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Equinix(EQIX) - 2024 Q3 - Earnings Call Transcript
EQIXEquinix(EQIX)2024-10-31 02:23
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Financial Data and Key Metrics - Q3 revenues were 2.2billion,up72.2 billion, up 7% YoY, driven by strong recurring revenue growth and xScale fees [24] - Adjusted EBITDA increased 12% YoY, with solid AFFO per share profitability [24] - Interconnection revenues grew 10% YoY, with Equinix Fabric contributing significantly [25] - Net interconnection additions improved to 5,700, driven by hyperscale connects and ecosystem diversification [26] - Equinix Fabric achieved an annual revenue run rate of over 250 million, with a 40% attach rate globally [26] - MRR per cabinet increased 6% YoY to over 2,300,drivenbyfavorablepricingandhigherpowerdensities[34]BusinessLinePerformance−Cabinetsbillingincreasedmeaningfully,contributingtothe87thconsecutivequarterofrevenuegrowth[8]−xScaleleasingreached385megawattsglobally,withnearly902,300, driven by favorable pricing and higher power densities [34] Business Line Performance - Cabinets billing increased meaningfully, contributing to the 87th consecutive quarter of revenue growth [8] - xScale leasing reached 385 megawatts globally, with nearly 90% of operational and under-construction capacity leased [18] - Equinix Fabric saw solid growth, supported by 100-gigabit port additions and higher bandwidth virtual connections [26] - The company opened new data centers in Johannesburg, New York, and Tokyo, easing capacity constraints in key metros [27] Market Performance - APAC was the fastest-growing region at 15% YoY, followed by the Americas at 6% and EMEA at 3% [41] - Demand outpaced supply in top markets, driving a favorable pricing environment, particularly in the Americas [42] - The Asia Pacific region reached a quarterly revenue milestone of 500 million for the first time, driven by strong AI demand in Japan [43] Strategy and Industry Competition - The company is focusing on three strategic areas: customer engagement, integrated solutions, and innovative data center design [11][12][13] - Equinix plans to build fewer, larger campuses to address power constraints and meet customer needs from SMEs to hyperscalers [15] - The company announced a 15billionjointventurewithCPPInvestmentBoardandGICtoexpandxScalefacilitiesintheU.S.[17]−EquinixisuniquelypositionedtoserveAIworkloads,offeringlow−latencyaccesstohyperscaleron−rampsin47metrosacross25countries[19]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−ThecompanyseesrobustdemandfordigitalinfrastructuretoenableAIcapabilitiesacrossindustriesandregions[8]−Theforward−lookingpipelineremainsstrong,withhealthypre−salesactivitiessupportingmomentumintoQ4andbeyond[8]−ManagementhighlightedtheimportanceofxScaleasaforcemultiplier,enablingthecompanytoserveabroadrangeofcustomerneedsglobally[52]OtherImportantInformation−Thecompanyissued15 billion joint venture with CPP Investment Board and GIC to expand xScale facilities in the U.S. [17] - Equinix is uniquely positioned to serve AI workloads, offering low-latency access to hyperscaler on-ramps in 47 metros across 25 countries [19] Management Commentary on Operating Environment and Future Outlook - The company sees robust demand for digital infrastructure to enable AI capabilities across industries and regions [8] - The forward-looking pipeline remains strong, with healthy pre-sales activities supporting momentum into Q4 and beyond [8] - Management highlighted the importance of xScale as a force multiplier, enabling the company to serve a broad range of customer needs globally [52] Other Important Information - The company issued 750 million in senior green bonds, aligning with its sustainability strategy [45] - Capital expenditures for the quarter were 724million,with57majorprojectsunderwayacross35markets[46]−Full−yearrevenueguidancewasraisedby724 million, with 57 major projects underway across 35 markets [46] - Full-year revenue guidance was raised by 36 million, and adjusted EBITDA guidance was raised by $10 million due to strong bookings and favorable FX rates [48] Q&A Session Summary Question: Benefits of shifting to large campuses and impact on existing markets - Building fewer, larger campuses allows the company to secure power, optimize location, and offer a full spectrum of products to customers [56] - Economies of scale in design and construction improve efficiency and returns [58] Question: Pace of new capacity additions from the xScale joint venture - The company expects to introduce new capacity within 12-18 months, with Atlanta as the first site [92][93] - Long-lead items have already been ordered, and negotiations with power providers are underway [94] Question: Momentum in cabinet net additions and underlying drivers - Strong bookings, lower churn, and capacity openings in key metros drove a 3,100 increase in net billable cabinets [97] - The backlog of sold but uninstalled cabinets suggests continued strength into Q4 and early 2025 [97] Question: Adjustments to cabinet disclosure and impact on MRR per cabinet - The company adjusted cabinet capacity metrics to reflect higher power density, impacting net utilization but not revenue [101][102] - MRR per cabinet is measured on a cabinet-equivalent basis, accounting for varying power consumption [106] Question: Narrative shift towards xScale and AI training - xScale is seen as a multiplier for the core retail colocation business, enabling the company to serve a full spectrum of customer needs [108][113] - The program is expected to contribute significantly to AFFO as recurring fees from joint ventures grow [117][119] Question: Progression of pricing and presold capacity - Pricing remains robust, particularly in high-demand, capacity-constrained markets [126] - Approximately 20% of growth activity in the core business is presold, with xScale preleasing at 92% [129][130]