Equinix, Inc.

Good afternoon and welcome to the Equinix second quarter earnings conference call. All lines will be able to listen only until we open for questions. Also, today's conference is being recorded. If anyone has objections, please disconnect at this time. I'd now like to turn the call over to Katrina Reimel, Vice President of Investor Relations. You may begin.

Thank you. Good afternoon and welcome to today's conference call. Before we get started, I'd like to remind everyone that some of the statements we'll be making today are forward-looking in nature and involve risks and uncertainties. Actual results may vary significantly from those statements and may be affected by the risks we identified in today's press release and those identified in our filings with the SEC, including our most recent Form 10-K, filed on February 22, 2019, and 10-Q, filed on May 3, 2019. Equinix assumes no obligation and does not intend to update 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 is done through an explicit public disclosure. In addition, we will provide non-GAAP measures on today's conference call. We provide a reconciliation of those measures to the most directly comparable GAAP measures, and the list of the reasons why the company uses these measures in today's press release on the Equinix IR page at www.equinix.com. We have 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. 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. With us today are Charles Myers, Equinix's CEO and President, and Keith Taylor, Chief Financial Officer. Following our prepared remarks, we'll be taking questions from sell-side analysts. In the interest of wrapping this call up in an hour, we'd like to ask these analysts to limit any following questions to just one. At this time, I'll turn the call over to Charles.

Thank you, Katrina. Good afternoon, and welcome to our second quarter earnings call. As you can see in our results, we continue to enjoy significant momentum in our business. Our ability to deliver distinctive and durable value for our customers as they pursue their digital transformation agenda is is fueling strong bookings performance and accelerated new logo capture. Our platform continues to be highly differentiated due to our superior global reach, vast operating scale, and the power of our interconnection platform, separating us from other data center providers and positioning us as the trusted center of a cloud-first world. We continue to execute well against our strategy, achieving our second-best gross bookings quarter with incremental deals from more than 3,000 of our customers and strong cross-border bookings driven largely by the Americas team. We achieved our 66th consecutive quarter of revenue growth, tops among S&P 500 companies, and we now serve more than half of the Fortune 500, with a record number of Fortune 500 and Global 2000 prospects still in the pipeline. The diversity, volume, and velocity of our selling engine continues to shine, generating over 4,000 deals in the quarter, with the majority comprised of small to mid-sized multi-metro deals, reflecting the tremendous health of our interconnection-centric retail business and foreshadowing future land and expand opportunities as these customers use Equinix as the nexus for implementing their hybrid and multi-cloud aspirations. Our global reach continues to fuel our top line, with revenue from customers deployed across all three regions ticking up to 61% and multi-region revenues at 73%. We saw substantial progress against the six priorities I outlined at the start of the year, including evolving our portfolio of products, expanding our go-to-market engine, including channel, and delivering on our hyperscale strategy. We signed our first hyperscale JV, a greater than $1 billion deal with GIC, Singapore's sovereign wealth fund, targeting development projects across Amsterdam, Frankfurt, London, and Paris to serve the unique core workload deployments for a targeted group of hyperscale companies. And we continue to expand our global platform with 30 projects underway, including five Xscaler builds and Q2 openings in all three regions, including Chicago, Madrid, Osaka, Perth, Seattle, Sophia, and Tokyo. Digital transformation continues to be a top priority for our customers, and a variety of key trends are making them think differently about their infrastructure. We are responding to this changing demand by both investing across our traditional strengths and layering in incremental capabilities. We're expanding our data center footprint, enhancing our market leading interconnection platform, and have now launched the first offering in our planned edge services portfolio, positioning Equinix as an easier to use, more valuable, and more accessible platform, and driving attach rates that will help us sustain and enhance cabinet yields over the coming years. Turning to the quarter, as depicted on slide three, Revenues for Q2 were $1.385 billion, up 10% year-over-year. Adjusted EBITDA was up 12% year-over-year, and AFFO was meaningfully ahead of our expectations due to strong operating performance. Our interconnection platform continues to perform well, once again outpacing colocation revenues, growing 13% year-over-year as our ecosystems continue to scale. These growth rates are all on a normalized and constant currency basis. We now have 348,000 interconnections, over four times more than the next closest competitor. In Q2, we added an incremental 7,000 interconnections, with strong growth in virtual connections. For our Internet Exchange platform, we're seeing strength in the APAC and EMEA markets, with IAC's provision capacity up 30% year over year. ECX Fabric, our SDN-enabled interconnection service, now has over 1,600 customers. We're seeing increasing adoption of ECX for new use cases, including a diversification of ICX end destinations and more frictionless hybrid multi-cloud deployments enabled by API-level integration between ECX and market-leading cloud and network providers. In Q2, we also launched Network Edge Services, an NFV offer that provides enterprises a faster, easier, and more efficient way to deploy virtual network services at Equinix as we extend our portfolio of interconnection offerings. Customers can choose virtualized services such as routers, firewalls, and load balancers from industry-leading partners, including Cisco, Juniper, and Palo Alto networks. Early customer response has been great. We have a healthy pipeline ahead, and we're working to build out the service offering with additional partners and locations over the coming quarters. Now let me cover some highlights from our verticals. Our network vertical experienced solid bookings led by growth in EMEA and strong resale activity from our top global network partners. We also continue to deepen our network density, with over 1,800 networks now available on Platform Equinix, including every network provider in the Fortune 500 and 90% of those in the Global 2000. New wins included a Chinese telecom provider serving 40% of China's Internet users and Wander, a U.S. regional ISP, deploying infrastructure to launch wireless services for West Coast residential customers. Our financial services vertical achieved record bookings led by capital markets, banking, and insurance subsegments as firms embraced digital transformation. Expansions included a key win with CME Group, a top three global exchange, re-architecting their network and securely connecting to ecosystem partners, and Hanover Life Reassurance, a top five global insurer, deploying infrastructure and connecting to ECS Fabric. Our content digital media vertical produced solid bookings led by the Americas and strong growth in gaming and publishing sub-segments. Expansion wins included Akamai, a top content distributor, extending coverage and scale and supporting existing security solutions. And Zynga, a leading mobile gaming developer, expanding across platform equinix to support enterprise IT. Our cloud and IT vertical captured record bookings led by the APAC region and the infrastructure and services sub-segments. Equinix continues to be the leading solution for cloud connectivity today, with over 40% of all cloud ramps from the top cloud service providers in our IBXs across our metros. Expansions this quarter included a Fortune 75 technology company hosting unified communication services and ServiceNow, expanding its footprint to support its rapidly growing customer base. Our enterprise vertical experienced diversified growth with particular strength in travel, legal, and healthcare subsegments. New wins included a global builder and operator of toll roads, enabling IoT smart transportation systems, and Tapestry Premium, a leading fashion brand implementing a multi-cloud strategy, as well as expansions with a top three food services company re-architecting their network to enable data access and analytics. Our channel business had another great quarter with broad-based strengths. driving over 25% of bookings and accounting for 60% of our new logos as we deepen our engagement with high-priority partners to significantly amplify our go-to-market reach. We are focusing our efforts on driving more productivity and joint offer creation across our reseller and alliance partners, which include Amazon, AT&T, Microsoft, Oracle, Orange, Telstra, Verizon, and WWT. New channel wins this quarter included a win with Telstra for Genomics England, solving for cloud connectivity to increase computing, storage, and resiliency. Now, let me turn the call over to Keith to cover the results for the quarter.