Equinix, Inc. (EQIX) on Q2 2021 Results - Earnings Call Transcript

Operator: Good afternoon. Welcome to the Equinix's Second Quarter Earnings Conference Call. All lines will be able to listen only until we open for questions. Also, today's conference is being recorded. . I would now like to turn the call over to Katrina Rymill, Vice President of Investor Relations and Sustainability. You may begin. Katrina Rymill: Good afternoon, and welcome to today's conference call. Before we get started, I'd like to remind everyone that some of the statements we're making today are forward-looking in nature and involve risks and uncertainties. Actual results may vary significantly from those statements and may be affected by the risks we identified in today's press release, and those identified in our filings with the SEC, including our most recent Form 10-K filed on February 19, 2021 and 10-Q filed on April 30, 2021. Equinix assumes no obligation and does not intend to update or comment on forward-looking statements made on this call. Charles Meyers: Thanks, Kate. Good afternoon, everybody and welcome to our second quarter earnings call. As reflected in our results we are seeing significant momentum in our business as digital transformation outpaces previous expectations. Technology span is accelerating and Equinix remains uniquely positioned as traditional technology markets continue to shift as a service consumption models and hybrid multi-cloud is widely adopted as the architecture of choice. The pandemic is highlighted divisional infrastructure is not just a business enabler, but a primary source of competitive advantage for digital leaders across all industries. And we continue to see a multitude of trends driving infrastructure that is more distributed or on demand and more ecosystem connected than ever before, playing to our distinctive strengths. Our results reflect strong performance across our geographies, tremendous momentum in our market leading interconnection franchise and deep customer demand across our expanding portfolio of services. Against this robust demand backdrop, we had a great second quarter, delivering record bookings, fueled by continued momentum in our Americas business and strong quarter of Equinix metal. We processed more than 4600 deals in the quarter across more than 3200 customers, demonstrating both the scale and the consistency of our go-to-market machine. We achieved our 74th consecutive quarter of top-line growth and are pleased to have been recently been included in the Fortune 500, an exciting milestone made possible by the confidence our customers place on Equinix, and by the incredible commitment and passion of our 10,000 plus employees around the world. Keith Taylor: Thanks, Charles. And good afternoon to everyone. I hope you and your families are well and enjoying summer months. Charles Meyers: Thanks, Keith. The momentum behind digital transformation is as robust as ever, and shows no signs of letting up. As the world's digital infrastructure company, Equinix plays a unique role in this evolving story and is positioned to be both a catalyst and a key beneficiary as we partner with customers to unlock the enormous promise of digital both economically and socially. As we discussed in our latest Analyst Day, say we are focused on three strategic levers as we execute on this transformational opportunity. First, we will continue to scale, doubling down on the strength of our core business, investing further scale our go-to-market machines to win new customers, putting our capital to work to add capacity in existing markets, and executing on targeted operations whether it's standardized simplified and automate. Driving expanded operating margins and providing a better experience for customers and partners. Second, we will extend the reach of our platform and accelerate our aspirations in xScale. By the end of this year, we'll be in 66 markets around the world and see continued opportunities for expansion and growth across the retail and xScale. And third, we will continue to innovate across our portfolio, scoring scalability, self-service and energy efficiency across our space , delivering advanced features to sustain momentum in our market leading interconnection franchise and driving adoption of our digital infrastructure services to deepen our relevance to customers. Our ability to scale expand and innovate starts with our people. And with our commitment to building a diverse and inclusive workplace for every person, every day, you can confidently say I'm safe, I belong and I matter. We show up every day with an in service to mindset, starting by being in service to each other, which enables us in turn to be in service to our customers, to our communities, and to you, our shareholders. Purpose creates passion. And we are inspired by ours. To be the platform where the world comes together, serving as an enabling force for our customers in unlocking their incredible potential to deliver the innovations that enrich our work, our life and our planet. So let me stop there and open it up for questions. Operator: Thank you, sir. Our first question comes from Jordan Sadler with KeyBanc Capital Markets. Sir, your line is open. Jordan Sadler: Thank you, good afternoon. So during the Investor Day last month, you guys outline the 7% to 10% annual AFFO per share growth through 2025. But you also suggested that next year could come in in the lower half of the range. I think efficiency initiatives took some time to ramp and you didn't have as much benefit from refinancing opportunities that have taken place. Given the acceleration you're still seeing in this quarter and the bump you've seen here, can you can you speak to what the trajectory looks like heading into next year? And then certainly as a follow up and just curious about the ATM in the quarter. I think Keith, you talked about significant incremental debt capacity, given sort of leeway offered by the agencies. And so we expect to see the equity raise in the quarter? Thanks. Keith Taylor: Okay, great. Thank you for the questions. Let me take the first one, let me take the first question. First and foremost, when we came up at the Analyst Day, one of the questions we spent a lot of energy talking about was the AFFO per share growth rate in 2022 relative to the broader guide. The reason I said it was going to be in the bottom half of the range instead of the top half of the range was, one that was a reflection of all the investments we're making across our portfolio this year. Not only as it relates to xScale, but also our digital infrastructure services and then all the efficiency initiatives. So we were absorbing the full annualized impact of those costs in in 2022. As a result, it tends to cause us to be a little bit more dilutive on the per share metric relative to the broader guide. In addition, of course, we've got a very strong guide for this year as well. So we've had the benefit of refinancing out of the majority of our high yield debt. And so you've got a little bit of wind at your back and you won't have that wind to get back next year. So that's the primary reason. Relative to the comments we made about this year and raising our guide, probably not a big surprise to many of you, as we saw a lot of this coming in is reflected in their long-term model. That all said, we saw the ability to move our numbers up. But it's a five-year plan as you can appreciate. And so I wouldn't say that we're changing the trajectory on the guide for Analyst Day, just because we had one good quarter. That doesn't feel like the right thing to do. Secondly, as it relates to ATM. Like anything, we are going to use a little bit of debt and equity. This was really commensurate with our commitment to our rating agencies to tap periodically at ATM facility. But we've dramatically reduced what we anticipate that we would otherwise use. And as a result, you saw $100 million. But the message that I had in the prepared remarks was really the lean is towards debt capital on a go forward basis, for obvious reasons when the cost of bad debt capital and even over the last few weeks has continued to trend downwards. And so that will be a lien on a go forward basis. So there is always going to be a little bit of land. But again, I want to want to make sure that everybody fully appreciates. We want to use the debt capacity that we have on our balance sheet to its fullest advantage, but also at the same time maintaining a very positive relationship with a rating agencies. Charles Meyers: Yeah, I might augment this bit in terms of Jordan in terms of just saying, I think in the environment as attractive as I believe we're operating in now in terms of seeing so much growth opportunity for the business. I think the ability to continue to ensure that we have the ability to respond to that and the balance sheet to do so. It's just something is top of mind for us, as Keith said and the lien is definitely towards debt for the obvious reasons. But I think it probably makes sense for us to I think have some level of ATM, just to continue to have optionality in the business. Operator: Thank you for your question. Our next question is from David Guarino with Green Street. Your line is open, sir. David Guarino: Hey, thanks, guys. I want to ask you regarding the 3%, stabilized revenue growth in the quarter and your comments on the acceleration of that, through the rest of the year. Was actually due to the timing of when the Americas bookings hit during the quarter. So it would be a little bit higher? And could you just remind us of the top end of your stabilized growth rate? Keith Taylor: Sure, David, yeah, we've typically guide three to five. So we're kind of at the bottom lower end of that range this quarter. I think there are some timing effects in there and there's also some onetime items, I think that are flowing through. But as we really unpacked that and looked at what we expected, towards the back half of the year, I think we feel good about as sort of moving more towards the top end. And I think that's partially due to just really, obviously really strong continued momentum in the Americas business and out of the full portfolio of assets there. So, 8% percent quarter there, obviously some strong NRR in there. But even on the NRR side, 6% growth really strong quarter. And so I think towards the back half of the year, we're feeling really good about the trajectory there on the stabilized assets same store number. David Guarino: Okay. And then switching gears, you noted strong bookings in the Atlanta market. Could you comment on which data centers in that market saw the strong demand? And specifically, I guess could you come in if your 180 Peachtree datacenter is gaining any traction versus other properties in that market? Keith Taylor: Yeah, I mean, that's where our focus is. I believe the 51 and putting the energy in there and continuing to build that ecosystem, which we believe has the critical mass of interconnection and ecosystem depth that is really necessary to scale our market effectively. So yeah, we're seeing good success there and again, the emphasis is on that Peachtree location in Q1. Operator: Thank you for your question. Our next question is from Sami Badri with Credit Suisse. Your line is open. Sami Badri: Hi, thank you for the question. Charles, I have a question for you. And this is kind of going back a couple of quarters. I believe in the back half of 2020, you discussed that there was going to be an enterprise acceleration. And I know that dynamics now are actually picking up across the majority of the tech sector and we've seen some large-cap tech results that have reflect this, including your results. But, how would you describe your expectations in the back half of 2020? So what you're seeing right now? Is this coming in line or this coming ahead of what you were expecting in the back half of 2020? Charles Meyers: Yeah. As you indicated here, we were pretty optimistic and bullish about the momentum we were seeing with the enterprise customer, even during the more peak levels of the pandemic et cetera. And so we're seeing people, despite that saying, hey, we've got to be investing in digital. And so it will be showing up in terms of our pipeline build and, in our bookings, and just qualitatively in the conversations, we were having with customers. And so that's why we were kind of signaling that optimism. I think that is definitely translated how we expected it. And I would say that this quarter was even stronger than I think we would have thought it was going to be. And that's as reflected in our results and therefore, in the adaptation and our guide. And so I think the business, just a really strong quarter from enterprise perspective. As I said in the script, across all three regions across a variety of sectors, enterprise bookings, were very strong. channels a big part of that working not only in terms of pursuing hybrid cloud opportunities with our key alliance partners, and the cloud players, but also with our retailer portfolio partners. And so, yeah, I think we're seeing it in line or better than we had thought. And I think we expect to continue to see sustained output and growth from the enterprise segment and probably over indexing. Again, cloud and IT and enterprise have been over indexing for a very long time now. An enterprise just seems to be just on a tear in terms of its growth right now. Sami Badri: Thank you for giving us color on that. One quick follow up. And I want to ask you this, because this is the question a lot about investors actually asked me. And where do you think enterprises are in their kind of IT modernization cycle? Are enterprises 20% there, 40% there 60%? Where would you put them as far as a cycle in terms of where they are in their upgrades and modernization efforts? Keith Taylor: Yeah. I mean, it's obviously really hard to pinpoint that with any precision. But what I would say is, I do think it's still relatively early in terms of people whether they want to use a baseball analogy or whatever. I think it's early innings. We haven't past the midpoint here. And so I think there's a long way to go in terms of people who still have a lot of legacy IT architecture, that they're looking to adapt to that sort of hybrid multi-cloud world. And then the other comment I would make is that the pace of change itself is just continuing to accelerate. And so, I think that the technology life cycles and refresh cycles are shortening. I think people are thinking differently about how that idea, as I said, in my comments, a number of very large technology markets are dislocating as they shift to as a service. And as we talked about at Analyst Day, that provides an upside opportunity for us to get a bit more wallet share, as those things are delivered as a service with Equinix as a point of nexus for consuming those services. Because we're getting both the underlying service providers themselves locating infrastructure at Equinix. And then we're often able to deliver those services on the platform aligned with things like fabric and metal and other things that are allowing us more wallet share. And so I think it's still early days. I think there is a long period of IT architecture and digital transformation investment in front of us for the foreseeable future. Sami Badri: Got it. Thank you. Operator: Thank you for your question. Our next question is from Simon Flannery with Morgan Stanley. Your line is open. Simon Flannery: Great, thank you very much. Good evening. Just on the normalization point again. Can you just talk about the supply chain side of things? And are there any challenges that you see both in terms of availability, basically as you get into more of the infrastructure businesses and then just inflation which some of the others in the food chain have been talking about with freight costs, et cetera? And you mentioned some of the challenges with COVID and some of the Asian markets like Singapore. I think we've also heard more stories about limitations on power and water and some municipalities kind of looking at datacenters in a slightly different lens. You obviously highlighted your ESG initiatives, but any color around you see that evolving and how the Equinix is positioned for that would be great? Keith Taylor: Thanks. Thanks for the question. I'll take the one around supply chain. Suffice it to say, we've been investing quite heavily. You've heard us speak about in our procurement and strategic sourcing initiatives under a very strong leadership. And as a result, we are getting ahead of some of the perceived constraints in the marketplace. And we're just normally managing our access into the production cycles for this year, but it's also contemplating our consumption needs for next year, that marries up nicely with also the inflationary exposure that one might otherwise have, by entering into broader commitments, you can mitigate some of that inflationary pressure as well. But that all said, I think we're making some great for having great successes and working with our partners or vendors and our suppliers. And then I would also go on to say that inherent in our contracts is a lot of inflationary protection. So there's the aspect of supply and demand and then there's the aspect of pricing. And again, we're very confident that our contracts will appropriately contemplate the exposure to the extent that you brought up your higher inflationary environment over the coming years. And so from both perspectives, we want to speed up and in both to make sure that we protect our industries and revenue, but we also have access to deliver the management support the cost model. I think we're doing a good job of that as a company. Charles, do you want to talk about the Singapore? Charles Meyers: Yeah, a little bit there in terms of - I think the question of - specifically as it relates to Singapore. I think there was a COVID related delay in terms of the timing of that facility, that created a little bit of revenue headwind, relative to the timing. Because demand for that is so strong for us, that we had planned on that coming online a little bit earlier. And so we're seeing a little bit less, despite that delivered a really strong quarter. And I do think there is a broader phenomenon, as you described in terms of markets thinking about how they're going to allocate capacity and deal with the demand for datacenters and the environmental impacts. What I would say is that, that's exactly why we're making the level of commitment into ESG and in particular, the environmental side that we are. I think, we're really positioned to tell a story there as now the leader going out and saying, we're going to be Climate Neutral by 2030. And then we're going to be in a position to really partner with municipalities to say, hey look, there's a tonne of economic and social benefit being driven by digital. I talked about that in the Analyst Day, to the tune of $100 trillion. And people want to tap into that, but they want to do so responsibly. And I think our ability to make the investments in ESG is going to continue to be something that really differentiates us. And that's not true only in Asia by any means. There's a number of markets around the world facing those same things. And honestly, I think that's going to be the thing one of the areas where we continue to separate ourselves from packs. One of the added piece of color on the prior question to on the supply chain sort of constraints issues. Now, as I've talked to some people about it. There's really kind of three areas in our business where you think about it. The data centers build side of things. There --because of our size, our market leadership et cetera, I think we feel like we're in a very good position to gain access to the equipment, we need to continue to hit our delivery dates. And so feeling in a good position there, but obviously, continuing to monitor trends. And on the networking side of our business where maybe we're a little less positioned, but what we've done is really said, okay, we're going to go ahead and make investments to mitigate risks there. And in fact, that's an area where we've had real success. And again, that showed up a bit in the quarter and in our guide, as we think about pulling some costs in. And then as the third level of is really at the digital infrastructure services line with things like metal. And that's an area where it's a smaller business for us. And so, it will be less impactful, but we are looking there about how we can partner with a number of folks to mitigate supply chain impacts there, especially since we had just come off a very strong bookings quarter for metal. And so we want to make sure that we can continue to sustain that momentum. Simon Flannery: Good color. Thank you. Operator: Thank you for your question. Our next question from Brendan Lynch with Barclays. Your line is open Brendan Lynch: Great, thanks for taking my question. You recently put out a press release related to the channel. And it was clearly another strong quarter for the channel in 2Q. Maybe you could talk a little bit about your changing approach there and what type of investment you might need to make to bring the new structure to fruition? Keith Taylor: Yeah, it really incredibly strong performance from the channel. And it's been that way for every quarter for. As far as I can remember, we've just been really delivering well in that arena. I would say that there's a few things. One, the relationship that we have, with what we refer to as our alliance partner group, you mentioned several of them in the script, again, the usual suspects, AWS, Microsoft, Oracle, et cetera. Those are posts that we are partnering with as enterprises think through their demand for hybrid infrastructure. They are wanting to advance sales cycles for their public cloud services. And in order to do so they have to have a comprehensive answer for the customer in terms of the hybrid infrastructure story. And so together, that's very much a one in one equals three kind of story. And we can bring that to the customer, and have really been effective in winning business together. And so we're seeing real strength there. On the retailer side, people that are combining value in certain ways with Equinix value to solve customer problems, we're seeing a nice uptick there. And what I would say is, we're seeing more concentration in terms of a smaller number of our really well - highly capable retailers delivering more of the revenue. And I think that's a good general dynamic for us. And in terms of the investments we're making, the big area there is really to continue to upgrade our processes and systems. To be very honest, we're not designed channel ready from the beginning and continue to adapt those to be more channel-friendly. So that, quoting, ordering, customer support can all be done in ways that support a customer of customer or a customer by channel partner in this case. And so the adaptation of our systems is - that's a multiyear sort of trajectory. But that really is some of the key areas that we're making investments to really better serve channel partners. Brendan Lynch: Great, just one follow up on that. I believe you have a goal of getting to about 50% from channel sales. What is the timeframe for that? And also, what effect on margins will be increased channel sales have? Keith Taylor: Yeah, I see people have asked me that question. And I've answered that. So I think you're probably referring to statements I made in the past of that I see no reason why we couldn't be 50%. I don't know exactly when that will occur. I do think that success with our - as we're seeing channel partners embrace some of our newer services like metal and network edge. Network edge is almost inherently sort of a channel or service, because we're partnering both with people that are providing their virtualized network functions, and then with providers who are bringing that to market in tandem with other value. I think we're seeing a bias towards continued strength in the channel. But we also have a continued great success with our direct selling team, and so both are growing nicely. So I don't know, our channels been over indexing a bit. And so I think we will trend towards higher numbers. But it's hard to predict, I think exactly where we land. I think if the newer services really accelerate, I think that could bring us the higher channel percentages faster. And in terms of impact on margins, they're really not particularly meaningful in terms of - our current model is slightly higher cost in that we often are double copying on commissions, when we have our direct team partnering with channels. But when you look at the customer lifetime value of these contracts, the implication of that to margins is actually quite small. And, given there is very attractive profile, in terms of return on capital and margin of some of these newer services, I don't feel like that's going to be a significant drag on margins. In fact, I think our other areas of margin expansion are going to overpower those. Brendan Lynch: Great, thanks for the color. Operator: Thank you for your question. Our next question is from Ari Klein with BMO Capital Markets. Your line is open. Ari Klein: Thanks. And just maybe in the Americas, the cabinet additions have picked up which I think you've been alluding to over the last couple of quarters in the backlog. And now you mentioned that at least overall, committed backlog exceeded the build backlog. So how should we think about utilization rates I guess moving forward, it's around 73% now? A little bit lower than it's been historically. What kind of rate would you like to get to? Keith Taylor: I'll take that one. Clearly, you're right, the, we had a really good quarter something that we foreshadow for the last two quarters, particularly around the West Coast of the U.S. And so great success in particular with the cable landing station. That I'll say we've introduced some new capacity or the Silicon Valley 11 asset has come online. And so when you look at the overall utilization rate, it's still in the mid to low-70s. That said, we're going to continue to have success in the Americas. Charles alluded to and I've mentioned that. And so I would assume that utilization level is going to continue to move up as we consume the inventory of the assets were built. I'd also add just on that basis, I made the comment in my prepared remarks. The amount of booked but yet to be built inventory is up slightly, despite all of the inventory that we've got all of the inventory that moved into the billing queues. And so that's a real positive. So it gives you a sense that there has been substantial bookings already that will consume that inventory. The other thing I think is really worthy of note is quarter and for that matter, through the rest of the year. We anticipate it will continue to be selling into what was historically known as horizon assets. We've seen a real nice move up in as we said, six of the seven markets plus some of the smaller markets in the U.S. And that includes much of the capacity related to the formerly known as Verizon assets. So we're excited about the momentum. I think you're going to see the Americas region continue to perform well. As we said, last quarter and we're going to tell you this quarter through the rest of the year, and we'll update you on '22 when we get there. But overall, we're just delighted by the success we've seen on the heels of all this opportunity. Ari Klein: Thanks. Maybe just a follow up on the America's, AMR per cabinet came down slightly in the quarter. Was that just timing, given the cabinet additions? Keith Taylor: It is timing. And again, it goes back to large, as I referred to a large cable landing station deployment, it came at a different price point. And so you've got the timing impact, as well as a very large deployment on the West Coast. But overall, from a pricing perspective, we have seen great success. Charles alluded to it in his prepared remarks, just the number of deals that we're doing across a number of customers, the volume of activity and mainly small to medium sized deals with high focus on pricing on the pricing environment is playing out perfectly for the company. And as a result, despite timing, there's really nothing that is abnormal as it relates to our pricing environment. Charles Meyers: Yeah, I think that's just a better area where the healthy pricing and the business mix that is being reflected in the - across the board. It's just continue to be really strong, and we're hitting that sweet spot in the market, pricing is firm, and then interconnection activity is high. And all that comes together into a really an awesome story relative to yields. And so it's been years now, because people are always saying, can they - can the Americans get better. And here's a guy I was always like, okay, that's pretty darn good and yet it continues to rise. So it's been - it's really been a good story. Ari Klein: Great, thanks for the color. Operator: Thank you for your question. Our next question is from Michael Rollins with Citi. Your line is open. Michael Rollins: Thanks. And good afternoon. Just a couple of follow ups. So first, there was a mention that the cabinet backlog increased in the quarter. And I was curious if that's relative to the 11,000, that was disclosed at the Analyst meeting in June, and how that might compare to historical levels of backlog? And then secondly, the gross new global customers added in the quarter increased to 270. And curious if you could unpack how the increase in this metric could influence your future results and where this increase may be coming from. Charles Meyers: If I take the backlog question, I'll take. Keith Taylor: So on the backlog Mike, we did disclose 1000. Over the last three quarters, we have seen an increase to this level. I'll refer to this as an elevated level of backlog. So it did increase slightly over the prior quarter. And as a result - again, it's a reflection of the momentum in the business, also, to some degree, the tightening of our booking activity very, very strong June. And because of the strong June, of course, that goes into booked but yet to be build. But overall, into momentum that we're seeing not only in the activity of the booking activity, what it means for the backlog, but even more importantly, the depth and scale of our pipeline as we look forward. And that's really about revenue. In all three cases, that seems to be enough up into the right movement. Charles Meyers: On the new customers, I'd say we continue to feel really good about our new logo capture capabilities both direct and via channel. And interestingly via channel isn't necessarily showing up in customer account. Because oftentimes, those are the customer record is the channel partner. And so it's actually there's even more strength than sort of appear on the face of the results overall. And in terms of where they're coming from, I think we're having pretty uniform success geographically. So there's no one region that is significantly outpacing the others. Obviously, we have really strong quarter for the Americas. And that selling team, I think, has been doing an exceptional job. But we're also seeing good new logo capture across the other regions as well. And in terms of how it translates into business, you do see that new logos over index on a growth rate perspective from vis-à-vis existing customers. And so I think they have the opportunity to as we can continue to do that. That's really why when we talk about this three-legged strategy of scale, expand, innovate. Scale is with the customers are buying. And so let's continue to get new customers and add capacity in existing markets to serve them. Then expanding in terms of new geographies to increase wallet share. And then the innovation side, which is really bringing in new services and the ability to capture more wallet over time in terms of the service types. And so I think it gives us a really a multi-dimensional growth opportunity that's really showing up. So new customer, definitely, look we still get the bulk of our bookings from existing customers. And that sort of always good news and that our customers are expanding. There's less friction and that. There's lower cost to acquire. Customer lifetime value is continuing to go up. But new customers are definitely the lifeblood for the business as well. And so we're having focus there and real success there. But it's fairly uniform both across geos and across our products. Michael Rollins: Thanks. Operator: Thank you for your question. Our next question is from Colby Synesael with Cowen. Your line is open. Colby Synesael: Great. Two modelling questions, if I may. One in the AFFO calculation, there was an adjustment for impairment charges of $33.6 million, and just curious what that is? And then secondly, you've done just over, I think 40% margin in the first half. You're getting to just over 47% for the year. So obviously an implied downtick in the back half. Where are we most likely going to see that as at COGS, sales and marketing or is it G&A? Thanks. Keith Taylor: So let me just take the impairment charge first. And Charles and I will respond to the other one. There were some federal tax adjustments associated with the causing of some matters in the quarter. And as a result, because to the tax - and you have to keep pure. And you'll see that there's basically a substantial decrease in tax. It was primarily in relation to a transaction we did in Australia, vis-à-vis Metronode where we're indemnified by the other party. And as a result, you've got the benefit on the tax line, that you impaired your assets on the other way. And so net-net, it has no meaningful impact on the P&L, but it gets disclosed separately and it's grossed up. And so itself shows itself independent in the other income and expense line. So that's what happened there? But again, as it relates to AFFO there is no meaningful move, because it was embedded in the other lines. Then as it relates to the margin question. Yes, we've done very well in the first two quarters of the year. As we continue to say, we want to guide you to what we think will happen for the year, no surprise. And although for the year, we're saying greater than 47%. We are making a relatively meaningful investment. Q2, we added net roughly 250 heads to the organization, Q3 and Q4, we're going to add another 700-800 heads to the organization. And as a result, you're observing the human capital that we're - that we need to invest in our growth. And so that's one aspect of it. Two you've got the seasonal impact of utilities in the Americas that's coming through. And then three, because Q1 and Q2, we've had the benefit of a number of non-recurring revenue items that don't carry a lot of cross with them. So the JV fees when we sell an asset, and we get a sales fee, or we get a development fee. As you know and as you can see in our results, it comes through the revenue line, but there's very low drag to the bottom line. And so it can be inherently lumpy. And we just don't see a lot of that through the second half of the year. If anything, as I mentioned, non-recurring revenue will go down Q3 over Q2, but then it's going to flatline in Q4, and there will be another one-off fee that likely gets recorded in the fourth quarter. The bottom line - Colby Synesael: But even with that fee that you just mentioned, you think that NRR is flat in 4Q versus the 3Q number? Keith Taylor: Yeah, it is. That's correct. Colby Synesael: Okay, thank you. Operator: Thank you for your question. Our next question is from Tim Horan with Oppenheimer. Your line is open. Tim Horan: Thank you. We've seen some pretty transformational outsourcing by the carriers, the hyperscalars. Do you guys think it will be an important partner there? And will that just also attract your new enterprise customers fewer locations? Thanks. Charles Meyers: If I understand that, you're asking if the carriers themselves will be attractive partners for us to attract enterprise customers. Tim Horan: Well, AT&T is outsourcing their core network to Azure. And we've seen this announce something, but AWS. Do you think, will you be an important part about outsourcing, helping to hyperscalars and AT&T and other carriers are looking to do the same thing globally? Charles Meyers: Yeah, I think so. I think that we definitely have an opportunity there. I think that overall supply chain is definitely showing sort of signs of reshaping a bit. But as you know, carriers are really important set of partners for us as it is. In fact, it's our enterprise success, it's actually more than what is reflected in some of our results that we report to you in this earnings deck for example. Because some of the revenues on the enterprise - on the network side are really carrier selling enterprises. And I think when you have this dynamic of carriers, working with other providers that are, that are really taking a different and more non-traditional approach to building their infrastructure. And Dish is a great example there. I think we have absolutely had an opportunity to continue to play. And our points of interconnection and really act as key points of nexus in in some of these architectures, that I think are going to be important pieces of the puzzle. So yes, absolutely. In fact, our business development team is really quite active in really thinking through edge opportunities and some of these more emerging infrastructure areas where people making new significant investments, unlike what you're seeing from Dish. Tim Horan: And just a follow up to that, do you think qualitatively the hyperscalars are more likely to outsource infrastructure or the insourcing more? What do you think the trend is heading there? Charles Meyers: As we do see some a greater level of appetite from some of the hyperscalars to self-provision. But I think that the demand is just so robust, that there's going to continue to be a huge amount of that, that is going to need to come from third-parties. And so - and as we've already said, our xScale aspirations aren't to sort of go, capture share in in huge buckets. That is really to grow that business by targeting attract have been strategically important locations and deployments that we think play to the overall benefit of Equinix and deliver outstanding returns to the JV and for our JV partner. And I think we're really executing very well on that strategy. So I think there's plenty of opportunity out there. But there is some, I think some of the hyperscalars are seeing desire to self-provision in certain markets. Tim Horan: Thank you. Operator: Thank you for your question. Our last question will come from Jon Atkin with RBC. Your line is open. Jon Atkin: Thanks very much. So a question on hyperscale, Slide 20 xScale looks like you did 37 megawatts of leasing, you've got 140 megawatts of capacity. And if I'm interpreting the lower right numbers correctly, 31 megawatts available to sell? So I guess my question is, what's the type of wage that we should expect annually quarterly in terms of at least a number? And at what rate to that 140 grow kind of on a quarterly one-rates? Keith Taylor: Yeah. I would say one of the comments we made was, we have seen a lot of success. And Charles made the comment previously, virtually everything was built was now sold out. And so we're going to continue to ramp up dramatically. One of the things that is critically important in the xScale initiative is for plan. And quite openly, we've had more momentum in the business than we originally anticipated. So the teams are working exceedingly hard to procure - secure future inventory. And it's probably a little bit early to tell you exactly how that will present itself. But suffice it to say, we'll continue to provide a really detailed and detailed summary of all the different builds that are going on across the three regions of the world. And again, we anticipate that xScale will be in all three regions of the world now. And as we said, with the GIC initiative, about $7 billion of capital over 32 buildings and 600 megawatts, that is through time period in 2025 will take us to 2025 and beyond. But that doesn't take into consideration some of the other initiatives that we're working on, including another joint venture with a different party. And so as we continue to progress, we'll just update you and the rest of the community. But we are seeing great success, if I can summaries this. So that diversity, everything that we have built and we're continuing to procure and secure more land and capacity to build up for the future. Charles Meyers: Yes, it's not 00 certainly not precise. I realized, but I can tell you that the next 140 to come a lot faster than the first 100 employees. And because, we're definitely accelerating putting capital to work and seeing, seeing the success. Jon Atkin: Great. And then lastly, the balance sheet is showing $227 million in assets held for sale. Can you remind us what is it you're selling? Keith Taylor: Those assets typically, so Dublin was the first example of that. Our Dublin 5 asset moved to the joint venture on July 7. And so that's an asset that is available for sale. We have some other assets. Again we're investing the capital on our balance sheet, and then we're going to transition or contribute it to the joint ventures and move and thereby get a recovery of those investments that have equity or ownership. So those are just the assets that are sort of queuing up to be delivered to the joint ventures. Jon Atkin: Thank you. Katrina Rymill: Great. That concludes our Q2 call. Thank you for joining us. Operator: This does conclude today's conference call. You may now disconnect.
EQIX Ratings Summary
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Equinix (NASDAQ:EQIX) Maintains Strong Position in REIT Sector

  • Cowen & Co. reaffirms "Buy" rating for Equinix (NASDAQ:EQIX) with a stock price of $790.51.
  • Equinix is recognized for its potential in accelerating earnings growth in 2026 and 2027 amidst macroeconomic uncertainties.
  • The company's market capitalization stands at approximately $77 billion, indicating its significant industry presence.

Equinix (NASDAQ:EQIX) is a leading global data center and colocation provider, connecting businesses with partners and customers worldwide through its extensive network of data centers. As a key player in the real estate investment trust (REIT) sector, Equinix focuses on digital infrastructure, competing with entities like Digital Realty Trust and CyrusOne in the data center space.

On July 3, 2025, Cowen & Co. maintained its "Buy" rating for Equinix, with the stock priced at $790.51. This endorsement highlighted Equinix as one of TD Cowen's top three best ideas, as reported by StreetInsider. Despite a slight decrease in its stock price to $787.57, Equinix remains a strong contender in the REIT sector.

During REITWeek 2025, it was noted that REITs, including Equinix, are expected to see accelerating earnings growth in 2026 and 2027. This optimism persists despite macroeconomic uncertainties. Equinix's focus on AI-driven data centers aligns with key investment themes, positioning it well for future growth.

Equinix's market capitalization is approximately $77 billion, reflecting its significant presence in the industry. The stock has traded between $782.55 and $797.69 today, with a 52-week high of $994.03 and a low of $701.41. This range indicates the stock's volatility and potential for growth.

Equinix's trading volume on the NASDAQ exchange is 211,789 shares, showcasing investor interest. The company's resilient cash flows and potential for dividend growth make it an attractive option compared to other asset classes, as highlighted by Seeking Alpha.

Equinix, Inc. (NASDAQ:EQIX) Earnings Preview: Key Financial Insights

  • Equinix is expected to show year-over-year growth in revenues and adjusted funds from operations (AFFO) per share.
  • The company has consistently surpassed consensus estimates over the last four quarters with an average beat of 3.13%.
  • Financial metrics indicate a P/E ratio of approximately 85.15 and a debt-to-equity ratio of about 1.41.

Equinix, Inc. (NASDAQ:EQIX), a leading data center real estate investment trust (REIT) based in Redwood City, California, specializes in providing colocation and interconnection services, essential for digital infrastructure. Competing with other data center providers like Digital Realty Trust and CyrusOne, Equinix is set to release its quarterly earnings on February 12, 2025.

Wall Street analysts estimate Equinix's earnings per share (EPS) to be $2.75, with projected revenue of approximately $2.28 billion. The company's results are expected to show year-over-year growth in both revenues and adjusted funds from operations (AFFO) per share, driven by the increasing demand for data centers amid rising digitization. However, high interest expenses may have negatively impacted the earnings.

In the previous quarter, Equinix reported a 4% surprise in AFFO per share, consistently surpassing consensus estimates over the last four quarters with an average beat of 3.13%. This performance is supported by steady growth in colocation and interconnection revenues, reflecting strong demand for digital infrastructure. Analysts forecast an 8.1% year-over-year revenue growth to $2.28 billion, with EPS expected to increase by 11.1% to $8.11.

Equinix's financial metrics reveal a price-to-earnings (P/E) ratio of approximately 85.15, indicating that investors are willing to pay $85.15 for every dollar of earnings. The company's price-to-sales ratio stands at about 10.58, suggesting that investors are paying $10.58 for every dollar of sales. Equinix's enterprise value to sales ratio is around 12.49, reflecting the company's valuation relative to its sales.

The company's debt-to-equity ratio is approximately 1.41, showing that Equinix uses $1.41 of debt for every dollar of equity. The current ratio is around 1.16, indicating that Equinix has $1.16 in current assets for every dollar of current liabilities, suggesting a relatively balanced liquidity position. These financial metrics provide insight into Equinix's valuation and financial health as it prepares to release its earnings.

Equinix, Inc. (NASDAQ:EQIX) Earnings Preview: Key Financial Insights

  • Equinix is expected to show year-over-year growth in revenues and adjusted funds from operations (AFFO) per share.
  • The company has consistently surpassed consensus estimates over the last four quarters with an average beat of 3.13%.
  • Financial metrics indicate a P/E ratio of approximately 85.15 and a debt-to-equity ratio of about 1.41.

Equinix, Inc. (NASDAQ:EQIX), a leading data center real estate investment trust (REIT) based in Redwood City, California, specializes in providing colocation and interconnection services, essential for digital infrastructure. Competing with other data center providers like Digital Realty Trust and CyrusOne, Equinix is set to release its quarterly earnings on February 12, 2025.

Wall Street analysts estimate Equinix's earnings per share (EPS) to be $2.75, with projected revenue of approximately $2.28 billion. The company's results are expected to show year-over-year growth in both revenues and adjusted funds from operations (AFFO) per share, driven by the increasing demand for data centers amid rising digitization. However, high interest expenses may have negatively impacted the earnings.

In the previous quarter, Equinix reported a 4% surprise in AFFO per share, consistently surpassing consensus estimates over the last four quarters with an average beat of 3.13%. This performance is supported by steady growth in colocation and interconnection revenues, reflecting strong demand for digital infrastructure. Analysts forecast an 8.1% year-over-year revenue growth to $2.28 billion, with EPS expected to increase by 11.1% to $8.11.

Equinix's financial metrics reveal a price-to-earnings (P/E) ratio of approximately 85.15, indicating that investors are willing to pay $85.15 for every dollar of earnings. The company's price-to-sales ratio stands at about 10.58, suggesting that investors are paying $10.58 for every dollar of sales. Equinix's enterprise value to sales ratio is around 12.49, reflecting the company's valuation relative to its sales.

The company's debt-to-equity ratio is approximately 1.41, showing that Equinix uses $1.41 of debt for every dollar of equity. The current ratio is around 1.16, indicating that Equinix has $1.16 in current assets for every dollar of current liabilities, suggesting a relatively balanced liquidity position. These financial metrics provide insight into Equinix's valuation and financial health as it prepares to release its earnings.

Equinix Shares Up 16% Since Q3 Results Announcement

Equinix (NASDAQ:EQIX) shares rose more than 16% since the company’s reported Q3 results on Nov 2. Q3 EPS came in at $7.73, better than the Street estimate of $1.83. Revenue was $1.8 billion, compared to the Street estimate of $1.84 billion.

Adjusted EBITDA of $871 million was 3.8% higher than Street estimates, and the adjusted EBITDA margin was 47.3% vs. a Street estimate of 45.7%. AFFO and AFFO/share beat the Street estimates by over 7%. Management raised guidance for normalized AFFO growth to 9-10% from 8-9% on healthy bookings, demand, and MRR/cab trends.

Analysts at RBC Capital updated their model following solid quarterly results and increased their price target to $720 from $668 while reiterating their Outperform rating.

The analysts estimate 2022 revenue/EBITDA of $7,257/$3.365 million (vs. previous $7,281/ $3,350 million) and AFFO/share of $29.30 (vs. previous $29.00). Their 2023 revenue, EBITDA and AFFO/share are $7,993 million/$3,706 million/$31.77 (vs. previous $7,992 million/ $3,632 million/$31.56).

Equinix Shares Up 16% Since Q3 Results Announcement

Equinix (NASDAQ:EQIX) shares rose more than 16% since the company’s reported Q3 results on Nov 2. Q3 EPS came in at $7.73, better than the Street estimate of $1.83. Revenue was $1.8 billion, compared to the Street estimate of $1.84 billion.

Adjusted EBITDA of $871 million was 3.8% higher than Street estimates, and the adjusted EBITDA margin was 47.3% vs. a Street estimate of 45.7%. AFFO and AFFO/share beat the Street estimates by over 7%. Management raised guidance for normalized AFFO growth to 9-10% from 8-9% on healthy bookings, demand, and MRR/cab trends.

Analysts at RBC Capital updated their model following solid quarterly results and increased their price target to $720 from $668 while reiterating their Outperform rating.

The analysts estimate 2022 revenue/EBITDA of $7,257/$3.365 million (vs. previous $7,281/ $3,350 million) and AFFO/share of $29.30 (vs. previous $29.00). Their 2023 revenue, EBITDA and AFFO/share are $7,993 million/$3,706 million/$31.77 (vs. previous $7,992 million/ $3,632 million/$31.56).

Equinix Shares Up 16% Since Q3 Results Announcement

Equinix (NASDAQ:EQIX) shares rose more than 16% since the company’s reported Q3 results on Nov 2. Q3 EPS came in at $7.73, better than the Street estimate of $1.83. Revenue was $1.8 billion, compared to the Street estimate of $1.84 billion.

Adjusted EBITDA of $871 million was 3.8% higher than Street estimates, and the adjusted EBITDA margin was 47.3% vs. a Street estimate of 45.7%. AFFO and AFFO/share beat the Street estimates by over 7%. Management raised guidance for normalized AFFO growth to 9-10% from 8-9% on healthy bookings, demand, and MRR/cab trends.

Analysts at RBC Capital updated their model following solid quarterly results and increased their price target to $720 from $668 while reiterating their Outperform rating.

The analysts estimate 2022 revenue/EBITDA of $7,257/$3.365 million (vs. previous $7,281/ $3,350 million) and AFFO/share of $29.30 (vs. previous $29.00). Their 2023 revenue, EBITDA and AFFO/share are $7,993 million/$3,706 million/$31.77 (vs. previous $7,992 million/ $3,632 million/$31.56).

Takeaways From Equinix’s CFO Visit

Analysts at RBC Capital provided a review on Equinix, Inc. (NASDAQ:EQIX) following their meeting with the company’s CFO Keith Taylor and Director of IR Chip Newcom, who feel even more confident about demand tailwinds than at the time of the company's Analyst Day.

Management expects the strong bookings seen in 2021 to continue into 2022, supported by a strong, broad-based pipeline of enterprise demand and lower churn. 2021 revenue growth of 9-10% was driven by volume notably in the Americas, which grew 10%, or roughly double the rate of the previous year, supported by service provider activity.

Management views 2022 as a transition year and feels confident of achieving 50% EBITDA margins by 2025 as it reaps the benefits of the efficiency investments from the past few years and investments in areas such as digital services (e.g., bare metal) and xScale.