Digital Realty (DLR) Q2 2025 Earnings Transcript

Core Insights - The company achieved record bookings of $177 million in gross new leases for Q2 2025, with $135 million attributed to the company's share, marking an 18% increase over the previous record set two quarters earlier [2][19][24] - Core FFO per share reached a record $1.87, reflecting a 13% year-over-year increase and a 6% increase from the previous quarter [3][40] - The backlog at the company's share stood at $826 million at quarter-end, indicating strong growth visibility for the coming years [3][25] Financial Performance - The company signed renewal leases totaling $177 million at a blended cash increase of 7.3%, exceeding the original guidance of 4%-6% [4][39] - The gross data center development pipeline reached $9 billion, with an expected stabilized yield of 12.2% [4][43] - Liquidity exceeded $7 billion, with leverage at 5.1 times, below the long-term target of 5.5 times [5][45] Growth and Guidance - Full-year 2025 core FFO per share guidance was raised to a range of $7.15–$7.25, with revenue and adjusted EBITDA guidance increased by $100 million and $75 million, respectively [6][49] - The company added 139 new customer logos, indicating expanding wallet share and recurring revenue base [6][30] Sustainability and ESG - The company matched 185 data centers with 100% renewable energy, with 75% of global electricity needs met from renewables, a 9% increase from the prior year [7][33] - A 14% year-over-year reduction in water use intensity was achieved in North America [7][34] Market Dynamics - The demand for data center capacity remains strong, driven by digital transformation, cloud, and AI [26][70] - The company noted that EMEA and APAC regions are trailing the US in AI-driven demand, although both regions saw record participation in interconnection bookings [10][72] Strategic Initiatives - The US Hyperscale Fund received over $3 billion in LP equity commitments, expected to support approximately $10 billion of data center investment [5][28] - The company emphasized a balanced approach between rapid expansion in the zero to one megawatt plus interconnection segment and future contributions from large-scale hyperscale bookings [10][50]