Digital Realty's (DLR) Q2 FFO Beats Estimates, Revenues Miss

Core Insights - The company reported operating revenues of $1.36 billion in Q2 2024, missing the Zacks Consensus Estimate of $1.38 billion, with a Same-Capital cash net operating income (NOI) growth of 2% [1][5] Financial Performance - Rental property operating expenses increased by 5.7% to $237.6 million, property taxes rose by 6.2% to $49.6 million, and interest expenses jumped by 3.3% to $114.7 million [3] - Core funds from operations (FFO) per share for Q2 2024 was $1.65, surpassing the Zacks Consensus Estimate of $1.63 but down from $1.68 per share a year ago [12] - Year-over-year, operating revenues declined by 0.7% and core FFO per share fell by 1.8% [13] - Adjusted EBITDA for the quarter was $727 million, marking a 4% increase year over year [15] Leasing Activity - The company experienced healthy leasing activity, signing renewal leases that generated $215 million of annualized cash rental revenues, with rental rates on renewal leases increasing by 4.0% on a cash basis and 7.5% on a GAAP basis [6][5] - Total bookings in the quarter were estimated to generate $164 million of annualized GAAP rental revenues, with a weighted average lag of 20 months between new leases signed and their commencement [14] Debt and Guidance - As of June 30, 2024, the company had total debt outstanding of $16.3 billion, with a net debt-to-adjusted EBITDA ratio of 5.3X and a fixed charge coverage of 4.1X [4] - The company maintained its guidance for 2024 core FFO per share in the range of $6.60-$6.75, with the Zacks Consensus Estimate at $6.64 [8] - Total revenue guidance for 2024 is set between $5.55 billion and $5.65 billion, with the consensus mark at $5.57 billion [17] Cash Position - The company exited Q2 2024 with cash and cash equivalents of $2.28 billion, an increase from $1.19 billion as of March 31, 2024 [16]