go to this that that inside managed Was And global

Charles Meyers

do take that? Keith, want to you

Keith Taylor

and fact, in in to referring I'll one-off David, my that take -- that. the adjustment was the to referred I'm prepared Yes, one-off remarks.

step the So an adjustment saw quarters. revenues the quarter basically, that colocation accounting down it we was in the fourth X that between in made

in saw a step-up step and QX. down QX in So a then we

David Guarino

Okay. the Got it. on xScale... then And

Keith Taylor

line. managed through Managed -- go me, service MIS pardon our providers

Just so know. you

David Guarino

really then project Helpful. And Okay. you for you 'XX, to fees, stabilized share not us the your helpful Equinix's JV on day the just level, X one, the are? with returns what those And quick. last projects yield just but of just it'd to kind expect get all On achieve? be xScale projects what just on could of remind the

Charles Meyers

to of on sort shooting I target. on or cash-on-cash dynamics about of pressure there's been double-digits and Analyst digits. yields cash-on-cash about and just space low hyperscale mean, more in the said I've we on people at returns because the that mid-double couple -- talked those yields Yes. supply occasions yields of had at overall that think I lot demand a low talked -- we Day, in of a

low our be at fee I that. you're able so going end think that that to And yields. still you're standpoint at substantially exists into structure to there leverage think project when either you get the But I of attractive more and seeing I that double-digit range. both single-digit exists, from cash-on-cash I think it and And high double-digit that lower returns with more or looking are then very think look

Katrina Rymill

That QX everyone, for Thanks, our concludes joining. call.

Operator

you participating in for Thank conference. today's

may at this You disconnect time.

Equinix (EQIX) 11 Feb 212020 Q4 Earnings call transcript