Q1 2024 Equinix Inc Earnings Call

Operator: Good afternoon, and welcome to the Equinix First Quarter Earnings Conference Call. All lines will be able to listen only until we open for questions. Also, today's conference is being recorded. If anyone has objections, please disconnect at this time. I would now like to turn the call over to Chip Newcom, Senior Director of Investor Relations. You may begin.

Good afternoon, and welcome to the Equinix first quarter earnings Conference call all lines will be able to listen only until we open for questions. Also today's conference is being recorded if anyone has objections. Please.

Chip Newcom: Disconnect at this time I would now like to turn the call over to chip NUKEM Senior director of Investor Relations you may begin.

Chip Newcom: Good afternoon, and welcome to today's conference call. Before we get started, I would like to remind everyone that some of the statements that we will be making today are forward-looking in nature and involve risks and uncertainty. Actual results may vary significantly from those statements and may be affected by the risks we've identified in today's press release and those identified in our filings with the SEC, including our most recent Form 10-K, filed February 16, 2024, and recently filed Form 10-Q.

Chip Newcom: Good afternoon, and welcome to today's conference call before we get started I would like to remind everyone that some of the statements that we will be making today are forward looking in nature and involve risks and uncertainties.

Chip Newcom: Actual results may vary significantly from those statements and maybe affected by the risks we have identified in today's press release and those identified in our filings with the SEC, including our most recent Form 10-K filed February 16th 2024, and recently filed Form 10-Q.

Chip Newcom: Equinix assumes no obligation and does not intend to update or comment on forward-looking statements made on this call. In addition, in light of regulatory fair disclosure, it is Equinix's policy not to comment on its financial guidance during the quarter unless it's done through an explicit public disclosure. In addition, we'll provide non-GAAP measures on today's conference call. We provide a reconciliation of those measures to the most directly comparable gap measures and a list of the reasons why the company uses these measures in today's press release on the Equinix Investor Relations page at www.equinix.com.

Chip Newcom: Equinix assumes no obligation and does not intend to update or comment on forward looking statements made on this call.

Chip Newcom: In addition in light of regulation fair disclosure it is.

Chip Newcom: Equinix is policy not to comment on its financial guidance during the quarter unless it is done through an explicit public disclosure.

Chip Newcom: In addition, we'll provide non-GAAP measures on today's conference call.

Chip Newcom: We provide a reconciliation of those measures to the most directly comparable GAAP measures and a list of the reasons why the company uses these measures in today's press release on the Equinix Investor Relations page at Www Dot Equinix Dot com.

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

Chip Newcom: We've made available on the IR page of our website a presentation designed to accompany this discussion along with certain supplemental financial information and other data.

Chip Newcom: We'd also like to remind you that we post important information about equinix on the IR page of our website from time to time and encourage you to check our website regularly for the most current available information.

Speaker Change: With us today are Charles Meyers, Equinix, as CEO, and President and Keith Taylor Chief Financial Officer.

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

Charles J. Meyers: In the interest of wrapping this call up in one hour, we'd like to ask these analysts to limit any follow on questions to one at this time I'll turn the call over to Charles.

Chip Newcom: Following our prepared remarks, we'll be taking questions from cell site analysts. In the interest of wrapping this call up in one hour, we'd like to ask these analysts to limit any follow-on questions to one. At this time, I'll turn the call over to Charles.

Charles J. Meyers: Thank you, Chip. Good afternoon, and welcome to our first quarter earnings call. We had a great start to 2024, driven by our highest Q1 bookings performance on record, strong conversion rates, continued favorable pricing dynamics, and lower than expected churn, all resulting in our 85th consecutive quarter of top-line revenue growth, the longest such streak of any S&P 500 company. We closed more than 3,800 deals across more than 3,100 customers for the quarter, demonstrating both the scale and the consistency of our go-to-market

Charles J. Meyers: Thank you chip good afternoon, and welcome to our first quarter earnings call. We had a great start to 2024, driven by our highest Q1 bookings performance on record strong conversion rates continued favorable pricing dynamics and lower than expected churn all resulting in our 18th consecutive quarter of topline revenue growth the longest such streak of any.

Charles J. Meyers: The S&P 500 company.

Charles J. Meyers: It was more than 3800 deals across more than 3100 customers for the quarter demonstrated both the scale and the consistency of our go to market machine and.

Charles J. Meyers: And we again saw accelerating hyperscale demand translate into robust X-scale leasing in both EMEA and AIM. While we continue to operate in an environment of broader economic uncertainty and see some level of corresponding customer caution, our forward-looking pipeline is strong, and we remain optimistic about the opportunity ahead. Digital transformation, particularly given the rapid adoption of AI, serves as a powerful catalyst for economic expansion, and our customers remain steadfastly committed to their digital initiatives, recognizing the pivotal role they play in fostering long-term revenue growth and driving operational efficiency.

Charles J. Meyers: And we again saw accelerating hyperscale demand.

Charles J. Meyers: Played into robust X scale leasing in both EMEA and <unk>.

Charles J. Meyers: While we continue to operate in an environment of broader economic uncertainty and see some level of corresponding customer caution are forward looking pipeline is strong and we remain optimistic about the opportunity ahead.

Charles J. Meyers: Digital transformation, particularly given the rapid adoption of AI serves as a powerful catalyst for economic expansion and our customers remain steadfastly committed to their digital initiatives.

Charles J. Meyers: Recognizing the pivotal role they play in fostering long term revenue growth and driving operational efficiency.

Charles J. Meyers: As we continue to make digital infrastructure more powerful, more accessible, and more sustainable, we're thrilled that Mary Williamson has joined our team as Chief Customer and Revenue Officer. Mary is an operational and visionary leader with unique skills and experience to help drive the next chapter of our growth and brings a proven track record of building new routes to market, enhancing the customer experience, and accelerating go-to-market productivity.

Charles J. Meyers: As we continue to make digital infrastructure more powerful more accessible and more sustainable we're thrilled that Mary Williamson has joined our team as chief customer and revenue officer, Mary as an operational and visionary leader with unique skills and experience to help drive the next chapter of our growth and brings a proven track record of building new routes to market enhancing the customer.

Charles J. Meyers: Bearing and accelerate and go to market productivity.

Charles J. Meyers: On the sustainability front, we continue to advance our bold future-first agenda, with Gartner estimating that by 2027, 80% of CIOs will have performance metrics tied to the sustainability of their IT organization. It's clear to us that companies are prioritizing sustainability in their digital infrastructure decisions. We recently published our 9th annual ISR report and continued our industry leadership with 96% renewable energy coverage across our growing portfolio, marking our 6th consecutive year with over 90% coverage.

Charles J. Meyers: On the sustainability front, we continue to advance our bold future first agenda with Gartner estimating that by 2027, 80% of CIO will have performance metrics tied to the sustainability of their IP organization.

Charles J. Meyers: Clear signs that companies are prioritizing sustainability and their digital infrastructure Conservatives.

Charles J. Meyers: We recently published our ninth annual ISR reports, we continued our industry leadership with 96 per cent.

Charles J. Meyers: Renewable energy coverage across our growing partner <unk>.

Charles J. Meyers: Marking our sixth consecutive year with over 90% coverage.

Charles J. Meyers: Equinix PPAs now support more than one gigawatt of new clean energy in high-impact markets, and we continue to seek additional clean energy projects that will support our growth. In late April, we were pleased to announce our first renewable energy PPA in Singapore, an important part of our plan to continue to grow in this strategically critical market. This project will provide 75 megawatts of solar power and is in line with Singapore's Green Plan 2030, which seeks to have all business sectors supported by cleaner energy sources.

Charles J. Meyers: Equinix Ppas now support more than one gigawatt of new clean energy in high impact markets and we continue to seek additional clean energy projects that will support our growth.

Charles J. Meyers: In late April we were pleased to announce our first renewable energy PPA in Singapore and important part of our plan to continue to grow in this strategically critical market.

Charles J. Meyers: This project will provide 70 975 megawatts of solar and is in line with Singapore Green planned 2030, which seeks to have all business sectors supported by cleaner energy sources.

Charles J. Meyers: In parallel, we remain highly focused on improving the energy efficiency of our existing facilities, as measured by power usage effectiveness. In 2023, we invested $78 million in high-returning efficiency projects, improving our average annual PUE by over 8% year-over-year to 1.42, another lever in continuing to drive performance in our stabilized assets. We also continue to make progress on adjusting the thermostat.

Charles J. Meyers: In parallel we remain highly focused on improving the energy efficiency of our existing facilities as measured by power usage effectiveness in.

Charles J. Meyers: In 2023, we invested $78 million in high returning efficiency projects, improving our average annual PSP by over 8% year over year to $1 14.

Charles J. Meyers: Another lever and continuing to drive performance in our stabilized assets.

Charles J. Meyers: We also continue to make progress on adjusting the service that in our facilities with more than 50 of our Datacenters now operationally ready to enable a one eight and strong industry support for the implementation of this important new temperature standard.

Charles J. Meyers: With more than 50 of our data centers now operationally ready to enable A1A and strong industry support for the implementation of this important new temperature standard, according to our results, as depicted on slide 3, revenues for Q1 were $2.1 billion, up 7% over the same quarter last year, driven by strong recurring revenues and Excel. Adjusted EBITDA was up 6% year over year, and ASFO per share was meaningfully better than expectations due to strong operating performance. Interconnection revenue stepped up 9% year-over-year. These growth rates are all on a normalized and constant currency basis.

Charles J. Meyers: Turning to our results as depicted on slide three revenues for Q1 were $2 1 billion up 7% over the same quarter last year, driven by strong recurring revenues index scale fees adjust.

Charles J. Meyers: Adjusted EBITDA was up 6% Europe year over year, and <unk> per share was meaningfully better than expectation due to strong operating performance.

Charles J. Meyers: Connection revenues stepped up 9% year over year.

Charles J. Meyers: These growth rates are all on a normalized and constant currency basis.

Charles J. Meyers: Our unmatched scale and reach continue to drive performance in our data center services portfolio. Given strong underlying demand for digital infrastructure and a long duration for delivering new capacity, we see a growing scarcity mindset, and therefore, we continue to invest broadly across our global footprint. We currently have 50 major projects underway in 34 markets across 21 countries, including 14 X-scale buildings, representing more than 16,000 retail units and more than 50 megawatts of Excel capacity through the end of 2024.

Charles J. Meyers: Our unmatched scale and reach continues to drive performance in our datacenter services portfolio.

Charles J. Meyers: Given strong underlying demand for digital infrastructure, and a long duration and delivering new capacity, we see a growing scarcity mindset and therefore, we continue to invest broadly across our global footprint. We currently have 50 major projects underway in 34 markets across 21 countries, including 14 X scale builds represent.

Charles J. Meyers: Any more than 16000 cabinets of retail and more than 50 megawatts of X scale capacity through the end of 2024.

Charles J. Meyers: This quarter, we added new projects in Frankfurt, Madrid, Osaka, and Silicon Valley. Key multi-market wins this quarter include ServiceNow, expanding with Equinix in multiple locations globally, powering their continued growth, including new Gen-AI workloads, and Wasabi Technologies, a cloud object storage service provider expanding across all three regions to support their continued growth. Our MRR per cabinet continues to rise, increasing $119 year over year on a normalized and constant currency basis to $2,258.

Charles J. Meyers: This quarter, we added new projects in Frankfurt, and Madrid, Osaka and Silicon Valley.

Charles J. Meyers: Key multi market wins. This quarter include service now expanding with Equinix in multiple locations globally.

Charles J. Meyers: Their continued growth, including new Gen AI workloads.

Charles J. Meyers: And wasabi technologies cloud object storage service provider expanding across all three regions to support their continued growth.

Charles J. Meyers: Our MMR per cabinet continues to rise increasing $119 year over year on a normalized and constant currency basis to $2258 driven by continued mark to market momentum solid attach rates for interconnection and digital services and the increasing power densities.

Charles J. Meyers: This was driven by continued mark-to-market momentum, solid attach rates for interconnection and digital services, and increasing power networks. With respect to our net cabinet building, the capacity constraints in certain key markets and the meaningful delta in power density between churned cabs and booked cabs continues to pressure this metric, but gross emissions remain strong, and our booked kilowatts in the retail business were at near record levels.

Charles J. Meyers: With respect to our net cabinets billing capacity constraints in certain key markets and a meaningful delta in power density between churn cabs and booked cabs continues to pressure this metric, but gross editions remained strong and our book to kilowatts and retail business were at near record levels.

Charles J. Meyers: Given strong bookings and upcoming capacity additions, we expect billable CABs to increase in the second half and continue to see CABinet growth as part of the long-term growth story for the business. According to our industry-leading global interconnection franchise, we now have more than 468,000 total interconnections deployed on our platform. In Q1, interconnection ads picked up to 6200, supported by healthy growth and ads and a moderation of consolidations into higher bandwidth connections.

Charles J. Meyers: Given strong bookings and upcoming capacity additions, we expect global cabs to increase in the second half and continue to see cabinet growth as part of our long term growth story for the business.

Charles J. Meyers: Turning to our industry, leading global interconnection franchise, when you have more than 468000 total interconnections deployed on our platform in.

Charles J. Meyers: In Q1 interconnection adds picked up to 6200 supported by healthy gross adds and a moderation of consolidations into higher bandwidth connections and we continue to see a healthy pricing dynamic with a roughly 16% spread in the quarter between churned interconnects and new additions.

Charles J. Meyers: And we continue to see a healthy pricing dynamic, with a roughly 16% spread in the quarter between churned interconnects and new additions. Internet Exchange saw peak traffic up 5% quarter-over-quarter and 24% year-over-year to nearly 38 terabits per second, led by the American. We remain confident that Equinix's unique and durable advantages will continue to position our platform as the logical point of nexus for buyers and sellers of digital services to come together to fuel digital transformation and unlock the enormous potential of AI.

Charles J. Meyers: Internet exchange saw peak traffic up 5% quarter over quarter, and 24% year over year to nearly 38 Terabits per second led by the Americas.

Charles J. Meyers: We remain confident that Equinix is unique and durable advantages will continue to position our platform as the logical point of Nexus for buyers and sellers of digital services to come together to fuel digital transformation and unlock the enormous potential of.

Charles J. Meyers: This year, Gartner projects the spending on public cloud services will grow 20% to reach $679 billion. We're seeing this translate into strong demand across multiple vectors with key cloud and IT customers broadly and with hyperscalers specifically. In the quarter, we added one new native plowed on-ramp in Madrid, bringing us to 220 native plowed on-ramps across our portfolio, spanning 47 metros.

Charles J. Meyers: This year Gartner projects spending on public cloud services will grow 20% to reach $679 billion as business needs and emerging technologies, including <unk> drive our model innovation.

Charles J. Meyers: We're seeing this translate into strong demand across multiple vectors with key cloud and IP customers broadly and with the Hyperscale specifically in the quarter. We added one new native cloud on ramp in Madrid, bringing us to 220 native cloud on ramps across our portfolio spanning 47 metros. This represents nearly <unk>.

Charles J. Meyers: This represents a nearly 40% market share of private cloud on-ramps in the markets where we operate. We remain an integral and growing part of hyperscaler architecture, with these customers collectively representing more than $1.3 billion of annualized revenue in Q1 in our retail business alone, with deployments across an average of more than 60 of our data centers around the world. Importantly, we're also seeing strong go-to-market momentum with these market-shaping players as we partner to meet end-customer needs for hybrid cloud and private AI, making the hyperscalers some of our most productive channel partners.

Charles J. Meyers: 40% market share of private cloud on ramps in the markets, where we operate.

Charles J. Meyers: We remain an integral and growing part of hyper scaler architectures with these customers collectively representing more than one $3 billion of annualized revenue in Q1 in our retail business alone with.

Charles J. Meyers: With deployments across an average of more than 60 of our data centers around the world.

Charles J. Meyers: Importantly, we're also seeing strong go to market momentum with these market shaping players as we partner to meet customer needs for hybrid cloud and private AI.

Charles J. Meyers: The hyperscale or some of our most productive channel partners.

Charles J. Meyers: In our XCL program, demand remains robust as cloud and AI needs translate into strong pre-leasing activity. Since our last earnings call, we've pre-leased an incremental 48 megawatts of capacity across our Frankfurt 10, Osaka 4, and Osaka 5 assets, including approximately 34 megawatts leased in mid-April.

Charles J. Meyers: In our <unk> program demand remains robust as cloud and AI needs are translating into strong pre leasing activity.

Charles J. Meyers: Since our last earnings call, we pre leased an incremental 48 megawatts of capacity across our Frankfurt 10, Osaka for an Osaka five assets, including approximately 34 megawatts leased in mid April.

Charles J. Meyers: This brings total X-scale leasing to nearly 350 megawatts globally, with nearly 90% of our operational and under construction capacity leased and a meaningful pipeline of opportunities to drive continued X-scale momentum in the quarters to come. Additionally, in mid-April, we announced our first U.S. X-scale joint venture with PGIM Real Estate for our SV-12XS. When combined with our existing joint ventures in Europe, Asia-Pacific, and Latin America, this new JV will bring the expected global X-scale portfolio to more than $8 billion in investment across more than 35 facilities and greater than 725 megawatts of power capacity when fully built out.

Charles J. Meyers: This brings total X scale leasing to nearly 350 megawatts globally with nearly 90% of our operational and under construction capacity leased and a meaningful pipeline of opportunities to drive continued <unk> momentum in the quarters to come. Additionally.

Charles J. Meyers: Additionally, in mid April we announced our first U S ex CLS in that venture with PJM real estate for RSV <unk> ex asset when combined with our existing joint ventures in Europe Asia Pacific and Latin America. This new JV will bring the expected global X scale portfolio to more than $8 billion of investments across more than 35 facilities and great.

Charles J. Meyers: <unk> 725 megawatts of power capacity when fully built out.

Charles J. Meyers: We're also making good progress on additional planned X-scale opportunities in the U.S., and we look forward to updating you on those developments in the coming quarter. Moving to our digital services portfolio, Equinix Fabric and Network Edge continue to outperform relative to the broader business. We see solid interest from customers looking to use the combination of fabric, network edge, and metal for their digital infrastructure requirements. In support of this need, our engineering teams recently completed the integration of metal and fabric, significantly improving the DC creation experience for metal users.

Charles J. Meyers: We're also making good progress on additional planned X scale opportunities in the U S and we look forward to updating you on those developments in the coming quarters.

Charles J. Meyers: Shifting to our digital servicing portfolio Equinix fabric and network edge continue to over index relative to the broader <unk> business.

Charles J. Meyers: See solid interest from customers looking to use the combination of fabric network edge metal with their digital infrastructure requirements.

Charles J. Meyers: In support of this need our engineering teams recently completed the integration of metal and fabric significantly improving the DC creation experience for metal users.

Keith D. Taylor: Wins across the business, including global security leader CrowdStrike, deploying a cloud-adjacent storage solution on platform Equinix in EMEA to leverage proximity to Equinix's rich ecosystem of cloud and storage provider customers, and an online AI and data analytics education company building out AI infrastructure to support learning for global practitioners. Our channel program delivered another solid quarter, with channel and partner-influenced deals accounting for over 30% of gross bookings and over 60% of new logos.

Charles J. Meyers: Wins across the business, including global security leader quiet crowd strike deploying our cloud adjacent storage solution on platform Equinix in EMEA leverage proximity to Equinix as rich ecosystem of cloud and storage provider customers and an online AI and data analytics education company building out AI infrastructure to support.

Keith D. Taylor: Learning for global practitioners.

Keith D. Taylor: Our channel program delivered another solid quarter with channel and partner influenced deals accounting for over 30% of gross bookings and over 60% of new logos we.

Keith D. Taylor: We continue to see growth from the hyperscalers and from other key partners like AT&T, Avant, Dell, Kindle, and Zenlayer, with wins across a wide range of industry segments and a broad mix of Equinix services. As we expand into new markets, our partners are accelerating our efforts to sell the global platform. In Q1, we had a number of wins with Venlayar in Malaysia, including delivering co-location and interconnection solutions to a FinTech firm, extending its reach into Kuala Lumpur, as well as supporting a logistics consulting firm expanding into Johor.

Keith D. Taylor: We continue to see growth from the Hyperscale and from other key partners like AT&T, Dell Kindle and Zen later with wins across a wide range of industry segments, and a broad mix of Equinix services.

Keith D. Taylor: As we expand into new markets, our partners are accelerating our efforts to sell the global platform.

Keith D. Taylor: Q1, we had a number of wins with ventilator in Malaysia, including delivering Colocation and interconnection solutions to a fintech firm extending its reach into Kuala Lumpur, as well as supporting logistics consulting firm extending into July.

Keith D. Taylor: We also saw a win with Kindred. We also selected Platform Equinix to service some of its largest customers in Canada, including from the public sector. So, let me turn the call over to Keith and cover the results by the court.

Keith D. Taylor: We also saw win with Kindred, who also selected platform Equinix to service some of its largest customers in Canada, including from the public sector.

Keith D. Taylor: So let me turn the call over to Keith and cover the results for the quarter.

Keith D. Taylor: Great, thanks, Charles, and good afternoon to everyone. As highlighted by Charles, we had a strong start to the year, delivering better than planned results across each of our core financial metrics. Our netbookings were meaningfully better than expected. We had strong customer momentum, more than expected to show a continued positive appreciation. And our forward-looking pipeline remains deep as we look to execute against our plan for the remainder of the year. Global MRR per cabinet, our R metric measured in U.S. dollars, continues to show momentum across all three regions. With each of our regions now exceeding $2,000 for the first time, despite the weaker foreign currency relative to the U.S. dollar.

Keith: Great. Thanks, Charles and good afternoon to everyone as.

Keith D. Taylor: As highlighted by Charles we had a strong start to the year delivering better than planned results across each of our core financial metrics.

Keith D. Taylor: Our net bookings were meaningfully better than expected.

Keith D. Taylor: We had strong customer momentum lower than expected churn continued positive pricing actions.

Keith D. Taylor: And our forward looking pipeline remains deep as we look to execute against our plans for the remainder of the year.

Keith D. Taylor: Worldwide.

Keith D. Taylor: Global MMR per cabinet, our operating metric measured in U S dollars continues to show momentum across all three regions.

Keith D. Taylor: With each of our regions now eclipsing the $2000 for the first time, despite the weaker foreign currencies relative to the U S dollar.

Keith D. Taylor: Also, our XScale business continues to perform very well, having leased another five assets year to date with a meaningful pipeline of opportunities for the quarters to come. Now, as many of you know, Equinix's competitive advantage in the marketplace is derived from both our interconnected digital ecosystems and our industry-leading global scale and reach. But also, Equinix's operational reliability and putting the customer at the center of everything we do is a third competitive advantage. As an example, our Global Ops teams strive to deliver greater than six-ninths of annual availability to our customers, which means being up and running for all but approximately 30 seconds a year on average.

Speaker Change: Also our <unk> business continues to perform very well, having at least another five assets year to date with a meaningful pipeline of opportunities for the quarters to come.

Keith D. Taylor: Now as many of you know Equinix has competitive advantages in the marketplace is derived from both our interconnected digital ecosystems.

Keith D. Taylor: Industry, leading global scale and reach.

Keith D. Taylor: But also equinix as operational reliability and putting the customer at the center of everything we do as a third competitive advantage.

Keith D. Taylor: As an example, our global ops teams strive to deliver greater than 69% of annual availability to our customers.

Keith D. Taylor: Which means being up and running all but approximately $36 a year on average.

Keith D. Taylor: To achieve this outcome, our operations team perform thorough capacity reviews and regularly monitor both our average and peak customer fire draw against the shared facility capacity to ensure we can support our commitments to our customers, as demonstrated throughout our greater than 25-year history. We've reliably delivered against these operational commitments, which is why nearly 90% of our new 40 bookings activity has historically come from existing customers. And by reliably delivering on our commitments to our customers, our team has also been able to deliver sustained value creation to you, our shareholders, at an additional level.

Keith D. Taylor: To achieve this outcome our ops team performed thermal capacity reviews and regularly monitor both our average and peak customer higher drop against the shared facility capacity to ensure we can support our commitments to our customers.

Keith D. Taylor: As demonstrated throughout or greater than 25 year history, we have reliably delivered against these operational commitments, which is why nearly 90% of our new <unk> bookings activity has historically come from existing customers.

Keith D. Taylor: And by reliably delivering on our commitments to our customers. Our team has also been able to deliver sustained value accretion to you our shareholders.

Speaker Change: As an additional update.

Keith D. Taylor: We're also pleased to share that the Audit Committee of the company's Board of Directors conducted and has substantially completed a previously announced independent investigation with the assistance of independent third-party professional advisors. Based on the findings of the independent investigation, the Audit Committee has concluded that Equinix's financial reporting has been accurate, and the application of its accounting practices has resulted in an appropriate representation of its operating performance. The audit committee had full discretion over the scope of the investigation and was not restricted in any way.

Keith D. Taylor: We're also pleased to share that the audit committee of the company's board of directors conducted and have substantially completed the previously announced independent investigation with the assistance of independent third party professional advisors.

Keith D. Taylor: Based on the findings of the independent investigation. The audit Committee has concluded that Equinix is financial reporting has been accurate.

Keith D. Taylor: And the application of its accounting practices has resulted in an appropriate representation of this operating performance.

Keith D. Taylor: The audit committee has full discretion over the scope of the investigation and was not restricted in any way.

Keith D. Taylor: As part of this assessment, the Audit Committee did not identify any accounting inconsistencies or errors requiring an adjustment to or restatement of previously issued financial statements or non-GAAP measures. Also, as previously disclosed, shortly after the release of the short-selling report, we received a subpoena from the U.S. Attorney's Office in the Northern District of California. Additionally, on April 30th, 2024, we received a subpoena from the Securities and Exchange Commission. We are cooperating fully with both subpoenas and do not expect to comment further on such matters until it is appropriate to do so.

Keith D. Taylor: As part of this assessment of the audit Committee did not identify any accounting consistency or errors, requiring an adjustment to a restatement of our previously issued financial statements on non-GAAP measures.

Keith D. Taylor: Also as previously disclosed shortly after the release of the short seller report, we received a subpoena from the U S. Attorney's office from the Northern District of California.

Keith D. Taylor: Additionally on April 32024, we received a subpoena from the Securities and Exchange Commission.

Keith D. Taylor: We are cooperating fully with both subpoenas do not expect to comment further on such matters until appropriate to do so.

Keith D. Taylor: Now, let me cover the highlights from the quarter. Note that all growth rates in this section are on a normalized and constant currency basis. As depicted on slide four, global revenues were $2.127 billion, up 7% over the same quarter last year, in the upper half of our guidance range on a constant currency basis. As expected, non-recurring revenues stepped down sequentially, yet still remain elevated as a percentage of revenues due to the level of ex-scale leasing activity in the quarter.

Keith D. Taylor: Now let me cover the highlights from the quarter note that all growth rates in this section are on a normalized and constant currency basis.

Keith D. Taylor: As depicted on slide four global revenues were $2 <unk> $2 7 billion up 7% over the same quarter last year in the upper half of our guidance range on a constant currency basis.

Keith D. Taylor: As expected nonrecurring revenue step down sequentially, yet still remain elevated as a percentage of revenues due to the level of X scale leasing activity in the quarter.

Keith D. Taylor: For Q2, given our strong Q1 netbooking activity and increased non-recurring revenues related to our APAC XScale business in April, Q2 revenues are expected to step up 2 to 3% over the prior quarter. Q1 revenues, net of our FX hedges, included a $14 million headwind when compared to our prior FX guidance rates due to the strong U.S. dollar in the quarter. Global Q1 digested EBITDA was $992 million, or 47% of revenues, up 6% over the same quarter last year and above the top end of our guidance range due to lower utility expense and timing of spend.

Keith D. Taylor: For Q2, given our strong Q1, net bookings activity and increased nonrecurring revenues related to our APAC ex skilled business. In April Q2 revenues are expected to step up 2% to 3% over the prior quarter.

Keith D. Taylor: Q1 revenues net of our FX hedges, including included a $14 million headwinds when compared to our prior FX guidance rates due to the strong U S dollar in the quarter.

Keith D. Taylor: Global Q1, adjusted EBITDA was $992 million or <unk>, 47% of the revenues up 6% over the same quarter last year and above the top end of our guidance range due to lower utilities expense and timing of spend.

Keith D. Taylor: Q1 adjusted EBITDA net of our FX hedges included a $6 million FX headwind when compared to our prior guidance rates and $1 million of integration costs. Global Q1 FFO was $843 million, up 8% over the same quarter last year and above our expectations due to strong operating performance and lower than expected net interest. As planned, we exceedingly lower recurring capex spend consistent with prior years. Q1AFFO included a $4 million ethics headwind when compared to our prior guidance. However, global Q1MR was better than expected at 2.1%.

Keith D. Taylor: Q1, adjusted EBITDA net of our FX hedges included a $6 million FX headwind when compared to our prior guidance rates and $1 million of.

Keith D. Taylor: The integration costs.

Keith D. Taylor: Global Q1, <unk> was $843 million up 8% over the same quarter last year and above our expectations due to strong operating performance and lower than expected net interest expense.

Keith D. Taylor: As planned we had seasonally lower recurring capex spend consistent with prior years.

Keith D. Taylor: Q1, if it's all included a $4 million FX headwind when compared to our prior guidance rates.

Keith D. Taylor: Global <unk> churn was better than expected at two 1%.

Keith D. Taylor: For the full year, we continue to expect MR to return to average in the two to two and a half percent quarterly guidance rate. Turning to our regional highlights, whose full results are covered on slides 5 through 7, on a year-over-year normalized basis, APAC was our fastest growing region at 12%, followed by the Americas and the MENA regions, both going at six.

Keith D. Taylor: For the full year, we continue to expect the MMR churn to averages of two to two 5% quarterly guidance range.

Keith D. Taylor: Turning to regional highlights whose full results are covered on slides five through seven.

Keith D. Taylor: On a year over year normalized basis, APAC was our fastest growing region at 12% followed by the Americas and EMEA regions, both growing at 6%.

Keith D. Taylor: The Americas region had a great quarter with strong bookings performance led by public sector activity and healthy pickup and exports to other regions as our teams sold across our global platform. We saw particular strength in the Atlanta, Culpeper, and Miami metros, as well as strong interest in the additional soon-to-be-open capacity in the New York metro. Army business delivered a strong quarter with robust gross bookings activity, including an increased mix of medium and larger footprint deals. In the quarter, we saw cooking strength in our Barcelona, Frankfurt, and Paris markets.

Keith D. Taylor: The Americas region had a great quarter with strong bookings performance led by the public sector activity and healthy pickup in exports to the other regions as our teams sold across our global platform.

Keith D. Taylor: We saw particular strength in our Atlanta, Culpeper, and Miami Metros as well as a strong interest in the additional soon to be open capacity in the New York and the New York Metro.

Keith D. Taylor: Our EMEA business delivered a strong quarter with robust gross bookings activity, including an increased mix of medium and larger footprint deals.

Keith D. Taylor: In the quarter, we saw bookings strength, and our Barcelona, Frankfurt and Paris markets.

Keith D. Taylor: And finally, the Asia-Pacific region had a great quarter with firm pricing and strength from our digital services products, including increased adoption of inter-metro connections on Equinix fabric, as customers continue to focus on their network optimization efforts. In the quarter, we saw good and recently opened capacity in Malaysia and continued momentum in our largest markets in the region, including Hong Kong, Tokyo, and Sydney. And now, looking at our capital structure, please refer to slide 8. Our net on average remains low relative to our peers at 3.6 times our annualized adjusted EBITDA. Our balance sheet decreased to approximately $31.9 billion, including an unrestricted cash balance of over $1.5 billion.

Keith D. Taylor: And finally, the Asia Pacific region had a great quarter with firm pricing and strength from our digital services products, including increased adoption of Internet Inter metro connections on Equinix tablets as customers continue to focus on their network optimization efforts.

Keith D. Taylor: In the quarter, we saw <unk> recently opened capacity in Malaysia, and continued momentum in our largest markets in the region, including Hong Kong, Tokyo and Sydney.

Keith D. Taylor: And now looking at our capital structure, please refer to slide eight.

Keith D. Taylor: Our net leverage remained low relative to our peers at three six times, our annualized adjusted EBITDA or.

Keith D. Taylor: Our balance sheet decreased approximately $31 9 billion include.

Keith D. Taylor: Including unrestricted cash balance of over one 5 billion.

Keith D. Taylor: Our cash balance decreased quarter over quarter as our strong operating cash flow was more than offset by the growth investment. [inaudible] As noted previously, and given our strong balance sheet and liquidity position, we plan to remain opportunistic as it relates to the timing, size, and currency of our future capital market activity, including when we plan to refinance the $1 billion of debt maturing later this year. Turning to slide 9, for the quarter.

Keith D. Taylor: Our cash balance decreased quarter over quarter as our strong operating cash flow was more than offset by the growth investments.

Keith D. Taylor: Totally cash dividend.

Keith D. Taylor: As noted previously and given our strong balance sheet and liquidity position, we plan to remain opportunistic as it relates to the timing size and currency of our future capital market activities, including plan, we plan to refinance the $1 billion of debt maturing later this year.

Keith D. Taylor: Turning to slide nine for the quarter.

Keith D. Taylor: Capital expenditures were $707 million, including seasonally lower recurring capex of $21 million.

Keith D. Taylor: Capital expenditures were $707 million, including seasonal recurring capex of $21 million. Since our last earnings call, we opened three retail projects in Mexico City, Mumbai, and Paris. We also purchased our Dublin 2, Mumbai 2, and Stockholm 3 assets, as well as land for development in San Diego, Chile. Revenues from owned assets increased by 67% of our recurring revenue, and more than 90% of the current retail expansion investment will be on own land or own buildings with long-term ground lease.

Keith D. Taylor: Since our last earnings call, we opened three retail projects in Mexico City, Mumbai and Paris.

Keith D. Taylor: We also purchased our Dublin to Mumbai to in Stockholm, three assets as well as land for development in San Diego Chile.

Keith D. Taylor: Revenues from owned assets increased 67% of our recurring revenues.

Keith D. Taylor: And more than 90% of the current retail expansion investments will be on own land.

Keith D. Taylor: Our own buildings with long term ground leases.

Keith D. Taylor: Now, we're also entering a stage in our asset life cycle where we're evaluating select opportunities to invest in highly valued IDXs that have been operating for 20 years or longer. Starting this quarter, we added a new category of non-occurring CapEx spend to our disclosures, referred to as redevelopment CapEx, to track these investments to enhance the capacity, efficiency, and operating standards of facilities in this category and to track capital investments that are intended to meaningfully extend the economic life of assets.

Keith D. Taylor: Now we're also entering a stage in our asset lifecycle, where we're evaluating select opportunities to invest in highly valued IV access that's been operating for 20 years or longer.

Keith D. Taylor: Starting this quarter, we added a new category of nonrecurring capex spend toward disclosures referred to as redevelopment Capex to track these investments to enhance the capacity efficiency and operating standards of facilities in this category.

Keith D. Taylor: And subtract capital investments that are intended to meaningfully extend the economic life of assets.

Keith D. Taylor: Our first redevelopment project is DC2, one of our original IVXs that opened in the early 2000s and home to our networking ecosystem in Northern Virginia. Total estimated spend on this DC2 project will be approximately $76 million, broken into two primary categories of CapEx investment, redevelopment, and recurrence.

Keith D. Taylor: Our first redevelopment project is DC to.

Keith D. Taylor: One of our original <unk> that opened in the early 2000 and home to our networking ecosystem in Northern Virginia.

Keith D. Taylor: Total estimated spend on this <unk> project will approximate $76 million broken into two primary categories of Capex investment.

Keith D. Taylor: Redevelopment and recurring.

Keith D. Taylor: We expect the $56 million redevelopment portion of the investment to yield meaningful additional space and power capacity. And given the favorable pricing environment and high customer demand for the DC2 asset, we anticipate that this capacity will generate additional revenues and cash flow that should result in an IR well above our current stabilized asset yield. The remaining portion of the investment, which relates to maintaining our existing revenues, such as roof replacement, will be categorized as typical as recurring cafe. Now, moving to slide 10.

Keith D. Taylor: We expect the $56 million redevelopment portion of the investment to yield meaningful additional space and power capacity and given the favorable pricing environment and high customer demand for the <unk> asset.

Keith D. Taylor: <unk> of this capacity will generate additional revenues and cash flow that should result in an IRR well above current stabilized asset yields.

Keith D. Taylor: The remaining portion of the investment which related to maintaining our existing revenues.

Keith D. Taylor: Such as roof replacement will be categorized as typical as recurring capex.

Keith D. Taylor: Now moving to slide 10.

Keith D. Taylor: Our capital investments have continued to deliver strong returns. Consistent with prior years, in Q1, we completed the annual refresh of our IBX categorization exercise, and our stabilized asset count increased by a net 6 IBX, which are now 180 stabilized assets, increased recurring revenues by 5% year over year on a constant currency basis, a quarter over a quarter step down as we lap the power price actions in 2023. Stabilized assets were collectively 84% utilized and generated a 26% cash-on-cash return on the gross PP&E investment. Please refer to slides 11-15 for an updated summary of 2024 guidance and bridges. Do note all growth rates are on a normalized and constant currency basis.

Keith D. Taylor: Our capital investments have continued to deliver strong returns.

Keith D. Taylor: Consistent with prior years in Q1, we completed the annual refresh.

Keith D. Taylor: Ibs categorization exercise and are stabilized stabilized asset count increased by a net six Ivy exits.

Keith D. Taylor: Our now 180, <unk> stabilized assets increased recurring revenues by 5% year over year on a constant currency basis.

Keith D. Taylor: Quarter over quarter step down as we lap the prior price actions in 2023.

Keith D. Taylor: Stabilized assets were collectively 84% utilized and generated a 26% cash on cash return on the gross PP&E invested.

Keith D. Taylor: And finally.

Keith D. Taylor: Please refer to slides 11 through 15 for updated summary of 2020 for guidance and bridges.

Keith D. Taylor: Do note all growth rates are on a normalized and constant currency basis.

Keith D. Taylor: For the full year 2024, we're maintaining our underlying revenue outlook with expected top line growth of 70%, a reflection of our continued strong momentum. We're raising our underlying 2024 adjusted EBITDA guidance by $5 million due to lower integration. We're raising our underlying 2024 AFFO guidance by $25 million to now grow between 10% and 13% compared to the previous year due to lower net interest expense. AFFL4Share is now expected to grow between 8% and 11%. 2024 CapEx is expected to range between $2.8 and $3 billion, including about $220 million of recurring CapEx.

Keith D. Taylor: For the full year of 2024.

Keith D. Taylor: Underlying revenue outlook with expected topline growth of 7% to 8% reflected a reflection of our continued strong momentum.

Keith D. Taylor: We are raising our underlying 2024, adjusted EBITDA guidance by $5 million due to lower integration spend.

Keith D. Taylor: We are raising our underlying 2024 full guidance by $25 million to now grow between 10, and 13% compared to the previous year due to lower net interest expense.

Keith D. Taylor: <unk> per share is now expected to grow between eight and 11%.

Keith D. Taylor: 2020 for Capex is expected to range between two eight and $3 billion, including.

Keith D. Taylor: Including about $220 million of recurring Capex spend.

Charles J. Meyers: Let me stop here, and I'll turn the call back to Charles. Thanks, Keith. In closing, we continue to see our customers derive compelling value from PlatformX, leveraging our superior global reach, our scaled digital ecosystems, our market-leading interconnection platform, and our greater than 25-year track record of delivering on our commitments to fuel their investments in digital transformation. We are delighted to see the continued strengths and fundamentals of our business. We remain highly confident in the integrity of our financials, and we are as optimistic as ever that we'll continue to be an important partner for digital leaders as they accelerate AI investment and embrace hybrid and multi-cloud as the clear architecture of choice.

Keith D. Taylor: So let me stop here and I'll turn the call back to Charles.

Charles: Thanks Keith.

Charles J. Meyers: In closing, we continue to see our customers derive compelling value platform equinix, leveraging our superior global reach our scaled digital ecosystems, our market, leading interconnection platform and a greater than 25 year track record of delivering on our commitments to fuel their investments in digital transformation. We are delighted to see continued stress.

Charles: And fundamentals of our business, we remain highly confident in the integrity of our financials and we are as optimistic as ever that we will continue to be an important partner for digital leaders as they accelerate AI investments and embrace hybrid and multi cloud as the clear architecture of choice.

Charles J. Meyers: Before we turn to Q&A, I want to spend a few minutes on MyTransit. Reflecting on the last six years, it has been both a pleasure and a privilege to be the CEO of Equinix. Showing up every day in service to our customers, to our employees, and to our shareholders. As I transition to the role of Executive Chairman later this quarter, I'll continue to take an active part in the business, as, as a matter of fact, Martin steps into the CTO role.

Charles: Before we turn to Q&A I want to spend a few minutes on my transition and.

Charles J. Meyers: In reflecting on the last six years. It has been both a pleasure and privilege to be the CEO of Equinix showing up every day in service to our customers to our employees and to our shareholders as I transition to the role of executive Chairman later this quarter I'll continue to take an active part in the business as it aircrafts Martin steps into the CEO role.

Charles J. Meyers: Adair is an extremely accomplished executive with a proven ability to deliver sustained value to the full range of stakeholders. I'm confident that she brings the experience, the skills, and the passion that we need to inspire our teams and support the evolving needs of our customers, driving growth and unlocking the extraordinary power of platform expertise. I look forward to working with Adair in this next chapter of the Equinix journey. I'd also like to thank Peter Van Kamp, a shining example of the magic of Equinix over the last 25 years, and look forward to partnering with him as he moves from our Executive Chairman to Special Advisor to the President.

Charles J. Meyers: <unk> is an extremely accomplished executive with a proven ability to deliver sustained value to the full range of stakeholders I'm confident that she brings the experience skills and the passion that we need to inspire our teams and support the evolving needs of our customers driving growth and unlocking the extraordinary power platform Equinix.

Charles J. Meyers: I look forward to working with the bear in this next chapter of the Equinix journey I'd also like to thank Peter Van Camp. A Shining example of the magic of Equinix over the last 25 years and look forward to partnering with him as he moves from our executive chairman to special adviser to the board.

Charles J. Meyers: I look forward to further collaboration with both the DARE and the broader leadership team as we continue on our path as the world's digital infrastructure company, capturing and creating new opportunities and leveraging our distinctive advantages to ensure digital leaders can harness our trusted platform to create and interconnect the foundational digital infrastructure that enhances our world. Thank you. At this time, I would like to

Charles J. Meyers: Look forward to further collaboration with both the debt and the broader leadership team as we continue on our path is the world's digital infrastructure company, capturing and creating new opportunities and leveraging our distinctive advantages to ensure digital leaders can harness our trusted platform to create an interconnect the foundational digital infrastructure that enhance.

Speaker Change: Since our world. So let me stop there and open it up for questions.

Speaker Change: Thank you.

Operator: Thank you. At this time, I would like to inform all parties that if you would like to ask a question, please press star 1 on your touchtone phone. Again, please press star 1 on your touchtone phone. Your name will be announced prior to asking your question. If your question has already been asked, please press star two. Again, please press star 1 to ask your question. One moment. Our first question will come from John Atkins of RBC. Your line is open.

Speaker Change: At this time I would like to inform all parties that you would like to ask a question to please.

Operator: Press Star one on your Touchtone phone.

Operator: Again, Please press star one on your Touchtone phone.

Jonathan Atkin: Your name will be announced prior to asking your question.

Operator: Your question has already been asked please press star two.

Operator: Again, Please press star one to ask a question one moment.

Jonathan Atkin: X-scale, just interested in what you're seeing in terms of targeted unlevered returns that you're underwriting to, any difference given the strong demand profile. And then it looks like you've got a billion of senior notes coming due late this year, a billion due, and billion two coming due in 25, and I just wondered what you're thinking in terms of refinancing, the cost of debt, and whether a non-U.S. jurisdiction might provide a cost advantage.

Jonathan Atkin: Our first question will come from Jon Atkin of RBC.

Speaker Change: Your line is open.

Jonathan Atkin: Yes.

Jonathan Atkin: X scale just interested in what you're seeing in terms of targeted unlevered returns that youre underwriting to any any difference.

Jonathan Atkin: Given the strong demand profile and then.

Jonathan Atkin: It looks like you've got a billion of senior notes coming due late this year 1 billion to $2 billion to kind of do a 25% I'm just wondering what youre thinking in terms of refinancing cost of debt and whether a non U S jurisdiction might provide a cost advantage.

Charles J. Meyers: Yeah, John, I'll take the first piece. And then Keith can both add to that and take the second piece on the refinancing. Look, XScale, you're right, continues to perform extremely well. We've seen, you know, huge pre-lacing activity over the last several quarters. And I think we continue to see a lot of demand out there and a lot of confidence that we'll be able to effectively, you know, pre-sell that capacity as well and under returns that I think are in line with the I mean, I do think we're seeing, you know, relatively firm pricing.

Speaker Change: Yes, John I'll take the first piece and then Keith can add to that and take the second piece on the on the.

Charles J. Meyers: Refinancing.

Charles J. Meyers: Look at scale, you're right continues to perform extremely well we've seen <unk>.

Charles J. Meyers: <unk> pre leasing activity over the last several quarters and I think we continue to see a lot of demand out there and a lot of confidence that we will be able to.

Charles J. Meyers: Effectively.

Charles J. Meyers: Pre sell that that capacity is well under under returns that I think are are in line with I mean, I do think we're seeing relatively firm pricing I also think we're seeing rising costs.

Charles J. Meyers: I also think we're seeing rising costs, you know, and so, you know, I think that the combination of those things leaves us with, I think, a level of underwriting that is, you know, at or above kind of where we probably were last year and feeling, you know, very confident in the range where we are on cash on cash returns overall. And John, you know, just and adding to you know, maybe I just want to add on to what Charles said there.

John: And so I.

Charles J. Meyers: I think the combination of those things leaves us with I think a level of underwriting that is at or above kind of where we probably were <unk>.

Charles J. Meyers: Last year and feeling very confident in the range, where we are on cash on cash returns overall.

Keith D. Taylor: I think it's important to appreciate that, you know, there's a fee stream that Equinix continues to enjoy on a larger revenue base to compensate for the higher costs that Charles alluded to. So what I think about are all in returns; they're really, they're really quite attractive as a business. And as we've talked about over the last few years, you know, they're at a point where, you know, it's not only the recurring and non-recurring stream that we get; I think there's opportunity over some period of time, as our partners think about eventually monetizing some of their investments to get, you know, promotion fees associated with it.

Speaker Change: And John just.

Charles J. Meyers: Adam maybe I just want to add on to what Charles said, there I think it's important to appreciate that.

Keith D. Taylor: The fee stream that Equinix continues to enjoy.

Keith D. Taylor: On a larger revenue base to compensate for the higher cost debt.

Keith D. Taylor: That Charles alluded to so when I think about our all in returns are really they're really quite attractive as a business.

Keith D. Taylor: As we've talked about over the last few years.

Keith D. Taylor: They are at a point, where all of that.

Keith D. Taylor: It's totally of the recurring or nonrecurring stream that we get I think there is opportunity over some period of time as our partners thinking about potentially monetizing some of their investments to get promote promote fees.

Keith D. Taylor: So overall, I, you know, again, I think the return profile, as Charles alluded to, is attractive, recognizing it's a higher cost model than it was previously. And you'll see that as a result. As it relates to the debt that's being refinanced, I'm going to maybe approach it from a different perspective, because when you think about the cost, I really want to talk about the spread. largely the spread is really about, you know, what we think we can borrow over whatever the base rate is. And as I made reference to it, and I'm going to pause here for a second, John, can you hear me? Absolutely, yes. Okay, thank you.

Keith D. Taylor: Associated with it. So overall I think again I think the return profile as Charles alluded to as attractive.

Keith D. Taylor: Recognizing it's a higher cost model than it was previously and Youll see that.

John: In our results.

Speaker Change: As it relates to two really.

Keith D. Taylor: That is being refinanced I'm going to ask maybe approach it from a different perspective.

Keith D. Taylor: Because when you think about the cost I really want to talk about the spreads.

Keith D. Taylor: Largely the <unk>.

John: Spread is really about what do we think we can borrow over whatever the base rate is and as I.

Speaker Change: I made reference to it.

Speaker Change: I'm going to pause here for a second John can you hear me.

Speaker Change: Absolutely yes.

Keith D. Taylor: We had a funny something going on with our conference line here. So, so I think about it more as a spread. And I, you know, again, I made the reference in my prepared remarks that we're going to look at the timing and the currency in which we borrow money, suffice it to say, between how we raise our capital and where we need it to refinance the existing debt.

Speaker Change: Okay. Thank you we had a we had a funny.

Keith D. Taylor: Something going on with our conference like Yours.

Keith D. Taylor: So I think about a more spread.

Keith D. Taylor: Can I made the reference in the prepared remarks that we're going to look at you know the timing and the currency in which we borrow money suffice it to say between how we we raised our capital and where we need it to refinance the existing debt.

Keith D. Taylor: We're really looking at different markets and so the spread I think you should expect.

Keith D. Taylor: Based on where we were I think somewhere between $105 115 basis points over base, whether that is that we might do to in euro we might do might do it in dollars, we could swap it depending on where the cash flows we need are needed, but suffice it to say I think we're in a really good spot to enjoy a spread relative to others.

Keith D. Taylor: We're really looking at different markets. And so the spread, I think you should expect, based on where we were, I think, somewhere between 105 and 115 basis points over base, whatever that is, that we might do it in euros, we might do it, we might do it in dollars, and we could swap it depending on where the cash flows are needed. But suffice it to say, I think we're in a really good spot to enjoy a spread relative to others that is very, very competitive.

Keith D. Taylor: Okay.

Keith D. Taylor: As a very very competitive and the last comment I would just say is look the markets are very volatile right now for obvious reasons see that and Thats why I think it's important to talk about the spreads suffice it to say I think we will have ample ample access to capital. It just depends on the timing of when we execute against that that transaction. So.

Keith D. Taylor: The last comment I would just say is, look, the markets are very volatile right now, for obvious reasons, see that, and that's why I think it's important to talk about the spread. Suffice it to say, you know, I think we will have ample access to capital. It just depends on the timing of when we execute against that transaction. So, whether it's this year or next year's refinancing, I think we're in a really good spot.

Keith D. Taylor: Whether it's this year or this next year's refinancing I think we're in a really good spot.

Keith D. Taylor: And then, I think, as everybody's also aware, we have an effectively an unused line of credit of 4 billion dollars. So, if the markets aren't there, for whatever reason, we can always draw on that and then refinance at a later date, but I don't foresee that as being an issue for us. John, I would back up a little bit on XScale and just say, in addition to the underwriting continuing to be strong, and pre-leasing activity strong, I think we're seeing, you know, exactly, it play out very much as we expected in terms of how the whole thing fits together from a platform strategy standpoint. And so I think, you know, very pleased with the XScale business and very pleased with how it fits in overall, in terms of, you know, driving the broader value of the platform to our customers.

Keith D. Taylor: And then I think as everybody is also aware we have effectively an unused line of credit of $4 billion. So that the markets are there for whatever reason can always draw on that and then refinance.

Keith D. Taylor: Later date, but I don't foresee that as being an issue for us.

John: Thank you Arnaud.

Keith D. Taylor: Back up a little bit to the X scale and just say in addition to the underwriting continuing to be strong pre leasing activity strong I think we're seeing.

Keith D. Taylor: Exactly play out very much as we expected in terms of how the whole thing fits together from a platform strategy standpoint, and so I think.

Keith D. Taylor: Very pleased with the X scale business and very pleased with how it fits in overall in terms of driving the broader value of the platform to our customers.

Jonathan Atkin: I'm just giving the demand profile and the pricing dynamic that we've heard elsewhere. Would low teens be an unreasonable kind of assumption to think about for unlevered return development yields, or not? You didn't know that.

Keith D. Taylor: Just given the demand profile in the pricing dynamic that we've heard elsewhere would low teens be an unreasonable assumption to think about for a levered return development yields.

Jonathan Atkin: Or not.

Keith D. Taylor: You know, that's reasonable, of course, certain markets have different price points, as you can appreciate, but, but, one of the things I think in a broad range, I think low teens is very, very appropriate on an unlevered basis. And I don't think we can all lose sight, you know, generally speaking, of the supply and sort of the demand sort of dynamics here, that, you know, supply is going to continue to be It's going to be difficult to deliver into the marketplace, and so when you look at the demand profile, you know, I think pricing will continue to remain very, very firm.

Jonathan Atkin: Yes.

Speaker Change: I think it is reasonable of course certain markets have different price points. As you can appreciate that but one of the things I think in a broad range I think low teens is very very appropriate on a unlevered basis.

Keith D. Taylor: Don't think we can all you can't lose sight generally speaking of the supply and sort of the demand sort of dynamics here.

Keith D. Taylor: Supply is going to continue to be.

Keith D. Taylor: It's going to be difficult to deliver into the marketplace and so and so when you look at the demand profile I think pricing will continue to remain very very firm. So on an unlevered basis. We can get you can get a really nice return then you add on the fee structure that we that we can enjoy as a business.

Keith D. Taylor: So on an unlevered basis, we can get a really nice return, and then you add in the fee structure that we can enjoy as a business, and, you know, we recently announced the Silicon Valley 12 transaction. Again, we're very pleased with, you know, the overall structure and type of deal we're doing there, and we're working really hard to bring that to a fully stabilized position and, you know, at the returns that you're considering.

Keith D. Taylor: We recently announced the Silicon Valley 12 transaction again, we're very pleased with the overall structure and type of deal. We're doing there and we're working really hard to bring that to a fully stabilized positions at the returns that.

Keith D. Taylor: You are considering.

Keith D. Taylor: Thanks.

Speaker Change: Thanks, John.

Keith D. Taylor: Thank you. The next question comes from Nick.

Nicholas Ralph Del Deo: Thank you. The next question comes from Nick Del Deo of Moffett Nathanson. Your line is open.

Keith D. Taylor: So Dale of Moffett Nathanson your line is open.

Charles J. Meyers: Hey, afternoon, guys. Thanks for taking my questions. And Charles, best of luck in the new role. I obviously appreciate all the time you spent with us on these calls and other forums over the years. First, can you share any details regarding the mechanics of the internal review, like who was engaged before in the work, or the aspects of the accounting that were reviewed and how far back they went, any suggestions for go-forward changes? Anything you can share along those lines would be super helpful.

Speaker Change: Hey, good afternoon, guys. Thanks for taking my questions and Charles Best of luck in her new role. Obviously appreciate all the time you spent with US on these calls and other forms over the years.

Charles J. Meyers: First can you share any details regarding the mechanics of the internal review.

Charles J. Meyers: Who is engaged reform the work or the aspects of the accounting that was reviewed and how how far back they win.

Charles J. Meyers: Any suggestions for go forward changes.

Charles J. Meyers: Anything you can share along those lines would be super helpful.

Charles J. Meyers: Sure, I'll give you a bit of that, and Keith can certainly add to it. Yeah, the, you know, the mechanics of what we did. The audit committee, obviously, was the one conducting that. And then they retained independent advisors in WilmerHale, the law firm that led the investigation, as well as Alex Partners, the forensic accountants, independent forensic accountants that led that. And so, and they looked in particular at the surrounding circumstances, obviously, the accounting-related matters that were sort of referenced in the allegations in the short report.

Speaker Change: Sure I'll give you a bit of that and Keith can certainly add to it.

Charles J. Meyers: Yes.

Charles J. Meyers: The mechanics of what we did the audit Committee, obviously was the one conducting that and we have a very experienced audit committee acting independently.

Charles J. Meyers: And then they retained independent advisors in Wilmerhale. The law firm that led the investigation as well as Alex partners, the forensic accountants and independent forensic accountants that led that and so.

Charles J. Meyers: They looked at.

Charles J. Meyers: Particularly surrounding obviously the accounting related matters.

Charles J. Meyers: We're sort of referenced in the allegations in the short report.

Charles J. Meyers: And as a public company, as frustrating as it might be, that's our obligation to undertake an investigation to look into those things. And so we tried to keep people focused on the business while that investigation took place during the audit, and we tried to focus on serving our customers while the audit committee led that investigation alongside the advisors. They collected the right information that they deemed as appropriate to validate and understand the concerns that were there and make a judgment and assessment about the accuracy of our financial reporting, both on a gap basis and the non-gap measures that were involved here.

Charles J. Meyers: And as a public company as frustrating as it might be that's our obligation to.

Charles J. Meyers: Undertaken investigation to look into those and so we tried to keep people focused on the business while that that investigation took place in the audit and we tried to focus on serving our customers while the.

Charles J. Meyers: While the audit community led that investigation alongside the advisors.

Charles J. Meyers: <unk> collected the right information that they deemed as appropriate to validate and understand the concerns that were there and making a judgment and assessment about the accuracy of our financial reporting both on a GAAP basis and the non-GAAP measures that were involved here.

Charles J. Meyers: And again, as we said in the press release and in the prepared remarks here, they came back with a level of confidence in those results and in the accuracy of those results. And so, while the investigation remains open, in large part because we have to sort of navigate the subpoenas with the SEC and the DOJ, we feel great about the outcome. I feel like it really speaks to the integrity of our team, which I, as I said, I have great confidence in, and in the integrity of our finances. So, I'll leave it there. And if anything, you want to add there, Keith? No, I think it was well said, Charles.

Charles J. Meyers: And again as we said in the press release and in the.

Keith: Prepared remarks here.

Keith: They came back with a level of confidence in those results and in the accuracy of those results and so while we while.

Keith: While the investigation remains open.

Keith: Part, because we have to sort of navigate.

Keith: The <unk> with the SEC and the Doj.

Keith: We feel.

Keith: Feel great about the outcome I feel like it.

Keith: It really speaks to the integrity of our team, which I have as I said I have great confidence in and in the and the integrity of our financials.

Charles J. Meyers: I'll leave it there and if anything you want to add there Keith.

Keith: Well said Charles Thanks.

Nicholas Ralph Del Deo: Okay, but again, you know, great to hear. Thanks for sharing those details.

Keith: Okay. Okay.

Keith: Great to hear thanks for sharing those details.

Keith: Yes, I guess one other topic.

Speaker Change: Keith you noted that <unk> is going through a redevelopment.

Nicholas Ralph Del Deo: Obviously, a crown jewel facility for you guys.

Nicholas Ralph Del Deo: I guess you noted the attractive IRR is associated with investments I guess can you expand a little bit on the work that youre doing to that data center and what you think those capex dollars might unlock from a revenue perspective.

Keith D. Taylor: Um, yeah, I guess, you know, one of the topics, Keith, you noted that DC2 is going through a redevelopment, obviously, a crown jewel facility for you guys. I guess you noted the attractive IRRs associated with the investments. I guess, can you expand a little bit on the work that you're doing to that data center and what you think those CapEx dollars might unlock from a revenue perspective? Yeah, sure, I'd look at it.

Keith D. Taylor: Yeah, sure. It's one of those ones.

Speaker Change: Yes sure.

Nicholas Ralph Del Deo: It's one of those ones we've been working on this initiative for roughly a year.

Keith D. Taylor: We've been working on this initiative for roughly a year because it is a new category of expansion CapEx. And certainly, what you're trying to do is do two things. One, we want to, you know, effectively extend the life of the asset further than people would typically anticipate. What we're really going in and doing is really a heart transplant in a live environment. It's one of our highest performing assets in the portfolio.

Keith: Because it is a new category of expansion Capex.

Keith D. Taylor: And certainly what Youre trying to do is do two things one we wanted to.

Keith D. Taylor: Extend effectively the life of the asset.

Keith D. Taylor: Further than people would typically anticipate we're really going in and doing is really a heart transplant on a live environment. It's one of our highest performing assets in the portfolio and so to give you a perspective of substantial because we refer to $76 million. So you get a sense, it's not something that <unk>.

Keith D. Taylor: And so to give you a perspective, it's substantial, because we refer to the $76 million. So you get a sense, it's not something that's small, it's going to do two things, it's going to extend the life of the product, and it's going to create more revenue opportunities. And think of the range of 15 to 20% of an augmentation to an already high revenue environment. So that's the kind of value you can extract from it. The $20 million, the recurring CapEx component, will be doing roof replacement and some other things.

Keith D. Taylor: <unk> it.

Keith D. Taylor: It is going to do two things that's going to extend the life is going to create more revenue opportunity.

Keith D. Taylor: Think of the range of 15% to 20% of an augmentation to an already high revenue environment. So that's the kind of value you can extract from it the $20 million the recurring capex component will be doing roof replacement and some other things and so that will go through the recurring line.

Keith D. Taylor: And so that will go through the recurring length. But it's the $56 million, you know, and in the prepared remarks, we really talked about the fact that this is going to get a yield, a return for us on an IRR basis better than stabilized assets. So it gives you a sense that it's in the $30. But if you decide to put sort of the end of life stuff that was recurring into the mix, you're still in the 20s.

Keith D. Taylor: The $56 million.

Keith D. Taylor: In the prepared remarks, we really talked about the fact that this is going to get a yield a return for us on an IRR basis better than stabilized assets. So it gives you a sense that it's in the thirties.

Keith D. Taylor: <unk> decided to put sort of the end of life stuff that was recurring into the mix you are still in the twenty's. So it gives you a sense of the investment decisions that we're making is very very substantial.

Keith D. Taylor: So it gives you a sense of the investment decision that we're making is very, very substantial in a very critical asset. The last thing I'll sort of want to leave you with, when we make this type of decision, part of the reason we call it, we're really calling it redevelopment, is this isn't like getting something done over a quarter. We're again, in a high density, live environment. It's going to take two to three years to get this done.

Keith D. Taylor: And a very critical asset the last thing I'll sort of want to leave you with when.

Keith D. Taylor: When we make this type of decision part of the reason we call we really calling that redevelopment is this isn't like getting something done over a quarter ago.

Keith D. Taylor: High density live environment is going to take two to three years to get this done. So it gives you a sense of the level of investment is not like.

Keith D. Taylor: So it gives you a sense of the level of investment. It's not like replacing a motor; we're basically taking out the guts of the entire IBX and replacing it with basic new and updated equipment. So, overall, I just say, you know, it's 1 of those things. There's not going to be a huge portfolio, but I think over the next 3 to 5 years or something like that, you should expect something like 6 to 8 assets could fall into that mix.

Keith D. Taylor: Don't like replacing a motor we're basically taking out the guts of the entire the entire ibs and replacing it with basic new and updated equipment. So overall I'd just say it is one of those things are still can be it's not a huge portfolio, but I think over the next three to five years or something like that you should.

Keith D. Taylor: Expect something like six to eight assets could fall into that mix again, it has to be older than 20 years, and we have to invest more than $20 or $20 million.

Keith D. Taylor: Again, it has to be older than 20 years, and we have to invest more than 20 million dollars for it to be considered a redevelopment CapEx item. Yeah, I'll just add a little more color, Nick, to that.

Keith D. Taylor: For it to be considered a redevelopment capex item.

Charles J. Meyers: So I think that the type of CapEx investment, as you said, is in the base infrastructure required to operate the data center, you know, power, cooling, etc. But the big difference here is that, and we're seeing this dynamic play out because of the sort of rising density needs across the business, where we are at times needing to de-rate space and actually have space come off the, you know, sort of go on to what we refer to as engineering hold.

Speaker Change: Yes ill just add little more color, Nick and that.

Charles J. Meyers: So I think the type of Capex investment as you said is in the base infrastructure required to operate the data centers.

Charles J. Meyers: <unk> cooling et cetera.

Charles J. Meyers: But the big difference here is that we're seeing this dynamic play out because of the sort of rising density needs across the business, where we are at times meeting to Derate space and actually have space coming off of the sort of go onto what we refer to as engineering.

Charles J. Meyers: And in situations, where you can unlock additional usable power either through power efficiency projects or this kind of redevelopment investment, where you're putting new entirely new equipment and if you can unlock that power of match it to the space that is is unused or on hold.

Charles J. Meyers: And in situations where you can unlock additional usable power, either through power efficiency projects or this kind of redevelopment investment where you're putting new, entirely new equipment in, if you can unlock that power and match it to the space that is unused or on hold, you get meaningful incremental capacity. And that's really the big difference here, you're getting incremental capacity that starts to feel like another phase of a project.

Charles J. Meyers: Get meaningful incremental capacity and Thats really the big difference here is you are getting incremental capacity that starts to feel like another phase of a project and so in this case <unk> is coming out of the stabilized assets, which by the way hurts stabilized asset pool goes back into expansion and the reason is.

Charles J. Meyers: And so in this case, DC2 is coming out of the stabilized assets, which, by the way, hurts the stabilized asset pool when it goes back into expansion. And the reason is because it's a really meaningful uptick in the overall capacity available from that facility. And so that's really the litmus test that we use to say, okay, is it appropriate to qualify as a redevelopment project? And in this case, very, very much so given the, you know, customer demand for that.

Charles J. Meyers: It's a really meaningful uptick in the overall capacity available from that facility and so and that's really the litmus test that we used to say okay is it appropriate to qualify as a redevelopment project and in this case very very much so given that the.

Charles J. Meyers: Customer demand for that asset.

Speaker Change: That's great. Thank you guys.

Aryeh Klein: Thank you. The next question comes from Aryeh Klein of BMO Capital Markets. Your line is open.

Charles J. Meyers: Thank you. The next question comes from Ari Klein of BMO capital markets. Your line is open.

Charles J. Meyers: Thank you and good afternoon, and congratulations, Charles, on the transition. I guess, going back to x-scale, I think about 40% of all the leasing done by x-scale since launch has been since the beginning of the fourth quarter. How does the pipeline look relative to the amount of leasing that's been done recently? And then, when fully built out, you noted having about 725 megawatts of capacity, so you're essentially almost halfway there with what's leased. Are you looking to add more to that?

Aryeh Klein: Thanks, Good afternoon, Congrats Charles on the transition I guess going back to X scale, I think about 40% of the ordinary from down the X scale since launch has been since the beginning of the fourth quarter.

Charles J. Meyers: Does the pipeline look relative to the amount of leasing that's been done recently and then when when fully built out you noted having about 725 megawatts of capacity. So youre essentially almost halfway there with what's leased are you looking to add more to that or you would just how big the platform can be and the investments you want to make on that.

Charles J. Meyers: The short answer is absolutely. We're going to continue to grow the overall platform on the ex-scale side and retail side. Clearly, there is a ton of demand out there, and we think we have a very, very credible story. And I think, as you said, the leasing momentum that we have generated over the last several quarters is quite indicative of that. And so, yeah, what we have left, we feel confident we're going to be able to lease effectively.

Charles J. Meyers: The short answer is absolutely we are going to continue to grow the grow the overall platform on the scale side and sale side, but its.

Charles J. Meyers: I think clearly there is a ton of demand out there.

Charles J. Meyers: And we think we have a very very credible story and I think as you said as you said the leasing momentum that we have generated over the last several quarters is quite indicative of that and so yes. What we have left we feel confident we're going to be able to lease effectively and as I said as I said in the script. We're also excited to.

Charles J. Meyers: And as I said in the script, we're also excited to give you updates on what we have talked about pretty openly. And we announced the SV-12x asset, the first ex-scale facility in the Americas. But we also are deeply engaged in a set of conversations around how we're going to expand our ex-scale platform in the U.S. and the Americas more broadly. And so, we don't have anything specific to share with you, but we will in the not-too-distant future.

Charles J. Meyers: Give you updates on what we have talked about pretty openly and we announced the <unk> ex asset the X first X scale in the Americas, but.

Charles J. Meyers: We also are deeply engaged in set of conversations around how we're going to expand our Rx scaled platform in the U S and the Americas more broadly and so we.

Charles J. Meyers: We don't have anything specific to share with you, but we will in the not too distant future and we look forward to that conversation in terms of and we're not yet prepared to sort of size that precisely but I.

Charles J. Meyers: And we look forward to that conversation, but we're not yet prepared to sort of size that precisely. But I will say that when you look back at what we said when we first talked about ex-scale at analyst day, I don't know when that was, 18 or something, and what we said was what we thought it was going to be, it's certainly proven to be a lot more than that. And I think it continues to be a super exciting opportunity, very proud of the team that continues to run that business for us. And they're doing great things, and we're excited about the value that they deliver for our customers.

Charles J. Meyers: I will say that when you look when you look back at what we said when we did when we first talked about X scale at the analyst day I don't know when that was 18 or something and what we said was what we thought it was going to be it has certainly proven to be a lot more than that.

Charles J. Meyers: And I think it's a it continues to be a super exciting opportunity very proud of the team that continues to run that business for us and they are doing great things and we're excited about the value of that delivers for our customers.

Aryeh Klein: Thanks. And then separately, you noted some of the reasons that cabinet ads were soft in the quarter, and you talked about seeing better growth in the second half of the year. Can you just talk about what underpins that? And is that coming from backlog? Or is there an assumption in there around some of the longer sales cycle times, moderate?

Speaker Change: Okay. Thanks, and then just separately you noted some of the reasons that cabinet adds were soft in the quarter you talked about seeing better growth in the second half of the year can you just talk about what underpins that and is that coming from backlog or is there an assumption in there around some of the longer sales cycle cycle times moderate moderating.

Charles J. Meyers: Yeah, I mean, billable CAVs are it comes from a few different things. You're right.

Speaker Change: Yeah, I mean, the billable cabs or it comes from a few different things Youre right. We've always talked about the dense areas had the volatility in billable calves.

Charles J. Meyers: We've always talked about the volatility in billable CAVs, based partially on the timing of installs. It's not so much a longer sales cycle, but sometimes it is a bit of a longer install cycle.

Charles J. Meyers: Based partially on timing of installs, it's not so much a longer sales cycle.

Charles J. Meyers: <unk> is a bit of a longer install cycle.

Charles J. Meyers: And so, depending on the timing of installs and, in fact, the timing of churn, you can see volatility in any quarter. It's why we've always sort of told people over the years to look at a rolling four-quarter metric. But even that has really been under pressure, and it's been under pressure primarily because of density, power density.

Charles J. Meyers: So depending on the timing of installs and in fact, the timing of churn you can see volatility in any quarter is why we've always sort of told people over the years to look at a rolling four quarter metric, but even that has really been under pressure and has been under pressure, primarily because density power density and I think that kind of make.

Charles J. Meyers: To people, but we're I'm, realizing I think that we really need to give people a bit more to hang their hat on relative to that particular metric. So let me give you some of the math I think that will help people understand the available cabs metric and how it plays here and what's what's causing the.

Charles J. Meyers: And I think that kind of makes sense to people, but we're, I'm realizing, I think, that we really need to give people a bit more to hang their hat on relative to that particular metric. So, let me give you some of the math, I think, that'll help people understand the billable CAVs metric and how it plays here and what's, you know, what's causing the bit of pressure on It's, you know, we guide the two to two and a half percent churn rate on our recurring revenue each quarter. So, we're running today at an MRR run rate of about $667 million. So, if you take 2% of that figure, that's the low end of the range.

Charles J. Meyers: A bit of pressure on that.

Charles J. Meyers: We guide the 2% to two 5% churn rate on our recurring revenue each quarter. So we're running today at an <unk> run rate of about $667 million. So if you take 2% of that figure.

Charles J. Meyers: At the low end of the range, so you're at 13% to $14 million in MRO or churn in any given quarter.

Charles J. Meyers: So, you're at $13 to $14 million in MRR churn in any given quarter. As we said, our MRR per CAV is averaging right now at $2,258. So, if you take that and divide those two together, you'd be churning around about 6,000 CAVs in any given quarter. And more than that, if we're churning CAVs that are at a lower than average MRR per CAV, which, candidly, we would hope to be doing. We want, if you're going to churn some CAVs, they should be ones that are below the average, right? And so, in Q1, we were churning CAVs that were at an average of 4.4 kilowatts. We were adding back CAVs at an average of 5.8 kilowatts.

Charles J. Meyers: As we said our MRI per cab is averaging right now 2258, so if you take that and divide those two together you'd be churn in round about 6000 cabs in any given quarter.

Charles J. Meyers: And more than that if we're churning calves that are at a lower than average MLR per cap, which candidly we would hope to be doing do you want to if youre going to turn some cabs. This should be ones that are below the average right.

Charles J. Meyers: And so so in Q1, we were churning cabs. They were at an average of four four kilowatts, we were adding back calves at an average of five eight kilowatts.

Charles J. Meyers: And so when you do the math all in terms of that relatively large gap in density, you're looking at about a 1,500 cab hole that you've got to fill. So actually staying flat on cabs is really a pretty significant win. That density increase, the density increase that's causing that sort of hole in the bucket on cab count is a really important factor in driving the MRR per cab. So if you go and if you look at our year-over-year growth for available cabs, Q1 to Q1, last year to this year, it's softer for sure.

Charles J. Meyers: So when you do that math all in in terms of that that relatively large.

Charles J. Meyers: GAAP and density Youre looking at about a 1500 cab hole that you've got to fill so actually staying flat on cabs is really a pretty significant win.

Charles J. Meyers: That density increasing the density increase thats, causing that sort of hole in the bucket on cab count, though is a really important factor in driving the MMR per cab. So if you're going if you look at our.

Charles J. Meyers: Our year over year growth.

Charles J. Meyers: Billable cabs Q1 to Q1 last year to this year. It is softer for sure. It's only up about 1%, but over that same timeframe. Our MRI per cab is up 6% across the estate.

Charles J. Meyers: It's only up about 1%. But over that same timeframe, our MRR per cab is up 6% across the estate. And so you add those two together, and the composite gives you that 7% growth. So, long way of saying that, in other words, the stable to slightly growing cab count is certainly a different dynamic than what we have seen. But the growth is coming; it's just coming in a slightly different shape. And so we're still driving growth in the business and getting the economic returns that we were anticipating.

Charles J. Meyers: And so you add those two together and the composite gives you that 7% growth so.

Charles J. Meyers: Long way of saying that in other words the stayed.

Charles J. Meyers: Stable to slightly growing cab count is certainly a different dynamic than what we have seen so but the growth is coming as just chrome coming in a slightly different shape and so we're still driving the growth in the business and.

Charles J. Meyers: And getting the economic returns that we were anticipating so I think that for us rather than looking for a new indicator I think what we're going to look to do is moderate expectations.

Charles J. Meyers: So I think that for us, rather than looking for a new indicator, I think what we're going to look to do is moderate expectations on the cab growth and say, look, we're having to cover that whole quarter over quarter from a density standpoint, but it's really driving the MRR per cab, and it's the composite of those two things that really gives you the solid growth model going forward.

Charles J. Meyers: On the <unk> growth and say look we are we're having to cover that whole quarter over quarter from a density standpoint, but it is really driving the MLR per cab and the composite of those two things that really give you the solid growth growth model going forward.

Aryeh Klein: I appreciate the call. Thank you.

Speaker Change: I appreciate the color. Thank you.

David William Barden: Thank you. The next question comes from David Barden of Bank of America. Your line is open.

Aryeh Klein: Thank you. The next question comes from David Barden of Bank of America. Your line is open.

David William Barden: Hey guys, thank you so much for taking the questions.

David William Barden: Hey, guys. Thank you so much for taking the questions.

David William Barden: And thanks Charles and Keith for the incremental color.

David William Barden: And thanks, Charles and Keith.

David William Barden: Incremental color.

David William Barden:

David William Barden: So I guess.

Keith D. Taylor: So, Keith, the first question would be, based on what Charles was just saying and the explanations that he's been having to make about, you know, this interpretation of MRR per cabinet and power density and cabinet numbers, where are we on the evolution of and creation of these new metrics that I think we've been talking about for six months? And the second question, if I could, would be, it's great that the audit committee hired Exonerated itself and the company.

David William Barden: So Keith.

David William Barden: The first question would be based on what Charles we're just saying the explanations that he's been having to make about this interpretation of MMR per cabinet and power density and cabinet numbers.

Keith D. Taylor: Where are we on the evolution of the creation of these new metrics that I think we've been talking about for six months.

Speaker Change: And the second question, if I could would be.

Keith: It's great.

Keith D. Taylor: The audit committee.

Keith D. Taylor: These independent advisers and exonerated itself and the company.

David William Barden: You know in all the words that were used.

Keith D. Taylor: And all the words that were used.

David William Barden: But how much daylight is there between what you looked at and what the SEC and the DOJ are looking at, and your comfort factor that we've buttoned this thing up and in what time frame? What can we expect?

David William Barden: But how much daylight is there between what you looked at and what the FCC and the Doj are looking at.

David William Barden: And your comfort factor that we've gotten this thing up and.

David William Barden: In what timeframe can we expect.

David William Barden: A resolution to that thank you.

David William Barden: Yes.

Keith D. Taylor: Yeah, I'm trying to decide which order to take them in. On the MRR for CAB, we said we, I think we're, I think we are, we feel like we're, we've got the metrics that we need. And, and I think there's a lot of complexity to introducing new metrics to the, and, and so, you know, I think that the MRR for CAB, even though it's probably going to have a slightly different growth profile that it has combined with the MRR for CAB, is the, are really the, or I'm sorry, the billable CAB count and the MRR for CAB and the product of those two is really the metric that we, that we continue to come back to.

David William Barden: Yes.

Keith: I'm trying to decide which we're going to take them in.

Keith D. Taylor: Alright.

Keith D. Taylor: We said, we I think we're.

Keith D. Taylor: I think we are we feel like we've got the metrics that we need and I think theres a lot of complexity to introducing new metrics to the end and so.

Keith D. Taylor: I think that the MMR per cab.

Keith D. Taylor: Even though it's probably going to have a slightly different growth profile and it has combined with the MMR per cab.

Keith D. Taylor: Is the are.

Keith D. Taylor: Yes.

Keith D. Taylor: Alright, I'm, sorry, the billable cab count any MMR per cab and the product of those two is really the metric that that we continue to come back to and so I think that rather than introduce a new metric, we're going to really stick to those two and try to give you better visibility to what you should expect along the product of those two which really drives the growth.

Keith D. Taylor: And so I think that rather than introduce a new metric, we're going to really stick to those two and try to give you better visibility to what you should expect along the product of those two, which it really drives the growth. As it relates to the, you know, to the investigation, I would say that, you know, the, I think we can't comment in detail on this, the specifics of the DOJ and SEC subpoenas, but I would say that the investigation work conducted by the audit committee and by the independent advisors who I just talked about over the several, now several weeks seems like an attorney, but eternity, but it's been the last, you know, several weeks and a lot of amazing work done really represents, I think the foundation that we believe is needed to address the matters in the DOJ and SEC subpoenas.

Keith D. Taylor: As it relates to the.

Keith D. Taylor: To the investigation I would say that.

Keith D. Taylor: I think we cant comment in detail on.

Keith D. Taylor: The specifics of the Doj and SEC subpoenas, but I would say that the investigation work conducted by the audit Committee and by the independent Advisors, who I just talked about over the several now several weeks seems like an attorney, but eternity, but it's been in the last several weeks and a lot of amazing work done really represents I think the.

Keith D. Taylor: Foundation that we believe is needed to address the matters in the Doj and SEC subpoenas.

Keith D. Taylor: And it's not unusual for the sort of discussions with those parties, DOJ and SEC, to lag and take a bit longer. But, but I feel like we've got our arms around that solidly and, you know, we'll provide an update on that in the, in, whatever timeframe that requires. Unfortunately, I think that it's very hard for us to provide any specificity around if you want to add anything. No, I understand it.

Keith D. Taylor: And it's not unusual for I think.

Keith D. Taylor: Sort of discussions with those parties, Doj and FCC to lag and take a bit longer.

Keith D. Taylor: No, I appreciate it. Thank you, guys. I'd just like to add one.

Keith D. Taylor: But but I feel like we've got.

Keith D. Taylor: Our arms around around that solidly and.

Keith D. Taylor: We will provide we will provide an update on that.

Keith D. Taylor: Whatever timeframe that requires unfortunately, I think that's very hard for us to provide any specificity around if you want to add no I got it.

Speaker Change: I appreciate it thank you guys.

Keith D. Taylor: I mean, as Charles said, and I think it's important to understand that the level of work that was done over the last most since March 20. So, five, six weeks of work, also included what was anticipated to be needed by the DOJ and the SEC. So a tremendous amount of work has been done, and it surrounded what I would call the matters that relate to accounting irregularities.

Speaker Change: I was wondering I mean.

Speaker Change: As Charles said and I think it's important to understand.

Keith D. Taylor: The level of work that was done over the last.

Keith D. Taylor: Since our March 20th.

Keith D. Taylor: So five six weeks of work.

Keith D. Taylor: <unk>.

Keith D. Taylor: Also included what was anticipated to be needed or by the Doj and the SEC. So tremendous amount of work has been has been done and is surrounded.

Keith D. Taylor: What I would call the matters that relate to accounting irregularities.

Keith D. Taylor: And I would expect, and I know that this is true, that they're already in dialogue with the parties. You know, they're appropriately in dialogue with the parties. And again, this is going to be done independently, as you would expect, of course, they're going to draw on the resources of the company where needed to answer questions and inquiries.

Keith D. Taylor: And I would expect.

Keith D. Taylor: I know that there has to be true that theyre already in dialog with the parties.

Keith D. Taylor: They are appropriately within dialog with parties.

Keith D. Taylor: Again this is going to be done independently as you would expect of course theyre going to draw on the resources of the company where needed to answer answer to questions and inquiries. So.

Keith D. Taylor: It takes a little bit of time, but.

Keith D. Taylor: So I just think it takes a little bit of time. But, getting to where we are that we could have, filed the TANQ yesterday, should give you tremendous comfort. Where were we? We concluded. And again, there is no adjustment, no findings.

Keith D. Taylor: Getting to where we are that we could have we filed the 10-Q yesterday.

Keith D. Taylor: Gives you should give you tremendous comfort.

Keith D. Taylor: <unk>, where we concluded.

Keith D. Taylor: And again there is no adjustments.

Keith D. Taylor: And so, as a result, I feel really good about where we are. And, you know, as Charles said in his remarks, that related to both the gap and the non-gap. And I think that was really important. So again, I'll take him. I'll take a little bit of time. But overall, again, I feel very comfortable that by filing our 10 Q, it's a pretty good, strong indication of where we are on the journey.

Keith D. Taylor: No findings and so as a result, I feel really good about where we are and as Charles has said in his remarks that related to both GAAP and non-GAAP, but I think that was really important so again it will take it will take.

Keith D. Taylor: Little bit of time, but overall again I feel very comfortable that by the filing of our 10-Q is a pretty good strong indication of where we are in the in the journey, Yes, I think the shorter answer to your question probably not a lot of light between those I think.

Keith D. Taylor: Yeah, I think, you know, a shorter answer to your question probably would have been not a lot of light between those, I think. And, and I think we feel confident that we're going to be able to navigate those again. How timely, I'm not sure, because I think those are probably not, you know, things that are frequently rapid, just due to the parties we're dealing with. And so, you know, we'll navigate them on as rapid a timeframe as we can. And, or the independent, the audit committee, and the independent investigators will, and then we'll report that back to you as we know more.

Keith D. Taylor: Think we feel confident we're going to be able to.

Keith D. Taylor: To navigate those again, how timely I'm not sure because I think those are probably not.

Keith D. Taylor: Things that are frequently rapid.

Keith D. Taylor: Just due to the parties are dealing with.

Keith D. Taylor: So we will navigate them on.

Keith D. Taylor: Rapid timeframe as we can.

Keith D. Taylor: Or are they.

Keith D. Taylor: The independent audit Committee and independent investigators well and then we'll report that back to you as we know more.

David William Barden: That's clear. Thank you, Charles. Thank you, Keith.

Speaker Change: That's clear thank you Charles Thank you Keith.

Michael Ian Rollins: Thank you. The next question comes from Michael Rollins of Citi. Your line is open.

Speaker Change: Thank you. The next question comes from Michael Rollins of Citi. Your line is open.

Michael Ian Rollins: Thanks and good afternoon, and Charles, I want to wish you the best on the transition as well. I wanted to ask a question about some of the comments from earlier.

Michael Ian Rollins: Thanks, and good afternoon, Charles what I wish you the best on the transition as well.

Michael Ian Rollins: Wanted to ask a question about some of the comments from earlier.

Michael Ian Rollins: You commented that 1Q was better, I think, on the netbooking, your budget.

Michael Ian Rollins: You commented that <unk> was better I think on the net bookings your budget and you had lower churn and you maintained the outlook for constant currency revenue growth.

Michael Ian Rollins: and you had lower churn, and you maintained the...

Michael Ian Rollins: for Constant Currency Revenue Growth, xPPI of 7 to 8%. And so I'm curious, has your view evolved on how you expect the second half in terms of organic year-over-year growth to ramp relative to the first half of the year? And are there other considerations that kept the organic constant currency revenue guidance unchanged?

Michael Ian Rollins: PPI of 7% to 8% and so I'm curious.

Michael Ian Rollins: Has your view evolved and how you expect the second half in terms of organic year over year growth.

Michael Ian Rollins: To ramp relative to the first half of the year and are there other considerations that kept the organic constant currency revenue guidance.

Michael Ian Rollins: Unchanged.

Michael Ian Rollins: And then I'll have a second one if I can as well. Thanks.

Speaker Change: And then I'll have a second one if I could as well.

Charles J. Meyers: Thanks for the question. I would say that the second half guide or the second half outlook for us doesn't look dramatically different. I think we had said that we're clearly looking at some acceleration in the back half of the year from a bookings perspective. And again, we feel good about the pipeline.

Speaker Change: Sure Yeah. Thanks, Thanks for the well wishes, Mike and thanks for the question.

Speaker Change: I wouldn't say that.

Charles J. Meyers: Yes.

Charles J. Meyers: The second half guide or the second half I think outlooks for us doesn't look dramatically different I think we had said that we're clearly looking at some acceleration in the back half of the year from a bookings perspective.

Charles J. Meyers: We had a strong Q1, and so we probably had a slightly better Q1. And that gives us a little running start in the back half of the year. But I also think we are seeing, although we saw a lower churn than we had forecasted or expected in the prior guide, I do think we are continuing to see some level of churn in the system that I think we have to continue to navigate.

Charles J. Meyers: And again, we feel good about the pipeline, we had a strong Q1 and so we probably have a slightly better Q1.

Charles J. Meyers: And that gives us a little little a running start at that at that back half of the year.

Charles J. Meyers: But I also think we are seeing although we saw lower churn.

Charles J. Meyers: Then than we had forecasted or expected in the prior guide I do think we're going to we are continuing to see some level of churn in the in the system that is.

Charles J. Meyers: That I think we have to continue to navigate and and so.

Charles J. Meyers: And so I think there aren't any big changes in the outlook, and that's why, again, you saw us maintain that outlook overall. I'm like, maybe I'm just adding on to that, you know, when you get to the second half of the year, you recognize that certainly it matters to the year, but it's not as important because it really matters to the year following. And so that's, you know, one of the things that you have to look at. We had a pretty good idea of what we think we could do for the first half of the year.

Charles J. Meyers: So I think there.

Charles J. Meyers: Not a big not a big changes in the outlook and that's why again you saw us maintain that outlook overall.

Charles J. Meyers: Unlike maybe just adding onto that when you get to the second half of the year you recognize that that certainly it matters to the year, but it's not as important.

Charles J. Meyers: Because it really matters to the year falling so thats one of the things that you have to look at it we had a pretty good idea of what we think we can do for the first half of the year and Charles just mentioned, we're ahead of where we were.

Keith D. Taylor: And as Charles just mentioned, we're ahead of where we were. But offsetting some of that, of course, are some other things that have gone on inside the business, an example of power, you know, meter power. And so you're absorbing the fact that power costs have been down relative to where we were. We actually had a power price decrease, as you're aware, on the fourth quarter earnings call. And because of that, you know, you're diluting a little bit of the growth.

Keith D. Taylor: Offsetting some of that of course is some other things that are going on inside the business. An example of a par metered power and so youre absorbing the fact that our costs have.

Keith D. Taylor: Being down relative to where we where we actually had a prior price decrease as you are aware from.

Keith D. Taylor: From the fourth floor.

Keith D. Taylor: Third quarter earnings call and because of that.

Keith D. Taylor: You're sort of you're diluting it a little bit of the growth. So it's a combination of <unk> being a little bit Lois are diluting it in the second half of the year, we still anticipate to deliver against the expectations.

Keith D. Taylor: So, it's a combination of carving a little bit lower, diluting it, and the second half of the year, you know, we still anticipate to deliver against the expectations, but we're, but I would maybe characterize this as maybe a parting remark that when we look at risks and opportunities, the opportunities, both on the revenue line and on the cost line, are much greater than those on the risk line. Yeah, and you know, Mike, we've used this term on the last few calls as to cross currents, right, which is, you know, a sort of strange combination of a lot of interest in demand around digital transformation, broadly speaking around AI in particular. I think we're still seeing that.

Keith D. Taylor: But I would maybe characterize this as maybe a parting remark that when we look at risks and opportunities the opportunities. Both on the revenue line on the cost line are much greater than those in the risk weights and so where we are today I just think that we're taking a posture that is appropriate given where we are.

Keith D. Taylor: This time of year and just all the noise that's in the system.

Keith D. Taylor: We've used this term on last few calls us to Red Cross currents right, which as you know.

Keith D. Taylor: A sort of strange combination of a lot of.

Keith D. Taylor: Interest in demand around digital transformation broadly speaking bound AI in particular, I think we're still seeing that I think we're seeing great interest in AI and hybrid AI private AI sort of mixed with public cloud as a sort of a preferred architecture for a lot of the AI workloads that we're looking at I think we're seeing a lot.

Charles J. Meyers: I think we're seeing great interest in AI and hybrid AI, private AI sort of mixed with public cloud as a, you know, sort of preferred architecture for a lot of the AI workloads that we're looking at. I think we're seeing a lot of customers looking at where they want to place their data. And I think that they are increasingly reaching the conclusion that sort of approximating to the cloud is the right answer.

Charles J. Meyers: Customers looking at where they want to place their data.

Charles J. Meyers: And I think that they are increasingly reaching a conclusion that sort of proximate to the cloud is the right answer and I think we're really well positioned to benefit from that and we're seeing some demand there we're seeing a nice pipeline on the <unk> opportunity that we have out of the market with Nvidia.

Charles J. Meyers: And I think we're really well positioned to benefit from that. And we're seeing some demand there. We have a nice pipeline for the managed DGX opportunity that we have out in the market with NVIDIA. And yet, at the same time, we are also seeing, as I characterized in the script, some level of customer caution, some level of tightening, and desire for optimization in a still somewhat uncertain macro environment.

Charles J. Meyers: And yet at the same time, we are also seeing as I characterized in the script some level customer caution some level of tightening and desire for optimization in a still still somewhat uncertain macro environments and so I think it's all of those things together and that led us to say hey this.

Charles J. Meyers: And so I think it's all those things together that led us to say, hey, this guide is a good one. We feel like we've got opportunity to outperform against it, particularly on the FO line. And, you know, but that's kind of where we landed and the sort of overall balance for the guide.

Charles J. Meyers: This guide is a good one we feel like we've got opportunity to outperform against it particularly on the <unk> line.

Charles J. Meyers: But thats kind of where we landed.

Charles J. Meyers: <unk> balance for that for the guidance.

Michael Ian Rollins: Thanks. And just the second thing I wanted to touch on was what you were just touching on some of the use case examples for.

Speaker Change: Thanks, and just the second thing I wanted to hit was what you were just touching on some of the use case examples for AI. So you gave some examples of how customers can use the equinix platform.

Michael Ian Rollins: AI. So you gave some examples of how customers can use the Equinix platform. Can you just share?

Michael Ian Rollins: Can you just share in terms of whether it was relative to the number of deals that you did in the quarter or relative to the pipeline.

Michael Ian Rollins: Transcripts provided by Transcription Outsourcing, LLC. What the market should be mindful of for Equinix. Yeah, I wouldn't say

Michael Ian Rollins: Youre kind of seeing in terms of that interest or the realization of that interest so far and are there any other additional learnings on the AI frame that.

Michael Ian Rollins: The market should be mindful of for Equinix.

Charles J. Meyers: Yeah, I would say I would still characterize it as quite early days because I do think there is a ton of interest in AI. But I think that, you know, the actual execution of, you know, implementing infrastructure, driving workloads, etc. is, I think, still relatively early in the cycle.

Michael Ian Rollins: Yeah, I would say I would still characterize it as quite early days because I do think there is a ton of interest in AI, but I think that the actual execution.

Charles J. Meyers: Implementing infrastructure driving workloads et cetera is I think still relatively early in the cycle and I do think there is a lot of attention on really large scale training workloads and and I do think we're seeing some of the demand.

Charles J. Meyers: And I do think there is a lot of attention on really large-scale training workloads. And, and I do think we're seeing some of the demand, you know, in our X scale business being driven by, you know, demand for that from hyperscalers, which, again, are the largest customers of our X scale offering. And I do think that's the, and we've been saying this all along, I think that's the whole point, that's where the unique differentiation of Equinix is likely to be because of our highly distributed footprint.

Charles J. Meyers: In our X scale business being driven.

Charles J. Meyers: Bye bye demand for that from Hyperscale or which again are the are the largest customers of our of our scale offering.

Charles J. Meyers: And so I think that is that is probably ahead of the game, but I think what we're now seeing is a really rich pipeline of enterprise training opportunities as well as inference opportunities where.

Charles J. Meyers: We're inference is more distributed and I do think that and we've been saying this all alone I think thats the.

Charles J. Meyers: And so, and because I think we bring that blend of capabilities to the table, not only X scale, but we did see an uptick, I will say this quarter, in larger footprint opportunities. And I think some of that is really associated with AI-related workloads, both service provider and enterprise. And so we're seeing a little bit of a different mix, but I think, you know, still relatively early, but I think there is a lot of room for optimism in the AI opportunity overall for us.

Charles J. Meyers: All along and Thats, where the unique differentiator creation of Equinix is likely to be because of our highly distributed footprint and so and because I think we bring that blend of.

Charles J. Meyers: Capabilities to the table not only scale, but and we did see an uptick I will say this quarter in larger footprint opportunities.

Charles J. Meyers: Some of that is really associated with AI related.

Charles J. Meyers: Workloads, both service provider and enterprise.

Charles J. Meyers: And so we're seeing a little bit of a different mix, but I think it's still relatively early but I think a lot of room for optimism in the AI opportunity overall for us.

Speaker Change: Thank you.

Simon William Flannery: Thank you. The last question comes from Simon Flannery of Morgan Stanley. Your line is open.

Charles J. Meyers: Thank you. The last question comes from Simon Flannery of Morgan Stanley. Your line is open.

Simon William Flannery: Thanks very much, and Charles, best of luck with everything. I wanted to come back to the cabinets if I could.

Simon William Flannery: Thanks very much.

Simon William Flannery: Charles Best of luck with everything I wanted to come back to the <unk>.

Simon William Flannery: So if I could I think you mentioned Charles at one point that you were limited.

Simon William Flannery: I think you mentioned, Charles, at one point that you were limited by capacity constraints in certain key markets. If we look at overall utilization, we're seeing 78, 79 percent, and that's down year over year. You've added a lot of capacity over the last few quarters here. So just help us unpack that a little bit, because it looks like, at least on an aggregate level, where are the pressure points here, and what's the opportunity to relieve those?

Simon William Flannery: For comp of capacity constraints in certain key markets. If we look at the overall utilization, we're seeing 70, 879% and thats down year over year.

Simon William Flannery: <unk> added a lot of capacity over the last few quarters here. So just help us unpack that a little bit because it looks like at least on an aggregate level, where are the pressure points here and what's the opportunity to release those.

Charles J. Meyers: Yeah, great question. I mean, I think there are a few markets around the world that we have recently added capacity to, or it is just around the corner. A great example would be the New York Metro, where we are already pre-selling capacity in that but don't yet have as much available to actually bill into as we would like. And so I think that's a classic area of constraint. We've also seen, of course, Singapore is a more, I think, a more protracted area of constraint in business.

Charles: Yeah, Great question, I mean, I think there's a few markets around the world that we have.

Charles J. Meyers: Recently added capacity or it is around the corner are Great example, would be would be the New York Metro.

Charles J. Meyers: Where we are already pre selling capacity and that but but don't yet have as much available to actually build into.

Charles J. Meyers: We would like and so I think Thats a classic area of constraints. We've also seen of course, Singapore is a more I think a more protracted area of constraints in the business and it's one of the reasons why we talked about our sustainability efforts, there, which were quite central and our ability to gain incremental capacity.

Charles J. Meyers: And it's one of the reasons why we talked about our sustainability efforts there, which were quite central to our ability to gain incremental capacity, sort of awards, if you will, from the Singaporean government. But I think that was going to be a little bit of a longer slog for us. And I think, unfortunately, it means that we're going to have to continue to be opportunistic about churn and trying to rewrite that and use that to continue to sort of serve the capacity that is critical there. But those are just a couple of key examples.

Charles J. Meyers: Sort of awards, if you will.

Charles J. Meyers: From the Singaporean government and so I think that one is going to be a little bit of a longer slog for us and I think unfortunately, it means that we're going to have to continue to be opportunistic about churn and trying to re rate that end and use that to continue to sort of serve the capacity that is critical there, but those are those are a couple of key examples.

Keith D. Taylor: What might be some of the other ones, Keith, where we had some constraints? Yeah, no, overall, I mean, you look at some of the Canadian markets, it's not so much a constraint of generations, a constraint of distribution, and sort of Northern Virginia is an example of that. Some of the Canadian markets, the Irish market, the Dublin market, is another place.

Keith D. Taylor: What might be some of the other ones keep it where we had.

Keith D. Taylor: Some constraints that yes.

Keith D. Taylor: Overall as you look to some of the Canadian markets.

Keith D. Taylor: It's not so much a constraint.

Keith D. Taylor: Generations constraints of distribution and so northern Virginia is an example of that some of the Canadian markets. The Irish market, the Dublin market and other and other places and so overall it sort of trying to optimize the environment.

Keith D. Taylor: And so overall, it's sort of trying to optimize the environment, as Charles alluded to Singapore being that perfect example of deciding how you want to rewrite the space and being very disciplined about what we sell. Notwithstanding just a general thought about introducing a lot of new capacity into new markets, second tier, third tier markets for us, which take longer to ramp up. Well, at the same time, you have these major metros around the world where, you know, we're in dire need of incremental capacity.

Keith D. Taylor: Charles alluded to Singapore being a perfect example.

Keith D. Taylor: Deciding how you want to re rate the space and being very disciplined about what we sell notwithstanding just the general thought about introducing a lot of new capacity into new markets second tier third tier markets for us and they take longer to ramp while at the same time you have these major metros around around the world, where we are in dire need of incremental capacity.

Keith D. Taylor: And so that's what we're investing in. And so it's really trying to optimize as best as we can across the portfolio portfolio, recognizing each market has a little bit of uniqueness to it. And so working alongside, what are we turning? Where are we turning it?

Keith D. Taylor: So that's what that's what we're investing in and so it's really trying to optimize as best as we can across the portfolio portfolio recognizing each market is a little bit of uniqueness to it.

Keith D. Taylor: And so working alongside what are we charging we're returning it what is the inventory Ole.

Keith D. Taylor: What is the inventory hold or engineering hold and some of the capacity as we augment with efficiency initiatives and the like? It's a combination of all these things that are factoring into our decision. And it goes back to the sort of the net cabinet billing discussion. When you look at that, when you step back and say, well, that's part of what's causing that utilization level to be where it is, but you really have to step back and understand what the revenue drivers of the business are.

Keith D. Taylor: Our engineering hold on some of the capacity as we augment with efficiency initiatives and the like it's a combination of all of these things that are factoring into our decision.

Keith D. Taylor: And it goes back to the sort of the net cabinets billing discussion when you look at it.

Keith D. Taylor: When you step back and say well.

Keith D. Taylor: Part of what's causing that utilization level to be where it is you really have to step back and understand what is the revenue drivers of the business you saw in a quarter of our second quarter guide, we have a meaningful step up in revenues a good roughly 65% to 70% of that is coming from MRI.

Keith D. Taylor: You saw in our second quarter guide, we had a meaningful step up in revenues, a good roughly sixty five to seventy percent of that is coming from MRR. And so, you know, that we're getting what we've got more revenue for coming into the next quarter. We've got some MRR activity through X scale, but there's momentum in the business. And it doesn't necessarily appear the way that some of us would expect historically because it's not necessarily going to result in a lot of new incremental cabinets.

Keith D. Taylor: So you know that we're getting what will go more revenue forthcoming into into the next quarter robust manner, our activity through X scale, but there is momentum in the business and it doesn't necessarily appear the way that some of US would expect historically, because it's not necessarily going to a lot of new incremental cabinets is more volume attached to the cabinets that we have.

Keith D. Taylor: It's more volume attached to the cabinets that we have. And so it's a combination of those two things that I think is causing us to, I guess, be a little bit more cautious about what we talked about on the net billing cabinet basis, but we know that the revenues are there to support our growth.

Keith D. Taylor: So combination of those two things I think are causing us to.

Keith D. Taylor: I guess it'd be a little bit more cautious in what we talked about on the net billing cabinet basis, but we know that the revenues there to support our growth.

Simon William Flannery: So, we shouldn't be thinking of utilization getting back to the low to mid 80s, but more in this sort of 79 or 80 level. You know, I think it's a lot.

Keith D. Taylor: So we shouldnt be thinking of utilization getting back to the low to mid eighties grew more in the sort of $7 980 level.

Keith D. Taylor: You know, I think, look, Charles alluded to in his prepared remarks, we see, you know, the cabinet billing number is going to, is going to increase. And as a result, devaluation will certainly continue to increase. I just don't know if it will happen at the rate that we would expect, given all the other things that are going on in the business. And the caution that Charles alluded to, you know, we are being cautious in our guide. You know, we left the guide, the revenue guide constant, absent currency. We have momentum. We did better than we anticipated in the first quarter. Obviously, you know, we made a reference to the fact that the pipeline is exceedingly deep. That's a positive.

Speaker Change: Well I think.

Simon William Flannery: Charles alluded to in his prepared remarks, we see the <unk>.

Keith D. Taylor: <unk> 1 billion number is going to is going to increase and as a result of utilization.

Keith D. Taylor: We'll certainly continue to increase I, just don't know if it will happen at the rate that we would expect given all the other things that are going on in the business and the caution that Charles alluded to we are being cautious in our guidance.

Keith D. Taylor: We left we left the guidance the revenue guide constant absent currency.

Keith D. Taylor: We have momentum.

Keith D. Taylor: We did better than we anticipated in the first quarter. Obviously, we made a reference to the fact that the pipeline is exceedingly deep.

Keith D. Taylor: But we're just not at a point to say, well, what does that mean from a billing cabinet basis? Are we going to alter the trajectory of our revenues based on what we've already guided? And there are just a number of factors that we're considering.

Keith D. Taylor: That's a positive.

Keith D. Taylor: We're just not at a point to say well what does that mean from a billing cabinet basis are we going to alter basically the trajectory of our revenues.

Keith D. Taylor: Based on what we've already guided and Theres just a number of factors that we're considering.

Keith D. Taylor: But overall, I just say there's strong momentum in the business. I think utilization will go up. I think cabinet spilling will net cabinet spilling will go up. I think based on how, you know, the power utilization that we're selling will cause the density of cabinets or parcel per cabinet to continue to be elevated. And for all those reasons, that's why we have, I would think, momentum on the revenue line. But we're just not yet prepared to change the trajectory of the revenue guide at this point.

Keith D. Taylor: But overall I would just say there is strong momentum of the business I think utilization will go up I think cabinets billing net cabinets billing will go up I think based on the card utilization that we're selling caused the density of cabinets too.

Keith D. Taylor: Pars sold per cabinet too to continue to be elevated but for all those reasons. That's why we have I would say.

Keith D. Taylor: <unk> momentum in the on the revenue line, but we're just not we're not yet prepared.

Keith D. Taylor: To change the trajectory of the revenue guidance at this point, but I do think that the I mean look the stabilized assets are 84% utilized overall I think.

Simon William Flannery: But I do think that, look, the stabilized assets are 84 percent utilized overall. I think, you know, and I think we've got room in the class that just went in for additional utilization. And so I think that we absolutely are going to continue to see improved utilization. But we also are adding, you know, we are continuing to add capacity for sure, just given the level of demand that's out there. So I think it'll just depend on how that ebbs and flows into the utilization. Great, thanks for the call.

Simon William Flannery: I think we've got room in the class that just went in for additional <unk>.

Simon William Flannery: Utilization and so I think that we absolutely are going to continue to see improving utilization.

Simon William Flannery: But we also are adding we are continuing to add capacity for sure just given the level of demand that out that's out there. So I think it'll just depend on how that ebbs and flows into the into the utilization number.

Speaker Change: Right. Thanks for the color.

Operator: This concludes our Q&A earnings call. Thank you for joining us. Goodbye.

Speaker Change: This concludes our Q1 earnings call. Thank you for joining us.

Operator: Goodbye.

Operator: Again, that does conclude today's conference. You may disconnect at this time. Thank you, and have a good day.

Speaker Change: Again that does conclude today's conference you may disconnect at this time, thank you and have a good day.

Operator: Okay.

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