Q4 2024 Equinix Inc Earnings Call
Speaker Change: Good afternoon and welcome to the Equinix Fourth Quarter Earnings Conference Call. All lines will be able to listen only until we open for questions. Today's conference is being recorded. If anyone has any objections, please disconnect at this time. I would now like to turn the call over to Chip Newcom, Senior Director of Investor Relations. You may begin.
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 that 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 identified in today's press release, as well as those identified in our filings with the SEC, including our most recent Form 10-K filed February 12, 2025.
Speaker Change: Equinix assumes no obligation and does not intend to update on 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.
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.
Speaker Change: We would also like to remind you that we post important information about Equinix on the IR 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 Adaire 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 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 the call over to Adaire.
Speaker Change: Thank you Chip. Good afternoon and a warm welcome to our earnings call for the fourth quarter and full year 2024.
Adaire Fox-Martin: Before we delve into the key figures, I want to take a moment to underscore that 2024 was a year in which we proved our ability to adapt and to deliver in equally successful measure.
Adaire Fox-Martin: Our performance not only demonstrates the strength, resilience and consistency of our business, but also, and increasingly importantly, our ability to meet the future moments in the market.
Adaire Fox-Martin: Our unique business model enables us to serve the full spectrum of our customers' connectivity and digital infrastructure requirements.
Adaire Fox-Martin: This gives me great confidence as we continue to shape our organization to make the very most of the opportunity ahead.
Adaire Fox-Martin: Now, turning to our results, we had an outstanding close to 2024.
Adaire Fox-Martin: Revenues for the full year were $8.7 billion, up 8% year-over-year, an amazing 22 years of consecutive quarterly revenue growth.
Adaire Fox-Martin: Adjusted EBITDA was $4.1 billion, a 160 basis point improvement in our margins year over year.
Adaire Fox-Martin: AFSO per share, our lighthouse metric, grew 10% year-over-year. This performance is at the top end of our long-term expectations as we continue to compound value for our shareholders.
Adaire Fox-Martin: These growth rates are all on a normalised and constant currency basis, excluding lower power costs passed through to our customers.
Adaire Fox-Martin: Our as-reported numbers and outlook have been tempered by a significantly stronger U.S. dollar during Q4.
Adaire Fox-Martin: Our team has focused on executing against all the variables within their control to deliver an exceptional quarter and strong outlook, highlighting the underlying health of our business and the scale of our opportunity.
Adaire Fox-Martin: To give a sense of our accelerating pace of execution, in both Q4 and 2024, we delivered the best gross bookings performance in our 26-year history, with solid pricing dynamics and strong execution across all three regions.
Adaire Fox-Martin: This translated to more than 16,200 deals across more than 6,000 customers in 2024.
Adaire Fox-Martin: Supported by proactive demand shaping, putting the right customer with the right workload in the right location, in 2024 we delivered record megawatts sold, including our best year ever for volume sold in non-tier 1 metros.
Adaire Fox-Martin: Our channel program delivered nearly 30% of bookings and more than 50% of company new logos for the year, with wins across a wide range of industry segments and use cases.
Adaire Fox-Martin: In our X-scale business, during 2024, we leased approximately 150 megawatts of capacity and nearly tripled the investment capital of the program.
Adaire Fox-Martin: Our best-in-class operations team delivered greater than five nines of uptime for our customers.
They also decreased our PUE by more than 6%.
Lowering operating costs by $18 million for 2024.
Adaire Fox-Martin: This supports both our customers' efforts to green their digital infrastructure and enhances our operational efficiency.
Adaire Fox-Martin: Now, as we look to 2025, it is clear that the pace of technological change has never been faster.
Adaire Fox-Martin: At the same time, I strongly believe that the market opportunity and Equinix's relevance to that opportunity has never been greater.
Adaire Fox-Martin: We are fortunate to host a diverse range of customer workloads within our data centers.
as we support their broad digital infrastructure needs.
Adaire Fox-Martin: from networking and peering, to capital market value creation, to hybrid multi-cloud architectures, and to the workloads driving artificial intelligence use cases and training.
Adaire Fox-Martin: We continue to cultivate and win significant opportunities for both inferencing and training workloads as we cement Equinix as the place where private AI happens.
Adaire Fox-Martin: In Q4, more than half of the volume of our top 25 deals was related to high-performance compute and AI workloads.
Adaire Fox-Martin: Importantly, we are increasingly seeing a diversification of AI and machine learning use cases across healthcare, finance, transportation, and gaming.
Adaire Fox-Martin: Recent wins in customer production use cases include Outrider Technologies, the leader in autonomous yard operations.
Adaire Fox-Martin: who are deployed at Equinix to support AI-based training and inference workloads that maximize freight throughput and enhance safety in logistics yards.
Adaire Fox-Martin: To seize the market opportunity, we are on a journey to simplify the path for our customers to consume digital infrastructure.
Our focus is on three strategic moves.
Adaire Fox-Martin: How we can, one, serve better, two, solve smarter, and three, build bolder.
Adaire Fox-Martin: These critical priorities are already bearing fruit, and we expect them to enable our accretive growth in 2025 and beyond.
Adaire Fox-Martin: First, we are serving our customers better by enabling our customer facing resources to execute with precision and velocity.
Adaire Fox-Martin: We introduced automated quoting and capacity visualization tools, revised our compensation plans, and rolled out a more sophisticated approach to segmentation.
Adaire Fox-Martin: These changes are part of our journey to accelerate value creation for customers as we nurture our opportunities into bookings and from bookings to revenue faster.
Adaire Fox-Martin: It also means that we continually refine our course to serve, whilst simultaneously improving the customer experience.
Adaire Fox-Martin: Second, we are solving smarter for our customers. We are simplifying our product portfolio and working to make Equinix the easy button that manages the inherent complexity of hybrid, multi-cloud and AI environments.
Adaire Fox-Martin: We are prioritizing products that will continue to differentiate and extend the value of Equinix.
particularly around our enduring value proposition of connectivity.
Adaire Fox-Martin: This focus also resulted in our decision to end-of-sale Equinix metal.
Adaire Fox-Martin: so we can concentrate our development efforts on solutions core to interconnection.
Adaire Fox-Martin: Finally, we are building bolder. Based on the demand signals we are seeing in the marketplace, we plan to build bigger data centers in fewer, larger phases, allowing us to optimally accommodate the full product continuum on our campuses across traditional retail, larger footprint retail, and x-scale.
Adaire Fox-Martin: This balanced approach should accelerate our delivery of saleable capacity whilst allowing us to respond to our customers' needs as market dynamics, particularly those related to generative AI, continue to evolve at a rapid pace.
Adaire Fox-Martin: No other provider in the market offers this unique combination of a data center product continuum with interconnection density at a global scale.
Adaire Fox-Martin: Whilst we delivered record gross bookings in Q4, we could have delivered an even stronger bookings outcome if we had available capacity in our Tier 1 metros.
Adaire Fox-Martin: By building Boulder, our intent is to sprint towards this demand.
Adaire Fox-Martin: More than 65% of our retail expansion is supporting capacity in major metros, and here we have clear visibility into pipeline and fill rates.
Adaire Fox-Martin: Now, pivoting to the operational highlights for the quarter. Our customers value our premium service and our global footprint.
Adaire Fox-Martin: With two-thirds of our recurring revenues now generated by customers deployed in more than 10 IBXs, we continue to invest to build our network of data centers across the globe.
Adaire Fox-Martin: We now have 62 major projects underway in 36 metros across 25 countries, including 16 X-scale projects.
Adaire Fox-Martin: This represents approximately 34,000 cabinets of retail and 165 megawatts of X-scale capacity which will be delivered through to the end of 2026.
Adaire Fox-Martin: In November, we were pleased to announce our Singapore VI build.
Adaire Fox-Martin: This facility will provide 20 megawatts of capacity in one of APAC's fastest-growing digital economies.
Adaire Fox-Martin: This month we opened our first data center in Jakarta. This new Indonesian presence expands our reach to 74 metros across 35 countries.
Adaire Fox-Martin: Our interconnected digital ecosystems continue to drive growth and customer value.
Adaire Fox-Martin: We now have more than 482,000 total interconnections deployed on our industry-leading platform.
We added an incremental 6,000 underlying interconnections in Q4.
Adaire Fox-Martin: Interconnection revenue stepped up 9% year-over-year on a normalized and constant currency basis, now representing 19% of our recurring revenues.
Adaire Fox-Martin: Equinix Fabric continues to over-index as customers increasingly adopt 25 and 50 gigabit per second circuits.
Adaire Fox-Martin: Interconnection and ecosystem customer wins and use cases included Payments Processing Company WebSpace.
Adaire Fox-Martin: who is leveraging Fabric Cloud Router to connect to their key cloud partners and lower their networking costs.
Adaire Fox-Martin: ZAO, the largest independent fiber provider in North America, is aggressively expanding its fiber infrastructure in key markets with Equinix.
Adaire Fox-Martin: delivering on-demand, high-capacity connectivity to meet the growing demands of enterprise and exponential bandwidth growth driven by AI.
Adaire Fox-Martin: Our xScale portfolio continues to see strong overall demand as service providers expand to support their cloud and AI businesses.
Adaire Fox-Martin: Since our last earnings call, we leased an incremental 31 megawatts across our Paris 12 and Paris 13 assets.
Cumulative X-scale leasing is now over 400 megawatts globally.
Adaire Fox-Martin: We have a strong funnel of additional ex-scale opportunities in 2025 as customers increasingly look to secure capacity for delivery dates in 2027 and beyond.
Adaire Fox-Martin: We secured two new native cloud on ramps this quarter in New York and Mexico City.
Adaire Fox-Martin: We host more than twice the metros with multiple native cloud on-ramps as our nearest competitor.
Adaire Fox-Martin: Native access to the clouds enables improved management of security, cost, control, and neutrality, especially for customers pursuing a hybrid and or a multi-cloud strategy.
Adaire Fox-Martin: Ease of connectivity and access to data stored in the clouds is a key requirement for inferencing use cases and training workloads.
Adaire Fox-Martin: Our ability to deliver value for our customers and accretive growth for our shareholders in 2024 is a testament to the strength of our team and the quality of our differentiated business model.
Adaire Fox-Martin: I'm proud of our performance and excited by the opportunity for our business in the year ahead. With that, I'll turn it over to Keith to cover the quarter's financials.
Thanks, Adaire, and good afternoon to everyone.
Speaker Change: As already noted by Adaire, we had a great end to the year. The Aclinic's team continued to deliver across all levels of the organization.
Speaker Change: For the full year, our record gross bookings and robust performance across each of our regions highlight the diversity and strength of our unrivaled go-to-market engine.
Speaker Change: We had solid net bookings and healthy net pricing actions while our pipeline conversion improved throughout the year.
Speaker Change: We also celebrated our 10th year operating as a real estate investment trust, a meaningful milestone for the company.
Speaker Change: Over this 10-year period, our as-reported lighthouse metric AFFO per share has grown 10% on an annual compounded basis, while we also return more than $9.3 billion of capital to our shareholders via our quarterly cash dividends.
Speaker Change: Our customer focused and differentiated business model and strong consistent execution has truly allowed us to create value over the past decade.
Speaker Change: and as highlighted by Adaire, we continue to see a very significant opportunity ahead and are positioning the business to drive accretive growth for the many years to come. Yes, this is a very exciting time.
Speaker Change: And our non-financial metrics continued to trend favorably as we completed the year. Our net cabinet's billing stepped up by $2,200 in the quarter, driven by continued strong booking activity.
Speaker Change: Our backlog of cabinets, sold but not yet installed, doubled over the last year, which, when combined with our 2025 Operating Plan goals, should drive continued performance of this core metric.
Speaker Change: Net underlying interconnection additions also showed a healthy step-up as the gross cross-connect activity was at its highest level in three years.
Speaker Change: Finally, our MRR per cabinet yield stepped up to $2,326 per cabinet driven by net positive pricing actions and increasing power densities.
Speaker Change: So, simply put, we continue to drive value on both the top line and at the per share level while delivering meaningful operating leverage across the business.
Speaker Change: On the sustainability front, we're pleased to be recognized on CDP's Prestigious Client Change A-List for the third consecutive year, while also rated AAA by MSCI for the first time.
Speaker Change: We consider our sustainability efforts to be a fundamental tenet of our business, which both supports the needs of our customers and drives operational efficiency, both very good for the business.
Speaker Change: And finally, as we look forward into 2025 and beyond, we plan to continue to adapt each of our organizations and our products and services to serve our customers better with greater efficiency.
Speaker Change: This includes the end of sale of our metal product offering, while realigning the organization to enable us to make investments in other key priority areas.
Speaker Change: Given the metal decision, we booked a $160 million dollar impairment charge on specific assets related to metal.
Speaker Change: Separately, we recorded a one-off and discrete charge for the impairment of our Hong Kong 4 asset totaling $73 million.
Speaker Change: We also recorded a 31 million dollar restructuring charge primarily related to the reduction in force in the quarter.
Speaker Change: These decisions, although difficult at the time, are the right decisions for our business.
Speaker Change: They allow us to reprioritize where we invest while also reducing the net drag on the business and improving our return on invested capital.
Speaker Change: Now let me cover the highlights for the quarter as depicted on slide 4.
Speaker Change: Note that all growth rates in this section are on a normalized and constant currency basis and exclude the impact of lower power costs passed through to our customers.
Speaker Change: Global Q4 revenues were $2.261 billion, up 7% over the same quarter last year, and at the midpoint of our guidance range, with both solid recurring and non-recurring revenue growth across our regions, despite a portion of our X-scale fees being deferred into Q1.
Speaker Change: Q4 revenues net of our FX hedges included a 22 million dollar FX headwind when compared to our prior guidance rates given the meaningful strengthening of the US dollar in the fourth quarter
Speaker Change: Global Q4 adjusted EBITDA was $1.021 billion or approximately 45% of revenues up 9% over the same quarter last year and at the midpoint of our guidance range due to strong operating performance low down sequentially due to planned timing of spend and eggscale fee mix.
Speaker Change: Q4 at Justice D. Bidot, net of our FX hedges included a nine million dollar FX headwind when compared to our prior guidance rates.
Speaker Change: Global Q4 FFO was $770 million, up 10% over the same quarter last year, due to strong operating performance, offset by our seasonally higher recurring capex spend, as expected.
Speaker Change: Q4FFO included a $2 million FX benefit when compared to our prior guidance rates.
Speaker Change: Global Q4 MRR churn was 2.5% as planned through the previously discussed deferral of MRR churn from late September into early October. Normalized for this timing, churn would have been 2.2%.
Speaker Change: For the full year, our average quarterly churn was 2.2%, well placed in the lower half of our 2 to 2.5% quarterly guidance range.
Speaker Change: Turning to our regional highlights, whose full results are covered on slides 5 through 7.
Speaker Change: On a year-over-year normalized basis, excluding the impact of lower power costs passed through to our customers, APAC was our fastest growing region at 13%, followed by the Americas region at 8%.
Speaker Change: Our AMEA region grew 2% year-over-year, dampened by the significant ag-scale leasing activity in Q4 of 2023.
Speaker Change: Again, as noted earlier, outscaled fees are inherently lumpy and can impact the quarter-over-quarter and year-over-year growth rates, both at the consolidated and regional levels.
Speaker Change: The Americans region had a strong quarter with solid gross bookings as revenues for the region reached the $1 billion quarterly revenue threshold for the very first time.
Speaker Change: Also, our Americas team had strong sales across our global assets, achieving its best export quarter in two years.
Speaker Change: We saw particular strength in our Denver, Montreal and Santiago markets as well as continued momentum in our Tier 1 metros.
Speaker Change: Our EMEA business delivered record gross bookings and firm pricing led by our flat metros with strong momentum also in Geneva, Istanbul, and Milan.
Speaker Change: In the quarter we signed our first power purchase agreement in Italy with Neon to support 53 megawatts of new solar projects. This agreement brings Equinix's total global renewable energy capacity under long-term contracts to greater than 1.2 gigawatts across 10 countries.
Speaker Change: And finally, the Asia-Pacific region had a great quarter with record gross bookings. We saw particular strength in both our Osaka and Tokyo markets as we continue to capture significant AI deployments from both domestic and international customers.
We also saw Stranthair and Mumbai, Singapore, and Sydney markets.
Speaker Change: And now looking at the capital structure, please revert to slide 8.
Speaker Change: Our 3.4 times net leverage continues to remain low, both in absolute and relative terms to our peers.
Speaker Change: As of year-end, we had cash and short-term investments of $3.6 billion on our balance sheet due to record customer collection and our financing activity, which puts us in a solid funding position to meet our 2025 capital needs and set us up for 2026.
Speaker Change: In the quarter, we issued Euro 1.15 billion in senior green notes at a weighted average rate of 3.4%.
Speaker Change: Additionally, we repaid $1 billion of senior notes in the quarter and raised approximately $700 million of equity through our ATM program.
Speaker Change: We plan to continue to take a balanced and opportunistic approach to accessing the capital markets as and when the market conditions are favorable to fund our future growth.
Speaker Change: Turning to slide nine, for the quarter, capital expenditures were approximately $1 billion, including seasonally higher recurring capex of $115 million, as planned.
Speaker Change: We opened three major projects since the last earnings call, Barcelona, Jakarta, and Rio de Janeiro. We also purchased land for development in Lagos and Paris.
Speaker Change: More than 85% of our current retail expansion spend is on our own land, our own buildings with long-term ground leases.
Speaker Change: Our capital investments deliver strong returns, as shown on slide 10.
Speaker Change: Our now 177 stabilized assets increase revenues by 3% year-over-year on both an as-reported and constant currency basis.
Speaker Change: Stabilized assets were collectively 83% utilized and generated a 27% cash on cash return on the gross PP&E invested.
Speaker Change: As a reminder, unlike prior years, we plan to update our Stabilized Asset Summary on the Q1 earnings call.
Speaker Change: And finally, please refer to slides 11 through 16 for our summary of 2025 guidance and bridges.
Speaker Change: Do note, all growth rates are on a normalized and constant currency basis.
Speaker Change: Starting with revenues, for the full year 2025, we expect top-line growth of 7 to 8 percent.
Speaker Change: As noted, this is on a normalized and constant currency basis which adjusts for the significant net impact of FX.
Speaker Change: but also lower power costs passed through to our customers and the end of sale of our metal product offering.
and given our bookings momentum.
Speaker Change: and our largest backlog of three years and timing of capacity additions across our major metros. Our Q1 guidance assumes a $28 million step-up in recurring revenues.
Speaker Change: but continued healthy step-ups in recurring revenues over the course of the year.
Speaker Change: MRR return is expected to remain within our targeted quarterly range of 2 to 2.5% per quarter.
Speaker Change: We expect 2025 adjusted EBITDA margins to be approximately 49%, a 190 basis point improvement over last year due to strong operating leverage, targeted expense management efforts, and anticipated lower power prices.
Speaker Change: And like our revenues, we expect quarterly margins to step up over the course of the year, with a meaningful increase in Q2 margins over Q1, in part due to seasonality, and second half adjusted EBITDA margins are expected to be at or near 50%.
Speaker Change: 2025 AFFO is expected to grow between 9 and 12 percent compared to the previous year. And AFFO per share is expected to grow between 7 and 9 percent, despite the sizable investment in warehouse capital to support our future growth into 2026.
Speaker Change: 27 and beyond and also the refinancing of debt maturing in the year.
Speaker Change: 2025 CapEx is expected to range between $3.2 and $3.5 billion, including approximately $200 million of on-balance sheet X-scale spend, which we expect to be reimbursed as we transfer assets into our U.S. joint venture, and about $250 million of recurring CapEx spend.
Speaker Change: And finally, we're increasing our 2025 cash dividend on a per share basis by 10%.
Speaker Change: due to strong operating performance, our 10th consecutive year of dividend per share growth since our reconversion. The cash dividend will be approximately $1.8 billion, a 13% year-over-year increase, 100% of which is expected to be derived from operating performance.
Adaire Fox-Martin: So I'm going to stop here and turn the call back to Adaire. Thank you, Keith. In closing, Q4 was a record quarter for Equinix in a year of record performance.
Adaire Fox-Martin: 2024 demonstrated the enduring market demand for the services offered by Equinix.
Adaire Fox-Martin: the execution excellence of our team in prosecuting that demand in service to our customers and our continued drive to improve our profitability and our return to our shareholders.
Adaire Fox-Martin: In 2025, we will double down on these qualities and further prime ourselves for growth.
Adaire Fox-Martin: We will focus on the elements of our business that define our relevance and our differentiation in a rapidly evolving world.
Adaire Fox-Martin: Our product continuum, our global reach, our interconnection density, and our cloud connectivity.
Adaire Fox-Martin: We will embrace the relentless pursuit of efficiency and effectiveness in all that we do.
Adaire Fox-Martin: We will work to make it easy at Equinix for our customers and our partners, so that we can deliver the greatest value and capture as much of the opportunity as possible, driving attractive revenue growth, expanding margins and increasing profitability.
Adaire Fox-Martin: With that, I'll stop here and open it up to questions.
Speaker Change: Thank you. We will now begin our question-and-answer session. If you would like to ask a question, please press star 1. Please press star 2 if you would like to withdraw your question.
Speaker Change: Our first question comes from Simon Flannery with Morgan Stanley. Your line is open.
Simon Flannery: We've had a lot of news in the recent weeks on DeepSeek and the implications for the industry. It seems like...
Speaker Change: There's a general sense that inference may be coming more important relative to training and quicker. I'd love to get your perspective on that development and how you think about inference coming through your numbers.
Speaker Change: in 2025, 2026, and beyond. And I think, Keith, you just mentioned briefly on the U.S. X-scale JV. It'd be great to just get a little update since you've announced that project. Where do we stand in terms of identifying markets, bill programs, and so forth? Thank you.
All right, thank you so much for the question, Simon.
Keith Taylor: Yes, it's been an interesting period of time, I think we've seen a step change in compute
Speaker Change: efficiency along the performance curve and that is something that I expect to continue. We expect to see continued innovation in the sector and across
Speaker Change: both training and inference, which we think is a net positive for the space.
Speaker Change: The drop in inferencing costs that's implied by the work released into the open-source market by DeepSeek
Speaker Change: I think will enable the economics of AI transformations to become a little bit more feasible for a broader set of organisations and so that's why we feel that this will represent a circular demand driver for our business.
Speaker Change: As it relates to the actual workload characteristics and the role of inferencing and how that will play out.
Speaker Change: and certainly we believe that within the next three years 80% of apps and processes that operate within businesses will be infused with AI and in fact if our own business is an example of that that that is something that will be true for us too.
You can see the absolute relevance of Equinix.
Speaker Change: to this market opportunity. We are right in the demand center of this opportunity. And in Q4, as I mentioned in my remarks.
Speaker Change: 50% of the top 25 deals that we closed in Q4 were very much related to deals where high-performance compute associated with training workloads and inferencing requirements were very prevalent and present.
Speaker Change: and one of the things that I think plays very strongly into Equinix's value proposition is that it is very clear that the market will be multi-cloud and that means that we will have data landing everywhere across all of these clouds.
Speaker Change: and then in addition to that data profile there will also be apps and agents that land everywhere in order to process the information associated with the applications and underpinning capability that they are running.
Speaker Change: So, for us, this means that our interconnection density and that heritage of equinix in connectivity is something that will be extremely important as these apps and agents bounce to and from wherever the data is located.
Speaker Change: We see that we have a wonderful opportunity to look at how we continue to make it easy at Equinix for our customers to deploy these technologies.
Speaker Change: and how we have a pivotal role in abstracting some of this complexity through programmatic interfaces that will make it easier for our customers to deploy models.
Speaker Change: easier for our customers to access the APIs that will be key in this architecture and easy for our customers to deploy and mount agents on globally deployed POPs.
Speaker Change: So we're, you know, we're very, very positive on the opportunity, very positive about the innovations that we continue to see. We know that this is a market where the innovations will continue to come and at a fast pace.
Speaker Change: and we believe that our position is one that is very balanced and appropriate towards actually encapsulating and garnering as much of that opportunity as possible, so very excited about the potential here.
Speaker Change: And Simon, let me just capture the second question that you'd asked, and again, thanks for asking it. I think there's two aspects in which I want to share with you and the rest of the listeners today. There's what's going on in the matrix side and what's going on in X scale.
Speaker Change: In Adaire's prepared remarks, as you're aware, we have 16 AgScale projects currently underway.
Speaker Change: Now, as part of that, one of the things that we've announced that basically 87 percent, roughly 87 percent
Speaker Change: of all projects that have been built or that are under construction have been pre-sold, either leased or pre-leased. So it gives you a sense of the momentum, at least as it relates to the one-off fees, the non-recurring fees, such as sales and marketing.
We're working hard on the Hampton site.
Speaker Change: including working with the utility provider and power infrastructure providers to get the power ready or available for when we need it.
Speaker Change: We're also investing in a lot of what I call forward leaning commitments, both as it relates to power and basically the MEP equipment.
Our goal is to have an asset up in 2027.
Speaker Change: That is our goal and that's what we're working hard towards, so it gives you a sense we're making progress there. That all said, we've got three other sites that we're continuing to look at in the United States, without even discussing where could we go somewhere else outside of the U.S.
Speaker Change: So again, making, I think, really good progress. The last thing I probably want to just leave you and everybody with is in the guide that we shared with you,
There's roughly $40 million of incremental operating expense.
associated with the amplification of our XScale business.
under new leadership with Tiffany.
Speaker Change: and putting the resources behind it, given that we're going to triple it, we're making a really heavy investment.
Speaker Change: And as I said, that's roughly $40 million embedded in the guide that you've seen.
Speaker Change: so it tells you that how committed we are to this next opportunity that's in front of us both as we exit 2025 but more as we look into 26, 27, and 28.
Speaker Change: Thank you. Our next question comes from Eric Lugtsov with Wells Fargo. Your line is open.
Speaker Change: Hi, thanks for taking the question. So, Adaire, I just wanted to touch back on the demand funnel that you talked about and the bookings momentum.
Speaker Change: Maybe you could talk a little bit about what your forward pipeline looks like today. And, you know, you mentioned in your prepared remarks, you know, pursuing kind of a larger end of the retail co-location spectrum, or maybe small wholesale, depending on the definition. Maybe you could talk about.
Speaker Change: Are your bookings in trended in that segment and what the pricing and returns may look like relative to your more core interconnection dense based retail business?
Speaker Change: Great. Thank you. Thank you very much for the question. So first of all, let me say that I had the pleasure in Q4 and continuing into Q1 of being both the CRO of the company and the CEO. So I had the opportunity to be very close with the team as they executed on our Q4 quarter and delivered, as we already mentioned, record growth bookings in the quarter.
Speaker Change: In terms of, you know, the footprint that we see, one of the other elements that I made in my remarks was that we had the highest volume of non-Tier 1 metros.
Speaker Change: sold during the course of the year and Q4 was no different from that perspective.
Speaker Change: This is, I think, largely due to a number of tech service providers.
Speaker Change: who are looking for large footprint capability in order to grow their own businesses and their own services.
Speaker Change: and of course that footprint capability needs to be a contiguous one. And this is where the team works closely with our customers to ensure that this demand-shaped program happens very early on in the engagement.
Speaker Change: In terms of pricing, we are absolutely seeing a positive progress in pricing in terms of being in a set of circumstances where there is much demand, of course, and broad-based demand for the products and services offered by Equinix.
Speaker Change: So we continue to see some pricing strength across even the tier two scenarios that we are selling into.
Speaker Change: And just one follow-up for me, maybe you could just update us on what your current expectations are for this year. I know you had forecasted picking up in Q4, and you've gone through some grooming activity from the service providers throughout the last year. Can you update on when you think that settles back to the kind of lower 2% end of the range on a sustainable basis?
Speaker Change: Yes, so I think as you saw for Q4 our churn was 2.5% and as Keith mentioned in his remarks
Speaker Change: and that put our Q4 churn at the top end of our range. In normalising for that, we would have had a 2.2% churn number for Q4, which in fact is the average churn rate across 2024.
Speaker Change: So in 2025 we absolutely expect our churn to be within that 2.5% MRR range and that's what we will manage to.
You know, for any MRR business, return is a reality.
Speaker Change: And just as a reminder, as we discuss through this topic, our definition of churn
Speaker Change: includes any reduction in products or services consumed at an order line level. So we count that decrease even though the customer might be growing with us on a net basis either in another location or even in another region.
Speaker Change: and I think there are a number of factors so one aspect of my CRO hat here has been the opportunity to work with the team you know to unpack this and to and to double-click into the data here.
Speaker Change: First of all, you can see that we have, on the churn side, looked at some of the factors that are associated with churning customers.
Speaker Change: Now much of the churn, as I mentioned already, is frictional.
Speaker Change: By that I mean that customers are continually evolving what they're doing inside an Equinix data center. It doesn't mean that they're leaving our data center. It means they're continually evolving their architecture and their structure in order to maximize the cost-benefit outcomes for them.
Speaker Change: And I think this speaks to the health and strength of the platform as they continue to grow with us even when we're seeing some of that frictional churn.
Speaker Change: Secondly, we know, when we've looked at the data, that from both an interconnection perspective and a more-than-one or multiple metros or regions perspective,
Speaker Change: The customers who have interconnection with us have a much lower propensity to churn, as do customers who are in a multiple regional scenario with us.
Speaker Change: So whilst we expect our churn rate to be between 2% and 2.5% during the course of 2025, we intend to lean in during the course of this year on the front end of our sales process.
Speaker Change: and to ensure that we are doing as much as we meaningfully can to ensure that we're increasing the interconnection rate.
Speaker Change: because we know that that's one of the clear delineators around managing churn later in the relationship with the customer. So a whole series of things that we're looking at based on the data that we have seen.
Speaker Change: But we are guiding to the range of 2 to 2.5% for 2025, and we'll look to manage within that range and to the lower end of it, using the data to help us guide how we approach and manage this topic with our customers.
Speaker Change: 4 5 2 1 0 9 0 7 1 0 9 0 7 1 0 9 0 7 1 0 9 8 1 1 .
Speaker Change: Thank you. Our next question comes from Jonathan Atkin with RBC Capital Markets. Your line is open.
Jonathan Atkin: drawing more power within the framework of their existing service agreements, and how does that affect your ability to meet SLAs and even take on new business within those buildings? And then I'll follow up later on the headcount question.
Jonathan Atkin: Yeah, I'll work through the power one and I'll ask Keith to add anything, you know, to ensure that I cover all of the topics here.
Speaker Change: One thing I would say is that within the context of our business, Equinix has a 26-year history of managing power as an input, and a valuable input into our data center environment.
Speaker Change: and we manage very carefully to a whole series of SLAs that we have with our customers in order to ensure that we are compliant to those SLAs.
and as it relates to our stabilized assets.
Speaker Change: I am not aware of any issues around, you know, a power draw that would impact how our customers are executing in the context of those stabilized assets.
Speaker Change: Keith, is there anything that you would add to that piece? Yeah, John, and maybe I'll just, you know, follow on the conversation, you know, as part of what was in Adaire's prepared remarks, that no surprise to you, we also demand shape based on the needs of the customer, and to the extent that there's a customer that is looking...
Speaker Change: to increase meaningfully, whether it's more inventory in the form of a cabin or more energy in the form of power, you've got to demand shape it into the right place because, as Adaire says, we have a very detailed set of processes that allows the team to manage the energy that's inside the four walls.
That all said...
Speaker Change: It's also probably not a surprise to you and or anybody else one of the key modifiers to the compensation plan for VPs and above is the
the Power Efficiency Initiative, or PUE.
And so we're always working to drive down.
Speaker Change: the amount of energy that gets consumed through different operational exercises or new technology, different software packages and the like. And so to the extent that, you know, capacity gets created through that, then we have the ability to sell it.
Speaker Change: sell it to the customer inside maybe an older asset, but suffice it to say, you know, again, as Adaire said, look, we manage inventory from a number of different vectors.
Speaker Change: Again, no surprise whether it's the energy that is consumed, the cooling that is required, and the location of that, and we appropriately adjust our inventory availability for IBX on that basis. And again, I would just say that...
Speaker Change: that you're going to put the right customer with the right application or the right needs into the right asset. And, you know, that's one of our core tenets in managing our inventory.
Thank you, Keith. There was a second question of people.
Speaker Change: Yeah, you know what, I'm going to switch topics to expenses. So, in 2025, I'm just wondering, broad strokes, any kind of SG&A or COGS or OPEX of any type that might not reoccur in 2026?
Speaker Change: Whether it's due to maybe some some costs associated with your efficiency initiatives or IT or anything else That might not recur in 2026. That is an element of your 25 guide
Speaker Change: Well, perhaps in this case, John, I'll take this and I'll let Adaire maybe sort of jump in as appropriate.
Speaker Change: I think it's very important to sort of really look at, you know, what's going on inside the business, certainly quarter for quarter, and then, you know, 2025 over 2024. But suffice it to say, you can see that we're delivering incremental margin this year over 2024 of roughly 190 basis points.
30 basis points of that is just coming, you know.
Speaker Change: I should talk about revenue, but I can come back to that, but it's coming from basically lower power costs and that gets consumed by the customer and therefore when you take down revenue related to power, of course...
Speaker Change: It's the inversion of what we experienced in 2023, margins move up, and so that's one thing. I would anticipate all else being equal. It feels like, you know, power costs seem like they've continued to step down year over year over the last couple of years.
Speaker Change: and although you know customers consume more but you know just the overall cost
Speaker Change: The unit cost of Electron has been decreasing. The second thing I would just say that the 160 basis points of sort of operational improvement comes from a bunch of sort of many factors.
Speaker Change: You know, the reference to the reduction in force in the fourth quarter, clearly that's something that is impacting, if you will, the financial results for 2025, and that would extend it to 2026 as well.
as we continue to end of life the metal business.
Speaker Change: Again, metal was running at a negative EBITDA trend, and as a result, you know, that will continue to improve both.
Speaker Change: We take the one-off cost, but as we continue to wind that down, again, $25,000 over $24,000 and certainly $26,000 over $25,000, it will reduce the revenues, but more operational performance will come into the business.
Speaker Change: And then, you know, I alluded to in my prior remarks, you know, the decisions of investing in Matrix. Today, you're investing today for what you will earn tomorrow, whether it's on the capital side or whether it's on the operating expense side.
Speaker Change: And suffice it to say, you know, as we get more and more of these assets up and running in commercial, operationally commercial.
Speaker Change: The cost that we're bearing today, you're going to get a nice flow-through on profits.
Speaker Change: because you're bearing the cost of the capital and investing in the staff to support, you know, a much larger franchise in the business and, you know, part of that is really associated with our matrix, you know, we're tripling the size of the business and, you know, we really, we need to invest in order to scale the business to the magnitude in which we plan to take it.
Speaker Change: So those are the things I would say, and then if I could just maybe make one other comment because it really impacted the quarter over quarter.
Speaker Change: Q4, what happened in Q4, and where we are in Q1 vis-à-vis the EBITDA margins. Repairs and maintenance, we spend about 50, on average, about $50 million a quarter. Again, that's an average.
in Q4 of 2024.
Speaker Change: We took our repairs and maintenance up. We wanted to get at the front end of it, and that increased to $83 million in the fourth quarter.
Speaker Change: As a result, when you look in the first quarter, we're stepping back down to roughly the $50 million mark. And so there's a $30 million swing quarter over quarter in the amount of maintenance that is being done inside the assets.
Speaker Change: As we come to the back end of 2025, again, we'll make some decisions about timing and the like.
Speaker Change: But, you know, sometimes you make the decision to accelerate costs or push them out depending on the circumstances.
Speaker Change: But what I wanted to leave everybody with is when you look at the first half of the year, you see a meaningful step up in Q2 margins over Q1.
Speaker Change: but what you really see is the continued performance of the business to the second half of the year and as I said at or near the 50% margin target it just tells you about the operational efficiency that we're that we're building into the business.
Adaire Fox-Martin: And we haven't even spent the energy yet of talking about what it means to change the processes and change the systems, which is a core priority that Adaire has for myself and the team.
Thank you very much.
Speaker Change: Thank you. Our next question comes from Nick Del Dio with Moffitt Needs Sense and your line is open.
Speaker Change: Hi, thanks for taking my questions. First, I want to talk a bit about capacity constraints. I think a year ago you talked about there being capacity constraints in some key markets that were crimping sales and you opened facilities over the course of 2024 to address that.
Speaker Change: Adaire, you noted in your preferred remarks that bookings could have been better absent capacity constraints in some key markets, so it seems like that issue has cropped up again. I guess, by when do you feel like you'll be ahead of the ball on this front and unconstrained from an inventory perspective across at least most of your key markets?
Yeah.
Speaker Change: So, we absolutely are pursuing opportunity with the vigour and, in fact, part of our Build Bolder strategy is ensuring that we're leaning into those capacity constraints that we see in the market.
Speaker Change: Our capacity constraints vary region by region around which of our Tier 1 metros are impacted by this.
Speaker Change: You would also see in the deck that we provided the expansion guide which provides an indication of how much capacity we would be releasing in 2025 and how much will come into our inventory over the course of that year and the years that follow.
Speaker Change: It's absolutely true that there are cases where we could not meet the contiguous capacity requirement of a customer in a Tier 1 metro. And if we had to have that capacity available, we could have met that demand for the customer. In most cases, we were fortunate to be able to demand shape or to move them in on a smaller basis.
Speaker Change: very firmly in the center of what is a very hot demand market at the moment and the underlying signals continue to demonstrate the relevance of the product portfolio, the solution set, the global reach and so on that Equinix has to offer.
Speaker Change: As I mentioned, Build Bolder is a strategy that is very much focused on our retail portfolio as well as aspects of our X-scale portfolio, which Keith has just covered.
Speaker Change: and you know our core focus when we think about this strategy is where we can have a differentiated value creation for these retail campuses.
Speaker Change: and our intent is really to lean in here and to deliver retail capacity in as efficient manner as we can in order to meet customer demands.
Speaker Change: I mentioned in my prepared remarks that we have 62 major projects underway.
Speaker Change: and our goal is really to enable our design and our construction team to streamline this build cycle and bring larger critical retail capacity to the market faster for our customers, particularly in some of those key markets.
Speaker Change: So, for instance, within our retail pipeline, we have created a pipeline review.
Speaker Change: so that we can see where we have the opportunity to streamline the number of phases.
that will enable us to deliver this capacity.
Speaker Change: And as a result of that, when we look at NY3, DC-16, and LD-4, these are all examples of...
Speaker Change: projects that have been accelerated at least a year as a result of the Build Boulder lens that we are placing on the demand market that we, you know, the demand opportunity that we see and the opportunity that we have to provide that capacity through to our customers.
Speaker Change: and so continuing area of focus for us, continuing area of optimization and continuing engagement with our customers to ensure that and we meet their demands and their requirements as best as we possibly can.
Jonathan Atkin: Okay, great. That's helpful. Thank you Adaire. Can I ask one more on the fiber market? You know, there's obviously a lot of demand or a lot of activity.
for Fiber to Support AI.
Speaker Change: dark fiber, wavelengths, new routes being constructed. You alluded to some wins with ZAO in your prepared remarks as an example of that. Do you think that this source of activity is going to be large enough to be a meaningful incremental driver of the business in coming years? Because I'd imagine a lot of it is going to terminate in your facilities.
Speaker Change: That's quite possible. I mean, we're certainly seeing that with the ZAO partnership, you know, the opportunity to support their journey. And again, I would just come back to, you know, the unique differentiation and value proposition of Equinix.
Speaker Change: Global reach, densely interconnected, you know, and dense with network service providers. And these are all elements that will be crucially important as we look to capitalize on future opportunities.
Speaker Change: Thank you. Our next question comes from Michael Rollins with Citi. Your line is open.
Michael Rollins: Thanks and good afternoon. Adaire, you mentioned earlier some of the work that you've done on segmentation and so curious if you can give us an update as to where do you see Equinix being under penetrated in certain key customer verticals and if you can give us an update
Michael Rollins: as you look at the 2025 guidance with respect to two paths. So, you know, one path is, as you look at constant currency revenue growth of 7% to 8% in the guide. You know, how do you think about that in terms of expanding customers?
Michael Rollins: versus expanding customer spend, and then on the second path, how do you think about that in terms of the cabinet growth versus the pricing and MRR per cabinet expansion? Thanks.
Adaire Fox: Adaire Fox, Keith Taylor, Charles Meyers, Keith Taylor, Charles Meyers, Keith Taylor,
Michael Rollins: Thanks, Michael. I'm just jotting down the three elements of your question there to make sure that I address them.
Um,
Michael Rollins: So we undertook a very comprehensive segmentation exercise looking at, you know, our customer base.
Michael Rollins: and looking at the customer base through a variety of different lenses.
Michael Rollins: The first output of our segmentation exercise is really to define where and how we best serve these customers.
Michael Rollins: So with what kind of account coverage, you know, what kind of account management, what kind of cost to serve?
Michael Rollins: That being said, it does give you an opportunity then to take your segmentation of your customers and look at it through the lens of the TAM, the total available TAM in the market, and to see where we are and how we are actually covering various different segments.
Michael Rollins: We have a very balanced portfolio across industry, so it would be hard to point to an industry where we don't have a representation.
but I think that our reach into accounts
Michael Rollins: that are, you know, smaller in terms of revenue turnover and might fall into that general business-type category is harder. Our, you know, our focus has very much been on enterprise customers. And that's really where your channel begins to play and that's really where you can have a digital sales motion in order to make that reach possible.
Michael Rollins: I also mentioned in my prepared remarks that one of the things that we had done as a result of our implementation this year was to make some amendments to our compensation plan.
Michael Rollins: And one of the amendments that we have made to our compensation plans is actually around net new name acquisition.
Michael Rollins: So how the team not only expands the footprint in an existing account, but to your point, enable us to actually expand the number of customers that Equinix service. So we should see an uptick in that number during the course of this year based on that focus.
Speaker Change: And then the last question was relevant to cabinets. Sorry, Mike, you might need just to remind me of that part of your question.
Speaker Change: Oh sure, so as you look at the constant currency revenue guide of 7-8%, how do you think about the contribution from cabinet growth versus pricing and MRR growth, MRR per cabinet growth?
Michael Rollins: Yeah, Michael, maybe I'll take that and Adaire can sort of jump in.
Michael Rollins: First, I think it's important to really understand just where we are on the growth rate, you know, year over year, and as I said, you know, as I said, there's a little bit of
Michael Rollins: Probably noise in the fourth quarter, noise in the guidance, so let me explain that.
Michael Rollins: So the fourth quarter, we know currencies, the currency has impacted us both, you know, from revenue all the way down to the bottom. As it related to the fourth quarter, it was $22 million.
Michael Rollins: There's also 22 million of non-recurring fees that we were anticipating to close in Q4 that did not close And so that would have put us to the top end of the guidance range that that will happen in Q1 And in fact it it the vast majority of this has already happened in Q1. So that's good
Michael Rollins: So then when you start to think a little bit about the growth rate for 2025 over 2024, I want to reconcile how we got to the 78. There's $147 million of FX.
Michael Rollins: Everybody can take a take a view on it Are we going to continue to have dollar strand throughout the rest of the year or not? But we've booked a hundred at least in the guide 147 million
Michael Rollins: reduced power costs to roughly $50 million, impact of metal, you know, reducing $45 million, and then
Michael Rollins: in the XCO franchise, which we typically don't do, but we're outside of the JV for a couple fit-outs just based on the structure. That's a $40 million reduction. So when you look at that, overall, you see how the business is performing.
Michael Rollins: Having said all that, when you look at just the fundamental business, we absolutely anticipate that you'll see increased gross bookings.
Michael Rollins: That will come from higher density, or I should say continued higher density. That higher density, of course, does good things for the cabinet, the MRRPA cabinet.
Michael Rollins: Given the backlog, given we know when we think the inventory is coming online, we have what we think is good visibility into continued cabinet ads.
Michael Rollins: into 2025, there'll be some aberrations with some churn, but we'll always guide you to that. So that's how I think about that. As it relates to pricing, we think again in 2025, we'll have positive or net positive pricing actions.
That will represent about 10% of our gross bookings.
Michael Rollins: How that presents itself on a stabilized basis, we still envision three to five percent
Speaker Change: price growth on our stabilized assets, and again, that comes from, it does come from price, but it also comes from volume and more cross-connects, as Adaire alluded to. So hopefully that gives you a little bit of sense of what's happening.
Speaker Change: If I can just maybe say one other thing because I think it's important as you as you look at Q1
Speaker Change: The difference between Q1 and Q4, the lion's share of the degradation is $40 million is coming from currency.
Speaker Change: So it gives you a cent, and then $30 million is coming from lower non-recurring fees.
Speaker Change: But as I told you, we moved $20 million, so it would have been $50 million.
Speaker Change: So it gives you a sense, there's a lot of noise between Q4 and Q1, and how that's impacted the year.
But, you know, we're really, you know, I...
Adaire Fox-Martin: All these you heard from Adaire. We're really excited about where we are the positioning and we can see where the inventory is Is going to come online and allow us to sell more more to the customer over that you know over the year
Adaire Fox-Martin: and the customers consuming, you know, the average deal size is just getting bigger. It's getting more dangerous, it's getting larger. And that goes back to, you know, maybe part of what Nick was asking, that, you know, we're selling out some of the core assets faster than we anticipated and we need to put more assets up as fast as we can despite the constraints in the marketplace.
Thanks very much.
Adaire Fox, Keith Taylor, Charles Meyers
Speaker Change: Thank you. Our last question comes from Jim Schneider with Goldman Sachs. Your line is open.
Speaker Change: you know, decelerated by about 100 basis points last year and it got into another...
Speaker Change: 50 basis point deceleration, if I'm not mistaken, a 7.8% heading into 2025. I guess, can you maybe comment on what the recurring revenue outlook is doing for 2025, all in, and then, you know, what is your confidence level that you can actually re-accelerate that revenue growth over the course of the year and what would be the drivers of that?
Speaker Change: I'll take a first stab and then I'll have perhaps Keith decompose some of the numbers for you.
Speaker Change: So I think the guide that you see for 2025, that's very much in line with our performance from 2024.
Speaker Change: And implied in this guidance is a step up, as you've mentioned, of recurring revenue growth over the course of the year, giving us a very implied strong exit into 2026.
and that recurring a revenue growth step up is
Speaker Change: Sarka 28 million in Q1 and then stepping up during the course of the year into a 40 mil type category for our recurring revenue.
Speaker Change: So I'm really very happy about that because this core recurring revenue element is a key element of our business.
Speaker Change: and allows us to plan and consistently grow. As I mentioned already, I think we're very firmly in the centre of demand.
and have a very strong backlog to support this revenue.
Speaker Change: and continue to see this very clear and compelling signal from the market.
Speaker Change: We very much look forward to, you know, taking the gross bookings and the records that you've seen over the course of 24.
Speaker Change: taking that and turning it into revenue as quickly as we possibly can in order to ensure that we have that strong exit out in 2026.
Speaker Change: And of course, doing that whilst we're delivering 190 basis points of margin expansion. So not just, you know, stepping up on our recurring revenue, but delivering it in a profitable context.
Keith Taylor: and Keith is there anything that you wanted to do on the mechanics of where that's at? So maybe just to summarize what Adaire said that so that growth is all basically coming from the recurring line.
which is...
And so non-recurring revenues as we look to 25.
Keith Taylor: is going to be flat, you know, I would say generally flat. And so all that growth is coming from the recurring line. And then going, you know, just reminding everybody, it's really important, and Ralph knows this better than anybody, as well as the construction teams, we need the inventory.
Keith Taylor: If we had more inventory in the fourth quarter, we would have sold more. Our backlog is at near an all-time high, and we just have to make sure that we can continue to deliver the capacity into the market, and that gives you the ability to continue to accelerate the top line.
Thanks. Maybe just as a follow-up question...
Speaker Change: You know, there's been a lot of announcements in the market, whether that is Stargate or otherwise, about significant capacity additions over the next few years. So I was wondering if you could comment relative to your own XGILJV with CPP and GIC going forward.
Keith Taylor: Anything that makes you feel differently about the pace with which you're going to add that capacity via the JV? And is there anything you can do to actually accelerate that capacity addition further to bring it online per your earlier comment? Thank you.
yeah
Keith Taylor: So, in terms of some of the announcements that we've seen, you know, obviously this is a continued focus on the data center industry, and as I've mentioned earlier, we're very central to that.
Keith Taylor: We're very supportive of announcements like this because we feel that all boats can can rise on on that particular tide
Keith Taylor: In terms of how this relates to our own plans, we of course
Keith Taylor: have seen from the hyperscalers continued investment in their own CAPEX.
Keith Taylor: stories from their recent earnings announcements. So it doesn't seem that there is any desire to to step away from this in the short term.
Keith Taylor: So we feel that there is a lot of opportunity in the market for us to pursue. As we've mentioned already, we're at 85% leased and pre-leased on the projects that we have already in pipeline. Under X-Scale, you know, looking across the Americas, you know, to find those next sites outside of the Hamptons, the one that we have begun to work and develop the site.
Keith Taylor: So, we remain very focused on ensuring that we can capture as much of this opportunity as possible. The second phase, or the second part of Build Bolder, because it is an and strategy, is focused on our x-scale pipeline and how we execute against that pipeline and deliver that capacity fast to the market.
Keith Taylor: Thank you for joining our Q4 earnings call. This concludes our commentary.