Q2 2024 Equinix Inc Earnings Call

August 7, 2024

Good afternoon and welcome to the Equinix Second Quarter Earnings Conference Call.

All lines will be able to listen only until we open for questions.

Chip Newcom: 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. Thank you. You may begin.

Unknown Executive: 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 Newcomb, Senior Director of Investor Relations. Thank you. You may begin.

Chip Newcomb: I would now like to turn the call over to Chip Newcomb, Senior Director of Investor Relations. Thank you.

Unknown Executive: Good afternoon, and welcome to today's conference call. Before we get started, I would like to remind everyone that some of the statements 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 our most recent Form 10-Q.

Chip Newcomb: Good afternoon, and welcome to today's conference call. Before we get started, I would like to remind everyone that some of the statements 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 our most recent Form 10-Q.

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

Speaker Change: actual results may vary significantly from those statements and may be affected by the risks we've identied in today's press release and those identifieding our filings with the sec including our most recent form ten k filed february sixteenth two thousand and twenty four and our most recent form ten -q

Unknown Executive: 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, is it 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.

Equinix: 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 Regulation 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.

Speaker Change: we provide a reconciliation of those measures to the most directly comparable gaap measures and list of the reasons why the company uses these measures in today's press release on the equinx investor relations page at w do equinx com

Unknown Executive: 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 web page from time to time and encourage you to check our website regularly for the most current available information. With us today are Adaire Fox-Martin, Equinix's CEO and President, and Keith Taylor, Chief Financial Officer.

Speaker Change: 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 web page from time to time and encourage you to check our website regularly for the most current available information.

Speaker Change: With us today are Adair Fox-Martin, Equinix's CEO and President, and Keith Taylor, Chief Financial Officer.

Speaker Change: following our prepared remarks we will be taking questions from cellside analysts in the interest of rapping this call up in one hour we'd to ask these analyststo limit any follow-on questions to one at this time i'll turn it over to a

Unknown Executive: Following our prepared remarks, we will be taking questions from Southside 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 it over to Adaire.

Adaire Fox-Martin: Thank you, Chip. Good afternoon, and welcome to our second quarter earnings call. I'm honored to be hosting my first earnings call today as CEO and President of Equinix. I'm immensely proud to lead our dedicated team of more than 13,000 employees around the world. I would like to express my gratitude to Charles and the entire Equinix team for the warm welcome and the facilitation of a smooth transition over the past two months.

Adair Fox-Martin: Thank you, Chip. Good afternoon and welcome to our second quarter earnings call. I'm honored to be hosting my first earnings call today as CEO and President of Equinix.

Speaker Change: i'm immenally proud to lead our dedicated team of more than thirteen thousand employees around the world

Speaker Change: I would like to express my gratitude to Charles and the entire Equinix team for the warm welcome and the facilitation of a smooth transition over the past two months.

Adaire Fox-Martin: I look forward to the continued partnership with Charles in his role as Executive Chairman, and I'm excited and optimistic about the road ahead. As a board member for the past four years, I've witnessed many of the unique qualities that have driven Equinix's durable success. Our 25 years of investment have built a business now spanning 264 data centers in 72 metros across six continents. Our focus on customer value and outcomes has created interconnected digital ecosystems unrivaled in our industry. It is a phenomenal foundation to build upon as CEO.

Speaker Change: I look forward to the continued partnership with Charles in his role as Executive Chairman and I'm excited and optimistic about the road ahead.

Speaker Change: As a board member for the past four years, I've witnessed many of the unique qualities that have driven Equinix's durable success.

Adaire Fox-Martin: Our 25 years of investment have built a business now spanning 264 data centers in 72 metros across six continents. Our focus on customer value and outcomes has created interconnected digital ecosystems unrivaled in our industry. It is a phenomenal foundation to build upon as CEO. As the stewards of some of the most important digital infrastructure in the world, we are exceptionally and uniquely positioned to capitalize on the immense opportunities that lie ahead.

Speaker Change: Our 25 years of investment has built a business now spanning 264 data centers in 72 metros across 6 continents.

Speaker Change: Our focus on customer value and outcomes has created interconnected digital ecosystems unrivaled in our industry. It is a phenomenal foundation to build upon as CEO .

Adaire Fox-Martin: As the stewards of some of the most important digital infrastructure in the world, we are exceptionally and uniquely positioned to capitalize on the immense opportunities that lie ahead. Business transformation remains a critical priority for our customers, and the emergence of AI marks a pivotal point for our industry. AI, similar to the growth of cloud technologies a decade ago, will take time to fully develop.

Speaker Change: As the stewards of some of the most important digital infrastructure in the world, we are exceptionally and uniquely positioned to capitalize on the immense opportunities that lie ahead.

Adaire Fox-Martin: Business transformation remains a critical priority for our customers, and the emergence of AI marks a pivotal point for our industry. AI, similar to the growth of cloud technologies a decade ago, will take time to fully develop.

Speaker Change: Business transformation remains a critical priority for our customers, and the emergence of AI marks a pivotal point for our industry. AI, similar to the growth of cloud technologies a decade ago, will take time to fully develop.

Adaire Fox-Martin: In the near term, AI training workloads are driving significant demand, particularly from service providers. Our ex-scale program continues to be a direct beneficiary of this demand. We intend to build on this momentum, meaningfully augmenting and extending our X-scale portfolio, particularly in North America, which will complement our robust portfolio across Europe and Asia Pacific. We are excited to share that we recently closed on land and power for our first multi-hundred megawatt X-scale campus in Atlanta.

Adaire Fox-Martin: In the near term, AI training workloads are driving significant demand, particularly from service providers. Our ex-scale program continues to be a direct beneficiary of this demand. We intend to build on this momentum, meaningfully augmenting and extending our X-Scale portfolio, particularly in North America, which will complement our robust portfolio across Europe and Asia Pacific. We are excited to share that we recently closed on land and power for our first multi-hundred megawatt X-scale campus in Atlanta. We look forward to announcing details of this project and our next X-scale joint venture in the coming months. At the operational end of the AI spectrum are network nodes and inference workloads.

Speaker Change: In the near term, AI training workloads are driving significant demand, particularly from service providers.

Speaker Change: Our X-Scale program continues to be a direct beneficiary of this demand.

Speaker Change: We intend to build on this momentum, meaningfully augmenting and extending our X-Scale portfolio, particularly in North America.

Speaker Change: This will complement our robust portfolio across Europe and Asia Pacific.

Speaker Change: We are excited to share that we recently closed on land and power for our first multi-hundred megawatt X-scale campus in Atlanta. We look forward to announcing details of this project and our next X-scale joint venture in the coming months.

Adaire Fox-Martin: We look forward to announcing details of this project and our next X-scale joint venture in the coming months. At the operational end of the AI spectrum, there are network nodes and inference workloads. As with cloud, Equinix continues to be the preferred location for network nodes as customers seek the right connectivity solutions for data ingestion and distribution. We also see inference demand beginning to take shape. We believe the implementation and deployment of these workloads will accelerate in the coming years.

Speaker Change: At the operational end of the AI spectrum are network nodes and inference workloads.

Adaire Fox-Martin: As with cloud, Equinix continues to be the preferred location for network nodes as customers seek the right connectivity solutions for data ingestion and distribution. We also see inference demand beginning to take shape. We believe the implementation and deployment of these workloads will accelerate over the coming years. The neutrality, global reach, and scale of platform Equinix can deliver the performance, network density, and cloud adjacency which inference workloads will require. We are already seeing significant enterprise and service provider interest in our deployment capabilities.

Speaker Change: As with cloud, Equinix continues to be the preferred location for network nodes as customers seek the right connectivity solutions for data ingestion and distribution.

Speaker Change: We also see inference demand beginning to take shape.

Speaker Change: We believe the implementation and deployment of these workloads will accelerate over the coming years.

Adaire Fox-Martin: The neutrality, global reach, and scale of platform Equinix can deliver the performance, network density, and cloud adjacency which inference workloads will require. We are already seeing significant enterprise and service provider interest in our deployment capabilities. In Q2, we partnered with the WWT to serve Olympic technologies, an AI-powered marketing analytics platform for enterprises. Almavik Technologies deployed their AI infrastructure at Equinix to run proprietary inference algorithms on massive datasets for predictable cost, privacy, speed, and secure access to data sources in the cloud.

Speaker Change: The neutrality, global reach, and scale of Platform Equinix can deliver the performance, network density, and cloud adjacency which inference workloads will require.

Adair Fox-Martin: We are already seeing significant enterprise and service provider interest in our deployment capabilities.

Adaire Fox-Martin: In Q2, we partnered with WWT to serve Omnibic Technologies, an AI-powered marketing analytics platform for enterprises. Almavik Technologies deployed their AI infrastructure at Equinix to run proprietary inference algorithms on massive datasets for predictable cost, privacy, speed, and secure access to data sources in the cloud.

Adair Fox-Martin: In Q2, we partnered with the WWT to serve Omnibic Technologies, an AI-powered marketing analytics platform for enterprise.

Speaker Change: almusic technologies deployed their ai infrastructure at equrics to run proprietary inference algorithms on massive datasse for a predictable cost privacy speed and secure access to data sources in the cloud

Adaire Fox-Martin: InstaDeep, a leading provider of AI decision-making solutions, deployed an NVIDIA AI cluster at our Paris 10 asset to access key ecosystems, optimize their network, and support their growth objectives. Our approach to the market opportunity created by AI is multifaceted, and we believe it will deliver value in the short term and sustainable growth over the medium to long term. Our XScale offering provides the infrastructure and expertise required for massively scalable data center operations for our cloud and large-scale technology customers.

Adaire Fox-Martin: InstaDeep, a leading provider of AI decision-making solutions, deployed an NVIDIA AI cluster at our Paris 10 asset to access key ecosystems, optimize their network, and support their growth objectives. Our approach to the market opportunity created by AI is multifaceted, and we believe it will deliver value in the short term and sustainable growth over the medium to long term. Our XScale offering provides the infrastructure and expertise required for massive, scalable data center operations for our cloud and large-scale technology customers.

Speaker Change: InstaDeep, a leading provider of AI decision-making solutions, deployed a NVIDIA AI cluster at our Paris 10 asset to access key ecosystems, optimize their network, and support their growth objectives.

Speaker Change: Our approach to the market opportunity created by AI is multifaceted and we believe it will deliver value in the short term and sustainable growth over the medium to long term.

Speaker Change: Our XScale offering provides the infrastructure and expertise required for massive, scalable data center operations for our cloud and large-scale technology customers.

Adaire Fox-Martin: For our enterprise and mid-market customers, we offer AI-ready data centers and taranty solutions, enabling them to scale efficiently and effectively as they introduce AI technologies into their business operations. For those who require high-performance inferencing, our edge solutions handle the data at the edge where it is generated, ensuring optimal performance for the next generation of business applications. Over the past two months, I have embarked on a listening tour across a number of our locations, meeting with our customers, partners, and employees.

Adair Fox-Martin: For our enterprise and mid-market customers, we offer AI-ready data centers and guarantee solutions, enabling them to scale efficiently and effectively as they introduce AI technologies into their business operations.

Adair Fox-Martin: For those who require high-performance inferencing, our Edge solutions handle the data at the edge where it is generated, ensuring optimal performance for the next generation of business applications.

Speaker Change: Over the past two months, I have embarked on a listening tour across a number of our locations, meeting with our customers, partners, and employees.

Adaire Fox-Martin: And whilst it is still early in my tenure, and there is still work that I need to complete, I have noted some areas of opportunity that will underpin our strategy for the company going forward. The opportunity to simplify across numerous aspects of our business. This will allow us to accelerate our pace of execution. The opportunity to drive more focus.

Adaire Fox-Martin: And whilst it is still early in my tenure, and there is still work that I need to complete, I have noted some areas of opportunity that will underpin our strategy for the company going forward. For example, the opportunity to simplify across numerous aspects of our business. This will allow us to accelerate our pace of execution and the opportunity to drive more focus. Whilst we may do less, the programs of work that we focus on will represent excellence in execution and deliver the highest quality outcomes.

Adair Fox-Martin: And whilst it is still early in my tenure, and there is still work that I need to complete, I have noted some areas of opportunity that will underpin our strategy for the company going forward.

Adair Fox-Martin: The opportunity to simplify across numerous aspects of our business. This will allow us to accelerate our pace of execution.

Adaire Fox-Martin: Whilst we may do less, the programs of work that we focus on will represent excellence in execution and deliver the highest quality outcomes. The opportunity to amplify our go-to-market efforts to delight our customers and energize our partners. Equinix has consistently demonstrated discipline and execution. This mantra of discipline allows us to deliver market-leading returns on capital and serves as the underlying fuel for long-term growth in AFSL per share, our core financial metric.

Adair Fox-Martin: The opportunity to drive more focus. Whilst we may do less, the programs of work that we focus on will represent excellence in execution and deliver the highest quality outcomes.

Adaire Fox-Martin: The opportunity to amplify our go-to-market efforts to delight our customers and energize our partners. Equinix has consistently demonstrated discipline and execution. This mantra of discipline allows us to deliver market-leading returns on capital and serves as the underlying fuel for long-term growth in AFSL per share, our core financial metric. Building on this foundation and executing on the opportunities I noted should create a simpler, more focused, and ultimately higher-valued company. With all of this in mind, I'll turn to our Q2 performance. Equinix had a great second quarter.

Adair Fox-Martin: The opportunity to amplify our go-to-market efforts to delight our customers and energize our partners.

Adair Fox-Martin: Equinix has consistently demonstrated discipline and execution.

Adair Fox-Martin: This mantra of discipline allows us to deliver market-leading returns on capital and serves as the underlying fuel for long-term growth in AFFO per share, our core financial metric.

Adaire Fox-Martin: Building on this foundation and executing on the opportunities I noted should create a simpler, more focused, and ultimately higher-valued company. With all of this in mind, I'll turn to our Q2 performance. Equinix had a great second quarter.

Adair Fox-Martin: Building on this foundation, and executing on the opportunities I noted, should create a simpler, more focused, and ultimately higher valued company.

Adair Fox-Martin: With all of this in mind, I'll turn to our Q2 performance.

Adaire Fox-Martin: We delivered record gross bookings, and our pricing remains strong. We continue to invest broadly across our offerings to further enhance the scale and reach of our industry-leading platform. Our delivery of adjusted EBITDA and AFSO per share continues to run ahead of expectations. As you can see on slide 3, Q2 revenues were $2.2 billion, up 8% over the same quarter last year. This represents our 86th consecutive quarter of top-line growth. Adjusted EBITDA was up 17% year-over-year, with strong FFO per share flow-through. Interconnection revenue stepped up to 9% year over year. These growth rates are all on a normalized and constant currency basis.

Adaire Fox-Martin: We delivered record growth bookings, and our pricing remains strong. We continue to invest broadly across our offerings to further enhance the scale and reach of our industry-leading platform. Our delivery of adjusted EBITDA and AFSO per share continues to run ahead of expectations. As you can see on slide 3, Q2 revenues were $2.2 billion, up 8% over the same quarter last year. This represents our 86th consecutive quarter of top-line growth. Adjusted EBITDA was up 17% year-over-year, with strong FFO per share flow-through. Interconnection revenue stepped up to 9% year over year. These growth rates are all on a normalized and constant calorie C basis.

Adair Fox-Martin: Equinix had a great second quarter. We delivered record growth bookings.

Adair Fox-Martin: Our pricing remains strong.

Adair Fox-Martin: we continue to invest broadly across our offerings to further enhance the scale and reach of our industry-leading platform

Adair Fox-Martin: our delivery of adjusted ebitda and apfo per share continues to run ahead of expectations

Adair Fox-Martin: as you can see on slide three q two revenues were two point two billion of eight percent over the same quarter last year

Adair Fox-Martin: This represents our 86th consecutive quarter of top-line growth.

Adair Fox-Martin: Adjusted EBITDA was up 17% year-over-year, with strong FFO per share flow-through.

Adair Fox-Martin: Interconnection revenue stepped up to 9% year over year.

Adair Fox-Martin: These growth rates are all on a normalized and constant calendar C basis.

Adaire Fox-Martin: In May, we announced the opening of our first data center in Jomor with strong interest from customers across our new Malaysian footprint. In July, we announced our expansion into the Philippines through the planned acquisition of three data centers in Manila from Total Information Management. This transaction, valued at approximately $180 million, is expected to close in the fourth quarter of 2024, adding more than 1,000 cabinets of capacity, in addition to land for future development.

Adaire Fox-Martin: In May, we announced the opening of our first data center in Jamur with strong interest from customers across our new Malaysian footprint. In July, we announced our expansion into the Philippines through the planned acquisition of three data centers in Manila from Total Information Management. This transaction, valued at approximately $180 million, is expected to close in the fourth quarter of 2024, adding more than 1,000 cabinets of capacity, in addition to land for future development.

Adair Fox-Martin: In May, we announced the opening of our first data center in Jomor with strong interest from customers across our new Malaysian footprint.

Adair Fox-Martin: In July , we announced our expansion into the Philippines through the planned acquisition of three data centers in Manila from Total Information Management.

Adair Fox-Martin: This transaction valued at approximately $180 million is expected to close in the fourth quarter of 2024, adding more than 1,000 cabinets of capacity, in addition to land for future development.

Adaire Fox-Martin: The combination of our strong leadership position in our Singapore hub and our entries into Malaysia, Indonesia, and the Philippines strategically positions Equinix to help our customers capitalize on the expanding digital opportunity in the fast-growing Southeast Asia region. Customers taking advantage of our expanding global footprint include First Digital, an internet and telecommunications provider. First Digital is significantly lowering its total cost of ownership by building a multi-cloud network with Equinix Fabric Cloud Router to connect to Cisco WebEx and AWS across all three regions.

Adaire Fox-Martin: The combination of our strong leadership position in our Singapore hub and our entries into Malaysia, Indonesia, and the Philippines strategically positions Equinix to help our customers capitalize on the expanding digital opportunity in the fast-growing Southeast Asia region. Customers taking advantage of our expanding global footprint include First Digital, an internet and telecommunications provider. FirstDigital is significantly lowering its total cost of ownership by building a multi-cloud network with Equinix Fabric Cloud Router to connect to Cisco WebEx and AWS across all three regions.

Adair Fox-Martin: The combination of our strong leadership position in our Singapore hub and our entries into Malaysia, Indonesia and the Philippines

Adair Fox-Martin: Strategically position Equinix to help our customers capitalize on the expanding digital opportunity in the fast-growing Southeast Asia region.

Adair Fox-Martin: Customers taking advantage of our expanding global footprint include First Digital, an internet and telecommunications provider.

First Digital: First Digital is significantly lowering total cost of ownership by building a multi-cloud network with Equinix Fabrics Cloud Router to connect to Cisco WebEx and AWS across all three regions.

Adaire Fox-Martin: Our global interconnection franchise continues to perform, with over 472,000 total interconnections now deployed. Growth interconnection additions were at the highest level in two years, and pricing continues to trend favorably. However, net interconnection ads were 3,900 due to grooming activity primarily in our content and networking verticals. We do expect this grooming to lessen over time.

First Digital: Our global interconnection franchise continues to perform, with over 472,000 total interconnections now deployed.

Speaker Change: Growth interconnection additions were at the highest level in two years and pricing continues to trend favorably.

Speaker Change: However, net interconnection ads were 3,900 due to grooming activity primarily in our content and networking verticals.

Speaker Change: We do expect this grooming to lessen over time.

Adaire Fox-Martin: Equinix fabric growth was underpinned by 100 gigabit port additions and strong pull through from other digital services products. Network Edge experienced continued rapid growth with expansion activity from existing customers. Key recent interconnection and ecosystem wins include Noam Exchange, a new company formed after the integration of the Santiago, Lima, and Colombian stock exchanges. Capital market participants can now benefit from Noom's extended reach, low latency, and secure connectivity, supported by Equinix in key markets like New York and Sao Paulo.

Adaire Fox-Martin: Equinix fabric growth was underpinned by 100 gigabit port additions and strong pull through from other digital services products. Network Edge experienced continued rapid growth with expansion activity from existing customers. Key recent interconnection and ecosystem wins include Neum Exchange, a new company formed after the integration of the Santiago, Lima, and Colombian stock exchanges. Capital market participants can now benefit from Noom's extended reach, low latency, and secure connectivity, supported by Equinix in key markets like New York and Sao Paulo.

Speaker Change: Equinix fabric growth was underpinned by 100 gigabit port additions and strong pull through from other digital services products.

Speaker Change: Network Edge experienced continued rapid growth with an expansion activity from existing customers.

Speaker Change: Key recent interconnection and ecosystem wins include NuomExchange. This is a new company formed after the integration of the Santiago, Lima, and Colombia stock exchanges.

Speaker Change: capital market participants can now benefit from newon's extended reach low latency and secure connectivity supported by equinics and key markets like new york and sapallow

Adaire Fox-Martin: Our channel program delivered another solid quarter, accounting for over 30% of new bookings and 55% of company new logos. We continue to see growth from partners like AT&T, Avant, Dell, HPE, and Orange Business, with wins across a wide range of industry segments and use cases. Notable wins included an AI as a service solution via our distribution partner TechData and MSP partner Asiapac. Leveraging a combination of co-location and Equinix fabric, our partners are delivering an LLM for a high-level learning institution based in Malaysia.

Keith Taylor: Our channel program delivered another solid quarter, accounting for over 30% of new bookings and 55% of company new logos. We continue to see growth from partners like AT&T, Avant, Dell, HPE, and Orange Business, with wins across a wide range of industry segments and use cases. Notable wins included an AI as a service solution via our distribution partner TechData and MSP partner Asiapac. Leveraging a combination of co-location and Equinix fabric, our partners are delivering an LLM for a high-level learning institution based in Malaysia.

Speaker Change: Our channel program delivered another solid quarter, accounting for over 30% of new bookings and 55% of company new logos.

Speaker Change: We continued to see growth from partners like AT&T, Avant, Dell, HPE, and Orange Business, with wins across a wide range of industry segments and use cases.

Speaker Change: Notable wins included an AI-as-a-Service solution via our distribution partner, TechData, and MSP partner, Adapac.

Speaker Change: Leveraging a combination of co-location and Equinix fabric, our partners are delivering an LLM for a high-level learning institution based in Malaysia.

Keith Taylor: Now, before I turn the call over to Keith, I wanted to say that we believe we are in a position of strength financially, from both a balance sheet and from an access to capital perspective. Our investment strategy delivers a strong return on investor capital, all of which gives us the flexibility to execute our go-forward strategy. With that, I'll turn it over to Keith to discuss the results for the quarter.

Adaire Fox-Martin: Now, before I turn the call over to Keith, I wanted to say that we believe we are in a position of strength financially, from both a balance sheet and from an access to capital perspective. Our investment strategy delivers a strong return on investor capital, all of which gives us the flexibility to execute our go-forward strategy. With that, I'll turn it over to Keith to discuss the results for the quarter.

Speaker Change: Now, before I turn the call over to Keith, I wanted to recognize that we believe we are in a position of strength financially, from both a balance sheet and from an access to capital perspective.

Speaker Change: Our investment strategy delivers a strong return on investor capital.

Keith Taylor: All of which gives us the flexibility to execute our go-forward strategy.

Speaker Change: With that, I'll turn it over to Keith to cover the results from the quarter.

Keith Taylor: Great. Thanks, Adaire.

Keith Taylor: Now, let me first say I look forward to the next phase of the Equinix journey alongside you and know it's going to be a very exciting time for all of us at Equinix. And also, good afternoon to all those that are on the call today or who might be listening later. So to start, we had a great second quarter, but the team continued to execute against our plan. We had record gross bookings, closing more than 4,000 deals with more than 3,000 customers.

Keith Taylor: Now, let me first say I look forward to the next phase of the Equinix journey alongside you and know it's going to be a very exciting time for all of us at Equinix. And also, good afternoon to all those that are on the call today or who might be listening later. So to start, we had a great second quarter as the team continued to execute against our plan. We had record gross bookings, closing more than 4,000 deals with more than 3,000 customers.

Keith Taylor: Great. Thanks, Sudhir.

Keith Taylor: Now let me first say I look forward to the next phase of the Equinix journey alongside you and know it's going to be a very exciting time for all of us at Equinix.

Keith Taylor: And also good afternoon to all those that are on the call today or who might be listening later.

Speaker Change: So to start, we had a great second quarter as the team continued to execute against our plans.

Speaker Change: We had record gross bookings, closing more than 4,000 deals with more than 3,000 customers.

Keith Taylor: We continued our trend of net positive pricing action, and we ended the quarter with solid net bookings. Our forward-looking pipeline remains deep, which we expect will drive momentum in the second half of the year. And we're delivering profitability ahead of our expectations. As a result, we're again raising our full-year adjusted EBITDA and AFFO guidance and, therefore, AFFO per share to our lighthouse metric. Also, as Adaire highlighted, I'm excited about the next phase of our X-scale initiative.

Keith Taylor: We continued our trend of net positive pricing actions, and we ended the quarter with solid net bookings. Our forward-looking pipeline remains deep, which we expect will drive momentum in the second half of the year. And we're delivering profitability ahead of our expectations. As a result, we're again raising our full-year adjusted EBITDA and AFFO guidance and, therefore, AFFO per share to our lighthouse metric. Also, as Adaire highlighted, I'm excited about the next phase of our X-scale initiative.

Speaker Change: We continued our trend of net positive pricing actions.

Speaker Change: And we end the quarter with solid net bookings.

Speaker Change: our forward-looking pipeline remains deep

Speaker Change: which we expect will drive momentum in the second half of the year. And we're delivering profitability ahead of our expectations.

Speaker Change: as a result again raising our fullyear adjusted ebitda ffo guidance and thereforefor iffo per share to our lighthouse metric

Speaker Change: Also, as Adair highlighted, I'm excited about the next phase of our X-scale initiative.

Keith Taylor: We plan to lean into this program as we've seen strong demand for this offering, as evidenced by both our cloud and AI bookings momentum. We continue to believe this off-balance sheet JV structure with our equity partners is the right model to pursue this significant opportunity, which also drives durable value on a per share basis. To date, through the X-Scale JVs, we've invested about $4.7 billion in the program.

Keith Taylor: We plan to lean into this program as we've seen strong demand for this offering, as evidenced by both our cloud and AI bookings momentum. We continue to believe this off-balance sheet JV structure with our equity partners is the right model to pursue this significant opportunity, which also drives durable value on a per share basis. To date, through the X-Scale JBs, we've invested about $4.7 billion in the program.

Adair Fox-Martin: We plan to lean into this program as we have seen strong demand from this offering.

Adair Fox-Martin: for this offering, as evidenced by both our cloud and AI bookings we'll mention.

Speaker Change: We continue to believe this off-balance sheet, JV structure, with our equity partners is the right model to pursue this significant opportunity, which also drives durable value on a per-share basis.

Speaker Change: To date, through the X-Scale JVs, we've invested about $4.7 billion in the program.

Keith Taylor: Since our last earnings call, we leased an incremental 17 megawatts of capacity and a Silicon Valley 12 and Paris 13 asset. This brings our total global ag scale leasing to 365 megawatts, representing nearly $6 billion of total contract value and more than $700 million of annualized revenue once these assets are fully ramped. Looking forward, we have a strong funnel of additional X-scale opportunities, and we look forward to updating you on our future JV partnerships in the near term. For non-financial metrics, MR per cabinet is rising, increasing 7% year over year on a normalized and constant currency basis to $2,287 per cabinet. Driven by favorable pricing environments, solid interconnection attach rates, and increasing power density.

Keith Taylor: Since our last earnings call, we leased an incremental 17 megawatts of capacity and a Silicon Valley 12 and Paris 13 asset. This brings our total global ag scale leasing to 365 megawatts, representing nearly $6 billion of total contract value and more than $700 million of annualized revenue once these assets are fully ramped. Looking forward, we have a strong funnel for additional X-scale opportunities, and we look forward to updating you on our future JV partnerships in the near term. For non-financial metrics, MR per cabinet is rising, increasing 7% year over year on a normalized and constant currency basis to $2,287 per cabinet. Driven by favorable pricing environments, solid interconnection attach rates, and increasing power density.

Speaker Change: since our last earnings call we leased an incremental seventeen megawatts of capacity and a silicon valley twelve and pis thirteen assets

Adair Fox-Martin: This brings our total global ag scale leasing to 365 megawatts.

Adair Fox-Martin: Representing nearly $6 billion of total contract value and more than $700 million of annualized revenue once these assets are fully ramped.

Adair Fox-Martin: Looking forward, we have a strong funnel of additional X-scale opportunities, and we look forward to updating you on our future JV partnerships in the near term.

Speaker Change: For non-financial metrics, MR per cabinet is rising, increasing 7% year-over-year on a normalized and constant currency basis to $2,287 per cabinet.

Adair Fox-Martin: Driven by favorable pricing environments, solid interconnection attach rates, and increasing power densities.

Keith Taylor: As discussed on our last earnings call, as expected, we saw continued pressure on our unadjusted net cabinet spilling metric due to capacity constraints in certain key markets, increasing power density, and timing of churn. SACPAT unexpectedly announced their immediate liquidation in June, resulting in 300 cabinets churning a quarter end, as an example.

Keith Taylor: As discussed on our last earnings call, as expected, we saw continued pressure on our unadjusted net cabinet spending metric due to capacity constraints in certain key markets, increasing power density, and timing of churn. SACPAT unexpectedly announced their immediate liquidation in June, resulting in 300 cabinets churning a quarter-end, as an example.

Adair Fox-Martin: As discussed on our last earnings call, as expected, we saw continued pressure on our unadjusted net cabinet spending metric due to capacity constraints in certain key markets.

Adair Fox-Martin: Increasing Power Density and Timing of Churn.

Adair Fox-Martin: SACPAT unexpectedly announced their immediate liquidation in June , resulting in 300 cabinets churning a quarter-end, as an example.

Keith Taylor: Related to cabinet density, the Q2 cabinets churned were at an average density of 4 kilowatts per cabinet. Meanwhile, the new cabinets booked were at an average density of 5.9 kilowatts per cabinet. In Q2, non-XGIL net megawatts sold increased meaningfully compared to the prior six quarters. As we look forward, given our strong gross bookings, and as a result, the rising backlog of cabinets sold but not yet installed, we expect billable cabinets to improve in the second half of the year.

Keith Taylor: Related to cabinet density, the Q2 cabinets churned were at an average density of 4 kilowatts per cabinet. Meanwhile, the new cabinets booked were at an average density of 5.9 kilowatts per cabinet. In Q2, non-X scale, net megawatts sold increased meaningfully compared to the prior six quarters. As we look forward, given our strong gross bookings, and as a result, the rising backlog of cabinets sold but not yet installed, we expect billable cabinets to improve in the second half of the year.

Adair Fox-Martin: Related to cabinet density, the Q2 cabinets churned were at an average density of 4 kW per cabinet.

Speaker Change: Well, the new cabinets booked were an average density of 5.9 kilowatts per cabinet.

Adair Fox-Martin: In Q2, non-ag scale, net megawatts sold increased meaningfully compared to the prior six quarters.

Adair Fox-Martin: As we look forward, given our strong gross bookings, and as a result, the rising backlog of cabinets sold but not yet installed, we expect billable cabinets to improve in the second half of the year.

Keith Taylor: On the sustainability front, we continue to advance our bold future-first agenda, implementing innovative ways to integrate into the communities in which we operate. This includes new heat export programs across Europe and the United States, including our new Paris 10 IDX, which helps heat a portion of the aquatic center at the Paris Olympics. This is one example of a sustainability initiative that we believe will become commonplace in the markets we serve in the future. Now, let me cover the highlights from the quarter.

Adair Fox-Martin: On the sustainability front, we continue to advance our bold future-first agenda, implementing innovative ways to integrate into the communities in which we operate.

Adair Fox-Martin: This includes new heat export programs across Europe and the Americans, including our new Paris 10 IDX, which helps heat a portion of the Aquatic Center at the Paris Olympics.

Adair Fox-Martin: This is one example of a sustainability initiative that we believe will become commonplace in the markets we serve in the future.

Keith Taylor: Note that all growth rates in this section are on a normalized and constant currency basis. I've shown on slide 4, Global Q2 revenues were $2.159 billion, up 8% over the same quarter last year, and in the upper half of our guidance range on a constant currency basis, including the impact of a one-off charge against recurring revenues. Non-recurring revenue stepped up sequentially due to strong ex-field leasing activity in the quarter.

Speaker Change: Now let me cover the highlights from the quarter. Note that all growth rates in this section are on normalized and constant currency basis.

Adair Fox-Martin: As depicted on slide 4, Global Q2 revenues were $2.159 billion, up 8% over the same quarter last year, and in the upper half of our guidance range on a constant currency basis, including the impact of a one-off charge against recurring revenues.

Adair Fox-Martin: I've expected non-recurring revenue stepped up sequentially due to strong XCO leasing activity in the quarter.

Keith Taylor: Q2 revenues net of our FX hedges included a $6 million headwind when compared to our prior guidance rates due to the weaker Brazilian Real and the Japanese Yen in the quarter. Global Q2 adjusted EBITDA was $1.036 billion, or 48% of revenues, up 17% over the same quarter last year and above the $1 billion quarterly threshold for the very first time. Relative to our expectations, just to be clear, just to be the guy was at the top end of our guidance range due to strong operating profits and timing of spend. In Q2, just to add insult to injury, none of our FX hedges included a $3 million FX head when compared to our prior guidance rates and $4 million of integration costs.

Adair Fox-Martin: Q2 revenues net of our FX hedges included a $6 million headwind when compared to our prior guidance rates due to the weaker Brazilian Real and the Japanese Yen in the quarter.

Operator: All lines will be able to listen only until we open for questions.

Operator: Also, today's conference is being recorded. If anyone has objections, please disconnect at this time.

Adair Fox-Martin: Global Q2 adjusted EBITDA was $1.036 billion or 48% of revenues, up 17% over the same quarter last year, and above the $1 billion quarterly threshold for the very first time.

Chip Newcom: I would now like to turn the call over to Chip Newcompt, Senior Vice, Senior Director of Investor Relations. Thank you, you may begin.

Keith Taylor: I was at the top end of our guidance range due to strong operating profits and timing of spend. In Q2, just to hammer it home, none of our FX hedges included a $3 million FX headwind when compared to our prior guidance rates and $4 million of integration costs. Global Q2 AFFO was $877 million, up 17% over the same quarter last year, better than our expectations due to strong operating performance and the timing of the land lease payment related to our upcoming Singapore 6 bill. Q2 AFFO included a $3 million FX headwind when compared to our prior guidance rate. Global Q2 MR churn was 2.3%.

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

Adair Fox-Martin: Relative to our expectations, adjusted EBITDA was at the top end of our guidance range due to strong operating profits and timing of spend.

Speaker Change: Q2, just to deep it up, none of our FX hedges included a $3 million FX head when compared to our prior guidance rates and $4 million of integration costs.

Keith Taylor: Global Q2 AFFO was $877 million, up 17% over the same quarter last year, better than our expectations due to strong operating performance and the timing of the land lease payment related to our upcoming Singapore 6 Bill. Q2 AFFO included a $3 million FX headwind when compared to our prior guidance rate. Global Q2 MR churn was 2.3%.

Speaker Change: Global Q2 AFFO was $877 million, up 17% over the same quarter last year, better than our expectations due to strong operating performance and the timing of the land lease payment related to our upcoming Singapore VI build.

Unknown Executive: 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 regulation fair disclosure, it is Equinix's policy not to comment on its financial guidance during the quarter unless it's done to an explicit public disclosure. In addition, we'll provide non-GAT measures on today's conference call. We provide a reconciliation of those measures to the most directly comparable GAT 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 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 webpage from time to time and encourage you to check our website regularly for the most current available information.

Adair Fox-Martin: Q2 AFFO included a $3 million FX headwind when compared to our prior guidance rates.

Keith Taylor: For the balance of the year, we expect MR churn to remain in the 2 to 2.5% quarterly guidance range. Turning to our regional highlights, the results of which are covered on slides five through seven. On a year-over-year normalized basis, APAC was our fastest growing region at 11%, followed by the Americas and EMEA regions growing at 9% and 5%, respectively. The Americas region had a great quarter with record gross bookings, led by strong financial services activity, firm pricing, and a higher mix of medium and large footprint deals.

Keith Taylor: For the balance of the year, we expect MR churn to remain in the 2 to 2.5% quarterly guidance range. Turning to our regional highlights, the results of which are covered on slides five through seven. On a year-over-year normalized basis, APAC was our fastest-growing region at 11%, followed by the Americas and EMEA regions growing at 9% and 5%, respectively. The Americas region had a great quarter with record gross bookings, led by strong financial services activity, firm pricing, and a higher mix of medium and large footprint deals.

Adair Fox-Martin: Global Q2 MR churn was 2.3%. For the balance of the year, we expect MR churn to remain in the 2 to 2.5% quarterly guidance range.

Adair Fox-Martin: Turning to our regional highlights, the results, which are covered on slides five through seven.

Adair Fox-Martin: On a year-over-year normalized basis, APAC was our fastest growing region at 11%, followed by the Americas and India regions growing at 9% and 5% respectively.

Keith Taylor: We saw particular strength in our tier one markets, including Dallas, New York, and Washington, D.C. Our EMEA business delivered a solid quarter with healthy bookings activity and strong pricing. The team did an excellent job selling our global platform with record exports and strong intra-region activity, including into our growth and emerging markets such as Abu Dhabi, Istanbul, and Warsaw. And finally, the Asia-Pacific region had a strong quarter with momentum in our largest markets in the region, including Hong Kong, Singapore, and Tokyo, as well as strong customer interest in our new ASEAN metros. Additionally, we saw strong intra-region activity driven by customers deploying AI workloads in both Japan and Malaysia.

Adair Fox-Martin: The Americas region had a great quarter with record gross bookings led by strong financial services activity, firm pricing, and a higher mix of medium and large footprint deals. We saw particular strength in our Tier 1 markets including Dallas, New York, Washington, D.C.

Adair Fox-Martin: Our EMEA business delivered a solid quarter with healthy bookings activity and strong pricing.

Chip Newcom: With us today are Adair Fox Martin, Equinix's CEO and President and Keith Taylor, Chief Financial Officer. Following our prepared remarks, we will be taking questions from self-hide analysts.

Adair Fox-Martin: The team did an excellent job selling our global platform with record exports and strong intra-region activity, including into our growth and emerging markets such as Abu Dhabi, Istanbul and Warsaw.

Unknown Executive: 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.

Adair Fox-Martin: And finally, the Asia Pacific region had a strong quarter with momentum in our largest markets in the region, including Hong Kong, Singapore and Tokyo, as well as strong customer interest in our new ASEAN metros.

Chip Newcom: At this time, I'll turn it over to Adair. Thank you, Chip.

Adaire Fox: Good afternoon and welcome to our second quarter, Arning's call. I'm honored to be hosting my first Arning's call today as CEO and President of Equinix. I'm immensely proud to lead our dedicated team of more than 13,000 employees around the world. I would like to express my gratitude to Charles and the entire Equinix team for the warm welcome and the facilitation of a smooth transition over the past two months. I look forward to the continued partnership with Charles in his role as Executive Chairman and I'm excited and optimistic about the road ahead.

Adair Fox-Martin: Encouragingly, we saw strong intra-region activity driven by customers deploying AI workloads in both Japan and Malaysia.

Keith Taylor: And now, looking at our capital structure, please refer to slide 8. Our balance sheet increased to approximately $33 billion, including an unrestricted cash balance of $2 billion. Our cash balance increased quarter-over-quarter due to strong operating cash flow and the debt raised in the quarter, offset by our growth investments and the cash dividend. In May, we raised $750 million of senior U.S. dollar notes due in 2034, and we immediately swapped these notes into euros at an effective interest rate of 3.9%. Our net leverage remains low relative to our peers at 3.5 times our annualized adjusted EBITDA. Moreover, our blended debt borrowing rate is now 2.4%, the lowest in our industry.

Keith Taylor: And now, looking at our capital structure, please refer to slide 8. Our balance sheet increased to approximately $33 billion, including an unrestricted cash balance of $2 billion. Our cash balance increased quarter-over-quarter due to strong operating cash flow and the debt raised in the quarter, offset by our growth investment and the cash dividend. In May, we raised $750 million of senior U.S. dollar notes due in 2034, and we immediately swapped these notes into euros at an effective interest rate of 3.9%. Our net leverage remains low relative to our peers at 3.5 times our annualized adjusted EBITDA. Moreover, our blended debt borrowing rate is now 2.4%, the lowest in our industry.

Speaker Change: And now looking at our capital structure, please refer to slide 8.

Adair Fox-Martin: A balance sheet increase to approximately $33 billion, including an unrestricted cash balance of $2 billion.

Adair Fox-Martin: Our cash balance increased quarter-over-quarter due to strong operating cash flow and the debt raised in the quarter offset by our growth investments and the cash dividend.

Adair Fox-Martin: In May, we raised $750 million of senior U.S. dollar notes due in 2034, and we immediately swapped these notes into euros at an effective interest rate of 3.9 percent.

Adaire Fox: As a board member for the past four years, I witnessed many of the unique qualities that have driven Equinix's durable success. Our 25 years of investment has built a business now spanning 264 data centers in 72 metros across six continents. Our focus on customer value and outcomes has created interconnected digital ecosystems unrivaled in our industry. It is a phenomenal foundation to build upon as CEO. As the stewards of some of the most important digital infrastructure in the world, we are exceptionally and uniquely positioned to capitalize on the immense opportunities that lie ahead.

Adair Fox-Martin: Our net leverage remains low relative to our peers at 3.5 times our annualized adjusted EBITDA.

Adair Fox-Martin: Our blended debt borrowing rate is now 2.4%, the lowest in our industry.

Keith Taylor: As noted previously, given the global nature of our business, we plan to opportunistically raise additional debt capital in low-rate markets where we intend to expand, creating both incremental debt capital to fund our growth but also placing a natural hedge in these markets. Turning to slide nine of the quarter, capital expenditures were $648 million, including a recurring capex of $45 million. We continue to invest across our platform with 54 major projects currently underway in 36 markets in 24 countries, including 15 X-scale projects.

Keith Taylor: As noted previously, given the global nature of our business, we plan to opportunistically raise additional debt capital in low-rate markets where we intend to expand, creating both incremental debt capital to fund our growth but also placing a natural hedge in these markets. Turning to slide 9 of the quarter, capital expenditures were $648 million, including a recurring capex of $45 million. We continue to invest across our platform with 54 major projects currently underway in 36 markets in 24 countries, including 15 X-scale projects.

Adair Fox-Martin: As noted previously, given the global nature of our business, we plan to opportunistically raise additional debt capital in low-rate markets where we intend to expand, creating both incremental debt capital to fund our growth.

Adair Fox-Martin: but also placing a natural hedge into these markets.

Adair Fox-Martin: Turning to slide 9 of the quarter, capital expenditures were $648 million, including a recurring capex of $45 million.

Adaire Fox: Business transformation remains a critical priority for our customers, and the emergence of AI marks a pivotal point for our industry. AI, similar to the growth of cloud technologies a decade ago, will take time to fully develop. In the near term, AI training workloads are driving significant demand, particularly from service providers. Our ex-scale program continues to be a direct beneficiary of this demand. We intend to build on this momentum, meaningfully augmenting and extending our ex-scale portfolio, particularly in North America.

Adair Fox-Martin: We continue to invest across our platform, with 54 major projects currently underway in 36 markets in 24 countries, including 15 eggscale projects.

Keith Taylor: Since our last earnings call, we opened 10 projects across eight metros, including new data centers in Johor, Osaka, Silicon Valley, and Warsaw. We also purchased our Helsinki 5 and Madrid 2 assets and land for development in Atlanta, Dallas, and Milan.

Keith Taylor: Since our last earnings call, we opened 10 projects across eight metros, including new data centers in Johor, Osaka, Silicon Valley, and Warsaw. We also purchased our Helsinki Five and Madrid Two assets and land for development in Atlanta, Dallas, and Milan.

Adair Fox-Martin: Since our last earnings call, we opened 10 projects across 8 metros, including new data centers in Johor, Osaka, Silicon Valley, and Warsaw.

Adair Fox-Martin: We also purchased our Helsinki 5 and Madrid 2 assets and land for development in Atlanta, Dallas, and Milan.

Keith Taylor: Revenues from owned assets increased to 69% of our recurring revenues, and more than 80% of our current retail expansion will be on our own land or in our own buildings with long-term ground leases. Our capital investments deliver strong returns, as shown on slide 10. 180 stabilized assets increased recurring revenues by 4% year over year on a constant currency basis. Stabilized assets were collectively 83% utilized and generated a 26% cash-on-cash return on the gross PPP invested.

Keith Taylor: Revenues from owned assets increased to 69% of our recurring revenues, and more than 80% of our current retail expansion will be on our own land or in our own buildings with long-term ground leases. Our capital investments deliver strong returns, as shown on slide 10. 180 stabilized assets increased recurring revenues by 4% year-over-year on a cost and currency basis. Stabilized assets were collectively 83% utilized and generated a 26% cash-on-cash return on the gross PPE invested.

Adair Fox-Martin: Revenues from owned assets increased at 69% of our recurring revenues, and more than 80% of our current retail expansion will be on our own land or own buildings with long-term ground leases.

Adaire Fox: This will complement our robust portfolio across Europe and Asia Pacific. We are excited to share that we recently closed on land and power for our first multi-hundred megawatt ex-scale campus in Atlanta. We look forward to announcing details of this project and our next ex-scale joint venture in the coming months. At the operational end of the AI spectrum, our network nodes and inference workloads. As with cloud, Equinix continues to be the preferred location for network nodes as customers seek the right connectivity solutions for data ingestion and distribution.

Adair Fox-Martin: Our capital investments deliver strong returns as shown on slide 10.

Adair Fox-Martin: 180 stabilized assets increased recurring revenues by 4% year-over-year on a cost-in-currency basis.

Adair Fox-Martin: Stabilized assets were collectively 83% utilized and generated a 26% cash-on-cash return on the gross PPE invested.

Keith Taylor: And finally, please refer to slides 11 through 15 for our updated summary of 2024 guidance and bridges. Do note all growth rates are on a normalized and constant currency basis. For the full year 2024, we're maintaining our underlying revenue outlook with expected top line growth of 7 to 8%. This reflects our solid execution in the first half of the year and a strong pipeline to drive momentum in the second half of the year.

Adair Fox-Martin: And finally, please refer to slides 11 through 15 for our updated summary of 2024 guidance and bridges.

Adair Fox-Martin: Do note all growth rates are on a normalized and constant currency basis.

Adair Fox-Martin: For the full year 2024, we're maintaining our underlying revenue outlook with expected top line growth of 7-8%. This reflects our solid execution in the first half of the year and a strong pipeline to drive momentum in the second half of the year.

Adaire Fox: We also see inference demand beginning to take shape. We believe the implementation and deployment of these workloads will accelerate over the coming years. The neutrality, global reach and scale of platform Equinix can deliver the performance, network density and cloud adjacency which inference workloads will require. We are already seeing significant enterprise and service provider interest in our deployment capabilities. In Q2, we partners with WWT to serve al-Movic technologies, an AI-powered marketing analytics platform for enterprise.

Keith Taylor: We're raising our underlying 2024 adjusted EBITDA guidance by another $15 million due to strong operating performance and lower integration costs. We're also raising our underlying 2024 AFFO guidance by $15 million, an 11 to 13% increase over the previous year. FFO per share is expected to grow between nine and 11% at or above the top end of our long-term plan as we continue to compound value for our shareholders. And finally, 2024 CapEx is expected to range between $2.8 and $3.1 billion, including about $240 million of recurring CapEx. So let me stop here; I will turn the call back to Adaire.

Keith Taylor: We're raising our underlying 2024 adjusted EBITDA guidance by another $15 million due to strong operating performance and lower integration costs. We're also raising our underlying 2024 AFFO guidance by $15 million, an 11 to 13% increase over the previous year. FFO for shares is expected to grow between nine and 11% at or above the top end of our long-term plan as we continue to compound value for our shareholders. And finally, 2024 CapEx is expected to range between $2.8 and $3.1 billion, including about $240 million of recurring CapEx. So let me stop here; I will turn the call back to Adaire.

Adair Fox-Martin: We're raising our underlying 2024 adjusted EBITDA guidance by another $15 million due to strong operating performance and lower integration costs.

Adair Fox-Martin: We're raising our underlying 2024 AFFO guidance by $15 million, an 11% to 13% increase over the previous year.

Adair Fox-Martin: AFFO for shares is expected to grow between 9 and 11% at or above the top end of our long-term plan as we continue to compound value for our shareholders.

Adair Fox-Martin: And finally, 2024 CapEx is expected to range between $2.8 and $3.1 billion, including about $240 million of recurring CapEx.

Adaire Fox: Al-Movic technologies deployed their AI infrastructure at Equinix to run proprietary inference algorithms on massive data sets for predictable cost, privacy, speed and secure access to data resources in the cloud. Institute, a leading provider of AI decision-making solutions to exploit and video AI cluster at our Paris 10 asset to access key ecosystems, optimize their network and support their growth objectives. Our approach to the market opportunity created by AI is multifaceted and we believe it will deliver value in the short term and sustainable growth over the medium to long-term.

Adair Fox-Martin: So let me stop here, I will turn the call back to Adair.

Adaire Fox-Martin: In closing, we had a strong first half of 2024. We stand apart from our competitors by seamlessly integrating a global footprint with cutting-edge infrastructure. This allows us to effectively address a wide range of opportunities in the era of AI, from the training needs of service providers to the business needs of our enterprise customers. It also positions us to continue to effectively address a broader set of demands of our customer base.

Adair Fox-Martin: Thank you, Keith.

Adair Fox-Martin: In closing, we had a strong first half of 2024.

Speaker Change: We stand apart from our competitors by seamlessly integrating a global footprint with cutting-edge infrastructure.

Adair Fox-Martin: This allows us to effectively address a wide range of opportunities in the era of AI, from the training needs of the service providers to the business needs of our enterprise customers.

Adair Fox-Martin: It also positions us to continue to effectively address the broader set of demands of our customer base.

Adaire Fox-Martin: We believe our unwavering commitment to discipline, simplicity, and focus, combined with our amplified go-to-market efforts, will continue to drive growth and deliver higher value for our employees, customers, partners, and shareholders. With that, I'll stop here and open it up to questions.

Adair Fox-Martin: We believe our unwavering commitment to discipline, simplicity and focus.

Adaire Fox: Our Excel offering provides the infrastructure and expertise required for massive scalable data center operations for our cloud and large-scale technology customers. For our enterprise and mid-marker customers, we offer AI-ready data centers and guarantee solutions, enabling them to scale efficiently and effectively as they introduce AI technologies into their business operations. For those who require high performance inferencing, our edge solutions handle the days that at the edge where it is generated, ensuring optimal performance for the next generation of business applications.

Adair Fox-Martin: Combined with our amplified go-to-market efforts, we'll continue to drive growth and deliver higher value for our employees, customers, partners, and shareholders.

Speaker Change: With that, I'll stop here and open it up to questions.

Operator: Thank you. We would now like to open the phone lines for questions. If you would like to ask a question, you may press star 1 on your phone. If you would like to withdraw your question, you may press star 2. Our first question comes from Simon Flannery from Morgan Stanley. Please go ahead.

Unknown Executive: Thank you. We would now like to open the phone lines for questions. If you would like to ask a question, you may press star 1 on your phone. If you would like to withdraw your question, you may press star 2. Our first question comes from Simon Flannery from Morgan Stanley. Please go ahead.

Speaker Change: Thank you. We would now like to open the phone lines for questions. If you would like to ask a question, you may press star 1 on your phone. If you would like to withdraw your question, you may press star 2. Our first question comes from Simon Flannery from Morgan Stanley . Please go ahead.

Simon Flannery: All right, thank you. Good evening.

Simon Flannery: All right. Thank you. Good evening. Derek, congratulations on the new position and thank you for the comments on.

Adaire Fox-Martin: Adaire, congratulations on the new position, and thank you for the comments on your listening tour and where you see the opportunities. I'd love to get your high-level perspective on what led you to take the role at Equinix. Obviously, you'd known them from the board, but you came from Google, and you worked at SAP before that, so you've got a great perspective on the cloud needs of the hyperscalers, and the AI opportunities. So it would be great if you could just put all of that into context on where you see Equinix being positioned for the training, but particularly for the inference wave of AI. Thank you. Thank you very much for the questions.

Speaker Change: You're listening to her and where you see the opportunities.

Adaire Fox: Over the past two months, I have embarked on a listening tour across a number of our locations, meeting with our customers, partners, and employees. And once it is still early in my tenure, and there is still work that I need to complete, I have noted some areas of opportunity that will underpin our strategy for the company going forward. The opportunity to simplify across numerous aspects of our business. This will allow us to accelerate our pace of execution.

Simon Flannery: I'd love to get your high-level perspective on what...

Simon Flannery: led you to take the role at Equinix. Obviously, you'd known them from the board, but...

Speaker Change: You came from Google, you'd worked at SAP before that, so you've got a great perspective on the cloud needs of the hyperscalers, the AI opportunities. So, it'd be great if you could just put all of that into context on where you see Equinix being positioned.

Adair Fox-Martin: for the training, but particularly for the inference wave of AI. Thank you.

Simon Flannery: Thanks very much for the question, Simon, and thank you for the kind words.

Speaker Change: Thanks very much for the questions, Simon, and thank you for the kind words.

Adaire Fox: The opportunity to drive more focus. Once we made a less, the programs of work that we focus on will represent excellence and execution and deliver the highest quality outcomes. The opportunity to amplify our go-to-market efforts to delight our customers and energize our partners. Equinix has consistently demonstrated discipline and execution. This mantra of discipline allows us to deliver market leading returns on capital and serves as the underlying fuel for long-term growth in AFFO per share, our core financial metric.

Adair Fox-Martin: It's certainly been a whirlwind of 10 weeks.

Adaire Fox: Building on this foundation and executing on the opportunities I noted should create a simpler, more focused, and ultimately higher valued company.

Adair Fox-Martin: You know, since I formally took the position.

Adair Fox-Martin: and a lot that I've heard and understood during the listening and learning sessions.

Adair Fox-Martin: I have to say I remain exceptionally positive about the opportunity ahead. One of the reasons, or one of the main reasons, or one of the many reasons actually why

Adaire Fox-Martin: It's certainly been a whirlwind of 10 weeks since I formally took the position, and there are a lot that I've heard and understood during the listening and learning sessions. I have to say I remain exceptionally positive about the opportunity ahead. One of the reasons, or one of the main reasons, or one of the many reasons, actually why I took the role with Equinix is obviously understanding the strategy of the company and its unique position in the ecosystem.

Adair Fox-Martin: I took the role with Equinix.

Adair Fox-Martin: is obviously understanding the strategy of the company and its unique position in the ecosystem.

Adaire Fox-Martin: I believe that Equinix is uniquely positioned to offer a range of enabling services for our customers so that they can actually capitalize on the opportunities presented by various different technology platforms. But when I think about our demands and customers' needs, it is actually much broader than the AI portfolio. Many of our customers have made a very significant commitment to hybrid and to multi-cloud. And as customers become more at ease with cloud as a technology paradigm, we can see many more workload-based decisions beginning to occur.

Adair Fox-Martin: I believe that Equinix is uniquely positioned.

Adair Fox-Martin: to offer a range of enabling services for our customers so that they can actually capitalise on the opportunities presented by various different technology platforms.

Adaire Fox: With all of this in mind, I'll turn to our YouTube performance. Equinix had a great second quarter. We delivered record growth bookings. Our pricing remains strong. We continue to invest broadly across our offerings to further enhance the scale and reach of our industry leading platform. Our delivery of adjusted EBITDA and AFFO per share continues to run ahead of expectations. As you can see on slide three, Q2 revenues were 2.2 billion up 8 percent over the same quarter last year.

Adair Fox-Martin: When I think about our demands and the customer needs...

Adair Fox-Martin: It is actually much broader than the AI portfolio.

Adair Fox-Martin: Many of our customers have made a very significant commitment to hybrid and to multi-cloud.

Adair Fox-Martin: As customers become more at ease with cloud as a technology paradigm, we can see many more workload-based decisions beginning to occur, so decisions about where particular workloads are best suited.

Adaire Fox-Martin: So decisions about where particular workloads are best suited. And as I look at this in the context of AI and AI demand, that initial short-term demand is coming indeed from the service providers. And this is reflected in our x scale business and in the bookings performance that we've seen in the x scale business. And as you heard in our remarks, this is something that we're looking to expand globally.

Adaire Fox-Martin: So decisions about where particular workloads are best suited. As I look at this in the context of AI and AI demand, that initial short-term demand is indeed coming from service providers. And this is reflected in our x-scale business and in the bookings performance that we've seen in the x-scale business. And as you heard in our remarks, this is something that we're looking to expand globally. But many CIOs, like during the early days of cloud computing, are looking to ensure that they have an AI strategy.

Adair Fox-Martin: As I look at this in the context of AI and the AI demand, that initial short-term demand is coming indeed from the service providers.

Adaire Fox: This represents our 86th consecutive quarter of top line growth. Adjusted EBITDA was up 70 percent year over year with strong AFFO per share flow through. Interconnection revenues stepped up to 9 percent year over year. These growth rates are all on a normalized and constant currency basis. In May, we announced the opening of our first data center in Jermore with strong interest from customers across our new Malaysian footprint. In July, we announced our expansion into the Philippines through the planned acquisition of three data centers in Manila from total information management.

Adair Fox-Martin: And this is reflected in our X-scale business and in the bookings performance that we've seen in the X-scale business. And as you heard in our remarks, this is something that we're looking to expand globally.

Adaire Fox-Martin: But many CIOs, like during the early days of cloud, are looking to ensure that they have an AI strategy. And we are beginning to see the beginnings of enterprise training and the enterprise funnel, as we look at customers looking to evolve their strategy into proof of concepts and beyond that into working production systems. As I said, I think retail will have much broader demand and a more meaningful long-term upside from AI as these use cases move from proof-of-concepts into production.

Adaire Fox-Martin: And we are beginning to see the beginnings of enterprise training and the enterprise funnel, as we look at customers looking to evolve their strategy into proofs of concepts and beyond that into working production systems. As I said, I think retail will have much broader demand and a more meaningful long-term upside from AI as these use cases move from proof-of-concepts into production. There is, of course, a lot that Equinix is offering to our customers here, both in our retail business and, of course, on the X-scale side of the house.

Adair Fox-Martin: But many CIOs, like during the early days of cloud, are looking to ensure that they have an AI strategy.

Adair Fox-Martin: And we are beginning to see the beginnings of enterprise training and enterprise funnel as we look at customers looking to evolve their strategy into proof of concepts and beyond that into working production systems.

Adaire Fox: This transaction, valued at approximately 180 million, is expected to close in the fourth quarter of 2024, adding more than 1000 cabinets of capacity in addition to land for future development. The combination of our strong leadership position in our Singapore hub and our entry into Malaysia, Indonesia and the Philippines, strategically positioned Equinix to help our customers capitalize on the expanding digital opportunity in the fast growing Southeast Asia region. Customers taking advantage of our expanding expanding global footprint include first digital and internet and telecommunications provider.

Adair Fox-Martin: As I said, I think retail will have a much broader demand and a more meaningful long-term upside from AI as these use cases move from proof-of-concepts into production.

Adaire Fox-Martin: There is, of course, a lot that Equinix is offering to our customers here, both in our retail business and, of course, on the X-scale side of the house. And I think this unique, balanced approach to the opportunity, presented in the broader demand context but also in the era of cloud AI, is something that's extremely exciting, and I'm looking forward to leading the company on this journey.

Speaker Change: There is, of course, a lot that Equinix is offering to our customers here, both, you know, in our retail business and, of course, on the X-scale side of the house.

Adaire Fox-Martin: And I think this unique, balanced approach to the opportunity, presented in the broader demand context but also in the era of cloud AI, is something that's extremely exciting, and I'm looking forward to leading the company on this journey.

Speaker Change: And I think this unique, balanced approach to the opportunity, represented in the broader demand context, but also in the era of CloudAI, is something that's extremely exciting, and I'm looking forward to leading the company through this journey.

Adaire Fox: First digital is significantly lowering total cost of ownership by building a multi cloud network with Equinix fabric cloud router to connect to Cisco WebX and AWS across all three regions. Our global interconnection franchise continues to perform with over 472,000 total interconnections now deployed. Growth interconnection additions were at the highest level in two years and pricing continues to trend favorably. However, net interconnection ads were 3,900 due to grooming activity primarily in our content and networking verticals.

Speaker Change: Great, thanks for your thoughts.

Nick Del Deo: Next, we'll go to the line of Nick Del Deo from Moffitt Nathanson. Please go ahead.

Speaker Change: Thank you, Simon.

Speaker Change: Next we'll go to the line of Nick Del Deo from Moffett Nathanson. Please go ahead.

Nick Del Deo: Oh, hey, afternoon. Again, congratulations, Adaire, on taking the helm. Adaire, you had mentioned simplification, focus, and amplifying go-to-market as some of the areas that seemed interesting to you initially. I guess, can you expand a little bit on what you saw and things we might see on that front in the coming years?

Speaker Change: Oh, hey, afternoon. Again, congratulations there on taking the helm.

Speaker Change: You had mentioned simplification, focus, and amplifying go-to-market as some of the areas that seemed interesting to you initially. Can you expand a little bit on what you saw and things you might see on that front in the coming years? Thank you.

Adaire Fox-Martin: For sure. Thank you very much again for the congratulations, Nick.

Speaker Change: For sure. Thank you very much again for the congrats, Nick. I appreciate that.

Nick Del Deo: I appreciate that. First of all, when I look at the overall approach that I will take, it is about creating value. And it will always have a customer lens, an outside-in perspective, ensuring that customer success translates and is equal to Equinix success in many regards. When I look at this, it means looking at how we continue to evolve the product portfolio, how we continue to drive critical partnerships so that we're at the center of the digital ecosystem, and how we continue to enhance and evolve our go-to-market engine. Let me specifically pick up on the notion of simplification.

Adaire Fox-Martin: I appreciate that. First of all, when I look at the overall approach that I will take, it is about creating value. And it will always have a customer lens, an outside-in perspective, ensuring that customer success translates and is equal to Equinix success in many regards. When I look at this, it means looking at how we continue to evolve the product portfolio, how we continue to drive critical partnerships so that we're at the center of the digital ecosystem, and how we continue to enhance and evolve our go-to-market engine. Let me specifically pick up on the notion of simplification.

Speaker Change: First of all, when I look at the overall approach that I will take, it is about creating value.

Adaire Fox: We do expect this grooming to lessen over time. Equinix fabric growth was underpinned by 100 gigabits poor traditions and strong pull through from other digital services products. Network edge experience continued rapid growth with an expansion activity from existing customers. Key recent interconnection and ecosystem wins include new exchange. This is a new company formed after the integration of the Santiago, Lima and Columbia stock exchanges. Capital market participants can now benefit from new extended reach low latency and secure connectivity supported by Equinix and key markets like New York and Sao Paulo.

Speaker Change: And it will always have a customer lens, an outside-in perspective, ensuring that customer success translates and is equal to Equinix success in many regards.

Speaker Change: When I look at this, this means looking at how we continue to evolve the product portfolio, how we continue to drive critical partnerships so that we're at the center of the digital ecosystem, and how we continue to enhance and evolve our go-to-market engine.

Adaire Fox-Martin: When you simplify, you bring core processes back to their very core. This enables you to be agile in your response and helps you to accelerate the underpinning pace of the business. And whilst this list is not exhaustive, there are definitely a few areas that I see we have some opportunity to continue to involve and simplify. Things like our quote-to-cash process, elements like our customer lifecycle, and ways that we can systematize and process the customer's journey with us throughout their lifecycle. These types of enterprise-grade processes will help us remove friction within the system and help deliver that pace, agility, and simplicity.

Speaker Change: Let me specifically pick up on the notion of simplification.

Speaker Change: When one simplifies, you bring core processes back to their very core. This enables you to be agile in your response and helps you to accelerate the underpinning pace of the business.

Adaire Fox: Our channel program delivered another solid quarter accounting for over 30% of new bookings and 55% of company new logos. We continue to see growth from partners like AT&T, Avant, Dell, HPE and Orange Business with wins across a wide range of industry segments and use cases. Notable wins included an AI as a service solution via our distribution partner tech data and MSP partner Asia pack. Leveraging a combination of co-location and Equinix fabric, our partners are delivering an LLM for a high level learning institution based in Malaysia.

Adair Fox-Martin: And whilst this list is not exhaustive, there are definitely a few areas that I see we have some opportunity to continue to involve in Simplify.

Adair Fox-Martin: Things like our quote-to-cash process.

Adair Fox-Martin: Elements like our customer life cycle and ways that we can systematize and process the customer's journey with us.

Adair Fox-Martin: These type of enterprise-grade processes will help us remove friction within the system and help deliver that pace, agility, and simplicity.

Adaire Fox-Martin: When I look at it from a focus point of view, it is about understanding not just the footprint that's in our core but how we continue to grow and evolve our core business to meet the needs of our customers. And this is both in our X-scale business but also in retail, where we look at how our global footprint enables customers to operate and transact in environments where they may not need to invest in the physical infrastructure themselves to do that.

Adair Fox-Martin: When I look at it from a focus point of view, it is about understanding not just the footprint that's in our core, but how we continue to grow and evolve our core business.

Adaire Fox: Now, before I turn the call over to Keith, I wanted to recognize that we believe we are in a position of strength financially from both a balance sheet and from an access to capital perspective.

Adair Fox-Martin: ...to meet the needs of our customers. This is both in our X-scale business, but also on retail, where we look at how our global footprint enables customers to operate and transact in environments where they may not need to invest in the physical infrastructure themselves to do that.

Adaire Fox: Our investment strategy delivers a strong return on investor capital, all of which gives us the flexibility to execute our go-forward strategy.

Adaire Fox-Martin: I also think that focus is an important point when we consider our digital services portfolio and look at this through the lens of where we have adjacency and augmenting some of that core functionality that we have that exists in the core footprint of the Equinix data center world. This is a point where we have the right to win, and customers would expect us to lead. And so, for instance, I look at the underpinning growth in our fabric business and how important that can be as we look to continue to evolve our virtual interconnections portfolio.

Adair Fox-Martin: I also think that focus is an important point when we consider our digital services portfolio and look at this through the lens of where we have adjacency and augmenting some of that core functionality that we have that exists in the core footprint of the Equinix data center world.

Keith Taylor: With that, I'll turn it over to Keith to cover the results from the quarter. Great, thanks Adaire.

Keith Taylor: Now let me first say I look forth the next phase of the ethnic journey alongside you and know it's going to be a very exciting time for all of us at Equinix. And also good afternoon to all those that are on the call today or who might be listening later. So to start, we had a great second quarter, but the team continued to execute against our plans. We had record growth bookings, closing more than 4,000 deals with more than 3,000 countries.

Adair Fox-Martin: This is a point where we have the right to win, where customers would expect us to lead.

Adair Fox-Martin: And so, for instance, I look at the underpinning growth in our fabric business.

Adair Fox-Martin: How important that can be as we look to continue to evolve our virtual interconnections portfolio.

Adaire Fox-Martin: And this enables us to focus on perhaps certain aspects of our product portfolio in order to ensure that we're investing where we can have the highest level of returns. And then on the go-to-market side, we have new leadership in our go-to-market team. I think it's a very important aspect of our business to underpin our go-to-market processes with a very clear segmentation strategy that allows us to identify those customers that have, you know, the highest revenue potential for us and, you know, to manage those customers in a high-touch environment, but likewise, to enable us to extend our reach through channels and distribution effectively to customers who are, you know, in an SME, more general business type Thank you for the question, Nick.

Adair Fox-Martin: This enables us to focus in perhaps on certain aspects of our product portfolio in order to ensure that we're investing where we can have the highest level of returns.

Keith Taylor: We continued our trend of net positive pricing actions. And we ended the quarter quarter with solid net bookings. Our poor looking pipeline remained deep, which we expect will drive momentum in the second half of the year. And we're delivering profitability ahead of our expectations. As a result, we're again raising our full year of just a debauch an AFFO guidance and therefore AFFO for share to our lighthouse metric.

Adair Fox-Martin: And then on our go-to-market side, we have new leadership in our go-to-market team. I think it's a very important aspect of our business to underpin our go-to-market processes.

Adair Fox-Martin: with a very clear segmentation strategy that allows us to identify those customers that have the highest revenue perspective for us.

Keith Taylor: Also, as Adair highlighted, I'm excited about the next phase of our ex-scale initiative. We plan to lean into this program as we've seen strong demand from this offering for this offering as evidenced by both our cloud and AI booking momentum. We continue to believe this off balance sheet JV structure with our equity partners is the right model to pursue this significant opportunity, which also drives durable value on a per share basis.

Adair Fox-Martin: and to manage those customers in a high-touch environment, but likewise to enable us to extend our reach through channels and distribution effectively to customers who are in an SME, more general business type space.

Adair Fox-Martin: So I hope that's given you a little bit of amplification on simplicity, focus, and the actual augmentation of our go-to-market. Thank you for the question, Nick.

Nick Del Deo: Yeah, that was a terrific detail. Thank you.

Keith Taylor: To date through the ex-scale JVs, we've invested about 4.7 billion in the program. Since our last earnings call, we released an incremental 17 megawatts of capacity and a Silicon Valley 12 and Paris 13 assets. This brings our total global ex-scale leasing to 365 megawatts, representing nearly 6 billion of total contract value and more than 700 million of annualized revenue.

Nick Del Deo: Can I follow up with one on interconnection ads? Obviously, they dropped quite a bit sequentially. I think you called out optimization and grooming and content and networking as drivers of that, but you also noted strong ads. Maybe you could expand a little bit on those puts and takes and how we should think about the path to getting interconnection ads back to a healthier and more sustainable level? Yeah, yeah, I'm happy to comment on that.

Nick: Yeah, that was terrific detail. Thank you.

Speaker Change: Can I follow up with one on interconnection ads? Obviously they drop quite a bit sequentially. I think you called out optimization and grooming and content and networking as drivers of that, but also noted strong ads.

Speaker Change: So maybe, can you just expand a little bit on those puts and takes and how we should think about the path to getting interconnection ads back to a healthier and more sustainable level?

Adaire Fox-Martin: Yeah, I'm happy to comment on that, and I can ask any of my colleagues here to add if there's anything that they would need to add to my commentary. So first of all, as we noted, we had 3,900 net ads. We had, as Keith mentioned in his comments, the Stackpath liquidation, which impacted us negatively by 400. And so without that, we would have had 4,300 ads.

Speaker Change: Yeah, I'm happy to comment on that and I can ask any of my colleagues here to add if there's anything that they would need to add to my commentary. So first of all, as we noted, we had 3,900 net ads.

Keith Taylor: We have a strong funnel of additional ex-scale opportunities, and we look forward to updating you on our future JV partnerships in the near term. For non-financial metrics, MR per cabinet is rising, increasing 7% year over year on a normalizing cost and currency basis to $2,287 per cabinet. Driven by favorable pricing environments, solid interconnection, attach rates, and increasing prior densities. As discussed on our last earnings call, as expected, we saw continued pressure on our unadjusted net cabinet spending metrics due to capacity constraints in certain key markets, increasing prior density, and timing of churn.

Keith Taylor: We had, as Keith mentioned in his comments, the stack path liquidation, which impacted us negatively 400. And so without that, we would have had 4,300 ads.

Adaire Fox-Martin: Now, let me just unpack some of the trends for you, Nick, to build on your question. First, on the positive side, when I look at growth ads, it's the highest level in two years. And year to date, this interconnection demand is actually back to peak pandemic levels. In absolute numbers, our A to Z connections continue to increase. And we've seen this quarter over quarter, and this is obviously the way that we define unique relationships between companies in a metro. I think this really truly speaks to the value of Equinix.

Adaire Fox-Martin: Now, let me just unpack some of the trends for you, Nick, to build on your question. First, on the positive side, when I look at the gross revenue from ads, it's the highest level in two years and year to date. This interconnection demand is actually back to peak pandemic levels. In absolute numbers, our A to Z connections continue to increase, and we've seen this quarter over quarter. And this is obviously the way that we define unique relationships between companies in a metro. I think this really truly speaks to the value of Equinix.

Nick: Now, let me just unpack some of the trends for you, Nick, to build on your question. First, on the positive side, when I look at the grossed ads, it's the highest level in two years. And year to date, this interconnection demand is actually back to peak pandemic levels.

Keith Taylor: Backpath unexpectedly announced during immediate liquidation in June, resulting in 300 cabinets churning a quarter end as an example. Related to cabinet density, the Q2 cabinets churn were on average density of 4 kilowatts per cabinet, while the new cabinets booked were on average density of 5.9 kilowatts per cabinet. In Q2, non-ex-scale net megawatt sold increased meaningfully compared to the prior six quarters. As we look forward, giving our strong close bookings, and as a result, the rising backlog of cabinet sold but not yet installed, we expect the little cabinets to improve in the second half of the year.

Speaker Change: In absolute numbers, our A to Z connections continue to increase, and we've seen this quarter over quarter. And this is obviously the way that we define unique relationships between companies in a metro. And I think this really, truly speaks to the value of Equinix.

Adaire Fox-Martin: So those things coupled together, the growth ads, the absolute number of A to Z ads continuing to increase, the fact that we're at peak pandemic levels, I think they're very good indicators of future momentum. Pricing is also trending very favorably. We have 11% spread between shares and new additions, and you see revenue up to 9% year-on-year on a normalized and constant currency basis. So there are a number of positives as we look at the interconnection lens.

Adaire Fox-Martin: So those things coupled together, the growth ads, the absolute number of A to Z ads continuing to increase, the fact that we're at peak pandemic levels, I think they're very good indicators of future momentum. Pricing is also trending very favorably. We have 11% spread between leased and new additions, and you see revenue up to 9% year-on-year on a normalized and constant currency basis. So, a number of positives as we look at the interconnection lens.

Speaker Change: So those things coupled together, the grossed ads, the absolute number of A to Z continuing to increase, the fact that we're at a peak pandemic levels, I think they're very good indicators of future momentum.

Speaker Change: Pricing is also trending very favorably. We have 11% spread between churned and new additions.

Adair Fox-Martin: and you see revenue up to nine percent year-and-year on a normalized and constant currency basis so a number of positives as we look at the interconnection length

Keith Taylor: On the sustainability front, we're continuing to advance our bold future first agenda, implementing innovative ways to integrate into the communities in which we operate. This includes new heat export programs across Europe and the Americans, including our new Paris TANIBX, which helps heat a portion of the aquatic center at the Paris-Atlantic's. This is one example of a sustainability initiative that we believe will become commonplace in the markets we serve in the future.

Adaire Fox-Martin: On the churn side, we saw churn elevated in 23 and continued to worsen in early 24. And this was especially true in the EMEA theater of operation. I think networks have had the toughest operating environment, and we're continuing to see pressure in that segment of our industry customers. I would also say that M&A affects this, where we have paid cross connects but unpaid intercompany cross connects and often replace those in an M&A trajectory.

Adaire Fox-Martin: On the churn side, we saw churn elevated in 2023 and continued to worsen in early 2024, especially in the EMEA theater of operations. I think networks have had the toughest operating environment, and we're continuing to see pressure in that segment of our industry customers. I would also say that M&A affects this, where we have paid cross connects but unpaid intercompany cross connects, often replacing those in an M&A trajectory.

Speaker Change: On the CHIRN side, we saw that CHIRN elevated in 2023 and continued to worsen in early 2024. And this was up especially in the EMEA theatre of operation.

Speaker Change: I think networks have had the most toughest operating environment and we're continuing to see pressure in that segment of our industry customers.

Keith Taylor: Now let me cover the highlights from the courtroom. You know that all growth rates in this section are on normalizing constant currency bases. I have depicted on slide four global Q2 revenues were 2.159 billion up 8% over the same quarter last year, and in the upper half of our guidance range on a constant currency basis, including the impact of a one-off charge against recurring revenues. I've expected non-requering revenue stepped up sequentially due to strong ex-scale leasing activity in the quarter.

Adair Fox-Martin: I would also say that M&A affects this, where we have paid cross-connects but unpaid intra-company cross-connects, often replacing those in an M&A trajectory, and this takes some time for us to work through.

Adaire Fox-Martin: And this takes some time for us to work through. But specifically, as it relates to EMEA, we can see that the data indicates some decelerating churn rate from the top 10, who have been churning in the past. So that, again, gives me the confidence to say that I can believe we'll move forward on a positive trajectory here, and this is an area of focus for me as we move forward over the course of this quarter.

Speaker Change: But specifically, as it relates to EMEA, we can see that the data indicating some decelerating churn rate from the top 10 who have been churning in the past.

Speaker Change: So that again gives me the confidence to say that I can believe we'll move forward on a positive trajectory here and this is an area of focus for me as we move forward over the course of this quarter.

Keith Taylor: Q2 revenues net of our apex hedges included a six million dollar headwind, and compared to our prior guidance rates due to the weaker Brazilian Riau and the Japanese yen in the quarter. Global Q2 adjusted EBITDA was 1.036 billion or 48% of revenues, up 17% over the same quarter last year, and above the $1 billion quarterly threshold for the very first time. Relative to our expectations that just the EBITDA was at the top end of our guidance range due to strong operating profits and timing of spend.

David Barden: Next, we'll go to the line of David Barden from Bank of America. Please go ahead.

Speaker Change: That's great. Thank you so much.

Adair Fox-Martin: Next we'll go to the line of David Barden from Bank of America. Please go ahead.

David Barden: Hey guys, thank you so much for taking questions and, Adaire, welcome. I guess I have to be the one to ask. So obviously, the DOJ and SEC subpoenas continue to kind of be the subject of conversation around the company. So I guess if you could kind of give us an update on where we are and what it will take to put that to bed, it'd be great. Also, a follow-up on that is, in the aftermath of the conclusion of the independent review conducted by the board, were there any changes that you guys made in this past quarter with respect to any kind of internal or external reporting?

David Barden: Hey guys, thank you so much for taking the questions and Adaire, welcome. I guess I have to be the one to ask. So, obviously, the DOJ and SEC subpoenas continue to kind of be the subject of conversation around the company. So, I guess if you could kind of give us an update on where we are and what it will take to put that to bed, that would be great. Also, a follow-up on that is, in the aftermath of the conclusion of the independent review conducted by the board, were there any changes that you guys made in this past quarter with respect to any kind of internal or external reporting?

David Barden: Hey guys, thank you so much for taking the questions, and Adair, welcome.

David Barden: I guess I have to be the one to ask, so...

David Barden: Obviously, the DOJ, SEC subpoenas continue to kind of be...

Speaker Change: subject of conversation around the company. So I guess if you could kind of give us an update on where we are and what will take to put that to bed to be great.

Keith Taylor: Q2 adjusted EBITDA net of our apex hedges included a three million dollar apex headwind when compared to our prior guidance rates and four million dollars of integration costs. Global Q2 AFFO was 877 million, up 17% over the same quarter last year, better than our expectations due to strong operating performance and the timing of the land lease payment related to our upcoming Singapore 6 build. Q2 AFFO included a three million dollar apex headwind when compared to our prior guidance rates. Global Q2 MR term was 2.3% for the balance of the year, we expect MR term to remain in the 2 to 2.5% quarterly guidance range.

Speaker Change: Also, a follow-up on that is, in the aftermath of the conclusion of the independence

Speaker Change: review conducted by the board, were there any changes that you guys have made?

Speaker Change: In this past quarter, with respect to any kind of internal or external reporting,

David Barden: And then the last one, if I could, Keith, you referenced the unadjusted cabinets. I think this is the third or fourth quarter in a row we've had to talk about why they aren't. In volume terms, it's living up to expectations, and that's because of the densities and better revenue per cabinet. Where are we on kind of coming up with some language that represents the adjustment that you think investors need to see when they read the release, you know, the first time around? Thanks.

Keith Taylor: And then the last one, if I could, Keith, you referenced the unadjusted cabinets. I think this is the third or fourth quarter in a row we've had to talk about why cabinets aren't...

Speaker Change: in volume terms living up to expectations, and it's because of the densities and better revenue per cabinet. Where are we on kind of coming up with some language that represents the adjustment that you think investors need to see when they read the release, you know, the first time around? Thanks.

Keith Taylor: Turning to our regional highlights, the results which are covered on slides 5 through 7. On a year-over-year normalize basis, APAC was our fastest-going region at 11% followed by the Americas and Mia regions growing at 9% and 5% respectively. The Americas region had a great quarter with record growth bookings led by strong financial services activity, firm pricing, and a higher mix of median and large footprint deals. We saw particular strength in our tier one markets including Dallas, New York, Washington, D.C. Our Mia business delivered a solid quarter with healthy bookings activity and strong pricing.

David Barden: Okay, David, thank you very much for the words of welcome. And maybe we'll start with the muted, cabinet growth scenario. We'll throw that to Keith, and then he can perhaps comment on the investigation status.

Adaire Fox-Martin: Okay, David, thank you very much for the words of welcome. And maybe we'll start with the muted, cabinet growth scenario. We'll throw that to Keith, and then he can perhaps comment on the investigation status.

Adair Fox-Martin: Okay, David, thank you very much for the words of welcome. Maybe we'll start with the cabinet growth scenario. We'll throw that to Keith and then he can perhaps comment.

Keith Taylor: Yeah, David. So, first and foremost, look, we continue to see net cabinet billings as an area of high focus. As I said, sort of in the prepared remarks, roughly 300 of those cabinets related to StackPath announced their liquidation at the end of the quarter. Put that aside, you know, there's a number of things that are impacting the industry, and one of them I'll refer to as why we say unadjusted, but capacity constraints, of course, continue to have an impact on basically the net cabinet billing and then the timing of churn, which is an obvious statement.

Keith Taylor: Yeah, David, so first and foremost, look, we continue to see the net cabinet billings as an area of high focus. As I said, sort of in the prepared remarks, roughly 300 of those cabinets related to StackPath, you know, that announced their liquidation at the end of the quarter. Put that aside, you know, there's a number of things that are impacting, and one of them I'll refer to as why we say unadjusted, but capacity constraints, of course, continue to have an impact on basically the net cabinet billing and then the timing of churn, which is an obvious statement.

Adair Fox-Martin: David, so first and foremost, look, we continue to see the Net Cabinet Billings as an area of high focus.

Adair Fox-Martin: and

Speaker Change: As I said, sort of in the prepared remarks, roughly 300 of those cabinets related to StackPath announced their liquidation at the end of the quarter.

Keith Taylor: The team did an excellent job selling our global platform with record exports and strong interim region actively including into our growth in emerging markets such as Abu Dhabi, Istanbul, and Warsaw. And finally, the Asian Pacific region had a strong quarter with momentum in our largest markets in the region, including Hong Kong, Singapore, and Tokyo as well as strong customer interest in our new ASEAN Metro. Incurgingly, we saw strong inter-region activity driven by customers to point AI workloads in both Japan and Malaysia.

Speaker Change: Put that aside, there's a number of things that are impacting it, and one of them I'll refer to on why we say unadjusted, but capacity constraints, of course, continue to have an impact.

Speaker Change: on basis of the NetCanonism billing and then the timing of churn which is an obvious statement. The increasing density continues to be a factor and as we said there's two things I wanted to pull out for you.

Keith Taylor: The increasing density continues to be a factor, and as we said, there are two things I wanted to pull out for you. And I said in the prepared remarks, but I wanted to make sure that you understood and it was full of context. First and foremost, we had record gross bookings. So, it gives you a sense of the volume and the businesses that are there. So, that gives me great confidence, and we had record gross bookings in America's Theater, more specifically. You add to that that we had the best net megawatts, net megawatts.

Keith Taylor: The increasing density continues to be a factor, and as we said, there are two things I wanted to pull out for you. And I said in the prepared remarks, but I want to make sure that you understand and that it's full of context.

Speaker Change: And I said in the prepared remarks, but I wanted to make sure that it's understood and it's full of context. First and foremost, we had record gross bookings.

Keith Taylor: First and foremost, we had record gross bookings. So it gives you a sense of the volume and the businesses are there. So that gives me great confidence, and we had record gross bookings at America's Theater, more specifically. You add to that that we had the best net megawatts, net megawatts, billing in the retail space. I'm not talking about eggscale in retail.

Keith Taylor: And now looking at a capital structure, please refer to slide 8. A balance sheet increased to approximately 33 billion, including an unrestricted cash balance of 2 billion. Our cash balance increased quarter to quarter due to strong operating cash flow, and the debt raised in the quarter. Offset by our growth investment and the cash dividend. In May, we raised 750 million of senior US dollar notes due in 2034. And we immediately swapped these notes into euros at an effective interest rate of 3.9%.

Speaker Change: So it gives you a sense that the volume in the businesses is there. So that gives me great confidence and we had record gross bookings in the America's Theatre more specifically. You add to that that we had the best net megawatts, net megawatts.

Keith Taylor: Billing in the retail space, I'm not talking about eggscale in retail, and that shows in the last seven quarters. So this is six quarters prior, we had, you know, we did meaningfully better than we had done before. So it tells you about the health of the underlying business and really ties into what Adaire was talking about on the sort of gross interconnects. So there's the volume there, but there's this element of the business both in terms of how things are timing out.

Keith Taylor: And that tells you, in the last seven quarters, so this is six quarters prior, we had, you know, we've done meaningfully better than we did before. So it tells you about the health of the underlying business and really ties into what Adaire was talking about in terms of the sort of gross interconnects. So there's the volume there.

Speaker Change: Billing in the retail space, I'm not talking about AgScale, in retail, and that tells in the last seven quarters, so this is...

Speaker Change: Six quarters prior we had, you know, we've done meaningfully better than we had done before. So it tells you about the health of the underlying business and really ties into what Adair was talking about on the sort of gross interconnects.

Keith Taylor: Our net leverage remains low relative to our peers at 3.5 times our annualized adjusted EBITDA. Our blended debt borrowing rate is now 2.4%, the lowest in our industry. As noted previously, given the global nature of our business, we plan to opportunity to raise additional debt capital in low-rate markets where we intend to expand creating both incremental debt capital to fund our growth, but also placing a natural hedge into these markets.

Keith Taylor: But there's this element of the business both on how it's timing things out. We knew, you know, as you know, we're sort of forecasting Q2 would probably be a negative quarter again because of the timing of the churn. But when I talked about the, the unadjusted is, you know, we do that. We can do that math for you, which basically says, well, when you when you turn out a certain number of cabinets at that level of density, and you apply different factors to them, With a higher level of density, you're basically dealing with a whole of roughly 2000 just because of density. And so that's why we say the unadjusted.

Adair Fox-Martin: So there's the volume there, but there's this element of the business both on how it's how things are timing out.

Keith Taylor: We knew, you know, as you know, we're sort of forecasting Q2 would probably be a negative quarter again. There's the timing of the churn. But when I talk about the unadjusted, you know, we do that, and we can do that math for you, which basically says, well, when you churn out a certain number of cabinets at that level of density, and you apply different factors to them, with a higher level of density, you're basically dealing with a whole of roughly 2000 just because of density.

Adair Fox-Martin: We knew, you know, as you knew, we're sort of forecasting Q2 would be...

Speaker Change: In the second one, they're talking about probably a negative quarter again, there's the timing of the churn. But when I talk about the unadjusted issues, we can do that math for you, which basically says, Well, when you churn out a certain number of cabinets at that level of density, and you apply different factors to them,

Keith Taylor: And so that's why we say the unadjusted. I think the most important thing is that look, we've given you a good sense of how there's great momentum in the business. We're seeing great gross values. Yes, there's an element of churn that's coming through the business. We've been talking about that for many quarters now, the economic climate in which we operate. But overall, with the depth of the pipeline and the momentum we see in our business, that's what gives us confidence that you're going to see that abate.

Keith Taylor: I think the most important thing is that look, we've given you a good sense of there being great momentum in the business. We're seeing great gross values. Yes, there's an element of churn that's coming through the business. We've been talking about that for many quarters now, the economic climate in which we operate. But overall, with the depth of the pipeline and the momentum we see in our business, that's what gives us confidence that you're going to see that abate.

Keith Taylor: Turning to slide 9th of a quarter, capital expenditures were 648 million, including recurring cap ex of 45 million. We continue to invest across our platform with 54 major projects currently underway in 36 markets in 24 countries, including 15 ex-scale projects. Since our last earnings call, we opened 10 projects across eight net close including new data centers in Johor, Osaka, Silicon Valley, and Warsaw. We also purchased our Health 65 and Madrid to asset and land for development in Atlanta, Dallas, and Milan. Reviews from own assets increased at 69% of our recurring revenues, and more than 80% of our current retail expansion will be on our own land or own buildings with long-term ground leases.

Speaker Change: With a higher level of density, you're basically dealing with a whole of roughly 2,000 just because of density. And so that's why we say the unadjusted. I think the most important thing is that, look, we've given you a good sense of there's great momentum in the business.

Speaker Change: We're seeing great growth values. Yes, there's an element of churn that's coming through the business. We've been talking about that for many quarters now, the economic climate in which we operate.

Keith Taylor: And then the last part I would just say is the backlog is as high as we've seen in a very long period of time, and it's substantial, not a surprise, largely because we did more medium to larger-size deals in the quarter. And when you do that, you have some level of extension in the book to bill interval, and therefore the backlog does creep up as we work to configure those those deployments and get them into implementation. So, hopefully, that answers that question. And I mean, then just go to the DOJ, which I think there was going to pass to me.

Speaker Change: But overall, the depth of the pipeline and the momentum we see in our business, that's what gives us confidence that you're going to see that abate.

Speaker Change: And then the last part I would just say is the backlog has been as high as we've seen in a very long period of time and is substantial.

Speaker Change: Not a surprise, largely because we did more medium to larger size deals in the quarter, and when you do that, you have some level of extension in the book-to-bill interval, and therefore the backlog does creep up as we work to configure those deployments and get them into implementation.

Keith Taylor: Our capital investments deliver strong returns as shown on slide 10. A 180 stabilized assets increased recurring revenues by 4% year over year on a constant currency basis. Stabilized assets were collectively 83% utilized and generated a 26% cash-on-cash return on the growth pp invested.

Keith Taylor: No, no surprise to you. We're continuing to work with the SEC and the DOJ. It's a process where we're working through that process. We continue to feel very confident in that process and how we're responding to it. I would like you to draw great comfort from the fact that not only did we file our 10Q last quarter, but today we filed our 10Q again today. And so when you think about the reinforcement we got from the Audit Committee's investigation of our financials, you should draw great comfort from it. But like anything with the short seller report as it comes out and the following subpoenas that came from the SEC and DOJ, we have to respond to, and therefore, it is a process.

Speaker Change: So hopefully that answers that question, and let me then just go to the DOJ, which I think Dara was going to pass to me anyway.

Keith Taylor: Anyway, no, no surprise to you. We're continuing to work with the SEC and the DOJ. It's a process where we're working through that process. We continue to feel very confident in that process and how we're responding to it. I would like you to draw great comfort from the fact that not only did we file our 10Q last quarter, but today we filed our 10Q again today. And so when you think about the reinforcement we got from the Audit Committee's investigation of our financials, you should draw great comfort from it.

Keith Taylor: And finally, please refer despite the 11th through 15th for our updated summary of 2024 guidance and bridges. Do know at all growth rates are on a normalizing constant currency basis. For the full year 2024, we're maintaining our underlying revenue outlook with expected top-line growth of 78%. This reflects our solid execution in the first half of the year and a strong pipeline to drive momentum in the second half of the year. We're raising our underlying 2024 adjusted eBadak guidance by another $15 million through the strong operating performance and more integration costs.

Dara: No surprise to you, we're continuing to work with the SEC and the DOJ. It's a process. We're working through that process. We continue to feel very confident in that process and how we're responding to it.

Speaker Change: I would like you to draw great comfort from the fact that not only did we file their TANQ last quarter, but today we filed our TANQ today.

Speaker Change: And so, when you think about the reinforcement we got from the Audit Committee's investigation of our financials...

Keith Taylor: But like anything with the short seller report as it comes out and the following subpoenas that came from the SEC and DOJ, we have to respond to, and therefore, it is a process. In your question to it, was there anything that came out of what we want to do differently? I think it was very important.

Speaker Change: You should draw great comfort from it, but like anything with the short seller report as it comes out and the following subpoenas that came from the SEC and DOJ, we have to respond to it and therefore it is a process.

Keith Taylor: We're raising our underlying 2024 AFFO guidance by $15 million, an 11% to 13% increase over the previous year. AFFO shares expected growth between 9% and 11%. At or above the top end of our long-term plan as we continue to compound value for our shareholders. And finally, 2024 CAPEX is expected to range between 2.8 and 3.1 billion, including about 240 million of recurring CAPEX.

Keith Taylor: In your question to it, was there anything that came out of what we wanted to do differently? I think it was very important that when you look at what we announced in May, we were clear that not only did we not have any restatements, but we didn't have any adjustments. Restatements is a fact about materiality. An adjustment is an adjustment. And so the system is working as it should, which is great.

Unknown Executive: So let me stop here.

Adair Fox-Martin: In your question, was there anything that came out of what we want to do differently?

Keith Taylor: When you look at what we announced in May, we were clear that not only did we not have any restatements, but we didn't have any adjustments. Restatements are a fact about materiality. An adjustment is an adjustment. And so the system is working as it should, which is great. We have the controls, the team does the work, and overall, we feel very confident about it. But like anything, you're always sort of going to step back and reflect: are there other things that we could do that are different?

Speaker Change: I think it was very important, when you look at...

Adair Fox-Martin: What we announced in May, we were clear that not only did we not have any restatements, but we didn't have any adjustments.

Adair Fox-Martin: Restatements is a fact about materiality.

Unknown Executive: I will turn the call back there. Thank you, Keith.

Adair Fox-Martin: Adjustment is an adjustment, and so the system is working as it should, which is great. We have the controls, the team does the work, and overall we feel very confident about it. But like anything, you're always going to step back and reflect, are there other things that we could do that are different? And so that's what the team, they're looking at all the things that we do and saying, do we do different type of disclosures?

Adaire Fox: In closing, we had a strong first half of 2024. We stand apart from our competitors by seamlessly integrating a global footprint with cutting edge infrastructure. This allows us to effectively address the wide range of opportunities in the era of AI from the training needs of the service providers to the business needs of our enterprise customers. It also positions us to continue to effectively address the broader set of demands of our customer base. We believe our unwavering commitment to discipline, simplicity and focus. Combined with our amplified go to market efforts, we'll continue to drive growth and deliver higher value for our employees, customers, partners, and shareholders.

Keith Taylor: And so that's what the team is looking at all the things that we do and saying, do we do different types of disclosures? You saw us recently talking about the redevelopment of our cap, you know, redevelopment CapEx, which we thought was a very important disclosure. We had already been planning for it in advance of the short seller report.

Keith Taylor: We have the controls, the team does the work, and overall, we feel very confident about it. But like anything, you are always going to step back and reflect. Are there other things that we could do that are different? And so that's what the team is looking at all the things that we do and saying, do we do different types of disclosures? You saw us recently talk about the redevelopment of our cap, you know, redevelopment CapEx, which we thought was a very important disclosure; we had already been planning for it in advance of the short seller report.

Adair Fox-Martin: Recently talked about the redevelopment of our cap, you know, redevelopment CapEx, which we thought...

Adair Fox-Martin: on was a very important disclose your we'd already been planning for it in advance of the short seller report. But those are the kind of things that we just we make sure that there's appropriate augmentation of policy and disclosure, and I think it puts us in a much better position.

Keith Taylor: But those are the kind of things that we just make sure that there's appropriate augmentation of policy and disclosure. And I think it puts us in a much better position. But relating to, are there any adjustments? The answer is no.

Adair Fox-Martin: But relating to it, are there any adjustments? The answer is no.

Adair Fox-Martin: But we always think that there's things we can do better, and I'm drawing from a line of one of my cool CFO friends. He always says, better, better, never done.

Unknown Executive: With that, I'll stop here and open it up to questions. Thank you.

Adair Fox-Martin: So, because we're always looking to do better every single quarter, and we're never going to be done. So, we'll take the advice and guidance from both the council and whether anything comes back from DOJ and SEC, and we'll get better. But overall, I feel very comfortable in our financial disclosures.

David Barden: But we always think that there are things we can do better, and I'm drawing from a line from one of my close CFO friends. He always says better, better, never done. So, because we're always looking to do better every single quarter, and we're never going to be done. And so we'll take the advice and guidance from both the council and whether anything comes back from DOJ and SEC, and we'll get better. But overall, I feel very comfortable with our financial disclosure.

David Barden: But we always think that there are things we can do better. And I'm drawing from a line from one of my close CFO friends: he always says better, better, never done. So, because we're always looking to do better every single quarter, and we're never going to be done. And so we'll take the advice and guidance from both the council and whether anything comes back from DOJ and SEC, and we'll get better. But overall, I feel very comfortable with our financial disclosure.

Operator: We would now like to open the phone lines for questions. If you would like to ask a question, you may press star one on your phone. If you would like to withdraw your question, you may press star two.

David Barden: Alright guys, thank you so much. Thank you both.

David Barden: All right, guys. Thank you so much. Thank you both.

Simon Flannery: Our first question comes from Simon Flannery from Morgan Stanley. Please go ahead. Great. Thank you. Good evening, Derek.

Speaker Change: All right, guys, thank you so much. Thank you both.

Jim Schneider: Next, we'll go to the line of Jim Schneider from Goldman Sachs. Please go ahead.

Adair Fox-Martin: Next we'll go to the line of Jim Schneider from Goldman Sachs. Please go ahead.

Jim Schneider: Good afternoon. Thanks for taking my questions and welcome, Adaire. I was wondering if you could maybe expand on your comments earlier about AI workloads moving from service providers to enterprises. Adaire, from your vantage point, how long do you believe it will be before that AI demand becomes more directly material on the enterprise side to Equinix on the sort of conventional retail side?

Adaire Fox: Congratulations on the new position. And thank you for the comments on your listening tour and where you see the opportunities. I'd love to get your high level perspective on what led you to take the role at Equinix. Obviously, you'd known them from the board, but you came from Google. You'd worked at SAP before that. So you've got a great perspective on the cloud needs of the hyper scalars, the AI opportunities. So it'd be great if you could just put all of that into context and what where you see Equinix being positioned for the training, but particularly for the inference wave of AI.

Jim Schneider: Good afternoon. Thanks for taking my questions and welcome, Adair. I was wondering if you can maybe expand on your comments earlier about AI workloads moving from service providers to enterprise. Adair, from your vantage point, how long do you believe it'll be before that AI demand becomes more directly material on the enterprise side to Equinix, on the sort of conventional retail side?

Adaire Fox-Martin: Yeah, thanks very much, Jim, and thanks for your question and your words of welcome. So I think you know, in the short term, the demand that we're seeing is primarily for training-based work loads, and this is primarily driven in the short term by the cloud and the various different technology partners that we have, and this, as I've mentioned, is how our near-term pipeline is being represented, and the beneficiary of this, in many instances, is our X scale business.

Adair Fox-Martin: Yeah.

Adair Fox-Martin: Thanks very much, Jim, and thanks for your question and your words of welcome.

Adair Fox-Martin: So, I think, you know, in the short term, the demand that we're seeing is primarily for training-based work loads, and this is primarily driven in the short term by cloud and the various different technology partners that we have.

Adaire Fox: Thank you. Thanks very much for the question, Simon. And thank you for the kind words. It's certainly being a whirlwind of 10 weeks, you know, since I formally took the position. And a lot that I've heard and understood during the listening and learning sessions, I have to say I remain exceptionally positive about the opportunity ahead. One of the reasons or one of the main reasons or one of the many reasons actually why I took the role with Equinix is obviously understanding the strategy of the company and its unique position in the ecosystem.

Adair Fox-Martin: And this, as I've mentioned, is how our near-term pipeline is being represented, and the beneficiary of this, in many instances, is our X-scale business.

Adaire Fox-Martin: In the enterprise mid-market retail business, we absolutely have AI-ready data centers ready to take customer workloads. We have already closed a number of transactions where we are running smaller AI-based workload scenarios in the training world for enterprise-based customers. We are working with many of our CIOs to support their AI strategy as they look to integrate AI into their business and manage their costs whilst they're doing so. And, of course, some of our ecosystem partners have created almost a magnetism around Equinix as it relates to AI.

Adair Fox-Martin: in in the enterprise midmarket retail business

Adair Fox-Martin: We absolutely have AI ready data centers ready to take a customer workloads.

Adair Fox-Martin: We have already closed a number of transactions where we are running smaller AI-based workload scenarios in the training world for enterprise-based customers.

Adaire Fox: I believe that Equinix is uniquely positioned to offer a range of enabling services for our customers so that they can actually capitalize on the opportunities presented by various different technology platforms. When I think about our demands and the customer needs, it is actually much broader than the AI portfolio. Many of our customers have made a very significant commitment to hybrid and to multi cloud. And as customers become more at ease with cloud as a technology paradigm, we can see many more workload based decisions beginning to occur.

Speaker Change: We are working with many of our CIOs to support their AI strategy as they look to integrate AI into their business and manage their cost whilst they're doing so.

Speaker Change: And of course, some of our ecosystem partners have created almost a magnetism around Equinix as it relates to AI companies like CoreWeave and Lambda that we announced.

Adaire Fox-Martin: Companies like CoreWeave and Lambda that we announced last year in 2023, which have capabilities available today in Equinix data centers, and, of course, the NVIDIA DGX private cloud offering that we also announced late in 2023. All of these have very active work pipelines. Some of them have active users who are making use of this system now. So I'd say that we're seeing early traction in the enterprise-level inference and type workloads that are beginning to occur in our data center environment. But that is something that we'll see extrapolate and grow over the medium to longer term.

Adair Fox-Martin: Last year in 23, who have capabilities, you know, available today and Equinix data centers, and of course, the NVIDIA DGX private cloud offering that we also announced late in 23.

Adaire Fox: The decisions about where particular workloads are best suited. And as I look at this in the context of AI and the AI demand, that initial short term demand is coming indeed from the service providers. And this is reflected in our ex scale business and in the bookings performance that we've seen in the ex scale business. And as you heard in our remarks, this is something that we're looking to expand globally. But many CIOs alike during the early days of cloud are looking to ensure that they have an AI strategy and we are beginning to see the beginnings of enterprise training and enterprise funnel.

Adair Fox-Martin: All of these have very active work pipelines. Some of them have active users who are making use of this system now. So I'd say that we're seeing early traction in, you know, the enterprise level inference and type workloads beginning to occur in our data center environment. But that is something that we'll see extrapolate and grow over the medium to longer term.

Jim Schneider: Thanks, and then as a follow-up, last quarter you outlined your plans for your DC-1 data center to both modernize and expand capacity.

Speaker Change: Thanks. And then as a follow-up, last quarter you outlined your plans for your DC-1 data center to both modernize and expand capacity. As you look across your portfolio, do you foresee the opportunity to do this more broadly across more facilities?

Adaire Fox: As we look at customers looking to evolve their strategy into proof of concepts and beyond that into working production systems. As I said, I think retail will have a much broader demand and a more meaningful long term upside from AI as these use cases move from from proof of concepts and into into production. There is of course a lot that Equinix is offering to our customers here, both in our retail business and of course on the ex scale side of the house.

Jim Schneider: Yeah, I think Jim, you're referring to our DC2 redevelopment, if I'm not mistaken. Our DC2, excuse me. Yeah, I just want to make sure.

Speaker Change: Yeah, I think, Jim, you're referring to our DC-2 redevelopment, if I'm not mistaken. It's our DC-2. Excuse me.

Keith Taylor: We think the universe of, you know, the universe of what we call redevelopment projects like that is five to seven-ish. They're strategic, they're of scale, they're of size, and of great importance. And hence, we're doing those types of redevelopments because of the value that we get to create, introduce more capacity into that highly connected data, and get a good return, not only a good return on the element of it, which is redevelopment, but also the enhancement aspect of it. And so overall, the universe isn't massive, you know; we have 264 data centers, as Adaire alluded to. We think it's five to seven strategic assets strewn throughout the world that will do that too.

Keith Taylor: We think the universe of, you know, the universe of what we call redevelopment projects like that is five to seven-ish. They're strategic, they're of scale, they're of size, and of great importance. And hence, we're doing those types of redevelopments because of the value that we get to create, introduce more capacity into, into that highly connected data center and, you know, and get a good return, not only a good return on the element of it, which is redevelopment, but also the enhancement aspect of it. And so overall, the universe isn't massive. You know, we have 264 data centers, as Adaire alluded to. We think it's five to seven strategic assets strewn throughout the world that will do that too.

Speaker Change: I just want to make sure we think the universe of the universe of what we call redevelopment projects like that is five to seven ish.

Adair Fox-Martin: They're strategic, they're of scale, they're of size, and of great importance.

Adair Fox-Martin: And hence, you know, we're doing those type of redevelopments because...

Adair Fox-Martin: of the value that we get to create, introduce more capacity into that highly connected data center, and get a good return, not only a good return on...

Adaire Fox: And I think this unique balanced approach to the opportunity represented in the broader demand context, but also in the era of cloud eye is something that's extremely exciting. I'm looking forward to leading the company through this journey. Thanks for your thoughts.

Adair Fox-Martin: Both the element of it, which is redevelopment.

Adair Fox-Martin: but also the enhancement aspect of it.

Adair Fox-Martin: And so overall, the universe isn't massive. You know, we have 264 data centers, as Adair alluded to. We think it's five to seven strategic assets strewn throughout the world that will do that too.

Unknown Executive: Thank you, Simon.

Nick Del Dayo: Next we'll go to the line of Nick Del Dayo from Moffit, Nathanson, please go ahead. Hi, afternoon, again, congratulations are there on taking the helm. You would mention simplification focus and amplifying go to market as some of the areas that seemed interesting to you initially.

Keith Taylor: Next, we'll go to the line of Michael Elias from TD Cowan. Please go ahead.

Michael Elias: Next, we'll go to the line of Michael Elias from TD Cowan. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Next we'll go to the line of Michael Elias from TD Cowan. Please go ahead.

Michael Elias: Great, thanks for taking the questions, and Adaire, congratulations on taking the helm. Maybe to kick things off, one of the things that we've noticed is the differential in densities between what's being churned out and what's coming in. You know, as I think through kind of the evolution at the chip level, it seems like there's an acceleration in power consumption there. Do you view this as a structural trend, i.e., we could be talking about, you know, four or five quarters from now, you taking in cabinets at 7kW per cabin, churning at four, and thus this represents an increasing headwind to that cabinet number? I guess that's my first question, just trying to get a sense of whether or not this is going to become a greater and greater headwind.

Michael Elias: Great, thanks for taking the questions, and Adaire, congratulations on taking the helm. Maybe to kick things off, one of the things that we've noticed is the differential in densities between what's being churned out and what's coming in. You know, as I think through kind of the evolution at the chip level, it seems like there's an acceleration in power consumption there. Do you view this as a structural trend, i.e., we could be talking about, you know, four or five quarters from now, you taking in cabinets at 7kW per cab and churning at 4, thus this represents an increasing headwind to that cabinet number? I guess that's my first question, just trying to get a sense of whether or not this is going to become a greater and greater headwind.

Michael Elias: Great, thanks for taking the questions and Adair, congratulations on taking the helm.

Speaker Change: Maybe to kick things off, one of the things that we've noticed is the differential in densities between what's being churned and what's coming in. You know, as I think through kind of the evolution at the chip level, you know, it seems like there's an acceleration in power consumption there.

Adaire Fox: I guess can you expand a little bit on what you saw and things we might see on that front in the coming years? For sure, thank you very much again for the congrats Nick. I appreciate that. And first of all, when I look at the overall approach that I will take it is about creating value and it will always have a customer lens and outside in perspective ensuring that customer success translates and is equal to Equinix success in many regards.

Speaker Change: Do you view this as a structural trend, i.e., we could be talking about, you know, four or five quarters from now, you taking in cabinets at 7 kW per cab and churning at 4, thus this represents an increasing headwind

Adaire Fox: When I look at this, this means looking at how we continue to evolve the product portfolio, how we continue to drive critical partnerships so that we're at the center of the digital ecosystem, and how we continue to enhance and evolve our go to market engine.

Speaker Change: I guess that's my first question, just trying to get a sense around, you know, is this going to become a greater and greater headwind?

Adaire Fox-Martin: Yeah, you know, 10 weeks in, so this is certainly one of the areas that I've done a little bit of a double-click on here. And I can certainly see that there are absolutely some shifting dynamics in the business. And Keith highlighted, you know, this increasing power density in the cabs that are turning in versus, as you pointed out, those that are turning out. And for us, perhaps this is something where we would look to see the billable CABs as a measure, maybe not being as tightly tied to revenue growth as we've seen it in the past.

Adaire Fox-Martin: Yeah, and, you know, 10 weeks in, so this is certainly one of the areas that I've done a little bit of a double click on here. And I can certainly see that there are absolutely some shifting dynamics in the business. And Keith highlighted, you know, this increasing power density in the cabs that are turning in versus, as you pointed out, those that are turning out.

Speaker Change: Yeah, you know, 10 weeks in, so this is certainly one of the areas that I've done a little bit of a double click on here, and I can certainly see that there are absolutely some shifting dynamics.

Adaire Fox: Let me specifically pick up on the notion of simplification. When one simplifies, you bring core processes back to their very core. This enables you to be agile in your response and helps you to accelerate the underpinning pace of the business. And whilst this list is not exhaustive, there are definitely a few areas that I see we have some opportunity to continue to involve and simplify things like our quote to cash process.

Speaker Change: In the business, and Keith highlighted, you know, this increasing, you know, power density in the cabs that are churning in versus as you pointed those that are churning out.

Adaire Fox-Martin: And for us, perhaps, this is something where we would look to see billable CABs as a measure, maybe not being as tightly tied to revenue growth as we've seen it in the past. And that's something that I think we're reflecting on. You know, if I think about our X-scale business, kilowatts probably is a cleaner metric. But when I think about it from the retail perspective, our MRR per cab and our billable cabs, you know, that perhaps is the right P times Q map that we have now, even though growth is probably more weighted towards the cabinet yield versus the cabinet count at this point.

Speaker Change: and for us perhaps this is something where we would look to see the billable cabs as a measure maybe not being as tightly tired to revenue growth as we've seen it in the past

Adaire Fox-Martin: And that's something that I think we should be reflecting on. You know, if I think about our X-scale business, kilowatts probably is a cleaner metric. But when I think about it from the retail perspective, our MRR per cab and our billable cabs, you know, that perhaps is the right P times Q map that we have now, even though growth is probably more weighted towards the cabinet yield versus the cabinet count at this point. And I think that we can continue to supplement that with quarterly insights into how we're seeing the density evolve as our business evolves and as the capabilities within our data centers continue to evolve.

Speaker Change: and that's something that I think we're reflecting on. You know, if I think about our X-scale business, kilowatts probably is a cleaner metric.

Adaire Fox: Elements like our customer lifecycle and ways that we can systematize and process the customer's journey with us throughout their life cycle. These types of enterprise-grade processes will help us remove friction within the system and help deliver that pace, agility and simplicity.

Speaker Change: But when I think about it from retail, our MRR per cab and our billable cabs, you know, that perhaps is the right T times Q map that we have now, even though growth is probably more weighted towards the cabin yield versus the cabin account at this point.

Adaire Fox: When I look at it from a focus point of view, it is about understanding not just the footprint that's in our core, but how we continue to grow and evolve our core business to meet the needs of our customers. This is both in our ex-scale business, but also on retail where we look at how our global footprint enables customers to operate and transact in environments where they may not need to invest in the physical infrastructure themselves.

Adaire Fox-Martin: And I think that we can continue to supplement that with quarterly insights into how we're seeing the density evolve as our business evolves and as the capabilities within our data centers continue to evolve. So certainly something that's, you know, a thought process for us here. I think, as Keith mentioned, just to reiterate, you know, I think those very strong growth bookings plus the leading indicator of cabinets sold but not yet installed are indicators that we will improve on this number in the second half.

Keith Taylor: And I think that we can continue to supplement that with quarterly insights into how we're seeing the density evolve as our business evolves and as the capabilities within our data centers continue to evolve. So it's certainly something that's, you know, a tall process for us here. I think as Keith mentioned, just to reiterate.

Adaire Fox-Martin: So certainly something that's, you know, a thought process for us here. I think, as Keith mentioned, just to reiterate, I think those very strong growth bookings plus the leading indicator of cabinets sold but not yet installed are indicators that we will improve on this number in the second half.

Adaire Fox: I also think that focus is an important point when we consider our digital services portfolio and look at this through the lens of where we have adjacency and augmenting some of that core functionality that we have that exists in the core footprint of the Equinix Data Center world. This is a point where we have the right to win where customers would expect us to lead. For instance, I look at the underpinning growth in our fabric business, how important that can be as we look to continue to evolve our virtual interconnections portfolio. This enables us to focus in perhaps on certain aspects of our product portfolio in order to ensure that we're investing where we can have the highest level returns.

Keith Taylor: You know I think those very strong gross bookings plus the leading indicator of cabinets sold not yet installed are indicators that we will improve on this number in the second half.

Michael Elias: And maybe, Michael, if I can just add to what Adaire said. I think it's important, as Adaire said, look, we've got to keep on looking at it. David asked the question earlier on.

Keith Taylor: And maybe, Michael, if I can just add to what Adaire said. I think it's important, as Adaire said, look, we've got to keep on looking at it. David asked the question earlier on.

Michael Elias: And maybe, Michael, if I can just add on to what Adair said. I think it's important, as Adair said, look, we've got to keep on looking at it. David asked the question earlier on. We want to be able to respond to it in a way that absolutely makes sense.

Keith Taylor: We want to be able to respond to it in a way that absolutely makes sense and gives you all the statistics, at least so you can have the same sort of view that we have. Clearly, the shifting dynamics is more density, so that's positive. But I think what's really important, the crux of what is going to happen here, if you have more density, your price per unit is going to go up, and you're seeing that in the ARPU or the MR per cabinet. But we're also, when we look to monetize the capital that we invest in the business, no surprise to you, we're looking at a return on that investment. Those targeted IRRs are 20% to 30% fee leverage.

David Barden: and give you all the statistics at least so you can have the same sort of view that we have.

Speaker Change: Clearly, the shifting dynamics is more density, so that's a positive. But I think what's really, you know, the crux of what is going to come here, if you have more density, you're price per unit's going up and you're seeing that in the ARPU or the MR per cabinet.

Speaker Change: But we're also, when we look to monetize the capital that we invest in the business, no surprise to you, we're looking at a return on that investment. Those targeted IRRs are 20 to 30 percent, you know, free leverage.

Adaire Fox: And then on our go-to-market side, we have new leadership in our go-to-market team. I think it's a very important aspect of our business to underpin our go-to-market processes with a very clear segmentation strategy that allows us to identify those customers that have the highest revenue perspective for us and to manage those customers in a high-touch environment. But likewise, to enable us to extend our reach through channels and distribution effectively to customers who are in an SME more general business type space. So I hope that's given you a little bit of amplification on simplicity, focus, and the actual augmentation of our go-to-market. Thank you for the question, Nick. Yeah, that was terrific detail. Thank you.

Keith Taylor: And so you're seeing the cash on cash yield still to liver, but that one core metric really feels like it's, again, something that I think makes sense to keep on tracking. But we're really going to have to give you other components so that you get the full value of what's going on in the business. But the underlying bias is more density. And that's how you know where retail, where retail data, you know, multi-tenant data center player, and you need to deal with, you know, the changing shifts in customer expectations.

Speaker Change: and so you're seeing the the cash on cash yield still still deliver to that one core metric really feels like it's again something that i think makes sandage to keep on tracking

Speaker Change: But we're really going to have to give you other components so that you get the full value of what's going on in the business.

Keith Taylor: So you're seeing the cash on cash yield still to liver, but that one core metric really feels like it's, again, something that I think makes sense to keep on tracking. But we're really going to have to give you other components so that you get the full value of what's going on in the business, but the underlying bias is more density. And that's how, you know, we're a retail, we're a retail data, you know, multi-tenant data center player, and you need to deal with, you know, the changing shifts in customer expectations.

Speaker Change: The underlying bias is more density, and that's how, you know, we're a retail data, you know, multi-tenant data center player, and you need to deal with, you know, the changing shifts in customer expectations, and that

Keith Taylor: And that, you know, when you go into one of our data centers, you get a real good feel for the true difference between somebody maybe in one hour versus somebody in a different aisle. And that tells you that there are shifting dynamics taking place in a really live environment. And it is an ecosystem that thrives without, you know, with a propensity to increase density.

Keith Taylor: And that, you know, when you go into one of our data centers, you get a real good feel for that, the true difference between somebody maybe in one aisle versus somebody in a different aisle. And that tells you, like, there are shifting dynamics taking place in a really live environment, and it is an ecosystem that thrives with a propensity to increase density.

Speaker Change: When you go into one of our data centers, you get a real good feel for the true difference between somebody maybe in one isle versus somebody in a different isle, and that tells you there are shifting dynamics taking place in a really live environment, and it is an ecosystem that thrives with a propensity to increase density.

Nick Del Dayo: Can I follow up with one on interconnection ads? Obviously, they drop quite a bit sequentially. I think you called out optimization grooming and content and networking as drivers of that, but also noted strong ads.

Michael Elias: Great, thanks for the color there. And if I could just squeeze one more in,

Speaker Change: Great. Thanks for the color there. And if I could just squeeze one more in. I believe the expectation at the beginning of the year was for churn to step down in the back half. Is that still your expectation? And maybe as part of that, could you give us a sense for the churn that you're seeing among medium and small-sized deployments?

Adaire Fox: So maybe can you expand a little bit on those puts and takes and how we should think about the past to getting interconnection ads back to a healthier and more sustainable level? Yeah, I'm happy to comment on that and I can ask any of my colleagues here to add if there's anything that they would need to add to my commentary. So first of all, as we noted, we had 3,900 net ads. We had, as Keith mentioned in his comments, the stack path liquidation, which impacted us negatively 400. And so, without that, we would have had 4,300 ads.

Michael Elias: I believe the expectation at the beginning of the year was for churn to step down in the back half. Is that still your expectation? And maybe, as part of that, could you give us a sense of the churn that you're seeing among medium and small-sized deployments? Thanks.

Speaker Change: Yep, I'll comment on this and then perhaps Keith, feel free to add. I mean, certainly we're seeing that, you know, our churn in the range of 2 to 2.5%, which is the range that we guided to, is something that we can continue to manage.

Keith Taylor: I think that if we normalized for stack path in this quarter, we would have been slightly better than our expectations in terms of where we landed.

Adaire Fox: Now, let me just unpack some of the trends for you, Nick, to build on your question. First, on the positive side, when I look at the growth ads, it's the highest level in two years. And here today, this interconnection demand is actually back to peak pandemic level. In absolute numbers, our A to Z connections continue to increase, and we've seen this quarter over quarter. And this is obviously the way that we define unique relationships between companies in a metro.

Adaire Fox-Martin: Yep, I'll comment on that. And then, perhaps, Keith, feel free to add.

Speaker Change: We also have, you know, a supply and demand situation in the market, which has a, you know, a very positive trajectory on pricing. So maybe, you know, this gives us the opportunity to be thoughtful about managing our overall churn and dynamic so that we could

Adaire Fox-Martin: I mean, certainly, we're seeing that our churn in the range of 2 to 2.5%, which is the range that we guided to, is something that we can continue to manage. And I think that if we had normalized for stack path in this quarter, we would have been slightly better than our expectations in terms of where we landed. We also have a supply and demand situation in the market, which has a very positive trajectory for pricing.

Adaire Fox-Martin: So maybe this gives us the opportunity to be thoughtful about managing our overall churn dynamic so that we could selectively use proactive churn to help us drive and improve some yields. However, I see that some of the challenges that we had in the first half will still exist at the macro level.

Speaker Change: You know, selectively use proactive churn to help us drive and improve some yields here.

Adaire Fox: I think this really truly speaks to the value of Equinix. So those things couple together, the gross ads, the absolute number of A to Z continuing to increase. The fact that we're at a peak pandemic levels, I think they're very good indicators of future momentum. Pricing is also trending very favorably. We have 11% spread between churned and new additions, and you see revenue up to 9% year in year on a normalized and constant currency basis. So a number of positives as we look at the interconnection lens.

Speaker Change: I see that some of the challenges that we had in the first half will still exist at the macro level, you know, there's certainly this need for customers across all industry segments to do more with less.

Adaire Fox-Martin: You know, there's certainly this need for customers across all industry segments to do more with less. Optimization is still something that customers are looking to do because it does give them that outcome on the more with less tangent. We definitely have a number of our customers who are in a tougher environment in terms of the industry that they're operating in and the dynamics of that industry. That being said, we see that we will be able to manage within our full year as per the guide to the ranges that we set.

Speaker Change: Optimization is still something that customers are looking to do because it does...

Speaker Change: Give them, you know, that outcome on the more with less tangent.

Speaker Change: And we definitely have a number of our customers, you know, who are in a tougher environment in terms of the industry that they're operating in and the dynamics of that industry. That being said, we see that we will be managing within our full year as per the guide to the ranges that we set.

Adaire Fox: On the churn side, and we saw that churn elevated in 23 and continued to worsen in early 24. And this was up, especially in the Amir theater of operation. I think networks have had the most toughest operating environment and we're continuing to see pressure in that segment of our industry customers. I would also say that MNA affects this where we have paid cross connects, but unpaid intercompany cross connects often replacing those in an MNA trajectory.

Adaire Fox-Martin: And then I guess just from, you know, a thought process, you know, coming to this, you know, in the world of clouds, this is quite a usual process. I think that there is an opportunity for us to look at some enhancements in terms of, you know, management and proactive management early on in our customer engagement with us, as it relates to their usage profile and intention to churn.

Speaker Change: And then I guess just from, you know, a thought process, you know, you know, in coming to this.

Speaker Change: I think that there is an opportunity for us to look at some enhancements in terms of management and proactive management early on of our customer engagement with us.

Speaker Change: and you know as it relates to their use profile and intention to churn. And so I think there is a potential for us to lean in and support our customers as they optimise and to engage in you know churn type discussions much earlier in the process than we've been doing thus far.

Adaire Fox-Martin: And so I think there is a potential for us to lean in and support our customers as they optimize and to engage in, you know, churn-type discussions much earlier in the process than we've been doing thus far. And Michael, maybe I just...

Adaire Fox: And this takes some time for us to work through. But specifically as it relates to Amir, we can see that the data indicating some decelerating churn rate from the top 10 who have been churning in the past. So that again gives me the confidence to say that I can believe we'll move forward on a positive trajectory here. And this is an area of focus for me as we move forward over the course of this quarter.

Unknown Executive: That's great. Thank you so much.

Keith Taylor: Michael, maybe I'll just add one thing, one additional thing. In the second half of the year, the pipeline is deep. The underlying expectation really is to see our gross booking activity continuing to go up. We expect churn is going to be consistent with how we previously guided, which is important. And then in the fourth quarter, we've already sort of telegraphed that we're working with one customer in Singapore that is coming in size, that we're asking, we're asking, we're working with them to vacate the premises.

Adaire Fox-Martin: Yep, I'll comment on that. And then, perhaps, Keith, feel free to add.

Adair Fox-Martin: Michael, maybe I'll just add on one thing, one additional thing.

Michael: You've given Adair's comment.

Michael Elias: The second half of the year, the pipeline is deep. The underlying expectation really is to see

Michael Elias: of our gross booking activity.

David Barden: Next we'll go to the line of David Barton from Bank of America. Please go ahead. Hey guys, thank you so much for taking questions and dare welcome.

Michael Elias: Continuing to go up.

Speaker Change: We expect Churn is going to be consistent with how we previously guided, which is important. And then in the fourth quarter, we've already sort of telegraphed.

Keith Taylor: I guess I have to either want to ask. So obviously the DOJ SEC subpoenas continue to kind of be subject of conversation around the company. So I guess if you can kind of give us an update on where we are and what we'll take to put that to bed to be great. Also a follow up on that is in the aftermath of the conclusion of the independent review conducted by the board.

Adair Fox-Martin: We're working with one customer in Singapore that is coming in size.

Michael: We're asking, we're asking, we're working with them to vacate the premises.

Keith Taylor: We will update you on that by the time we get to the back end of the third quarter, so when you're on the October call, but that's the one area that is a plan for churn. It was built into our guide, and as I said, it should happen by the end of the year. And that gives us back some very valuable capacity in Singapore that we would like to have put to our use in our Singapore six asset isn't going to be available to probably sometime in late 26, I would think by the time it's up and running.

Michael: We will update you on that by the time we get to the back end of the third quarter, so on the October call. But that's the one area that is a planful churn. It was built into our guide.

Michael: And as I said, it should happen by the end of the year.

Keith Taylor: Were there any changes that you guys have made in this past quarter with respect to any kind of internal or external reporting. And then the last one if I could keep you referenced the unadjusted cabinets. I think this is a third or fourth quarter to row. We have to talk about why cabinets aren't involved in terms living up to expectations. And it's because of the densities and better revenue per cabinet where we are kind of coming up with some language that represents the adjustment that you think investors need to see when they read the release. You know, the first time around. Thanks. Okay, David. Thank you very much for the words of welcome.

Speaker Change: It is a fantastic group that we would like to have put to our use. Our Singapore VI asset isn't going to be available till probably sometime in late 26, I would think, by the time it's up and running.

Speaker Change: Great, thanks for the call.

Michael Rollins: Next, we'll go to the line of Michael Rollins from Citi. Please go ahead.

Michael: Next we'll go to the line of Michael Rollins from Citi. Please go ahead.

Michael Rollins: Thanks and good afternoon, and Adaire, congratulations on the new role. I'd like to get your thoughts on the addressable market for your retail data center services, maybe in a slightly different way. So the deck, the presentation deck shows that you have about 2,000 networks, Over 4800 enterprises, and I think about 3000 cloud and IT service providers. And when you look at the opportunity for future revenue growth, you know, curious how much more room you have to grow the customers in each of these verticals?

Michael Rollins: Thanks and good afternoon and Adair, congratulations on the new role. I'd like to get your thoughts on the addressable market for your retail data center services, maybe in a slightly different way. So the deck, the presentation deck sites that you have about 2000 networks.

Speaker Change: Over 4,800 enterprises, and I think about 3,000 cloud and IT service providers. And when you look at the opportunity for future revenue growth, you know, curious how much more room

David Barden: And maybe we'll start with the with the mute at the cabinet growth scenario or throw that to Keith and then he can perhaps comment on the investigation status. Yeah, David. So yeah, first and foremost, look we continue to see the net cabinet buildings is an area of high focus. As I said, sort of in the prepared remarks, roughly 300 of those cabinets related to to stack to stack path, you know, that an answer liquidation at the end of the quarter, put that aside.

Speaker Change: Do you have to grow the customers in each of these verticals?

Michael Rollins: relative to the opportunity to increase the spend from the customers that you have. And then just to follow up, if I could, as well, Keith, just following on some of your comments about, you know, second half influences. When we take a look at the constant currency normalized ex-PPI revenue growth for the last two quarters, it seems like the first half average was roughly 8%, which is at the high end of the 7% to 8% target for the year.

Speaker Change: Relative to the opportunity to increase the spend from the customers that you have. And then just to follow up, if I could as well, you know, Keith, just following up on some of your comments about, you know, second half influences.

David Barden: You know, there's a number of things are impact and one of them, one of them, I'll refer to on why we say unadjusted, but capacity constraints, of course, is continue to have an impact on based the net cabinet billing and then the timing of children, which is an obvious statement. The increasing density continues to be a factor. And as we said, there's two, there's two things I wanted to pull out for you.

Keith Taylor: When we take a look at the constant currency normalized ex-PPI revenue growth for the last two quarters,

Speaker Change: It seems like the first half average was roughly 8%.

Speaker Change: which is at the high end of the seven to eight percent target for the year. And then you made comments, I think, a few times now on the gross bookings environment, the pipeline. So can you share a bit more of what's happening in the back half of the year that's leaving the annual?

Michael Rollins: And then you made comments, I think a few times now, on the gross bookings environment and the pipeline. So can you share a bit more of what's happening in the back half of the year that's leaving the annual range at that 7% to 8% target?

David Barden: And I said in the prepared remarks, but I want to make sure that's understood in this for this context. First and foremost, we had record growth bookings. So it gives you a sense that the volume and the businesses is there. So that gives me great confidence and we had record growth bookings in the Americas theater more specifically. You add to that that we had the best net megawatts net megawatts. Billing in the retail space, I'm not talking about ex-hailing retail, and that tells you in the last seven quarters.

Speaker Change: range at that 7 to 8 percent.

Adaire Fox-Martin: There is certainly this need for customers across all industry segments to do more with less. However, optimization is still something that customers are looking to do because it does give them that outcome on the more with less tangent. We definitely have a number of our customers who are in a tougher environment in terms of the industry that they're operating in and the dynamics of that industry. That being said, we see that we will be able to manage within our full year as per the guide to the ranges that we set.

Keith Taylor: Would you like to take that first, Keith? Yeah, sure. Do you want to do the first one? Yeah, should I take first, or should you go first?

Speaker Change: Thanks.

Speaker Change: You want to take that first, Keith? Yeah, sure. Do you want to do the first one? Yeah, I take first or you go first? Why don't I take it? Let me take the second half of the year first, Michael, if I may.

Keith Taylor: Why don't I take it? Let me take the second half of the year first, Michael, if I may. Look, it's not lost on you and I'm sure all the other listeners that, you know, the business is performing well. The one thing that is being, you know, persistent is that although we're comfortable with the range of churn, our ability to guide it has been persistently high, and we had, you know, a tough fourth quarter in 2023, and that translates into momentum into 2024. That said, when you look at this particular quarter, you know, 2159, there's an element of quarter to quarter currency movement. We've given you all those numbers. I won't repeat them here.

Michael: It's not lost on you and I'm sure all the other listeners that the business is performing well. The one thing that has been...

David Barden: So this is six quarters quark prior we had, you know, we've done meaningfully better than we had done before. So it tells you about the health of the underlying business and really ties into what Adaire was talking about on the sort of gross interconnects. So there's the volume there, but there's this element of the business both on how it's, how things are tying me out. We knew, you know, as you knew, we're sort of forecasting Q2 would be probably a negative quarter again.

Speaker Change: You know, persistent is the, although we're comfortable with the, you know, the range of churn, our ability to guide it is being persistently high, and we had a tough fourth quarter in 2023, and that translates into momentum into 2024.

Speaker Change: That all said, when you look at this particular quarter...

Speaker Change: 2159, there's an element of quarter-to-quarter currency movement. We've given you all those numbers, so I won't repeat them.

David Barden: There's the timing of the churn, but when I talk about the, the, the unadjusted is, you know, we do that. We can do that maps for you, which basically says, well, when you, when you churn out the certain number of cabinets at that level of density and you apply different factors to them. With a higher level of density, you're basically dealing with a whole of roughly 2000 just because of density. And so that's why we say the unadjusted.

Keith Taylor: We also felt the drag related to energy. As you know, we're going through power price decreases. Then we had this one-off, you know, one-off large charge to our recurring revenues that we booked in the quarter, and to size it for you, it's roughly $7 million. And so there's a number of things that sort of have affected the, you know, the sequential movement of a quarter, and that's on the recurring side of it. There's great variability in the non-recurring.

Speaker Change: We're also felt the drag related to energy. As you know, we're going through power price decreases. Then we had this one-off large charge to our recurring revenues that we booked in the quarter. To size it for you is roughly $7 million.

David Barden: I think the most important thing is that look, we've given you a good sense of there's great momentum in the business. We're seeing great gross values. Yes, there's an element of churn that's coming through the business. We've been talking about that for many quarters now, the economic climate, climate and which we operate. But overall with the depth, the depth of the pipeline and the momentum we see in our business, that's what gives us confidence that you're going to see that a bait.

Speaker Change: And so there's a number of things that sort of have affected the, you know, the sequential movement quarter over quarter, and that's on the recurring side of it.

Keith Taylor: We're all, and we'll do our best to guide you each quarter on what's going on. Suffice it to say, the success of the X-scale business has created some volatility with non-recurring revenue. And we'll reconcile that and normalize it out for next year as well, just so you can truly get the sense of how the underlying business is performing. So all that said, the pipeline is at the highest level we have ever seen in our business, so that's good.

Michael: There's great variability in the non-recurring. We'll do our best to guide you each quarter on what's going on. Suffice it to say, the success in the X-Scale business has created...

Speaker Change: some volatility with non-recurring and we'll reconcile that and normalize it out for next year as well. Just so you can truly get the sense of how the underlying business is performing. So all that said.

David Barden: And then the last part I would just say is the backlog is being as high as we've seen in a very long period of time. [inaudible] continue to work with the SEC and the DOJ. It's a process. We're, we're working through that process. We continue to feel very confident in, in that process and how we're, we're responding to it. I, I would like you to draw great comfort from the fact that not only did we file their thank you last quarter, but today we filed our thank you again today.

Adair Fox-Martin: We said that churn would slow down in the second half of the year and our bookings would accelerate.

Speaker Change: The pipeline is at the highest level we have ever seen in our business, so that's good. Sure, we have, I think, good visibility, too, and as a result, that's the momentum you're seeing that you should see in the business.

Keith Taylor: Churn, we have, I think, good visibility into, and as a result, that's the momentum you're seeing that you should see in the business. And so we continue to remain confident. And as Adaire said, despite the macroeconomic conditions, we know they're tough out there. Companies like Stackpath, when they hit the wall basically at full speed and just liquidate, it gives you a sense that some companies aren't doing well out there.

Adair Fox-Martin: And so we continue to remain confident, and as Adair said,

Speaker Change: No, despite the macroeconomic conditions, we know they're tough out there. Companies like Stackpath, when they hit the wall basically at full speed and just liquidate, it just gives you a sense that some companies aren't doing well out there. But you've got an evolving economic environment.

Keith Taylor: But you've got an evolving economic environment. We know our relevance. We know the digital environment is very friendly to Equinix, and we know the supply environment is going to continue to get more constrained. So the combination of all of that continues to give us the optimism that we have, not only in how we finish this year but also how we position ourselves for 2025. And again, you know what our lighthouse metric is, driving value on a per share basis. That is our whole intention. But we believe we can do that with both good fiscal management and top-line growth. So hopefully, that gives you the answer that you're looking for.

Speaker Change: We know our relevance.

Speaker Change: We know the digital environment is very friendly to Equinix, and we know the supply environment is going to continue to get more constrained. So the combination of all of that continues to give us the optimism that we have, not only in how we exit the year, but also how we position ourselves for 2025.

David Barden: And so when you think about the, the reinforcement we got from the audit committee's investigation of our financials, you should, you should draw great comfort. You should draw great comfort from it, but like anything with the short seller report as it comes out in the following subpoenas that came from the SEC and DOJ, we have to respond to and therefore it is a process. And you're, in your question to, was there anything that came out of what we want to do differently.

Adair Fox-Martin: And again, you know what our lighthouse metric is, is driving value on a per share basis. That is our whole intention. But we believe we can do that with both good fiscal management and top line growth.

Michael Rollins: Thanks, and good afternoon, and Adaire, congratulations on the new role. I'd like to get your thoughts on the addressable market for your retail data center services, maybe in a slightly different way. So, the deck, the presentation deck shows that you have about 2,000 networks, over 4800 enterprises, and I think about 3000 cloud and IT service providers. And when you look at the opportunity for future revenue growth, you know, curious how much more room you have to grow the customers in each of these verticals?

Adaire Fox-Martin: And perhaps just building on that, and to address the first part of the question around the opportunity in our installed base and new market opportunities, this is something that I feel very, very positive about. Not only have we undertaken and already commenced a very deep refresh of our segmentation of our customer base, but in the context of that, we have looked at each of those elements and how we can create sales place scenarios that allow us, you know, to have almost a rinse and repeat model from a selling perspective with a cohort of customers.

Adair Fox-Martin: So hopefully that gives you the answer that you're looking for.

David Barden: I think it was very important. When you look at what we announced in May, we were clear that not only did we not have any restatements, but we didn't have any adjustments. Restatements that is a fact about materiality, adjustment is an adjustment. And so the system is working as it should, which is great. We have the controls, the team does the work. And overall we feel very confident about it. But like anything, you're all just going to step back and reflect, or there are other things that we could, could do that are different.

Speaker Change: And perhaps just building on that and to address the first part of the question around the opportunity in our install base.

Michael Rollins: relative to the opportunity to increase the spend from the customers that you have. And then just to follow up, if I could, as well, Keith, just following on some of your comments about, you know, second half influences. When we take a look at the constant currency normalized xPPI revenue growth for the last two quarters, it seems like the first half average was roughly 8%, which is at the high end of the 7% to 8% target for the year.

Speaker Change: and New Market Opportunities.

Speaker Change: This is something that I feel very, very positive about.

Speaker Change: Not only have we undertaken and already commenced a very deep refresh of our segmentation of our customer base,

Speaker Change: But in the context of that, we have looked at each of those elements and how we can create sales place scenarios that allow us.

David Barden: And so that's what the team, they're looking at all the things that we do and saying, do we do different type of disclosures. You saw as recently talked about the redevelopment of our cap, you know, redevelopment cap ex, which we thought, one was a very important disclosure. We'd already been planning for it in advance of the short seller report. But those are the kind of things that we just, we make sure that there's appropriate augmentation of policy and disclosure.

Speaker Change: You know, to have almost like a rinse and repeat model from a selling perspective into a cohort of customers. So, very excited about, you know, the upsell opportunity as a result of some of those programs in our install base.

Adaire Fox-Martin: So very excited about, you know, the upsell opportunity as a result of some of those programs in our installed base, but also about the outcomes of the segmentation exercise and the way that we will define our coverage model to enable us to reach further, you know, prospects and bring them into the Equinix family as customers. So this piece of work that's underway, and I'm very confident about the prognosis and outcome of that work.

David Barden: And I think it puts us in a much better position. But relating to it, there are any adjustments. There's no, but we always think that there's things we can, we can do better. And I'm drawing up from a line of one of my close CFO friends. He all says better, better, never done. So because we're always looking to do better every single quarter. And we're never, we're never going to be done. So we'll take, we'll take the advice and guidance from both the council and whether anything comes back from DOJ and SEC. And we'll, we'll get better. But overall, I feel very comfortable in our financial disclosure.

Speaker Change: but also about the outcomes of the segmentation exercise and the way that we will define our coverage model to enable us to reach further to prospects and bring them into the Equinix family as customers. So a piece of work that's underway and I'm very confident about the prognosis and outcome of that work.

Unknown Executive: Thank you very much.

Unknown Executive: Thank you, everyone, for joining our call today. This concludes our Q2 call.

Speaker Change: Thank you everyone for joining our call today. This concludes our Q2 call.

Unknown Executive: Thank you all for participating in the Equinix Second Quarter Earnings Conference Call. That concludes today's conference. Please disconnect at this time and have a great rest of your day.

Michael Rollins: Would you like to take that first, Keith? Yeah, sure. Do you want to do the first one? Yeah, should I take first, or should you go first?

Keith Taylor: Why don't I take it? Let me take the second half of the year first, Michael, if I may. Look, it's not lost on you and I'm sure all the other listeners that, you know, the business is performing well. The one thing that is being, you know, persistent is that although we're comfortable with the range of churn, our ability to guide it has been persistently high, and we had, you know, a tough fourth quarter in 2023, and that translates into momentum into 2024. That all said, when you look at this particular quarter, you know, 2159, there's an element of quarter of a quarter currency movement. We've given you all those numbers. I won't repeat them here.

Operator: Thank you all for participating in the Equinix Second Quarter Earnings Conference Call. That concludes today's call.

Speaker Change: Thank you all for participating in the Equinix Second Quarter Earnings Conference Call. That concludes today's conference. Please disconnect at this time and have a great rest of your day.

Keith Taylor: Well, we'll do our best to guide you each quarter on what's going on. Suffice it to say, the success of the x-scale business has created some volatility with non-recurring revenue. And we'll reconcile that and normalize it out for next year as well, just so you can truly get the sense of how the underlying business is performing. So all that said, we said that churn would slow down in the second half of the year and our bookings would accelerate.

Keith Taylor: The pipeline is at the highest level we have ever seen in our business, so that's good. Churn, we have, I think, good visibility into, and as a result, that's the momentum you're seeing that you should see in the business. And so we continue to remain confident. And as Adaire said, no, despite the macroeconomic conditions. We know they're tough out there. Companies like Stackpath, when they hit the wall basically at full speed and just liquidate, it gives you a sense that some companies aren't doing well out there.

Unknown Executive: All right, guys, thank you so much.

Jim Schneider: Thank you both. Next, we'll go to the line of Jim Schneider from Goldman Sachs. Please go ahead. Good afternoon. Thanks for taking my questions and welcome, Adaire. I was wondering if you can maybe extend on your comments earlier about AI workloads moving from service providers to enterprise. Adire from your vantage point, how long do you believe it'll be before that AI demand becomes more directly material on the enterprise side, Equinix on the sort of conventional retail side?

Adaire Fox-Martin: And perhaps just building on that, and to address the first part of the question around the opportunity in our installed base and new market opportunities, this is something that I feel very, very positive about. Not only have we undertaken and already commenced a very deep refresh of our segmentation of our customer base, but in the context of that, we have looked at each of those elements and how we can create sales place scenarios that allow us to have almost a rinse and repeat model from a selling perspective with a cohort of customers.

Adaire Fox-Martin: So very excited about the upsell opportunity as a result of some of those programs in our installed base, but also about the outcomes of the segmentation exercise and the way that we will define our coverage model to enable us to reach further to prospects and bring them into the Equinix family as customers. So a piece of work that's underway, and I'm very confident about the prognosis and outcome of that work.

Operator: Thank you, everyone, for joining our call today. This concludes our Q2 call.

Jim Schneider: Yeah, thanks very much Jim and thanks for your question and your words of welcome. So I think, you know, in the short term, the demand that we're seeing is primarily for training based workloads. And this is primarily driven in the short term by cloud and the various different technology partners that we have. And this, as I've mentioned, is how our near term pipeline is being represented and the beneficiary of this in many instances is our ex scale business.

Jim Schneider: In the enterprise mid market retail business, we absolutely have AI ready data centers ready to take a customer workloads. We have already closed a number of transactions where we are running smaller AI based workload scenarios in the training world for enterprise based customers. We are working with many of our CIOs in to support their AI strategy as they look to integrate AI into their business and manage their cost whilst they're doing so.

Jim Schneider: And, of course, some of our, you know, some of our ecosystem partners have created almost a magnetism around Equinix as it relates to AI companies like Cori's and Lambda that we announced last year in 23 who have capabilities, you know, available today in Equinix data centers. And, of course, the Nvidia DGX private cloud offering that we also announced late in 23 all of these have very active work pipelines. Some of them have active users who are making use of this system now.

Jim Schneider: So, I'd say that we're seeing early, early traction in, you know, the enterprise level inference and type workloads beginning to a car in our data center environment. But that is something that we'll see extrapolate and grow over the medium to longer term.

Adaire Fox: Thanks, and then I'll follow up last quarter you out on your plan for your DC one data center to both modernize and expand capacity as you look across your portfolio, do you foresee the opportunity to do this more broadly across more facilities? Yeah, I think Jim, you're referring to our DC to redevelopment. If I'm not mistaken, I just want to make sure we think the universe of the universe of what we call redevelopment projects like that is five to seven.

Adaire Fox: The strategic they're of scale, they're of size and of great importance and hands that were up, you know, we're doing those type of redevelopments because of the value that we get to create, introduce more capacity into into that highly connected data center and, you know, and get a good return, not only good return on both the element of it, which is redevelopment, but also the enhancement aspect of it. And so overall, the universe isn't massive. You know, we have 264 data centers that are alluded to. We think it's five to seven strategic assets strewn throughout the world that we'll do that too. Thank you.

Michael Elias: Next, we'll go to the line of Michael Elias from TD Cowan. Please go ahead. Great. Thanks for taking the questions and adair. Congratulations on taking the helm. Maybe to kick things off. One of the things that we've noticed is the differential and densities between what's being churned and what's coming in. You know, as I think through kind of the evolution at the chip level, you know, it seems like there's an acceleration in power consumption there.

Michael Elias: Do you view this as a structural trend, I.e., we could be talking about, you know, four or five quarters from now, you, you taking them cabinets at seven KW per cab and churning at four. Thus, this represents an increasing headwind to that, to that cabinet number. I guess that's my, my first question. Just trying to get a sense around, you know, is this going to become a greater and greater headwind? Yeah.

Michael Elias: You know, 10 weeks in. So, you know, this is, you know, this is, this is certainly one of the areas, you know, that I've gone a little bit of a double click on here. And I can certainly see that there are absolutely some shifting dynamics in the business. And Keith highlighted, you know, this increasing power density in the cabs that are turning in versus as you've pointed to those that are turning out.

Michael Elias: And for us, perhaps this is something where we would look to see the billable cabs as a measure, maybe not being as tightly tied to revenue growth as we've seen it in the past. And that's something that I think we're reflecting on. You know, if I think about our ex-scale business, killer was probably as a cleaner metric, but when I think about it from retail and our MRR per cab and our billable cabs, you know, that that perhaps is the right P times Q map that we have now, even though growth is probably more weighted towards the cabin yield versus the cabinet count at this point.

Michael Elias: And I think that we can continue to supplement that with quarterly insights into how we're seeing the density, the density evolves as our business evolves and as the capabilities within our dangerous centers continue to evolve. So certainly something that's, you know, a call process for us here. I think as Keith mentioned, just to reiterate, you know, I think those very strong growth bookings plus the leading indicator of cabinets sold not yet installed are indicators that we will improve on this number in the second half.

Michael Elias: And maybe Michael, if I can just add on to what Adiris said, okay, I think it's important. As Adiris said, look, we got to keep on looking at it. David asked the question earlier on, we want to be able to respond to it in a way that that absolutely makes sense and give you all the statistics, at least so you can have the same sort of view that we have clearly the shifting dynamics is more density.

Michael Elias: So that's a positive. But I think what's really, you know, the crux of what is going to come here, if you have more density, you're getting your price per unit's going up and you're seeing that in the arpoor, the MR per cabinet. But we're also, when we, when we look to monetize the capital that we invest in the business, no surprise to you, we're looking at a return on that investment, those targeted IRRs are 20 to 30% free leverage.

Michael Elias: And so you're seeing the cash on cash yield still still deliver, but that one core metric really feels like it's, you know, again, something that I think makes sense is to keep on tracking. But we're really going to have to give you other components so that you get the full value of what's going on in the business. But the underlying bias is more density. And that's how, you know, we're retail, we're retail data, you know, multi tenant data center player, and you need to deal with, you know, the changing shifts in customer expectations.

Michael Elias: And that, you know, when you go into one of our data centers, you get a real good feel for that the true difference between somebody, maybe in one hour versus something in a different aisle. And that tells you, like, there are shifting dynamics taking place in a really live environment, and it is an ecosystem that drives with, you know, with a propensity to increase density. Great, thanks for the color there. And if I could just squeeze one more in.

Michael Elias: I believe the expectation at the beginning of the year was return to step down in the back half. Is that still your expectation? And maybe as part of that, could you give us a sense for the term that you're seeing among medium and small size deployments? Thanks. Yep, I'll comment on this and then perhaps Kate, feel free to add. I mean, certainly we're seeing that. And you know, our turn in the range of two to 2.5%, which is the range that we guided to is something that we can continue to manage to I think that if we normalize for stack path in this quarter, we would be slightly better than our expectations in terms of where we landed.

Michael Elias: We also have, you know, a supply and demand situation in the market, which has a, you know, a very positive trajectory on pricing. So maybe, you know, this gives us the opportunity to be told about managing our overall a churn and dynamic so that we could, you know, selectively use proactive churn to help us drive and improve some years here. I see that some of the challenges that we had in the first half will still exist at the macro level.

Michael Elias: You know, there's certainly this need for customers across all industry segments to do more with less optimization is still something that customers are looking to do because it does give them, you know, that outcome on the more with less attention. And we definitely have a number of our customers, you know, who are in a tougher environment in terms of the industry that they're operating in the dynamics of that industry. That being said, we see that we will be managing within our full year as per the guide to the ranges that we set.

Michael Elias: And then I guess just from, you know, a full process, you know, you know, incoming to this, you know, in the world of cloud, this is quite a usual process. I think that there is an opportunity for us to look at some of some enhancements in terms of, you know, management and proactive management early on of our customer engagement with us. And, you know, as as it relates to their use profile and attention to churn.

Michael Elias: And so I think there is a potential for us to lean in and support our customers as they optimize and to engage in, you know, churn type discussions much earlier in the process than we've been doing this far. Michael, maybe I just, I'll just add on one thing, one additional thing given a dare's comment. The second half of the year, the pipeline is deep. We have the underlying expectation really is to see what they are, our gross booking activity continuing to go up.

Michael Elias: We expect churn is going to be consistent with how will previously guided, which is important. And then in the fourth quarter, we've already sort of telegraphed. We're working with one customer in Singapore that is coming in size and we're asking, we're asking, we're working with them to vacate the premises. We will update you on that by the time we get to the back end of the third quarter. So in the on the October call, but that's the one area that is a plan full churn.

Michael Elias: It was built into our guide. And as I said, it should happen by the end of the year. And that gives us back some very valuable capacity in Singapore. That we, that we would like to have put to our use in our Singapore six assets isn't going to be available to probably some time in late 26. I would think by the time it's up and running. Great, of the car.

Michael Elias: Next we'll go to the light of Michael Rollins from City. Please go ahead. Thanks. I'm good afternoon and Adaire.

Michael Elias: Congratulations on a new role. I'd like to get your thoughts on the addressable market for your retail data center services, maybe in a slightly different way. So the deck, the presentation deck site that you have about 2,000 networks, over 4,800 enterprises, and I think about 3,000 cloud and IT service providers. And when you look at the opportunity for future revenue growth, curious how much more room do you have to grow the customers in each of these verticals relative to the opportunity to increase the spend from the customers that you have.

Michael Elias: I didn't just follow up if I could as well, you know, keep just following up some your comments about, you know, second half influences. Then when we take a look at the constant currency normalized XPPI revenue growth for the last two quarters, it seems like the first half average is roughly 8%, which is at the high end of the 7 to 8% target for the year. And then you made comments, I think, a few times now on the growth stockings environment, the pipeline.

Michael Elias: So can you share a bit more of what's happening in the back half of the year that's leaving the annual range at that 7 to 8%. Thanks. You don't take the first one. Yeah, sure. Yeah, I take first or you go first. I don't I take it.

Keith Taylor: Let me take the second half of the year first, Michael, if I may look the non lost in you and I'm sure all the other listeners that, you know, the business is performing well. The one thing that has been, you know, persistent is the although we're comfortable with the, you know, the range of turner ability to guide it has been persistently high. And we had a tough fourth quarter and in 2023 and that translates into momentum into 2024.

Keith Taylor: That all said, when you look at this particular quarter, you know, 2159, there's an element of quarter to quarter currency movement, we've given you all those numbers. I won't, I won't repeat them. We're also felt the drag to relate related to energy. As you know, we have, we're going through power price decreases. Then we had, we had this one off, you know, one off large charge to our recurring revenues that we booked in the quarter that decides it for you is roughly $7 million.

Keith Taylor: And so there's a number of things that sort of have affected the, you know, the sequential movement quarter of a quarter. And that's on the recurring side of it. There's great variability in the non recurring. We'll, we'll do our best to guide you each quarter on what's going on suffice it to say the success in the ex scale business has created some volatility with non occurring. And we'll reconcile that and normalize it out for next year as well, just so you can truly get the sense of how the underlying business is performing.

Keith Taylor: So all that said, we said that churn would would would slow down the second half of the year and our bookings within accelerate. The pipeline has at the highest level we have ever seen in our business. So that's good. Certainly I think good visibility to, and as a result, that's the momentum you're seeing that you should see in the business. And so we continue to remain confident. And as Adaire said, no, despite the macroeconomic conditions, we know they're tough out there.

Keith Taylor: Companies like Stackplath, when they hit the wall, basically at full speed and just liquidate, it gives you a sense that some companies aren't doing well out there. But you've got an evolving economic environment. We know our relevance. We know the digital environment is very friendly to Equinix, and we know the supply environment is going to continue to get more constrained. So the combination of all of that continues to give us the optimism that we have not only in how we exit here, but also how we position ourselves for 2025.

Keith Taylor: And again, you know what our lighthouse metric is is driving value on a per share basis. That is our whole intention. But we believe we can do that with both good fiscal management and top line growth. Totally that gives you, it gives you the answer that you're looking for.

Adaire Fox: I'm perhaps just building on that and to address the first part of the question around the opportunity in our install base and a new market opportunities. This is something that I feel is very, very positive about. Not only have we undertaken and already commenced a very deep refresh of our segmentation of our customer base. But in the context of that, we have looked at each of those elements and how we can create sales place scenarios that allow us, you know, to have almost like a rinse and repeat model from a selling perspective into a cohort of customers.

Adaire Fox: So very excited about, you know, the upsell opportunity as a result of some of those programs in our install base, but also about the outcomes of the segmentation exercise and the way that we will define our coverage model to enable us to reach further, you know, to prospects and bring them into the economics family as customers. So a piece of work that's underway and I'm very confident about the prognosis and outcome of that work.

Unknown Executive: Thank you, everyone for joining our call today. This concludes our Q2 call. Thank you all for participating in the Equinox Second Quarter Earnings Conference call. That concludes today's conference.

Operator: Please disconnect at this time and have a great rest of your day.

Q2 2024 Equinix Inc Earnings Call

Request a DemoDemo

EQIX

Equinix

Earnings