Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to the Equinix Second Quarter Earnings Conference Call. All lines will be in 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 Chip Newcom, Senior Director of Investor Relations. sir. you, Thank

begin. You may

Chip Newcom

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

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

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

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

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

be from questions we'll analysts. prepared our sell-side remarks, Following taking

to one. of this analysts up any like ask to questions In in X we'd the interest follow-on call these limit hour, wrapping to

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

Charles Meyers

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

service the innovation digital scale in business IT architecture results, drivers, changes combined an is a accelerating a that of GXXXX making data By basis of and growth. way as the rapidly digital their secular pace in multicloud for and driving AI XX% from services is the enjoy for continues in of revenue IDC of commitment transformation Equinix our done. capacity reflected demand for experiences, to will appetite infrastructure momentum are companies from hybrid and nearly force products, extend an unprecedented dynamic to come XXXX, enterprise global their our as into center These that providers economic competition choice. forecasting integrate is As reshaping accelerates operations industry as the digital support and the to increased every range broad companies with and to of business clear

gross before. Equinix sustainable demand great more the delivering than against strong dynamics, excellent net we ecosystem-centric need pricing quarter pipeline remains ever for more more to connected, and solid backdrop, is bookings, positioned and exceptionally well growth. second that and healthy more environment, cloud respond distributed, Against new a to with had logo infrastructure this conversion this very

than go-to-market machine more disciplined drive unmatched deals approach. our demonstrating with the to execution of at X,XXX strength than across quarter scale continued X,XXX sales in continue the more and We customers,

operating normalized scale of revenues, billion, XX X% megawatts capacity on strong in projects are xScale approximately performance. customers rates and was on currency we metros and XX reach that fees. once and by of up timing year-over-year in growth depicted to Slide up revenues our recurring across approximately and were of recurring driven better have including price representing Turning These EBITDA X, to our underway $X.XX builds We of Adjusted XX% year-over-year, services now growth, behind due increases our power a all major regions revenue deliver was the expectations portfolio. expect for again now than AFFO QX xScale results, opened. deployed X/X XX our constant as will countries, center XX XX data invest three all With continue basis. to strong we

This in added Lumpur, quarter, in new Monterrey, XX we Kuala Malaysia. Mumbai first our including builds Lisbon, projects, new data center and build

expanding the foundational Platform seen Kuala and global the their success. platform strategic our digital increasingly to Malaysia leverage together that in infrastructure markets Johor emerge an and businesses infrastructure. digital several for we as years, location Lumpur, and two Equinix enable we Over to have most past important bring will trusted local in Malaysia, the will By interconnect power

recently results the announced incremental application, a Additionally, selected call we in Equinix of was Singapore's set the Singaporean of delighted limited where critical data for participants build very data capacity center of with are center market. to one

services interconnection cloud to and low-latency leverage cloud-optimized of Fabric network provider infrastructure as enhance that for and multinational Equinix's enterprises software-defined will for ecosystems plan. critical is opportunity quarter Singapore's connectivity. economy, capabilities, and the using digital and Cogent a ecosystem have Equinix networks Equinix optimize platform U.S. transforming Singapore's honored they wins digitally aligned a to fuel sustainable Communications, Apcela robust to services and and this other ISP their green Multi-region global global delivering customer cultivate this strengthen digital to included

with the across continued to digital year-over-year thrive continues with QX, at franchise normalized and the basis, In consolidation expand to exceptional to Our currency and unique XXX,XXX by revenue bandwidth traffic of driven pairs, pricing, but relationships side XX% over healthy up lower constant interconnection into over our the interconnection XXX,XXX and on global reflecting unique levels Net our adds on of adds. total on interconnections platform. number due strong platform gross higher scaled connections, a interconnection grooming value increasing remain stepped activity X,XXX ecosystems. continues our interconnection

Beginning like of as quarter, second third the support will up support Fabric capabilities Equinix and workloads Fabric had second. connections bandwidth to virtual the strong in virtual nearly provision connections first migration. to be with quarter-over-quarter up total the EMEA addition another new XX terabits customers XX quarter APAC traffic to partner cloud data-intensive for first cloud and X% to able with XX,XXX this time passing our per and providers strength the cloud Cloud peak saw capability. to gig year-over-year to XX% exchange Google with in and markets Internet with per AI

experience network beginning wins three with Brazilian X this interconnection all a to company, customer telco PEER South the entertainment through digital a leveraging America and and expanding establish across Platform Key hubs, quarter to gaming and included regions gamer presence optimize Equinix interconnection its Miami.

portfolio. to Turning our xScale

as over see QX, to adoption in force year. megawatts back a our the half continue overall leased for cumulative of XX asset we remains globally, in digital In driving of X megawatts transformation. and the xScale a cloud Osaka XXX of now opportunities have demand strong We funnel additional leasing with we strong scale capacity

three to on worldwide. represents Equinix won of on continuing cloud and quarter, further enterprise leading cloud nearly the quarter optimize new automotive largest total platform. our deploying to also XX% and Madrid of We a connectivity to native cloud to in the at reliable support connectivity its Toronto, multi-cloud scalable our cloud expand ecosystem, to platform the interconnection European one and Bogotá, including ecosystem insurers and this auto networks company this interconnections in on-ramps U.S., Key which strengthening our wins

X HPE their continuing to for enhance partnerships. our speed, business QX, cloud both look consume GreenLake As of while and providing private platform costs offerings pre-provisioned will expand digital and our in demand select with and to addition, help centers. for we data Equinix expanded GreenLake globe infrastructure and at workload In data. available Packard around cloud Enterprise greater control their strategy enterprise businesses businesses at private multi-cloud announced for expand metros IBX the These partnership agility, we're hybrid software our new increasingly on predictability Hewlett HPE strategies,

Bionexo facilitate included services complexity Equinix partners network reducing digital for that key global using wins tech cost. its health fabric with marketplace for edge connectivity infrastructure a connections among network a health provider company to Additional customers, for solutions offers digital seamless mobile and customers. processes, Platform its and using to Brazil, while this cellular Telna, care managing and quarter

accounting logos. of nearly Channel for delivered XX% XX% strong of new another Our quarter, program bookings and

and growth American ecosystem. provider their partnering insurance efforts, support with partners cloud range We Key industry large with a digital of continue health verticals the infrastructure use and of included and application from to Dell, wins HPE wide cases. a health modernization like across with featuring Cisco and Avant, Accenture, wins interconnection adjacent Kyndryl see to this quarter network the deployment to care

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

Keith Taylor

of back summer and enjoying everyone. Charles, months. Thanks, afternoon, and well Day be in time in with spending you person. you're Analyst many was at York hope I all great City doing I the must our June New say it good to

to the guessed, views share excited you with expanding have might you As we our market were opportunity. on

dynamic to share thoughts this shareholder maximize to most And global manage value. perhaps, our on the importantly, environment, business. of Our we deliver through durable and how while we continued our ability complex can believe value working

net our dynamics can solid in gross the bookings We pricing results, we many existing on solid the positive reflecting both from report, delivered Now of while and had yield see to and Overall, a continue as see again investments. and driving business. you focus we continued earnings on QX our higher momentum the addressing complexities we our market. affecting new

cabinet per net up basis, including was quarter-over-quarter cabinet. currency per to constant Global MRR $XX actions, positive a On $X,XXX our pricing

customer tight across IBX. selective focused the certain being focusing the points strategy Also, right we into high and given markets, our price levels the across metros of remain increased constrained of and supply high right our at backfilling on in on power Now space right our the portfolio, utilization environment application very densities. putting the with many we're particularly

is timing deployments outcome by all in higher returns capital. and the on invested three net actively billing growth, quarterly result, an our MRR stabilized we're per our create a offset may regions. As these better positively metric, some This asset cabinet cabinet managing strong of fluctuations across

has Turning to cash our macro distributes impacts remain the customers. business. price and energy remain with collections historical some the across We of how with volatility affecting with and organization are trends. mitigated our and Concessions our in of the our low pleased line business factors

we relates to many recent of hedge. our the the outlook, volatility and made it to to banks continue of adjust devaluation we Also, As do XXXX Japanese dampen attributable of we rates. some largely interest appropriate the modest currencies, to weaker actions naira Nigerian that the the to to attributed currencies the hedge central yen, foreign to operating FX two our not where

highlights me basis. let on Note all normalized the and cover Now from are section comments a that in this quarter. constant the currency

same price power fees. increases XX% revenues, strong on and QX $X.XXX quarter depicted recurring timing last global year xScale over the up were revenues the Slide nonrecurring As billion, due to of X,

the the compared and expect business guidance quarter-over-quarter a xScale we've custom in are But NRR FX As net of hedges, our to FX headwind our NRR see rates. our scale in certain revenues, nonrecurring attributable second meaningful revenues, of noted given was particularly those Hence, QX year. as included down lumpy. installation pipeline, when before, a step-up $X we planned. million significant works prior to inherently half to our

a adjusted the higher EBITDA costs. in or included same and net $X QX utility forecasted. operating integration when $XX reset and revenues, year quarter last QX benefit software QX XX% performance, compared of contracts one-off FX over million net EBITDA, $XXX salaries million our and X% business was costs related average headwind EMEA variable of range $X Global energy prior adjusted at Americas increased managed million certain million costs. strong Also, rates up to FX of our services including our to expense an resulting as higher hedges guidance to saw due

above MRR X.X%. million was prior million, expectation interest performance business Global strong to a QX our range. $XXX FX QX was headwind compared AFFO QX guidance to net expense. $X and when due included lower Global AFFO our churn

quarterly the year, the churn expect we to continue average range. full our MRR lower X% to to half of at guidance For X.X%

XX% and On through and Turning basis, and our to at XX%, year-over-year our fastest-growing were constant normalized EMEA regional X. highlights, Slides X on are respectively. a whose APAC currency covered full results regions

of and region across rates region teams quarter momentum activity Culpeper our metros continued business. APAC the the while price to Boston, Americas impact in X% the and The global EMEA grew trends, sector were Americas the power respectively, another pricing strong Chicago region increases, strong the healthy channel had public excluding benefit solid X% when We Although the with platform. attributed and growth exports year-over-year. solid Canadian and had and and from XX%,

large assets. down Our the Dublin of as well our slightly booking Asia and Nigeria the Pacific region strength our deal Johor, firm MainOne quarter NRR Lumpur, pricing power delivered come as EMEA into solid timing deals firm our imports business was in churn substantial a company, Osaka had a from highlighting expanding markets a with and healthy as evidenced Kuala Singapore number deal lower Frankfurt footprint customer expansions, including to and pricing, due multinational across And with markets. deal while space net had and the quarter high, between continued Mumbai, their of Revenue to by and energy Chennai, the new bookings record demand. our this finally, large with And Lagos, We interest step-up behind strong in is volume. investing a we're in Amsterdam, Jakarta, metros, a and platform, quarters. new strong momentum Asian

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

billion, over cash including billion. unrestricted Our $XX.X balance an $X.X to increased approximately of sheet balance slightly

our and growth dividend, a expected, strong to cash decreased cash flows. our slightly investment balance offset CapEx quarter-over-quarter operating due As quarterly by cash in our

our low fund EBITDA. Our raise will incremental environments we to and to create net capital a natural growth hedge leverage reduce remains and our markets. additional where placed at into as previously, adjusted we And both operate. rate opportunistically This capital mentioned annualized X.Xx these currently debt debt plan

XXXX during $XXX capital. XXXX Additionally, the which in will transactions, settled fund million we ATM our of to of growth other sale early quarter, alongside sources executed plans our be about help forward

Turning to X. Slide

projects Frankfurt assets our across $XX million, earnings XX% Americas owned opened For Revenue recurring two and in we our projects quarter. retail $XXX and Tokyo. capital xScale the from a million. to the were quarter, X and Since regions revenues CapEx the both expenditures for call, including of EMEA of last increased recurring

XX continue expect lease We over ground trend our our properties, XX% Americas. the of bills XXX% CapEx of including with in or to expansion owned long-term spend this on

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

power XX% stabilized assets benefit attributed year-over-year. stabilized the revenues XXX increased X% increased to a price currency constant assets now Our on the by out Taking year-over-year basis. increases,

gross assets stabilized the and a Our on are PP&E XX% XX% collectively invested. generate utilized cash-on-cash return

currency to And rates and summary finally, not bridges. XX guidance on refer Do normalized and updated constant please basis. all a are for to XXXX XX Slides through our growth of

between underlying our strong million, continued $XX costs to For raising power of revenue between the by XX% expected operating expected integration year to we're now full XXXX, our XXXX a to primarily XX%, XX%. by now line XX% the X% reflection impact per of raising compared guidance guidance X% lower cost and $XX due underlying to million we're outlook And or EBITDA pass-through the is with XX% of favorable maintaining and previous spend. to grow AFFO share our underlying our to customers, AFFO growth XX% grow We're top our adjusted excluding execution. and to year.

the CapEx million year xScale or $XXX CapEx assets early $X.X into and of is approximately between sheet next $X.X transfer be later JV and including reimbursed expected to as year balance recurring range on billion, about million spend, spend. billion we expect to of which we $XXX this

here, stop and back to the me I'll let call So turn Charles.

Charles Meyers

enterprise on share response will and and strategy the a superior durable remains grow demand with translate driving to and extending capital, all as closing, distinctive our infrastructure continue to for keen had drivers leadership, value of drive robust Keith. sustained as climate. a continues on disciplined sustainability. and investors, of market and performance architecture a need global see on first multi-cloud returns this metric. half of positively execution and the we AFFO highly choice continue Thanks, as influence of expanding lighthouse service uniquely the to which our for and deliver for our to key our focus In differentiated buying sustained scalability customers, will we their confident and per focus behavior operating capabilities in a are delivering we Equinix secular a relevance growing our of platform infrastructure out to performance, macro and context, in strong The even demand our Platform the providers leverage, with environment hybrid face challenging of to scale positioned to agility, believe as Equinix In hybrid for year associated you, growth fuel

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

Operator

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

Ari Klein

have it are and Maybe the AI to as entering about that some large potentially demand? you of front on where the there exceptionally some thinking with a relates of How done vast being the doesn't xScale, majority xScale in U.S. market capture are the leases presence. those

Charles Meyers

a of different has think I xScale talked specifically. few little And posture terms the We've in bit and probably that. this think a Yes. in thinking our forms. evolved that the part I around broadly of do Americas in about AI our is U.S. in

really factor, not only that can address demands. but whether at And set the see, services full -- see had already markets I is we of of chicken a driving the thinking what I to where we portfolio that or markets digital the been egg so bit where -- that around able we the xScale you full do it's think as believe certain when portfolio, terms in the broader perform mean about of world, we're said have customer what scale, we is retail But there we what. argue have best. little do it's a I it's what's we

to we an do the U.S. at like there as have presence. think that think we in markets I that, we that so And xScale would looked are

would how a that pursuits. -- and through organic inorganic potentially we're I so And and potentially think at looking combination do of we're we

pipeline continued part. to a cloud So think, and with And AI for think that a of of world I but that lead how for and think the driving solve I that something our only strong pace across at adoption, I xScale that, us really part services commitment that the mind. enterprise, the thinking about Americas to is on believe continues that in it cloud is really does do demand a to the all is

Ari Klein

just decline. color and the sense pieces? some the timing us EMEA like churn It And moving was size a Americas cabinet saw you some then maybe backlog? give And the there. sounds and some maybe on of there of the of Can potentially provide

Charles Meyers

over both of -- you fluctuations mean do churn cab really I activity. billable as therefore, Yes. we due and very meaningfully the Sure. backlog over grow can platform. we've to metric, volatile backlog pretty timing question in particular, can as we tell said installs But a continues it has short-term start and and in metric to see swing that billable to optimize and healthy. we see years, backlog I'd do that cabs be really be with to We that fuel the recognize business. Undoubtedly, time the the

at So of rolling if encouraged really to it, quarter as that you look noted, forward always look volatility. you averages we've at people because

of the three what is actually rolling If the consecutive meaningfully running actually typically. Equinix some been is you the lower is ahead to in it's cab quarter why so is in the -- are EMEA bit three capacity APAC years, constraints able quarter capacity XX%, really rolling of fourth to for it's Americas is about to dynamic three-year with the look excited at is its average four what last about which APAC Singaporean and related XX% to lower average allocation a of unique a of market. quarters of in Singapore, been announce of have particularly Asia we adds, the but

markets we're some in I I and to roll So comfortable think activity I churn some is we think There that there. is backlog the think that is going that through. --

four-quarter knew -- normalize kind when things on we -- a And we'll rolling I see we'll of we let so at that basis, think would a issue. think look this those But bit. be me I a and

little So insight a I billable into want to maybe more the give you concrete caps.

the If And those churns of of had the you churn. meaningful from consider deployments we past churn. would specifically that total X churn coming X XX% quarters, are look cab on volume size over it about at what we've favorable side,

power very XX% we really uplift trajectory actually three positive are we're prevailing that interconnection, on refill markets right range. we XX% and the cabs as expect mark-to-market. seeing given additional -- in about on the at market constrained on we those in pricing, of now and welcome in capacity cabs those And uplifts where -- prices densities, cabs the XX% consolidate Basically, on MRR power the the those a density, and to that

to going MRR So that's zero optimize on of really have just that extra believe reflection look get or platform of actions in cabs to those but billable positive taking of basis tens of over sort at of it, the we dollars by millions kind we impacts annual with terms millions kinds impacts upside of on and a that we're and of we're an turning of cabinets CapEx. the

of seeing that. some that's a you're it think bit dynamic move I so will around identify that and the as there, And we

Now of many not those that there's out there.

And impacted so that's the that -- dynamic is couple a -- cabs billable the that of a is has bit but quarters. last over

Operator

with Citi. next Michael Rollins question from comes Our

Michael Rollins

environment, organic an Curious next updated bit at for and the price your if constant you unpack that was what the of And without stabilized you think there at opportunities over in set year-over-year. just of -- look years? what's Equinix stabilized increases terms as in the currency is growth the describing I more you can of X% power view opportunities that quarter? a few look the like were re-leasing current the should growth

Charles Meyers

we now attractive around seeing bounce a is pricing. I X%, pricing what's very do that had to that a we're guided good level. question, we're than that there with that think in bit, a lower power I the Yes. a Obviously, do and as think really think right a that are and we'll think But major having absent because reflected on happening little based Mike. PPIs range do number seeing, will impact that reported It's that's XX%, certainly not I PPIs valid I that very but at a is obviously, X% firm.

-- and products to prices continue we've and raised stable and interconnection raising churn. on colo demand see meaningfully strong underlying our are on We

that's I so And think be a to positive going factor.

Power one in cabs are a conversation, little The is power other I bit mentioned just densities. densities the on the previous rise. that definitely about billable

And are so -- deployments in assets. XX were of activity talked stabilized of the that just about many there, churn some I those them

And over. going some that turn of you so you're there as to uplift see

or long about that in question been to the do what major we I of above X think your obviously I have in I pricing the hope nicely X, non-answer range, terms of answer So driver. obviously, a is would X to talking is certainly -- right is think that. market the current dynamic

And but back see we we like that's so track guided we'll being trajectory, end. we look a how love come just feel if that that. sustained and -- that obviously, at And and top we'll above

Michael Rollins

if with could And other. up just one follow I

power of equation. environment And those XXXX? updates look revenues the pricing of you're for You how the the variability specifically, looking and for mentioned power might of pricing side the any surcharges and as at power power

Charles Meyers

Mike. too, up, come might that figured I Yes.

some where still halfway that year have we the are that. to yet of there's at a bit So over the say the positions We've Obviously, below is materially we in into a of significant are hedging lot in positions. portion had been obviously, we're our cases, our been previously, rates left. fill. that And what a we a some And hedging markets, I'd -- -- year. and in just through little below somewhat hedging

what predict exactly to happen. And for so us it's will impossible, think, I

markets too hedge was current some that think want we 'XX. would be course I if might rate is 'XX I be So that matter. there But concrete what will this to continues, a on in into it below don't where

our that provides sort -- is well. embraced And as program said as think to we've we that understood would to really to the occur, hedging and you benefits we we've that as if and through they would them and our of pass -- communicated customers, customers, told our I to

think we'll But said, And might guide provided provided to other sort look, as and I that we're said business. sort forums, and nothing important of optics we out relative adjust that markets the for not we in Analyst assumes Day margin. at price And increases is while example, power occur we really perspective because this recognize power the how of so on the underlying sure. of some many it when when -- the or decreases, or and we accordingly our has that from in, what's performance price, impact normalize do

underlying I fundamental the sort business. isn't on impact think an of it really

you that we'll so we let a see would price PD think some answer year be, others A markets would we do or shorter next know. And and would and a I may that which of in more see as in work keep it perhaps we still would more. up. go see But we into flat know it do you see others updated terms to positions, hedging our and we'll decrease

Operator

RBC. question Atkin with next Our from comes Jon

Jonathan Atkin

at stabilized margins, like a of by Yes, if about margins? look was if sort stabilized gross pressure on gross questions. earlier, book-to-bill, that thing? of it looks down the you might but I And have then couple I just curious you why and that this decision forgot time frames was customers closing mentioned rates,

Charles Meyers

even really I'll be saw a cautious perspective. solid conversion, we that to saw Really one. the customers but slippage the I Yes. give in quarter-to-quarter there What you think from a sales QX, I'll bounced -- And we thing pipeline same had as good though you, who to And we extended little I'll saw previously. some continue with we we actually line much let quarter cycles our we one, overall color not back where are come quarter. norms. the we it told very QX, historical saw bookings environment. rate had from in a very Keith from tackle pretty and saw give think QX the more were in first into little I on second saw you consistent. In push said we the the that deal rates been actually close QX,

dynamics. back solid So and they're us want as need but is do bit I say take more much that for advantage then And some about hard, and because buying, negotiating having billable see look a to numbers. of cabs previously, favorable a I of back cautious -- of have us they we with said, back. of some some for And coming obviously, think quarter. us to capacity which the we norm that very that described if capacity we what's I those overall, the is dialogue a a and our than impacting going how take about whether is of that. opportunities very some cases, dynamic We'll the do dynamic that's being coloring would kind some they just in which of customers

I though, So half customer about sentiment from good the year. second an funnel and good in the terms for I standpoint execution also feel overall sales overall would are feel of standpoint we and from overall, quarter the say, where of a about

strong really of half have think big and in on a of do a terms teams, optimism got -- hill obviously, X,XXX lot quarter to So deals QX the lot second the I our for had visits time think, sales the based and quarter, we to in a with year. and there's my customer a climb of lot every of I selling, of our but deals. a team, a you

Keith Taylor

just question, surprise. relating second of no the to Jon, the part

the the Europe across sort You've metrics, in to the seen of stabilized contracts. see it's the total reset it's on whether assets, of erosion the key related basis, of that whether of the energy it's you'll whether margin it's a primarily a the number or in

our a step if benefit, they were. quarter, contracts that at second the in had the look was the was felt up where you you reset, they power was as But will, first meaningful number a there of quarter, core -- of contracts and As metrics. throughout we the

which structure good that the had into part. started the year. of stabilize, we is the forward, pass what when points through was sort the going all factored and going an on that And as were We to that that look is they to now customers. anticipated our we the most at which price be pricing we basis, to was rate And average of

Jonathan Atkin

as requirements of AI you that any I in models to uptick segments at that tailwinds connect that training or then And little a seeing up. Are of expect lastly, these wonder if would business not? all you cost spun attribute bit get seeing in given you connectivity an might you're your

Charles Meyers

to interconnect of instances specific support AI. seen We've

core pretty we interconnection an really AI really with the really nodes realm inference provider to to the cloud. and us interconnection AI-as-a-service multi-cloud fact, significant to the connectivity In win support quarter and the this drive their in a that had put network to with

so -- I And we wouldn't shown did see that that's say up. likely

results that's what's In we little because there, of on to our hasn't just tough some I a going up in a yet indicative it's fact, deal. that But think of tell. probably booked shown

seen add averages. gross we've what say Interestingly, on with line it's and nine strong really really that quarter our activity, is interconnect, Jon, in I would

year-over-year. little terms And was down sign. think, so that's, year-over-year I was Intersect at a moderated terms It meaningfully up of but in in stable is really in the to adds, which ecosystem, cloud the a interconnect a of little And we're end on encouraging gross the fact, side financial gross by adds. very

is that I'm so some to AI. sure attributable -- And that and of

a types, seeing cloud, cloud also are seeing to we provider side, little you're cloud churn the a more service as et VM, more more on but with then -- cetera. to but network, activity little bit -- a cloud between churn then And

and M&A and And to XXX a XX so a of of lot I some think, grooming, -- activity. migration that's, lot

looking of So think think of I the we're I data we're see terms there transfer agile time. positioned I to to than that that of of in advanced over in little lot just And terms a interconnect. a being and gave you're of nature more really well going on our multi-cloud more for on sort you more connectivity you fabric were that demand happening. do But --

there And excited that talking as AI talking that the is people they're really, market about doing I are into to more a the lot service -- the about operations. up and really in we're out lot it. opportunity, their enterprise think a provider is certainly also side, things coming but is So bring about on

Operator

And Flannery our next question Simon Morgan is from from Stanley.

Simon Flannery

density couple a You talked times. about the requirements of power

that have Are design. strategically? retrofitting that your that So might that know center the so like people or thinking here? about how I And how thinking far redesigns you been and build impact data Meta IBXs? you're you've reconsidering to doing there you about scales from built are does

Charles Meyers

with nice type density very of from of we've what's with the have sort pace little design really benefited are thinking certainly arena more to a think, in really, our In and you And our actively differing xScale that -- -- keeping our hyperscale the we that. business what And broad you're range of serve it's more or about able evolving over ensuring requirements, extract more about from a the Yes. and the customers we up it's you challenging. is Yes. the space, and do of evolution I retail market. when retail dense the time. When system

customer little -- in I because two have and single to a bit out it's all or maybe power a just think allocate different. typically you to that a be facility, you

I -- up. need do going average density are so design be to think densities And going to

cooling designs looking innovation actively we're -- to I often D.C., in as actively standard a we in of that more at there at, And think our think get center in way the I to go-forward your out are current also feature looking is as are cooling our our and a constraint. more as to implement designs. ability in liquid well as fact, testing

use going I seeing to you're going design existing up -- And to also seeing get you're them. we're facilities out going to be more so to us going and be do to technologies densities augment think of

Operator

Eric next Wells Fargo. Our is Luebchow call with

Eric Luebchow

Keith. One for

a in material side I step-up think the of half. you would see nonrecurring mentioned back business the the

maybe install of as the color us about so out look we xScale a custom think work, rate for Is the you more to right more little on run fees, that. NRR just remainder year? could maybe provide And the that

Keith Taylor

Yes.

mentioned of lot As it the xScale business a step has to exceedingly of you we've delivered a we fees. the -- our the aspect downs well. the the can few and is with step-ups relates tell you Charles nonrecurring, times, from and The particularly said recurring performing experienced, guidance what

xScalev fees two there's xScale aware, As recurring are fees. you're two wholly and nonrecurring there

the it's has it fee really marketing sales that business. nonrecurring, As and the the to relates biggest impact to our

said, pipeline right of of a the deep. front There's us. opportunity very we as So that's lot is in

so but anticipate could in now, quarter, half the that Right set be of year. it's there's there be quarter. always very second second half the I it's get be a large a of to fourth that And the -- that over we're really a will the targeting earned we it scenario third fees where guess anticipated close.

got guidance. And that, the that's so with we've in what

And you But fees. on recurring of the to can seen the just that, then over of rest from that, go year. guidance see to of And have that course, still of step-up those history. the our going the the on in you part of our be you've the of nice midpoint business a that, top that seeing is you're and driven of nonrecurring course, to is the -- one part meaningful of quarters one step-up ever is of largest

Eric Luebchow

I one Great. up If at And little a follow-up. to churn, bit X.X%. ticked just look it

way in about earlier? churn Just range? should we of that cabinet network of going wanted said lower the little the with based seeing of call, some X% forward, a is Or cross-connects? metrics you're you still confirm, variable think related the how Any to to you the grooming about more in it what earlier to some think volatility on the be build mentioned will on end

Charles Meyers

XX% the that that having it related was view billable those the we that going have Again, Yes. net on part churn on basis, I range. to huge is cabs because are a And so cabs are to related interconnection those as mark-to-market I churns in not those not giving that related of XX the the XX% much to driver to to -- deployments, probably a in that's color XX% deployments -- favorable. does about But talked positive on the that when metric.

can when them. those take we're -- that's we get so And

several Singapore. in and -- of so those And

out will future. with that's in And so the in allocation, our even there build. -- additional of terms we

have of it's in performance, so kind the network and sort terms the the do proximity and a And et Singaporean to market, precious capacity in that we particularly of to ability that of density drive has capacity resource characteristics cetera. cloud

comfortable part our activity. see will spikes capacity. a like prepared higher bit little those remarks, may that range. we're of on we'll of some quarter, bit probably there. But things an us sort but did we of so year, take And led little more the the we little guided end attributable turn that in is of for that a there this generally are in average, to you seeing favorable the lower And that to as a type the we, in And said uptick

Keith Taylor

just add Eric And just thing. maybe other X

constrained and part Singapore. to on, alluded forward, earlier in have assets highly as As capacity is negotiations to think Charles we of markets, back of about the we some some we get and look that

are you. small going X thing negotiated to we identify we'll on it that of things come out working to so the that cause And call outcome. it examples of -- are say, for But we sort if we're an those suffice appropriate blips, clearly but to those we'll

Operator

is of David America. Our Barden Bank next caller with

David Barden

started to Charles, the you as how investors, or see the do you're kind think at that to when we, V guess the dynamic the that global Mexico City, Toronto, landscape you Northern the extrapolating to price kind V P Valley, we've scarcity of Southern I on constrict business you of of in look the start Virginia, and and element monetize that places should in? equation your versus about how availability of P about ability power ramp the like as think kind

Charles Meyers

Yes, there's in question. lot that a

the I going broader bit that's I to On point Q is very price at wholesale the whichever see obviously think operate environment. or case type a the prevailing we than -- we times industry, large. for -- a be think industry and capacity But which And that at side -- price a business -- the are think of seeing firm point. in true rise, the you around we're time to on I the centers of the prefer, or think V retail peak data more a I or it's different that's I But on think continue definitely pricing hyperscale here. of both

think I of in terms volumes grow. I think going are also to volumes,

supply The not question. or is power would interesting whether question of an availability constrain

we side, relationships on to our build market, have execute market to that feel comfortable us our I that are could by think that continue very place. plan power but I to -- the visibility and think allow that allocations going it on in our to in we

challenging, those -- actively a power at side, xScale the market identity actively probably we're we that. a time. little on-site alternatives. are looking of some in more sure like generation, are folks with but reality more for also the And of example, working On think I things to in think, And over make that I it's the

done in markets. So certain that

on-site a facility fuel not primary as power gas-based -- actually in Dublin fact, as power. I in with Bloom cells trends think but area. but continue that's fuel natural see we're has Silicon generation We Valley, -- going a primary source I a of that Energy as our recent In source use cells fuel cells, think to to

the may don't -- necessary, that area to I center you're going is. of and adapt to see if training think simply some in and certain go hyperscale data forms of So capacity, where AI the also I of the that positioning particularly power

think may that I And of well. some see you so that as movement

is So that constrained by I -- in business availability, our going but grapple don't constrained to we, think an as need to retail something power continue I materially material with. is it industry, quantity to think be

David Barden

CapEx a point land other follow-up a to in reports opportunities? novel the bank you as to your allocation let's call development is of to instance, Meta, just that geography that, to that centers? kind Obviously, like for traditional in gigawatt in shift going it, to of, where the power see about And specifically more looking would or into do is, do seen that be Wisconsin tend places we've this a not data

Charles Meyers

world, our the obviously, answer our sourced is been. sort campus demand fact, our in and large that's our where our land and vast revenue of of is of around And environments has from bulk the Short profitability and not yet. majority Yes.

continuing because in and land owned the on we're of You're facilities owned seeing the rise now our build asset owned to world. around revenue sort

And land really be towards so we'd that. of doesn't opposed mean bank is bulk to going the That still our that. necessarily

things thing, those that be through would do we probably but more which have think think likely type would about. -- kinds that of are the I I thinking the run xScale be to

I going -- campus think think in I to more do we approximate shorter But can equation. xScale areas think, locations is in of question be right our terms is our out the we of some the to no, I to answer our it's think that. of the those do don't support where part though, really more that. of now, But not that's we yet question

Keith Taylor

our I the the going we sizes what as that's note little Again, on David, heard markets that's major we're more of then probably least into. of number And talk the result, in emphasis a at just bit the entering most the facilities. XX of centers around that the in to just capital remarks, sort And forward, or byte projects today. across that markets sort the their you're particularly spreading of about, going make we're smaller be, that we're sense, the a existing actually think, capture of contiguous new and I underway seeing. have far in to wide and ones opportunity with you us those prepared just And globe. adjacent are that

we experiences markets And the advantages just others to where to retail go but that have hyperscale. and to of push of the versus are enjoy in continue likely sort in we the so our today, get focusing also markets our -- we'll less to the go business on

Operator

Sachs. Goldman with Feldman Brett is caller next Our

Brett Feldman

some power chain. Is dealing curious Is of around procurement just challenges supply literal associated it? comments with to supply that want of that you've a development? some in degree some years concentrated certain remarks And embedding then the in is quite market? you I with clarify, is Keith, elements were distinct Obviously, been into within now. to the your to made go Or I'm prepared it how just that chain? grappling physical the in it number about you to that broad-based come to with stresses for back the improvement?

Keith Taylor

generated industry. all The think things reference even generally fact time X-megawatt made Analyst today continue the And the generator just that for I to centers XXX-week be at speaking, a the supply demand chains constricted. that Brett, and to line. roughly to Yes, data Charles surrounded, given has Day,

how sense a you thinking out gives to you and have far it planning. So of start

that available Analyst one what from get the the a capacity things a sure tried providers on we markets, sophisticated line determine capacity we that making the all slot to at emphasize at look and we larger our work projects we production team was have we or the all of the at Day availability very need in to where procurement of And so then inventories. . exactly focuses with the either and and or look production

We think fair Demand, you power, And that on you have sure available And cooling a and the have kit is we ourselves, roll be available something out the have into and can making Charles prudently just to you that's back well. to going basis a power. that it's the very appropriate data to I you on again, And in the lot work of that something capacity way important a manage you tie that's to made the have have about that do. done to look-forward comments need. the the centers that. deliver as

or as see procurement some like in all as the we the The cases, opportunity future years. tandem, look London And the construction working XX go said, where we'll X teams well. broad market design, together far in out I and as -- out are -- construction, XX we sourcing a team years as

Charles Meyers

I that Yes. forward sustainability. a be one availability of now in constrained approach somewhat what really I'll one in I power bring inevitably around is to ensuring going Brett, think I'd the the to places factors mention add for thoughtful in that to did is think on critical do is there thing I previously really that put resource world

was -- of that Singapore. forces, the allocation and an driving our So terms getting believe, one in successfully of in I

I And talking and in been the for about to these of try to of -- and so topics closely sustainability CEOs with utility to think, to in past that put I've has picture. recent on work heads terms with these our together our how similarly, part ability think I phone the some be, and of things

that's We're bring on on to lean only in partners utility going side emphasis really continue as well. market-leading to the our going in we're our think do that and sustainability, with I And the so for something to customers our not table. but tandem

we into think play And those power come other are about the so I when think issue. I think that really factors

Operator

Our next Deutsche Niknam Bank. caller with is Matt

Matt Niknam

for a Just of like couple ones me. housekeeping

you somewhat increase if was it think what First, stepped of CapEx. can the also, slight $XX comment then recurring drove up modestly. And increase? on I DSO noticed about million I

accounts receivable $XXX is a I think quarter. about million headwind of in the

Just that wondering if out typical seasonality? there's call anything you'd XQ beyond

Keith Taylor

Yes.

it at one, step lowest On right is QX you the up two be seasonal when then would to see on you was just our year-over-year, a recurring the on QX we basis, of QX we're is it with further. we thought sort first be CapEx where consistent that And last spend -- look with and X% even over line next year. tends quarters,

be up we times It needs about But quarter-over-quarter massage based to, we the just it step buildings. it'll So and making different sort was but sure quarter, by part at that. just to million say the move just on need of timing result, is quarters. into we a around do the has And caused would that it. work inside different of can an exact $XX meaningfully I nothing as

still up with as the on there's their not our And although relates bit. as entire I appreciate, But would the tell increases. what a there's anticipated, what -- whole of the working And to a back. gone a that can held the I bit. we're around increase there's the moved some little -- price discussion DSOs, was, remarks, instead up been paying bill has said had recovery of what DSOs customers, negotiations. we've disputing weren't power it customers you some is ahead we I was Customers some result, prepared said the you just DSOs, of As some price our our weren't in our as bill of things certainly power being

time frame. those since the some in made July And of have been

a And see back going DSO, you're down to that to traditional I more think level. step so

running I'd the and what say got go anticipated down. already. cash as you've collections average I business, in the just is DSO And third of seasonality. I the liquidity overall, delinquent days for quarter ahead the said, get we'd be We're you'll we're we think generating an some But will

Matt Niknam

it clarify, to the recurring for CapEx. Keith, guide just more on was

for relative the I think up that million $XX to guide the stepped year. prior

So there's just there? I if to was of aware be wondering anything notable

Keith Taylor

question I'm misunderstood sorry, then. I your

have. we it portfolio recurring have As little look bit and based we a relates on can more we we think when the across and No, CapEx what do there's capacity the capacities

And sometimes we little capacity we Rob work into year. to more said, so organization put have recurring the Abdel's bit with when a CapEx

do And and into pull you forward from prior. year so is could what it the it one put year

that's just so what And you've seen.

for really have We some this bit -- recurring felt more we little next capacity CapEx had year. away invest to a obligation takes we year. in That that

Operator

comes Del Deo last Nathanson. Moffat with Our Nick question from

Nick Del Deo

previously? as a in still think Charles, an improvement headwinds move communicated on are you expecting interconnection expected? than front, Or the softer we bit you like are these the you adds year through do

Charles Meyers

But seen you, bit play in now. I'd have prior lot tell expected of moderation in of levels. question, up we towards Great factors there's all Yes. I Nick. a a honesty, a had back would there.

I see the the I that to be is at look when that going strong. adds continue to really because answer do it, short we're gross believe think I

with even persistent. overall end. the for said, as as cloud interconnection So demand growing I And

is churn the And that net the so on me. we what suppressed side. to clearly is adds, encouraging unpack it's that, When most I think the really

more the churn we've we see is expected further, than sufficient we down, have side so -- cost the to have seeing more normal in the to And that. available accelerated to it unpack great who this, electronics provider number of is it from we people levels. and as just interconnects broadly of I think in terms justify over almost And of bit And a you elevated And definitely is as unpacked but goes it depth, XX you we're imagine. all that service that migration. has should really because might XXX a anticipated really as there where maybe

see did And so continued we uptick.

sort was going what XX be to sophisticated the XXX to it's broader But seeing you're see migration -- so you population And then most like that. almost sort begins customers stake of relevant with most by led again, to of for blip integrate as is and at the the it another not seems everybody.

You have an viable to level economically to make really to have some concentration it of proposition. routes

see Then M&A Those to you then activity. some the of in true partially impacted XX and things. normal. the seeing way go you some a work saw space. back CDN -- and space to you sort And their are that's you're there. So through, XXX finite in network They

management, third than people area I we some belt do, just better way is many real from say And more then network space, where you would are they know the a the looking to in -- particularly there's of where overall inventory you tighten as aggressively business aggressive their any challenges can.

we don't previously even -- we're fully one, return. kind -- back would higher see very of dynamics we're on Independent whether and seeing potentially And we'll of port priced driving we're that, level are by all a And I so the seeing lift expected back those strong speeds pricing I think that speed. know our I and current we migration some get range, think why at ads, are offerings had there. towards to finite see in seeing that and those is -- dynamics is that of which -- way several but I of our guided nature, all

And helping. mix so is that

growth. And going see to as you're healthy think to continue a very result, I revenue

plays of hope how year, we'll have will see through just certainly out. that my we that back So that. the we'll the elevation half track see but some to It's

Nick Del Deo

Okay.

can obviously, about then long before Singapore, you in How you And how megawatts long got. Great. And online? XX-megawatt last then see that to will Okay. allocation XX actually great bring you? the

Charles Meyers

we speak to size Well, can't the the allocation. actual of

drive about don't We're the out confirm very relative what I believe will customers and demands important an meantime, I to runway can't capacity in to capacity incredibly our -- to really harvest it is In excited some give superior us say there, very but got. solid market. continue about I very meet that or So in the incremental would we market. size doubt of to we're to sort there information we deny the excited of that And that very continuing opportunistically we're market. the anything the allegation. build simply of in to returns opportunity

Chip Newcom

This you, concludes QX our Thank everyone. earnings call.

Operator

And this you Thank for concludes today's participating. conference.

a You rest may day. time, at disconnect this of great and have your

Equinix (EQIX) 2 Aug 232023 Q2 Earnings call transcript