Digital Realty (DLR) Q4 2025 Earnings Transcript

Core Insights - 2025 was a transformative year for Digital Realty Trust, Inc., marked by record financial performance and significant growth in bookings and backlog, driven by increased demand for data center capacity due to AI adoption and cloud scaling [1][2][18]. Financial Performance - The company reported core FFO per share of $1.86 for Q4 and $7.39 for the full year 2025, reflecting a 10% increase over 2024 [3][26]. - Total bookings exceeded $1 billion for the second consecutive year, with a record backlog of nearly $1.4 billion [2][22]. - Revenue and adjusted EBITDA showed strong double-digit growth, supported by robust leasing activity and a significant backlog [18][19]. Market Demand and Strategy - Demand for data center capacity remained strong, particularly in the zero to one megawatt interconnection category, which saw bookings of nearly $340 million, a 35% increase from 2024 [6][21]. - The company’s strategy focused on a global connectivity-rich platform, operational excellence, and disciplined capital allocation, which has gained momentum [5][10]. - Hyperscale leasing exceeded $800 million in 2025, indicating strong and durable demand in this segment [7][19]. Product and Service Expansion - The company expanded its PlatformDigital into 31 countries and 56 markets, enhancing its service offerings and interconnection capabilities [6][11]. - The adoption of the private AI exchange platform is growing, enabling enterprises to connect compute data and models across various environments [8][9]. - Investments in APAC markets, including Indonesia and Malaysia, have strengthened the company’s presence in fast-growing regions [10][11]. Operational Highlights - The company maintained a leverage ratio below five times and significant liquidity of nearly $7 billion, positioning itself well for future investments [18][32]. - Development CapEx for 2025 reached $3 billion, with a robust pipeline of projects underway, totaling over $10 billion [29][30]. - The company is transitioning its reporting metrics to focus on power-based metrics, aligning with its operational strategy [28][29]. Future Outlook - Guidance for 2026 indicates core FFO per share growth of 8%, with expectations for total revenue and adjusted EBITDA growth exceeding 10% [34][35]. - The company anticipates continued strong demand for AI-specific services and infrastructure, with a focus on delivering AI-ready solutions in key markets [14][35]. - The backlog provides strong visibility into future revenue, with $634 million of leases scheduled to commence in 2026 [24][36].